nep-dev New Economics Papers
on Development
Issue of 2017‒08‒13
twelve papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. Does Soft Corruption Make Grease or Sand for Development? Evidence from Road's Special Allocation Fund for Indonesian Districts By Nasrudin, Rus'an
  2. The Informal Economy in Sub-Saharan Africa; Size and Determinants By Leandro Medina; Andrew W Jonelis; Mehmet Cangul
  3. Skills Training and Employment Outcomes in Rural Bihar By Chakravorty, Bhaskar; Bedi, Arjun S.
  4. Inequality, Crime, and the Long Run Legacy of Slavery By Buonnano, Paolo; Vargas, Juan F.
  5. Chronic Food Poverty in the Philippines By Bayudan, Connie B.; Baje, Lora Kryz
  6. Integrating Early-life Shocks and Human Capital Investments on Children´s Education By Duque, Valentina; Rosales-Rueda, María; Sánchez, Fabio
  7. Spatially Heterogeneous Effects of a Public Works Program By Merfeld, Joshua D
  8. Chronic and Transient Poverty and Weather Variability in the Philippines: Evidence Using Components Approach By Dacuycuy, Connie B.; Baje, Lora Kryz
  9. Financial Resource Curse in Resource-Rich Countries By Montfort Mlachila; Rasmané Ouedraogo
  10. Returns to Controlling a Neglected Tropical Disease: Schistosomiasis Control Program and Education Outcomes in Nigeria By Francis Makamu; Mehtabul Azam; Harounan Kazianga
  11. The Nigerian Urban Reproductive Health Initiative: a decomposition analysis of the changes in modern contraceptive use By Oludamilola Adeyanju; Sandy Tubeuf; Tim Ensor
  12. Economic effects of climate change in developing countries: Economy-wide and regional analysis for Ethiopia By Yalew, Amsalu W.; Hirte, Georg; Lotze-Campen, Hermann; Tscharaktschiew, Stefan

  1. By: Nasrudin, Rus'an
    Abstract: Under a question whether corruption acts as grease or sand for development, this paper estimates the effect of special allocation fund (SAF) or DAK in road sector to infrastructure provision (road) at the district level in Indonesia. The political fragmentation and its political earmarking, defined as the effective number of central parliamentary members from a district are used as an instrumental variable (IV) for the amount of SAF in each district combined with a difference-in-difference measure for the rural road. Such empirical strategy is adopted to tackle three endogeneity problems: selection bias, measurement error and reverse causality between SAF allocation and rural road. First I find that the influence of political earmark is statistically significant than the formula-based approach. Second, under the influence of political earmarking, the IV result shows that the SAF allocation does not affect a rural-road provision in Indonesia in the early implementation of fiscal decentralisation. It seems that allocation based on the block grant or general allocation fund is having more clear effect in the presence of earmarking of special allocation fund. %A billion IDR the allocation is associated with 7 pp. increase in rural with asphalt road. The result challenges the sand hypothesis in the context of decentralising public fund in road sector in Indonesia in the early implementation of decentralisation period.
    Keywords: pork-barrel; road; special allocation fund; Indonesia
    JEL: H30 H60 O12
    Date: 2015–12–10
  2. By: Leandro Medina; Andrew W Jonelis; Mehmet Cangul
    Abstract: The multiple indicator-multiple cause (MIMIC) method is a well-established tool for measuring informal economic activity. However, it has been criticized because GDP is used both as a cause and indicator variable. To address this issue, this paper applies for the first time the light intensity approach (instead of GDP). It also uses the Predictive Mean Matching (PMM) method to estimate the size of the informal economy for Sub-Saharan African countries over 24 years. Results suggest that informal economy in Sub-Saharan Africa remains among the largest in the world, although this share has been very gradually declining. It also finds significant heterogeneity, with informality ranging from a low of 20 to 25 percent in Mauritius, South Africa and Namibia to a high of 50 to 65 percent in Benin, Tanzania and Nigeria.
    Keywords: Uganda;South Africa;Rwanda;Senegal;Seychelles;Sierra Leone;Sudan;Swaziland;Tanzania;Togo;Zambia;Zimbabwe;Congo, Democratic Republic of the;Congo, Republic of;Djibouti;Equatorial Guinea;Eritrea;Ethiopia;Angola;Benin;Burkina Faso;Burundi;Cameroon;Central African Republic;Chad;Comoros;Kenya;Lesotho;Liberia;Gabon;Gambia, The;Ghana;Guinea;Guinea-Bissau;Madagascar;Malawi;Mali;Mauritania;Mauritius;Mozambique;Namibia;Niger;Nigeria;Informal economy, MIMIC estimation methods, Sub-Saharan Africa
    Date: 2017–07–10
  3. By: Chakravorty, Bhaskar (Erasmus University Rotterdam); Bedi, Arjun S. (ISS, Erasmus University Rotterdam)
    Abstract: In a number of countries, youth unemployment is a pressing economic and political concern. In India, 54 percent of the country's population of 1.21 billion is below the age of 25 and faces a high rate of (disguised) unemployment. To augment youth employment, the Government of India has launched a number of skills training programs. This paper deals with participation in and the impact of one of these programs (DDUJKY) located in rural Bihar, one of India's poorest states. The analysis is based on data collected in mid-2016 and compares training participants with non-participants who applied for the scheme but eventually did not attend. We find that the training program squarely reaches the intended target group - rural poor youth. Initially, the program leads to a 29 percentage point increase in the employment rate of the trained graduates. However, two to six months after the training, the employment effect of the program drops to zero. A third of the placed graduates leave their jobs due to caste-based discrimination and another third leave due to a mismatch between the salaries offered and their living costs. The upshot is that while the training program enhances job market prospects, other labor market factors undo the positive effects.
    Keywords: India, Bihar, skills training, youth unemployment
    JEL: J60 J68
    Date: 2017–07
  4. By: Buonnano, Paolo; Vargas, Juan F.
    Abstract: This paper investigates the relationship between economic inequality and crime in Colombian municipalities. Following recent scholarly research that suggests that the legacy of slavery is largely manifest in persistent levels of economic inequality, we instrument economic inequality with a census-based measure of the proportion of slaves in each municipality before the abolition of slavery in the 19 century. We also explore the robustness of our estimates to relaxing the exclusion restriction, as the slavery instrument is only plausibly exogenous. We document a strong association between inequality and both violent and property crime rates at the municipal level. Our estimates are robust to including traditional determinants of crime (like population density, the proportion of young males, the average education level, the quality of law enforcement institutions, and the overall economic activity), as well as current ethnic differences and geographic characteristics that may be correlated both with the slave economy and with crime.
    Keywords: Educación, Economía, Equidad e inclusión social, Investigación socioeconómica, Pobreza, Seguridad,
    Date: 2016
  5. By: Bayudan, Connie B.; Baje, Lora Kryz
    Abstract: There are few studies in the Philippines that analyze poverty dynamics; and studies that analyze the effects of weather variability on food poverty dynamics are even fewer. Given that there are some sectors that are more adversely affected by the changing weather patterns, a study analyzing the effects of weather variability on poverty is essential. Using a simple spells approach to understand the food poverty dynamics in the Philippines, this paper finds that deviation of rainfall from its normal values and other key variables such as education, employment, assets, and armed conflict affect chronic food poverty. A discussion of some inputs to policies is provided.
    Keywords: Philippines, chronic food poverty, spells approach, food poverty, rainfall
    Date: 2017
  6. By: Duque, Valentina; Rosales-Rueda, María; Sánchez, Fabio
    Abstract: This study investigates how early-life conditions interact with subsequent human capital investments to influence future educational outcomes. To provide causal evidence, we exploit two sources of exogenous variation: i) variation in early-life environments resulting from a child's exposure to extreme rainfall and drought shocks in early-life; and ii), variation in subsequent investments resulting from the availability of conditional cash transfers (CCT) that promote investments in children's health and education. Using Colombian administrative data, we combine a natural experiment with a regression discontinuity design using the CCT assignment rule. Results show that, although the CCT has an overall positive impact on children's educational outcomes, it does not have a differential effect on children exposed to early-life shocks; however, the overall effect of the program is large enough to mitigate the negative impact of the weather shock. These findings have important policy implications as they provide evidence of the role of social policies in closing gaps generated by early-life trauma.
    Keywords: Desarrollo social, Educación, Equidad e inclusión social, Investigación socioeconómica, Salud, Niñez, Familia,
    Date: 2016
  7. By: Merfeld, Joshua D
    Abstract: Most research on labor market effects of the Mahatma Gandhi National Rural Employment Guarantee Scheme focuses on outcomes at the district level. This paper shows that such a focus masks substantial spatial heterogeneity: treated villages located near untreated areas see smaller increases in casual wages than treated villages located farther from untreated areas. I argue that worker mobility, rather than spatial differences in implementation or program leakages, drives this spatial heterogeneity. I also present evidence that the effects of the program on private-sector employment display similar intra-district heterogeneity. Finally, by exploiting the difference in wage changes over space, I show that a large portion of consumption increases are driven by wage increases, not program employment. Overall, these results suggest that a district-level focus underestimates the true effect of the program on wages and also support the argument that increasing rural wages is an effective poverty-fighting tool in developing countries.
    Keywords: India; Public Works; Labor; Wages; Spillovers
    JEL: D50 H53 I38 J38
    Date: 2017
  8. By: Dacuycuy, Connie B.; Baje, Lora Kryz
    Abstract: Weather is an integral part of our life and weather shocks can have severe implications on income and household consumption. Given evidence that points to altered patterns of weather parameters resulting from climate change, this paper aims to contribute to poverty studies in the Philippines by analyzing the effects of geographic attributes, like weather variability, on chronic and transient poverty. Based on the estimates of the generalized linear model, higher than normal rainfall contributes to a modest increase in chronic total and chronic food poverty in both urban and rural areas. In addition, asset ownership and college education have the most impact on the reduction of both types of poverty.
    Keywords: Philippines, weather variability, poverty dynamics, components approach, chronic poverty, transient poverty, food poverty
    Date: 2017
  9. By: Montfort Mlachila; Rasmané Ouedraogo
    Abstract: Why do commodity-dependent developing countries have typically lower levels of financial development than their peers? The literature has proposed many possible explanations, but it typically does not dwell on the deep mechanisms that drive such an outcome. In this paper, we argue that the main cause is the shocks in commodity prices. We test the hypothesis on 68 commodity-rich developing countries between 1980 and 2014, and we find strong evidence of the financial development resource curse through the channel of commodity price shocks, after controlling for other explanations found in the literature. The findings are robust to the different types of commodities, the nature of the shocks, and various indicators of financial development. We also show how the impact of these shocks can be mitigated through good quality of governance.
    Keywords: Commodity price shocks;financial sector development, General, Financial Markets and the Macroeconomy, Government Policy and Regulation
    Date: 2017–07–19
  10. By: Francis Makamu (Oklahoma State University); Mehtabul Azam (Oklahoma State University); Harounan Kazianga (Oklahoma State University)
    Abstract: Using the rollout of the schistosomiasis campaign in Nigeria as a quasi-experiment, we examine the impact of the disease control program on school age children education outcomes. Schistosomiasis is a parasitic disease caused by infections from a small worm. Its most severe effects hamper growth and cognitive development of children. The mass campaign targeted four states that saw large reduction in the infectious disease afterwards. Using difference-in-differences strategy, we find that the cohort exposed to the treatment in rural areas accumulated an additional 0.6 years of education compared to cohort not exposed to the treatment. Moreover, the impact of the schistosomiasis treatment is mainly on girls residing in rural areas.
    Keywords: Schistosomiasis; Disease Control; Child Education; Nigeria.
    JEL: I15 I18
    Date: 2017–07
  11. By: Oludamilola Adeyanju (Academic Unit of Health Economics, Leeds Institute of Health Sciences, University of Leeds); Sandy Tubeuf (Academic Unit of Health Economics, Leeds Institute of Health Sciences, University of Leeds); Tim Ensor (Leeds Institute of Health Sciences, University of Leeds)
    Abstract: Despite the implementation of several family planning (FP) programmes, uptake and use of modern contraception in Nigeria remains constrained by a limited access and weak service delivery especially among the poorest. Between 2009 and 2014 the Nigerian Urban Reproductive Health Initiative (NURHI) was initiated among urban Nigerian women in 6 states with the aim of increasing the use of modern contraceptive. The objective of this paper is to assess the changes in modern contraceptive use within the NURHI programme participants and understand the characteristics explaining the changes. We use data collected before and after the programme and apply the Fairlie decomposition method to evaluate the contribution of socioeconomic and other individual factors to the changes in contraceptive use over time. Results show an increase in modern contraceptive use in the programme areas over time. While wealth and education are important determining factors of modern contraceptive use pre-programme, their contribution post-programme reduces substantially. Pre-programme it is mainly women with higher education who use modern contraception because of greater autonomy, financial ability, social interaction and access to FP services however the programme appears to help close the socioeconomic gaps in modern contraceptive use over time. In particular, the NURHI reduces the strength of the link between contraceptive use, and education and wealth, and increases women’s empowerment and decision-making regarding contraception.
    Keywords: Modern Contraceptive use, Family Planning, Fairlie Decomposition, Nigeria
    JEL: J13 I14 I12
    Date: 2017
  12. By: Yalew, Amsalu W.; Hirte, Georg; Lotze-Campen, Hermann; Tscharaktschiew, Stefan
    Abstract: Quantifying the economic effects of climate change is a crucial step for planning adaptation in developing countries. This study assesses the economy-wide and regional effects of climate change induced productivity and labor supply shocks in agriculture in Ethiopia. The study shows, in worst case scenario, the effects on national GDP may add up to -8% with uneven regional effects ranging from -10% in agrarian regions (e.g. Amhara) to +2.5% in urbanized regions (e.g. Addis Ababa). Cost-free exogenous structural change scenarios in labor markets and transaction costs may offset about 20-30% of the ripple effects of climate change. Therefore, the ongoing structural transformation in the country may underpin the resilience of the economy to climate change. Nevertheless, given the role of agriculture in the current economic structure of the country and the potency of biophysical impacts of climate change, adaptation in the sector is indispensable. Otherwise, climate change may hamper economic progress of the country, and make rural livelihood unpredictable.
    Keywords: climate change,agriculture,migration,CGE model,Ethiopia
    JEL: C68 D58 J21 J43 J62 O55 Q54 Q56 R11 R13
    Date: 2017

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