nep-dev New Economics Papers
on Development
Issue of 2022‒09‒19
twelve papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. Quality of sub-national government and regional development in Africa By Iddawela, Yohan; Lee, Neil; Rodríguez-Pose, Andrés
  2. The Growing US-Mexico Natural Gas Trade and Its Regional Economic Impacts in Mexico By Haoying Wang; Rafael Garduno Rivera
  3. Evaluating the Impacts of Minigrid Electrification in Sub-Saharan Africa By Ayhan, Sinem H.; Falchetta, Giacomo; Steckel, Jan C.
  4. Poverty Convergence Clubs By Gustavo A. Marrero; Angel S. Marrero-Llinares; Luis Servén
  5. Electric stoves as a solution for household air pollution: Evidence from rural India By E. Somanathan; Marc Jeuland; Eshita Gupta; Utkarsh Kumar; T. V. Ninan; Rachit Kamdar; Vidisha Chowdhury; Suvir Chandna; Michael H. Bergin; Karoline Barkjohn; Christina Norris; T. Robert Fetter; Subhrendu K. Pattanayak
  6. Patronage and power in rural India: a study based on interaction networks By Anindya Bhattacharya; Anirban Kar; Sunil Kumar; Alita Nandi
  7. Information, Intermediaries, and International Migration By Samuel Bazzi; Lisa Cameron; Simone Schaner; Firman Witoelar
  8. Effects of Intergovernmental Transfers on Income and Poverty Rates: Evidence from the Philippines By Cheng-Tao Tang; Chun Yee Wong; Orelie Bathan Delas Alas
  9. The impact of the JUNTOS conditional cash transfer programme on foundational cognitive skills: Does age of enrollment matter? By Douglas Scott; Jennifer Lopez; Alan Sánchez; Jere Behrman
  10. Immigration, Wages, and Employment under Informal Labor Markets By Delgado-Prieto, Lukas
  11. Does the Minimum Wage Affect Wage Inequality? A Study for the Six Largest Latin American Economies By Carlo Lombardo; Lucía Ramirez-Veira; Leonardo Gasparini
  12. Social cohesion and firms' access to finance in Africa By Yabibal Mulualem Walle

  1. By: Iddawela, Yohan; Lee, Neil; Rodríguez-Pose, Andrés
    Abstract: Despite widespread interest in government quality and economic development, the role of sub-national government has been largely overlooked. This represents an omission in Africa, given ongoing processes of devolution in much of the continent. In this article, we consider the impact of sub-national government institutions on economic development in 339 regions across 22 African countries. We create a novel index of sub-national government quality based on large-scale survey data and assess its impact on regional economies using satellite data on night light luminosity. To address causality concerns, we instrument sub-national government quality with data from pre-colonial societies. Our results show a positive and significant relationship between sub-national government quality and regional economic development, even when controlling for the quality of national-level institutions. Better sub-national governments are a powerful but often overlooked determinant of development in Africa.
    Keywords: institutions; quality of government; regions; Africa; decentralisation
    JEL: N0 R14 J01
    Date: 2021–08–03
  2. By: Haoying Wang; Rafael Garduno Rivera
    Abstract: With the recent administration change in Mexico, the fluctuations in national energy policy have generated widespread concerns among investors and the public. The debate centers around Mexico's energy dependence on the US and how Mexico's energy development should move forward. The goal of this study is two-fold. We first review the history and background of the recent energy reforms in Mexico. The focus of the study is on quantifying the state-level regional economic impact of the growing US-Mexico natural gas trade in Mexico. We examine both the quantity effect (impact of import volume) and the price effect (impact of natural gas price changes). Our empirical analysis adopts a fixed-effects regression model and the instrumental variables (IV) estimation approach to address spatial heterogeneities and the potential endogeneity associated with natural gas import. The quantity effect analysis suggests a statistically significant positive employment impact of imports in non-mining sectors. The impact in the mining sector, however, is insignificant. The state-level average (non-mining) employment impact is 127 jobs per million MCFs of natural gas imported from the US. The price effect analysis suggests a statistically significant positive employment impact of price increases in the mining sector. A one-percentage increase in natural gas price (1.82 Pesos/GJ, in 2015 Peso) leads to an average state-level mining employment increase of 140 (or 2.38%). We also explored the implications of our findings for Mexico's energy policy, trade policy, and energy security.
    Date: 2022–08
  3. By: Ayhan, Sinem H. (Institute for East and Southeast European Studies, Regensburg); Falchetta, Giacomo (IIASA - International Institute for Applied Systems Analysis); Steckel, Jan C. (Mercator Research Institute on Global Commons and Climate Change (MCC))
    Abstract: A large share of the population of sub-Saharan Africa (SSA) lacks access to modern energy services. To bridge the electricity access gap, distributed power generation systems such as minigrids and stand-alone photovoltaic systems emerge as attractive options in the power supply solution space. In this study, we analyze the impact of minigrid electrification on household welfare and agricultural development across SSA countries. The empirical analysis makes use of a novel geocoded database covering 1,888 minigrid projects from 27 SSA countries, which is merged with various data sources including satellite-based nighttime light data, vegetation health index, and Demographic and Health Surveys. Our results indicate that minigrid electrification is positively associated with households’ electricity uptake, ownership of low-power home appliances, and agricultural employment and productivity, while being effective in changing neither overall labor market outcomes nor the choice of cooking fuels.
    Keywords: electricity access, minigrids, household welfare, agriculture, sub-Saharan Africa
    JEL: O13 J43 Q01 Q42 N57
    Date: 2022–07
  4. By: Gustavo A. Marrero (University of La Laguna (CEDESOG)); Angel S. Marrero-Llinares (University of La Laguna (CEDESOG)); Luis Servén (CEMFI)
    Abstract: Global eradication of extreme poverty requires absolute convergence of poverty rates worldwide towards zero. Using data for more than a hundred developing countries over 35 years, we conclude that such goal is likely to remain elusive. Rather than absolute convergence, we find club convergence: countries’ long-run poverty rates cluster into three or four convergence clubs, depending on the specific poverty measure considered. The club-based country classification that results is different from standard classifications based on per capita income. The lowest-poverty club has seen a steady poverty decline, to levels close to zero by the end of the sample period. The intermediate-poverty club(s) exhibit the largest poverty reduction, especially fast since the mid-1990s. In turn, the highest-poverty club, whose member countries comprise almost half the world’s poor in the final year of the sample, evokes a poverty trap: it has seen little change in average poverty over the entire sample period. We find that income plays a bigger role than inequality for club membership, and income growth matters more than initial income; in contrast, initial inequality plays a bigger role than its changes over time. High initial income and low initial inequality almost invariably drive countries into the lowest-poverty club, while weak growth and low initial income are the key drivers of membership in the highest-poverty club. Inequality plays a more substantive role for membership in intermediate-poverty clubs.
    Keywords: Absolute Poverty, Convergence clubs, Income growth, Inequality, Developing countries.
    JEL: D31 I3 O11 O4
    Date: 2022–09
  5. By: E. Somanathan (Indian Statistical Institute, Delhi); Marc Jeuland (Duke University, RWI-Leibniz Institute for Economic Research); Eshita Gupta (KPMG India); Utkarsh Kumar (Indian Statistical Institute, Columbia Univeristy); T. V. Ninan (Indian Statistical Institute, University of Washington); Rachit Kamdar (Indian Statistical Institute, University of Maryland); Vidisha Chowdhury (Indian Statistical Institute); Suvir Chandna (Indian Statistical Institute, United Nations Development Programme); Michael H. Bergin (Duke University); Karoline Barkjohn (Duke Univesity, US Environmental Protection Agency); Christina Norris (Duke University); T. Robert Fetter (Duke University); Subhrendu K. Pattanayak (Duke University)
    Abstract: We collected minute-by-minute data on electricity availability, electric induction stove use, and kitchen and outdoor particulate pollution in a sample of rural Indian households for one year. Using within household-month variation generated by unpredictable outages, we estimate the effects of electricity availability and electric induction stove use on kitchen PM2.5 concentration at each hour of the day. Electricity availability reduces kitchen PM2.5 by up to 50 μg/m3, which is between 10 and 20 percent of peak concentrations during cooking hours. Induction stove use instrumented by electricity availability reduces PM2.5 in kitchens by 200-450 μg/m3 during cooking hours
    Keywords: household air pollution, indoor air pollution, induction cookstoves, electricity reli- ability
    Date: 2022–08
  6. By: Anindya Bhattacharya; Anirban Kar; Sunil Kumar; Alita Nandi
    Abstract: This work has two intertwined components: first, as part of a research programme it introduces a new methodology for identifying `power-centres' in rural societies of developing countries in general and then applies that in the specific context of contemporary rural India for addressing some debates on the dynamics of power in rural India. We identify the nature of `local' rural institutions based on primary data collected by ourselves (in 2013 and 2014). We took 36 villages in the states of Maharashtra, Odisha and Uttar Pradesh - 12 in each of these states - as the sites for our observation and data collection. We quantify nature of institutions from data on the day-to-day interactions of households in the spheres of economy, society and politics. Our household survey shows that there is substantial variation in power structure across regions. We identified the presence of `local elites' in 22 villages out of 36 surveyed. We conducted a follow-up survey, called `elite survey', to get detailed information about the identified elite households. We observe that landlordism has considerably weakened, land has ceased to be the sole source of power and new power-centres have emerged. Despite these changes, caste, landownership and patron-client relation continue to be three important pillars of rural power structure.
    Date: 2022–08
  7. By: Samuel Bazzi (University of California - San Diego, NBER, and CEPR); Lisa Cameron (University of Melbourne); Simone Schaner (University of Southern California and NBER); Firman Witoelar (Australian National University)
    Abstract: Job seekers face substantial information frictions, especially in international labor markets where intermediaries match prospective migrants with overseas employers. We conducted a randomized trial in Indonesia to explore how information about intermediary quality shapes migration outcomes. Holding access to information about the return to choosing a high-quality intermediary constant, intermediary-specific quality disclosure reduces the migration rate, cutting use of low-quality providers. Workers who do migrate receive better pre-departure preparation and have improved experiences abroad, despite no change in occupation or destination. These results are not driven by changes in beliefs about average provider quality or the return to migration. Nor does selection explain improved outcomes for those who migrate with quality disclosure. Together, our findings are consistent with an increase in the option value of search: with better ability to differentiate offer quality, workers search longer, select higher-quality intermediaries, and ultimately have better migration experiences.
    Keywords: International migration, information, middlemen, quality disclosure, search
    JEL: F22 O15 D83 L15
    Date: 2022–08
  8. By: Cheng-Tao Tang (IUJ Research Institutey, International University of Japan); Chun Yee Wong (IUJ Research Institutey, International University of Japan); Orelie Bathan Delas Alas
    Abstract: This paper investigates the effects of intergovernmental transfers on the development outcomes by exploiting a formula-based transfer scheme among the Philippine municipalities and cities. The results suggest that the household disposable income per capita increases 9.6 percent in the long run as a result of extra transfers of 1000 Philippine pesos per capita in the Philippine local governments. However, the poverty rate increases by around 5 percentage points in the long run. The income gains, associated with higher poverty rate, mainly occur in small and less-developed LGUs (i.e., municipalities). Furthermore, there exist a large stimulatory effect on local spending and a small effect on local tax revenue reduction due to extra grant transfers.
    Keywords: Intergovernmental transfer, income, poverty, instrumental variable, the Philippines
    Date: 2022–08
  9. By: Douglas Scott (University of Oxford); Jennifer Lopez (Grupo de Análisis para el Desarrollo (GRADE)); Alan Sánchez (Grupo de Análisis para el Desarrollo (GRADE)); Jere Behrman (University of Pennsylvania)
    Abstract: This paper studies the relationship between the age of enrolment in Peru’s conditional cash transfer programme, JUNTOS, and the foundational cognitive skills of a sample of children aged between 5 and 12 years old. Using a difference-in-differences approach and exploiting within-household variation, we show that younger siblings in recipient households display significantly higher levels of inhibitory control than their older counterparts (0.11 standard deviations), having benefited from the programme for the first time at a relatively earlier age. In high-income countries, this behavioural trait has been linked to later-life outcomes such as job success, physical health, and even reduced risk of criminality. Conversely, we find little evidence that enrolment age is associated with long-term memory, working memory, or implicit learning. Employing a threshold estimator, we show that relative gains in inhibitory control are most clearly defined where a child benefits from the programme before they reach 80 months of age (6.7 years). In an extension to our main results, we then conduct mediation analysis, demonstrating that a small but meaningful proportion of this benefit (6.5%) operates through changes in the probability of the child’s timely entry into primary school.
    Keywords: Cognitive skills; JUNTOS; conditional cash transfer; Peru; inhibitory control
    JEL: J24 I24
    Date: 2022–09–06
  10. By: Delgado-Prieto, Lukas
    Abstract: This paper studies the labor market impacts of Venezuelan immigrants in Colombia. Exploiting spatial variation in exposure, I nd a negative e ect on native wages driven by the informal sector (where immigrants are concentrated) and a reduction in native employment in the formal sector (where the minimum wage binds for many workers). To explain this asymmetry, I build a model in which rms substitute formal for informal labor in response to lower informal wages. Consistent with the model's predictions, I document that the increase in informality is driven by small rms that use both labor types in production.
    Keywords: Immigration; Event study; Labor market; Informality
    JEL: F22 O15 O17 R23
    Date: 2022–08
  11. By: Carlo Lombardo (CEDLAS-IIE-FCE-UNLP & CONICET); Lucía Ramirez-Veira (CEDLAS-IIE-FCE-UNLP & CONICET); Leonardo Gasparini (CEDLAS-IIE-FCE-UNLP & CONICET)
    Abstract: Minimum wage (MW) policies are widespread in the developing world and yet their effects are still unclear. In this paper we explore the effect of national MW policies in Latin America’s six largest economies by exploiting the heterogeneity in the bite of the national minimum wage across local labor markets and over time. We find evidence that the MW has a compression effect on the wage distribution of formal workers. The effect was particularly large during the 2000s, a decade of sustained growth and strong labor markets. In contrast, the effect seems to vanish in the 2010s, a decade of much weaker labor markets. We also find suggestive evidence of a lighthouse effect: the MW seems to have an equalizing effect also on the wage distribution of informal workers.
    JEL: J22 J31 J38 K31
    Date: 2022–09
  12. By: Yabibal Mulualem Walle
    Abstract: Social cohesion has recently gained increasing attention in academic and policy circles. Apart from being a necessary feature of stable societies per se, social cohesion is also a key factor for sustainable economic development. One potential means through which social cohesion could foster economic development is by enhancing financial development. In this paper, we examine whether social cohesion is significantly associated with firms' access to finance in Africa. To this end, we use a recently constructed dataset on social cohesion in Africa, which is based on the Afrobarometer survey and the Varieties of Democracy database. The dataset contains indices for the three pillars of social cohesion - trust, inclusive identity and cooperation for the common good. Combining this dataset with that of the World Bank Enterprise Surveys, we build a sample which covers more than 12,500 firms and 27 African countries. Our results show that all three components of social cohesion are positively associated with at least one measure of firms' access to external finance. In particular, trust - but not inclusive identity and cooperation for the common good - is significantly associated with the likelihood that firms have a checking or savings account, or are financially constrained. When we measure access to finance with respect to having a line of credit or a loan from a financial institution, all the three pillars of social cohesion, including inclusive identity and cooperation for the common good, are related to access to finance. The results are robust to addressing endogeneity concerns using a heteroskedasticity-based identification strategy. Overall, our results suggest that improving social cohesion (e.g. through social protection, education, strengthening civil society organisations) could do more than hold society together; it could also promote access to finance, growth of firms, and thus economic development and job creation.
    Keywords: access to finance,social cohesion,trust,cooperation for the common good,identity,Africa
    Date: 2022

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