nep-dev New Economics Papers
on Development
Issue of 2020‒08‒10
sixteen papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. Humanitarian vs. Development Aid for Refugees: Evidence from a Regression Discontinuity Design By Claire MacPherson; Olivier Sterck
  2. Isolated and Poor: the cost of remoteness from the capital city By Provenzano, Sandro
  3. Cash Transfers and Migration: Theory and Evidence from a Randomized Controlled Trial By Jules Gazeaud; Eric Mvukiyehe; Olivier Sterck
  4. How Do Voters Respond to Welfare vis-à-vis Public Good Programs? An Empirical Test for Clientelism By Pranab Bardhan; Sandip Mitra; Dilip Mookherjee; Anusha Nath
  5. Hiding Behind the Veil of Ashes: Social Capital in the Wake of Natural Disasters By Victor Stéphane
  6. Obstacles on the Road to School: The Impacts of Mobility Restrictions on Educational Performance By Miaari, S.; Lee, I
  7. Intrahousehold Bargaining and Agricultural Technology Adoption : Experimental Evidence from Zambia By Ken Miura; Yoko Kijima; Takeshi Sakurai
  8. Building Resilient Health Systems: Experimental Evidence from Sierra Leone and the 2014 Ebola Outbreak By Darin Christensen; Oeindrila Dube; Johannes Haushofer; Bilal Siddiqi; Maarten Voors
  9. Changes in South African well-being between 2008/9 and 2014/15: The evidence from expenditure and asset data By Motshidisi Nthatisi; Martin Wittenberg
  10. Cognitive Droughts By Guilherme Lichand; Anandi Mani
  11. A Fat Subsidy and its Impact on Edible Oil Consumption: Evidence from India By Jaya Jumrani; J.V. Meenakshi
  12. Why are boys falling behind? Explaining gender gaps in school attainment in Sri Lanka By Rozana Himaz; Harsha Aturupane
  13. Remittance Concentration and Volatility: Evidence from 72 Developing Countries By Amr Hosny
  14. Financial Literacy in South Africa By Lwanga Elizabeth Nanziri; Matthew Olckers
  15. Natural Resources and the Salience of Ethnic Identities By Victoire Girard; Nicolas Berman; Mathieu Couttenier
  16. The Contribution of Residential Segregation to Racial Income Gaps: Evidence from South Africa By Florent Dubois; Christophe Muller

  1. By: Claire MacPherson; Olivier Sterck
    Abstract: Assistance to refugees living in camps is shifting from a humanitarian model, based on care and maintenance, to a development model that promotes refugee self-reliance through income-generating activities, market development, and cash transfers. Evidence on the effects of this paradigm shift is limited. Exploiting a regression discontinuity design, this paper tests whether the adoption of a development approach to refugee assistance in a new settlement in Kenya has a positive impact in the short run. We find that refugees benefiting from the new approach have better diets and perceive themselves as happier and more independent from humanitarian aid. We find no effect on assets and employment. These effects appear to be driven by the switch from food rations to cash transfers and by the wider promotion of kitchen gardens. Our findings argue in favor of the development approach to refugee assistance, which is cheaper and leads to better outcomes.
    Keywords: Refugees; Humanitarian aid, Self-reliance; Cash transfers; Agriculture; Kakuma; Kalobeyei
    JEL: O12 O15 I38 Q12
    Date: 2019
  2. By: Provenzano, Sandro
    Abstract: This paper investigates whether areas isolated from the capital city are less de- veloped economically in Sub-Saharan Africa. We apply a boundary-discontinuity design using national borders that divide pre-colonial ethnic homelands to obtain quasi-experimental variation in distance to the national capital city. Based on night- lights and geocoded surveys, we find that a one percent increase in distance to the capital city causes a decrease in the probability of detecting nightlights by 3 percent- age points and a reduction in household wealth corresponding to 3.5 percentiles of the national wealth distribution. Our results suggest that a lower provision of public goods in isolated areas is a key link between remoteness and economic performance. Despite receiving worse services, people who are isolated exhibit a higher level of trust in their political leaders. We interpret this as pointing towards dysfunctional accountability mechanisms that reduce the incentives of state executives to invest into isolated areas.
    Keywords: boundary discontinuity; capital city; economic growth; nightlights; public goods; spatial inequality; Sub-Saharan Africa
    JEL: D72 H41 O10 O40 R12
    Date: 2020–07
  3. By: Jules Gazeaud; Eric Mvukiyehe; Olivier Sterck
    Abstract: Will the fast expansion of cash-based programming in developing countries increase international migration? Theoretically, cash transfers may favor international migration by relaxing liquidity, credit, and risk constraints. But transfers, especially those conditional upon staying at home, may also increase the opportunity cost of migrating abroad. This paper evaluates the impact of a cash-for-work program on migration. Randomly selected households in Comoros were offered up to US$320 in cash in exchange for their participation in public works projects. We find that the program increased migration to Mayotte – the neighboring and richer French Island – by 38 percent,from 7.8% to 10.8%. The increase in migration is explained by the alleviation of liquidity and risk constraints, and by the fact that the program did not increase the opportunity cost of migration for likely migrants.
    Keywords: Migration Cash Transfers Financial Constraints Risk-aversion
    JEL: J61 O12 O15 F22
    Date: 2019
  4. By: Pranab Bardhan; Sandip Mitra; Dilip Mookherjee; Anusha Nath
    Abstract: This paper examines allocation of benefits under local government programs in West Bengal, India to isolate patterns consistent with political clientelism. Using household survey data, we find that voters respond positively to private welfare benefits but not to local public good programs, while reporting having benefited from both. Consistent with the voting patterns, shocks to electoral competition induced by exogenous redistricting of villages resulted in upper-tier governments manipulating allocations across local governments only for welfare programs. Through the lens of a hierarchical budgeting model, we argue that these results provide credible evidence of the presence of clientelism rather than programmatic politics, and how this distorts the allocation of government programs both within and across villages.
    Keywords: Welfare programs; Public goods; Clientelism; Voting
    JEL: H40 O10 H76 P48 H75
    Date: 2020–07–08
  5. By: Victor Stéphane (Univ. Lyon, UJM Saint-Etienne, GATE UMR 5824, F-42023 Saint-Etienne, France)
    Abstract: This paper investigates the impact of natural disasters on social capital. By heterogeneously affecting people in a community, natural disasters create a temporary information asymmetry on their post-disaster income. Using an original dataset collected in rural Ecuador, we provide suggestive evidence that households use this asymmetric information to pretend to be poorer than they actually are, in order to escape from solidarity mechanisms in the aftermath of the shock. The magnitude of this effect decreases with the level of wealth inequality in the community and vanishes in the most unequal communities where bilateral cooperation is rather fostered.
    Keywords: Social Capital, Moral Hazard, Asymmetric Information, Volcanic Eruptions, Ecuador
    JEL: D71 O12 Q54 D82
    Date: 2021
  6. By: Miaari, S.; Lee, I
    Abstract: This paper examines the impact of mobility restrictions on educational performance in the West Bank over 2000–2006 during the Israeli-Palestinian conflict. This conflict is characterized by a system of mobility restrictions enforced through physical barriers such as checkpoints. Using novel data on the location of barriers, we find that exposure to one or more checkpoints reduces the probability of passing the final high school exam by 1–3 percentage points and the overall score by 0.04–0.07 standard deviations. We find evidence of three mechanisms at play: school resources deteriorate, students’ psychological wellbeing worsens, and students lose time due to delays at checkpoints.
    JEL: D74 I25 J61
    Date: 2020–07–30
  7. By: Ken Miura (Kyoto University, Japan); Yoko Kijima (National Graduate Institute for Policy Studies, Japan); Takeshi Sakurai (The University of Tokyo, Japan)
    Abstract: This study examines how technology adoption is determined in an intra-household bargaining process between spouses with different incentives and resource constraints. We develop a noncooperative bargaining model in which individual investments affect not only a household’s total income but also its members’ future bargaining position, which can yield Pareto-inferior outcomes. To test for possible inefficiency, we introduce rice seeds to farmers in rural Zambia and randomly distribute vouchers for transportation from the village to a miller in town to husbands and wives. The results show that the identity of the voucher recipients matters for rice seed take-up when wives choose which crop to grow on suitable plots for rice production. We also find that the voucher given to husbands is effective only when they manage the plots by themselves. Furthermore, intra-household information flows are distorted by the recipients. The heterogeneous effects and incomplete information sharing among spouses provide evidence against efficient resource pooling within the family. We present suggestive evidence that limited commitment to the production plan is a key mechanism behind strategic spousal behavior. Overall, this study highlights the importance of directly targeting individuals with productive resources relevant to a technology.
    Keywords: Non-unitary model, productive efficiency, gender, targeting, Zambia
    Date: 2020–07
  8. By: Darin Christensen; Oeindrila Dube; Johannes Haushofer; Bilal Siddiqi; Maarten Voors
    Abstract: Developing countries are characterized by high rates of mortality and morbidity. A potential contributing factor is the low utilization of health systems, stemming from the low perceived quality of care deliv- ered by health personnel. This factor may be especially critical during crises, when individuals choose whether to cooperate with response efforts and frontline health personnel. We experimentally examine efforts aimed at improving health worker performance in the context of the 2014–15 West African Ebola crisis. Roughly two years before the outbreak in Sierra Leone, we randomly assigned two accountability interventions to government-run health clinics — one focused on community monitoring and the other gave status awards to clinic staff. We find that over the medium run, prior to the Ebola crisis, both inter- ventions led to improvements in utilization of clinics and patient satisfaction with the health system. In addition, child health outcomes improved substantially in the catchment areas of community monitoring clinics. During the crisis, the interventions also led to higher reported Ebola cases, as well as lower mor- tality from Ebola — particularly in areas with community monitoring clinics. We explore three potential mechanisms: the interventions (1) increased the likelihood that patients reported Ebola symptoms and sought care; (2) unintentionally increased Ebola incidence; or (3) improved surveillance efforts. We find evidence consistent with the first: by building trust and confidence in health workers, and improving the perceived quality of care provided by clinics prior to the outbreak, the interventions encouraged patients to report and receive treatment. Our results suggest that accountability interventions not only have the power to improve health systems during normal times, but can additionally make health systems resilient to crises that may emerge over the longer run
    Date: 2020
  9. By: Motshidisi Nthatisi (Poverty and Inequality Statistics, Statistics South Africa); Martin Wittenberg (School of Economics and DataFirst, University of Cape Town)
    Abstract: South Africa's Living Conditions Surveys (LCSs) are crucial instruments in monitoring the well-being of South Africa's population. Using expenditure as the yardstick for assessing well-being, the LCSs show a marked drop in poverty between 2008/09 and 2014/09. This would be a welcome trend. Unfortunately, the data collection method changed between these surveys so that there is at least some doubt as to whether the trend is real or due to measurement changes. Given that the expenditure modules are quite onerous for respondents this is an important question. In this paper we assess the reliability of the measured improvement of welfare by analysing also the information in the asset modules of these surveys. In comparison to the expenditure diaries the asset modules are much easier to complete and should therefore be much less prone to measurement error. We combine the information in the asset variables by constructing various asset indices and show that if these are used across the surveys they confirm that indeed average well-being has improved between 2008/09 and 2014/15.
    Keywords: poverty measurement, asset indices
    Date: 2019
  10. By: Guilherme Lichand; Anandi Mani
    Abstract: Poverty involves both low income levels and high income uncertainty. Do both these dimensions of being poor capture attention in ways that distort decision-making and trap people in poverty? We examine these issues using real-life shocks faced by farmers in Brazil: random payday variation affecting income levels, and rainfall shocks that affect income uncertainty. We find that it is income uncertainty that systematically has adverse cognitive effects; low income levels affect only the poorest households. The net adverse impacts on cognitive function prevail even though both dimensions of poverty reallocate attention to scarce-resource tasks. These results broaden our understanding of the impacts of uncertainty by exploring a psychological channel distinct from risk aversion, and help reconcile apparently contradictory evidence on the cognitive impact of poverty in previous studies.
    Keywords: Uncertainty; Attention; Psychology of poverty; Scarcity;
    JEL: D81 D91 I32
    Date: 2020
  11. By: Jaya Jumrani (Department of Economics, Delhi School of Economics); J.V. Meenakshi (Centre for Development Economics, Delhi School of Economics)
    Abstract: Nearly one-fifth of adult Indians are overweight or obese. Among potential interventions to address the public health problem this poses, are the so-called fat taxes. While these are yet to be implemented in India at scale, this paper looks at the impact of a negative tax (subsidy) on palm oil that has been implemented in three states—Tamil Nadu, Maharashtra and Andhra Pradesh— to examine the extent to which this policy has had an impact on edible oil consumption. Using consumer expenditure survey data, and a matched differences-in-differences approach, the paper finds that the subsidy on palm oil led to an increase in its consumption, both in rural and urban areas, with effects being more pronounced in rural areas. The increases are also the largest in Tamil Nadu, relative to other states. There was modest impact on overall consumption of edible oils in rural areas of two states; and there is consistent evidence that consumers displaced market-sourced groundnut and coconut oils for palm oil. The paper draws some nutritional implications of this switch.
    JEL: H31 I38 Q18
    Date: 2020–07
  12. By: Rozana Himaz; Harsha Aturupane
    Abstract: A trend that is increasingly common in developed countries and middle income countries such as Thailand, South Africa, Malaysia, Indonesia and Sri Lanka is that females outperform males in terms of attainment at school and enrolment in higher education, on average. Alarmingly in countries such as Sri Lanka and Thailand, households also seem to allocate significantly higher resources towards girls' education rather than boys’ (Himaz, 2010, Wongmonta and Glewwe, 2017). This paper looks at attainment in mathematics among a sample of 12 year olds in Sri Lanka to see to what extent parental aspirations, teacher attitudes as well as school-based management programs, inter alia, can explain gender differentials disfavouring boys. The paper finds that although teacher attitudes and parental aspirations are significantly lower for boys, these factors -as we measure them- do not sufficiently explain the attainment gap. Much of the gap remains ‘unexplained’ and is due to differences in returns to endowments. The paper argues that positive discrimination of men in the labour market and bottle necks in higher-education may be important in understanding the unexplained component.
    Date: 2019
  13. By: Amr Hosny
    Abstract: This paper contributes to the literature by introducing the role of geographic concentration of the source of remittances. Specifically, using data over 2010-2015 for 72 developing countries, we study the impact of (i) large remittances and (ii) the geographic concentration of the source of remittances on economic volatilities. Results suggest that while (i) large remittances can be stabilizing on average, (ii) high remittance concentration from source countries can aggravate economic volatilities in recipient countries. Results are robust to global shocks affecting both source and recipient countries, and volatility in the remittance-sending country.
    Keywords: Real effective exchange rates;Financial sector development;Exchange rate appreciation;Exchange rate regimes;Terms of trade;Remittances,volatility,remittance concentration,developing countries,WP,remittance,recipient country,HHI,remittance inflow
    Date: 2020–01–17
  14. By: Lwanga Elizabeth Nanziri (Newton International Fellow of the Royal Society and a British Academy Scholar.); Matthew Olckers (Research fellow at Monash University)
    Abstract: We analyse measures of financial literacy, included in the NIDS survey for the first time in Wave 5. South Africa follows patterns found in other countries. Less educated and low income respondents display low levels of financial literacy. Most countries have large gender gaps in financial literacy while the gender gap is absent in South Africa. Controlling for a number of socio-demographic variables, financial literacy is positively related to ownership of a pension and of mutual funds, stocks, or shares.
    Keywords: financial literacy, gender, pension, mutual funds
    Date: 2019
  15. By: Victoire Girard; Nicolas Berman; Mathieu Couttenier
    Abstract: This paper documents a new channel of the natural resource curse: the fragmentation of identities, between ethnic groups and nations. We combine individual data on the strength of ethnic – relative to national – identities with geo-localized information on the contours of ethnic homelands and on the timing and location of mineral resources exploitation in 25 African countries, from 2005 to 2015. Our strategy takes advantage of several dimensions of exposure to resources exploitation: time, spatial proximity, and ethnic proximity. We show that the strength of an ethnic group identity increases when mineral resource exploitation in that group’s historical homeland intensifies. This result holds independently of the impact of resources on local economic conditions and conflicts. We then investigate the various potential channels of transmission. Our findings suggest that feelings of economic deprivation and political exclusion associated with natural resources exploitation drive their impact on the strength of ethnic identities.
    Keywords: Identity, ethnicity, natural resources
    JEL: J15 N57 O55 Q32
    Date: 2020
  16. By: Florent Dubois; Christophe Muller
    Abstract: Persistent racial income disparities cannot only be explained by differences in socio-economic characteristics. In this paper, we contend that local segregation should be an essential component of the determination of socio-ethnic income gaps using the contemporary White/African gap in South Africa. First, we complete Mincer wage equations with an Isolation index. Second, we decompose the income gap distribution into detailed composition and structure components. Third, we explore the heterogeneity of segregation effects along three theoretical lines: racial preferences, labor market segmentation, and networks effects. Segregation is found to be the main contributor of the structure effect, ahead of education and experience, and to make a sizable contribution to the composition effect. Moreover, segregation is detrimental to incomes at the bottom of the African distribution, notably in association with local informal job-search networks, while it is beneficial at the top of the White distribution. Only minor influences of racial preferences and labor market segmentation are found. Specific subpopulations are identified that suffer and benefit most from segregation, including for the former, little educated workers in agriculture and mining, often female, immersed in their personal networks. Finally, minimum wage policies are found likely to attenuate the segregation’s noxious mechanisms.
    Keywords: Post-Apartheid South Africa, Distribution Decompositions, Income Distribution, Residential Segregation
    JEL: J15 D31 R23
    Date: 2020

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.