Publications

The economic impact of schistosomiasis and the underlying tradeoffs between water resources development and public health concerns have yet to be quantified. Schistosomiasis exerts large health, social and financial burdens on infected individuals and households. While irrigation schemes are one of the most important policy responses designed to reduce poverty, particularly in sub-Saharan Africa, they facilitate the propagation of schistosomiasis and other diseases. We estimate the economic impact of schistosomiasis in Burkina Faso via its effect on agricultural production. We create an original dataset that combines detailed household and agricultural surveys with high-resolution geo-statistical disease maps. We develop new methods that use the densities of the intermediate host snails of schistosomiasis as instrumental variables together with panel, spatial and machine learning techniques. We estimate that the elimination of schistosomiasis in Burkina Faso would increase average crop yields by around 7%, rising to 32% for high infection clusters. Keeping schistosomiasis unchecked, in turn, would correspond to a loss of gross domestic product of approximately 0.8%. We identify the disease burden as a shock to the agricultural productivity of farmers. The poorest households engaged in subsistence agriculture bear a far heavier disease burden than their wealthier counterparts, experiencing an average yield loss due to schistosomiasis of between 32 and 45%. We show that the returns to water resources development are substantially reduced once its health effects are taken into account: villages in proximity of large-scale dams suffer an average yield loss of around 20%, and this burden decreases as distance between dams and villages increases. This study provides a rigorous estimation of how schistosomiasis affects agricultural production and how it is both a driver and a consequence of poverty. It further quantifies the tradeoff between the economics of water infrastructures and their impact on public health. Although we focus on Burkina Faso, our approach can be applied to any country in which schistosomiasis is endemic.

This paper shows that early colonial interactions between Europeans and indigenous populations, specifically the deaths of the latter, have long-term effects on economic development. We propose an alternative view on the historical origins of comparative development, arguing for links between pre-colonial conditions, colonial-era practices, and growth centuries later. We explore the decades of first contact between Europeans and the indigenous population for both violence against that population and the type of political-economic “regime” established. These violence and regime consequences affected the strength or weakness of property-protecting institutions, with the latter in turn influencing per capita income today.

We develop an exchange rate target zone model with finite exit time and non-Gaussian tails. We show how the tails are a consequence of time-varying investor risk aversion, which generates mean-preserving spreads in the fundamental distribution. We solve explicitly for stationary and non-stationary exchange rate paths, and show how both depend continuously on the distance to the exit time and the target zone bands. This enables us to show how central bank intervention is endogenous to both the distance of the fundamental to the band and the underlying risk. We discuss how the feasibility of the target zone is shaped by the set horizon and the degree of underlying risk, and we determine a minimum time at which the required parity can be reached. We prove that increases in risk after a certain threshold can yield endogenous regime shifts where the "honeymoon effects" vanish and the target zone cannot be feasibly maintained. None of these results can be obtained by means of the standard Gaussian or affine models. Numerical simulations allow us to recover all the exchange rate densities established in the target zone literature.

We extend the celebrated Rothschild and Stiglitz (1970) definition of Mean-Preserving Spreads to a dynamic framework. We adapt the original integral conditions to transition probability densities, and give sufficient conditions for their satisfaction. We then focus on a class of nonlinear scalar diffusion processes, the super-diffusive ballistic process, and prove that it satisfies the integral conditions. We further prove that this class is unique among Brownian bridges. This class of processes can be generated by a random superposition of linear Markov processes with constant drifts. This exceptionally simple representation enables us to systematically revisit, by means of the properties of dynamic mean-preserving spreads, workhorse economic models originally based on White Gaussian Noise. A selection of four examples is presented and explicitly solved.

A portion of the economics literature has long debated about the relative importance of historical, institutional, geographical, and health determinants of economic growth. In 2001, Gallup and Sachs quantified the association between malaria and the level and growth of per capita income over the period 1965–1995 in a cross-country regression framework. We took a contemporary look at Gallup and Sachs’ seminal work in the context of significant progress in malaria control achieved globally since 2000. Focusing on the period 2000–2017, we used the latest data available on malaria case incidence and other determinants of economic growth, as well as macro-econometric methods that are now the professional norm. In our preferred specification using a fixed-effects model, a 10% decrease in malaria incidence was associated with an increase in income per capita of nearly 0.3% on average and a 0.11 percentage point faster per capita growth per annum. Greater average income gains were expected among higher burden countries and those with lower income. Growth of industries with the same level of labor intensity was found to be significantly slower in countries with higher malaria incidence. To analyze the causal impact of malaria on economic outcomes, we used malaria treatment failure and pyrethroid-only insecticide resistance as exogeneous instruments in two-stage least squares estimations. Despite several methodological challenges, as expected in these types of analyses, our findings confirm the intrinsic link between malaria and economic growth and underscore the importance of malaria control in the agenda for sustainable development.

Using a unique dataset collected in 59 rural Gambian villages, we study how ethnic heterogeneity is related to the structure of four economic exchange networks: land, labour, inputs and credit. We find that different measures of village‐level ethnic fragmentation are mostly uncorrelated with network structure. At a more disaggregated level, household heads belonging to ethnic minorities are not less central than those from the predominant ethnicity in any of the networks and, at the dyadic level, the fact that two households share ethnicity is not an economically significant predictor of link formation. Our results indicate that, in the particular setting of our study, the structure of the exchange networks is better defined by other variables than ethnicity and that ethnic heterogeneity is unlikely to be a driver for sub‐optimal economic exchanges.

We study the mortality cost of political patronage in the context of China’s Great Leap Famine (GLF; 1958-1962). As a direct consequence of a series of radical and misguided policies implemented during a political and economic campaign initiated by China’s top leader Mao, the GLF caused millions of deaths in rural China, with famine mortality varying substantially across provinces. We show that provincial party leaders who were socially connected to Mao 1) pursued Mao’s policies with more zealousness, which led to significantly more famine deaths in their jurisdictions; 2) were more likely to get promoted right before the GLF; 3) had more interactions with Mao during the GLF. Our results point to political patronage as an important contributing factor of the Great Leap Famine.

We use a Chinese longitudinal survey to examine the association between beauty and individual labor market earnings. We estimate Mincerian earning equations with both cross sectional and longitudinal samples using parental characteristics as instrumental variables for beauty. We include the hazard rate to control for selection into occupations where beauty is perceived as being productive in the cross sectional specification. In the longitudinal specification, we add the inverse Mills ratio in the earning equation and carry out a test of selection bias. We get similar results in both specifications. Estimating over the full sample, we find that beauty is associated with higher earnings for females, that its exogeneity is rejected using the appropriate Hausman test, and that there is no evidence for selection into occupations where beauty is important. Our preferred point estimates indicate that the impact on hourly labor earnings of a one standard deviation increase in beauty is equivalent to a seven year increase in the number of years of schooling for the cross sectional model. For the longitudinal model, a one standard deviation increase in beauty increases women’s annual income by 40% and increase men’s annual income by more than 20%.

Stiglitz and Weiss (1981) credit rationing is embedded within rank dependent expected utility theory. Our results show that sufficient pessimism or sufficient risk-aversion by borrowers may eliminate adverse selection. Moreover, lender optimism may eliminate credit rationing even when adverse selection exists.

The extensive literature on civil-military relations deals with the influence of the military on politics by attending to either specific policy outcomes, such as budgetary allocations, coups, or decisions to employ force; or to prerogatives, such as legal privileges, high office, or control of state enterprises. However, more structural, background forms of influence are not reducible either to policy outcomes or to prerogatives: for example, if the military is able to set the political agenda, or if certain civilian cadres owe their advancement to their ties with the military. This latter possibility, which we call access, is the focus of this paper. We propose a dyadic methodology for assessing access, based on long-term geographical proximity between particular civilian cadres and particular military officers; our measurement argument is that civilians who for many years have had ”buddy” ties with officers are, ceteris paribus, likely to advance more rapidly up the ladder than counterparts who lack such ties; and vice-versa for military officers with civilian buddies. This argument is tested using a sample from a large-scale data set of party cadres and military officers in China, with results pointing toward mutual effects of members of each group on the other, and the paper concludes with preliminary thoughts on both civil-military relations and dyadic research more generally.

Using panel village census data from Senegal, we assess the impact of a decentralized agricultural development program—the Programme de Services Agricoles et Organisations de Producteurs (PSAOP)—on membership and assortative matching in community-based organizations (CBOs). We find that channeling agricultural assistance through CBOs makes these organizations more inclusive in the sense that several tradition-bound assortative matching patterns are broken: homophily in ethnicity and wealth are reduced. Traditionally marginalized groups such as men of nomadic background, women with small landholdings and little education and those residing in female-headed households become CBO members whereas the position of previous CBO leaders is not reinforced. Similarly, those households that received services from a CBO before the PSAOP was in place are less likely to stay. This leads to more heterogeneous CBOs and is in line with the terms and conditions of the program. On the other hand, the likelihood of CBO membership is reduced in project villages, with significant differences between men and women. Women disproportionately drop out of CBOs which receive PSAOP benefits. We conclude that for grassroots-level development projects to be successful, contextual factors need to be integrated into program design and implementation, since they shape local participation. Understanding local power relations and the potential for changing preferences due to external support are key to inclusive participation and development at the local.

A recent policy brief from the Peterson Institute suggests that the "Too Much Finance" result may be an artifact of spurious attribution of causality. While more works needs do be done to understand the links between finance and growth and explore the drivers of possible non-monotonicities, this note shows that the too much finance result is robust.

This paper examines whether there is a threshold above which financial depth no longer has a positive effect on economic growth. We use different empirical approaches to show that financial depth starts having a negative effect on output growth when credit to the private sector reaches 100% of GDP. Our results are consistent with the “vanishing effect” of financial depth and that they are not driven by endogeneity, output volatility, banking crises, low institutional quality, or by differences in bank regulation and supervision.

This article estimates the causal impact of land mines on child health in Angola, controlling for conflict exposure. Our identification strategy is based on the geography of the Angolan civil war. We posit that distance between communes and rebel headquarters is an exogenous driver of land mine contamination. We find that land mine intensity is positively correlated with the distance to a set of rebel headquarters. Instrumental variables estimates, based on two household surveys and the Landmines Impact Survey, indicate that land mines have large and negative effects on weight-for-age and height-for-age. We discuss our results with respect to the costs and benefits of land mine clearance, as well as the long-term costs of early malnutrition. We also compare the magnitude of our estimates with those of related studies on the impact of conflict on child health.

A recurring puzzle to many academics and some policymakers is why impact evaluations, which have become something of a cottage industry in the development field, have so little impact on actual policymaking. In this paper, I study the impact of impact evaluations. I show, in a simple Bayesian framework embedded within a standard contest success function-based model of competition amongst anti-evaluation policymakers, Bayesian policymakers, and frequentist evaluators, that the likelihood of a program being cancelled is a decreasing function both of the impact estimated by the evaluation and of the prior on whose basis the program was approved to begin with. Moreover, the probability of cancellation is a decreasing function of the effectiveness of the influence exerted by frequentist evaluators. Since the latter?s effectiveness in terms of lobbying in favor of their findings in the real world is likely to be close to zero, the likelihood of cancelling a program that was approved in the first place, despite its suffering a highly negative evaluation, is extremely low. The model thus provides one possible explanation for why impact evaluations have so little impact in the realm of decisionmaking, and why they have contributed so little to evidence-based policymaking.

Using a simple experimental design, count data models and routinely collected administrative data from Senegalese health districts, this study examines whether funding community-based organisations can be an effective method of increasing voluntary counselling and testing. Two treatment groups are identified: a newly introduced peer-mentoring mechanism and traditional social mobilisation. Findings indicate that funded peer mentoring roughly doubles the number of individuals who get tested, who follow pretest counselling and who collect their test results, whereas funded traditional social mobilisation appears to be slightly less effective. Moreover, the study demonstrates that inexpensive administrative data can be used for impact evaluation.

No abstract is available for this item.

Une question récurrente qui déroute plusieurs chercheurs et certains responsables politiques est celle de savoir pourquoi les évaluations d’impact, qui sont devenues monnaie courante dans le domaine du développement, ont si peu d’impact sur la prise de décision à proprement parler. Dans cet article, j’étudie l’impact des évaluations d’impact. Je fais appel à un cadre bayésien simple emboîté dans un modèle standard reposant sur une fonction de « contest success ». Avec ce modèle de concurrence entre des décideurs anti-évaluation, des décideurs bayésiens et des évaluateurs fréquentistes, je montre que la probabilité d’annulation d’un programme est une fonction décroissante de l’impact estimé par l’évaluation et de la croyance a priori sur la base de laquelle le programme a été initialement approuvé. En outre, la probabilité d’annulation est une fonction décroissante de l’efficacité de l’influence exercée par les évaluateurs fréquentistes. Dans la mesure où il est fort probable que cette efficacité en termes de lobbying des évaluateurs fréquentistes soit proche de zéro dans la vraie vie, la probabilité d’annulation d’un programme qui avait été approuvé au départ, bien qu’il soit entaché d’une évaluation très négative, est extrêmement faible. Le modèle fournit ainsi une explication possible de la raison pour laquelle les évaluations d’impact ont si peu d’impact sur la prise de décision, et pourquoi elles ont si peu contribué à la prise de décision fondée sur les faits.

This paper aims to provide the first evidence concerning the relationship between time and risk preferences and illegal migration in an African context. Based upon our theoretical model and using a unique data set on potential migrants collected in urban Senegal, we evaluate a measure of time and risk preferences through the individual’s intertemporal discount rate and coefficient of absolute risk aversion. Remarkably, our results show that these individual preferences matter in the willingness to migrate illegally and to pay a smuggler.

This paper examines whether there is a threshold above which financial development no longer has a positive effect on economic growth. We use different empirical approaches to show that there can indeed be too much finance. In particular, our results suggest that finance starts having a negative effect on output growth when credit to the private sector reaches 100% of GDP. We show that our results are consistent with the vanishing effect; of financial development and that they are not driven by output volatility, banking crises, low institutional quality, or by differences in bank regulation and supervision.

This paper tests the generalized Trivers Willard hypothesis in the spirit of Kanazawa (2005), which predicts that parents with heritable traits that increase the relative reproductive success of males compared to females will have relatively more male than female offspring. We test whether taller mothers are more likely to have a male first-born using data on 400,302 mothers in a sample of Demographic Health and Surveys (DHS) from 46 developing countries. Despite using a plethora of statistical models that take into account the multi-level structure of the data, we find no strong evidence in favor of the hypothesis between and within communities, as well as on a country-by-country basis. Conversely, Andrews (1989)s inverse power calculations suggest that the absence of a statistically small effect cannot be rejected.

Using a rich dataset from West Africa, we examine the household characteristics associated with membership in community-based organizations (CBOs). We find that on average it is the more fortunate members of rural society who belong in CBOs. In Senegal, the dominant criterion is land ownership. In Burkina Faso it is age and family ties with village authorities. Ethnicity plays a role as well: CBO membership is less likely for ethnic groups that traditionally emphasize livestock raising. Next we look for evidence of assortative matching along multiple dimensions, using an original methodology based on dyadic regressions. We find robust evidence of positive assorting by physical and ethnic proximity as well as by wealth and household size. Along certain dimensions, donor-sponsored CBOs are less elitist and more inclusive. But the reverse is true for other dimensions, particularly in Burkina Faso.

The recent theoretical literature on the determinants of trade agreements has stressed the importance of political gains, such as credibility, as a rationale for trade agreements. The empirical literature, however, has lagged behind in the estimation of the economic gains or losses associated with these politically motivated trade agreements. This paper fills that gap by providing estimates of the economic impact of politically and economically motivated trade agreements. We find that credibility gains play a role in increasing the probability of two countries signing an agreement. Moreover, agreements with a stronger political motivation are more trade creating than agreements that are signed for pure market access / economic reasons, and the value for the government of solving its time inconsistency problems through trade agreements is estimated at an average of 1.8% of GDP, which compares quite well with the traditional estimates of the economic gains from trade.

Using unique village census data collected in 2003 and 2008 in Senegal, we assess the impact of a major World Bank-funded Community Driven Development (CDD) program on membership and assortative matching in community-based organizations (CBOs). We implement both standard discrete choice and dyadic regression techniques. We find that channeling development aid through CBOs makes these organizations more inclusive in the sense that a number of tradition-bound assortative matching patterns are partly broken. Ceteris paribus, this leads to more heterogeneous CBOs. On the other hand, the likelihood of CBO membership is reduced in treated villages, with significant differences between men and women. Our results suggest that grassroots level development projects which target CBOs must be carefully designed and executed if they are not to result, paradoxically, in a greater degree of social exclusion, with differentiation by gender playing a crucial role.

We assess the impact on teenage childbearing as well as student knowledge, attitudes, and behavior of a typical HIV/AIDS teacher training program in the Cameroon. Applying a regression discontinuity design identification strategy based on the key administrative criterion that determined program deployment, we find that 15–17 year old girls in teacher training schools are between 7 and 10 percentage points less likely to have started childbearing, an objective proxy for the incidence of unprotected sex. They are also significantly more likely to have used a condom during their last sexual intercourse. For 12–13 year old girls, the likelihood of self‐reported abstinence and condom use is also significantly higher in treated schools, while the likelihood of having multiple partners is significantly lower.

In this paper, we present a rent-seeking model of conflict, which highlights the role of ideology in determining whether the government or the rebels take the initiative. We use the model to interpret the impact of a large-scale Community-Driven Development project on civil conflict in the Philippines. The country is characterized by the presence of two rebel groups, the New Peoples Army (NPA) and the Moro Islamic Liberation Front (MILF), with two distinct ideologies. We use a unique geo-referenced panel dataset on the occurrence of conflicts in 2003 and 2006 gathered from local newspapers that we match with nationally representative household survey and budget data on all municipalities in the country. Consistent with our models predictions, using a variety of estimation strategies, we find robust evidence that the project leads to a decline in MILF-related events and to an increase in NPA-related events.

[fre] Dans cet article, nous étudions les rendements salariaux au capital santé, mesuré par l’indice de masse corporelle, et à la nutrition, mesurée par la consommation de kilocalories, dans un panel de travailleurs chinois issu des China Health and Nutrition Surveys de 1991 et 1993. Nous mettons en oeuvre la procédure économétrique de Semykina et Wooldridge (2005 ) qui tient compte simultanément de l’hétérogénéité individuelle inobservable, du biais de sélection et de l’endogénéité. Nos résultats démontrent que les rendements à la santé et à la nutrition sont limités en Chine au secteur privé, et qu’ils ne sont pas présents dans le secteur étatique, assujetti au dirigisme centralisé. [eng] In this article, we study wage returns to health capital (measured by body-mass index) and to nutrition (measured by kilocalorie consumption) on a panel of Chinese workers from the 1991 and 1993 China Health and Nutrition Surveys. We apply Semykina and Wooldridge’s econometric procedure (2005), which takes simultaneous account of unobservable individual heterogeneity, selection bias, and endogeneity. Our results demonstrate that returns to health and nutrition in China are confined to the private sector and are not in evidence in the State command economy.

Deforestation is a phenomenon that has largely been concentrated in the developing world. We construct a theoretical model of deforestation that focuses on the factors affecting the incentives to transform forested land into agricultural land. We show that: (i) lower discount rates and stronger institutions decrease deforestation; (ii) a depreciation in the real exchange rate increases deforestation in developing countries whereas the opposite obtains in developed countries; (iii) paradoxically, better institutions may exacerbate the deleterious impact of a depreciation in developing countries. These hypotheses are tested on an annual sample of 101 countries over the 1961-1988 period, and are not rejected by the data. Our results suggest that short-term macroeconomic policy, institutional factors, and the interaction between the two, are potentially important determinants of environmental outcomes.

We formalize the link between optimal cost-sharing contracts and the production technology in the presence of moral hazard by appealing to several well-known results from duality theory. Building on intuitions from the interlinkage literature, we show that optimal contractual structure is determined by the (i) substitution possibilities that exist between different observable factor inputs, as well as (ii) between these inputs and unobservable effort. We endogenize contractual choice using landlord characteristics as instruments, exploiting the fact that, in our dataset, landlords interact with several tenants and vice versa. The approach is applied to an unbalanced plot-level panel of cost-sharing contracts in a Tunisian village, using a translog representation of the restricted profit function. Contractual terms are found to be a significant determinant of input use and therefore lead to Marshallian inefficiency, while the optimality of the underlying contractual structure is rejected.

We revisit the simultaneous equations model of rebellion, mobilization, grievances and repression proposed by Gurr and Moore (1997). Our main contribution is to clarify and improve on the underlying identification strategy by resorting to the well-known colonization instruments recently constructed by Acemoglu, Johnson and Robinson (2001, 2002). We also emphasize the role played by the institutional environment. Instrumental variables estimates for post-colonial societies reveal that the strength of the state, as captured empirically by an index of bureaucratic quality, exerts a strong preventive effect on rebellion. On the other hand, working institutions also influence the likelihood of rebellion indirectly, through mobilization. Our estimates suggest that this indirect effect increases rebellion. As such, the total net effect of better institutions on rebellion is ambiguous.

When market structure is complete, factor demands by households will be independent of their characteristics, and households will take their production decisions as if they were profit-maximizing firms. This observation constitutes the basis for one of the most popular empirical tests for complete markets, commonly known as the “separation” hypothesis. In this paper, we show that all existing tests for separation using panel data are potentially biased towards rejecting the null-hypothesis of complete markets, because of the failure to adequately control for unobservable individual effects. Since the variable on which the test for separation is based cannot be identifed in most panel datasets following the usual covariance transformations, and is likely to be correlated with the household-specific effect, neither the within nor the variance-components procedures are able to solve the problem. We show that the Hausman-Taylor (1981) estimator, in which the impact of covariates that are invariant along one dimension of a panel can be identifed through the use of covariance transformations of other included variables that are orthogonal to the household-specific effects as instruments, provides a simple solution. Our approach is applied to a rich Tunisian dataset in which separation -and thus the null of complete markets- is strongly rejected using the standard approach, but is not rejected once correlated unobservable household-specific effects are controlled for using the Hausman-Taylor instrument set.

Community Driven Development (CDD) programs are an extremely important component of the World Bank’s portfolio in the developing world, representing close to $7 billion in 2003, yet solid empirical evidence on their impact is relatively scarce, especially for Subsaharan Africa. In this paper, we consider the impact on access to basic services, household expenditures and child anthropometrics of the PNIR (Programme National d’Infrastructures Rurales) CDD project in Senegal using a unique multidimensional panel dataset on rural households that we followed over a two-year period. Using a variety of estimation procedures, including instrumental variables, and working at different levels of aggregation, we find no evidence for an impact of the PNIR on household expenditures, but find statistically significant effects of the program on access by villagers to clean water and health services, as well as on two standard measures of child malnutrition. The latter effects are particularly important, quantitatively, for children in poor households. The identification strategy we adopt in order to assess the impact of completed projects on beneficiary welfare highlights the importance of the role played by village chiefs and sub-regional politics in determining which eligible villages receive projects and which villages do not.

In their celebrated contribution on credit rationing, Stiglitz and Weiss (1981) showed that the expected return to the borrower on a loan is increasing in the risk of the project it funds. In this paper, I show that their results do not necessarily carry over to the case where the agents’ preferences can be described by rank-dependent expected utility (RDEU). In particular, a pessimistic probability distortion function for borrowers can yield sufficient concavity in returns for the latter to be decreasing in risk, thus eliminating adverse selection. Whether credit rationing can obtain or not is then shown to depend upon the interaction between borrower pessimism and lender optimism.

African politics are often said to be dominated by ethnic divides, with the ensuing policies implemented by leaders being based almost exclusively on their ethnic power base. In this paper, we demonstrate that the identity of leaders matters for the attribution of development projects in the context of one of the largest Community-Driven Development (CDD) programs in Senegal. After showing that leadership matters, we consider its determinants by focusing on those factors that determine who becomes president and vice-president of a Conseil rural, the smallest administrative unit in Senegal, and which is elected by universal suffrage. We also consider the link between power in the Conseil rural and that in the Conseil de Concertation et de Gestion (CCG), an assembly coopted by the Conseil rural president that is typical of local institutions set up in the context of CDD programs, and which is responsible for the attribution of development projects to individual villages. Using a unique dataset, we show that ethnicity plays almost no role in determining who becomes president (or vice-president) of a Conseil rural and vice-president of the CCG, while party politics, age, political experience, village loyalty, and educational and professional qualifications do. Our results highlight the crucial importance, in terms of development policy, of the local political institutions that are often created alongside CDD programs.

This paper considers whether it is differences in technical efficiency or differences in factor endowments that explain productivity differentials in Moldovan agriculture. We compute non-parametric measures of technical efficiency for a sample of Moldovan small-holders using the four-step Data Envelopment Analysis (DEA) approach suggested by Fried, Schmidt and Yaisawang (1999). We also consider a model of class structure inspired by the work of Eswaran and Kotwal (1986), and estimate a bivariate probit model that explains a household’s labor market participation decisions (and hence class membership) in terms of its factor endowments. These constructs are then used in an effort to understand the determinants of output per hectare in Moldovan agriculture. We find that differences in technical efficiency explain very little of the great heterogeneity in productivity observed in our sample, while class membership is slightly more successful. Our empirical model of class structure suggests that self sufficient households will disappear and be replaced by a class of small capitalist farmers as land and credit markets develop.

The purpose of this paper is to examine inter-ethnic differences in the returns to education for the three main ethnic groups in the Metropolitan Region of Salvador (MRS), Bahia state, in Northeastern Brazil. Our results suggest that sheepskin effects take the traditional form of an additional return to the completion of a diploma for whites, whereas for blacks the additional return stems entirely from the sheepskin-like effect associated with admission to university. We show that it is possible to explain the observed pattern of inter-ethnic differences in the returns to education using a model of statistical discrimination that builds on the work of S. Lundberg and R. Startz and incorporates differences in the cost of acquiring an education that are usually associated with signaling models.

In this paper we consider different explanations for why the coefficient associated with human capital is often negative in growth regressions once country-specific effects are controlled for, whereas the coefficient in question is strongly positive in cross-sectional or panel results based on the pooling estimator. In turn, we explore: (i) additional sources of unobserved heterogeneity stemming from country- specific rates of labor-augmenting technological change, (ii) measurement error in the human capital series being used, and (iii) the lack of variability in the human capital series once the usual covariance transformations are implemented. Remaining unobserved country-specific heterogeneity and measurement error alone are shown to be inadequate explanations. The lack of variability in the human capital series is tackled using a modified version of the Hausman-Taylor (1981) approach whose identifying assumptions are found to be reasonable in the context of the Solow model.

Formulating the classic Allingham and Sandmo [1972] tax compliance problem under Rank Dependent Expected Utility (RDEU) provides a simple explanation for the “excess” level of full compliance observed in empirical studies, which standard Expected Utility (EU) theory is unable to explain. RDEU provides a compelling answer to this puzzle, without the need for the moral sentiments or stigma arguments that have recently been advanced in the literature. Formally, we show that the threshold audit probability or penalty rate at which full compliance becomes optimal for the decisionmaker are significantly lower under RDEU axiomatics than in the EU case, and that the optimal level of underreporting is lower under RDEU. Numerical simulations using various parameterizations of the probability weighting function illustrate the large quantitative differences between the two models, while a simulation of underreporting rates in the US over the past 50 years shows how RDEU can go some way towards explaining the tax-compliance puzzle.

This paper focuses on instrument choice while consistently estimating the returns to education in Vietnam. Using VLSS data, we explore different sets of exogenous instruments that rely on demand and supply side sources of variation in schooling as well as the matrix of instruments proposed by Hausman and Taylor [1981]. As in several studies, we find that IV estimates of the returns to education are substantially higher than the corresponding ols estimate. We show how the Hausman-Taylor matrix of instruments, when combined with other instruments, may be a useful way of consistently estimating an average return to education rather than a local average treatment effect (Angrist [1994]).

We consider the classic Allingham and Sandmo (1972) tax compliance problem in the context of the Choquet-Schmeidler Expected Utility (CSEU) model, using the Non-Extremal Outcome (NEO)-additive capacities proposed by Chateauneuf et al (2002), in which Knightian uncertainty (ambiguity) exists concerning the penalty rate faced in the case of an audit. Pessimistic incarnations of the CSEU model can yield much lower underreporting rates than its Expected Utility (EU) counterpart, and do so without the need for moral sentiments, social stigma or probability perception functions. We confirm previous results, obtained in other contexts, showing that ambiguity-aversion reinforces the incentive effects of risk-aversion. We define the concept of a Risk-preserving increase in ambiguity (RPIA), which allows us to consider a change in the distribution of penalty rates such that (i) a CSEU decisionmaker will perceive a change in her welfare, whereas (ii) an EU decisionmaker will not.

We examine cross-sectional empirical evidence on the determinants of economic growth in light of an instrumental variables estimator, based on sample moments of order higher than two, which does not require extraneous instruments and which remains consistent, under quite reasonable assumptions, when measurement errors affect the explanatory variables. We focus on several in‡fluential papers — Barro (1991), Mankiw, Romer, and Weil (1992), Sachs and Warner (1997a), Easterly and Levine (1997), Levine and Zervos (1998)— and find that many of their results are “fragile”. We argue that the application of our estimator to cross-sectional empirical studies of the determinants of growth yields important insights which may qualify previous findings in the literature, especially given the errors in variables problems which are known to plague commonly used cross-sectional datasets.

The social science literature has done much to document pervasive racial discrimination in Brazil and there is little doubt that a very dark colour is a handicap to social advancement. Nevertheless, very few empirical economic studies have attempted to quantify the impact of ethnic discrimination in Brazil. Using data culled from the Pesquisa National por Amostra de Domicílios (PNAD), this paper fills this void by analysing ethnic wage and employment gaps, as well as occupational segregation in Brazil, using the Oaxaca decomposition methodology.

This paper focuses on instrument choice while consistently estimating the returns to education in Vietnam. Using data culled from the 2 rounds of the Vietnam Living Standards Survey (VLSS), we explore different sets of exogenous instruments that rely on demand and supply side sources of variation in schooling as well as the matrix of instruments proposed by Hausman and Taylor (1981). Instrument validity tests suggest that many variables do not satisfy the necessary conditions allowing them to be used as instruments. As in several studies, we find that IV estimates of the returns to education are substantially higher than the corresponding OLS estimate. We show how the Hausman-Taylor matrix of instruments, when combined with other instruments, may be a useful way of consistently estimating an average return to education rather than a local average treatment effect (Angrist, 1994).

This paper, relying on the results of several cross-sectionnal growth regressions, examines the factors determining the sustainability of policy reforms and growth in Africa. Five structural factors are considered as determinants of policy: 1) ethno-linguistic fragmentation, which influences growth directly rather than through policy, 2) human capital, which due to its low level is an impediment to good policy, although its effect is in all likelihood waning, 3) vulnerability to external shocks, possibly dampened thanks to better management and democratization, 4) political factors, mainly political instability and violence, which themselves partly depend on the previous factors, 5) foreign aid which could be allocated and "conditionned" so as to be more conducive to policy reform and growth. A simplified structural model of growth and policy, estimated in first differences and by GMM, and supplemented by an estimate of a political instability function, summarizes the main lines of our arguments.

This paper questions the line of reasoning followed by several authors, notably Easterly and Levine according to which ethno-linguistic fragmentation, because it leads to poor policies, is the main factor explaining the tragedy of low African growth. A first set of criticism concerns the model itself and stresses that current empirical work is unable to convincingly identify the channels through which ethnic fragmentation affects growth: (i) polarization may be more relevant than fragmentation, (ii) the various tests of the effect of ethnicity on the quality of policy are far from being conclusive. A second set of remarks concerns the relevance of these studies to Africa: the African sub-sample is often quite limited, and the relationship is unstable (according to Chow tests). It actually appears that ethnicity has a more important effect on growth in Africa than elsewhere. This still needs to be explained and is not as such an explanation for lower African growth.

In the standard problem of mechanism design under adverse selection, it is well known that the transfer function from the principal to the agent will be increasing in the agent s unknown productivity when there exists an incentive compatible mechanism. Cost-sharing contracts in LDC agriculture are a particularly interesting form of such mechanisms. In this paper, we develop a simple model of cost sharing contracts and construct a measure of potentially unobservable household productivity by estimating a plot level production function with household-specific fixed effects, which are then purged of observable household characteristics. We then use the implications of the model and our measure of potentially unobservable tenant productivity to test whether the productivity of tenants is indeed unobservable to landlords. Our empirical results strongly suggest that adverse selection concerns are not empirically important : in the Tunisian village we consider, it would appear that peasants do much better than is expected by Spence and Mirlees.

The purposes of this paper are twofold. First, we examine, using a unique dataset collected in the Tunisian village of El Oulja, what might be termed “all or nothing” separability (Benjamin, 1992) by testing, while controling for plot characteristics (Udry, 1996), the proposition that farm input use is independent of household characteristics. Second, we test for separability in the context of a model of class structure based on the seminal work of Eswaran and Kotwal (1986). In order to do so, we construct a model of class structure which offers an appealing representation of the typology of household types in the village when they are classified in terms of (i) their hiring in of wage labor, and (ii) their hiring out of family labor. We use a two-stage estimation technique in which we first estimate the probability of class membership as a function of household characteristics using discrete choice methods. In the second stage we estimate labor intensity per hectare using a Lee-Heckman procedure in which the inverse-Mill ratio from the first stage is included as an additional explanatory variable. As with the case of the test for "all or nothing" separability, the test for selective separability involves exclusion restrictions on household characteristics, although these are now conditional on class membership. Our empirical results strongly support the selective separability hypothesis as well as our theoretical model: most of the "action" in terms of non-separability stems, as one would expect from the model, from the class of "self-cultivators" who neither hire in wage labor nor hire out family labor. Our paper extends the work of DeJanvry, Sadoulet and Benjamin (1996) on Mexican ejidatarios to plot- as opposed to household-level estimation. Moreover, our paper provides an elaboration on and an empirical bridge to theoretical models, such as Roemer (1982), Eswaran and Kotwal (1986), and Carter and Zimmerman (1995) which examine how credit constraints and imperfections on factor markets shape the class structure of the agrarian economy. The implications and scope for government intervention in the context of market imperfections are also examined.

When moral hazard concerns are present, standard contract theory predicts the "Marshallian inefficiency" of sharecropping contracts, in the sense that, ceteris paribus, sharecropping tenants will use different amounts of inputs than owner operators. In this paper, we examine this issue using a unique dataset collected in 1993 in the Tunisian village of El Oulja, thanks to the financial support of the PARADI program. We focus our attention on four questions that have been neglected by previous studies, namely: (1) cost sharing between landlords and tenants; (2) management inputs provided by landlords; (3) direct supervision of tenants by landlords;(4) repeated interaction between landlords and tenants. We implement panel estimation with household-specific fixed effects and control for the censoring of the dependent variable using the trimmed LAD estimator proposed by Honoré (1992). Our empirical results show that moral hazard is indeed an issue in tenancy contracts in the village, but that its quantitative importance in determining input use, in comparison with other factors, is relatively small. It follows that sharecropping is probably not chosen because of moral hazard concerns, and that other motivations, such as risk sharing or transaction costs, may be more important determinants of contractual choice.

A simple model is constructed in which short-term credit is needed to finance the purchase of inputs, in which there is bankruptcy risk, and in which land is the preferred means of saving of the small land-owner. These imperfections, which I argue were important characteristics of Egyptian agriculture during the first half of this century, result in aggregate agricultural output being dependent on the distribution of land-ownership. I study the effect on aggregate agricultural output of changes in the distribution of land-ownership by using Rothschild-Stiglitz s mean-preserving spreads. The main theoretical insight is that aggregate agricultural output will be increased by a decrease in the inequality of the distribution of land-ownership when returns to scale are decreasing. The results are extended to two concepts of Lorenz domination. Testable short- and long-run empirical propositions are formulated and carefully tested on Egyptian data for the period 1913–58. I find that, controlling for factor inputs, there is no trade-off between equity and efficiency for Egyptian agriculture—they go hand in hand in the short-run.

In this paper, we develop a two sector general equilibrium overlapping generations model to study migration and remittances between the countryside and the city, the links between migration and growth, as well as the conditions under which intersectoral migration begins and ends. The migration process in our model is mediated through optimal intergenerational / intrafamily contracts, introduced by Lucas and Stark, which result in remittances. The endogenous growth process in the urban sector is driven by a human capital accumulation process which differs from the standard treatment such as that in Lucas (1988): in our model, individuals (finitely lived) divide their first-period income between the accumulation of human capital and consumption. Our model yields: (i) an endogenous migration threshold; (ii) wage gaps between the agricultural sector and the urban sector which do not depend upon the existence of unemployment as in the standard Harris-Todaro treatment.

The nature of structural imbalances in the Canadian Labor market is identified by analyzing the relationship between unemployment and job vacancies. Three potential sources of imbalances are examined: (1) the regional nature of the Canadian economy; (2) the rise in the incidence of long-term unemployment (of 12 months or more); and (3) differences in the rate of growth of unemployment across industrial sectors. The major findings are: growing structural imbalances; an increase in long-term unemployment was the major cause of the shift in most cases; both inter-and intraregional effects played a significant role, but interregional disparities were the dominant factor; and the dispersion in employment growth rates across industrial sectors did not seem to play a role.

We test the flexibility of wages and prices in the U.S. before World War II using a simple two-market disequilibrium model. We test the model for four different tatônnement adjustment mechanisms and we find that the equilibrium restriction is strongly rejected in all cases. Hausman specification tests reject the equilibrium restriction but do not reject three of the disequilibrium specifications. Parameter estimates imply that the persistence of the Great Depression is not attributable to nominal rigidities but was caused by the system becoming dynamically neutral. We compute estimates of excess aggregate demand from 1892 to 1940 and find that a model in which adjustment obtains in prices in the goods market and in quantities in the labor market provides the best description of the data.

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