The New Institutional Economics and its applicability to development

The conditions under which the old-age security motive could be expected to be significant for fertility are described. Such conditions are likely to prevail in rural areas of developing countries and especially among women. Empirical studies on the subject are evaluated and the inconclusive and contradictory nature of the findings are attributed to failures to select appropriate samples and variables. Most findings derive from studies only marginally concerned with the old-age security motive for fertility. The paper concludes with suggestions for future research. Some of the earlier studies found surprisingly little or no relation between the old-age pension participation variables and various measures of fertility especially in developing countries. More recent studies have generally found significant negative relationships. Entwisle and Winegarden obtained evidence of a reinforcing feedback from low fertility to the expansion of the depth and breadth of coverage of participation in old-age security programs. A study done by DeVany and Sanchez concluded that the land-retention and other benefits of children to their parents are greater for those living on land which cannot be bought or sold than for those on privately owned land. Nugent and Gillaspy found that fertility changes between 1960 and 1970 across counties were negatively related to the size of the social security proxy variable. Cains 1981 study showed that the insecurity characterizing rural areas of developing countries is not limited to old age and disability but also includes calamitous events whose presence contribute to high fertility. The 1980 study of Vlassoff and Vlassoff concluded that old-age security was unimportant as a motive for fertility. There is a need for additional more systematic and more special-purpose empirical studies to investigate the impact of old-age security on fertility. Studies should be conducted in rural areas of developing countries where the old-age pension motive is expected to be strong. The sample size should be large enough to afford the opportunity to isolate the old-age pension affects from the effects of other variables and data collection should be repeated at various times. (summaries in ENG FRE SPA)

https://www.jstor.org/stable/pdfplus/1973379.pdf

The old-age security motive for fertility.

This paper presents an empirical investigation of adverse selection in the wholesale used car market. New car dealers (who sell both new and used cars) differ from used car dealers (who sell only used cars) in the propensity to sell trade-ins on the wholesale market. Models of adverse selection suggest that the dealer type that sells a higher proportion of its trade-ins on the wholesale market will sell, on average, cars of higher quality and receive in return a higher price. A survey of dealers' wholesale behavior and prices collected at a wholesale auction are used to test this prediction. I find weak evidence for adverse selection.

https://www.jstor.org/stable/info/2138742

Adverse Selection in the Wholesale Used Car Market

This paper tests adverse selection in the market for child care. A unique data set containing quality measures of various characteristics of child care provided by 746 rooms in 400 centers, as well as the evaluation of the same attributes by 3,490 affiliated consumers (parents) in the U.S., is employed. Comparisons of consumer evaluations of quality to actual quality show that after adjusting for scale effects, parents are weakly rational. The hypothesis of strong rationality is rejected, indicating that parents do not utilize all available information in forming their assessment of quality. The results demonstrate the existence of information asymmetry and adverse selection in the market, which provide an explanation for low average quality in the U.S. child care market.

Can consumers detect lemons? An empirical analysis of information asymmetry in the market for child care

This paper suggests that management's role in enterprise restructuring and market failures in the managerial labor market help explain important features of the German privatization program. A model of adverse selection based on information advantages for private owners demonstrates how privatization can improve the quality and number of western managers in eastern enterprises. These benefits can increase with the size of the transition. Evidence of management replacement and significant differences between state-owned and privatized firms from a survey of eastern German firms supports model assumptions and predictions. These results suggest the importance of management replacement to successful privatization. Copyright 1997 by American Economic Association.

Privatization in Eastern Germany: Management Selection and Economic Transition

This paper seeks to cast some light on the importance of adverse selection in competitive markets by examining the market for the sale of slaves in pre-Civil War New Orleans. Estimates of the degree of adverse selection in the New Orleans market are obtained by examining the relative prices of slaves from different regions of origin. These estimates indicate that slaves brought to market may on average have been of 20 percent to 40 percent lower quality than the slave population in general, and that good slaves were perhaps three times less likely to be sold than low quality ones.

Robert R. Glasspiegel

Papers

Adverse Selection in the Market for Slaves: New Orleans, 1830–1860