nep-dev New Economics Papers
on Development
Issue of 2024‒05‒27
seventeen papers chosen by
Jacob A. Jordaan, Universiteit Utrecht

  1. The Great Reversal By Tommy Chrimes; Bram Gootjes; M. Ayhan Kose; Collette Wheeler
  2. (De facto) Historical Ethnic Borders and Contemporary Conflict in Africa By Depetris-Chauvin, Emilio; Özak, Ömer
  3. Globalization, Trade, and Inequality: Evidence from a New Database By Borchert, Ingo; Larch, Mario; Shikher, Serge; Yotov, Yoto
  4. Watts happening to work? The labour market effects of South Africa's electricity crisis By Haroon Bhorat; Timothy Köhler
  5. Household Electricity Consumption Inefficiency and Poverty: Evidence from Ghana By Twerefou, Daniel Kwabena; Abeney, Jacob Opantu; Toman, Michael; Turkson, Festus Ebo; Baffour, Priscilla Twumasi
  6. The Impact of Rainfall Shock on Child Labor: The Role of the Productive Safety Nets Program and Credit Markets in Ethiopia By Yohannes , Dereje; Lindskog, Annika
  7. Private Benefits from Ambient Air Pollution Reduction Policies: Evidence from the Household Heating Stove Replacement Program in Chile By Uribe, Adolfo; Chávez, Carlos; Gómez, Walter; Jaime, Marcela; Bluffstone, Randy
  8. Livelihoods in Sudan amid armed conflict: Evidence from a national rural household survey By International Food Policy Research Institute; United Nations Development Programme
  9. Does Farm Size Matter for Food Security Among Agricultural Households? Analysis of Indonesia’s Agricultural Integrated Survey Results By Ruslan, Kadir; Prasetyo, Octavia Rizky
  10. The Impact of Caste on Income Disparity in India Today. A Pan-India Panel Data Approach By Chandra, Sonal; Chong, Terence Tai Leung
  11. Firms and inequality in Latin America By Eslava, Marcela; Meléndez, Marcela; Ulyssea, Gabriel; Urdaneta, Nicolás; Flores, Ignacio
  12. The potential of universal basic income schemes to mitigate shocks: Comparing the performance of universal basic income in Uganda and Zambia during COVID-19 By Enrico Nichelatti; Maria Jouste; Pia Rattenhuber
  13. Drought, Livestock Holding, and Milk Production: A Difference-in-Differences Analysis By Abebe, Meseret B.; Alem, Yonas
  14. Urbanization, climate change, and structural transformation in Accra, Ghana By Michael Danquah; Bazoumana Ouattara; Williams Ohemeng; Alfred Barimah
  15. We can incorporate agriculture ecosystems into urban green economy in Tanzania: Dar es Salaam households are willing to pay By Tibesigwa, Byela; Ntuli, Herbert; Muta, Telvin
  16. Willingness to Pay for Nature Restoration and Conservation in Sub-Saharan African Cities: The Case of Forests, Rivers and Coasts in Dar es Salaam, Tanzania By Tibesigwa, Byela; Ntuli, Herbert; Muta, Telvin
  17. Employment Formalization in Indonesia: Role of Parents’ Employment Mobility Toward Children’s Employment Mobility By Ruslan, Kadir; Sukma, Weni Lidya

  1. By: Tommy Chrimes; Bram Gootjes; M. Ayhan Kose; Collette Wheeler
    Abstract: The shock of the pandemic and subsequent overlapping crises has led to a reversal in development by exacerbating the challenges facing the most vulnerable 75 economies eligible for concessional loans and grants from the World Bank’s International Development Association (IDA). Over 2020-24, per capita incomes in half of IDA countries—the largest share since the start of this century—have been growing more slowly than those of wealthy economies. One out of three IDA countries is poorer than it was on the eve of the pandemic. Poverty remains stubbornly high, hunger has surged, and, amid fiscal constraints and rising investment needs, the development outlook could take an even bleaker turn—especially if weak growth prospects persist. IDA countries have several important demographic and resource advantages that could—if leveraged effectively—help close development gaps. Reaping the benefits of their advantages and meeting investment needs will require them to undertake comprehensive policy measures to bolster fiscal and monetary frameworks, enhance human capital development, and improve the quality of institutions. These policies should be complemented with significant and consistent international financial support as well as strong cooperation on global policy issues.
    Keywords: International Development Association, IDA, stagnation, convergence, development gap
    JEL: E6 F00 I00 J11 O1 Q00
    Date: 2024–05
  2. By: Depetris-Chauvin, Emilio; Özak, Ömer (Southern Methodist University)
    Abstract: We explore the effect of historical ethnic borders on contemporary conflict in Africa. We document that the intensive and extensive margins of contemporary conflict are higher close to historical ethnic borders. Exploiting variations across artificial regions within an ethnicity's historical homeland and a theory-based instrumental variable approach, we find that regions crossed by historical ethnic borders have 27 percentage points higher probability of conflict and 7.9 percentage points higher probability of being the initial location of a conflict. We uncover several key underlying mechanisms: competition for agricultural land, population pressure, cultural similarity, and weak property rights.
    Date: 2024–05–02
  3. By: Borchert, Ingo (University of Sussex Business School); Larch, Mario (University of Bayreuth); Shikher, Serge (United States International Trade Commission); Yotov, Yoto (Yoto V. Yotov, Drexel University,
    Abstract: We introduce the International Trade and Production Database for Simulation (ITPD-S) and use it, in combination with the International Trade and Production Database for Estimation (ITPD-E), to quantify the impact of globalization on bilateral trade, real income, and inequality in the world at the industry level in 1990-2019. To perform the analysis, we rely on a new quantitative trade model, which enables us to estimate the magnitude of globalization and then perform a counterfactual analysis of the impact of globalization on real output within the same framework. Our estimates reveal that, on average, bilateral globalization forces have led to a remarkable increase in international trade of about 570%, between 1990 and 2019, with very wide but intuitive variation across industries. Our counterfactual analysis reveals that globalization has benefited most countries but relatively more so smaller and more open economies, which are typically developing countries. As a result, this ‘catch-up’ implies less cross-country income inequality.
    Keywords: Trade dataset; Domestic trade; Globalization; Inequality; Disaggregated simulation analysis; Gravity
    JEL: F10 F14 F63 O11 O19
    Date: 2024–05–15
  4. By: Haroon Bhorat; Timothy Köhler
    Abstract: Frequent electricity outages threaten to impede the benefits of expanded access achieved by many developing countries in recent decades. A large literature documents these negative effects, however almost none consider labour market effects. This paper merges labour force survey microdata with high-frequency electricity supply and demand data to provide the first estimates of the relationships between outages and labour market outcomes in South Africa, a country characterized by frequent, severe outages referred to as load shedding.
    Keywords: Electricity, Labour market, Developing countries, South Africa
    Date: 2024
  5. By: Twerefou, Daniel Kwabena (University of Ghana); Abeney, Jacob Opantu (University of Ghana); Toman, Michael (World Bank); Turkson, Festus Ebo (University of Ghana); Baffour, Priscilla Twumasi (University of Ghana)
    Abstract: Demand-side management of energy consumption using energy efficiency improvements has the potential to reduce poverty in addition to reducing greenhouse emissions. However, very little is known about the impact of electrical energy consumption inefficiency on poverty. Using data from a household survey and the Ordinary Least Square estimation technique, we first assess the impact of household electricity consumption efficiency on multidimensional poverty using a stochastic energy demand frontier model. Next, we estimate the impact of electricity consumption efficiency on consumption poverty based on a probit model. The results show that a percentage increase in energy efficiency reduces multidimensional poverty by approximately 9.4 percentage points while for lower and upper consumption poverty, the probabilities reduce by approximately 10.2% and 14.3% respectively. Male-headed households are more likely to experience poverty than female-headed households. Multidimensional poverty is reduced more for risk-taking households than risk-averse ones. However, being risk-neutral is not enough to reduce the probability of household consumption poverty. Education in both cases is found to significantly reduce the probability of being poor. We recommend that government should encourage demand-side management of electricity through efficiency improvement options such as star ratings and appliance rebate systems and also increase awareness of energy efficiency as a way of addressing poverty.
    Keywords: Households; Electricity Consumption; Efficiency; Environment; Poverty
    JEL: I32 Q01 Q42
    Date: 2023–07–17
  6. By: Yohannes , Dereje (Addis Ababa University); Lindskog, Annika (University of Gothenburg, Department of Economics)
    Abstract: This paper examines the impact of positive and negative rainfall shocks on child labor in agricultural households in Ethiopia. We are the first to investigate how the presences of a public works program affect the child labor response to rainfall shocks. We also investigate heterogeneity with respect to access to local credit markets, and we use the timing of survey collection and Ethiopia’s two growing seasons to investigate both immediate effects of rainfall variation in the Belg (short rainy season) and more long-term effects of rainfall variation in the Meher (long rainy season). Using household panel data matched with geospatial rainfall data, we find the following: (1) the prevalence of child labor is higher after a positive Meher-season rainfall shock and lower after a negative one, in line with a productivity effect which dominates possible income effects. (2) The immediate impact of a negative Belg season rainfall shock is, however, to increase child labor, probably because tasks typically carried out by children, such as fetching water and herding livestock, take longer during droughts. (3) The PSNP mitigates the child labor effects of positive Meher season rainfall shocks. (4) Access to credit mitigates the increase in agricultural work hours but exacerbates the increase in household work hours immediately after a negative Belg season rainfall shock.
    Keywords: Rainfall shock; Child Labor; PSNP; Credit Market; Ethiopia
    JEL: J13
    Date: 2023–12–19
  7. By: Uribe, Adolfo (Universidad de Talca); Chávez, Carlos (Universidad de Talca); Gómez, Walter (Universidad de la Frontera); Jaime, Marcela (School of Management and Business, Universidad de Concepción); Bluffstone, Randy (Portland State University and EfD Initia)
    Abstract: We estimate the key private benefits from a program to improve ambient air quality during winter in central Chile by replacing inefficient wood-fired home heating stoves with more efficient pellet stoves. We are interested in the private benefits to households because they represent the additional value of the program and likely drive private adoption. Combining electronic stove surface temperature and air pollution monitoring with household surveys, we estimate the effects of adoption on household fuel expenditures, indoor temperatures, and indoor air pollution concentrations (PM2.5). We also explore heterogeneous effects of the program by income group and energy poverty status. Our results suggest that, after controlling for observable characteristics of individuals and dwellings, users of pellet stoves on average enjoy 14% lower indoor PM2.5 concentrations compared with those who have traditional stoves. Lower-income and energy-poor households receive much greater than average improvements in indoor air pollution than those with higher-incomes, driving the overall sample estimate and indicating that the program is progressive in this dimension. While those who use more efficient pellet stoves have more stable indoor temperatures than those using traditional stoves, we find no differences in mean temperatures. The improved heating stove has significantly higher operating costs, and we find that these costs are most salient for low-income and energy-poor households.
    Keywords: Air pollution; energy transition; environmental policies; household behavior; heating; stoves
    JEL: C21 Q48 Q52 Q55 Q58
    Date: 2022–10–24
  8. By: International Food Policy Research Institute; United Nations Development Programme
    Abstract: Analysis of a comprehensive survey of Sudanese rural households conducted from November 2023 to January 2024 by IFPRI and UNDP reveals significant socioeconomic impacts of the ongoing armed conflict on the Sudanese population, underscoring the need for immediate and targeted policy and programmatic interventions. The conflict has severely disrupted rural household incomes and exacerbated existing vulnerabilities related to their housing and access to infrastructure and services. Most households live in inadequate housing conditions, with disparities in access to water, electricity, and sanitation services posing additional challenges. Rural households’ low access to assets, including agricultural land, further complicates their livelihoods. The conflict, primarily concentrated in urban areas, particularly Khartoum, has triggered mass migration, with significant numbers relocating to states like Aj Jazirah and Gedaref. These migrants, often from relatively better-off backgrounds, face substantial income losses, necessitating basic needs support and enhanced provision of public services, particularly for the large families that are more likely to migrate. Agriculture, a critical sector for rural livelihoods, has been significantly affected across all states. Most households reported not cultivating land during the summer season of 2023 due to the conflict. The sharp reduction in the area of crops planted underscores the need for support for farming activities, particularly for smallholder households. The survey highlights extensive exposure to shocks among rural households, with personal shocks, such as illnesses among household members, being the most common. Natural and climatic shocks, although less prevalent, alongside conflict-related shocks, like theft and violence, emphasize the complex challenges faced by these communities. Market access and disruptions have further impacted rural households, with a considerable proportion of rural households unable to sell or buy goods, primarily due to high prices and sharp reductions in income for most households. These market challenges, coupled with the overall economic instability, necessitate interventions aimed at maintaining and improving market accessibility and functionality to promote recovery and resilience. The findings from the analysis of the survey data lend support to designing and implementing comprehensive strategies that address the immediate needs of displaced populations and other rural households affected by income losses and market disruptions. Enhancing public services, supporting livelihoods, building resilience through shock-responsive social protection systems, agricultural and economic interventions, and ensuring equitable access to resources and markets for all households, particularly those headed by women and vulnerable groups, are the principal policy recommendations that emerged from this analysis. This study of rural household livelihoods amid the armed conflict in Sudan provides a foundation for targeted interventions and policy reforms aimed at mitigating the conflict’s impacts and fostering long-term resilience and economic stability.
    Keywords: livelihoods; armed conflicts; household surveys; impact assessment; migration; resilience; food security; assets; market access; shock; Africa; Northern Africa; Sudan
    Date: 2024
  9. By: Ruslan, Kadir; Prasetyo, Octavia Rizky
    Abstract: Most agricultural households in Indonesia are small-scale farmers making them prone to food insecurity. Until recently, no study has assessed the impact of farm size and sociodemographic characteristics on the food insecurity status of agricultural households using a nationwide agricultural household survey in Indonesia. Our study aims to address this gap by utilizing the results of the first Indonesian Agricultural Integrated Survey conducted by BPS in 2021. Applying the Rasch Model, Multinomial Logistic Regression, and Ordinary Least Squares Regression, we found that the farm size has a positive impact in lowering the likelihood of experiencing moderate or severe levels of food insecurity among agricultural households. Our study also found that agricultural households with a higher probability of being food insecure are characterized by having higher members of households, relying only on agricultural activities for their livelihood, lower education attainment of household heads, and being led by female farmers.
    Keywords: food security, FIES, AGRIS, small-scale food producers
    JEL: Q1 Q12 Q15 Q18
    Date: 2023–10–10
  10. By: Chandra, Sonal; Chong, Terence Tai Leung
    Abstract: India has enacted several affirmative action policies since the 1990s to benefit the lower castes. This paper investigates if caste still affect an individual’s income in India today. Previous studies in this field have focused on specific regions or castes, and there is a dearth of pan-India empirical studies using panel data to investigate the relationship between caste and income. There is also a lack of studies that highlight the factors that help accentuate or ameliorate the caste-based income disparity in India. This paper addresses these gaps. The sample used for this paper is composed of respondents from all across India. Using the Indian Human Development Survey (IHDS) panel data, it is found that although the impact of caste on income has reduced, lower caste individuals’ income is still lower than that of their upper caste counterparts. The paper also finds evidence that the effects of caste on income are ameliorated in rural areas and that higher state-level GDP per capita and attainment of at least high school-level qualifications also contribute to reducing the impact of caste on income. Finally, this paper finds that the lower the caste, the stronger the ameliorating effect of attaining a high school-level qualification and state-level GDP per capita.
    Keywords: Caste; Income Disparity; India
    JEL: D31 J71 O15
    Date: 2024–04–08
  11. By: Eslava, Marcela; Meléndez, Marcela; Ulyssea, Gabriel; Urdaneta, Nicolás; Flores, Ignacio
    Abstract: The relationship between firms and inequality has been a focus of recent attention globally. This chapter summarizes basic facts about this relationship for Latin America. Unlike advanced economies where superstar firm growth has prompted concerns over disproportionate income growth at the top, the facts we summarize illustrate that the main concern for Latin America is the extreme prevalence of tiny businesses whose workers and owners tend to populate the bottom income segments. The empirical likelihood that these businesses improve their productivity and grow to hire more workers and pay better wages is also very low. The region displays a deficit of employment generation in SMEs, by contrast to both microbusinesses (including self-employment) and large corporations. While the former tend to remunerate both workers and owners with very low incomes, the latter pay high wages but also exhibit low labor shares.
    JEL: E20 J21 O54
    Date: 2024–04–01
  12. By: Enrico Nichelatti; Maria Jouste; Pia Rattenhuber
    Abstract: The debate over universal basic income (UBI) has gained traction in the developing world in recent years. We analyse the effects of four UBI schemes on poverty and inequality measures during normal times and times of crisis in Uganda and Zambia. We use static microsimulation models and nationally representative household surveys for each country. Our results show that in Zambia, where the existing social protection benefits have more extensive coverage, the least generous UBI benefit leads to higher poverty and inequality compared to existing benefits.
    Keywords: Universal basic income, COVID-19, Microsimulation, Poverty, Inequality
    Date: 2024
  13. By: Abebe, Meseret B. (Addis Ababa University); Alem, Yonas (University of Gothenburg and Jameel Poverty Action Lab (J-PAL))
    Abstract: We identify the effects of the 2015-16 El-Niño-induced large-scale drought on smallholder farmers’ livestock holding and milk production. The drought reduced milk production and livestock holding by 28.5% and 8.7%, respectively. Heterogenous impact analysis suggests that asset-rich households sold livestock and financed feed purchases, likely insulating milk production from the drought. In contrast, assetpoor households kept their livestock at all costs and absorbed all the decline in milk production. Our findings have important implications for formulating safety net and adaptation programs targeting smallholder farmers and the livestock sector in a rapidly changing climate.
    Keywords: Drought; diff-in-diff; climate change; livestock holding; Ethiopia
    JEL: D13 O13 O44 Q18 Q54
    Date: 2023–07–17
  14. By: Michael Danquah; Bazoumana Ouattara; Williams Ohemeng; Alfred Barimah
    Abstract: This study examines the effect of climate on citywide labour productivity in the Accra city region. We use data from Ghana's Integrated Business and Establishment Survey dataset, climate data at the sub-city level from Ghana Meteorological Agency, and satellite and reanalysis data, as well as key informant interviews with representatives of enterprises and city authorities and officials of the National Disaster Mobilization Agency, for this exercise.
    Keywords: Urbanization, Structural transformation, Climate, Climate change, Ghana
    Date: 2024
  15. By: Tibesigwa, Byela (University of Dar Es Salaam); Ntuli, Herbert (EfD - Environmental Policy Research Unit (EPRU) in the School of Economics at the University of Cape Town); Muta, Telvin (Jomo Kenyatta University of Agriculture and Technology (JKUAT) in Nairobi, Kenya)
    Abstract: We are living in a crisis era, with competing land-use for finite land and ill-informed myopic urban land-use policies that remain stagnant, in a world with rapidly changing urban environment, such as the mushrooming urban agriculture. While smallholder farms in and around cities, in sub-Saharan Africa, provide many ecosystem services including boosting household income and nutrition, access to land constrains these benefits. This paper examines the willingness to pay for urban farm plots, using a random parameter logit model. The estimation reveals that the marginal WTP for irrigation is US$19.47 per plot. With regard to plot size, households are willing to pay US$6.09 per hectare, while WTP for the distance to the plot is US$3.95per km per annum. WTP for an irrigated plot is about three times that of plot size and almost five times that of distance to the plot, a signal of adaptation to climate change due to extreme weather changes and water shortages in Tanzania. There is a high preference for mixed cropping, i.e., mixed vegetables and fruits. Approximately 10% of the households prefer purely subsistence farming, i.e., retaining all harvest for own consumption. The remaining 90% prefer semi-subsistence, where 57% would retain a quarter of the harvest for consumption, 27% would retain half and 6% would retain three-quarters, suggesting that farms would increase urban households’ food security. Our paper nudges policymakers to interrogate current policies and craft future inclusive green economy strategies that include urban agriculture and irrigation infrastructure.
    Keywords: land; urban farms; agriculture ecosystems; WTP; green economy; Tanzania
    JEL: Q57
    Date: 2022–12–09
  16. By: Tibesigwa, Byela (Environment for Development (EfD) in Tanzania, University of Dar Es Salaam; and a Research Associate at the Environmental Policy Research Unit (EPRU), University of Cape Town); Ntuli, Herbert (EfD - Environmental Policy Research Unit (EPRU) in the School of Economics at the University of Cape Town.); Muta, Telvin (Jomo Kenyatta University of Agriculture and Technology (JKUAT) in Nairobi, Kenya)
    Abstract: Sub-Saharan Africa’s urban ecosystem is under considerable pressure due to rapid urban sprawl and high direct dependency on the natural ecosystem. But the value of nature conservation or restoration is poorly understood. The current paper reports the results of an investigation of willingness to pay for nature restoration and conservation in Dar es Salaam, Tanzania. To account for preference and scale heterogeneity a menu of models - random parameter logit, generalised multinomial and latent class model - with varying assumptions are employed. Findings are that the marginal WTP is highest in relation to forests, where WTP is between TSH88- and TSH331, (US$0.04 – US$0.17) depending on the estimation model. This is followed by WTP for restoration and conservation of rivers, the value of which is TSH5- TSH53 (US$0 – US$0.03). The value placed on conservation of coasts is TSH2-TSH23 (US$0 – US$0.01). The low value placed on nature restoration and conservation by residents in the city of Dar es Salaam open up policy dialogue on the importance of nature in cities amidst rapid urbanization in the region. The figures also cast doubt on the potential for generating revenue to finance green infrastructure from the residents of cities in developing countries. The maximum revenue that can be collected ranges from US$43650 for coasts and US$743050 for forests. Lack of environmental awareness and concern translates into environmentally unsustainable behaviour in cities such as starting of veldt fires, deforestation, wetland conversion, stream bank cultivation and littering of beaches. Our results suggest the need for massive awareness campaigns to sensitize the city’s residents about different attributes of nature and their value in provision of ecosystems goods and services to charge their perceptions and attitudes.
    Keywords: choice modelling; WTP; conservation; restoration; forests; rivers; coasts; heterogeneity; Tanzania
    JEL: Q25 Q53 Q57
    Date: 2023–06–04
  17. By: Ruslan, Kadir; Sukma, Weni Lidya
    Abstract: This study aims to analyze the impact of parents’ employment status mobility on the children’s employment status mobility. In doing so, we applied a two-stage multinomial logistic regression model. In this research, employment status mobility refers to a mobility status from informal to formal jobs and vice versa. Using data from the Indonesian Family Life Survey (IFLS) for the period 2007 and 2014, the profile of the Indonesian workforce was dominated by stayers. The estimation results of multinomial logistic regression indicate that only fathers’ employment status mobility has a significant effect on the children’s employment status mobility, where fathers who are stayers and experiencing upward mobility will provide greater opportunities for their children to be stayers and fewer opportunities to experience downward mobility. Moreover, the employment status mobility of mothers does not have a significant impact on their children’s employment mobility. Our study points out the pivotal role of fathers in influencing employment formalization in Indonesia. Our findings could be valuable inputs for policy-making regarding employment formalization in Indonesia.
    Keywords: formal, informal, Recommendation 204, parents’employment, job mobility, upward mobility, downward mobility
    JEL: J2 J21 J24 J62
    Date: 2023–04–02

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