nep-dev New Economics Papers
on Development
Issue of 2019‒10‒07
seventeen papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. The Effects of Land Markets on Resource Allocation and Agricultural Productivity By Chaoran Chen; Diego Restuccia; Raul Santaeulalia-Llopis
  2. China and the World Bank - How Contrasting Development Approaches Affect the Stability of African States By Kai Gehring; Lennart C. Kaplan; Melvin H. L. Wong
  3. September 2019 PovcalNet Update: What's New By Aziz Atamanov; R. Andres Castaneda Aguilar; Carolina Diaz-Bonilla; Dean M. Jolliffe; Christoph Lakner; Daniel Gerszon Mahler; Jose Montes; Laura Liliana Moreno Herrera; David Locke Newhouse; Minh C. Nguyen; Espen Beer Prydz; Prem Sangraula; Sharad Alan Tandon; Judy Yang
  4. Estimating Global Poverty in Stata: The povcalnet command By R. Andres Castaneda Aguilar; Christoph Lakner; Espen Beer Prydz; Jorge Soler Lopez; Ruoxuan Wu; Qinghua Zhao
  5. The Geography of Intergenerational Mobility: Evidence of Educational Persistence and the “Great Gatsby Curve" in Brazil By Tharcisio Leone
  6. Activating women cognitive abilities: Impact of a financial literacy pilot program in India By Lucia, Dalla Pellegrina; Giorgio, Di Maio; Paolo, Landoni; Beatrice, Rama
  7. Forests and Conflict in Colombia By Barry REILLY; Rafael Isidro PARRA-PEÑA S.
  8. Experimental long-term effects of early-childhood and school-age exposure to a conditional cash transfer program By Teresa Molina Millán; Karen Macours; John A. Maluccio; Luis Tejerina
  9. Can Workfare Programs Moderate Conflict? Evidence from India By Fetzer, Thiemo
  10. Subjective Probabilistic Expectations, Indoor Air Pollution, and Health: Evidence from cooking fuel use patterns in India By Mriduchhanda Chattopadhyay; Toshi H. Arimura; Hajime Katayama; Mari Sakudo; Hide-Fumi Yokoo
  11. Migration, Specialization and Trade: Evidence from the Brazilian March to the West By Heitor Pellegrina; Sebastian Sotelo
  12. Fostering savings by commitment: Evidence from a quasi‐natural experiment at the Small Enterprise Foundation in South Africa By Lucia, Dalla Pellegrina; Angela, De Michele; Giorgio, Di Maio; Paolo, Landoni
  13. Nonlinear Impact of Public Debt on Economic Growth: Evidence from Sub-Saharan African Countries By Siméon Koffi
  14. Intellectual Property Protection and Foreign Direct Investment into Less Developed Economies in the post-TRIPs Period By Sunil Kanwar; Stefan Sperlich
  15. Determinants of Developing Countries' Export Upgrading: The Role of China and Productive Investment By Yue Teng; Dic Lo
  16. A review of the consequences of the Indian minimum wage on Indian wages and employment By Wolfson, Paul.
  17. ow Do Social Preferences and Norms of Reciprocity affect Generalized and Particularized Trust? By Holden, Stein T.; Tilahun , Mesfin

  1. By: Chaoran Chen; Diego Restuccia; Raul Santaeulalia-Llopis
    Abstract: We assess the effects of land markets on misallocation and productivity by exploiting policy-driven variation in land rentals across time and space arising from a large-scale land certification reform in Ethiopia, where land remains owned by the state. Our main finding from detailed micro panel data is that land rentals substantially reduce misallocation and increase agricultural productivity. Our evidence builds from an empirical difference-in-difference strategy, an instrumental variable approach, and a calibrated quantitative macroeconomic framework with heterogeneous household-farms that replicates, without targeting, the empirical effects. These effects are nonlinear, impacting more farms farther away from efficient operational scale, consistent with our theory. Using our model, we find that more active land markets reduce inequality, an important concern for the design of land policy. We also find that the positive effects of land markets are mainly driven by formal market rentals as opposed to informal rentals. Finally, our analysis also provides evidence that land markets increase the adoption of more advanced technologies such as the use of fertilizers.
    Keywords: Land markets, rentals, effects, misallocation, productivity, inequality, micro data, quantitative macro, informal markets, technology, fertilizers.
    JEL: E02 O10 O11 O13 O43 O55 Q10 Q15 Q18 Q24 D5
    Date: 2019–09–26
  2. By: Kai Gehring; Lennart C. Kaplan; Melvin H. L. Wong
    Abstract: China’s development model challenges the approaches of traditional Western donors like the World Bank. We argue that both aim at stability, but differ in the norms propagated to achieve that. Using fixed effects and IV estimations, we analyze a broad range of subnational stability measures in Africa. Aid by both the WB and China does not increase outright conflict nor any type of citizen protest, on average. Both even reduce outright conflict by governments against civilians. Still, Chinese aid is associated with more government repression and an increased acceptance of authoritarian norms, while WB projects strengthen democratic values.
    Keywords: development models, development aid, stability, conflict, repression, World Bank, China, Africa, geolocation
    JEL: H77 N90
    Date: 2019
  3. By: Aziz Atamanov; R. Andres Castaneda Aguilar; Carolina Diaz-Bonilla; Dean M. Jolliffe; Christoph Lakner; Daniel Gerszon Mahler; Jose Montes; Laura Liliana Moreno Herrera; David Locke Newhouse; Minh C. Nguyen; Espen Beer Prydz; Prem Sangraula; Sharad Alan Tandon; Judy Yang
    Abstract: The September 2019 global poverty update from the World Bank includes revised survey data which lead to minor changes in the most recent global poverty estimates. The update includes revisions to 18 surveys from four countries. As a result of the revised data, the estimate of the global $1.90 headcount ratio for 2015 increases slightly from 9.94% to 9.98%, whereas the number of poor increases from 731.0 million to 734.5 million people.
    Date: 2019–09
  4. By: R. Andres Castaneda Aguilar; Christoph Lakner; Espen Beer Prydz; Jorge Soler Lopez; Ruoxuan Wu; Qinghua Zhao
    Abstract: This note describes how poverty measures reported by the World Bank can be replicated using the Stata command povcalnet. Users can estimate poverty at any poverty line for the world, regions or sets of countries, by directly querying the World Bank’s database of household surveys. The command also retrieves inequality statistics provided by the database.
    Date: 2019–09
  5. By: Tharcisio Leone
    Abstract: This paper explores the variation in intergenerational educational mobility across the Brazilian states based on transition matrixes and univariate econometric techniques. The analysis of the national household survey (PNAD-2014) confirms a strong variation in mobility among the 27 states in Brazil and demonstrates a significant correlation between mobility and income inequality. In this sense, this work presents empirical evidence for the "Great Gatsby Curve" within a single country: states with greater income disparities present higher levels of persistence in education across generations. Finally, I investigate one specific mechanism behind this correlation – namely, whether higher income inequality might lead to a lower investment in human capital among children from socially vulnerable households. The paper delivers robust and compelling results showing that children born into families where the parents have not completed primary education have a statistically significant reduction in their chance of completing the educational system if they live in states with a higher level of income inequality.
    Keywords: Intergenerational mobility, Great Gatsby curve, socio-economic marginalization, inequality, Brazil.
    JEL: J62 I24
    Date: 2019–10–03
  6. By: Lucia, Dalla Pellegrina; Giorgio, Di Maio; Paolo, Landoni; Beatrice, Rama
    Abstract: This study is based on a randomized control trial (RCT) aimed at understanding the effectiveness of a financial literacy pilot program conducted in 2014-2016 at the Institute for Indian Mother and Child, a non-profit microfinance institution based near Kolkata. Significant impacts are revealed in terms of improvements in saving accumulation and punctuality in the repayment of the loan instalments for borrowers belonging to the treated group, compared to the group of borrowers who did not participated to the program. In particular, positive contribution emerges from the evolution of both the cognitive skills and the level of financial knowledge developed by the beneficiaries during the training program. Estimates provide evidence that enhancing cognitive abilities turn out to be strongly beneficial in fostering the accumulation savings, whereas financial principles also had an (although weaker) impact on stimulating a more timely reimbursement of the instalments. We conclude that the financial literacy pilot program has significantly activated women cognitive abilities, giving them the opportunity to apply them both in the course and in their businesses.
    Keywords: Microfinance; financial literacy; randomized control trial, repayment performance; savings.
    JEL: I21 I24 I28 J13 J24
    Date: 2019–05
  7. By: Barry REILLY; Rafael Isidro PARRA-PEÑA S.
    Abstract: This study offers evidence on the relationship between armed conflict and its environmental impacts. For the case of Colombia, using a unique annual municipality panel dataset (from 2004 to 2012) and an instrumental variable approach to control for possible endogeneity between forest cover and forced displacement, there is evidence that the armed conflict is a force for forest protection and growth. In December 2016, the Colombian government concluded the negotiations with the Revolutionary Armed Forces of Colombia (FARC) to end South America’s longest-running internal conflict. Forest degradation often increases in post-war situations. These findings highlight a need for increased protection of Colombia's forests in the wake of the peace settlement.
    Keywords: forest cover, forest change, reforestation, deforestation, armed conflict, violence, forced displacement, land abandonment, coca crops.
    Date: 2019–07–04
  8. By: Teresa Molina Millán; Karen Macours; John A. Maluccio; Luis Tejerina
    Abstract: Numerous evaluations of conditional cash transfer (CCT) programs show positive short-term impacts, but there is only limited evidence on whether these benefits translate into sustained longer-term gains. This paper uses the municipal-level randomized assignment of a CCT program implemented for five years in Honduras to estimate long-term effects 13 years after the program began. We estimate intent-to-treat effects using individual-level data from the population census, which allows assignment of individuals to their municipality of birth, thereby circumventing migration selection concerns. For the non-indigenous, we find positive and robust impacts on educational outcomes for cohorts of a very wide age range. These include increases of more than 50 percent for secondary school completion rates and the probability of reaching university studies for those exposed at school-going ages. They also include substantive gains for grades attained and current enrollment for others exposed during early childhood, raising the possibility of further gains going forward. Educational gains are, however, more limited for the indigenous. Finally, exposure to the CCT increased the probability of international migration for young men, from 3 to 7 percentage points, also stronger for the non-indigenous. Both early childhood exposure to the nutrition and health components of the CCT as well as exposure during school-going ages to the educational components led to sustained increases in human capital.
    Keywords: Conditional cash transfers (CCTs), Early childhood, Education, Migration
    Date: 2019
  9. By: Fetzer, Thiemo (University of Warwick)
    Abstract: Can public interventions persistently reduce conflict? Adverse weather shocks, through their impact on incomes, have been identified as robust drivers of conflict in many contexts. An effective social insurance system moderates the impact of adverse shocks on household incomes, and hence, could attenuate the link between these shocks and conflict. This paper shows that a public employment program in India, by providing an alternative source of income through a guarantee of 100 days of employment at minimum wages, effectively provides insurance. This has an indirect pacifying effect. By weakening the link between productivity shocks and incomes, the program uncouples productivity shocks from conflict, leading persistently lower conflict levels.
    Keywords: social insurance, civil conflict, India, NREGA, insurgency JEL Classification: D74, H56, J65, Q34
    Date: 2019
  10. By: Mriduchhanda Chattopadhyay (Graduate School of Economics, Waseda University, 1-6-1 Nishiwaseda, Shinjuku-ku, Tokyo 169-8050, Japan.); Toshi H. Arimura (Faculty of Political Science and Economics & Research Institute for Environmental Economics and Management (RIEEM), Waseda University, 1-6-1 Nishiwaseda, Shinjuku-ku, Tokyo, 169-8050, Japan.); Hajime Katayama (Faculty of Commerce & Research Institute for Environmental Economics and Management (RIEEM), Waseda University, 1-6-1 Nishiwaseda, Shinjuku-ku, Tokyo, 169-8050, Japan.); Mari Sakudo (Faculty of Engineering, Information and Systems, University of Tsukuba, Tennodai 1-1-1, Tsukuba, Ibaraki 305-8573, Japan & Management (RIEEM), Waseda University, 1-6-1 Nishiwaseda, Shinjuku-ku, Tokyo, 169-8050, Japan.); Hide-Fumi Yokoo (Graduate School of Economics, Hitotsubashi University, Naka 2-1, Kunitachi, Tokyo 186-8601, Japan & Management (RIEEM), Waseda University, 1-6-1 Nishiwaseda, Shinjuku-ku, Tokyo, 169-8050, Japan.)
    Abstract: An increasing number of empirical studies have investigated the determinants of cooking fuel choice in developing countries, where health risk from indoor air pollution is one of the most important issues. We contribute to this stream of literature by examining individuals f subjective probabilistic expectations about health risks when using different types of fuel and their influence on cooking fuel usage patterns. We also explore how these patterns, in turn, affect health status. Using data collected from 557 rural Indian households, we find that subjective probabilistic expectations of becoming sick from dirty fuel usage have a negative influence on the fraction of days with dirty fuel usage in the household. The results also show that dirty fuel usage degrades the health of the individual. We then examine the effectiveness of information provision regarding the health risks of dirty/clean fuel usage. Our simulation demonstrates that although the provision of information results in statistically significant changes in the households f cooking fuel usage patterns and in the individuals f health status, the changes may be small in size.
    Keywords: subjective probabilistic expectations, indoor air pollution, cooking fuel usage pattern, health, developing country
    JEL: I10 Q40 C83
    Date: 2019–09
  11. By: Heitor Pellegrina (New York University Abu Dhabi); Sebastian Sotelo (The University of Michigan, Ann Arbor)
    Abstract: Abstract We study how the knowledge that migrants carry over space shapes specialization and trade. Using Brazilian census data, we first document that, upon migration, farmers originating in regions specialized in a crop are more likely to grow that same crop and earn higher incomes than other farmers doing so. Second, we show that the composition of workers in terms of their region of origin correlates with regional exports, after controlling for total sectoral employment. Informed by these facts, we develop and estimate a quantitative dynamic model of trade and migration in which a region's specialization is determined, in part, by the knowledge that migrants in that region carried with them. Applying our model to the large migration of agricultural workers to the west of Brazil since the 1980s, we find that the knowledge carried by migrants contributed substantially to Brazil's recent specialization in exporting commodities, such as soybean.
    Date: 2019
  12. By: Lucia, Dalla Pellegrina; Angela, De Michele; Giorgio, Di Maio; Paolo, Landoni
    Abstract: We study the effects of a pilot project that strengthened the saving incentive mechanisms set up by the Small Enterprise Foundation (SEF), a leading microfinance institution based in South Africa. The program aimed at introducing a stimulus to save in the form of the possession of “Goal Card” whereby clients owning this tool were asked to identify a saving goal and to commit to a regular saving amount. The experiment had quasinatural approach, as it has been implemented by SEF in selected locations starting from May 2015. Difference in differences estimates show an improvement in the savings performance of the SEF customers treated with the program, compared to the counterfactual. Besides the evaluation of the program’s main effects, we investigate the clients’ understanding of the pilot and their attitude towards saving, as well as the quality of the pilot’s administration and its operational challenges, through the administration and analysis of surveys conducted on both the treated and control groups of clients.
    Keywords: Microfinance; quasi-natural experiment; savings.
    JEL: G21 I25 L31 O15
    Date: 2019–05
  13. By: Siméon Koffi (Auditeur GPE, Université Félix Houphoüet-Boigny)
    Abstract: This paper empirically explores the impact of public debt on economic growth in Sub-Saharan African (SSA) countries over the period 1960 to 2015 by using a system Generalized Methods of Moments (s-GMM). Specifically, this work studies the nonlinear relationship between public debt and economic growth. To do so, we perform the Sasabuchi-Lind-Mehlum's test (or U-test) to check if the required and sufficient conditions are met for an inverted U-shape. The results strongly suggest the presence of a nonlinear relationship between public debt and economic growth. By applying the Delta method, this threshold is evaluated at about 36.18 percent ratio debt-to-GDP with its confidence interval associated (13, 59). The public debt boosts the economic growth when its level is less than this turning point. Above this threshold, an increase in public debt would lower the economic growth. Accordingly, a re-examination of the public debt level of some convergence policies which set this level (debt-to-GDP ratio) to 70 per cent (cf. and 2) is proposed.
    Abstract: Cet article explore de manière empirique l'impact de la dette publique sur la croissance économique des pays de l'Afrique subsaharienne (ASS) de 1960 à 2015 en utilisant la méthode des moments généralisés (S-GMM). Plus précisément, ce travail étudie la relation non linéaire entre la dette publique et la croissance économique. Pour ce faire, nous effectuons le test de Sasabuchi-Lind-Mehlum (ou test U) afin de vérifier si les conditions nécessaires et suffisantes sont remplies pour obtenir une valeur maximale. Les résultats suggèrent fortement la présence d'une relation non linéaire entre la dette publique et la croissance économique. En appliquant la méthode Delta, ce seuil est évalué à environ 36,18% (ratio dette/PIB), avec un intervalle de confiance associé (13, 59). La dette publique stimule la croissance économique lorsque son niveau est inférieur à cette valeur. Au-dessus de ce seuil, une augmentation de la dette publique freinerait la croissance économique. En conséquence, il est proposé de réexaminer le niveau de la dette publique de certaines politiques de convergence fixant ce niveau (ratio dette/PIB) à 70% (cf. Encadré 1 et 2).
    Keywords: Economic growth,U-test,Delta method 2
    Date: 2019–09–18
  14. By: Sunil Kanwar (Department of Economics, Delhi School of Economics); Stefan Sperlich (Geneva School of Economics and Management, University of Geneva)
    Abstract: In this paper we study the relationship between the strength of intellectual property (IP) protection that less developed countries provide and foreign direct investment (FDI) flows into these countries, in the post-TRIPs period 2004-2015. Our sample period is highly appropriate insofar as it comes after the ten year period that the developing countries were allowed for implementing IP reforms in accordance with the Trade-Related Intellectual Property Rights (TRIPs) agreement. Further, it is long enough to permit the modelling of a delayed FDI response to the IP reform stimulus. Our modelling strategy attempts to capture the heterogeneity of the impact of the IP reform on the FDI inflows by estimating a conditional difference-in-differences specification. Thus, we allow for the fact that the impact of IP reform can vary significantly across countries depending on the magnitude of intellectual property that they own for which they seek such protection, for that would indicate the importance that they attach to IP protection. Estimating a varying coefficient model, our results do not provide evidence of a statistically significant effect of IP reform on FDI inflows into less developed countries, nor do we find that the effect of such reform is significantly stronger for countries that own relatively larger amounts of intellectual property. These results hold contemporaneously as well as with lags. Instead, FDI inflows appear to be driven by market size and domestic investment climate variables. Disaggregating our sample into the sub-groups of developing countries and least developed countries, we find that our overall results for less developed countries are driven by the sub-group of developing countries.
    Keywords: Foreign direct investment, Intellectual property protection
    JEL: O34 O24 O11
    Date: 2019–09
  15. By: Yue Teng (School of Social Sciences, University of Trento and University of Florence, Italy); Dic Lo (Department of Economics, SOAS University of London, UK)
    Abstract: This paper explores the determinants of developing countries' export upgrading measured by export sophistication. In particular, as a response to the recent debate on China's impact on developing countries' industrialisation, we examine a new hypothesis that the considerable growth in developing countries' trade with China may serve as a source of productive investment for their export upgrading. Dynamic panel estimations based on HS 6-digit export data on 62 developing countries during 1995-2014 show the positive effects of human capital, productive investment, and absolute gains from trade with China measured by income terms of trade vis-®§-vis China. Mediation analysis finds that the positive effect of trade with China on export upgrading takes effect largely through its enhancing effect on productive investment, which supports our hypothesis. By contrast, China's direct export-downgrading impact is minor. Our findings suggest that, for developing countries, China serves more as a stimulator of capital accumulation for industrial development than a competitor in manufacturing market or a predator of natural resources. This provides an alternative to the widespread argument of China's crowding-out and re-primarisation impact on developing countries. The priority for developing countries is therefore the appropriate use of the gains from trade for productive purposes.
    Keywords: export sophistication, developing countries, China, terms of trade, productive investment
    JEL: F14 O14 O19 O25
    Date: 2019–09
  16. By: Wolfson, Paul.
    Abstract: This paper reviews the literature that relates minimum wages in India to wage and employment outcomes. The entire empirical literature on the Indian minimum wage is not large, and the segment focused on wages and employment comprises only a few analyses. It reports that minimum wages result in higher wages. However, this occurs not near the bottom of the wage distribution, as would be expected from a wage floor, but near the middle of the distribution. This suggests a lighthouse effect; a minimum wage that is aspirational, acting as a benchmark to which various wages are compared, rather than a floor. The only statistically significant, negative effect on employment that is reported is for child labour. Other estimates are either not statistically significant or are positive.
    Date: 2019
  17. By: Holden, Stein T. (Centre for Land Tenure Studies, Norwegian University of Life Sciences); Tilahun , Mesfin (Centre for Land Tenure Studies, Norwegian University of Life Sciences)
    Abstract: We study how social preferences and norms of reciprocity are related to generalized and particularized trust among members of youth business groups in northern Ethiopia. Members of these groups are recruited among land-poor rural youth. The Ethiopian government promotes youth employment among land-poor rural youth by allocating them rehabilitated communal lands for the formation of sustainable businesses. The groups are organized as primary cooperatives, elect their own board, make their own bylaw and prepare a business plan that has to be accepted by the local government. The typical sustainable production activities that the groups are allowed to invest in include apiculture, forestry, horticulture, and livestock production. A recent study found that they to a large extent organize themselves according to Ostrom’s Design Principles (Ostrom 1990; 2010; Holden and Tilahun 2018) and that group performance, including trust, is positively correlated with the degree of compliance with the Design Principles. Our study has used incentivized experiments to elicit social preferences and trust. We use data from 2427 group members in 246 functioning business groups collected in 2019. We find that members with altruistic preferences have stronger norms of reciprocity and are more trustworthy and trusting both in outgroup and ingroup contexts. The norm of reciprocity is stronger in groups with a higher share of altruistic members and this enhances both generalized and particularized trust. The average levels of trust and trustworthiness among group members were low, even in the African context, but there were large variations in average levels of trust and trustworthiness across groups. We can, therefore, rule out that high levels of trust and particular social preferences are necessary for the stability achieved by the majority of these recently established youth business groups in northern Ethiopia. This indicates that the model is quite robust and may be replicable elsewhere.
    Keywords: ocial preferences; norm of reciprocity; trust; trustworthiness; youth; sustainable business
    JEL: C93 D22 D64 D71 D91
    Date: 2019–09–23

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