nep-dev New Economics Papers
on Development
Issue of 2022‒01‒31
eight papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. 40 Years of Dutch Disease Literature: Lessons for Developing Countries By M Goujon; Edouard Mien
  2. Intrahousehold Responses to Imbalanced Human Capital Subsidies: Evidence from the Philippine Conditional Cash Transfer Program By Raitzer, David; Batmunkh, Odbayar; Yarcia, Damaris
  3. Weather Shocks and Economic Activity. Evidence from the Philippines By Pardillo, Marvin
  4. Do mobile phones empower women? A perspective from rural India By Chen, Jingjing
  5. Intra-Household Management of Joint Resources: Evidence from Malawi By Anna Josephson
  6. Complementarities and Intergenerational Educational Mobility: Theory and Evidence from Indonesia By Ahsan, Nazmul; Emran, M. Shahe; Shilpi, Forhad
  7. Has access to health insurance through the Indonesian social security system improved people’s understanding of health issues? Evidence from a national survey By Indra Kurniawan, Muhammad
  8. Diversity matters in the world of finance: does ethnic and religious diversity hinder financial development in developing countries By Amin, S.; Murshed, S.M.

  1. By: M Goujon (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique); Edouard Mien (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)
    Abstract: This paper surveys the "Dutch disease" literature in developing and emerging countries. It describes the original model of Dutch disease and some main extensions proposed in the theoretical literature, focusing on the ones that match developing countries' conditions. It then reviews various empirical studies that have been conducted and provides evidence that the Dutch disease is still an issue for many developing countries. Finally, it discusses the gaps in the theoretical and empirical literature for understanding the suitable policy instruments to cope with Dutch disease.
    Keywords: Real exchange rate. JEL Codes: O13 • O14 • Q32 • Q33,Resource curse,Structural transformations,Natural resources,Dutch disease
    Date: 2021–11–23
  2. By: Raitzer, David (Asian Development Bank); Batmunkh, Odbayar (Asian Development Bank); Yarcia, Damaris (Asian Development Bank)
    Abstract: Extensive global evidence suggests that conditional cash transfers (CCTs) encourage long-term investment in human capital by poor households. However, CCTs also have the potential to distort incentives for investment among children. If only some children in the household are monitored/subsidized for compliance with conditionalities, returns to household investment in those children increase relative to siblings who are unmonitored/unsubsidized. This paper demonstrates that puzzling nutrition effects of the Philippine CCT are driven by effects on children unmonitored for educational compliance, due to a cap of monitoring at most three children per household. Regression discontinuity design interacted with a secondary instrument for monitoring finds that while monitored children have improved human capital investment, such investment declines for unmonitored children relative to nonbeneficiaries. Patterns are consistent for parental expectations, health, anthropometric, and educational outcomes, and are stronger for boys, in accordance with theoretical expectations. Equalized incentives among children can enhance intended CCT effects.
    Keywords: social protection; conditional cash transfer; human capital; intrahousehold allocation
    JEL: D13 D91 I24 I38
    Date: 2021–12–31
  3. By: Pardillo, Marvin (Monash University)
    Abstract: As global temperatures continue to rise, strategies to mitigate the adverse effects of weather shock events become crucial. While previous studies have analysed the effect of climatic variation on economic activity at the national level, there is a lack of understanding of the developmental effects of weather shocks at the subnational level. This study uses monthly night light data captured by Visible Infrared Imaging Radiometer Suite (VIIRS) and weather data to examine the effect of weather shock events at the municipal level in the Philippines. We find that excesses and shortages in monthly rainfall are associated with a decrease in the level of economic activity. We also find that lower temperatures are associated with an increase in the level of economic activity whereas higher temperatures are associated with a decrease in economic activity.
    Keywords: Philippines ; rainfall shocks ; temperature Shocks and night lights JEL Classification: Q54 ; Q58 ; R12
    Date: 2021
  4. By: Chen, Jingjing (University of Warwick)
    Abstract: Empowerment for girls and women, Goal 5 for the Sustainable Development Goals, is the key for economic development. As mobile phones become cheaper and more prevalent, a growing number of researchers are investigating their impact on women's empowerment. Most previous research has relied on interviews and cross-sectional data, so their conclusion limited to the association rather than establishing the causal relationship between mobile phones and female empowerment. This paper used Indian Human Development Survey 2005 and 2011-2012 to study the association between mobile phone ownership and women's empowerment in rural India. Then difference in- difference strategy was applied to identify the causal impact of village mobile phone service installation on female empowerment. Like previous studies, the results from this paper suggest that mobile phone ownership was associated with higher women's empowerment. Moreover, mobile phone service installation increased women's involvement in decision-making process but it decreased female labour force participation and contraceptive usage in rural India.
    Keywords: gender equality ; empower women ; mobile phones ; decision making power ; freedom of movement JEL Classification: J12 ; J13 ; J16
    Date: 2021
  5. By: Anna Josephson
    Abstract: In models of intra-household resource allocation, the earnings from joint work between two or more household members are often omitted. Accounting for income earned jointly by multiple household members, in addition to income earned individually by men and women, I test the assumption of complete pooling of resources within a household. By explicitly including intra-household collaboration, I find evidence of partial income pooling and partial insurance within the household. Pooling is an intentional behavior, in which households pool income for essential and regular expenditures. This indicates that households operate differently and more collaboratively than previous empirical findings suggest.
    Date: 2021–12
  6. By: Ahsan, Nazmul; Emran, M. Shahe; Shilpi, Forhad
    Abstract: We provide a theory based empirical analysis of the role of two types of complementarities in intergenerational educational mobility. We develop a model where parental financial investment in children’s schooling can be complementary to or a substitute of school quality and parent’s education level. Such complementarities can make the mobility equation convex with starkly different mobility patterns compared to the workhorse linear model. Mobility and investment equations derived from the model are estimated for Indonesia, using exceptional data that allow us to tackle two major sources of bias: coresidency and cognitive ability heterogeneity. We find that the mobility equation is convex in rural but linear in urban areas. The children of low educated fathers enjoy higher relative mobility in rural areas, while the urban children fare better in highly educated households. The standard linear model in rural areas incorrectly suggests no rural-urban gap in relative mobility. Theoretical insights help interpret the evidence, suggesting complementarity between financial investment and parental education in both rural and urban areas even though the mobility curve is linear in urban areas. We develop an approach to recover the parameters determining the interaction between school quality and parental investment. School quality is complementary to financial investment in rural areas, with stronger effect in more educated households. In urban areas, school quality is a substitute in low educated households, but complementary in the highly educated households. These results imply that public investment in school quality would lower relative mobility in Indonesia
    Keywords: Intergenerational Educational Mobility, Complementarity, Convex Mobility Curve, School Quality, Rural-Urban Divide, Returns to Education, Coresidency, Sample Truncation, Ability Heterogeneity, Developing Countries, Indonesia
    JEL: J62 O12
    Date: 2021–12–16
  7. By: Indra Kurniawan, Muhammad (Monash University)
    Abstract: This essay studies the national health insurance system’s impacts on health awareness in Indonesia. I estimate the effects of the insurance enrolment on health knowledge and health behaviour changes after the launch of compulsory social health insurance. Individuals who are less aware of their health may contribute to moral hazard in health insurance. I apply the difference-in-differences method to compare treatment and control groups and the before-after period of the intervention in 2014. Data from the Indonesia Demographic and Health Survey is utilised in this study. Results indicate that social health insurance is negatively correlated with the propensity of knowing certain diseases and contraceptive methods. The scheme adversely affects individuals’ smoking behaviour. Therefore, improving promotive and preventive programs throughout the insurance’s benefits is essential.
    Keywords: National Health Insurance Scheme (NHIS) ; Health behaviour ; Insured and uninsured ; Indonesia JEL Classification: H51 ; I12 ; I13 ; I18
    Date: 2021
  8. By: Amin, S.; Murshed, S.M.
    Abstract: This paper investigates the relationship between ethnic and religious diversity and financial development by using the data for 102 developing countries. It is widely accepted that financial depth, and the more ready availability of finance, has a central role to play in fostering economic growth. We hypothesize that financial development in developing countries, especially those at the early stages of economic development, may be retarded by pre-existing ethnic and religious diversity, which may produce conflict. However, we believe that this risk can be moderated by sound institutional functioning – including good governance and democracy. Financial depth is measured by M2 and private credit (as a percentage of GDP); the Alesina fragmentation index is used for measuring ethnic and religious diversity, varieties of democracy (VDEM) and the quality of governance datasets. Our results are supportive of our hypothesis that ethnic and religious diversity can indeed hamper financial development; these risks, however, are mitigated by well-functioning institutional arrangements
    Keywords: Ethnic diversity, religious diversity, financial development
    JEL: Z10 Z13 G0
    Date: 2022–01–10

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