nep-dev New Economics Papers
on Development
Issue of 2020‒12‒07
fifteen papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. The impact of cash transfers on subjective well-being and mental health in low- and middle- income countries: A systematic review and meta-analysis By McGuire, Joel; Kaiser, Caspar; Bach-Mortensen, Anders
  2. Understanding the Distributional Aspects of Microcredit Expansions By Melvyn Weeks; Tobias Gabel Christiansen
  3. The Imperium of the Colonial Tongue? Evidence on Language Policy Preferences in Zambia By Ramachandran, R.; Rauh, C.
  4. Does test-based teacher recruitment work in the developing world? Experimental evidence from Ecuador By Araujo P., Maria Daniela; Heineck, Guido; Cruz Aguayo, Yyannú
  5. Corruption and Cheating: Evidence from Rural Thailand By Olaf Hübler; Melanie Koch; Lukas Menkhoff; Ulrich Schmidt
  6. Fiscal incidence, inequality and poverty in Kenya: A CEQ assessment By Damiano Kulundu MANDA; Reuben MUTEGI; Samuel KIPRUTO; Moses MURIITHI; Martine OLECHE; Germano MWABU; Stephen D. YOUNGER
  7. Chronic child poverty and health outcomes in South Africa using a multidimensional poverty measure By Marisa von Fintel; Ronelle Burger
  8. Farm Production Diversity: Is it Important for Food Security, Dietary Diversity and Nutrition? Panel Data Evidence from Uganda By Haruna Sekabira; Shamim Nalunga
  9. External and Internal Real Exchange Rates and the Dutch Disease in Africa: Evidence from a Panel of Nine Oil-Exporting Countries By Edouard Mien
  10. Is demography destiny? The economic implications of Iraq's demography By Hamilton, Alexander
  11. Do Governance Institutions Matter for Trade Flows between Sub-Saharan Africa and its Trading Partners? By Adeolu O. Adewuyi; Ebenezer Olubiyi
  12. School Fee Elimination and Educational Inequality in Tanzania By Roxana Elena Manea
  13. The Implications of Inequality for Corruption: Does the MENA Region Stand Out? By Vladimir Hlasny
  14. Fiscal consolidation and health inequality: Evidence from infant mortality in Sub-Saharan Africa By Hélène EHRHART; Lisa CHAUVET; Marin FERRY
  15. Savings Goal Calendars as Soft Commitment Devices: Evidence from Small Business Owners in Uganda By Antonia Grohmann; Tabea Lakemann; Helke Seitz

  1. By: McGuire, Joel; Kaiser, Caspar (University of Oxford); Bach-Mortensen, Anders
    Abstract: Background: A large body of evidence evaluates the impact of cash transfers (CTs) on physical health and economic indicators. A growing amount of research on CTs contains measures of subjective well- being (SWB) and mental health (MH) but no attempt has been made to systematically synthesize this work. Methods/design: We undertook a systematic review and meta-analysis of RCTs and quasi- experimental studies, including peer-reviewed publications and grey literature (e.g. reports, pre-prints, and working papers), conducted over the period 2000-2020, examining the impact of CTs on self- reported SWB and MH outcomes. Results: Two authors (JM and CK) double-screened 1,147 records of potentially relevant studies, finding 38 studies suitable for inclusion in our meta-analysis, covering 100 outcomes and a total sample of n=114,274 individuals. The average effect size (Cohen’s d) of 38 CT studies on our composite outcome of MH and SWB is 0.10 standard deviations (SDs) (95% CI: 0.8, 0.13) for an average time until follow-up of two years. However, there is a substantial amount of heterogeneity in the estimated effects (I-squared = 64% and 95% Prediction interval: 0.0021, 0.215). CT value, both in absolute terms and relative to previous income, are significant predictors of the effect size. We find only weak evidence that the impact diminishes over time. Four randomized controlled trials in our sample were designed to identify the spillover effects of CTs on the SWB and MH outcomes of non-recipients. Two found negative spillovers but the average effect is not statistically significant and is close to zero. Discussion: Cash transfers significantly increase MH and SWB in low- and middle-income countries. More research on the long run (5+ years) effects is needed, as well as further analysis of the community and household spillover effects of cash transfers on MH and SWB outcomes. We encourage the inclusion of MH and SWB metrics in impact evaluations of interventions to enable the assessment of their relative cost-effectiveness at improving lives compared to cash transfers.
    Date: 2020–11–13
  2. By: Melvyn Weeks; Tobias Gabel Christiansen
    Abstract: Various poverty reduction strategies are being implemented in the pursuit of eliminating extreme poverty. One such strategy is increased access to microcredit in poor areas around the world. Microcredit, typically defined as the supply of small loans to underserved entrepreneurs that originally aimed at displacing expensive local money-lenders, has been both praised and criticized as a development tool (Banerjee et al., 2015b). This paper presents an analysis of heterogeneous impacts from increased access to microcredit using data from three randomised trials. In the spirit of recognising that in general the impact of a policy intervention varies conditional on an unknown set of factors, particular, we investigate whether heterogeneity presents itself as groups of winners and losers, and whether such subgroups share characteristics across RCTs. We find no evidence of impacts, neither average nor distributional, from increased access to microcredit on consumption levels. In contrast, the lack of average effects on profits seems to mask heterogeneous impacts. The findings are, however, not robust to the specific machine learning algorithm applied. Switching from the better performing Elastic Net to the worse performing Random Forest leads to a sharp increase in the variance of the estimates. In this context, methods to evaluate the relative performing machine learning algorithm developed by Chernozhukov et al. (2019) provide a disciplined way for the analyst to counter the uncertainty as to which algorithm to deploy.
    Date: 2020–11
  3. By: Ramachandran, R.; Rauh, C.
    Abstract: Sub-Saharan Africa stands out as a part of the world that relies primarily on the use of non-indigenous languages to act as official (e.g. in the domains of administration, education, law and politics). What explains the overwhelming preference for the colonial language to act as official despite the high costs of obtaining linguistic capital? In this paper, we analyze the role of perceived costs and returns to different languages, the attitudes towards the suitability of non-standardized indigenous languages to be used in formal domains and the importance of ethnolinguistic and class cleavages in influencing individual preferences concerning the choice of the official language. In order to do so we collect data on elicited beliefs about the effects of hypothetical changes to Zambia's language policy on schooling outcomes, income, and social cohesion. Our results show overwhelming support for the use of the colonial language to act as official. Looking at the determinants, we find that fears of being disadvantaged by the installation of another group's language to act as official, high perceived costs of learning in another group's language, and lack of association between retaining the elite language and socioeconomic inequality as crucial factors in affecting preferences over official language.
    Date: 2020–11–18
  4. By: Araujo P., Maria Daniela; Heineck, Guido; Cruz Aguayo, Yyannú
    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 testscreened 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
  5. By: Olaf Hübler; Melanie Koch; Lukas Menkhoff; Ulrich Schmidt
    Abstract: This study tests the prediction that perceived corruption reduces ethical behavior. Integrating a standard “cheating” experiment into a broad household survey in rural Thailand, we find clear support for this prediction: respondents who perceive corruption in state affairs are more likely to cheat and, thus, to fortify the negative consequences of corruption. Interestingly, there is a small group of non-conformers. The main relation is robust to consideration of socio-demographic, attitudinal, and situational control variables. Attendance of others at the cheating experiment, stimulating the reputational concern to be seen as honest, reduces cheating, thus indicating transparency as a remedy.
    Keywords: corruption; cheating; individual characteristics; lab-in-the-field experiment
    JEL: O12 D73 D91
    Date: 2020
  6. By: Damiano Kulundu MANDA; Reuben MUTEGI; Samuel KIPRUTO; Moses MURIITHI; Martine OLECHE; Germano MWABU; Stephen D. YOUNGER
    Abstract: The objective of this paper is to evaluate the effects of fiscal policy actions by the Government of Kenya on inequality and poverty. The paper uses the Kenya Integrated Household Budget Survey (KIHBS) dataset for 2015/16 combined with administrative data for the same period to construct various income concepts that are used in an analysis of welfare effects of fiscal measures following the methodology developed by the Commitment to Equity (CEQ) Institute (Lustig, 2018). The results show that the combined impact of government taxes and expenditure actions is to reduce inequality and increase poverty, a finding that is similar to effects reported in CEQ studies done in other African countries, such as Ghana, Tanzania, Uganda and Ethiopia. The study also finds that people in the first six deciles of the income distribution are net beneficiaries of taxation plus all social expenditures while those at the richer three deciles are net tax-payers, indicating that individually and jointly, taxation and social spending in Kenya are progressive. On a cash only basis (i.e. excluding in-kind health and education benefits), however, only the first decile is a net beneficiary, largely because indirect taxes are paid by everyone, including the poor. This is despite the fact that, contrary to expectation, indirect taxes in Kenya are generally progressive. However, direct taxes are significantly more progressive than the indirect taxes, i.e. they are paid at higher rates in richer deciles. Further, cash and near-cash transfers, basic education and health benefits are pro-poor while tertiary education benefits are not. Cash and near-cash transfers lead to a reduction in poverty. Finally, simulation results show that increasing cash transfer to existing beneficiaries by 50% and increasing coverage could lead to greater reduction in poverty and inequality. The main conclusion of our analysis is that Kenya’s fiscal policy can be redesigned to support both inequality and poverty reduction.
    Keywords: Kenya
    JEL: Q
    Date: 2020–11–20
  7. By: Marisa von Fintel (Department of Economics, Research on Socio-Economic Policy (ReSEP), Stellenbosch University); Ronelle Burger (Department of Economics, Research on Socio-Economic Policy (ReSEP), Stellenbosch University)
    Abstract: In this paper, we examine the differences in health outcomes between children residing in poor and non-poor households. In order to identify household poverty, we make use of the framework of multidimensional poverty as introduced by Alkire and Foster (2011). In our sample, we follow all children (defined as individuals aged 18 years or younger) over the period 2012- 2017, using the last three waves of the National Income Dynamics Study (NIDS). We find great disparities in health and well-being among children depending on the classification of the household as being poor or non-poor. In addition, children residing in households which are chronically poor (i.e. are observed to remain in poverty over time) have worse health outcomes than children residing in households which move in and out of poverty, pointing towards the negative effects of poverty traps. Finally, we rely on the previous work conducted by Wagstaff et al (2004) to explore some of the causes of child health inequalities in South Africa, including maternal education, water and sanitation and social norms (which includes the prevalence of female-headed households and the decision-making power of women in the household).
    Keywords: Poverty measurement, poverty dynamics, health inequality, children, South Africa
    JEL: I14 I31 I32
    Date: 2020
  8. By: Haruna Sekabira; Shamim Nalunga (International Institute of Tropical Agriculture (IITA)
    Abstract: Improved food security (quantities of food available to households for consumption) and nutrition security (quality of food available to households) remain global problems. Yet, food and nutrition security are areas of strategic importance with regard to the UN’s Sustainable Development Goals. The changing global food production systems pose a threat to sustainable improved food and nutrition security. Consequently, a significant population globally remains chronically hungry. Some evidence points to market access as pivotal to enhancing food and nutrition security, whereas other evidence points to own farm production diversity. Mixed evidence creates knowledge gaps that worsen with disjointed insufficient empirical works on the global agriculture-nutrition nexus. Using national household panel survey data from Uganda, and panel regression models, we find that farm production diversity is associated with both improved food and nutrition security. We identified that markets and own farm production are two important food security pathways through which households secure their nutrition. Own farm production was associated with larger effects. Patterns by which these pathways influenced household dietary diversity were similar to those for daily energy, iron and zinc intake, except for vitamin A. We also found gender effects with regard to household nutrition security. Findings could have broader implications for several countries practising smallholder agriculture.
    Date: 2020
  9. By: Edouard Mien (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Despite a large number of empirical studies on Dutch disease in developing countries and the evidence that oil revenues tend to appreciate the real exchange rate, there remains little discussion about the definition of real exchange rates. This article intends to fill this gap by using four different proxies of the real exchange rate, differentiating the internal and the external real exchange rates for agricultural and manufacturing sectors. Using Pooled-Mean-Group and Mean-Group estimates on a panel of nine African net oil-exporting countries, results show a clear appreciation of the RER generated by oil revenues except for the internal real exchange rate for manufacturing goods. This could imply that oil revenues more clearly affect agricultural compared to manufacturing competitiveness in these African countries.
    Keywords: Dutch disease,Africa,Equilibrium real exchange rate,Pooled Mean Group Estimator,Oil revenues
    Date: 2020–11
  10. By: Hamilton, Alexander
    Abstract: This paper examines the fiscal and economic implications of Iraq’s current demographic trajectory. We find that, given Iraq’s almost total dependence on oil for government revenues, slight changes in the demographic transition rate could result in significant cumulative per capita expenditure changes- equivalent to $2.9bn, or approximately 7% of the current health budget, 9% of the current defence budget, or 17% of current aid flows. Furthermore, evidence from the entire Middle East and North Africa (MENA) region, suggests that Iraq’s relatively slow demographic transition is reducing per capita economic growth, especially as it is combined with a hostile business environment. Specifically, using a panel dataset, we find that the interactive effect of a 1% decrease in the dependency ratio and a 1% decrease in the unit costs of starting and running a business could add, on average, 1.2% to GDP per capita in a typical MENA country. Therefore, investing in Iraq’s demographic transition could potentially yield significant economic returns. This is especially pertinent if the COVID-19 induced recession results in a significant increase in the budget deficit. As reducing demographic momentum will be equivalent to a per capita increase in resources available for basic services. Evidence from other MENA countries, especially neighbouring Iran, suggests that interventions that support a faster demographic transition, by promoting reproductive rights, are feasible to implement and could, therefore, have quite a profound effect on future economic growth.
    JEL: J1
    Date: 2020–11
  11. By: Adeolu O. Adewuyi; Ebenezer Olubiyi (University of Ibadan)
    Abstract: This study analyses the role of governance institutions in trade involving Sub-Saharan Africa (SSA) and its trading partners. Specifically, the objectives of this study are to: investigate the effect of institutions on trade between SSA and its trading partners; and examine whether governance institutions matter more for trade in SSA resourcepoor countries (or non-mineral products) than for trade in resource-rich countries (or mineral products). Based on a combination of strands of literature on the subject matter, we used a modified gravity model to analyse the objectives highlighted above. Using data spanning 1996 to 2014, empirical analysis involves estimating variants of gravity equations using the modified Poisson pseudo maximum likelihood estimation approaches. Empirical results show that not all governance variables matter for trade between SSA and its partners. Whether it matters or not depends on countries’ resource endowment, the pattern of trade and the direction of trade. Trade between SSA and developed countries (especially imports) is driven significantly by governance institutions, particularly the bureaucratic quality and compliance with law and order. Such importance of governance institutions could not be established in trade between SSA and Asia, which are both developing economies. Furthermore, governance institutions matter more for trade in non-mineral products than for trade in mineral products. The interaction of tariff with governance variables produced some results which suggest that inadequate governance institutions reflected in poor implementation of tariff policy may increase trade costs, thus reinforcing the negative effect of tariff on trade. Some policy recommendations were articulated to improve governance institutions in SSA to promote trade with its trading partners.
    Date: 2020
  12. By: Roxana Elena Manea
    Abstract: In this paper, we investigate the impacts of the elimination of primary school fees in Mainland Tanzania. We use 2002 and 2012 census data and conduct a difference-in- differences analysis. Spatial and temporal variation in the implementation process of the reform is generated by distinguishing between cohorts that were exposed to the reform and cohorts that were not, and by considering the intensity of the reform, which is defined based on pre-reform educational outcomes at the gender-district level. We find that exposure to an average of 1.7 years of free primary education has reduced educational inequality by 0.66 standard deviations. We also find that this outcome has been mainly driven by a reform-induced reduction of 6.8 percentage points in the proportion of people who have never attended primary education. The benefits of fee removal have been relatively larger for females compared to males. Therefore, the educational gender gap has been narrowed. Nevertheless, policy- makers should be wary of the reform’s limited reach in preventing dropouts and its diminishing effects as time elapses from the year when the reform was rolled out.
    Keywords: School fee; Educational Inequality; Tanzania
    Date: 2020–11–23
  13. By: Vladimir Hlasny (Ewha Womans University)
    Abstract: If political connectedness and ability to get ahead through corruption are latent dimensions of multidimensional inequality, then corruption could be the missing piece in the Arab inequality puzzle. In fact, the positive inequality–corruption link holds in a number of developed countries, but not in the MENA or other emerging, resource-reliant countries. This is confirmed using graphical and statistical analysis, both in levels and in changes. An increase in inequality has the expected detrimental effect on corruption in OECD countries, particularly those with state-led non-liberal markets. The relationship is weak or negative in liberal-market economies. Concentration of economic power appears to translate into political power in coordinated and networked societies while the link vanishes in societies where most transactions are done at arm’s length. Inequality affects corruption negatively in emerging and resource-extracting economies, and notably the MENA. Instead of following the trends among the comparative upper-middle income countries, MENA exhibits the trends seen among less developed economies, an indication of a variety of the Dutch disease. We do not find an inequality–pilferage trap across developing countries. Successful development and building of institutions initially raise inequality as growth is spread unevenly throughout society. The inequality–corruption link starts out negative and finishes positive across successive stages of development. This implies that, beside improving laws and punishing corrupt policymakers, countries should manage economic distribution, not just out of concern for social justice but also to lay down conditions for healthy political and economic contestation
    Date: 2020–11–20
  14. By: Hélène EHRHART; Lisa CHAUVET; Marin FERRY
    Abstract: In this paper, we examine the effect of fiscal consolidation episodes conducted over 1975- 2015 on infant mortality in sub-Saharan African countries. Episodes of fiscal austerity are indeed likely to be associated with spending cuts which might negatively affect the quantity and/or quality of public services such as health centers and hospitals. Infant mortality is measured at the child level using the combination of Demographic and Health Surveys for 35 African countries. Fiscal consolidation is measured at the country level with a dummy variable that is equal to one if a fiscal consolidation occurred in the birth year of the child, or the year before. Fiscal consolidation is, on average, associated with higher infant mortality: the estimated contribution of fiscal austerity to infant mortality is around 7 per 1000 additional infant deaths as compared with a situation where birth would have occurred outside fiscal consolidation periods. We also investigate how fiscal consolidation influences health inequality and find that these episodes disproportionately affect child deaths of mothers belonging to the poorer segment of the population as well as those of middle-class mothers.
    Keywords: Afrique
    JEL: Q
    Date: 2020–11–24
  15. By: Antonia Grohmann; Tabea Lakemann; Helke Seitz
    Abstract: This study examines the effect of a soft commitment device in the form of a savings goal calendar on savings for small business owners in Kampala, Uganda. We run a randomized controlled trial (RCT) under which the treatment group receives a calendar designed to set savings goals and to make a plan to reach this goal. The control group is given a plain calendar. We find no average effect on savings, but show that present-biased individuals save more when given the calendar. Further examinations indicate that present-biased individuals are more likely to use the calendar, suggesting that, in line with theory, present-biased individuals have a demand.
    Keywords: Soft commitment, savings, time preferences, small business growth
    JEL: O12 D14 D22 C93
    Date: 2020

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