Journal Issue: World Bank Economic Review, Volume 31, Issue 3
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Volume
31
Number
3
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Journal ISSN
1564-698X
Journal
World Bank Economic Review
1564-698X
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Articles
What Is Considered Development Economics? Commonalities and Differences in University Courses around the Developing World
(Published by Oxford University Press on behalf of the World Bank, 2017-10-01) Paffhausen, Anna Luisa; McKenzie, David
We use a combination of surveys of instructors and data from course syllabi to examine how the subject of development economics is taught at the undergraduate and Master’s level in over 200 courses in 56 developing countries and the United States. We find there is considerable heterogeneity in what is considered development economics: there is a narrow core of topics (growth theory, poverty and inequality, human capital, and institutions) taught in at least half the classes and large variation in the role of theory versus empirics. Employing clustering techniques, we find four views of development: a theoretical macro-based approach; an empirical micro-based approach; a mixed approach narrowly focused on these common core topics; and an expansive approach covering a much broader range of topics. We find country, course, and instructor characteristics are all associated with these differences in how development economics is conceptualized.
The Effect of a Transfer Program for the Elderly in Mexico City on Co-Residing Children's School Enrollment
(Published by Oxford University Press on behalf of the World Bank, 2017-10-01) Gutierrez, Emilio; Juarez, Laura; Rubli, Adrian
A regression discontinuity analysis is used to test whether a sharp increase in the government transfers received by households, induced by a pension program for individuals age 70 and older in Mexico City, affects co-residing children's school enrollment. Results show that while household composition and other characteristics do not change significantly at the cutoff age for program eligibility, school enrollment increases significantly. This suggests that households may be credit constrained, as the sharp increase in government transfers is known and anticipated by individuals below the cutoff age.
Does Financial Education Impact Financial Literacy and Financial Behavior, and If So, When?
(Published by Oxford University Press on behalf of the World Bank, 2017-10-01) Kaiser, Tim; Menkhoff, Lukas
In a meta-analysis of 126 impact evaluation studies, we find that financial education significantly impacts financial behavior and, to an even larger extent, financial literacy. These results also hold for the subsample of randomized experiments (RCTs). However, intervention impacts are highly heterogeneous: financial education is less effective for low-income clients as well as in low- and lower-middle–income economies. Specific behaviors, such as the handling of debt, are more difficult to influence and mandatory financial education tentatively appears to be less effective. Thus, intervention success depends crucially on increasing education intensity and offering financial education at a “teachable moment.”
A First Step Up the Energy Ladder? Low Cost Solar Kits and Household’s Welfare in Rural Rwanda
(Published by Oxford University Press on behalf of the World Bank, 2017-10-01) Grimm, Michael; Munyehirwe, Anicet; Peters, Jörg; Sievert, Maximiliane
More than 1.1 billion people in developing countries are lacking access to electricity. Based on the assumption that electricity is a prerequisite for human development, the United Nations has proclaimed the goal of providing electricity to all by 2030. In recent years, Pico-Photovoltaic kits have become a low-cost alternative to investment intensive grid electrification. Using a randomized controlled trial, we examine uptake and impacts of a simple Pico-Photovoltaic kit that barely exceeds the modern energy benchmark defined by the United Nations. We find significant positive effects on household energy expenditures and some indication for effects on health, domestic productivity, and on the environment. Since only parts of these effects are internalized, underinvestment into the technology is likely. In addition, our data show that adoption will be impeded by affordability, suggesting that policy would have to consider more direct promotion strategies such as subsidies or financing schemes to reach the UN goal.
The Cost of Fear
(Published by Oxford University Press on behalf of the World Bank, 2017-10-01) Rockmore, Marc
Although the effects of insecurity are believed to be important, these have never been directly measured. Previous estimates of the costs of conflict have only captured the joint effect of violence and insecurity. The distinction is important for understanding the origins of the costs and for policy design. Using the spatial-temporal variation in the placement of violence, I create spatially disaggregated measures of insecurity and present the first estimates of the relative causal contributions of the risk and experience of violence. The article also provides the first micro-data based counterpart to the cross-country literature on the costs of conflict.
Identifying Gazelles
(Published by Oxford University Press on behalf of the World Bank, 2017-10-01) Fafchamps, Marcel; Woodruff, Christopher
We conduct a business plan competition to test whether survey instruments or panel judges are able to identify the fastest growing firms. Participants submitted six- to eight-page business plans and defended them before a three- or four-judge panel. We surveyed applicants shortly after they applied and one and two years after the competition. We use follow-up surveys to construct measures of enterprise growth and baseline surveys and panel scores to construct measures of enterprise growth potential. We find that a measure of ability correlates strongly with future growth, but that the panel scores add to predictive power even after controlling for ability and other survey variables. The survey questions have more power to explain the variance in growth. Participants presenting before the panel were given a chance to win customized management training. Fourteen months after the training, we find no positive effect of the training on growth of the business.
On Minimizing the Risk of Bias in Randomized Controlled Trials in Economics
(Published by Oxford University Press on behalf of the World Bank, 2017-10-01) Eble, Alex; Boone, Peter; Elbourne, Diana
Estimation of empirical relationships is prone to bias. Economists have carefully studied sources of bias in structural and quasi-experimental approaches, but the randomized control trial (RCT) has only begun to receive such scrutiny. In this paper, we argue that several lessons from medicine, derived from analysis of thousands of RCTs establishing a clear link between certain practices and biased estimates, can be used to reduce the risk of bias in economics RCTs. We identify the subset of these lessons applicable to economics and use them to assess risk of bias in estimates from economics RCTs published between 2001 and 2011. In comparison to medical studies, we find most economics studies do not report important details on study design necessary to assess risk of bias. Many report practices that suggest risk of bias, though this does not necessarily mean bias resulted. We conclude with suggestions on how to remedy these issues.
Donor Competition for Aid Impact, and Aid Fragmentation
(Published by Oxford University Press on behalf of the World Bank, 2017-10-01) Annen, Kurt; Moers, Luc
We show that donors that maximize relative aid impact spread their budgets across many recipient countries in a unique Nash equilibrium. This aid fragmentation result is robust to the introduction of fixed costs, even if they are improbably large. In equilibrium, smaller donors have less fragmented aid, and behave better from an efficiency viewpoint. We present evidence that our theoretical results are in line with cross-country correlations. Our analysis has important policy implications: First, short of ending donors' maximization of relative aid impact, agreements to better coordinate aid allocations are not implementable. Second, since policies to increase donor competition in terms of aid effectiveness risk reinforcing relativeness, they may well backfire, as any such reinforcement increases aid fragmentation.
The Impact of Positive and Negative Income Changes on the Height and Weight of Young Children
(Published by Oxford University Press on behalf of the World Bank, 2017-10-01) Buser, Thomas; Oosterbeek, Hessel; Plug, Erik; Ponce, Juan; Rosero, José
We estimate the impact of changes in unearned income on the height and weight of young children in a developing country. As a source of income variation we use a change in the eligibility criteria for receipt of an unconditional cash transfer in Ecuador. Two years after families lost the transfer, which they had received for seven years, their young children weigh less and are shorter and more likely to be stunted than young children in families that kept the cash transfer. We find no statistically significant effect on young children's height and weight two years after gaining the cash transfer. Information on household expenditures suggests that a reduction of food expenditures by households that lost the transfer is the main mechanism behind this finding.
The Impacts of India's Food Security Policies on South Asian Wheat and Rice Markets
(Published by Oxford University Press on behalf of the World Bank, 2017-10-01) Villoria, Nelson Benjamin; Mghenyi, Elliot Wamboka
We quantify the extent to which India's success in stabilizing its wheat and rice markets affects other countries in South Asia. We deal with the variability of Indian trade and price policies by analyzing market outcomes during periods of low and high world prices; we also conduct stochastic simulations where Indian policies endogenously adjust to fluctuations in domestic and world supplies. South Asian wheat and rice markets operate near autarky, and therefore, intra-regional price transmission is limited. However, we find that when India's policies result in implicit export subsidies, consumers in countries that import from India benefit; meanwhile implicit producer taxation harms consumers elsewhere. Pakistan—the only country in the region that competes with India in foreign markets—would see gains in market shares when India reduces its export subsidies. We also find that the low intra-regional trade shields India's neighbors from the excess volatility caused by Indian policies.
Effect of Lengthening the School Day on Mother's Labor Supply
(Published by Oxford University Press on behalf of the World Bank, 2017-10-01) Contreras, Dante; Sepúlveda, Paulina
This article examines how a policy oriented toward a specific group within the population can have collateral effects on the economic decisions of other groups. In 1996, the Chilean government approved the extension of the school day from half- to full-day school. This article exploits the quasi-experimental nature of the reform's implementation by time, municipality, and age targeting of the program in order to examine how the maternal labor supply is affected by the childcare subsidy implicit in the lengthening of the school day. Using data from the Chilean socioeconomic household survey and administrative data from the Ministry of Education for 1990–2011, we estimate that, on average, there is a 5 percent increase in labor participation and employment rates of single mothers with eligible children (between 8 and 13 years old) with no younger children, who are the group that would be mainly affected by the policy. No significant labor supply responses are detected among others mothers with eligible children.
Can Agricultural Interventions Improve Child Nutrition? Evidence from Tanzania
(Published by Oxford University Press on behalf of the World Bank, 2017-10-01) Folke Larsen, Anna; Lilleor, Helene Bie
Severely reduced height-for-age due to undernutrition is widespread in young African children, with serious implications for their health and later economic productivity. It is primarily caused by growth faltering due to hunger spells in critical periods of early child development. We assess the impact on early childhood nutrition, measured as height-for-age, of an agricultural intervention that improved food security among smallholder farmers by providing them with a “basket” of new technology options. We find that height-for-age measures among children from participating households increased by about 0.9 standard deviations and the incidence of stunting among them decreased by about 18 percentage points.