fiscal policy expectation traps and child labor i introduction child labor is widespread in the contemporary world in fact the international labor organization ilo estimates that 246 million of the world s children aged 5 17 or 16 are child laborers most living in developing countries 1 recently there has been renewed interest in this topic among economists which has led to a series of theoretical studies with the aim of better understanding the causes and consequences of child labor in order to help guide appropriate policy responses as in grootaert and kanbur 1995 basu 1999 and basu and tzannatos 2003 for useful literature surveys typically theoretical models designed to address the important policy issues surrounding child labor posit that a family s decision to send a child to the labor market is taken only as a last resort in order to escape the dire consequences of poverty for example basu and van 1998 baland and robinson 2000 show that this response on the part of the family may be stronger in a dynamic setting because contracts between children and adults are not self enforcing and capital markets are incomplete 2 in this case an adult decision maker may not only send their children to work to escape poverty in the present but do so to escape poverty in the future as well this decision will hinder a child s ability to accumulate human capital and can lead to persistent cycles of poverty and child labor across generations 3 we begin by showing that a benevolent government can address the incidence of child labor that results from the non enforceability of intergenerational contracts and incomplete capital markets through the appropriate use of fiscal policy and that this policy is pareto improving it is then shown that if society s confidence in their government is incomplete this lack of confidence can render the same fiscal policy ineffective in other words if households do not believe that the government will follow through on their policy promise then in fact it is quite possible that the government will not be able to follow through on their promise as a result of these beliefs 4 this self reinforcing nature of fiscal policy in the presence of uncertainty can leave a country in an expectations trap with a low level of human capital and child labor 5 to formally demonstrate this fiscal policy expectations trap hypothesis we employ a three period overlapping generations model in which child labor exists 6 this stylized setup will keep the dynamics manageable and allow us to highlight the effects of uncertainty also within this framework we introduce a missing intergenerational contracts market in conjunction with a human capital production function that exhibits a threshold with respect to parental human capital which gives rise to two locally stable steady states there is a good equilibrium where there is a relatively high level of parental human capital which results in a high level of income and no child labor and there is a bad equilibrium where there is a relatively low level of parental human capital which results in a low level of income and positive child labor this low income child labor equilibrium is the standard poverty trap scenario that typically exists in a deterministic economy with multiple equilibria it is then shown that a benevolent government can replicate the missing intergenerational contracts market with a pay as you go social security program thereby eliminating this component of child labor in an economy with perfect foresight in addition it is also shown that this policy is pareto improving in the sense that all generations are strictly better off under this policy except the initial old who are no worse off the dynamics of this social security program are intuitive if child labor is one possible mechanism adults can use to redistribute resources from their children then the government can reduce this incentive by announcing a social security program that will begin during the current adults old age an institutional intergenerational contract

the determinants of teenage schooling in jamaica rich vs poor females vs males the belief that schooling is an important way to reduce poverty and increase social mobility has lead to large government sponsored investment in education in developing countries jamaica has an impressive literacy and primary enrolment rate yet the ability of its secondary school system to enhance social mobility and reduce inequality is limited regression results from a nationally representative household survey show that family background variables parental education and income are important determinants of secondary school enrolment and income is the single most important determinant of enrolment in an elite high school with the impact being twice as large for females part of the income effect is shown to represent unobserved community heterogeneity one conclusion is that the recent cost sharing education policy of the jamaican government if applied selectively to the elite academic high schools will fall disproportionately upon rich households

improving quality versus increasing the quantity of schooling estimates of rates of return from rural pakistan abstract this paper s approach permits a more satisfactory assessment than previously of the rates of return to improving school quality versus increasing quantity in terms of labor earnings and their implications for educational policy in developing countries special data from rural pakistan collected for this study are used to make estimates within a conceptual framework that controls for important individual and household choices the results indicate that rates of return were much higher for investing in primary school quality or quantity than for investing in middle schools and at the primary school level somewhat higher for expanding low quality schools than for increasing quality in existing schools

returns to investment in education a global update the author updates compilations of rate of return estimates to investment in education published since 1985 and discusses methodological issues surrounding those estimates some key patterns among the three main levels of education primary education continues to exhibit the highest social profitability in all world regions private returns are considerably higher than social returns because of the public subsidization of education the degree of public subsidy increases with the level of education which is regressive social and private returns at all levels generally decline by the level of a country s per capita income overall the returns to female education are higher than those to male education but at individual levels of education the pattern is more mixed the returns to the academic secondary school track are higher than the vocational track since unit cost of vocational education is much higher and the returns for those who work in the private competitive sector of the economy are higher than in the public noncompetitive sector and the returns in the self employment unregulated sector of the economy are higher than in the dependent employment sector controversies in the literature are discussed in the light of the new evidence the undisputable and universal positive correlation between education and earnings can be interpreted in many ways the causation issue on whether education really affects earnings can be answered only with experimental data generated by randomly exposing different people to various amounts of education given the fact that moral and pragmatic considerations prevent the generation of such pure data researchers have to make do with indirect inferences or natural experiments some have been attempted the author looks at the research on overeducation or surplus schooling the conclusions reinforce earlier patterns they confirm that primary education continues to be the number one investment priority in developing countries they also show that educating females is marginally more profitable than educating males that the academic secondary school curriculum is a better investment than the technical vocational tract and that the returns to education obey the same rules as investment in conventional capital that is they decline as investment is expanded

income shocks and gender gaps in education evidence from uganda abstract this paper uses exogenous variation in rainfall across districts in uganda to estimate the causal effects of household income shocks on children s enrollment and academic performance conditional on gender i find negative deviations in rainfall from the long term mean to have negative and highly significant effects on female enrollment in primary schools and the effect grows stronger for older girls i find no effect of rainfall variation on the enrollment of boys and young girls moreover i find that when schooling is free of charge and both marginal boys and girls are enrolled a negative income shock has an adverse effect on the test scores of female students while boys are not affected the results imply that households respond to income shocks by varying the amount of schooling and resources provided to girls while boys are to a large extent sheltered a finding consistent with a model where parents values of child labor differ across sexes

birth order schooling and earnings birth order effects are posited by many to affect earnings and schooling we show how such effects can be interpreted to shift either the earnings possibility frontier for siblings or parental preferences we find empirical evidence for birth order effects on age adjusted schooling and on earnings for young u s adults though the latter is not robust for all specifications the examination of intrahousehold allocations suggests that these birth order differences occur despite parental preferences or prices by birth order favoring later borns apparently because of stronger endowment effects that favor firstborns

virtuous interactions in removing exclusion the link between foreign market access and access to education abstract we outline a methodology which aims to give an answer to the widespread demand of impact analyses by regulators or by funding agencies which need to evaluate the current and past performance of development projects and may lack time series evidence we devise a retrospective panel data approach to evaluate the dynamics of the effects of fair trade affiliation on the schooling decisions of a sample of thai organic rice producers across the past 20 years we find that the probability of school enrolment in families with more than two children is significantly affected by fair trade affiliation years we try to ascertain whether our finding is robust to endogeneity of producers choices of local cooperative affiliation and adoption of organic techniques the significant difference between pre and post fair trade affiliation performance documents that fair trade participation generates a significant break in the schooling decisions of affiliated households

caveat emptor cross country data on education and the labor force abstract cross country data on education and the labor force frequently are used to describe important dimensions of development and to estimate models of economic growth and growth determinants the impact of education and related phenomena this investigation finds 1 there are serious intertemporal and inter country comparability problems with these data that may importantly affect inferences about labor force size trends and productivity and schooling investments and impact 2 data gaps are systematically related to levels of development and literacy and 3 conclusions about the determinants or consequences of development based on constructed data that have been made available to fill data gaps can be seriously misleading

primary schooling cognitive skills and wages in south africa using a fairly rich data set from south africa the paper finds that despite the sobriquet gutter education the african schooling systems help to create cognitive skills and these skills are a determinant of wage levels various robust estimators are used but the influential outlier problem does not turn out to be serious computational skills appear to be more important than comprehension skills in influencing wages the african primary schooling system was an extremely poor generator of computational skill the seven year course raising the computational test score by 13 if that a policy implication is that productivity could be raised by certain near costless reallocations of resources in favour of mathematical learning

inventory and price behaviour the point of this paper is that inventory adjustment attenuates downward pressure on price when realized demand is low because firms accumulate inventory hold overs speculating that demand will be stronger in the succeeding period when realized demand is high the firm draws down its inventories until a stock out occurs and price rises to clear the market

how can safety nets contribute to economic growth the paper provides an up to date and selective review of the literature on how social safety nets contribute to growth the evidence is carefully chosen to show how safety nets have the potential to overcome constraints on growth linked to market failures and is organized into 4 distinct pathways i encouraging asset accumulation by changing incentives and by addressing imperfections in financial markets caused by constraints in obtaining credit and from information asymmetries overcoming such failures helps households to invest into their human capital or productive assets ii failures in insurance markets especially in low income setting safety nets are assisting in managing risk both ex post and ex ante iii safety nets are overcoming failure to create assets and other local economy complementary factors to household level investments iv safety nets are shown to relax political constraints on policy safety nets have a dual objective of directly alleviating poverty through transfers to the poor and of triggering higher growth for the poor however the trade off between the dual objectives of equity and growth is not eliminated by the potential for productive safety nets this remains critical for designing social policies

school supply constraints and children s educational outcomes in rural ghana abstract studies of school attainment often fail to acknowledge the possibility that prices for all schooling levels affect the decision to attend any one schooling level in developing countries the assumption that schooling costs are constant throughout the education cycle is manifestly untrue this paper concentrates on the empirical implications of introducing schooling costs that increase with schooling level the results suggest that the cost of advanced levels of education influences decisions at the primary school level the relative magnitude of the cross price elasticities suggests that cross price effects should not be ignored when designing educational user fees

the impact of primary schooling on economic development a review of the evidence abstract the contribution of primary schooling to economic development is greater than has conventionally been percieved this review of recent research shows that primary schooling increases labour productivity in both urban and rural sectors and that the economic returns to such investment are typically high in addition it reduces fertility improves health and nutrition and promotes other behavioural and attitudinal changes which are helpful to economic development investment strategies which give primary schooling an important place would be more conducive of growth with equity than many alternatives priorities for government and donor policies are indicated as are those for future research

price smoothing and inventory this paper explains the phenomenon of price rigidity or price smoothing as the outcome of the optimal inventory policy of a multi period profit maximizing firm under demand and output uncertainties price smoothing may be manifested in two forms first price changes may be moderated with respect to those implied by the demand function and second the firm may choose to restrict price fluctuations by establishing upper and or lower bounds on prices we show that the extent of the asymmetry in price smoothing depends on the relationship between the inventory holding cost and the backlog penalty cost our model accommodates a wide range

market shares financial constraints and pricing behaviour in the export market a structural dynamic model of price and quantity adjustment is estimated on time series data for exports and export prices two sources of dynamics are considered customer markets and preset prices as predicted by the customer market model the market share adjusts slowly after a change in the relative price and financial conditions affect prices prices are found to be sticky in the sense that they do not reflect the most recent information about costs and exchange rates a parsimoniously parameterized structural model explains about 90 of the variation in market share and the relative price

the changing determinants of schooling investments evidence from villages in the philippines 1985 89 and 2002 04 abstract this paper aims to explore the changing determinants of child progress through school over the last two decades using unique long term household panel data from four villages in the philippines in a regime of low income in the late 1980s income from farming is the most important source of funds to finance child schooling as households shift away from farm to non farm activities and their children pursue higher education non farm income and revenues from pawning of land have emerged as main sources of schooling funds in the early 2000s in this process farm income has lost its prime importance as a determinant of schooling investments among rural households

the interrelationship between price and output decisions and investment decisions microfoundations and aggregate implications abstract this paper develops a model of firm behavior in which both price and output decisions and investment decisions are made the model permits an analysis of the dynamics of inventory and capital accumulation on price and output behavior there are two main results 1 short run price and output levels will differ from long run levels as desired stocks of inventory and capital diverge from actual levels 2 the size of the elasticities of price and output to changes in demand and cost variables depends on the speed with which gaps between desired and actual stocks are closed through investment

the information content of quantity signals and downward inflexible prices it is shown that nonmarket clearing prices can persist in noncooperative nash competition among firms when the dis semination of information depends critically on the flexibility of pr ices the key to this explanation is that the value of the informatio n revealed by quantity signals when prices are fixed can be greater t han the short run profit obtained by an instantaneous price adjustmen t copyright 1987 by the editors of the scandinavian journal of economics

inverse productivity land quality labor markets and measurement error abstract this paper examines the role that land quality and imperfect markets play in generating the inverse productivity relationship in the international crop research institute for the semi arid tropics icrisat data differences in land quality largely explain the inverse productivity ip relationship in the random effects profit regression but not in labor demand regressions controlling for labor and land market failures and differences in soil quality eliminates the ip relationship for male labor but not female labor in the random effects estimates the inverse relationship is much stronger in fixed effects than random effects estimates suggesting that the farm size variable may be subject to measurement error a view supported by the results of instrumental variables estimation

public inputs and child schooling in brazil household data from a one percent sample of the 1970 brazilian census are used to analyze the effect of public inputs i e the supply of schooling on children s school attainment in brazil the household data are combined with measures of school availability and quality derived directly from the same census data the measures are based on the number and education of schoolteachers in each of 169 different areas of the country elasticities of demand with respect to these public inputs are estimated these elasticities are high in both rural and urban areas in urban areas the positive effect of public inputs is greater for children from households with poorer and less educated parents in rural areas the positive effect of public inputs is greater if anything for children from households that are relatively better off at least compared to other rural households

investments in schooling in two generations in pre revolutionary nicaragua the roles of family background and school supply abstract family background and school supply underlie the demand and supply for schooling but are usually ignored in empirical estimates these considerations are investigated for two generations in nicaragua using unique data on adult sisters and their offspring to identify inter versus intrafamilial effects and to control for unobserved family background the results suggest that the standard interpretations are misleading 1 unobserved family background and school supply factors are important in schooling determination 2 omission of these factors leads to overestimates of impacts of parental schooling and family size 3 both parental schooling and family size primarily represent unobserved family background and school supply in standard estimates

borrowing constraints and progress through school evidence from peru this paper investigates the effect of borrowing constraints on the timing of human capital investment in a developing country by looking at how quickly children with different family backgrounds progress through the primary school system in peru the main findings are that children start withdrawing from school earlier as indicated by repetition of grades in households with lower income and durable good holdings and when children are more closely spaced behavior also differs as predicted between children from households that appear to be borrowing constrained and those that appear unconstrained copyright 1994 by mit press

impact of microfinance on schooling evidence from poor rural households in bolivia summary channels for the influence of microfinance programs on a rural household s demand for schooling are identified income growth risk management child labor demand gender empowerment and parent information within a random utility framework a model of household consumption investment in education and borrowing suggests determinants at the individual household and regional levels of the probability of schooling gaps using data from two surveys of households of clients of microfinance organizations in bolivia regression models examine determinants of schooling gaps inferences about otherwise positive microfinance impacts identify potential negative effects of increased child labor demand which challenge usual assumptions and pose dilemmas for policymakers

crop choice school participation and child labor in developing countries cotton expansion in burkina faso we estimate the effects of changes in cotton adoption on children s schooling and child labor in rural burkina faso using time and spatial variations we find evidence that expansion of cotton farming has led to an increase in enrollment and to a reduction of participation in child labor for girls there are however no detectable effects on boys in theory cotton adoption could increase household income leading to increased demand for schooling and reduced child labor on the other hand because children are productive on cotton farms adoption of cotton could increase the opportunity cost of child time and the demand for child labor we provide suggestive evidence showing that boys are more productive than girls on cotton farms taken together the results suggest that the income effect from cotton adoption might have been larger than the wage effect for girls hence the overall positive impacts on school enrollment for girls

price and output responsiveness to nominal changes under differential information abstract the paper considers how changes in nominal income are transmitted into price and output changes within a setting where the traditional assumption of instantaneous market clearing costless coordination is given up in favour of a more realistic setting where price decisions are made by numerous agents firms acting independently on their private decentralized information the responsiveness of firm specific prices is considered and it is shown how absolute or nominal price rigidity can be explained building this into a theory of the general price level it is proved that heterogenously perceived nominal changes affect the price level less than proportionally moreover it is shown how a phillips curve relation between inflation and output can be rationalized within the model finally the issue of relative price variability is considered and related to misallocation of economic resources under differential information

relative vs absolute price rigidity abstract it is shown that to explain some nominal price rigidity it is sufficient to assume changes in costs to be imperfect signals on nominal changes and not necessary to assume nominal costs to respond less than proportionally to nominal changes

economic growth and the demand for education is there a wealth effect abstract human capital investment in developing countries is thought to be significantly constrained by household resources this paper studies the relationship between household resources and the demand for education using recent household survey data from vietnam the data cover a period 1993 1998 of exceptional income growth in vietnam during which secondary school enrollment rose substantially using consumption expenditures to measure household wealth we find a positive and significant relationship between changes in wealth and changes in the demand for education this wealth effect persists even after controlling for locality specific factors such as changes in education returns and the supply and quality of schools and for the opportunity costs of schooling

child labor and schooling responses to access to microcredit in rural bangladesh microcredit has been shown to be effective in reducing poverty in many developing countries however less is known about its effect on human capital formation in this paper we develop a model examining the relation between microcredit and child labour we then empirically examine the impact of access to microcredit on children s education and child labour using a new and large data set from rural bangladesh we address the selection bias using the instrumental variable method where the instrument relies on an exogenous variation in treatment intensity among households in different villages the results show that household participation in a microcredit program may increase child labour and reduce school enrolment the adverse effects are more pronounced for girls than boys younger children are more adversely affected than their older siblings and the children of poorer and less educated households are affected most adversely our findings remain robust to different specifications and methods and when corrected for various sources of selection bias

labour market impacts of school expenditure and class size evidence from china this study is a first attempt to estimate the impact of school resources on students subsequent labour market earnings in china combining unprecedented school data from the early 1950s to the 199

parental investment in children s human capital in urban china the present study tests the extent of parental forgone consumption used instead to invest in children s human capital by use of intrahousehold resource allocation models using an unusual comprehensive data set for urban china there is more spending on boys aged 13 to 15 but more on girls aged 16 to 18 suggesting that standard human capital theories and traditional perceptions of gender bias do not completely explain educational expenditure decisions the evidence from urban china is consistent though with human capital models which consider parental intertemporal preferences also the findings suggest that the perceived bias in favour of sons exists weakly in contemporary urban china

agricultural productivity growth in brazil large and small farms excel abstract the long standing debate on the relationship between farm size and productivity has been generally limited by the range of farm sizes evaluated and the definition of productivity in this paper we use data from three brazilian agricultural censuses to address these issues in particular we introduce a wider distribution of farm sizes than presently available from the literature and we employ total factor productivity tfp as our performance measure in doing so we test which farm size class had the highest tfp levels in 1985 and 2006 how factor productivity growth varied within and across farm size classes between those years and which policy or factor had the greatest productivity enhancing effect when examining tfp growth we move beyond the common decomposition into technical and efficiency changes by identifying the complete distribution of farm productivity performances we find that by 2006 a u shaped distribution of productivity over farm sizes had emerged considerable 1985 2006 tfp growth differences are prevalent positive rates for the majority accompany stagnant or negative rates for some public education investments were associated with faster productivity growth regardless of farm size while technical assistance s positive effect and credit s negative effect were associated with larger farm sizes the role of specialization varied by size

the relation between farm size and farm productivity the role of family labor supervision and credit constraints abstract the paper shows that if the performance of hired farmhands is affected by supervision from family members and if the availability of credit is dependent on the amount of land owned then a systematic positive or negative relationship between per acre yields and farm size will prevail a model with no supervision effects on labor productivity would predict that yields are unaffected by farm size the paper also investigates the relation between land utilization and owned holding size when land rental possibilities are limited results are shown to be compatible with various observed patterns in ldcs

underinvestment low economic returns to education and the schooling of rural children some evidence from brazil a researcher analyzed 1972 1974 data on about 500 low income agricultural households from sao paulo and minas gerais regions in southeast brazil and ceara in the northwest to estimate the economic returns to schooling and to identify the major economic factors which determine household demand for the schooling of rural children the rates of return to schooling stood between 14 15 the main role of the household head was decision making further a considerably higher overall rate of return to education occurred which indicated a strong economic role of farmers schooling agriculture a strong positive association between childrens time spent on agricultural activities on their own farm and schooling p 05 yet household work and off farm earnings were negatively associated with schooling further both parents schooling was positively correlated with childrens schooling but mothers schooling p 05 had a greater effect than the fathers schooling insignificant yet the number of times the father moved off the farm to urban areas and had contacts strongly influenced childrens schooling p 05 when the researcher did not include childrens income family income had a strong negative relationship with childrens schooling p 05 yet when the family income variable was squared the correlation was positive p 05 this implied that when households had such low incomes that they could not meet basic needs any rises in income were invested in quantity of children not quality education yet after an increase in the initial stages household demand for schooling rose as income rose over time as a result of economic development use of improved technology on the farm had a significant positive correlation with schooling p 05 thus the government should see to modernization of agricultural practices eliminating discriminatory economic policies and reducing opportunity costs of schooling for low income parents

the long run relationship between interest rates and inflation some cross country evidence abstract this paper analyzes the effect of anticipated inflation on nominal interest rates paying special attention to the stability of this relationship over various regimes these regimes are analyzed to find out whether the inflation forecastability proposition recently advanced by barsky explains the observed poor performance of the fisher equation with historical data the analyses make use of the so called threshold and digression models and data from 11 western countries for 1875 1984 the main result of this paper is that the forecastability proposition does not explain the weakness of the anticipated inflation effect on interest rates rather various institutional factors seem to be of more importance

decomposing the gender gap in cognitive skills in a poor rural economy girls lag markedly behind boys in education in many developing countries which may slow economic growth and increase inequity this paper uses indicators of the output of the education production process cognitive skills to characterize and to investigate the determinants of the large educational gender gap in rural pakistan local school availability accounts for about a third of the total cognitive achievement gender gap and over two fifths of that in numeracy which implies that policies that increased local school availability for girls could reduce substantially the gender gaps in cognitive skills to further reduce these gender gaps will require policies that focus on the demand side of the market where our results suggest the response to modest changes in incentives may be high

agricultural policy and productivity evidence from brazilian censuses brazil s economic strategy has shifted hesitatingly during the last several decades from one of producer protection to trade competitiveness exploiting the variations these shifts have afforded we use a sequence of decennial agricultural censuses to examine brazilian policy implications for agricultural competitiveness and efficiency total factor productivity is decomposed into best technology and efficiency elements each subject to policy influence we find technology growth at 4 5 per annum to have been extraordinarily high particularly in the south but because productivity among average producers has fallen rapidly behind that on the technical frontier total productivity growth has been a much more modest 2 6 per year public agricultural research programs most benefit the country s technological leaders widening the gap between frontier and average producer credit education and road construction policies instead narrow that gap credit and road programs especially enhance efficiency in the south where efficiency losses have been greatest jel classification o2 o3

imperfect information and wage inertia in the business cycle nominal wages have less variation about a trend than the money supply does and the variation is more persistent this inertia in the nominal wage is often cited as the principal source of stagflation this paper explains the phenomenon by appealing to temporary wage inflexibility in an environment where agents cannot directly disentangle permanent versus transitory movements in key state variables a wage equation results that is a distributed lag of previous values of the state variables including money nominal wage variation becomes less sensitive to the money supply as agents ability to detect the permanent evolution of the money supply declines

the impact of bolsa familia on schooling summary we use longitudinal household data and propensity score weighting methods to assess the impact of brazil s bolsa familia conditional cash transfer program on schooling outcomes of children aged 6 17 years weak aggregate effects mask considerable heterogeneity among girls the program significantly increases school participation by 8 percentage points and grade progression by 10 percentage points with large significant effects across both younger and older girls in rural areas but concentrated among girls aged 15 17 years in urban areas few significant impacts are found among boys we discuss implications and potential mechanisms for differential impacts by sex age and location

child farm labor the wealth paradox this article is motivated by the remarkable observation that children of land rich households are often more likely to be in work than the children of land poor households the vast majority of working children in developing economies are in agricultural work predominantly on farms operated by their families land is the most important store of wealth in agrarian societies and it is typically distributed very unequally these facts challenge the common presumption that child labor emerges from the poorest households this article suggests that this apparent paradox can be explained by failures of the markets for labor and land credit market failure will tend to weaken the force of this paradox these effects are modeled and estimates obtained using survey data from rural pakistan and ghana the main result is that the wealth paradox persists for girls in both countries whereas for boys it disappears after conditioning on other covariates

price dynamics under imperfect information abstract the paper considers the pricing decision of a monopolist firm having demand and costs exposed to nominal and real shocks which include both permanent and transitory changes the firm obtains information through both price and quantity signals and the price equation is found by use of a filtering technique it is shown that imperfect information implies nominal price smoothing where the price adjusts only partially relative to the past price by incorporating new information observed through price and quantity signals

horticultural exports female wage employment and primary school enrolment theory and evidence from senegal abstract in this paper we analyse the indirect effects of the boom in horticultural exports in senegal on child schooling the export boom has caused a dramatic increase in female off farm wage employment which led to increased female bargaining power in the household we investigate the causal effect of female wage income on primary school enrolment we develop a collective household model with endogenous bargaining power to show that if women have higher preferences for schooling than men the impact of female wage income on school enrolment will be the result of a positive income effect a negative labour substitution effect and a positive empowerment effect we address the question empirically using original household survey data from senegal we use different econometric techniques and show that female off farm wage income has a positive effect on primary school enrolment for both boys and girls and that female empowerment is specifically important for the schooling of girls our results imply that the horticultural export boom in senegal has indirectly contributed to the second and third millennium development goals of universal primary education and elimination of gender disparities in primary education

labor force participation and earnings determinants for women in the special conditions of developing countries abstract little systematic analysis exists regarding hypothesized special labor market conditions for women in developing countries this study explores such conditions in nicaragua major results are i small children affect participation less than in developed countries due to child care from extended families or while on informal sector jobs and the necessity for poor mothers to work ii schooling and experience have major roles affecting work sector and earnings but the primary school return is half that cited by the world bank iii other human capital variables particularly nutrition have some impact

the relevance of standard estimates of rates of return to schooling for education policy a critical assessment abstract this paper examines the accuracy and usefulness of estimated rates of return to schooling based on the standard human capital model of becker and mincer regarding accuracy it investigates whether failure to account for differences in ability and school quality lead to significant biases estimates using ghanaian data confirm this possibility even when accurate estimated rates of return to additional years of schooling may have limited policy implications more useful for governments are rates of return to investments in school quality the paper uses data on cognitive skills to estimate rates of return to three types of school quality improvements

the demand for primary schooling in madagascar price quality and the choice between public and private providers abstract we estimate a discrete choice model of primary schooling and simulate policy alternatives for rural madagascar among school quality factors the results highlight the negative impacts on schooling demand of poor facility quality and the use of multigrade teaching several grades being taught simultaneously by one teacher in public schools simulations indicate the feasibility of reducing multigrade in public schools by adding teachers and classrooms a policy that would lead to modest improvements in overall enrollments and would disproportionately benefit poor children given much higher price elasticities for poorer households raising school fees to cover some of the additional costs would strongly counteract these favorable distributional outcomes an alternative policy of consolidation of primary schools combined with multigrade reduction or other quality improvements is likely to be ineffective because of the strongly negative impact of distance to school

college choice and wages estimates using data on female twins the authors assess the impact of college quality on women s earnings and the influence of family and individual endowments on college choice using new data from a survey of identical and nonidentical twins born in minnesota the estimates reject models that ignore school choice the statistically preferred estimates suggest that ph d granting private universities with well paid senior faculty and smaller enrollments produce students who have significantly higher earnings later in life both the quantity of schooling and the quality of schooling resources are allocated to higher endowed individuals which exacerbates preexisting inequality in human capital and biases conventional estimates of school quality effects copyright 1996 by mit press

opportunity inequality and the intergenerational transmission of child labour this paper presents a model in which opportunity differences within society result in child labour where opportunity is broadly defined but can include school quality access to higher paying jobs access to information about the returns to education and actual discrimination if opportunity differences exist child labour and poverty are shown to be symptomatic of this underlying socioeconomic condition it is then shown that policies that ban child labour and or introduce compulsory education laws can actually reduce dynastic welfare increase poverty and further exacerbate income inequality within society because they treat the symptom rather than the disease the lack of opportunity

household income and child schooling in vietnam the stronger are the associations between household income and child schooling the lower is intergenerational social mobility and the less equal is opportunity this study estimates the associations between household income and children s school success in vietnam the estimates indicate that these associations are considerable this article also investigates some ways in which policies relate to household incomes school fees are progressive but school fees are only about one third of what households pay directly to schools and are a much smaller proportion of a household s total school related expenditures total household expenditures paid directly to schools increase with household income less proportionately than do school fees alone so the overall structure of such payments is less progressive than is the structure of school fees because school enrollment is positively related to household income moreover the structure of school fees is less progressive for the entire population than for the selected subset that has children enrolled in school further the two school quality measures that have the strongest positive association with children s school success are much more available to higher income households meaning that higher income households have greater school expenditures in part because they are obtaining higher quality schooling and not because charges for the same quality schooling are progressive across income classes

endowments and the allocation of schooling in the family and in the marriage market the twins experiment 03 we show how comparisons between the within twin correlations of human capital outcomes across identical and nonidentical twins can be used to identify the variability in the individual specific component of endowments and the responsiveness of schooling to individual specific endowments in the family and in the marriage market even when schooling is measured with error estimates from two twins samples indicate that 27 42 percent of the variance in log earnings obesity is due to variability in individual specific endowments allocations of schooling reinforce specific endowments and individual specific earnings endowments of men and their wives schooling are negatively associated

the effects of education and family planning programs on fertility in indonesia 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

insiders outsiders and nominal wage contracts while the consequences of nominal wage contracts have been rather thoroughly analyzed there is no generally accepted theory of why such contracts prevail in this paper i argue that the distinction between insiders and outsiders is important for understanding nominal wage contracts since most employment fluctuations take the form of fluctuations in hiring insiders are normally not affected by them since prices are primarily determined by costs demand shocks have small effects on real wages thus insiders have little incentive to change to more complicated contracts with rigid nominal wages nominal demand shocks have large effects on the employment opportunities of outsiders but outsiders have little influence on labor contracts

schooling and earnings distributions with endogenous labour force participation marital status and family size this paper investigates the impact of various schooling investment strategies on family and per capita earnings within a framework that integrates effects on earnings family size marital status and labour force participation data are from a 1977 1978 survey of urban nicaraguan women aged 15 45 excerpt

inventories and sticky prices more on the microfoundations of macroeconomics the role of inventories in making prices sticky is studied by analyzing a dynamic linear quadratic model of a monopoly firm facing stochastic demand but able to store its finished goods in inventory it is shown that in contrast to the usual presumption firms that exhibit the smallest output responses to demand fluctuations may also exhibit the smallest price fluctuations specifically firms which have very flexible inventory storage facilities or are subjected to very transitory demand shocks will rely on inventories as buffers and will change neither production nor price very much on the other hand firms which have very inflexible storage facilities or whose demand shocks are quite permanent will display large swings in both price and output the standard assumption about inventory carrying costs that has been used in the literature that they are linear is shown to imply that production is impervious to fluctuations in demand it is also established that prices may respond more strongly to positive demand shocks than to negative ones if it is impossible to hold negative inventories i e to have unfilled orders the model offers an explanation for stickiness in relative prices however under certain circumstances it may help explain the persistence of inflation this abstract was borrowed from another version of this item

the quality of schooling quantity alone is misleading although much research discusses the quantity of schooling as an effective impact on productivity and earnings most such research leaves out the idea of the quality of schooling which may cause biases in the estimated returns to schooling this paper consequently attempts to extend the standard mincerian approach to incorporate school quality as well as quantity it demonstrates how exclusion of quality in the standard procedure may cause biases in the estimated returns to years of schooling probably in the upward direction the paper explores the implications of this extension of the standard model for the case of young brazilian males it shows that the estimate of the private return to years of schooling using the preferred quality inclusive specification is only one half the estimate using the standard procedure indicating substantial upward bias in the standard estimates it further outlines a method for estimating a social return to quality and finds that it exceeds substantially the social return to quantity the paper then shows why this in turn suggests there may be an equity productivity trade off in schooling investments

price inertia and policy ineffectiveness in the united states 1890 1980 this paper introduces a new approach to the empirical testing of the lucas sargent wallace lsw policy ineffectiveness proposition which compares the lsw hypothesis with an alternative that states that prices respond fully in the long run but only gradually in the short run to nominal aggregate demand disturbances the empirical equations estimated for a new set of quarterly data extending back to 1890 exhibit uniformly high responses of real output and low responses of price changes to anticipated changes in nominal gnp the paper compares and tests three alternative methods of introducing persistence effects into the lsw framework

commodity price shocks and child outcomes the 1990 cocoa crisis in cote d ivoire abstract we look at the drastic cut of the administered cocoa producer price in 1990 cote d ivoire and study to which extent cocoa producers children suffered from this severe aggregate shock in terms of school enrollment labor height stature and morbidity using precrisis 1985 88 and postcrisis 1993 data we propose a difference in difference strategy to identify the causal effect of the cocoa shock on child outcomes whereby we compare children of cocoa producing households and children of other farmers living in the same district or the same village this causal effect is shown to be rather strong for the four child outcomes we examine hence human capital investments are definitely procyclical in this context we also provide evidence of gender bias against young girls with respect to education and health care we finally argue that the difference in difference variations can be interpreted as private income effects likely to derive from tight liquidity constraints

evaluating the effects of optimally distributed public programs child health and family planning interventions this paper develops and tests an optimizing model determining the distribution of family planning and health subsidies across heterogeneous households and assesses the biases in cross area estimates of the health effects of such subsidies due to public resource optimization the model incorporates both health externalities and the endogenous response of the size of the recipient population to program subsidies longitudinal data describing child health and publicly provided family planning and health programs in 20 barrios in laguna province in the philippines are used to estimate the effects of such programs on child health and the relationships between the distribution of the programs and preprogram health levels the impact of a program on a particular childs health status is viewed as dependent upon the childs length of exposure to the program a basic feature of the model is the presence of health externalities which is shown to be sufficient along with plausible features of household behavior to make selective subsidization of fertility control either alone or in combination with health investment subsidies pareto efficient the model suggests that subsidization of fertility control is likely to be pareto efficient in the presence of health or human capital externalities when human capital and family size are gross substitutes and or when any per child human capital subsidies may substitute for direct subsidies to health investment and an equalizing distribution of the subsidies the highest family planning subsidies to the lowest health recipient households is efficient when both health and family planning subsidies are used fertility control subsidies minimize the subsidy burden for donors and are highest when total subsidy expenditures per child are greatest

sri lanka can conditional cash transfer programs serve as safety nets in keeping children at school and from working when exposed to shocks this brief summarizes the results of a gender impact evaluation study can conditional cash transfer cct programs serve as safety nets in keeping children at school and from working when exposed to shocks conducted the program started in 1997 and still exists today in sri lanka the study observed that income shocks on poor households are known to induce parents to take their children out of school and send them to work when other risk coping instruments are insufficient cct programs where the condition is on school attendance have been shown to be effective in increasing educational achievements and reducing child work shocks are highly prevalent and children have irregular periods of school enrollment children who are taken out of school are less likely to re enroll

college selectivity and earnings this article shows that college performance and selectivity have significant effects on earnings it suggests that work that does not include college performance overstates the effect of college se