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on Development |
| By: | Rafael Dix-Carneiro (Duke University); Pinelopi K. Goldberg (Cowles Foundation, Yale University); Costas Meghir (Cowles Foundation, Yale University); Gabriel Ulyssea (University College London) |
| Abstract: | We build an equilibrium model of a small open economy with labor market frictions and imperfectly enforced regulations. Heterogeneous ï¬ rms sort into the formal or informal sector. We estimate the model using data from Brazil, and use counterfactual simulations to understand how trade affects economic outcomes in the presence of informality. We show that: (1) Trade openness unambiguously decreases informality in the tradable sector, but has ambiguous effects on aggregate informality. (2) The productivity gains from trade are understated when the informal sector is omitted. (3) Trade openness results in large welfare gains even when informality is repressed. (4) Repressing informality increases productivity, but at the expense of employment and welfare. (5) The effects of trade on wage inequality are reversed when the informal sector is incorporated in the analysis. (6) The informal sector works as an “unemployment,†but not a “welfare buffer†in the event of negative economic shocks. |
| JEL: | F14 F16 J46 O17 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:cwl:cwldpp:2271&r=all |
| By: | Rodrigo Adao (University of Chicago - Booth School of Business); Paul E. Carrillo (George Washington University - Department of Economics); Arnaud Costinot (Massachusetts Institute of Technology - Department of Economics); Dave Donaldson (Massachusetts Institute of Technology - Department of Economics; CEPR; BREAD: NBER); Dina Pomeranz (University of Zurich - Department of Economics; CEPR) |
| Abstract: | We develop a new factor content approach to study the impact of trade on inequality. Our analysis generalizes the theoretical results of Deardorff and Staiger (1988) and improves on past empirical implementations of these results. Combined with unique administrative data from Ecuador, our approach yields measures of individual-level exposure to exports and imports, for both capital and labor income, as well as estimates of the incidence of such exposure across the income distribution. We find that international trade raises earnings inequality in Ecuador, especially in the upper-half of the income distribution. However, the drop in inequality experienced by Ecuador over the last decade would have been less pronounced in the absence of trade. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:bfi:wpaper:2020-182&r=all |
| By: | Susan Thomas (xKDR); Diya Uday (xKDR) |
| Abstract: | Under-utilisation of land as collateral for loans is often attributed to the poor quality of the land records infrastructure, which is seen to both increase the cost of closing credit transactions and the risk in collection if a loan fails. In this paper, we examine the link between the heterogeneity of the quality of the land records infrastructure across states and the access to credit by households in these states using two new data-sets for the analysis. The state-level variation in land record quality is measured using the NCAER Land Records Services Index score while the Consumer Pyramids household data is used to capture household borrowing. Our findings are that there is a weak link between the borrowing patterns of households and quality of land records infrastructure, particularly the availability of spatial records. However, it does not appear that this is sufficient to capture the extent to which households are able to access credit from formal financial sources. |
| JEL: | E2 G2 R1 R5 O4 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:anf:wpaper:1&r=all |
| By: | Michael Greenstone (University of Chicago - Department of Economics; NBER); Kenneth Lee (University of Chicago - Department of Economics); Harshil Sahai (University of Chicago - Department of Economics) |
| Abstract: | Delhi faces some of the world’s highest concentrations of PM2.5, the most damaging form of air pollution. Although awareness of outdoor air pollution is rising across the world, there is limited information on indoor air pollution (IAP) levels, particularly in heavily polluted cities like Delhi. Even less evidence exists on how IAP varies by socio-economic status (SES), and whether or not addressing information gaps can change defensive investments against IAP. In this paper, we deploy Indoor Air Quality Monitors (IAQMs) in thousands of Delhi households across varying socio-economic strata in order to document IAP levels during the peak wintertime air pollution period. Across high and low SES households, we document indoor PM2.5 levels that are: (1) extraordinarily high — more than 20 times World Health Organization (WHO) standards; (2) only 10 percent lower in high (versus low) SES households; and (3) significantly higher than levels reported by the nearest, outdoor government monitors, the main source of public information on air pollution in this setting. We then report on a field experiment that randomly assigned IAQMs, as well as an opportunity to rent an air purifier at a subsidized price, across medium and high SES homes during the 2019-20 winter season. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:bfi:wpaper:2021-06&r=all |
| By: | Inés Berniell; Lucila Berniell; Dolores de la Mata; Mariá Edo; Mariana Marchionni |
| Abstract: | We study the causal effect of motherhood on labour market outcomes in Latin America by adopting an event study approach around the birth of the first child based on panel data from national household surveys for Chile, Mexico, Peru, and Uruguay. Our main contributions are: (i) providing new and comparable evidence on the effects of motherhood on labour outcomes in developing countries; (ii) exploring the possible mechanisms driving these outcomes; (iii) discussing the potential links between child penalty and the prevailing gender norms and family policies in the region. |
| Keywords: | child penalty, event study, female labour supply, Self-employment, Informality, Developing countries, Latin America, Gender norms, Family policy |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2021-33&r=all |
| By: | Ferreira, Pedro Cavalcanti; Peruffo, Marcel Cortes; Cordeiro Valério, André |
| Abstract: | This article studies the short -and long-term effects of Universal Basic Income programs - a uniform transfer to every individual in society - in the context of a developing economy and compares this policy with other schemes that condition the transfer on household characteristics such as income and education. We construct a dynastic heterogeneous-agent model, featuring uninsurable idiosyncratic risk, investment in physical and human capital, and choice of labor effort. We calibrate the model to Brazilian data and introduce a UBI transfer equivalent to roughly 4.5% of average household income. We find that, over the short run, this policy alleviates poverty and increases welfare, especially for the poor. Over time, however, income falls and poverty and inequality increase as fewer people stay in school, labor supply decreases, and savings fall. We then explore the consequences of an equivalent transfer that is both subject to means testing and requires recipients to enroll their children in school. This policy outperforms the UBI in several dimensions, increasing overall income, reducing poverty and inequality, and improving welfare. This result is robust to varying the magnitude of the cash transfer. We then investigate which aspects of the CCT make it so effective, and find that the schooling conditionality is crucial in ensuring its long- and even short- run success. |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:fgv:epgewp:821&r=all |
| By: | Sugat Chaturvedi (Indian Statistical Institute, New Delhi); Sabyasachi Das (Ashoka University); Kanika Mahajan (Ashoka University) |
| Abstract: | The literature documenting the effect of electoral gender quotas on policy is extensive, and yet its potential mechanisms remain under-explored. In this paper, we examine the relative importance of differential preference of women leaders (supply) vis-a-vis greater demand expressed by women voters in the presence of female leadership in explaining the gender quota effect. We compile data on household level allocation of a politically salient good—toilets—for the entire rural population (over 25 million households) of Uttar Pradesh, the largest state of India. We argue and show that women exhibit a greater preference for toilets than men and this gender gap is significantly larger for Muslims than Hindus. Additionally, women in female headed households, relative to male headed ones, are more likely to express greater demand. We use the religious and gender identities of council presidents and household heads as proxies for toilet preference to disentangle demand and supply effects. Using a fuzzy regression discontinuity design, we find that gender quota among Muslim leaders has a large and statistically significant positive effect on toilet provision, while for Hindu leaders it doesn’t have any average effect. Hindu female leaders, however, allocate disproportionately more toilets to Muslim female headed households. We establish that greater demand expressed by households explains most of the heterogeneous effects of gender quota across Hindu and Muslim Sarpanches, while we do not find any evidence of the supply mechanism. Our results have important policy implications and can reconcile the mixed evidence on the effects of gender quotas in elections. |
| Keywords: | Sanitation, open defecation, women’s agency, public good preference |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:ash:wpaper:52&r=all |
| By: | Supreet Kaur (University of California, Berkeley - Department of Economics; NBER); Sendhil Mullainathan (University of Chicago - Booth School of Business; NBER); Suanna Oh (Paris School of Economics); Frank Schilbach (Massachusetts Institute of Technology - Department of Economics; NBER) |
| Abstract: | We test whether increasing cash-on-hand raises the productivity of poor workers. Our motivation is psychological. Concerns about money can create mental burdens such as worry, stress, or sadness. These in turn could interfere with the ability to work effectively. We empirically test for this possibility using a field experiment with piece-rate manufacturing workers in India. We randomize the timing of income receipt, so that on a given day some workers have more cash-on-hand than others. This manipulation holds constant wages and piece rates, as well as human and physical capital. On cash-rich days, average productivity increases by 0.11 standard deviations (6.2%); this effect is concentrated among relatively poorer workers. Mistakes also decline on these days — an effect that is again concentrated among poorer workers. Having more cash-on-hand thus enables workers to work faster while making fewer errors, suggesting improved cognition. We argue that mechanisms such as gift exchange, trust, and nutrition cannot account for our findings. Instead, our results suggest a range of psychological mechanisms wherein alleviating financial concerns allows workers to be more attentive and productive at work. |
| JEL: | D03 D14 D31 J24 O1 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:bfi:wpaper:2021-07&r=all |
| By: | Hans B. Christensen (University of Chicago - Booth School of Business); Mark Maffett (University of Chicago - Booth School of Business); Thomas Rauter (University of Chicago - Booth School of Business) |
| Abstract: | We examine whether foreign corruption regulation reduces corruption and increases the local economic benefits of resource extraction. After a mid-2000s increase in enforcement of the US Foreign Corrupt Practices Act (FCPA), economic activity (measured by nighttime luminosity) increases by 14% (3%) in African communities within a 10- (25-) kilometer radius of resource extraction facilities whose owners are subject to the FCPA. Local perceptions of corruption decline by 8%. Consistent with changes in existing extraction firms’ business practices contributing to the increase in development, the association between resource production, instrumented by world commodity prices, and local economic activity increases by 40%. |
| Keywords: | Foreign corruption regulation; Foreign Corrupt Practices Act (FCPA); economic development; natural resource extraction |
| JEL: | F50 F60 K2 M4 O1 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:bfi:wpaper:2020-155&r=all |
| By: | Chrisendo, Daniel; Siregar, Hermanto; Qaim, Matin |
| Abstract: | Structural transformation of agriculture typically involves a gradual increase of mean farm sizes and a reallocation of labor from agriculture to other sectors. Such structural transformation is often fostered through innovations in agriculture and newly emerging opportunities in manufacturing and services. Here, we use panel data from farm households in Indonesia to test and support the hypothesis that the recent oil palm boom contributes to structural transformation. Oil palm is capital-intensive but requires much less labor per hectare than traditional crops. Farmers who adopted oil palm increase their cropping area, meaning that some of the labor saved per hectare is used for expanding the farm. Average farm sizes increased in recent years. In addition, we observe a positive association between oil palm adoption and off-farm income, suggesting that some of the labor saved per hectare is also reallocated to non-agricultural activities. Oil palm adoption significantly increases the likelihood of households pursuing own non-farm businesses. However, oil palm adoption does not increase the likelihood of being employed in manufacturing or services, which is probably due to the limited non-farm labor demand in the local setting. Equitable and sustainable agricultural transformation requires new lucrative non-agricultural employment opportunities in rural areas. |
| Keywords: | Cross-country dataset,lower-middle income countries,risk preferences,smallholder farmers,time preferences |
| JEL: | O13 O14 Q12 Q15 R14 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:crc990:33&r=all |
| By: | Aniema Atorudibo |
| Abstract: | Recent UN data show that the lifetime fertility of women in developed countries has fallen below 2.1 live births. By contrast, fertility rates in most developing countries have remained quite high despite falling mortality rates. This paper examines the effect of culture on fertility outcomes in developing countries, using the norms of premarital sexual behaviour as a measure of culture. Three types of norms are identified viz., the emphasis on female early marriage, the emphasis on female virginity at marriage, and weakly censuring premarital sexual behaviour. These differences in premarital rules are a source of identifying variation in the age at first birth and the number of children. Using a sample of women aged 15 to 49 from Africa and Turkey, the study shows that premarital sexual norms significantly affect the age at first birth and the number of children per woman. It finds that the cultural emphasis on early marriage significantly lowers a woman’s age at first birth while it raises her fertility level relative to the culture which weakly censures female premarital sexual relations. Conversely, the emphasis on female virginity at marriage increases the age at first birth and lowers fertility relative to the comparison group. |
| Keywords: | Fertility; Adolescent fertility; Premarital norms; Cultural preferences |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:ukc:ukcedp:2101&r=all |
| By: | Nicholas Ryan (Yale University - Department of Economics); Anant Sudarshan (University of Chicago - Energy Policy Institute) |
| Abstract: | Common resources may be managed with inefficient policies for the sake of equity. We study how rationing the commons shapes the efficiency and equity of resource use, in the context of agricultural groundwater use in Rajasthan, India. We find that rationing binds on input use, such that farmers, despite trivial prices for water extraction, use roughly the socially optimal amount of water on average. The rationing regime is still grossly inefficient, because it misallocates water across farmers, lowering productivity. Pigouvian reform would increase agricultural surplus by 12% of household income, yet fall well short of a Pareto improvement over rationing. |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:bfi:wpaper:2020-93&r=all |
| By: | Joan Calzada (University of Barcelona); Meritxell Gisbert (University of Barcelona and UAB); Bernard Moscoso (University of Barcelona) |
| Abstract: | We study the effects of aerial fumigation of banana plantations on newborns’ birth weight during the period 2015-2017 in Ecuador. We use mothers’ addresses and information on the perimeter of the plantations to create an individual measure of newborns’ exposure to pesticides. We use this measure to implement three independent identification strategies to address the endogeneity of exposure to aerial fumigations. First, we consider a difference-in-differences strategy that exploits seasonal variations in the use of pesticides across provinces. Second, we estimate a difference-in-differences model that considers geographical variations in the use of pesticides across comparable crops. Third, and finally, we estimate a maternal fixed effects model to examine the effect of pesticides on siblings who had a different residence during gestation and who were exposed to different levels of fumigations. Our first empirical model shows that newborns exposed to pesticides, when their first gestational trimester coincides with the periods of intensive fumigations of the plantations, have a birth weight reduction of between 38 and 89 grams. Moreover, exposure to pesticides increases the likelihood of low birth weight and low Apgar score at the first minute by around 0.35 and 0.33, respectively. The second model finds that newborns exposed to fumigated banana plantations have a birth weight deficit of between 29 and 76 grams, when compared to those exposed to other fumigated crops. Finally, the maternal fixed effect model show that girl newborns exposed to pesticides have a birth weight deficit of 346 grams when compared to non-exposed siblings. |
| Keywords: | Air pollution, pesticides, aerial fumigation, newborns’ birth weight. |
| JEL: | I15 I18 O12 O13 Q18 Q53 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ewp:wpaper:405web&r=all |
| By: | Prem, M; Colonnelli, E; Lagaras, S; Ponticelli, J; Tsoutsoura, M |
| Abstract: | We study how the disclosure of corrupt practices affects firms and their employees. We construct novel firm-level measures of involvement in corrupt practices using randomized audits and public procurement suspensions in Brazil. On average, exposed firms grow larger after the audits. However, this result masks large heterogeneity depending on the degree of firm involvement in the corruption scheme. Using contract-, loan-, and worker- level data, we show that highly corrupt firms suffer after anti-corruption initiatives, while other exposed firms grow by changing their investment strategy when shifting away from doing business with the government. |
| Keywords: | Corruption, Firms, Anti-corruption programs, Brazil |
| JEL: | D72 D73 G38 H57 H83 K00 L22 O10 O43 |
| Date: | 2021–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:col:000092:018673&r=all |
| By: | Disha Gupta (Department of Economics, Delhi School of Economics) |
| Abstract: | This paper provides causal evidence of the impact of a change in the policy regime from flat rate to free farm electricity pricing, introduced in Punjab, India in February 1997 using a difference-in-differences framework. Based on village-level data from the second and the third rounds of the Minor Irrigation Census, the study finds a differential increase in the number of electric-operated tubewells and horsepower load of pumps in Punjab as compared to an agriculturally-similar and neighbouring state, Haryana, which is taken as the control group. Through these channels, the study finds that percentage deviation in groundwater depth from its mean in the baseline period increased by 16 per cent more in Punjab. Nationally-representative well-level data on groundwater depths from Central Ground Water Board shows impact heterogeneity with sharper effect on groundwater depth for wells that are lying closer to the cut-off of about 10 meters where a technological shift from centrifugal to submersible is required to maintain access to groundwater pumping. Key Words: Water Pricing, Power Subsidies, Groundwater Depletion, Irrigation,Agriculture JEL Codes: O13, Q18, Q25, Q48 |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:cde:cdewps:316&r=all |
| By: | Clare Leaver (Blavatnik School of Government University College); Owen Ozier (Williams College); Pieter Serneels (University of East Anglia); Andrew Zeitlin (Georgetown University) |
| Abstract: | This paper reports on a two-tiered experiment designed to separately identify the selection and effort margins of pay-for-performance (P4P). At the recruitment stage, teacher labor markets were randomly assigned to a pay-for-percentile or fixed-wage contract. Once recruits were placed, an unexpected, incentive compatible, school-level re-randomization was performed, so that some teachers who applied for a fixed-wage contract ended up being paid by P4P, and vice versa. By the second year of the study, the within-year effort effect of P4P was 0.16 standard deviations of pupil learning, with the total effect rising to 0.20 standard deviations after allowing for selection. |
| Keywords: | pay-for-performance, selection, incentives, teachers, field experiment |
| JEL: | C93 I21 J45 M52 O15 |
| Date: | 2021–01–27 |
| URL: | http://d.repec.org/n?u=RePEc:wil:wileco:2021-04&r=all |
| By: | Sodiq Arogundade (College of Business and Economics, University of Johannesburg); Mduduzi Biyase (College of Business and Economics, University of Johannesburg); Hinaunye Eita (College of Business and Economics, University of Johannesburg) |
| Abstract: | Emerging literatures on foreign direct investment (FDI) now suggest FDI’s positive spillovers in alleviating poverty depend on the absorptive capacities of host economies. Prime to these capacities includes the level of human capital development and institutional quality. This study examines how host absorptive capacity can facilitate the benefit FDI can offer. In achieving this, a panel of 28 Sub-Saharan African (SSA) countries from 1996-2018 was explored using instrumental regression. Findings from this study suggest that FDI has a positive and significant relationship with all the poverty indicators in SSA. This suggests that the impact of FDI is contingent on the conditions of the local economy. The study further reveals that FDI will alleviate poverty conditions if interacted with human capital and institutional quality at a given threshold. This implies that the more host nations improve their institutional quality and human capital, the more they reap the benefit of FDI in terms of job creation, technological spillovers, and poverty alleviation. Conclusion emanating from this paper is that policies aimed at attracting FDI without improving conditions of the local economy is effort in futility. Furthermore, SSA countries need to further liberalize, privatize, and securitize critical sectors in their economies in order to provide needed liquidity for investment in human capital as well as institutional reform |
| Keywords: | Poverty, Foreign Direct Investment, Absorptive capacity, Instrumental regression and Sub-Saharan African countries |
| JEL: | F23 I30 E24 E02 |
| URL: | http://d.repec.org/n?u=RePEc:ady:wpaper:edwrg-04-2021&r=all |
| By: | Hyojung Kang (Economics Department and International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University); Jorge Martinez-Vazquez (International Center for Public Policy, Georgia State University, USA) |
| Abstract: | Foreign Direct Investment (FDI) is widely considered among the most effective instruments for the promotion of economic development. However, not all FDI leads to inclusive economic growth, lifting the welfare of the poorest groups in developing countries. This paper examines the conditions under which FDI can effectively lead to inclusive growth. By using a fixed effects regression with annual data for 68 countries from 1990 to 2015, we find that FDI has the most positive effect on inclusive growth when there is a sufficiently large manufacturing sector and a developed enough infrastructure base in the host country. These not very optimistic results emphasize the critical importance of the host country’s absorptive capacity. A smaller technological or knowledge gap with the foreign firms is required for FDI to lead to more linkages and spillovers, and ultimately job creation for the poor. The results cast doubt on development strategies that rely on FDI as a sufficient policy for inclusive growth. |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:ays:ispwps:paper2104&r=all |