economic mobility and poverty dynamics in developing countries this study provides an introduction to this special issue of the journal of development studies on economic mobility and poverty dynamics in developing countries in addition to providing a conceptual framework it outlines how the contributions fit into the extant literature a series of regularities emerge across these studies the poor consist of those who are always poor poor at all dates and those who move in and out of poverty with the latter group tending to be strikingly large such movements in and out of poverty are apparent when looking at poverty in either absolute or relative terms changes in returns to endowments can be a potent source of increased incomes finally seemingly transitory shocks can have long term consequences the study concludes by drawing out the policy implications of these regularities

adaptation to climate change a review through a development economics lens abstract this paper looks at adaptation to climate change from the point of view of poor households since the development literature has firmly established the role of weather risk as a source of income volatility for the poor and climate change is expected to increase this risk we review the range of risk coping mechanisms available to poorer households with a focus on possible barriers to adaptation we ask both how government interventions affect the set of options available for adaptation and risk coping and also what these adaptive responses imply for the prospects of sustainable development support for adaptation can involve efforts to make existing locations livelihoods and forms of production more resilient to climate risk in situ adaptation or reductions in vulnerability through the geographical and sectoral mobility of the poor transformational adaptation our review shows how successful adaptation will need to strike a balance between the two forms of adaptation avoiding locking in unsustainable practices in locations that are already marginal from an economic perspective and taking account of broader socio economic trends already taking place in many developing countries such as population growth and urbanisation we also highlight important considerations for policy makers which to date have been relatively neglected in the literature in particular related to the dynamic interaction between adaptation and sustainable development

consumption smoothing and the welfare consequences of social insurance in developing economies studies of risk in developing economies have focused on consumption fluctuations as a measure of the value of insurance a common view in the literature is that the welfare costs of risk and benefits of social insurance are small if income shocks do not cause large consumption fluctuations we present a simple model showing that this conclusion is incorrect if the consumption path is smooth because individuals are highly risk averse hence social safety nets could be valuable in low income economies even when consumption is not very sensitive to shocks

agricultural productivity and the sectoral reallocation of labor in rural india abstract how do shocks to agricultural productivity affect the allocation of labor across sectors of the economy to answer this i use data from rural india to show that exogenous increases in agricultural productivity caused by abnormally high levels of precipitation lead to an increase in the labor share of the non agricultural sector i further show that the non tradable sector expands significantly when agricultural output increases this evidence is consistent with increasing agricultural output causing increased demand for local non tradables which in turn increases the non agricultural labor share

vulnerability of victims of civil conflicts empirical evidence for the displaced population in colombia summary internal conflicts and the forced displacement often caused by such conflicts impose a heavy burden on the civilian population and greatly damage a community s overall welfare the present study employs a household level survey administered to 2 322 colombian displaced households to estimate changes in household welfare after displacement and to assess aggregate consumption levels in destination sites we also assess whether households are able to smooth consumption and we analyze the strategies they are compelled to adopt in order to cope our results indicate that victims of civil conflict face difficulties in generating income are unable to rely on usual risk sharing mechanisms and are forced to draw upon costly coping strategies in order to smooth consumption the vulnerability of displaced households and the possibility of falling into poverty traps highlight the need to design and implement specific policies for victims of internal conflict in order to cope with the displacement shock

risk pooling between households and risk coping measures in developing countries evidence from rural bangladesh abstract using data from rural bangladesh i test whether income risks are pooled among villagers between neighboring households and between related households living in different villages i find evidence that risks to food consumption are pooled between neighboring households and between related households but not among villagers as for nonfood consumption i find little evidence of risk pooling except between unrelated neighboring households i also find that while households belonging to a neighborhood network do not take any special measures during an economic hardship those not belonging to any such network try to smooth consumption by selling off livestock and other assets and by getting interest free loans negative income shocks are found to have little effect on labor supply or private transfers

shocks consumption and income diversification in rural ethiopia abstract we present new evidence that households are unable to protect themselves from rainfall failure that occurs on average every five years in rural ethiopia however other less extreme rainfall variation and idiosyncratic shocks such as illness and crop pests do not impact significantly on consumption agricultural shocks impact negatively on farm income as expected however they also stimulate non agricultural earnings by an equivalent amount in the case of a covariate shock such as severe rainfall failure this smoothing mechanism may be ineffective and rainfall insurance or drought triggered safety nets could provide further protection

credit as insurance in agrarian economies abstract this paper examines consumption credit as an insurance mechanism in agrarian economies it explains the more rapid adoption of new technology in the green revolution by large farmers who had greater access to consumption credit the paper also demonstrates how the emergence and expansion of consumption credit markets by mitigating the need for hoarding in order to meet consumption contingencies enhances growth by encouraging investment

women s labor market reactions to family disruptions shadow price varies over time it is shown that the change in a woman s labor supply is related to the deviation of the husband s actual work hours from the expected amount the estimation indicates that the largest response to the loss of husband s income occurs with a divorce or separation smaller effects are noted for widowhood husband s unexpected unemployment or health change m x easuring reactions of a married woman s labor supply to shocks to her household presents a research problem that is best addressed in a dynamic framework but recent empirical research on this topic has been conducted in a static environment in this study a dynamic model which allows for uncertainty is developed and empirically implemented with the goal of measuring the labor force response of a woman to changes in her husband s contribution to household earnings the model suggests a simple form to quantify the size of an unexpected shock to the household this shock resulting from changes in her marital status a worsening of her husband s health or her husband becoming unemployed the basic behavioral assumption is that a woman forms expectations of her husband s likely contribution to household income based on their prior experiences and she then reacts to the particular circumstances encountered in a given year in an uncertain world shocks almost always occur where a shock is defined as the difference between

precautionary behavior migrant networks and household consumption decisions an empirical analysis using household panel data from rural china abstract we develop a test of precautionary behavior in the consumption decisions of rural agricultural households among surveyed households facing a median level of consumption risk 10 of savings can be attributed to a precautionary motive and this increases to 15 for households with consumption per capita below the poverty line we next use distant lags of local rainfall shocks uncorrelated with current consumption growth to identify the size of migrant networks outside the village and then present evidence that both poor and nonpoor households engage in less precautionary saving as the size of the village migrant network increases

transfer benefits from public works employment evidence for rural india current knowledge provides little guidance on one of the key questions in evaluating public employment schemes aimed at directly reducing poverty what are the net income gains to participating workers this paper offers an answer for rural public employment in two villages in the state of maharashtra in india a model of intrahousehold time allocation is proposed and estimates are made using household data over six years the empirical implementation indicates that the projects induce significant behavioral responses transfer benefits are large and are greatly underestimated using prevailing market wage rates for similar work to estimate forgone incomes copyright 1994 by royal economic society

wage labour activities by agricultural households in nicaragua this article considers wage labour activities by agricultural households in nicaragua it analyses the role of 1 comparative advantage as determined by individual and household characteristics and 2 agricultural conditions and market imperfections in shaping wage labour supply an econometric specification is developed which allows for random household specific effects results reveal that non agricultural wage work is largely determined by comparative advantages whereas agricultural wage work is used to deal with a number of agricultural conditions and market imperfections

seasonal labor utilization in agriculture theory and evidence from agrarian households in india this paper develops and tests a dynamic stochastic model of seasonal labor demand of farm households in a developing country seasonality in agriculture is modeled as a dynamic two stage process planting and harvesting with sequential dependence of decisions yield risk is an important determinant of behavior in the planting stage only the proposed model is estimated using plot specific cross section time series data from india consistent estimates of the male and female labor demand functions in the planting and harvesting stages are obtained by panel data econometric methods that control for the nonseparability of the model

weather shocks and urban livelihood strategies the gender dimension of household vulnerability in the kumi district of uganda abstractthe teso sub region of uganda suffered numerous weather shocks in the past with devastating food security consequences using household fixed effects and propensity score matching methods we analyse the impact of exposure to drought flood and severe incidence of pests and diseases on household consumption expenditure per adult equivalent for a random sample of households from kumi town council we find that weather shocks reduce consumption by 17 per cent and that the consumption decline is significantly larger among female headed households we also find a higher likelihood of non farm employment borrowing and receiving remittances in order to cope with the shocks

duration of disability job mismatch and employment outcomes abstractworkers with disabilities have functional limitations that affect their productivity in some but not necessarily all jobs workers who find a job that is a good match for their functional limitations i e a job where their limitations have little or no impact on important job functions should expect better employment outcomes e g higher wages longer job tenure than workers with similar disabilities who are mismatched in their jobs merging data from the survey of income and program participation with o net data on job demands we construct two continuous measures of job mismatch for workers with physical disabilities we then extend the literature on disability and employment by exploring relationships between duration of disability job mismatch wages and hours worked the results indicate that workers with long durations of disability are employed in jobs that are a better match to their physical limitations than are similar workers with shorter durations of disability and workers who

inequality as a determinant of malnutrition and unemployment policy this paper explores the policy implications that are obtained once it is recognized that at low nutrition intakes a person s productivity is an increasing function of intake in the context of a fully general equilibrium model it is shown that if aggregate assets in an economy are neither large nor small certain patterns of lorenz improving asset redistributions or nutrition transfers increase aggregate output and reduce the volume of involuntary unemployment and the incidence of undernourishment copyright 1987 by royal economic society

the decline of the immigrant home ownership advantage life cycle declining fortunes and changing housing careers in montreal toronto and vancouver 1981 2001 in the past working age immigrant families in canada s large urban centres had higher home ownership rates than the canadian born over the past 20 years however this advantage has reversed due jointly to a drop in immigrant rates and a rise in the popularity of home ownership among the canadian born this paper assesses the efficacy of a fairly standard microeconomic consumer choice model which includes indicators for age income education family type and immigrant characteristics plus several interactions with time to explain these changes it is found that the standard model almost completely explains the immigrant homeownership advantage in 1981 as well as the rise in home ownership rates over time among the canadian born even after accounting for the well known decline in immigrant economic fortunes however it is shown that only about half of the 1981 2001 immigrant change in homeownership rates is explained by the standard model

caste discrimination and transaction costs in the labor market evidence from rural north india abstract this paper is an empirical attempt to quantify caste based discrimination in the labor market using household data taken from rural north india in the regression analysis transaction costs associated with entry into the labor market and reservation wages are estimated simultaneously along with market wages the estimation results provide evidence of the existence of transaction costs in the labor market and discrimination against backward classes with regard to access to regular employment in line with previous studies the results suggest that the achievements of india s reservation policy so far have at best been limited in addition a comparison between the estimates from the model employed in this paper and conventional reduced form approaches shows that discrimination in labor market entry is likely to be underestimated in the conventional reduced form approaches

evaluating familial support for the elderly the intrahousehold allocation of medical expenditures in rural pakistan introduction in this article i examine the determinants of medical expenditures on the elderly in rural pakistani households analyzing in particular the dependence of such expenditures on the economic contribution of the elderly to household income the results for older males are contrasted with those for younger males improved life expectancies in the south asian economies as in other developing economies have generated new policy interest in the economic status of the elderly there is however little empirical evidence on this topic while the scant research on the elderly in south asia undoubtedly reflects the fact that they represent one of the smallest demographic groups in these economies it also reflects the widespread belief that they are well provided for by the intergenerational households where the vast majority of them reside with their adult children however this assumption has been questioned by a number of scholars who find that medical expenditures on the elderly are closely correlated with the elderly s individual incomes and wealth household data from pakistan support such claims data on individual medical expenditures and days of illness are available from two household surveys a panel data set collected by the international food policy research institute ifpri and from the pakistan living standards measurement survey lsms both data sets reveal a strong correlation between the number of days of illness reported by adult males and age leading one to expect a similarly strong correlation between medical expenditures and age instead the ifpri data yield a correlation that is less than one would expect given the relationship between illness and age the lsms data set which provides information on many more

intertemporal substitution in labor supply micro evidence from rural india abstract this paper tests the hypothesis of intertemporal substitution in labor supply using time allocation data on adult male and female members of agricultural households in india the robustness of the results with respect to functional form specification and credit constraints is examined the female intertemporal elasticity of substitution is found to be significant but low similar to estimates from the us elasticity estimates for males are negative or zero tests of symmetry and additive separability proved inconclusive as they are quite sensitive to functional form in addition the empirical analysis revealed significant differences in the elasticity of substitution of females depending on land ownership and whether the period of reference falls during planting and harvesting or after harvesting these differences suggest that credit constraints limit the possibilities of substitution of labor supply across time

sequential decision making in production models single equation estimates of production models usually are justified by the assumption that production inputs are chosen as part of a one period decision problem yet most production decisions in agriculture are made sequentially in this paper the farmer s optimal input choices are modeled as optimal controls in a stochastic control problem a two period cobb douglas example is used to show that sequential solutions to production problems may yield models which require either single equation or simultaneous equation estimators functional separability stochastic specification and behavior under uncertainty are discussed in the context of dynamic production models

smoothing consumption by smoothing income hours of work responses to idiosyncratic agricultural shocks in rural india while research has demonstrated that farm households in developing economies are able to protect consumption from idiosyncratic crop shocks little evidence shows how this is achieved this paper examines the extent to which labor markets allow households to shift labor from farm to off farm employment and the extent to which such a shift explains the observed lack of correlation between consumption and idiosyncratic crop shocks the empirical analysis uses a novel measure of the idiosyncratic crop income shock which utilizes information on start of season cropping choices to more accurately estimate household expectations of weather

in the eye of the storm the welfare impacts of a hurricane summary the impact of a large covariant shock namely hurricane mitch is examined in the context of household asset holdings in rural nicaragua utilizing household panel data from the period it is found that the hurricane did not have an adverse impact on the ownership of productive assets among the affected households on average on the other hand nonproductive asset holdings seem to have been significantly reduced a further examination confirms that the shock affected the poorest households disproportionally especially in terms of nonproductive assets finally this study presents strong suggestive evidence of a geographical poverty trap within the shock affected areas of the country

ex ante actions and ex post public responses to drought shocks evidence and simulations from zimbabwe abstract the study examines the consequences of alternative public responses to drought shocks it does so by drawing on household data from resettlement areas of rural zimbabwe from 1992 93 to 1995 96 and the estimation of four behavioral relations the determinants of crop income the determinants of investment in livestock the determinants of investment in agricultural capital stock and the determinants of private transfers this information is used to construct a series of simulations in which drought relief received in the aftermath of the 1994 95 the ex post response is made available to households in the form of agricultural capital stock and extension advice an ex ante action doing so is found to raise household welfare in nondrought years but provides only limited protection in the aftermath of drought

jobs off the farm wealth human capital and social group in rural eastern india abstractthis study examines the effects of wealth human capital and social group on the occupational choice and income of farm households to gain an understanding of the mechanism underlying the

household responses to economic and demographic shocks marginal logit analysis using indonesian data abstract we analyse the responses of indonesian households to demographic and economic shocks and examine how these responses vary in relation to the household s permanent income and the extent to which the shock is common across the community households respond in different ways to demographic and economic shocks economic shocks are more likely to result in a labour supply response from the household and this probability is further increased if the shock is common for rural households use of savings increases with permanent income the article also examines the role of the interviewer in influencing survey responses

natural disasters and labor markets abstract while it is clear that natural disasters have serious welfare consequences for affected populations less is known about how local labor markets in low income countries adjust to such large shocks combining data from the indonesia family life survey the desinventar database the u s geological survey and district level employment indicators this paper explores how a large earthquake in indonesia affected labor market outcomes in particular the evolution of wages across sectors i find that the earthquake had a positive effect on wage growth for workers who were employed in the agricultural sector at baseline i propose two mechanisms for this result a higher growth rate of the price of rice and a downward shift in the supply of workers in the agricultural sector i show that evidence mainly supports the latter labor shifted out of the agricultural sector into the construction sector raising the marginal product of labor in agriculture

saving in developing countries theory and review in the literature on economic development much of the interest in saving has been focused on the relation between saving and growth but saving is not only about accumulation it is about smoothing consumption in the face of volatile and unpredictable income and helping to ensure the living standards of poor people whose lives are difficult and uncertain this paper develops a model of households which cannot borrow but which accumulate assets as a buffer stock to protect consumption when incomes are low such households dissave as often as they save do not accumulate assets over the long term and have on average very small asset holdings but their consumption is markedly smoother than their income much of the evidence is as consistent with this view of saving as it is incosistent with standard views of smoothing over the life cycle and with explanations of the link between saving and growth in terms of life cycle saving behavior consumption smoothing is also a useful way of thinking about government policy where volatility in the world prices of taxed commodities can generate sharp fluctuations in government revenues as well as reallocations of revenue between the private and public sectors many important policy issues in developing countries hinge on issues of consumption and smoothing and research on these issues is currently likely to be more productive than work on the relation between saving and growth

economic shocks and labor market flexibility we test how labor markets adjust to large but temporary economic shocks in a context in which such shocks are common using an individual level panel from 1 140 philippine municipalities over 26 quarters we find that workers in areas affected by strong typhoons experience reductions in hours worked and hourly wages without evidence of layoffs the results are strongest for formal wage paying jobs we argue that those results are best explained by implicit contracts where workers and firms share risks we provide extensive qualitative data suggesting that employment contracts in the philippines allow for such flexibility abstract from author

social capital formation and credit access evidence from sri lanka summary while previous studies evaluate the impact of social capital on development outcomes there are very few empirical studies on determinants of social capital formation we use unique long panel data from sri lanka to examine the mechanism of social capital formation in an imperfect credit market we show that households facing credit constraints reduce investments in social capital furthermore temporal declines in investment persistently reduce general trust trust in villagers and trust in business partners while previous studies argue that social capital improves access to informal credit we show the reverse causality combining these findings suggests a potential poverty trap