Showing papers in "Economic Development and Cultural Change in 2005"
TL;DR: In this paper, the authors investigated the relationship between the investment climate and firm performance and found that objective measures of investment climate vary significantly across countries and across locations within these countries, focusing primarily on measures of the time or monetary cost of different bottlenecks (e.g., days to clear goods through customs, days to get a telephone line, and sales lost to power outages).
Abstract: Drawing on recently completed firm‐level surveys in Bangladesh, China, India, and Pakistan, this article investigates the relationship between the investment climate and firm performance These standardized surveys of large, random samples of firms in common sectors reveal that objective measures of the investment climate vary significantly across countries and across locations within these countries We focus primarily on measures of the time or monetary cost of different bottlenecks (eg, days to clear goods through customs, days to get a telephone line, and sales lost to power outages) For many of these costs, the obstacles are lower in China than in Bangladesh or India, which in turn are higher than in Pakistan There is also systematic variation across cities within countries We estimate a production function for garment firms and show that total factor productivity is systematically related to the investment climate indicators Factor returns (wages for a given quality of human capital a
442 citations
TL;DR: This article used a Markov schooling transition model applied to the experimental data to assess the impact of the subsidy program on schooling attainment and on the underlying behaviors that determine schooling attainment, including ages of matriculation, dropout rates, grade repetition rates, and school reentry rates.
Abstract: A new antipoverty program in Mexico, PROGRESA, provides monetary transfers to families that are contingent upon their children’s regular attendance at school. The benefit levels vary with the grade level and gender of the child and are intended to offset the opportunity costs of not sending children to school. The initial phase of the program was implemented as a randomized social experiment. This article uses a Markov schooling transition model applied to the experimental data to assess the impact of the subsidy program on schooling attainment and on the underlying behaviors that determine schooling attainment, including ages of matriculation, dropout rates, grade repetition rates, and school reentry rates. Results show that the program increases schooling attainment effectively by reducing dropout rates and facilitating grade progression, particularly during the transition from primary to secondary school. Many of these effects would not be clear if attention were limited to enrollments as in m...
351 citations
TL;DR: This article found that large firms are more likely to have started out large than to have grown to a large size, and this reinforces the importance of large firms for aggregate productivity growth in sub-Saharan Africa.
Abstract: In a sample of manufacturing firms from nine sub‐Saharan African countries, large firms are found to be extremely important. As in more developed economies, they achieve higher productivity levels and are more likely to survive. In contrast, the commonly found higher growth rates for small firms are not replicated in the African sample, and the distribution of firms changes very little over time. Firms are more likely to have started out large than to have grown to a large size. The labor market relocates workers toward the most productive firms, and this reinforces the importance of large firms for aggregate productivity growth. Formal credit institutions award most financing to large firms, and access to credit is positively correlated with productivity, even conditional on firm size.
317 citations
TL;DR: The authors analyzed trends in income inequality and the distribution of income in rural China from 1987 to 1999 and found that nearly half of the rural population was not much better off in 1999 than at the start of the period.
Abstract: In this article we analyze trends in income inequality and the distribution of income in rural China from 1987 to 1999. We find an uneven but long‐run increase in inequality in rural China and show that nearly half of the rural population was not much better off in 1999 than at the start of the period. We rule out geography as the most important factor for explaining income differences and the increases that occurred over time. Much more important were growing differences between households living in the same village, province, or region. We also find that access to nonagricultural incomes from local wage employment and family businesses contributes to inequality but that employment outside the county in which a household lives and accessed through temporary migration is relatively equalizing. Finally, we document important strengths and weaknesses of the primary data set used for our analyses relative to other data sources available for study of inequality and poverty in rural China.
287 citations
TL;DR: In this paper, the reliability of the household consumption-based (Engel curve) methodology in detecting gender bias has been called into question because it has generally failed to confirm bias even where it exists, and the authors seek to find explanations for this failure by exploiting a data set that has educational expenditure information at the individual level and also, by aggregation, at the household level.
Abstract: The reliability of the household consumption–based (Engel curve) methodology in detecting gender bias has been called into question because it has generally failed to confirm bias even where it exists. This article seeks to find explanations for this failure by exploiting a data set that has educational expenditure information at the individual level and also, by aggregation, at the household level. I find that, in the basic education age groups, the discriminatory mechanism in education is via differential enrollment rates for boys and girls. Education expenditure, conditional on enrollment, is equal for boys and girls. The Engel curve method fails for two reasons. First, it models a single equation for the two‐stage process. Second, even when we make individual‐ and household‐level expenditure equations as similar as possible, the household‐level equation still fails to “pick up” gender bias in about one‐third of the cases where the individual‐level equation shows significant bias. This article...
235 citations
Journal Article•
216 citations
TL;DR: The evidence indicates that rising AIDS‐related adult mortality in rural Kenya is adversely affecting primary school attendance among the poor, however, these results measure only short‐term impacts.
Abstract: The rapid increase in adult mortality due to the AIDS epidemic in sub‐Saharan Africa raises great concern about potential intergenerational effects on children. This article estimates the impact of AIDS‐related adult mortality on primary school attendance in rural Kenya using a panel of 1,266 households surveyed in 1997, 2000, and 2002. The article distinguishes between effects on boys’ and girls’ education to understand potential gender differences resulting from adult mortality. We also estimate how adult mortality affects child schooling before as well as after the death occurs. The article also estimates the importance of households’ initial asset levels in influencing the relationship between adult mortality and child school attendance. We find that all of these distinctions are important when estimating the magnitude of the effects of adult mortality on child school attendance. The probability that girls in initially poor households will remain in school prior to the death of a working‐age ...
153 citations
TL;DR: In this paper, the determinants of manufacturing firm exit in the context of Ghana, with particular attention paid to productivity (or lack thereof) as a potential determinant of exit was examined.
Abstract: In the context of Africa, which firms are driven out of business? Given that many markets do not function efficiently in Africa, the determinants of firm exit may not be the same fundamentals that force business closure elsewhere. In particular, less productive firms may not be the ones forced out of business. This article examines the determinants of manufacturing firm exit in the context of Ghana, with particular attention paid to productivity (or lack thereof) as a potential determinant of exit. Three different methods are used to measure productivity, two of which carefully handle the issue of simultaneity in production function estimation. In addition, other determinants of firm exit are examined and compared to previous results in the literature.
131 citations
TL;DR: The authors analyzes panel data on 297 new small enterprises in Romania with detailed annual information from the start-up date through 2001, showing that access to external credit substantially increases both employment and sales growth.
Abstract: Although the development of a new private sector is generally considered crucial to economic transition, there has been little empirical research on the determinants of start‐up firm growth. This article analyzes panel data on 297 new small enterprises in Romania with detailed annual information from the start‐up date through 2001. Controlling for heterogeneity with a rich set of firm characteristics and firm fixed effects, our panel regressions imply that access to external credit substantially increases both employment and sales growth. Entrepreneurial characteristics such as gender and education have weaker estimated effects. Neither technical assistance nor a wide variety of measures of the business environment (contract enforcement, property rights, and corruption) have any clear association with firm growth.
116 citations
TL;DR: In this article, the authors examined the factors that explain the employment choice and the wage differentials in public administration, state-owned enterprises, and the formal private wage sector in Turkey and found that for men public administration wages are higher than private sector wages except at the university level where the wages are at par.
Abstract: The main objective of this article is to examine the factors that explain the employment choice and the wage differentials in public administration, state‐owned enterprises, and the formal private wage sector in Turkey. Selectivity‐corrected wage equations are estimated for each sector for men and women separately. Oaxaca‐Blinder decomposition of the wage differentials between sectors by gender and between men and women by sector are carried out. Results indicate that when controlled for observed characteristics and sample selection, for men public administration wages are higher than private sector wages except at the university level where the wages are at par. State‐owned enterprise wages for men are higher than private sector wages. Similar results are obtained for women. Further, while the wages of men and women are at parity in the public administration, there is a large gender wage gap in the private sector in favor of men. Private returns to schooling are found to be lower in the noncompe...
115 citations
TL;DR: In this paper, the authors examined the effect of targeted food distribution on the probability of poor households participating in the program by combining time-varying policy changes in the value of the program with cross-sectional variation in program benefits generated by variation in market prices.
Abstract: Despite the widespread belief that a substantial assault on poverty requires targeting scarce resources toward the poor, practitioners frequently claim that targeted programs deliver fewer benefits to poor households than do universal programs. This article evaluates this concern through an analysis of India’s targeted food distribution program, the Public Distribution System. It first examines the case for targeting by assessing the responsiveness of caloric intake to the amount of the food grain subsidy; a low elasticity suggests that improvements in nutrition may require large subsidies and, hence, a targeted program. It then examines whether targeting adversely affects the probability of poor households participating in the program. The empirical analysis identifies the effect of the program by combining time‐varying policy changes in the value of the program with cross‐sectional variation in program benefits generated by variation in market prices. The results confirm the low responsiveness ...
TL;DR: This article examined the determinants of human and physical capital at marriage and found that assets brought to marriage are distributed in a highly unequal manner, indicating that a bequest motive affects assets at marriage.
Abstract: This article examines the determinants of human and physical capital at marriage. Using detailed data from rural Ethiopia, we find that assets brought to marriage are distributed in a highly unequal manner. For first unions, assets brought to marriage are positively associated with parents’ wealth, indicating that a bequest motive affects assets at marriage. Parental wealth affects the inheritance of neither groom nor bride. Sibling competition from brothers affects grooms’ inheritance, but sisters have no effect. The marriage market is a major conduit for rural and gender inequality, although avenues do exist for couples to accumulate wealth over their life cycle.
TL;DR: In this paper, the authors present the first empirical investigation of the consistency of the Bank's estimates with the hypothesis that net investment should equal the difference between a country's average future consumption and its current consumption.
Abstract: The World Bank recently began publishing estimates of countries’ “genuine savings”: a comprehensive measure of net investment across all forms of capital (natural and human as well as produced). This article presents the first empirical investigation of the consistency of the Bank’s estimates with the hypothesis that net investment should equal the difference between a country’s average future consumption and its current consumption. Results show that the Bank’s estimates are consistent only with weak versions of this hypothesis and then only for developing countries. Moreover, a simple autoregressive‐integrated‐moving‐average (ARIMA) model outperforms any net investment measure, comprehensive or conventional, as a predictor of the difference between current and future consumption. In sum, the Bank’s net investment estimates tend to move in the same direction as the difference between current and average future consumption in developing countries, but they have little value for predicting the mag...
TL;DR: In this paper, a dynamic pseudo-panel method was used to consistently estimate measures of absolute and conditional mobility in the presence of non-classical measurement errors, and the authors found that absolute mobility in earnings is very low in Mexico, suggesting that the high level of inequality found in the cross-section will persist over time.
Abstract: The degree of mobility in incomes is often seen as an important measure of the equality of opportunity in a society and of the flexibility and freedom of its labor market. But estimation of mobility using panel data is biased by the presence of measurement error and non-random attrition from the panel. This paper shows that dynamic pseudo-panel methods can be used to consistently estimate measures of absolute and conditional mobility in the presence of non-classical measurement errors. These methods are applied to data on earnings from a Mexican quarterly rotating panel. Absolute mobility in earnings is found to be very low in Mexico, suggesting that the high level of inequality found in the cross-section will persist over time. However, the paper finds conditional mobility to be high, so that households are able to recover quickly from earnings shocks. These findings suggest a role for policies which address underlying inequalities in earnings opportunities.
TL;DR: Using the 1997 Egypt Integrated Household Survey (EIHS), this paper estimated models of household consumption in the first stage and then predicted poverty rates corresponding to changes in potential policy variables, pointing out the importance of education, parental background, land redistribution, and access to health facilities in alleviating poverty in Egypt.
Abstract: Poverty profiles are a useful way of summarizing information on the levels of poverty and the characteristics of the poor in a society, but they are limited by the bivariate nature of their informational content. Using the 1997 Egypt Integrated Household Survey (EIHS), this article estimates models of household consumption in the first stage and then predicts poverty rates corresponding to changes in potential policy variables. The key results of the study point to the important instrumental role of education, parental background, land redistribution, and access to health facilities in alleviating poverty in Egypt.
TL;DR: In this paper, the authors used the 1993 Indonesian Family Life Survey to compare the estimated impacts of education on fertility from a simple model that assumes that a woman's educational attainment is exogenous.
Abstract: Numerous studies indicate that female education is a major determinant of fertility and that the estimated effects are large relative to other variables, including family planning program variables. There are, however, two serious deficiencies in the research relating educational attainment to fertility that could give rise to invalid inferences. First, many public programs, including health and family planning programs, may influence a woman’s decisions about education, and these indirect programmatic effects might be large. Second, nearly all existing studies of the impacts of education on fertility assume that a woman's educational attainment is exogenous. Education could be serving as a proxy for such unobservable determinants as ability, motivation, and parental background, as these factors most likely are important determinants of a woman's educational attainment. We use the 1993 Indonesian Family Life Survey to compare the estimated impacts of education on fertility from a simple model tha...
TL;DR: In this paper, the authors examined the link between child labor and financial development using cross-country data and found that child labor was negatively associated with financial development in low-income countries.
Abstract: In this article, we examine the link between child labor and financial development using cross‐country data. We show that child labor and financial development display a significant negative relationship, which is particularly strong in the sample of low‐income countries and is robust for a wide range of specifications and estimators, including fixed‐effects and instrumental variables. We identify a plausible channel through which financial development affects child labor, as we find that income variability has a sizable, positive impact on child labor in countries where financial markets are underdeveloped, although this is not the case when financial markets are developed. Our results suggest that policies aimed at widening access to credit could be effective in reducing the extent of child labor.
TL;DR: In this article, the authors analyzed the determinants of earnings differentials among enterprises of different ownership in urban China in 1995, using an extended version of Oaxaca-Blinder decomposition methods.
Abstract: This article analyzes the determinants of earnings differentials among enterprises of different ownership in urban China in 1995, using an extended version of Oaxaca‐Blinder decomposition methods. We find strong evidence of a nonintegrated multitiered labor market in China, pure ownership–related differences, and differences in hours worked being the major determinants of observed earnings gaps. Our results highlight different paying schemes among domestic enterprises as well as between domestic and foreign enterprises. We stress the dual nature of domestic production structures, workers in central state‐owned enterprises (SOEs) being highly protected as compared to other domestic enterprises. We also emphasize that foreign‐invested enterprises provide higher total annual earnings mostly at the cost of a much longer working time and do not offer higher hourly earnings than large state‐owned enterprises. Our results provide explanations for the very low labor mobility observed in large overstaffed...
TL;DR: In this paper, the authors attempt to encourage the revitalization of growth in the Arab world by addressing the following two questions: why has growth been so low, specifically in comparison to the high performers of East Asia, and why has it been so erratic and unstable.
Abstract: Why has growth in the Arab world been so disappointing? Stagnating since 1985, the little growth that does exist is volatile and unstable, and the region has lagged behind both the gains of other developing countries and the region’s own pre‐1985 performance. This article attempts to encourage the revitalization of growth in the Arab world by addressing the following two questions: why has growth been so low, specifically in comparison to the high performers of East Asia, and why has it been so erratic and unstable? I estimate two growth models of the determinants of long‐term growth and the persistence of growth, using global panel data drawn from more than 70 countries. I conclude by describing two strategies and one development constraint important in explaining the growth process specific to the Arab world.
TL;DR: In this paper, the authors explored the relationship between health status of children, measured by standardized height, socioeconomic characteristics of their parents and communities, and related shocks, using a 4-period-long panel of children from Russia's Longitudinal Monitoring Survey.
Abstract: This article explores dynamic links among the health status of children, measured by standardized height, socioeconomic characteristics of their parents and communities, and related shocks, using a 4‐period‐long panel of children from Russia's Longitudinal Monitoring Survey. Specific attention is given to the endogenous effect of lagged height on current height, which can be thought of as the catch‐up effect or the lingering effect of poor health. We find that while such an effect is significant, it is substantially smaller than that typically found in the literature. It is also shown that exploring the dynamic relationship between health and socioeconomic factors allows for a better understanding of the impacts of time‐varying socioeconomic variables on child growth.
TL;DR: In this article, the authors provided an empirical account of the human capital investment behavior of parents in the face of endowment differences among siblings, and found that parents compensate for initial differences in health but reinforce initial educational differences among sibling.
Abstract: In this article, I provide an empirical account of the human capital investment behavior of parents in the face of endowment differences among siblings. The data set used contains a three‐wave panel of 4,030 individuals. The article presents a rare case in which endowments are measured explicitly. Health endowments are estimated from dynamic health production functions, while educational endowments are obtained from test scores. The simple score of the standard Raven’s Colored Progressive Matrix (CPM) test is used to measure educational endowments. I use estimation procedures that combine an instrumental variables method with panel data estimators to control for endogeneity and heterogeneity. The results suggest that parents compensate for initial differences in health but reinforce initial educational differences among siblings. Hence, an educational subsidy aimed at reducing inequality may end up reinforcing the inequality that might exist in the absence of such subsidy. When parents invest mor...
TL;DR: In this article, the determinants of labor force participation and child care utilization of mothers in the slums of Guatemala City were investigated, and it was shown that education, life cycle, and household demographic factors affect mothers' child care decisions, while the value of assets the mother brought to her marriage increased the likelihood of working for pay.
Abstract: This study investigates the determinants of labor force participation and child care utilization of mothers in the slums of Guatemala City. Data come from a survey in 1999 of 1,300 randomly selected mothers with preschool children, out of whom 37% worked for pay in the last 30 days. Results show that education, life cycle, and household demographic factors affect work and child care decisions. Higher household wealth reduces the mother’s chances of being in the labor force but does not significantly affect hours worked. The value of assets the mother brought to her marriage, however, increases the likelihood of working for pay. Fees and travel time for child care do not have significant influences on the type of child care used or mothers’ labor force participation, but hours worked decrease with higher formal day care prices. This suggests that interventions to reduce the price of formal day care in poor urban areas may have the potential to increase the labor hours of mothers residing in such n...
TL;DR: This paper used panel data obtained using a short recall period to evaluate the added worker effect (AWE) in six major Brazilian metropolitan areas and found a positive AWE that is much more substantial than those found for the U.S. economy, indicating that liquidity constraints may prevent Brazilian households from sufficiently smoothing income and consumption in periods when the male head of the family is unemployed.
Abstract: The temporary participation in the labor force of wives whose husbands have become unemployed has been referred to in the literature as the “added worker effect” (AWE). Previous research conducted using data from the United States has found only a small AWE, a result that accords with life cycle models with perfect capital markets. The current article uses panel data obtained using a short recall period to evaluate the AWE in the six major Brazilian metropolitan areas. Our results show a positive AWE that is much more substantial than those found for the U.S. economy. The finding of an important AWE for Brazil suggests that liquidity constraints may prevent Brazilian households from sufficiently smoothing income and consumption in periods when the male head of the family is unemployed. Alternatively, the significant AWE may indicate that the husband’s unemployment signals household members that there may be a substantial reduction in future income flow.
TL;DR: In this paper, the authors evaluated an ongoing family planning program experiment in rural Bangladesh and found that while the program was effective in reducing fertility, it had no significant impact on children's school enrollment.
Abstract: Despite the attractiveness of experiments from the perspective of program evaluation, there have been very few program experiments in the area of family planning. This article evaluates an ongoing family planning program experiment in rural Bangladesh. The article estimates the effect of mothers' program exposure on fertility and children's time allocation. The results show that while the program was effective in reducing fertility, it had no significant impact on children's school enrollment. However, the program appears to have significantly raised boys' participation in the labor force.
TL;DR: In this paper, various measures of labor disputes and investigates whether these have detrimental effects on the location choice of new domestic investment across the various states of India, find significant evidence that this is indeed the case in India.
Abstract: Acrimonious relations between employers and employees in developing countries have often been cited as impediments to progress. This article considers various measures of labor disputes and investigates whether these have detrimental effects on the location choice of new domestic investment across the various states of India. Conventional wisdom holds that an increase in measures such as the number of strikes, the number of man‐days lost in work stoppages, and the percentage of unionized workers would hinder the location of new projects. Using panel data and a fixed‐effects methodology that controls for the effect of state‐specific unobservables, we find significant evidence that this is indeed the case in India. Furthermore, disaggregation by industrial classifications shows that, although labor disputes continue to exert negative effects, location choices are also conditioned on factors such as proximity to raw materials and minerals.
TL;DR: This article examined the importance of family background for early childhood development (ECD) using data collected in 2001 from 3,556 children ages 0-36 months in three regions of the Philippines.
Abstract: We examine the importance of family background for early childhood development (ECD) using data collected in 2001 from 3,556 children ages 0–36 months in three regions of the Philippines. We focus on four main research questions: (1) Are associations of family background with ECD in part proxying for health and ECD‐related programs? (2) Are associations of family background with ECD biased due to omission of unobserved community characteristics that may be related to placement of health and ECD‐related services? (3) Are there important interactions between family background and health and ECD‐related programs in their effect on ECD? (4) Are there important interactions among the components of family background? Physical assets and human assets have a number of important positive associations with ECD. These include the positive relations between physical assets and the anthropometrics and hemoglobin levels of children, as well as lower occurrence of worms. Each parent’s schooling and height also ...
TL;DR: In this paper, the impact of language barriers on school achievement and the potential ameliorating role of bilingual education is investigated. But, the authors focus on the educational performance of children with monolingual mothers versus bilingual mothers.
Abstract: This article estimates the impact of language barriers on school achievement and the potential ameliorating role of bilingual education. Using large household data sets from poor rural communities in Mexico, we find that parental language (failure to speak Spanish) represents an important barrier to the schooling of indigenous children. We provide an empirical test suggesting that this largely reflects parental human capital related to culture/language, rather than unobserved wealth effects. Using double difference estimators with community fixed effects to address endogenous program placement, we demonstrate that schools with bilingual education narrow the gap in the educational performance of children with monolingual mothers versus bilingual and nonindigenous mothers.
TL;DR: This paper examined returns to schooling in the Philippines and Thailand, using recent employee surveys in manufacturing industries, and found that schooling returns steadily increase as education attainment increases in Thailand, but the returns increase only at university level.
Abstract: This article examines returns to schooling in the Philippines and Thailand, using recent employee surveys in manufacturing industries. Empirical results show that (i) schooling returns steadily increase as education attainment increases in Thailand, but the returns increase only at university level in the Philippines, and that (ii) private school premiums are higher in the Philippines than Thailand. The latter finding is consistent with the dominance of private institutions in the Philippine education system. The premiums from private schooling investments in the Philippines are, however, found to be spurious in the sense that private schools screen high ability students, which augments wage. Therefore, the productivity gain from private schooling is small.
Journal Article•
TL;DR: A diagrammatic representation of the argument provided by Taylor Rozelle and de Brauw (2003) constitutes an original and appealing way of synthesizing the argument as discussed by the authors, however the diagram does not represent the argument adequately.
Abstract: One of the central ideas of the “new economics of labor migration” is that migration from a village household can enable the household to overcome two major obstacles that stand in the way of its ability to transform its production technology: paucity of investment funds (a credit constraint) and scarcity of risk-mitigating devices (an insurance constraint). “In bypassing the [local] credit and insurance markets . . . migration facilitates the transformation [to the new technology]; it succeeds in doing this via its dual role in the accumulation of investment capital . . . usually generating significant urban-torural- flows of remittances and through diversification of income sources [in] controlling the level of risk.” A diagrammatic display of this argument provided by Taylor Rozelle and de Brauw (2003) constitutes an original and appealing way of synthesizing the argument. However the diagram does not represent the argument adequately. The purpose of this note is to correct and supplement the representation offered by Taylor et al. (excerpt)