guaranty funds and risk taking evidence from the insurance industry abstract this paper examines change in property liability insurers risk taking around enactments of state guaranty fund laws our evidence suggests that the risk of insurers asset portfolios increases following enactments but this increase in risk is significant only for stock insurers our evidence of increased risk taking following guaranty fund adoptions suggests that the way these funds are organized creates counterproductive investment incentives especially for stock companies because these laws were enacted by states over the period 1969 1981 our evidence on changes in risk taking helps resolve statistical problems that have been troublesome for studies of bank deposit insurance

economic determinants of free trade agreements abstract the purpose of this study is to provide the first systematic empirical analysis of the economic determinants of the formation of free trade agreements ftas and of the likelihood of ftas between pairs of countries using a qualitative choice model we develop this econometric model based upon a general equilibrium model of world trade with two factors of production two monopolistically competitive product markets and explicit intercontinental and intracontinental transportation costs among multiple countries on multiple continents the empirical model correctly predicts based solely upon economic characteristics 85 of the 286 ftas existing in 1996 among 1431 pairs of countries and 97 of the remaining 1145 pairs with no ftas

impacts in uganda of rising global food prices the role of diversified staples and limited price transmission this study assesses the potential impact of rising world food prices on the welfare of ugandan households while uganda experienced sharply higher food prices in 2008 as a landlocked food exporting country the causes of those price changes were mainly regional and indirect rather than directly transmitted from global markets using trade volumes food prices and household survey data we describe how uganda unlike some other countries is partially shielded from direct impacts of global food price movements although the majority of ugandans are net food buyers the adverse impact at household level of rising global prices is moderated by the relatively large quantity and range of staples consumed that come from home production moreover several of these are not widely traded some population groups in uganda are vulnerable to rising food prices however primarily those for whom maize is an important staple including those dependent upon humanitarian relief and the urban poor only a relatively small group of ugandan households will benefit directly and immediately from rising food prices the significant net sellers of food crops constituting between 12 and 27 of the population in this assessment we do not estimate the level and extent of wider second round effects from these higher prices jel classification q18 r22

does child labor decline with improving economic status between 1993 and 1997 child labor in vietnam declined by nearly 30 percent while the country s gdp grew by nearly 9 percent per year on average using a simple nonparametric decomposition i investigate the relationship between improvements in per capita expenditure and child labor with a panel data set that spans this episode of growth in vietnam improvements in per capita expenditure can explain 80 percent of the decline in child labor that occurs in households whose expenditures improve enough to move out of poverty this finding suggests a previously undocumented role for economic growth in the amelioration of child labor

child labor and agricultural shocks this paper examines the relationship between household income shocks and child labor in particular we investigate the extent to which transitory income shocks lead to increases in child labor and whether household asset holdings mitigate the effects of these shocks using data from a household panel survey in tanzania we find that both relationships are significant we investigate mechanisms that could account for these results including buffer stocks and borrowing

estimating the effects of free trade agreements on international trade flows using matching econometrics abstract this paper provides the first cross section estimates of long run treatment effects of free trade agreements on members bilateral international trade flows using nonparametric matching econometrics our nonparametric cross section estimates of ex post long run treatment effects are much more stable across years and have more economically plausible values than corresponding ols cross section estimates from typical gravity equations we provide plausible estimates of the long run effects of membership in the original european economic community eec and the central american common market cacm between 1960 and 2000 and the estimates confirm anecdotal reports of these agreements effectiveness

is trade good or bad for the environment sorting out the causality we seek to contribute to the debate over globalization and the environment by asking what is the effect of trade on a country s environment for a given level of gdp we take specific account of the endogeneity of trade using exogenous geographic determinants of trade as instrumental variables we find that trade tends to reduce three measures of air pollution statistical significance is high for concentrations of so2 moderate for no2 and lacking for particulate matter although results for other environmental measures are not as encouraging there is little evidence that trade has a detrimental effect on the environment

weathering the storms credit receipt and child labor in the aftermath of the great floods 1998 in bangladesh summary in this paper we use data from a unique survey conducted in the aftermath of the 1998 floods in bangladesh to examine how the household shock child labor relationship is affected by credit receipts of households adopting the ratio of assets lost due to the floods as a likely exogenous shock proxy we find that child labor increases with the magnitude of the shock but only if households do not receive credit this suggests that following shocks child labor may be a response to non availability of credit the policy implication suggests a distinct and alternative channel in combating the economic incentives behind child labor access to credit diminishes the immediate financial burden on constrained households reducing their need for child labor

global oil prices and local food prices evidence from east africa it is widely believed that oil prices impact food prices in developing countries yet rigorous evidence on this relationship is scarce using maize and petrol price data from east africa we show that global oil prices do affect food prices but primarily through transport costs rather than through biofuel or production cost channels we find that global oil prices transmit much more rapidly to the pump and then to local maize prices than do global maize prices suggesting that the immediate effects of correlated commodity price shocks on local food prices are driven more by transport costs than by the prices of the grains themselves furthermore we present suggestive evidence that for markets furthest inland changes in world oil prices have larger effects on local maize prices than do changes in world maize prices

does trade liberalization lead to environmental burden shifting in the global economy abstract does trade liberalization lead to the outsourcing of pollution from industrialized countries to developing countries according to the pollution haven hypothesis international trade is a key channel through which richer countries can geographically dissociate consumption from production of goods we examine whether and how trade liberalization via preferential trade agreements ptas facilitates the shifting of consumption based environmental burdens from developed countries via imports to poorer countries via exports based on panel data analysis of 183 countries from 1987 to 2013 we find partial evidence for trade induced environmental burden shifting while we observe an increase in footprint exports from low income countries when these countries liberalize trade this is not matched by an increase in footprint imports of high income countries our results also show that environmental clauses in ptas and participation in international environmental agreements do not influence the relationship between trade liberalization and ecological footprint movements however domestic institutions have a significant effect on the trade induced distribution of environmental burdens these findings suggest that ptas as a policy tool for trade liberalization are per se unlikely to induce exploitation of low income countries natural capital by wealthier nations however they suggest that political incentives inherent to democratic institutions encourage environmental burden shifting

are rta agreements with environmental provisions reducing emissions article i nfo this paper investigates whether rtas with environmental provisions affect relative and absolute pollution levels in order to do so the determinants of carbon dioxide emissions convergence are estimated for a cross section of 182 countries over the period 1980 to 2008 a propensity score matching approach is com bined with difference in differences techniques to effectively isolate the effect of the regional trade agree ment rta variable the usual controls for scale composition and technique effects are added to the estimated model and the endogeneity of income and trade variables is modeled using instruments the main results indicate that the co2 emissions of the pairs of countries that belong to an rta with environmen tal provisions tend to converge and are lower in absolute terms whereas this is not the case for rtas without environmental provisions as regards specific agreements we find that emissions converge more rapidly for nafta than for eu 27 and euro med countries we find consistent evidence that only rtas with environ mental harmonization policies affect relative and absolute pollution levels

the economics of child labor if child labor as a mass phenomenon occurs not because of parental selfishness but because of the parents concern for the household s survival the popular argument for banning child labor loses much of its force however this assumption about parental decision making coupled with the assumption of substitutability in production between child and adult labor could result in multiple equilibria in the labor market with one equilibrium where children work and another where adult wage is high and children do not work the paper establishes this result and discusses its policy implications copyright 1998 by american economic association

assessing the impact of unilateral trade policies eba and agoa on african beneficiaries exports using matching econometrics the existing literature studying the impact of non reciprocal preferential trade agreements nrptas assumes implicitly nrptas are non randomly assigned without showing the evidence of that using a matching methodology this paper investigates whether the african growth and opportunity act agoa and the everything but arms eba unilateral trade concessions have had an impact and in what magnitude on the exports of african beneficiary countries in the light of the evidence of the non random nature endogeneity of nrptas methodologically previous studies using the matching procedure focused on bi or multilateral trade agreements our work focuses on nrptas that depend only on donors conditions accordingly we show that for nrptas gravity covariates cannot be used for the matching procedure we propose to use political variables as determinants for obtaining non reciprocal trade preferences in order to address the endogenous nature of nrpta assignment our main results confirm that a country becomes eligible for a nrpta only when it meets certain conditions defined by their donors such as political stability and economic regulation for agoa and freedom of expression and human development for eba results also show that both agoa and eba policies have had a positive impact on african beneficiary countries exports to nrpta s providers even if the magnitude impact of eba is significantly lower than that of agoa

hidden child labor determinants of housework and family business work of children in 16 developing countries summary two forms of hidden child labor housework and family business work are studied for 178 000 children in 16 african and asian countries about 30 of african children and 11 of asian children work over 15 h a week in hidden child labor girls are more involved in housework and boys more in family business work but this division is not strict most 80 90 of variation is due to household factors children work less in urban less traditional and more educated areas gender differences are larger in asia probably due to a stricter form of patriarchy

the impact of income and non income shocks on child labor evidence from a panel survey of tanzania summary this paper investigates the impact of income and non income shocks on child labor using a model in which the household maximizes utility from consumption as well as human capital development of the child we also investigate if access to credit and household assets act as buffers against transitory shocks our results indicate significant effects of agricultural shocks on the child s overall work hours and agricultural work hours with higher effects for boys crop shocks also have significant adverse effects on school attendance with girls experiencing a more than 70 increase in the probability of quitting schooling the results also indicate that access to a bank account has a buffering effect on the impact of shocks on child hunger having a bank account reduces both male child labor and household work hours of a girl child while assets reduce working hours of girls we do not find it having a significant effect on boys we also do not see assets to act as a buffer against shocks

gender and say a model of household behaviour with endogenously determined balance of power the evidence that the same total income can lead a household to choose different consumption vectors depending on who brings in how much of the income has led to an effort to replace the standard unitary model of the household with the collective model which recognizes that the husband and the wife may have different preferences and depending on the balance of power between them the household may choose differently one weakness of this new literature is that it fails to recognize that the household s choice could in turn influence the balance of power once this two way relation between choice and power is recognized we are forced to confront some new questions concerning how to model the household this paper tries to answer these by defining a household equilibrium examining its game theoretic properties and drawing out its testable implications it is shown for instance that once we allow for dynamic interaction a household can exhibit inefficient behavior and that for a certain class of parameters children will be less likely to work in a household where power is evenly balanced than one in which all power is concentrated in the hands of either the father or the mother the paper also draws out the implications for female labor supply

toward a new conception of the environment competitiveness relationship accepting a fixed trade off between environmental regulation and competitiveness unnecessarily raises costs and slows down environmental progress studies finding high environmental compliance costs have traditionally focused on static cost impacts ignoring any offsetting productivity benefits from innovation they typically overestimated compliance costs neglected innovation offsets and disregarded the affected industry s initial competitiveness rather than simply adding to cost properly crafted environmental standards can trigger innovation offsets allowing companies to improve their resource productivity shifting the debate from pollution control to pollution prevention was a step forward it is now necessary to make the next step and focus on resource productivity

is child labor inefficient we build a model of child labor and study its implications for welfare we assume that there is a trade off between child labor and the accumulation of human capital even if parents are altruistic and child labor is socially inefficient it may arise in equilibrium because parents fail to fully internalize its negative effects this occurs when bequests are zero or when capital markets are imperfect we also study the effects of a simple ban on child labor and derive conditions under which it may be pareto improving in general equilibrium we show that the implications of child labor for fertility are ambiguous

the policy analysis of child labor a comparative study the policy analysis of child labour c grootaert h a patrinos modelling the determinants of child labour c grootaert child labour in cote d ivoire k cartwright child labour in urban bolivia k cartwright h a patrinos child labour in the philippines c sakellariou a lall policies to reduce child labour c grootaert h a patrinos

estimating the short run poverty impacts of the 2010 11 surge in food prices global food prices have increased substantially since mid 2010 as have prices in many developing countries in this study we assess the poverty impact of the price changes between june and december 2010 in twenty eight low and middle income countries this is done by gathering detailed information on individual households food production and consumption levels for thirty eight agricultural and food commodities to assess the impacts on household welfare this study estimates that this sudden food price surge increased the number of poor people globally but with considerably different impacts in different countries the heterogeneity of these impacts is partly related to the wide variation in the transmission of global prices to local prices and partly to differences in households patterns of production and consumption on balance the adverse welfare impact on net buyers outweighs the benefits to net sellers resulting in an increase in the number of poor and in the depth of poverty we estimate that the average poverty change was 1 1 percentage points in low income countries and 0 7 percentage points in middle income countries with a net increase of 44 million people falling below the 1 25 per day extreme poverty line

income smoothing and consumption smoothing one way that risk averse households protect consumption levels is to borrow and use insurance mechanisms another way common in low income economies is to diversify economic activities and make conservative production and employment choices households thus tend toward limiting exposure only to shocks that can be handled with available credit and insurance typically both types of mechanisms are studied independently but much more can be learned by studying them together first we obtain a more complete picture of risks costs and insurance possibilities second it opens the way to considering biases in standard tests of credit and insurance

child labor and coordination failures abstract in this note we show that a technology based coordination failure may explain the emergence of laws restricting child labor child labor may arise because of the lack of a coordination mechanism between parental decisions to invest in the human capital of their children and firms decisions to invest in skill biased technologies legislative intervention in many cases helps coordinate expectations towards a pareto superior outcome with investments both in human capital and in skill biased technologies

the effect of food price changes on child labour evidence from uganda abstractmost people in developing countries spend up to 60 per cent of their income on food even though the majority of them are farmers hence a change in food prices affects both their revenue

household income as a determinant of child labor and school enrollment in brazil evidence from a social security reform abstractthis article studies the effects of household income on labor participation and school enrollment of children aged 10 14 in brazil using a social security reform as a source of exogenous variation in household income i find that increased benefits are associated with increases in school enrollment for girls as well as a smaller reduction in their labor participation but i find no effects for boys i also uncover evidence that the gender of the benefit receiver matters for girls labor variables only benefits received by females reduce girls work

does trade openness improve environmental quality the literature on trade openness economic development and the environment is largely inconclusive about the environmental consequences of trade this study treats trade and income as endogenous and estimates the overall impact of trade openness on environmental quality using the instrumental variables technique we find that whether or not trade has a beneficial effect on the environment varies depending on the pollutant and the country trade is found to benefit the environment in oecd countries it has detrimental effects however on sulfur dioxide so2 and carbon dioxide co2 emissions in non oecd countries although it does lower biochemical oxygen demand bod emissions in these countries we also find the impact is large in the long term after the dynamic adjustment process although it is small in the short term

risk and insurance in village india comment the protection of poor households in high risk agrarian economies from shocks to their incomes has often been seen as a compelling motive for various forms of policy intervention including transfers of cash or food credit subsidies and public employment schemes for a survey see lipton and ravallion 1995 the desirability of such safety net policies clearly depends on how well pre existing risk sharing arrangements work while it is commonly thought that without effective policy intervention rural households are vulnerable to village wide shocks such as adverse prices or poor rains it is less clear to what extent risk sharing institutions within the village mitigate the effects of idiosyncratic income risk stemming for instance from ill health or localized crop damage 2 several recent papers have used household level data to implement tests of risk sharing that might inform such concerns 3 these tests are based on the proposition that with perfect risk sharing consumption at the household level should be insured against idiosyncratic risks and thus depend solely on the realization of the aggregate risk wilson 1968 diamond 1967 townsend 1994 tests this implication of perfect intra village risk sharing using longitudinal household data on consumptions and incomes for three villages in india he reports that the full insurance hypothesis provides a surprisingly good benchmark in that household consumptions co move and do not appear to be much influenced by contemporaneous own income our aim here is to examine the robustness of this potentially important finding we have two main concerns the first is that the specification townsend adopts potentially biases his test towards the null hypothesis of full insurance because it yields inconsistent estimates of the key test parameter under a plausible alternative we therefore estimate a different specification that generates consistent estimates under both the null and the alternative our second concern is that a particular form of measurement error in the consumption data townsend uses may have further biased his results toward the null hypothesis of full insurance to address this concern we use an instrumental variables procedure when we implement the test of consumption insurance with townsend s consumption data we also re estimate the test equations with a measure of consumption derived from the same underlying primary data by an alternate method finally townsend reports 1discussions with robert townsend stimulated our interest in this investigation the staff of the

studying household purchasing and nonpurchasing behaviour for a frequently consumed commodity two models a panel data double hurdle model is developed to analyse household purchasing behaviour the model a time series extension of cragg s conventional double hurdle model of censored consumption is able to account not only for the censored nature of commodity purchases but also for the temporal linkage of the purchase process the panel data double hurdle model is compared with the marked renewal model that has also been used for studying household purchasing behaviour the empirical results of the double hurdle model show that for household milk purchases hurdle due to noneconomic reasons exists the results of the marked purchase renewal model showed that the duration dependence is positive both models fit the data well the views presented in this paper are those of the authors and not necessarily those of usda ers

the heterogeneous effects of a food price crisis on child school enrollment and labor evidence from pakistan using a panel survey this paper investigates how the increase in food prices in pakistan in 2008 2010 affected children s school enrollment and labor the causal identification relies on geographical variations in the price of food wheat the results show that the negative impacts of food price increase on school enrollment differ by gender economic status and the presence of siblings the negative effects on school do not directly correspond to the increase in child labor because the transition from being idle to labor activity or from school to being idle are significant particularly among the poor girls the results also show that children in households with access to agricultural land are not affected by higher food prices the analyses reveal a more dynamic picture of the impact of food price increase on child status and contribute to broader policy discussion to mitigate the impact of crises on children s education

the impact of conditional cash transfers on the amount and type of child labor this paper analyzes the impact of conditional cash transfers on the amount and type of child labor in poor households it first develops a simple theoretical model where child labor and training are chosen to maximize inter temporal household income given constraints to social household and child endowments then it conducts an empirical analysis using the randomized trial data collected to evaluate the 2006 nicaragua conditional cash transfer cct program this social program transferred wealth to poor families in rural areas of the country conditional on children s school attendance and health check ups one third of the beneficiaries received in addition a wealth transfer to begin a non agricultural business the paper finds that the cct program had a selective impact on the volume and quality of child labor reducing it in the aggregate and steering it toward skill forming activities specifically the program appears to have reduced child labor for household chores and traditional farming while increasing it for non traditional activities related to commerce and retail these require the child to develop basic skills in reading and writing arithmetic and interpersonal relationships moreover the paper finds that the source behind the increase in the better quality type of child labor is not the basic component of the program but distinctively its business grant intervention

the impact of urbanization on co2 emissions evidence from developing countries abstract this paper analyzes the impact of urbanization on co2 emissions in developing countries from 1975 to 2003 it contributes to the existing literature by examining the effect of urbanization taking into account dynamics and the presence of heterogeneity in the sample of countries the results show an inverted u shaped relationship between urbanization and co2 emissions indeed the elasticity emission urbanization is positive for low urbanization levels which is in accordance with the higher environmental impact observed in less developed regions among our contributions is the estimation of a semi parametric mixture model that allows for unknown distributional shapes and endogenously classifies countries into homogeneous groups three groups of countries are identified for which urbanization s impact differs considerably for two of the groups a threshold level is identified beyond which the emission urbanization elasticity is negative and further increases in the urbanization rate do not contribute to higher emissions however for the third group only population and affluence but not urbanization contribute to explain emissions the differential impact of urbanization on co2 emissions should therefore be taken into account in future discussions of climate change policies

does trade liberalization harm the environment a new test recent events such as the nafta and the completion of the uruguay round have raised concern over the impact of trade liberalization on the environment in particular it is believed that less stringent environmental standards in developing countries will give them a comparative advantage in pollutionintensive goods using single equation models existing empirical studies have found either no relationship between environment and trade flows or a positive relationship between trade liberalization and the environment this paper develops a simultaneous equations model to estimate this relationship directly incorporating the effects of openness on growth of income and of income growth on environmental damage a two good trade model with endogenous factor supply is estimated using pooled provincial data on chinese water pollution from 1987 1995 estimation of this model reveals that trade liberalization directly aggravates environmental damage via its influence on the terms of trade but indirectly mitigates it via its effect on income growth simulations suggest that trade reform during the period may have had a net beneficial impact on emissions growth

implications of higher global food prices for poverty in low income countries in many poor countries the recent increases in prices of staple foods raise the real incomes of those selling food many of whom are relatively poor while hurting net food consumers many of whom are also relatively poor the impacts on poverty will certainly be very diverse but the average impact on poverty depends upon the balance between these two effects and can only be determined by looking at real world data results using household data for ten observations on nine low income countries show that the short run impacts of higher staple food prices on poverty differ considerably by commodity and by country but that poverty increases are much more frequent and larger than poverty reductions the recent large increases in food prices appear likely to raise overall poverty in low income countries substantially

implications of high food prices for poverty in pakistan the study estimates the impacts of rising world food prices on poverty in rural and urban areas of pakistan household income and expenditure data for 2004 2005 is used to estimate compensated and uncompensated price and expenditure elasticities using the linear approximation of the almost ideal demand system taking the unexpected component of higher domestic food prices in 2007 2008 own and cross price compensated elasticities are used to derive the changes in the quantity consumed food expenditure and impacts on poverty assuming the food crisis happened in 2004 2005 the results indicate that poverty increased by 34 8 severely affecting the urban areas where poverty increased by 44 6 as compared to 32 5 in rural areas the estimates show that 2 3 million people are unable to reach even one half of poverty line expenditures while another 13 7 million are just below and 23 9 million are just above the poverty line in the short run it is important to ensure food availability to these people in the long run the policy environment of subsidizing urban food consumers by keeping wheat prices lower than the international price needs to be reconsidered to provide the right incentives to increase food availability

child labor and household wealth theory and empirical evidence of an inverted u some studies on child labor have shown that at the level of the household greater land wealth leads to higher child labor thereby casting doubt on the hypothesis that child labor is caused by poverty this paper argues that the missing ingredient may be an explicit modeling of the labor market we develop a simple model which suggests the possibility of an inverted u relationship between land holdings and child labor using a unique data set that has child labor hours it is found that controlling for child household and village characteristics the turning point beyond which more land leads to a decline in child labor occurs around 4 ac of land per household c 2009 published by elsevier b v

trade policy and productivity abstract previous studies on the determinants of productivity emphasized the role of trade and institutions but omitted trade policy due to endogeneity concerns this paper considers the role of one important element of trade policy free trade agreements ftas based on recent work on the determinants of ftas we suggest an instrument which is based on the propensity to enter an fta due to exogenous geographical characteristics we find that differences in institutional quality and trade due to variations in geography and trade policy have a sizeable effect on productivity and can explain the huge variation in per capita income across countries