nep-dev New Economics Papers
on Development
Issue of 2019‒01‒14
nineteen papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. Getting the First Job – Size and Quality of Ethnic Enclaves for Refugee Labor Market Entry By Öner, Özge; Klaesson, Johan
  2. Schooling Choices’ Responses to Labor Market Shocks: Evidence From a Natural Experiment By Belal Fallah; Ayhab Saad
  3. Teacher Policies, Incentives, and Labor Markets in Chile, Colombia, and Peru: Implications for Equality By Eleonora Bertoni; Gregory Elacqua; Analia Jaimovich; Julio Rodríguez; Humberto Santos
  4. Good things come in threes: multigenerational transmission of human capital By A. Hector Moreno M.
  5. Race-based Educational, Occupational and Industry Segregation and Wages Gaps in Trinidad and Tobago By Caroline Schimanski; Cristian Chagalj; Inder J. Ruprah
  6. Sanitation and Hygiene By Borooah, Vani
  7. Rainfall, Internal Migration and Local labor Markets in Brazil By Raphael Corbi; Tiago Ferraz
  8. Internal migration and education: A cross-national comparison By Aude Bernard; Martin Bell
  9. Micro-insurance at Scale: Evidence on Impact from Rwanda By Anuj Pratap Singh
  10. Effects of Food Price Spikes on Household Welfare in Nigeria By M. Shittu, Adebayo; Akerele, Dare; Haile, Mekbib
  11. Examining the Interactive Growth Effect of Development Aid and Institutional Quality in Sub-Saharan Africa By Mehmet Balcilar; Berkan Tokar; Godwin Olasehinde-Williams
  12. Armed Conflict and Child Labor: Evidence from Iraq By George Naufal; Michael Malcolm; Vidya Diwakar
  13. Does Child Labor Lead to Vulnerable Employment in Adulthood? Evidence for Tanzania By Sara Burron; Gianna Giannelli
  14. The joint impact of improved maize seeds on productivity and efficiency: implications for policy By Abro, Zewdu Ayalew; Debela, Bethelhem Legesse; Kassie, Menale
  15. The Institutional Foundations of Religious Politics: Evidence from Indonesia By Samuel Bazzi; Gabriel Koehler-Derrick; Benjamin Marx
  16. The Quest for Pro-poor and Inclusive Growth: The Role of Governance By Djeneba Doumbia
  17. Active Learning Improves Financial Education: By Kaiser, Tim; Menkhoff, Lukas
  18. How enhancing information and communication technology has affected inequality in Africa for sustainable development :An empirical investigation By Asongu, Simplice A; Odhiambo, Nicholas M
  19. Culture and collateral requirements: Evidence from developing countries By Panagiota Papadimitri; Fotios Pasiouras; Menelaos Tasiou

  1. By: Öner, Özge (University of Cambridge); Klaesson, Johan (Jönköping University)
    Abstract: This article analyses the relationship between the size and the quality of ethnic enclaves on immigrants’ labour market integration. Using exogenously defined grid cells to delineate neighbourhoods we find robust empirical evidence that the employment rate of the respective immigrant group in the vicinity (as a measure of enclave quality) facilitates labour market integration of new immigrants. The influence of the overall employment rate and the share of co-nationals in the neighbourhood tend to be positive, but less robust. We thus conclude that the quality is more important than the size of the ethnic enclave in helping new immigrants finding jobs.
    Keywords: Refugee immigrants; Ethnic enclave quality; Labor market outcomes
    JEL: F22 J15 J60 R23
    Date: 2018–12–05
  2. By: Belal Fallah; Ayhab Saad (Doha Institute for Graduate Studies)
    Abstract: This paper uses the closure of Israeli labor market to examine the effect of a large labor market shock on educational choices for Palestinian youth. Right after the outbreak of Second Intifada in October 2000, Israel severely restricted the entrance of Palestinians workers (commuters) to its market, which resulted to more than 50% reduction in the number of Palestinian workers in Israel, mostly males. Our identification strategy relies on the variation in the geographical distribution of commuters within the West Bank prior the Second Intifada. We implement a difference-indifference strategy to compare high school dropout between localities with different commuting shares pre the shock over time. We find that the closure had significantly decreased high school dropout for males aged between 15-19 year-olds but not for females. The triple difference analysis confirms that the gender gap in high school dropout rates had decreased more in localities with high commuting shares than that in localities with low commuting shares. These effects are driven by the significant decline in employment prospects for school dropouts, as commuters were mainly concentrated in low-skill male-dominant jobs.
    Date: 2018–09–18
  3. By: Eleonora Bertoni; Gregory Elacqua; Analia Jaimovich; Julio Rodríguez; Humberto Santos
    Abstract: This paper contributes to the teacher sorting literature by analyzing equity in the distribution of teachers in three educational systems in Latin America, with different equalization policies, teacher assignment rules, and incentives to work in disadvantaged schools: Chile, Colombia, and Peru. We use unique micro-data at the teacher and school level to describe the distribution of teachers across the three systems. Two main conclusions emerge from our results. First, we find that differences in the sources of funding and teacher salaries legislation can affect the equity in teacher allocation between administrative units. Second, we find substantial teacher sorting across schools (vertical inequities) in the three systems. Overall, the comparison of the three countries confirms that, after controlling for confounding variables, disadvantaged students, particularly those in rural areas, are more likely to attend schools with teachers who are less qualified (temporary and inexperienced) and paid less. One of the most consistent findings in this analysis are the vertical inequities across the three measures in Colombia. In contrast, in Chile, the three measures have an inconsistent and weak relationship with mother’s level of schooling and a moderate relationship with the geographic location of the school (rural). While our analyses are descriptive and do not attempt to identify the underlying causes of these patterns, we suggest that these differences are related to the salary structure and hiring policies in the three countries. We discuss some policy alternatives to increase equity, including the introduction of monetary and non-monetary incentives to attract teachers to hard-to-staff schools, improving the working conditions and modifications in the teacher hiring and assignment process.
    Keywords: Wages, Teacher Education & Quality, Education Policy, Latin America, Teacher sorting, School finance
    JEL: I24 I22 J45
    Date: 2018–08
  4. By: A. Hector Moreno M. (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)
    Abstract: This paper examines the effect of grandparental education on their children's and grandchildren's educative outcomes. The endogeneity of parental schooling is addressed by the use of a two-fold instrumental variable approach. A natural experimental set up from a regional war that occurred in 1926 is exploited to instrument years of schooling of the "grand-parents" generation whereas labour market indicators serve as an instrument for the education of the "parents" generation. Using a nationally representative Mexican survey that gathers retrospective information on the three generations, the paper first shows that accounting for endogeneity unveils less mobility than ignoring it. This allows documenting more persistence of family background in the older pair of parent-child link than in the younger pair in the three generations at hand. Finally, results also suggest that the influence of the grandparents' educative legacy, conditional on parental education, does not seem to reach the grandchildren's generation.
    Keywords: multigeneration,education,Mexico
    Date: 2018–11
  5. By: Caroline Schimanski; Cristian Chagalj; Inder J. Ruprah
    Abstract: As a result of its colonial history the labour market of Trinidad and Tobago is characterized by two majority racial groups of approximately equal number. During colonial times, these racial groups were highly segregated in terms of education, occupation, industry, and sector of work, and the institutionalized disparities in pay were large. This raises the question whether segregation and historical wage gaps still exist and are affected by the government in power. Using labour market survey data from 1999 to 2015, this study provides evidence of race-based educational, occupational, and industry segregation and wage gaps in Trinidad and Tobago’s private and public sectors and their development. Despite its history, aggregate racial educational and occupational segregation is low. With 7%, measured in terms of the KarmelMaclachlan index, it is even lower than respective gender-based segregation over the same period, and it has remained constant over the sample period. Furthermore, the findings suggest that most race-based occupational segregation is a result of prior educational segregation. In aggregate terms the racial wage gap was initially negligible but has been rising over time and shifting from initially favouring ATTs (citizens of Trinidad and Tobago of African origin) to favouring ITTs (citizens of Trinidad and Tobago of Indian origin). There is, however, considerable heterogeneity in segregation and wage gaps across educational attainment levels, occupations, industries, and sectors. Race-based wage gaps appear larger in the public sector, especially for women. Although we cannot control for all unobserved factors, there is also indicative evidence that the party in power affects the racial share of public sector workers and public sector wage gaps. Using quantile regression and decomposition techniques, this study also provides evidence of large heterogeneity in returns to education and a shift in the direction of the average wage gap from favouring ATTs to favouring ITTs along the entire wage distribution.
    Keywords: Wage Gap, Labor Market Discrimination, Wage Discrimination, Education, Wag Gap, Race, Occupation, Segregation
    JEL: J24 N16 J15 J71 J31
    Date: 2018–10
  6. By: Borooah, Vani
    Abstract: Using data from the Indian Human Development Survey, this chapter examines both toilet possession and personal hygiene in India. It shows that the strongest influences on households in India having a toilet were their standard of living, the highest educational level of adults in the households, and whether or not they possesses ancillary amenities like a separate kitchen for cooking, a pucca roof and floor, and water supply within the dwelling or its compound. However, in so doing, it also shows that whether households had toilets depended not just on household-specific factors but also on the social environment within which the households were located. More specifically, ceteris paribus households in more developed villages would be more likely to have a toilet than those in less developed villages. The chapter rejects the nihilism of the idea, put forward in several academic papers , that the problem of open defecation in India is an intractable one because caste, ritual pollution, and untouchability instil in rural Indians a preference for open spaces.
    Keywords: Sanitation, Defecation, Toilets, Handwashing, Hygiene
    JEL: I15 I18
    Date: 2018–05
  7. By: Raphael Corbi; Tiago Ferraz
    Abstract: We investigate the labor market impacts of weather-induced internal migration in Brazil between 1987 and 2010. We instrument the number of migrants at the destination municipalities using a two-step approach. First, we exploit the variation of out-migration flows from the Brazilian Semiarid, driven by deviations from historical average rainfall, to predict the number of internal migrants leaving their hometowns. Then, we distribute this predicted flow according to the preexisting support network in each destination based on the migrant’s region of origin. Our results indicate that increasing in-migration rate by 1ð ‘ .ð ‘ . reduces native employment by 0.3ð ‘ .ð ‘ ., mostly in the formal sector, decreases wages in the informal sector by 0.2% and deepens earnings inequality.
    Keywords: Migration; labor supply; wage effects; rainfall
    JEL: J21 J22 J61 R23
    Date: 2018–12–20
  8. By: Aude Bernard; Martin Bell
    Abstract: Migration the main process shaping patterns of human settlement within and between countries. It is widely acknowledged to be integral to the process of human development as it plays a significant role in enhancing educational outcomes. At regional and national levels, internal migration underpins the efficient functioning of the economy by bringing knowledge and skills to the locations where they are needed. It is the multi-dimensional nature of migration that underlines its significance in the process of human development. Human mobility extends in the spatial domain from local travel to international migration, and in the temporal dimension from short-term stays to permanent relocations. Classification and measurement of such phenomena is inevitably complex, which has severely hindered progress in comparative research, with very few large-scale cross-national comparisons of migration. The linkages between migration and education have been explored in a separate line of inquiry that has predominantly focused on country-specific analyses as to the ways in which migration affects educational outcomes and how educational attainment affects migration behaviour. A recurrent theme has been the educational selectivity of migrants, which in turn leads to an increase of human capital in some regions, primarily cities, at the expense of others. Questions have long been raised as to the links between education and migration in response to educational expansion, but have not yet been fully answered because of the absence, until recently, of adequate data for comparative analysis of migration. In this paper, we bring these two separate strands of research together to systematically explore links between internal migration and education across a global sample of 57 countries at various stages of development, using data drawn from the IPUMS database.
    Date: 2018–12
  9. By: Anuj Pratap Singh (Department of Economics, Trinity College Dublin)
    Abstract: Health insurance protects households from costly health shocks, and by encouraging health seeking behaviour, can safeguard earnings and assets. We confirm that micro-insurance serves as a social safety net by increasing health seeking behavior and reducing out of pocket medical expenses. We find evidence for complementarity between health micro-insurance membership and formal savings activity, confirming positive spillovers between formal financial products. We find substitution between health micro-insurance and informal financial services, where microinsurance crowds out both informal savings and informal borrowings. In obtaining these results, we use instrument variable estimation to correct for the issue of self-selection, an issue that undermines many previous studies. The study uses nationally representative cross-sectional data from Rwandan Integrated Living Conditions Survey conducted in 2005-06 and 2010-11.
    Keywords: Micro-insurance, CBHI, Health Service Utilisation, OOP Expenses, Hardship Financing, Financial Status
    JEL: I13 I31 O16 D81 G22
    Date: 2018–10
  10. By: M. Shittu, Adebayo; Akerele, Dare; Haile, Mekbib
    Abstract: The dramatic global food price upsurges of 2007/2008 and the resurgence of 2010/2011 have kept the welfare effects of food price shocks at the epicentre of policy discussions worldwide. Studies have found heterogeneous impacts, but empiricallylittle is known in Nigeria. The key objectives of this study are to examine the welfare, i.e. food quantity consumption, dietary diversity, and economic welfare effects of food price spikes among households in Nigeria. Using the 2012/2013 and 2015/2016 Household Survey Panel Data, the linear individual (fixed) effects models were estimated while controlling for participation in safety net interventions and other factors to achieve the stated objectives. Findings suggest that higher spike in the price of cereals consistently has negative effect on food quantity (including calories) consumed, dietary diversity, and economic welfare of households, spikes of price of other staples, animal proteins, fats and oils, fruits and vegetables exert heterogeneous influence. Female headed households advance calorie consumption and dietary variety. Findings suggest that food distribution may be more effective in improving welfare of households than direct cash transfers.Efforts to mitigate extreme spikes in the prices of staples (especially cereals) are relevant for improved food security, nutrition and overall household welfare. However, if policy actions are complemented with food distribution and sensitively guided welfare related gender interventions, more improvementsfor livelihoods can be achieved.
    Keywords: Consumer/Household Economics, Food Security and Poverty
    Date: 2018–02
  11. By: Mehmet Balcilar (Department of Economics, Eastern Mediterranean University); Berkan Tokar (Department of Economics, Eastern Mediterranean University); Godwin Olasehinde-Williams (Department of Economics, Eastern Mediterranean University)
    Abstract: This study analyses the interconnectivity of growth, aid and institutions in Sub-Saharan Africa. The study employs annual data on a panel of 39 countries for the period 1996-2017. The hypothesis that the growth impact of aid and institutions could be interactive was examined. The hypothesis was tested using panel data for official development assistance, aggregate and individual measures of institutional quality, and economic growth, while controlling for sub-regional differences in Southern Africa, Eastern Africa, Western Africa and Central Africa. The results indicate the following: Aid has a direct positive, and an indirect negative growth impact through its interaction with domestic institutions. The synergistic growth impact of aid and institutions is substitutive rather than complementary. The substitutive effect is most pronounced in Western Africa, followed by Eastern Africa, and then Southern Africa but lowest in Central Africa. Good quality institutions are positively correlated with growth, and the institutions that reduce rent-seeking and protect property rights are the types of institutions with the biggest growth effects.
    Keywords: CO2 emissions; Economic Growth, Official Development Assistance, Institutions, Sub-Saharan Africa, Panel GMM
    JEL: F35 F50 O43 O55
    Date: 2018
  12. By: George Naufal (Texas A&M University); Michael Malcolm; Vidya Diwakar
    Abstract: This paper examines the relationship between armed conflict intensity and child labor using household level data from Iraq and taking advantage of a quasi-experimental setup. Armed conflict intensity is measured as the number of deaths related to conflict and child labor is separated by type of work: economic and household. After controlling for individual and household characteristics that determine child labor, we find that armed conflict intensity is associated with a higher likelihood of economic child labor, but is not associated with changes in household labor. These results provide further evidence of the long-term costs of war on households.
    Date: 2018–09–18
  13. By: Sara Burron; Gianna Giannelli
    Abstract: This paper investigates the relationship between child labor and status in employment in adulthood. We aim to contribute to the literature that focuses on the obstacles to the formation early in life of the skills that allow people to avoid vulnerable employment and poverty. We focus on gender differences since the effects of child labor may differ greatly between boys and girls. Using the panel data survey for the Kagera region of Tanzania, we select children who were 7 to 15 years old in the 1990s and follow up with them in the first decade of the 2000s to study the consequences of child labor on their position in adult employment. We exploit the longitudinal structure of data to estimate linear probability models with fixed effects. We find that child labor is associated with vulnerable employment in adulthood and that this result is driven by the girls' sample. The analysis shows that negative adult employment effects arise when children who are younger than 11-12 work more than ten to twenty hours per week. Work on the household farm seems to have the largest negative effects for girls: the threshold lowers to 6 hours, and the probability of escaping from vulnerable employment decreases by approximately 20 to 40 percentage points for child laborers under 10.
    Keywords: child labor; vulnerable employment; unpaid work; women's employment in developing countries; Kagera region of Tanzania
    JEL: J13 J21 J24
    Date: 2018
  14. By: Abro, Zewdu Ayalew; Debela, Bethelhem Legesse; Kassie, Menale
    Abstract: Productivity and efficiency are key performance indicators of improved seeds. Efficiency differences explain part of the variation in productivity. Improved seeds may affect efficiency because farmers often do not apply inputs at optimum. Improved seeds therefore not only directly affect productivity but also indirectly through efficiency. If productivity and efficiency are not estimated jointly, it creates specification problems and it may (over)underestimate benefits of crop improvement research. Previous studies however estimate the productivity and efficiency impacts of improved seeds independently. In this paper, we estimate the joint impact of improved maize seeds on productivity and efficiency using panel data from maize farmers in Ethiopia. Selection biases associated with seeds choice are addressed by estimating production functions using endogenous switching regressions. Our findings show that improved seeds bring productivity and efficiency gains relative to recycled seeds suggesting that the benefits of improved seeds are underestimated by the amount of productivity (efficiency) gains if either of the two are ignored. Unsurprisingly, improved seeds are more productive than traditional seeds, but tradeoffs between productivity and efficiency exist because farmers are less efficient when they use improved seeds than traditional seeds. Our results may inform policy makers to design strategies that could increase productivity at most efficiency.
    Keywords: Agricultural and Food Policy, Consumer/Household Economics, Crop Production/Industries, Productivity Analysis, Research and Development/Tech Change/Emerging Technologies
  15. By: Samuel Bazzi (Boston University (Boston, Massachusetts) (BU)); Gabriel Koehler-Derrick (Harvard University); Benjamin Marx
    Abstract: Why do religious politics thrive in some societies but not others? This paper explores the institutional foundations of this process in Indonesia, the world’s largest Muslim democracy. We show that a major Islamic institution, the waqf, fostered the entrenchment of political Islam at a critical historical juncture. In the early 1960s, rural elites transferred large amounts of land into waqf—a type of inalienable charitable trust—to avoid expropriation by the government as part of a major land reform effort. Although the land reform was later undone, the waqf properties remained. We show that greater intensity of the planned reform led to more prevalent waqf land and Islamic institutions endowed as such, including religious schools, which are strongholds of the Islamist movement. We identify lasting effects of the reform on electoral support for Islamist parties, preferences for religious candidates, and the adoption of Islamic legal regulations (sharia). Overall, the land reform contributed to the resilience and eventual rise of political Islam by helping to spread religious institutions, thereby solidifying the alliance between local elites and Islamist groups. These findings shed new light on how religious institutions may shape politics in modern democracies.
    JEL: D72 D74 P16 P26 Z12
    Date: 2018–10
  16. By: Djeneba Doumbia (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics, The World Bank - The World Bank - The World Bank)
    Abstract: This paper analyses the role of good governance in fostering pro-poor and inclusive growth. Using a sample of 112 countries over 1975–2012, it shows that growth is generally pro-poor. However, growth has not been inclusive, as illustrated by a decline in the bottom 20 percent of the income distribution. While all features of good governance support income growth and reduce poverty, only government effectiveness and the rule of law are found to enhance inclusive growth. The investigation of the determinants of pro-poor and inclusive growth highlights that education, infrastructure improvement, and financial development are the key factors in poverty reduction and inclusive growth. Relying on the panel smooth transition regression (PSTR) model following Gonzalez, Tersvirta and Dijk (2005), the paper identifies a nonlinear relationship between governance and pro-poor growth, while the impact of governance on inclusive growth appears to be linear.
    Keywords: Pro-poor growth,Inclusive growth,Governance,PSTR
    Date: 2018–11
  17. By: Kaiser, Tim (University of Koblenz-Landau and DIW Berlin); Menkhoff, Lukas (DIW Berlin)
    Abstract: We conduct a randomized field experiment to study the effects of two financial education interventions offered to small-scale retailers in Uganda. The treatments contrast \"active learning\" with \"traditional lecturing\" within standardized lesson-plans. We find that active learning has a positive and economically meaningful impact on savings and investment outcomes, in contrast to insignificant impacts of lecturing. These results are not conditional on prior education or financial literacy. Tentative evidence suggests that only active learning stimulates several cognitive and non-cognitive mechanisms; moreover, a social mechanism may be at play as treated individuals join social groups discussing financial matters.
    Keywords: financial behavior; financial literacy; active learning; lecturing; training method; field experiment;
    JEL: I21 A20 D14 O16
    Date: 2018–12–20
  18. By: Asongu, Simplice A; Odhiambo, Nicholas M
    Abstract: This study examines if enhancing ICT reduces inequality in 48 countries in Africa for the period2004-2014. Three inequality indictors are used, namely, the: Gini coefficient, Atkinson indexand Palma ratio. The adopted ICT indicators include: mobile phone penetration, internetpenetration and fixed broadband subscriptions. The empirical evidence is based on theGeneralised Method of Moments. Enhancing internet penetration and fixed broadbandsubscriptions have a net effect on reducing the Gini coefficient and the Atkinson index, whereasincreasing mobile phone penetration and internet penetration reduces the Palma ratio. Policyimplications are discussed in the light of challenges to Sustainable Development Goals.
    Keywords: ICT; Inclusive development; Africa; Sustainable development
    Date: 2018–12
  19. By: Panagiota Papadimitri (Portsmouth Business School); Fotios Pasiouras (Montpellier Business School); Menelaos Tasiou (Portsmouth Business School)
    Abstract: We study the relationship between culture and the use of collateral in corporate borrow- ing. Using a dataset of over 14,000 firms from 70 transition and developing countries, we find evidence that the likelihood to pledge collateral is lower in countries with higher un- certainty avoidance and corporate ethical behavior. In contrast, long-term orientation and individualism enhance the likelihood to use collateral. These results hold when using sub- samples and further controls for various firm and country-specific attributes. Additional analysis reveals that culture influences not only the likelihood to pledge collateral but also its type (movable versus non-movable) and its value relative to the value of the loan.
    Keywords: Culture, Ethics, Collateral
    JEL: G21 G32
    Date: 2019–01–09

This nep-dev issue is ©2019 by Jacob A. Jordaan. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.