nep-dev New Economics Papers
on Development
Issue of 2017‒10‒29
thirteen papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. Foreign Aid in Areas of Limited Statehood By Axel Dreher; Valentin F. Lang; Sebastian Ziaja
  2. Non-Contributory Health Insurance and Household Labor Supply: Evidence from Mexico By Gabriella Conti; Rita Ginja, Renata Narita
  3. One cow per poor family: effects on consumption and crop production in Rwanda By Nilsson, Pia; Backman, Mikaela; Bjerke, Lina; Maniriho, Aristide
  4. Cognitive Skills and Intra-Household Allocation of Schooling By Jorge García Hombrados
  5. Trade in unhealthy foods and obesity: Evidence from Mexico By Osea Giuntella
  6. Malaria Risk and Civil Violence By Matteo Cervellati; Elena Esposito; Uwe Sunde; Simona Valmori
  7. Effect of Political Decentralization and Female Leadership on Institutional Births and Child Mortality in Rural Bihar, India By Santosh Kumar; Nishith Prakash
  8. Oil Dependency and Quality of Education: New Empirical Evidence By Mohammad Reza Farzanegan; Marcel Thum
  9. "Traditional Elites: Political Economy of Agricultural Technology and Tenancy" By Sabrin Beg
  10. Ethnic Diversity and Growth: Revisiting the Evidence By José García-Montalvo; Marta Reynal-Querol
  11. The Effect of Language Training on Immigrants' Economic Integration - Empirical Evidence from France By Alexia Lochmann; Hillel Rapoport; Biagio Speciale
  12. Can Africa Be a Manufacturing Destination? Labor Costs in Comparative Perspective By Alan Gelb; Christian J. Meyer; Vijaya Ramachandran; Divyanshi Wadhwa
  13. The impact of oil rents on military spending: Does corruption matter? By Farzanegan, Mohammad Reza

  1. By: Axel Dreher; Valentin F. Lang; Sebastian Ziaja
    Abstract: We review the aid effectiveness literature to assess whether foreign aid given to areas of limited statehood can be expected to promote economic and social outcomes in the recipient country. We distinguish different types of aid, motives for granting it, recipient country policies and characteristics, and modalities by which aid is delivered, as these factors have been argued to influence the effectiveness of aid. In short, aid is most likely to be successful if given for non-strategic motives, and if given to recipient countries with “good†policies and democratic institutions. Fragmented aid and aid amounts that exceed the absorptive capacity of the recipient reduce the effectiveness of aid. We then compare these properties between recipients most affected by limited statehood and those least affected. This allows us to assess the relative effectiveness of aid in countries with areas of limited statehood. We conclude that on average aid given there is less likely to be effective than elsewhere.
    Keywords: aid effectiveness, fragile states, limited statehood
    JEL: F35 H77 O47 O57 P26
    Date: 2017
  2. By: Gabriella Conti; Rita Ginja, Renata Narita
    Abstract: A central topic in the global health agenda is universal health coverage (UHC). The primary goal of social health insurance schemes is to protect beneficiaries from the health and financial consequences of adverse health events. While in this sense there is scope for government intervention in providing insurance, the impacts of UHC on labor markets in developing countries are less clear. We study this issue using the case of Mexico, which introduced in 2002 a non-contributory health insurance scheme directed to the half of the country’s population uncovered by Social Security protection (the Seguro Popular, SP). Since before SP uninsured individuals could only access affordable health care through their employer, the introduction of a non-contributory public health insurance scheme could have resulted in large effects on the labor market. In practice, SP is a transfer(tax) to the informal(formal) sector workers and to the nonemployed. On the one hand, if the value placed on SP benefits is high, the introduction of fully subsidized health insurance can lead to negative impacts on employment and/or formality. On the other hand, wages in equilibrium might compensate the increase in benefits in the informal sector, in which case the impact on formality and employment is ambiguous. We start analyzing the effects of SP on labor market outcomes by exploiting its staggered introduction across municipalities using a difference-in-differences strategy on the Mexican Labor Force Survey data. We show that the implementation of SP in a municipality is associated with an increase in informality by 4% for low-education families with children. Then, to study why the policy change had limited impacts on the labor market, we develop and estimate a novel household search model which incorporates the value of SP as well as the pre-reform valuation assigned to the amenities in the formal sector relative to the alternatives (i.e., informal sector and non-employment), in order to understand whether access to free health services is valued by household members when they make their labor market decisions. Our structural model is able to replicate both the stocks of household types by Social Security coverage and the transitions in and out of employment and between formal and informal jobs in the pre-reform period. The results show that the steady-state marginal willingness to pay for the health insurance coverage provided by SP is very low, amounting to only 1.3%-4.2% of the mean wage in the informal sector. Lastly, using the model to simulate counterfactual scenarios of employment and labor formality under different valuations of the new health system implemented in Mexico, we find that the willingness to pay for SP would have had to be significantly greater than it was to have substantial impacts on the economy.
    Keywords: Health Insurance; Social Security; Informality
    JEL: I13 J33 J42 O17
    Date: 2017–10–23
  3. By: Nilsson, Pia (Discipline of Economics, Finance and Statistics, Jönköping International Business School, Jönköping University & Centre for Spatial Entrepreneurship and Spatial Economics (CEnSE), Jönköping University.); Backman, Mikaela (Discipline of Economics, Finance and Statistics, Jönköping International Business School, Jönköping University, Centre for Spatial Entrepreneurship and Spatial Economics (CEnSE), Jönköping University & Centre of Excellence for Science and Innovation Studies (CESIS).); Bjerke, Lina (Discipline of Economics, Finance and Statistics, Jönköping International Business School, Jönköping University & Centre for Spatial Entrepreneurship and Spatial Economics (CEnSE), Jönköping University.); Maniriho, Aristide (School of Economics, University of Rwanda, Kigali, Rwanda.)
    Abstract: A random sample of households in Rwanda are used to estimate the effects of the one cow policy on consumption and crop production during 2010-2014. A first-differenced model that takes into account the selection bias and placement effect associated with the policy and heterogeneity across households is estimated. Findings show a positive effect of receiving a cow on crop production, indicating that fertilizers provided by the cattle has enabled households to increase their agricultural production. Findings also point to the importance of knowledge and experience of rearing livestock for the outcome on consumption to realize.
    Keywords: Girinka; consumption; crop production; CEM; Rwanda
    JEL: O12 R12 R20
    Date: 2017–10–23
  4. By: Jorge García Hombrados (Department of Economics, University of Sussex)
    Abstract: Using household data from two districts in northern Ghana, this study examines how cognitive skills affect the allocation of schooling across the children of a household. The analysis reveals that relative to the rest of the siblings in the household, an increase of one standard deviation in the score of cognitive tests increases by 0.128-0.178 the number of years of schooling attended in the following three years, depending on the cognitive test used. These results are interpreted as empirical evidence for the main prediction of the theoretical model for intra-household allocation of resources developed in the seminal paper A Treatise on the Family (Becker, 1981): parents reinforce cognitive differences between siblings through allocating more human capital resources to the more able siblings. The study also explores whether the effect of cognitive skills on the allocation of schooling across siblings depends on the gender of the child or on household level characteristics. On the one hand, I find weak evidence suggesting that the effect of cognitive skills on schooling investments seems larger for boys than for girls although the results are not conclusive. On the other hand, the analysis suggests that polygyny, household size and household wealth do not affect relevantly the magnitude of this effect.
    Keywords: cognitive skills; investments in education; intra-household allocation of resources
    JEL: D13 I21
    Date: 2017–10
  5. By: Osea Giuntella
    Abstract: This paper investigates the effects of trade in food on obesity in Mexico. We classifyMexican food imports from the U.S. into healthy and unhealthy and match thesewith anthropometric and food expenditure survey data. We exploit variation acrossMexican states in their exposure to food imports from the U.S.. We fi nd that imports ofunhealthy foods signi cantly contribute to the rise of obesity in Mexico. The empiricalevidence also suggests that unhealthy food imports may widen health disparitiesbetween education groups. By linking imports to food expenditure and obesity, thepaper sheds light on an important channel through which globalization may affecthealth.
    Date: 2017–01
  6. By: Matteo Cervellati; Elena Esposito; Uwe Sunde; Simona Valmori
    Abstract: Using high-resolution data from Africa over the period 1998-2012, this paper investigates the hypothesis that a higher exposure to malaria increases the incidence of civil violence. The analysis uses panel data at the 1o grid cell level at monthly frequency. The econometric identification exploits exogenous monthly within-grid-cell variation in weather conditions that are particularly suitable for malaria transmission. The analysis compares the effect across cells with different malaria exposure, which affects the resistance and immunity of the population to malaria outbreaks. The results document a robust effect of the occurrence of suitable conditions for malaria on civil violence. The effect is highest in areas with low levels of immunities to malaria. Malaria shocks mostly affect unorganized violence in terms of riots, protests, and confrontations between militias and civilians, rather than geo-strategic violence, and the effect spikes during short, labor-intensive harvesting periods of staple crops that are particularly important for the subsistence of the population. The paper ends with an evaluation of anti-malaria interventions.
    Keywords: malaria risk, civil violence, weather shocks, immunity, cell-level data, Africa
    JEL: D74 J10
    Date: 2017
  7. By: Santosh Kumar (Department of Economics and International Business, Sam Houston State University); Nishith Prakash (Department of Economics and Human Rights Institute, University of Connecticut)
    Abstract: In this paper, we investigate the impacts of political decentralization and women reservation in local governance on institutional births and child mortality in the state of Bihar, India. Using the difference-in-differences methodology, we find a significant positive association between political decentralization and institutional births. We also find that the increased participation of women at local governance led to an increased survival rate of children belonging to richer households. We argue that our results are consistent with female leaders having policy preference for women and child well-being.
    Keywords: Gender Quota, Political Decentralization, Institutional Delivery, Child Mortality, Bihar, India
    JEL: H41 I15 J16 O12
    Date: 2017–05
  8. By: Mohammad Reza Farzanegan (Philipps-Universität Marburg); Marcel Thum (TU Dresden)
    Abstract: The resource curse hypothesis suggests that resource-rich countries (especially oil dependent economies) show lower economic growth rates compared to resource-poor countries. We add to this literature by providing empirical evidence on a new transmission channel of the resource curse, namely, the negative long-run effect of oil rents on the quality of education. Our empirical analysis for more than 70 countries in the period of 1995-2015 shows a significantly positive effect of oil rents on the quantity of education measured by government spending on primary and secondary education. However, we find a robust and negative long-run effect of oil rents dependency on the objective and subjective indicators of quality of education, controlling for a set of other drivers of education quality and regional dummies. The significant negative effect of oil rents dependency on education quality can be explained by both the demand (e.g., skill acquisition) and supply (e.g., teacher quality) side channels.
    Keywords: oil rents, resource curse, quality of education, quantity of education
    Date: 2017
  9. By: Sabrin Beg (Department of Economics, University of Delaware)
    Abstract: Traditional elites can perpetuate their political influence through agricultural relationships. I show that landlords in Pakistan can make cost-effective transfers to sharecropper-tenants, thereby gaining tenants' electoral support and controlling policy. Technological change in agriculture makes sharecropping less optimal, attenuating landlords' electoral advantage. Exogenous productivity change lowers the rate of sharecropping and lowers the likelihood of election of landlords in landlord-dominated areas; in turn electoral competition improves and the composition of public goods shifts. While demonstrating clientelism in rural agrarian societies through sharecropping contracts, I also highlight how changes in agricultural technology affect it.
    Keywords: Land Inequality; Clientelism; Public Goods; Colonial Institutions; Electoral Competition, Traditional Chiefs; Political Economy; Elite Capture; Agricultural Productivity.
    JEL: O10 O13
    Date: 2017
  10. By: José García-Montalvo; Marta Reynal-Querol
    Abstract: The relationship between ethnic heterogeneity and economic growth is complex. Empirical research working with cross-country data finds a negative, or statistically in- significant, relationship. However, research at the city level usually finds a positive relationship between diversity and wages/productivity. Generally, the trade-off be- tween the economic benefits of diversity and the costs of heterogeneity implies that the relationship between diversity and growth depends on the size of the area used as the unit of observation. In this paper we perform a systematic analysis of the effect of the size of geographical units on the relationship between ethnic diversity and growth. We find a positive relationship for small geographical areas and no effect for large areas and countries. There are potentially different mechanisms that can explain this result depending on the structure of the economy and its level of development. In the case of Africa, we argue that a possible explanation of the positive relationship between diversity and growth is the increase in trade at the boundaries between ethnic groups due to ethnic specialization.
    Date: 2017–10
  11. By: Alexia Lochmann; Hillel Rapoport; Biagio Speciale
    Abstract: We examine the impact of language training on the economic integration of immigrants in France. The assignment to this training, offered by the French Ministry of the Interior, depends mainly on a precise rule: the training is available when the test score of an initial language exam is below a certain threshold. This eligibility rule creates a discontinuity in the relation between the test result and the variables of interest, which is used to estimate the causal effect of this training, through the method of Regression Discontinuity Design. We find that the number of assigned hours of training significantly increases labor force participation of the treated individuals. The language classes appear to have a larger effect for labor migrants and refugees relative to family migrants, for men and individuals below the median age, and for individuals with higher levels of education. Our estimates suggest that the main channel for the improved labor market participation is the information on job search strategies that immigrants derive from the interaction with their classmates and teachers during classes.
    Keywords: immigrants’ integration, language training, Regression Discontinuity Design
    JEL: J15 J61 J68
    Date: 2017
  12. By: Alan Gelb (Center for Global Development); Christian J. Meyer (European University Institute); Vijaya Ramachandran (Center for Global Development); Divyanshi Wadhwa (Center for Global Development)
    Abstract: Our central question is whether African countries can break into global manufacturing in a substantial way. Using a newly-constructed panel of firm-level data from the World Bank's Enterprise Surveys, we look at labor costs in a range of low and middle income countries in Africa and elsewhere. Using fixed effects and random effects models, we estimate a set of labor costs, both actual and hypothetical—what would labor costs for Sub-Saharan African firms look like if they were located outside of Africa? What would Bangladesh's labor costs be if it was located on the African continent? Our results suggest that for any given level of GDP, labor is more costly for firms that are located in Sub-Saharan Africa. However, we also find that there are a few countries in Africa that, on a labor cost basis, may be potential candidates for manufacturing—Ethiopia in particular stands out. We conclude with thoughts on the future of manufacturing in Africa.
    Keywords: Africa, industrialization, labor, manufacturing
    JEL: D2 L6 O14
  13. By: Farzanegan, Mohammad Reza
    Abstract: This study shows that the level of corruption matters in how oil rents affect the military spending within countries. Using panel data covering the 1984–2014 period for the Middle East and North Africa countries, we find that the effect of oil rents on military budget depends on the extent of political corruption. Oil wealth boosts military spending when corruption (measured by the re-scaled ICRG index) exceeds a critical score of 5 (out of 6) in the MENA region.
    JEL: H10 H56 H57
    Date: 2017

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