This paper analyzes a newly assembled data set consisting of subjective indices of corruption, the amount of red tape, the efficiency of the judicial system, and various categories of political stability for a cross section of countries. Corruption is found to lower investment, thereby lowering economic growth. The results are robust to controlling for endogeneity by using an index of ethnolinguistic fractionalization as an instrument.

/pdf/corruption-and-growth-2z9d0x0u16.pdf

Corruption and Growth

https://link.springer.com/content/pdf/10.2307%2F3343168.pdf

Development as Freedom

A Treatise on the Family. G. S. Becker. Cambridge, MA: Harvard University Press. 1981. Gary Becker is one of the most famous and influential economists of the second half of the 20th century, a fervent contributor to and expounder of the University of Chicago free-market philosophy, and winner of the 1992 Nobel Prize in economics. Although any book with the word "treatise" in its title is clearly intended to have an impact, one coming from someone as brilliant and controversial as Becker certainly had such a lofty goal. It has received many article-length reviews in several disciplines (Ben-Porath, 1982; Bergmann, 1995; Foster, 1993; Hannan, 1982), which is one measure of its scholarly importance, and yet its impact is, I think, less than it may have initially appeared, especially for scholars with substantive interests in the family. This book is, its title notwithstanding, more about economics and the economic approach to behavior than about the family. In the first sentence of the preface, Becker writes "In this book, I develop an economic or rational choice approach to the family." Lest anyone accuse him of focusing on traditional (i.e., material) economics topics, such as family income, poverty, and labor supply, he immediately emphasizes that those topics are not his focus. "My intent is more ambitious: to analyze marriage, births, divorce, division of labor in households, prestige, and other non-material behavior with the tools and framework developed for material behavior." Indeed, the book includes chapters on many of these issues. One chapter examines the principles of the efficient division of labor in households, three analyze marriage and divorce, three analyze various child-related issues (fertility and intergenerational mobility), and others focus on broader family issues, such as intrafamily resource allocation. His analysis is not, he believes, constrained by time or place. His intention is "to present a comprehensive analysis that is applicable, at least in part, to families in the past as well as the present, in primitive as well as modern societies, and in Eastern as well as Western cultures." His tone is profoundly conservative and utterly skeptical of any constructive role for government programs. There is a clear sense of how much better things were in the old days of a genderbased division of labor and low market-work rates for married women. Indeed, Becker is ready and able to show in Chapter 2 that such a state of affairs was efficient and induced not by market or societal discrimination (although he allows that it might exist) but by small underlying household productivity differences that arise primarily from what he refers to as "complementarities" between caring for young children while carrying another to term. Most family scholars would probably find that an unconvincingly simple explanation for a profound and complex phenomenon. What, then, is the salient contribution of Treatise on the Family? It is not literally the idea that economics could be applied to the nonmarket sector and to family life because Becker had already established that with considerable success and influence. At its core, microeconomics is simple, characterized by a belief in the importance of prices and markets, the role of self-interested or rational behavior, and, somewhat less centrally, the stability of preferences. It was Becker's singular and invaluable contribution to appreciate that the behaviors potentially amenable to the economic approach were not limited to phenomenon with explicit monetary prices and formal markets. Indeed, during the late 1950s and throughout the 1960s, he did undeniably important and pioneering work extending the domain of economics to such topics as labor market discrimination, fertility, crime, human capital, household production, and the allocation of time. Nor is Becker's contribution the detailed analyses themselves. Many of them are, frankly, odd, idiosyncratic, and off-putting. …

A Treatise on the Family

Trust: The Social Virtues and the Creation of Prosperity

Amartya Sen (1933–) was born and educated in India before completing his doctorate in economics at Cambridge University. He has taught in India, England, and the United States and is currently the Lamont University Professor at Harvard University. He is one of the most widely read and influential living economists. His books have been translated into more than thirty languages. In 1998, he was awarded the Nobel Price in Economics for his work on welfare economics, poverty and famines, and human development. He has also made major contributions to contemporary political philosophy. In this essay, he proposes that alternatives be appraised by looking to the capabilities they provide for individuals rather than only by individual utilities, incomes, or resources (as in commonly used theories). Introduction Capability is not an awfully attractive word. It has a technocratic sound, and to some it might even suggest the image of nuclear war strategists rubbing their hands in pleasure over some contingent plan of heroic barbarity. The term is not much redeemed by the historical Capability Brown praising particular pieces of land – not human beings – on the solid real-estate ground that they ‘had capabilities’. Perhaps a nicer word could have been chosen when some years ago I tried to explore a particular approach to well-being and advantage in terms of a person's ability to do valuable acts or reach valuable states of being.

Capability and Well-Being

Because most parents send their children to work when compelled by poverty, one would expect a rise in adult wage to lower child labor. However, if the rise in wage is achieved by a minimum wage law, its impact can be intriguing. It can, for instance, cause some adults to be unemployed, and send their children to work, which in turn displaces more adult labor, and sends more children to work. The paper solves this process, and predicts the incidence of child labor. It shows that, for appropriate parametric configurations, child labor may fall, or rise as the adult minimum wage is raised.

/pdf/the-intriguing-relation-between-adult-minimum-wage-and-child-1864alpzcg.pdf

The intriguing relation between adult minimum wage and child labor

The Less Developed Economy: A Critique of Contemporary Theory

The evidence that the same total income can lead a household to choose different consumption vectors, depending on who brings in how much of the income, has led to an effort to replace the standard unitary model of the household with the ‘collective model’, which recognizes that the husband and the wife may have different preferences and depending on the balance of power between them the household may choose differently. One weakness of this new literature is that it fails to recognize that the household’s choice could in turn influence the balance of power. Once this two-way relation between choice and power is recognized we, are forced to confront some new questions concerning how to model the household. This paper tries to answer these by defining a ‘household equilibrium’, examining its game-theoretic properties and drawing out its testable implications. It is shown, for instance, that a household equilibrium can be inefficient and that (for a certain class of parameters) children will be least likely to work in a household where power is evenly balanced. The paper also draws out the implications for female labor supply.

A Model of Household Behavior with Endogenously-determined Balance of Power

http://www.nelsonpricing.com.ar/biblioteca_pricing/1997-02_why_are_so_many_goods_priced_to_end_in_nine_Basu_K.pdf

Why are so many goods priced to end in nine? And why this practice hurts the producers

One of the central tenets of mainstream economics is Adam Smith's proposition that, given certain conditions, self-interested behavior by individuals leads them to the social good, almost as if orchestrated by an invisible hand This deep insight has, over the past two centuries, been taken out of context, contorted, and used as the cornerstone of free-market orthodoxy In Beyond the Invisible Hand, Kaushik Basu argues that mainstream economics and its conservative popularizers have misrepresented Smith's insight and hampered our understanding of how economies function, why some economies fail and some succeed, and what the nature and role of state intervention might be Comparing this view of the invisible hand with the vision described by Kafka--in which individuals pursuing their atomistic interests, devoid of moral compunction, end up creating a world that is mean and miserable--Basu argues for collective action and the need to shift our focus from the efficient society to one that is also fairUsing analytic tools from mainstream economics, the book challenges some of the precepts and propositions of mainstream economics It maintains that, by ignoring the role of culture and custom, traditional economics promotes the view that the current system is the only viable one, thereby serving the interests of those who do well by this system Beyond the Invisible Hand challenges readers to fundamentally rethink the assumptions underlying modern economic thought and proves that a more equitable society is both possible and sustainable, and hence worth striving forBy scrutinizing Adam Smith's theory, this impassioned critique of contemporary mainstream economics debunks traditional beliefs regarding best economic practices, self-interest, and the social good

Kaushik Basu

Papers

The intriguing relation between adult minimum wage and child labor

The Less Developed Economy: A Critique of Contemporary Theory

A Model of Household Behavior with Endogenously-determined Balance of Power

Why are so many goods priced to end in nine? And why this practice hurts the producers

Beyond the Invisible Hand: Groundwork for a New Economics