nep-dev New Economics Papers
on Development
Issue of 2020‒11‒23
twelve papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. Corruption, Tax reform and Fiscal space in Emerging and Developing Economies By Djedje Hermann Yohou
  2. The allocation of resources of national development banks: Does it fit development goals? By Laurent Wagner
  3. Financial performance and Corporate Governance: Evidence from National Development Banks in Africa By Samantha Attridge; Yunnan Chen; Michael Mbate
  4. Child Education and Work: Evidence from Mexico's Full-Time School Program By Kozhaya, Mireille; Martínez Flores, Fernanda
  5. Does Test-Based Teacher Recruitment Work in the Developing World? Experimental Evidence from Ecuador By Araujo, Maria Daniela; Heineck, Guido; Cruz-Aguayo, Yyannú
  6. Progress and stagnation in the livelihood of informal workers in an emerging economy: Long-term evidence from Indonesia By Mayang Rizky; Daniel Suryadarma; Asep Suryahadi
  7. Finance, Gender, and Entrepreneurship: India's Informal Sector Firms By Gang, Ira N.; Natarajan, Rajesh Raj; Sen, Kunal
  8. Heterogeneous effects of livelihood strategies on household well-being: An analysis using unconditional quantile regression with fixed effects By Tran, Tuyen; Vu, Huong
  9. Voluntary contributions in cascades: The tragedy of ill-informed leadership By Béatrice Boulu-Reshef; Nina Rapoport
  10. Informal-formal workers' transition in Nigeria: A livelihood analysis By Abiodun O. Folawewo; Olusegun A. Orija
  11. Maternal Age and Offspring Human Capital in India By Perez Alvarez, Marcello; Favara, Marta
  12. Heterogeneous Effects of Women's Schooling on Fertility, Literacy and Work: Evidence from Burundi's Free Primary Education Policy By Wild, Frederik; Stadelmann, David

  1. By: Djedje Hermann Yohou (International Monetary Fund (IMF))
    Abstract: Several studies have demonstrated that corruption hinders efforts in enhancing public revenue and fiscal space through different channels. This paper assesses the effect of tax reform on fiscal space conditional on corruption control for a large panel of developing and emerging economies over 1990-2016. Using a threshold approach, our findings indicate that tax reform effect on fiscal space is not monotonic and depends on corruption control. Tax reform enhances fiscal space and tax revenue when corruption control is better. The results also suggest that heterogeneity across countries and time does matter. Individual estimates of elasticity of fiscal space to tax reform support evidence that countries that benefit most from tax reform are those that prove enough ability to control corruption.
    Keywords: Corruption,Tax reform,Fiscal space,Threshold,Developing countries
    Date: 2020–11–03
  2. By: Laurent Wagner (FERDI - Fondation pour les Etudes et Recherches sur le Développement International)
    Abstract: Public financial institutions and National Development Banks (NDBs) in particular are well suited to fill financing gaps in un- or under- served markets. By virtue of their developmental mandate, and local expertise, NDBs are able to operate and invest in the most vulnerable regions where the risk is often too great for a majority of private actors. This study intends to reflect on NDBs mandates in this context by shedding light on the significant role they can play to address scarcity of financing in vulnerable areas within developing countries. Using firm-level data for 127 countries over 2006-2018, we find that on average, there is no significant difference in terms of productivity levels between firms accessing private versus public finance. NDBs tend to provide more finance in less developed localities relative to private commercial banks. Our results show therefore that public banks support more firms in less developed localities, without necessarily selecting less productive firms. Instead, they seem to be able to manage more risks related to the local context that fall outside of the direct control of the firm but that might affect their future portfolio performance. Evidence also supports the emerging consensus that public banks play a countercyclical role by strengthening their credit offer during bad times. This Research Paper is published in the framework of the International Research Initiative on Public Development Banks working groups and released for the occasion of the 14th AFD International Research Conference on Development. It is part of the pilot research program "Realizing the Potential of Public Development Banks for Achieving Sustainable Development Goals". This program was launched, along with the International Research Initiative on Public Development Banks (PDBs), by the Institute of New Structural Economics (INSE) at Peking University, and sponsored by the Agence française de développement (AFD), Ford Foundation and International Development Finance Club (IDFC).
    Keywords: Development Banks,Ressource allocation,Public loans
    Date: 2020–10–20
  3. By: Samantha Attridge; Yunnan Chen; Michael Mbate
    Abstract: This is a draft discussion paper and has not been through an external peer review process. A final ODI working paper will be published after the research conference. This study aims to examine the extent to which governance of national development banks (NDBs) in Africa affects their financial performance. The authors combine in-depth descriptive analysis with a quantitative analysis based on a sample of 33 banks, drawn from a dataset of over 100 identified African NDBs. They explore the governance and financial trends that characterise these diverse banks, then use an econometric analysis to measure the impact of political influence in governance. They find key measures of political influence, particularly political appointments, have a strongly negative impact for financial performance, as well as the risk-appetite for banks. Additionally, They find this effect is stronger in countries where the enabling environment is weaker. The authors conclude that increasing institutional distance between government ownership and management of banks may have a positive influence for financial performance.This Research Paper is published in the framework of the International Research Initiative on Public Development Banks working groups and released for the occasion of the 14th AFD International Research Conference on Development. It is part of the pilot research program “Realizing the Potential of Public Development Banks for Achieving Sustainable Development Goals”. This program was launched, along with the International Research Initiative on Public Development Banks (PDBs), by the Institute of New Structural Economics (INSE) at Peking University, and sponsored by the Agence française de développement (AFD), Ford Foundation and International Development Finance Club (IDFC).Have a look on the key findings for a quick overview of the research results (coming soon)See the video pitch
    Keywords: Afrique
    JEL: Q
    Date: 2020–11–01
  4. By: Kozhaya, Mireille; Martínez Flores, Fernanda
    Abstract: This paper examines the effect of a program that extended the length of a school day to improve schooling quality in Mexico, on school enrollment, time spent on schooling activities, and child labor of children aged 7 to 14. We take advantage of the staggered implementation of the FTS program across municipalities. Results show that the program has no effect on being enrolled in school, but affects weekly hours allocated to schooling activities. Moreover, exposure to the program reduces the prevalence of child labor. For boys, we see a decrease in engaging in market work, for girls in domestic work.
    Keywords: child labor,all-day schools,schooling,after-school programs
    JEL: J13 J21 J22 O12
    Date: 2020
  5. By: Araujo, Maria Daniela (University of Bamberg); Heineck, Guido (University of Bamberg); Cruz-Aguayo, Yyannú (Inter-American Development Bank)
    Abstract: Since 2007, the Ecuadorian government has required teacher candidates to pass national skill and content knowledge tests before they are allowed to participate in merit-based selection competitions for tenured positions at public schools in an attempt to raise teacher quality. We evaluate the impact of this policy using linked administrative teacher information to data from a unique experimental study where almost 15,000 kindergarten children were randomly assigned to their teachers in the 2012-2013 school year in Ecuador. We find positive and significant effects of test-screened tenured teachers of at least a 0.105 standard deviation for language and a 0.085 standard deviation for math, which persist even after controlling for teacher education, experience, cognitive ability, personality traits and classroom practices.
    Keywords: teacher quality, education policy evaluation, Latin America
    JEL: I20 I21 I25 I28 J45
    Date: 2020–10
  6. By: Mayang Rizky; Daniel Suryadarma; Asep Suryahadi
    Abstract: We use long-spanning individual longitudinal data to examine the long-term labour market outcomes of low-tier informal workers. We investigate their characteristics, calculate the extent of switching, and identify the characteristics of those who have switched. Finally, we estimate the earnings premium of switching. We find that individuals are negatively selected into low-tier informal work. Almost half of individuals who started out as a low-tier informal worker remained as low-tier informal workers through the next 8-19 years. The other half switched on average three times.
    Keywords: Earnings, Indonesia, Informal sector, Long-run effects
    Date: 2020
  7. By: Gang, Ira N. (Rutgers University); Natarajan, Rajesh Raj (Sikkim University); Sen, Kunal (University of Manchester)
    Abstract: How does informal economic activity respond to increased financial inclusion? Does it become more entrepreneurial? Does access to new financing options change the gender configuration of informal economic activity and, if so, in what ways and what directions? We take advantage of nationwide data collected in 2010/11 and 2015/16 by India's National Sample Survey Office on unorganized (informal) enterprises. This period was one of rapid expansion of banking availability aimed particularly at the unbanked, under-banked, and women. We find strong empirical evidence supporting the crucial role of financial access in promoting entrepreneurship among informal sector firms in India. Our results are robust to alternative specifications and alternative measures of financial constraints using an approach combining propensity score matching and difference-in-differences. However, we do not find conclusive evidence that increased financial inclusion leads to a higher likelihood of women becoming entrepreneurs than men in the informal sector.
    Keywords: entrepreneurship, financial constraints, gender, informal sector, difference-in-differences, India
    JEL: O12 G28 L26
    Date: 2020–11
  8. By: Tran, Tuyen; Vu, Huong
    Abstract: Using a household panel dataset for the 2008-2016 period, we analyze the heterogeneous effects of livelihood change on household well-being in rural Vietnam. We use an unconditional quantile regression (UQR) model with fixed effects to control for unobservable time-invariant household characteristics. We find that when a fixed-effects estimator is employed, households switching from a crop livelihood to any non-crop livelihood (e.g., livestock, wage-earning, nonfarm or private transfer livelihoods) increase their per capita income and food consumption. However, the results from the UQR with fixed effects reveal a significant variation in the effect of such a switch in livelihood across various quantiles of well-being distribution, with a larger effect for poorer households. The income effect, however, tends to decline with higher quantiles and even turns negative with a switch to a wage-earning or public transfer livelihood for the better off. Notably, our study confirms the advantage for the poor of changing livelihood from crop to non-crop activities in rural Vietnam. Our research results also suggest that a mean regression approach, that often assumes a homogeneous/mean effect of livelihoods on well-being, may miss some heterogeneity that is useful to researchers and policy makers.
    Keywords: Cluster analysis; fixed effects; food consumption; livelihood; unconditional quantile regression
    JEL: J1 J11 O1
    Date: 2019–12–15
  9. By: Béatrice Boulu-Reshef (LEO - Laboratoire d'Économie d'Orleans - UO - Université d'Orléans - Université de Tours - CNRS - Centre National de la Recherche Scientifique); Nina Rapoport (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 - Université Panthéon-Sorbonne, PSE - Paris School of Economics)
    Abstract: Voluntary contributions are often solicited in sequential and public settings where information on the quality of the fundraising project unfolds with the sequence of decisions. This paper examines how the different sources of information available to potential donors in such settings influence their decision-making. Contrary to most of the leadership literature, neither leaders nor followers in these settings have certainty about the quality of the fundraising project. We explore whether leaders remain influential, the extent to which they use their influence strategically, and the consequences on followers when leaders are misinformed. We combine an information cascade method with a modified public goods game to create a "Voluntary Contributions in Cascades" paradigm. Participants sequentially receive private signals about the state of the world, which determines the potential returns from the public good, and take two public actions: an incentivized prediction about the state of the world and a contribution to the public good. We find that participants' predictions mostly align with Bayesian predictions, and find no evidence for strategic or misleading predictions. Leaders' contributions are positively correlated with followers', suggesting they remain influential despite their limited informational advantage. This influence takes a tragic turn when leaders happen to be misinformed, as most misinformed leaders end up unintentionally misleading followers. We find that having a misleading leader is associated with a reduction in gains from contributions roughly twice as large as the reduction that stems from dividing the marginal-per-capita-return by two. Our results stress the significance of having well-informed leaders.
    Keywords: voluntary contribution,information cascade,fundraising,sequential public good game,leadership
    Date: 2020–10
  10. By: Abiodun O. Folawewo; Olusegun A. Orija
    Abstract: This study evaluates the effects of the informal sector on Nigerian workers' livelihoods and analyses workers' transitions within the informal sector and between informal and formal employment. A binary logit model is applied to General Household Survey panel data for the periods 2010/11, 2012/13, and 2015/16. We find that informal employment has the greatest impact on workers' livelihoods in terms of earnings. Results also indicate the existence of a high level of dynamic transition of workers within different types of informal employment.
    Keywords: Regression analysis, Employment, Formal and informal, Nigeria, transitions
    Date: 2020
  11. By: Perez Alvarez, Marcello; Favara, Marta
    Abstract: The consequences of early motherhood for the offspring are severely understudied, especially in low- and middle-income countries, where this phenomenon is prevalent. Using panel data from India, this paper investigates the effect of early maternal age on offspring human capital in terms of health and cognition. The analysis relies on mother fixed effects to allow for mother unobserved heterogeneity and explores for the first time the evolution of effects over time, covering the offspring phases of childhood and early adolescence. Our results indicate that children born to early mothers are shorter for their age and perform poorer in the math test, with stronger effects for (female) offspring born to very young mothers. Interestingly, the Adolescent Motherhood, Human Capital, Child Development, Cognition, Health, Nutrition, Gender, Parenting effect on health weakens over time, while the cognition effect surges in early adolescence. Further analysis suggests both biological and behavioral factors as transmission channels.
    Keywords: Adolescent Motherhood,Human Capital,Child Development,Cognition,Health,Nutrition,Gender,Parenting
    JEL: I15 I25 J13 J16 O15
    Date: 2020
  12. By: Wild, Frederik; Stadelmann, David
    Abstract: This article investigates women's returns to schooling by exploiting Burundi's free primary education policy (FPE) of 2005 as a natural experiment. Credibly exogenous variation in education is identified through a fuzzy regression discontinuity design (RDD). Our results show that while educational attainment was positively influenced by Burundi's FPE for women situated at all wealth levels, the relevant downstream effects of schooling - measured by fertility, literacy and employment - reveal heterogeneous treatment effects by wealth. Poorer women profit in terms of higher literacy, employment as well as reduced fertility through policy induced education, while there are almost no effects of additional education for non-poor women. Our findings help in evaluating the generalisability of the nexus between women's education and fertility as well as associated factors.
    Keywords: Female Education,Fertility,Sub-Saharan Africa,Regression Discontinuity Design
    JEL: I25 I26 J13 O55
    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.