nep-dev New Economics Papers
on Development
Issue of 2021‒04‒12
fourteen papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. Food vs. Food Stamps: Evidence from an At-Scale Experiment in Indonesia By Abhijit Banerjee; Rema Hanna; Benjamin A. Olken; Elan Satriawan; Sudarno Sumarto
  2. Africa's Latent Assets By Soeren J. Henn; James A. Robinson
  3. Inequality and Social Policy in Latin America By Nora Lustig
  4. Geography and Agricultural Productivity: Cross-Country Evidence from Micro Plot-Level Data By Tasso Adamopoulos; Diego Restuccia
  5. Global poverty and inequality from 1980 to the COVID-19 pandemic By Moses, Mark; Kharas, Homi; Miller-Petrie, Molly; Tsakalos, Goli; Marczak, Laurie; Hay, Simon; Murray, Christopher; Dieleman, Joseph L
  6. Do More School Resources Increase Learning Outcomes? Evidence from an Extended School-Day Reform By Agüero, Jorge M.; Favara, Marta; Porter, Catherine; Sanchez, Alan
  7. BangladeshMicrofinance Competition and Multiple Borrowing:Evidence using Panel Data from Bangladesh By Minhaj Mahmud; Yasuyuki Sawada; Mari Tanaka
  8. Developing Textbooks to Improve Student Math Learning: Empirical Evidence from El Salvador By Takao Maruyama; Takashi Kurosaki
  9. Interdependence between research and development, climate variability and agricultural production: evidence from sub-Saharan Africa By Bannor, Frank; Dikgang, Johane; Kutela Gelo, Dambala
  10. Impacts of the Interest Rate Ceiling on Microfinance Sector in Cambodia: Evidence from a Household Survey By Sovannroeun Samreth; Daiju Aiba; Sothearoath Oeur; Vanndy Vat
  11. The Persistent Effect of Famine on Present-Day China By Pramod Kumar Sur; Masaru Sasaki
  12. Impact of Rural Credit on Household Welfare: Evidence from a Long-Term Panel in Bangladesh By MD. Alamgir Hossain; Abdul Malek Mohammad; Zhengfei Yu
  13. The Impact of Taxes and Transfers on Poverty and Income Distribution in South Africa 2014/15 By Maya Goldman; Ingrid Woolard; Jon Jellema
  14. Class Size and Learning: Has India Spent Too Much on Reducing Class Size? By Datta, Sandip; Kingdon, Geeta G.

  1. By: Abhijit Banerjee; Rema Hanna; Benjamin A. Olken; Elan Satriawan; Sudarno Sumarto
    Abstract: Governments seeking to provide food assistance have a choice between providing in-kind food directly to beneficiaries, or providing vouchers that can be used to purchase food on the market. To understand the differences between these policies, the Government of Indonesia randomly phased in the transition from in-kind delivery of subsidized rice to approximately equivalent vouchers usable to buy rice and eggs across 105 districts comprising over 3.4 million beneficiary households. We find the transition led to substantial changes in the allocation of aid in practice. The vouchers provided concentrated assistance to targeted households, who received 45 percent more assistance in voucher areas than in in-kind districts. As a result, for households in the bottom 15 percent at baseline, poverty fell by 20 percent. Vouchers also allowed households to purchase higher-quality rice, and led to increased consumption of egg-based proteins. We find vouchers have little effect on aggregate rice prices, although we observe modest price increases in remote villages. Overall leakage from the program was not affected, but the administrative costs of benefits delivery substantially fell. In short, the results suggest that the change from in-kind food aid to vouchers led to substantial impacts on poverty through the way it changed how programs were implemented on the ground.
    JEL: I38 O15
    Date: 2021–04
  2. By: Soeren J. Henn; James A. Robinson
    Abstract: Despite the past centuries’ economic setbacks and challenges, are there reasons for optimism about Africa's economic prospects? We provide a conceptual framework and empirical evidence that show how the nature of African society has led to three sets of unrecognized “latent assets.” First, success in African society is talent driven and Africa has experienced high levels of perceived and actual social mobility. A society where talented individuals rise to the top and optimism prevails is an excellent basis for entrepreneurship and innovation. Second, Africans, like westerners who built the world's most successful effective states, are highly skeptical of authority and attuned to the abuse of power. We argue that these attitudes can be a critical basis for building better institutions. Third, Africa is “cosmopolitan.” Africans are the most multilingual people in the world, have high levels of religious tolerance, and are welcoming to strangers. The experience of navigating cultural and linguistic diversity sets Africans up for success in a globalized world.
    JEL: H11 J6 O1 O11
    Date: 2021–03
  3. By: Nora Lustig (Stone Center for Latin American Studies, Department of Economics, Tulane University, Commitment to Equity Institute (CEQ).)
    Abstract: This paper analyzes the evolution and determinants of inequality between 1990 and 2017 in Latin America. Throughout the period, inequality in the region has demonstrated three trends: it increased during the 1990s; decreased between 2002 and 2013; and, since 2014, it has remained constant or even increased depending on the country. The reduction of inequality in the second period corresponded to two main changes in social policy: (I) the expansion in access to education in the previous period, which led to a decrease in the salary gap; and (II) the expansion and progresivity of monetary transfers. However, despite improvements in income distribution, in recent years, there has been a wave of protests in various countries. This paper proposes possible explanations of this apparently paradoxical phenomenon. Finally, this paper analyzes the impact of fiscal policy on inequality and poverty using comparative data from fiscal incidence analysis. Although in all countries the combination of taxes, social spending, and consumption subsidies reduces inequality, it does not always reduce poverty.
    Keywords: fiscal incidence, inequality, poverty, taxes, social spending, Latin America
    JEL: I38 H22 D63 D31 D74
    Date: 2020–03
  4. By: Tasso Adamopoulos; Diego Restuccia
    Abstract: We quantify the role of geography and land quality for agricultural productivity differences across countries using high-resolution micro-geography data and a spatial accounting framework. The rich spatial data provide for each cell of land covering the entire globe, the potential yield for 18 crops, which measures the maximum attainable crop output given soil quality, climate conditions, terrain topography, and a given level of cultivation inputs. While there is considerable heterogeneity in land quality across space, even within narrow geographic regions, we find that low agricultural land productivity is not due to unfavourable geographic endowments. If countries produced current crops in each cell according to potential yields, the rich-poor agricultural yield gap would virtually disappear, from 214 percent to 5 percent. We also find evidence of additional aggregate productivity gains attainable through spatial reallocation and changes in crop production.
    Keywords: agriculture, land quality, productivity, spatial allocation, crop choice, cross-country.
    JEL: O11 O14 O4
    Date: 2021–03–31
  5. By: Moses, Mark; Kharas, Homi; Miller-Petrie, Molly; Tsakalos, Goli; Marczak, Laurie; Hay, Simon; Murray, Christopher; Dieleman, Joseph L
    Abstract: The world made remarkable progress in reducing extreme poverty over the last twenty years. Recent progress has slowed, however, and the economic damage wrought by the COVID-19 pandemic imperils progress towards achieving the Sustainable Development Goals (SDGs) of eradicating extreme poverty and alleviating inequality by the year 2030. To track progress towards the SDGs, we collated—to the best of our knowledge—the largest collection of poverty and inequality related data and developed novel methods to construct comprehensive and comparable estimates of poverty and inequality from 1980 to 2019 in 204 countries and territories, across urban and rural settings, and by age; further, we forecast the effects of the COVID-19 pandemic on poverty out to 2021. We find that over the past four decades, the number of individuals living in extreme poverty declined dramatically, however, extreme poverty counts were rising in Sub-Saharan Africa. The Millennium Development Goal (MDG) era corresponded to the fastest observed reduction in extreme poverty and a period of more equitable growth. Progress made is jeopardized by the economic shock resulting from the COVID-19 pandemic. Estimates of poverty through 2021 highlight the effect of the global economic shock, the effect of governments’ economic responses to the pandemic, and the need to build economies resilient to the next global threat.
    Date: 2021–03–29
  6. By: Agüero, Jorge M. (University of Connecticut); Favara, Marta (University of Oxford); Porter, Catherine (Lancaster University); Sanchez, Alan (GRADE)
    Abstract: Whether allocating more resources improves learning outcomes for students in low-performing public schools remains an open debate. We focus on the effect of increased instructional time, which is theoretically ambiguous due to possible compensating changes in effort by students, teachers or parents. Using a regression discontinuity approach, we find that a reform extending the school day increases math test scores, with a large effect size relative to other interventions. It also improved reading, technical skills and socio-emotional competencies. Our results are partly explained by reductions in home production by students, specialization by teachers and investments in pedagogical assistance to teachers.
    Keywords: extended school-day reform, Jornada Escolar Completa, JEC, Peru, Young Lives
    JEL: I2 I22 I26
    Date: 2021–03
  7. By: Minhaj Mahmud; Yasuyuki Sawada; Mari Tanaka
    Abstract: This paper examines the causes and consequences of multiple borrowing in rural Bangladesh using long-term household and village panel data covering the years 2000 to 2014. Our empirical analysis reveals that sharply growing number of microfinance institutions (MFIs) in a wider set of villages over time, coincides with corresponding increase in household borrowing from multiple MFIs as well as households accessing loans generally. The climbing number of MFIs also explains the significant rises in the total values of household assets especially in the form of agricultural equipment. Although the increasing number of MFIs resulted in some households borrowing for the purposes of repaying previous loans, the fraction of such households is still relatively small. Overall, our results suggest that the majority of the cases of multiple borrowing are “healthy” or “solvent” overlapping loans that meet the large demand for credit for productive purposes.
    Keywords: Microfinance Institutions, Household Borrowing, Micro Business, Bangladesh
    Date: 2021–01–19
  8. By: Takao Maruyama; Takashi Kurosaki
    Abstract: School enrollment has rapidly increased since 1990 in developing countries at the primary level but the quality of education has stagnated over the years. In teaching and learning practices, textbooks are an important intermediate that links curriculum, teachers, and students. Since textbooks describe the content and methodology of teaching and learning, they can improve teaching and learning practices, if they are carefully designed. This study evaluates the effectiveness of the package of interventions including the distribution of textbooks that are carefully designed to improve student learning in math through a randomized controlled trial in El Salvador. This experiment tracked same students for two years. The average one-year impact of the package on primary school 2nd grade students’ math learning is estimatedaround 0.48 standard deviation of test scores. The impact was larger on students with higher baseline scores. The average accumulated impact of the first-year interventions one year after is around 0.12 standard deviation. The package of intervention improved math learning of 2nd grade students, and the impact persisted even after schools of the control group also received the package of interventions in the following year.
    Keywords: Educational Development, Math textbook development, Math learning, Human Capital and Impact evaluation
    Date: 2021–01–19
  9. By: Bannor, Frank; Dikgang, Johane; Kutela Gelo, Dambala
    Abstract: The performance of the agricultural sector in sub-Saharan Africa (SSA) remains low compared to other regions. This is often attributed to the fact that agriculture in SSA is rain-fed, as well as to inadequate investment in research and development (R&D). It is well documented in the literature that climate variability is a possible reason for the low productivity observed in agriculture. It is similarly well documented that R&D investment affects the growth of agricultural productivity. This paper investigates whether public spending on R&D mitigates the negative effects of climate variability (measured by variability in rainfall) on agricultural productivity in SSA. We do so by employing a dynamic production model, and the Generalised Methods of Moments (GMM) technique. Based on cross-country panel data from the period 1995 to 2016, our empirical findings reveal that both climate variability and the interaction of R&D with climate variability are strongly correlated with agricultural productivity. As expected, climate variability reduces agriculture productivity by 0.433% to 0.296%. The interaction of R&D and climate variability enhances agricultural productivity by 0.124% to 0.065%. We also show that R&D is an absorption channel for the inimical effects of climate variability, and that the way in which climate variability impacts agricultural productivity depends on the magnitude of spending on R&D; in order to move from a negative to a positive impact of climate variability on agricultural productivity, public spending on R&D must increase by 3.492% to 4.554%. We conclude that to address the negative effects of climate variability, there is a need for governments to prioritise and increase spending on R&D.
    Keywords: Agriculture; Climate variability; R&D; Productivity; Sub-Saharan Africa (SSA)
    JEL: Q1 Q16 Q18 Q5 Q54
    Date: 2021–01–05
  10. By: Sovannroeun Samreth; Daiju Aiba; Sothearoath Oeur; Vanndy Vat
    Abstract: This paper examines the effects of the imposition of an interest rate ceiling in the microfinance sector in Cambodia in 2017, based on a household survey undertaken in 2019. Evidence indicates that the average interest rate was reduced after the imposition of the ceiling. Although this reduction is partially offset by the increase of the average loan assessment and processing fee, the average effective interest rate (i.e., credit cost) declined. The results also show the increase in the average loan size from formal sources at a relatively small level and the increase in the percentage of loans from informal sources by a few percentage points. Moreover, we find that relatively low-income households face a higher probability of being rejected for loans and a higher debt service ratio is positively associated with a larger loan amount. This implies the possibility of the increase of the debt burden occurring among relatively small borrowers, given that an increase of the average loan size at relatively small loan levels is observed. The evidence supporting the important role of financial literacy in reducing household debt burden is also confirmed.
    Keywords: Interest rate ceiling, Financial inclusion, Microfinance, Cambodia
    Date: 2021–03–16
  11. By: Pramod Kumar Sur; Masaru Sasaki
    Abstract: More than half a century has passed since the Great Chinese Famine (1959-1961), and China has transformed from a poor, underdeveloped country to the world's leading emerging economy. Does the effect of the famine persist today? To explore this question, we combine historical data on province-level famine exposure with contemporary data on individual wealth. To better understand if the relationship is causal, we simultaneously account for the well-known historical evidence on the selection effect arising for those who survive the famine and those born during this period, as well as the issue of endogeneity on the exposure of a province to the famine. We find robust evidence showing that famine exposure has had a considerable negative effect on the contemporary wealth of individuals born during this period. Together, the evidence suggests that the famine had an adverse effect on wealth, and it is even present among the wealthiest cohort of individuals in present-day China.
    Date: 2021–04
  12. By: MD. Alamgir Hossain; Abdul Malek Mohammad; Zhengfei Yu
    Abstract: Access to rural credit has long been considered a potential solution to ease liquidity constraints and improve household welfare in Bangladesh.Earlier studies on rural credit mostly focused on the impact of microfinance; however, the available results could not provide conclusive findings and failed to suggest how different sources of credit, namely, banks, microfinance institutes, and informal channels affect household welfare in the long term. This study aims to evaluate the long-term impact of different rural credit sources on household welfare indicators. To generate evidence, we use five-round (1988, 2000, 2004, 2008, and 2014) panel datasets of a nationally representative sample survey. We use a household-level panel fixed-effect model to estimate the impact on different outcome indicators. The results suggest that access to rural credit from any source has no significant impact on the increase in the household economic welfare in the long term. However, in the short term, access to bank credit increases the access to rented-in land, improves rice yield, and enhances girls' school enrollment among rural households. The impact estimates are found to be consistent across different model specifications, implying the robust internal validity of the study results. Key words: Long-term impact, panel data, rural credit sources, rural households, economic welfare, Bangladesh.
    Date: 2021–03
  13. By: Maya Goldman; Ingrid Woolard; Jon Jellema
    Abstract: This paper applies the Commitment to Equity (CEQ) Assessment Framework to the 2014/15 Living Conditions Survey for South Africa to analyse the progressivity of the main tax and social spending programs and quantify their impact on poverty and inequality. The tax and social spending system is progressive - the burden of taxes falls on the richest in South Africa and social spending results in sizable increases in the incomes of the poor. Reductions in poverty and inequality are the largest achieved in the emerging market countries that have so far been included in the CEQ. The analysis by gender shows that the fiscal system is partially responsive to the additional burden of childcare borne by women through social transfers such as the child support grant and public healthcare and education services, and partially responsive to inequality of access to labour opportunities through the progressive direct taxation system. However, these impressive results are partly due to high levels of pre-fiscal inequality in the country and due to valuing in-kind benefits from free government services in education and health at the average cost of provision – they do not take into account the significant variation in the quality of the services provided.
    Keywords: fiscal policy, fiscal incidence, social spending, inequality, poverty, taxes, transfers, education, health, housing, South Africa
    JEL: H22 I38 D31
    Date: 2021–01
  14. By: Datta, Sandip (City Montessori School); Kingdon, Geeta G. (University College London)
    Abstract: This paper examines the efficacy of class-size reductions as a strategy to improve pupils' learning outcomes in India. It uses a credible identification strategy to address the endogeneity of class-size, by relating the difference in a student's achievement score across subjects to the difference in his/her class size across subjects. Pupil fixed effects estimation shows a relationship between class size and student achievement which is roughly flat or non-decreasing for a large range of class sizes from 27 to 51, with a negative effect on learning outcomes occurring only after class size increases beyond 51 pupils. The class-size effect varies by gender and by subject-stream. The fact that up to a class-size of roughly 40 in science subjects and roughly 50 in non-science subjects, there is no reduction in pupil learning as class size increases, implies that there is no learning gain from reducing class size below 40 in science and below 50 in non-science. This has important policy implications for pupil teacher ratios (PTRs) and thus for teacher appointments in India, based on considerations of cost-effectiveness. When generalised, our findings suggest that India experienced a value-subtraction from spending on reducing class-sizes, and that the US$3.6 billion it spent in 2017-18 on the salaries of 0.4 million new teachers appointed between 2010 and 2017 was wasteful spending rather than an investment in improving learning. We show that India could save US$ 19.4 billion (Rupees 1,45,000 crore in Indian currency) per annum by increasing PTR from its current 22.8 to 40, without any reduction in pupil learning.
    Keywords: class size, student achievement, India
    JEL: I20 I21
    Date: 2021–03

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