nep-dev New Economics Papers
on Development
Issue of 2020‒07‒27
fourteen papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. Colonization, Early Settlers and Development: The Case of Latin America By José García-Montalvo; Marta Reynal-Querol
  2. The Cash Crop Revolution, Colonialism and Legacies of Spatial Inequality: Evidence from Africa By Philip Roessler; Yannick I. Pengl; Robert Marty; Kyle Sorlie Titlow; Nicolas van de Walle
  3. How large are African inequalities? Towards Distributional National Accounts in Africa, 1990 - 2017 By Lucas Chancel; Denis Cogneau; Amory Gethin; Alix Myczkowski
  4. Building social cohesion in South Africa By Lindokuhle Njozela; Justine Burns
  5. Happily Ever after? Domestic Violence in Periods of Scarcity By Adriana Camacho; Catherine Rodriguez
  6. Household Consumption Volatility and Poverty Risk: Case Studies from South Africa and Tanzania By Matthieu Bellon; Carlo Pizzinelli; Roberto Perrelli
  7. Social Programs and Formal Employment: Evidence from the Brazilian Bolsa Família Program By Anna Fruttero; Alexandre Ribeiro Leichsenring; Luis Henrique Paiva
  8. Incentives and Performance of Agents in a Microfinance Bank By Surajeet Chakravarty; Sumedh Dalwai; Pradeep Kumar
  9. Does a Motherhood Penalty Exist in the Post-apartheid South African Labour Market? By Sibahle Siphokazi Magadla; Murray Leibbrandt; Cecil Mlatsheni
  10. Supermarkets and their impacts on the relationship between food acquisition patterns and socio-economic and demographic characteristics of households: empirical evidence from Vietnam By Thi Huong Trinh; Dharani Dhar Burra; Michel Simioni; Stef de Haan; Tuyen Thi Thanh Huynh; Tung Van Huynh; Andrew D. Jones
  11. Improving Crop Yields in Sub-Saharan Africa - What Does the East African Data Say By Alun H. Thomas
  12. The Impact of Conflict and Political Instability on Banking Crises in Developing Countries By Ali Compaoré; Montfort Mlachila; Rasmané Ouedraogo; Sandrine Sourouema
  13. Long and short-distance internal migration motivations in post-apartheid Namibia: a gravity model approach By Eldridge Moses
  14. The complementarity between cash transfers and financial literacy for child growth By Dieter von Fintel; Marisa von Fintel; Thabani Buthelezi

  1. By: José García-Montalvo; Marta Reynal-Querol
    Abstract: In this paper, we document the long-run impact of the geographical heterogeneity in skills among the first settlers to Latin America. To this end, we compile administrative data on the early settlers in the Americas between 1492 and 1540 including, among others, name, city of origin, destination, and occupation. From a methodological perspective, a focus on the initial period of colonization in Latin America offers several advantages. First, differences in the geographical distribution of occupations among the first settlers are likely to be accidental. Second, a set-up that analyzes an area with a single colonizer (Spain) allows to hold constant formal institutions and legal origin. Our results show a relevant effect of the skills of first colonizers on long-run levels of development of the areas located around the original settlements. We find evidence of persistence in the form of market orientation and entrepreneurial spirit.
    Keywords: skills, early settlers, persistence, development
    JEL: O10
    Date: 2020–07
  2. By: Philip Roessler; Yannick I. Pengl; Robert Marty; Kyle Sorlie Titlow; Nicolas van de Walle
    Abstract: We analyze the long-term effects of colonial cash crop extraction in Africa. Our conceptual framework focuses on the dynamic, interactive effects of geography, trade and colonialism in the context of Africa’s structural change from the slave trades to export agriculture. The adoption of cash crops shifted the loci of economic production to smallholder farmersin areas suitable for cultivation. Concurrently, the cash crop revolution—tied to European industrialization—led to the diffusion of economic imperialism beyond coastal Africa. Imperial extractive economies fueled infrastructural development in highly-suitable zones but dislocated production linkages to Europe and stymied the economic differentiation that otherwise might have occurred. The result was economic agglomeration at the site of production but with limited spillovers to nearby areas. Using agro-climatic suitability scores and historical data on the source location of more than 95 percent of all exports across 38 African states, we find that colonial cash crop production exhibited a large and positive long-run effect on local development in terms of urbanization, road infrastructure, nighttime luminosity and household wealth. These effects rival or surpass other geographic and historical forces frequently linked to subnational development in Africa. Exploring causal mechanisms, we show that path dependence due to colonial infrastructure investments is the more important channel than continued advantages in agricultural productivity. We also find that the positive local effects of colonial cash crop extraction came at the expense of surrounding areas and thereby entrenched deep spatial inequalities.
    JEL: F63 N57 O13 O18 Q17
    Date: 2020
  3. By: Lucas Chancel (PSE - Paris School of Economics, WIL - World Inequality Lab); Denis Cogneau (IRD - Institut de Recherche pour le Développement, PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - ENPC - École des Ponts ParisTech - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique); Amory Gethin; Alix Myczkowski
    Abstract: This paper makes a first attempt to estimate the evolution of income inequality in Africa from 1990 to 2017 by combining surveys, tax data and national accounts in a systematic manner. The low quality of the raw data calls for a lot of caution. Results suggest that income inequality in Africa is very high, and stands at par with Latin America or India in that respect. Southern and Central Africa are particularly unequal. The bulk of continent-wide income inequality comes from the within country component, and the between country component was even slightly reduced in the two last decades, due to higher growth in poorer countries. Inequality was rather stable over the period, with the exception of Southern Africa. Dualism between agriculture and other sectors and mining rents seem to be important determinants of inequality.
    Keywords: Africa,Inequalities,Income inequality,Distributional National Accounts,DINA
    Date: 2019
  4. By: Lindokuhle Njozela (School of Economics, University of Cape Town); Justine Burns (School of Economics, University of Cape Town)
    Abstract: This paper uses data collected across the five waves of the National Income Dynamics Study (NIDS), covering 2008-2017, to update a measure of social cohesion for South Africa. This updating exercise is important in validating the measure and establishing its credibility and potential use amongst policymakers. The index suggests that social cohesion has been improving over time in South Africa, albeit the gains have been small. These gains have been driven primarily by improvements in perceived trust, and more recently, as shown in the data for Wave 5, by reduced perceptions of inequality. Conversely, our results suggest that a sense of belonging has been eroded over time. Controlling for individual and time fixed effects, we examine the underlying individual and household characteristics that are correlated with these changes in dimensions of the social cohesion index. Our key results suggest that access to employment and earned income are positively associated with individual perceptions of trust, equality and a sense of belonging. Moreover, service delivery, particularly electrification, street lights, and refuse collection, has contributed positively towards building social cohesion. We also consider the use of national symbols and holidays to promote social cohesion. The results show that individuals interviewed soon after Freedom Day report significantly lower levels of trust but significantly higher levels of perceived equality than individuals interviewed later. Conversely, individuals interviewed soon after Heritage Day report significantly higher levels of trust than those interviewed later. Since public holidays are exogenously given, and interview date is, for the most part, also exogenous, these results certainly suggest that there may be short-term effects associated with the experience of a particular public holiday that undermine or promote social cohesion.
    Date: 2019
  5. By: Adriana Camacho; Catherine Rodriguez
    Abstract: This paper estimates the causal impact that changes in household´s income have on Domestic Violence (DV) rates in Colombia. Using the arguably exogenous variation in time and space of the payments of a Conditional Cash Transfer (CCT) program and a three-year-long monthly municipal balanced panel data set, we find that DV rates decrease by six percent in the months when the transfers are received. However, this effect is only transitory and varies according to households’ expectations on when the transfers are received. Negative shocks that take place when families do not receive the transfer they were expecting, intensify economic scarcity, and DV rates in those months follow suit. On the contrary, positive shocks that occur when families receive an unexpected transfer only have a marginal reduction on DV. The channel that appears to be explaining our results is a budget constraint alleviation mechanism that reduces scarcity as the timing of the receipt of the transfer consistently reduces DV and increases consumption in the month of payment. Furthermore, there is no clear evidence of alternative channels that could explain the results such as changes in female empowerment, marital status, labor participation, or social networks of the beneficiary women.
    Keywords: Domestic Violence, Scarcity, Conditional Cash Transfers
    JEL: D03 J12 J16
    Date: 2020–06–23
  6. By: Matthieu Bellon; Carlo Pizzinelli; Roberto Perrelli
    Abstract: Economic volatility remains a fact of life in Sub Saharan Africa (SSA). Household-level shocks create large consumption fluctuations, raising the incidence of poverty. Drawing on micro-level data from South Africa and Tanzania, we examine the vulnerability to shocks across household types (e.g. by education, ethnic group, and economic activity) and we quantify the impact that reducing consumption volatility would have on aggregate poverty. We then discuss coverage of consumption insurance mechanisms, including financial access and transfers. Country characteristics crucially determine which household-level shocks are most prevalent and which consumption-smoothing mechanisms are available. In Tanzania, agricultural shocks are an important source of consumption risk as two thirds of households are involved in some level of agricultural production. For South Africa, we focus on labor market risk proxied by transitions from formal employment to informal work or unemployment. We find that access to credit, when available, and government transfers can effectively mitigate labor market shocks.
    Keywords: Economic conditions;National income;Income distribution;Demographic indicators;Poverty indicators;Poverty,Consumption Volatility,Tanzania,South Africa,WP,LSMS,government transfer,employment loss,NIDS,volatility
    Date: 2020–03–06
  7. By: Anna Fruttero; Alexandre Ribeiro Leichsenring; Luis Henrique Paiva
    Abstract: Employment is key to combating poverty. Thus, detractors of social assistance programs argue that they create disincentives to work. While there is substantial evidence showing limited effects of these programs on overall labor supply, the jury is still out with respect to their impact on formal employment. This paper exploits an unannounced change in the eligibility rule of the Bolsa Familia program in Brazil, one of the oldest and largest conditional cash transfers in the world, to identify the causal impact of the program on formal employment, combining three large administrative datasets. This paper finds that the program has a positive effect on entry in formal labor market, especially for younger cohorts.
    Date: 2020–06–19
  8. By: Surajeet Chakravarty (University of Exeter); Sumedh Dalwai (University of Exeter); Pradeep Kumar (University of Exeter)
    Abstract: An important aspect of providing credit to the poor is the mechanism adopted by the credit institutions to do so. Most microfinance banks use field agents to acquire new borrowers, manage the account and collect repayments. How does the supply of credit change with a change in incentives provided to such field agents? Mann Deshi Bank, a microfinance bank in India, changed its remuneration scheme from a pure commission based to a mixed scheme with a combination of a base salary and other incentives. This paper examines the effect it had on the effort and the performance of the agents by using a rich panel data on the bankÕs joint liability lending product. The results show that the change in the contract form with a large flat wage and reduced incentives improved performance of the agents in terms of the quantity (increase in the number of borrowers acquired) and quality (the borrowers acquired had fewer delays in repayments). We find evidence of mixed contract agents exerting significantly more effort than the pure commission agents to ascertain borrower quality.
    Keywords: Micro-finance institutions, joint liability loans, labor contracts, moral hazard
    JEL: G21 O12 J41
    Date: 2020
  9. By: Sibahle Siphokazi Magadla (Southern Africa Labour and Development Research Unit, University of Cape Town); Murray Leibbrandt (Southern Africa Labor and Development Research Unit, University of Cape Town. ARUA's African Centre of Excellence for Inequality Research); Cecil Mlatsheni (School of Economics, UCT and co-PI of the National Income Dynamics Study)
    Abstract: Do working mothers earn less than non-mothers in the South African labour market? This study examines whether there exists a motherhood (or child) penalty for Black African female employees in post-apartheid South Africa using data from wave 5 of the National Income Dynamics Study (NIDS), from 2017. NIDS is the first nationally representative survey in South African to include comprehensive child birth history. Restricting analysis to women aged 20 to 49, the Mincerian regression model results from the analysis indicate that a motherhood penalty does exist, ceteris paribus. Moreover, the study uses unconditional quantile regressions (RIF-OLS) to examine the wage returns of mothers versus non-mothers along the wage distribution. The study finds that, when controlling for relevant observable characteristics, there exists a motherhood wage penalty at lower wage levels, but this effect wanes in prominence at higher wage quantiles. At higher wage levels, mothers earn higher hourly wages than their child-free counterparts, especially if they are married and work part-time. This result indicates the effect of a part-time hourly wage premium. The study then applies Oaxaca-Blinder type decompositions within the RIF framework to decompose changes in the motherhood wage gap along the distribution into explained and unexplained contributions related to a range of factors. The decomposition results indicate that only at the hourly wages of mothers minus wages of non-mothers are negative only at the 10th quantile, but positive everywhere else. Moreover, even though most of the wage differential between mothers and non-mothers is due to explained characteristics, at the lower levels unobservable traits have an impact on the wage gap. This implies that there are additional relevant factors such as societal norms, selection effects into employment and behavioural characteristics which should be considered when analysing women's wage outcomes. Labour market policy needs to accommodate women with children, particularly if they are the main breadwinners at lower wage levels. Workplaces should consider embracing flexible work hours and provide the option for staff to work remotely.
    Date: 2019
  10. By: Thi Huong Trinh (International Center for Tropical Agriculture); Dharani Dhar Burra (International Center for Tropical Agriculture); Michel Simioni (UMR MOISA - Marchés, Organisations, Institutions et Stratégies d'Acteurs - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - INRA - Institut National de la Recherche Agronomique - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - Montpellier SupAgro - Institut national d’études supérieures agronomiques de Montpellier - Montpellier SupAgro - Centre international d'études supérieures en sciences agronomiques); Stef de Haan (International Center for Tropical Agriculture); Tuyen Thi Thanh Huynh (International Center for Tropical Agriculture); Tung Van Huynh (CTU - Can Tho University [Vietnam]); Andrew D. Jones (University of Michigan [Ann Arbor] - University of Michigan System)
    Abstract: Food environments in developing economies are rapidly evolving, alongside fast-paced changes in the socioeconomic and demographic characteristics of populations. These changes are evident in Vietnam with the widespread emergence of supermarkets, and restructuring in traditional markets that are poised to have profound effects on household diets and patterns of food acquisition. This paper examines the relationship between province level supermarket density, quantity and quality indices of food groups acquired by households within those provinces, between 2010 and 2014. An original approach on the basis of open access mixed data sets (administrative data on the number of supermarkets at provincial level as a proxy for supermarket density, and household living standard survey) is proposed and implemented. We find that the differential presence of supermarkets across provinces in Vietnam is associated with the diversity and macronutrient quality of food groups acquired by households. In addition, households with higher per capita expenditure, and those that purchase a larger proportion of food (relative to food obtained from own production), acquire a higher diversity of food groups. Additionally, diversity of food acquired is associated with higher fat and lower carbohydrate shares, and this is independent of the presence of supermarkets. We observe a significant interplay between low household financial capabilities (i.e., low per capita expenditure and low proportion of income spent on food), large household size, ethnic minority status, and the existence of limited number of supermarkets in the food environment. All of these factors are associated with a limited diversity of food groups acquired, as well as higher carbohydrate and lower fat shares. Our findings highlight potential intervention opportunities that can "rewire" local food environments to address the challenge of double burden of malnutrition in the country.
    Keywords: supermarket,diet diversity score,macronutrient shares,compositional data analysis,vietnam household living standard survey,poisson regression
    Date: 2019–05–15
  11. By: Alun H. Thomas
    Abstract: Recent micro level data from East Africa is used to benchmark aggregate data and assess the role of agricultural inputs in explaining variation in crop yields on smallholding plots. Fertilizer, improved seeds, protection against erosion and pesticides improve crop yields in Rwanda and Ethiopia, but not Uganda, possibly associated with lack of use there. With all positive yield determinants in place, wheat and maize yields could increase fourfold. The data hints at the negative effect of climate change on yields and the benefits of accompanying measures to mitigate its adverse impact (access to finance and protection against erosion). The adverse effect of crop damage on yields varies between 12/13 percent (Rwanda, Uganda) to 36 percent (Ethiopia). Protection against erosion and investment financing mitigate these effects considerably.
    Date: 2020–06–12
  12. By: Ali Compaoré; Montfort Mlachila; Rasmané Ouedraogo; Sandrine Sourouema
    Abstract: While there is an extensive literature examining the economic impact of conflict and political instability, surprisingly there have been few studies on their impact on the probability of banking crises. This paper therefore investigates whether rising conflict and political instability globally over the past several decades led to increased occurrence of banking crises in developing countries. The paper provides strong evidence that conflicts and political instability are indeed associated with higher probability of systemic banking crises. Unsurprisingly, the duration of a conflict is positively associated with rising probability of a banking crisis. Interestingly, the paper also finds that conflicts and political instability in one country can have negative spillover effects on neighboring countries’ banking systems. The paper provides evidence that the primary channel of transmission is the occurrence of fiscal crises following a conflict or political instability.
    Keywords: Banking crisis;Balance sheets;Economic recession;Banking sector;Real effective exchange rates;conflict,political instability,banking crises,fiscal crises,WP,bank crisis,fiscal crisis,cabinet change,government crisis
    Date: 2020–02–28
  13. By: Eldridge Moses (Department of Economics, Stellenbosch University)
    Abstract: The paper estimates a gravity model to analyse migration in contemporary Namibia, with the specific aim of understanding differences in long and short-distance migration. The sample is restricted to migrants moving in 2010 and 2011, who are between the ages of 20 and 49 years. Given Namibia’s history of apartheid-era segregation, the sample is later restricted to African-language speaking migrants to determine whether the distances traveled to satisfy information and finance-constrained needs differ from that of the full population. A zero-inflated negative binomial model is applied to estimate the effects of constituency-level economic indicators, labour market conditions, agricultural activity, and built amenities on migration flows. Regression analysis shows that analyzing internal migration flows in Namibia without accounting for distance-related differences in migrant motivations may produce misleading results. Disaggregation of migration flows by distance reveals that for both the entire population and the restricted African-language speaking sample, constituency differences in amenity quality are significant predictors of intermediate-distance migration volumes. Per capita income differences in favour of the receiving constituency increase long-distance migration volumes. For all distances, previous migration in the sending constituency is a strong positive predictor of migration volumes.
    Keywords: internal migration, urbanisation, Namibia, gravity model
    JEL: J61 R23
    Date: 2020
  14. By: Dieter von Fintel (Department of Economics, Stellenbosch University, South Africa. Research Affiliate: Institute of Labor Economics (IZA), Bonn); Marisa von Fintel (Department of Economics, Stellenbosch University, South Africa.); Thabani Buthelezi (Department of Social Development, Government of South Africa)
    Abstract: A large body of international research focuses on the corrective influence that cash transfers can have on the health of chronically malnourished children. However, the evidence also points to the heterogeneity of the impact of these cash grants within the recipient population. Identifying pre-existing household conditions that are correlated with grant efficacy can have important policy consequences. In this paper, we examine one such a condition, namely the financial literacy of the caregiver of the child. We make use of the fourth and fifth waves of the South African National Income Dynamics Study (NIDS) data. We estimate the relationship between height and growth in a sample of children aged 0 to 7 years and the child support grant. We find that eligible children who have financially literate caregivers receiving the cash transfer on their behalf have higher growth trajectories over time, compared to children with financially illiterate caregivers. We however find no such effect for child height. Our results do not preclude a pure income effect for cash transfers: children who become CSG beneficiaries gain in height immediately, even without financially literate caregivers. Arguably, the combination of cash transfers and financial literacy have long-run benefits for children over and above an income effect. Although we are unable to identify the specific mechanisms through which financial literacy may impact child growth, we discuss some potential channels. The results have important policy implications regarding potential ways in which to improve the efficacy of the child support grant in South Africa.
    Date: 2019

This nep-dev issue is ©2020 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.