optimal supervision with moral hazard abstract this paper adopts the principal supervisor agent hierarchy model pioneered by tirole tirole j 1986 hierarchies and bureaucracies on the role of collusion in organizations journal of law economics and organization 2 181 214 to analyze the optimal architecture of supervision we consider a principal who encounters a double moral hazard problem in particular we examine the endogenously determined supervisory effort and the possibility of untruthful revelation of supervisor s message the degree of accuracy for this endogenously chosen information architecture hinges upon the supervisory technology the supervisor s reservation utility and the agent s production technology besides though the principal s welfare would be lowered when the possibility of untruthful revelation is taken into account we find that his desired supervisory effort level may be enhanced instead

nash implementation a complete characterization the authors extend e maskin s results on nash implementation first they establish a condition that is both necessary and sufficient for nash implementability if there are three or more agents the case covered by maskin s sufficiency result second and more important they examine the two agent case for which there existed no general sufficiency results the two agent model is the leading case for applications to contracting and bargaining for this case too they establish a condition that is both necessary and sufficient the authors use their theorems to derive simpler sufficiency conditions that are applicable in a wide variety of economic environments copyright 1990 by the econometric society

evaluating program impacts on mature self help groups in india despite the popularity and the unique nature of women s self help groups in india evidence on the economic impact of these groups is scant on the basis of two rounds of surveys of 2 517 households we use a strategy of double differences and propensity score matching to assess the economic effects of a program that promoted and strengthened self help groups in andhra pradesh in india our analysis finds that longer exposure to the program has a positive impact on consumption nutritional intake and asset accumulation our investigation into the heterogeneity of these effects suggests that even the poorest households are able to benefit from the program

credit market constraints consumption smoothing and the accumulation of durable production assets in low income countries investments in bullocks in india in this paper we formulate and estimate a finite horizon structural dynamic model of agricultural investment behavior that incorporates the major features of low income agricultural environments income uncertainty constraints on borrowing and rental markets and the use of investment assets to generate income and smooth consumption the model is fit to longitudinal indian household data on farm profits bullock stocks and pump sets the estimated structural parameters are used to assess the effects on the life cycle accumulation of bullocks agricultural profits and welfare associated with complete markets and bullock liquidity and with second best policies that provide assured sources of income to farmers and weather insurance

financial intermediation and endogenous growth an endogenous growth model with multiple assets is developed agents who face random future liquidity needs accumulate capital and a liquid but unproductive asset the effects of introducing financial intermediation into this environment are considered conditions are provided under which the introduction of intermediaries shifts the composition of savings toward capital causing intermediation to be growth promoting in addition intermediaries generally reduce socially unnecessary capital liquidation again tending to promote growth

does microfinance reduce poverty in bangladesh new evidence from household panel data abstract the study examines whether loans from microfinance institutions mfi reduce poverty in bangladesh drawing upon the nationally representative household panel with four rounds from 1997 to 2004 the effects of general microfinance loans and loans for productive purposes on income food consumption and women s body mass index are estimated overall effects of mfi loans on income and food consumption were positive and the purpose of the loan is important in predicting which household welfare indicator is improved alternative estimation methods confirm a positive impact of mfi loans on food consumption growth which supports the poverty reducing effects of microfinance in bangladesh

whose opinion counts implementation by sortition abstract sortition is the process of selecting decision makers or senators by a lottery we introduce sortition in implementation theory by augmenting a mechanism with a kleroterion or lottery machine p that selects the senators an outcome is implemented after consulting only the opinions of the senators we call the corresponding notion of implementation as p implementation and provide necessary and sufficient conditions for p implementation our main result is that in economic environments every nash implementable social choice rule scr is also p implementable if p selects every quartet of players with positive probability and always selects at least three senators we apply this result to two kleroteria oligarchic democracy and random sampling in economic environments every nash implementable scr can be implemented by oligarchic democracy of three oligarchs in economic environments every nash implementable scr can be implemented by randomly selecting four senators

social protection food security and asset formation summary the last two decades have seen a rapid rise in social protection programs and studies that assess their impacts on a large number of domains we construct a new database of studies of these programs that report impacts on food security outcomes and asset formation our meta analysis finds that social protection programs improve both the quantity and quality of food consumed by beneficiaries the magnitudes of these effect sizes are meaningful the average social protection program increases the value of food consumed expenditure by 13 and caloric acquisition by 8 food expenditure rises faster than caloric acquisition because households use transfers to improve the quality of their diet most notably increasing their consumption of calories from animal source foods since the consumption of animal source foods in these populations is low and because there are significant nutritional benefits to increasing the consumption of these this is a positive outcome our meta analysis also finds that social protection programs lead to increased asset holdings as measured by livestock non farm productive assets farm productive assets and savings there is no impact on land holdings though the number of studies that assess these is small

on nash implementation of social choice correspondences abstract in this paper we extend danilov s conditions for nash implementation to weak preferences over an arbitrary set of alternatives we show that a certain condition of strong monotonicity is necessary for nash implementation if the domain of preferences is sufficiently large furthermore in any preference domain of weak orders it is also sufficient for nash implementation if there are at least three agents

china s uneven progress against poverty while the incidence of extreme poverty in china fell dramatically over 1980 2001 progress was uneven over time and across provinces rural areas accounted for the bulk of the gains to the poor though migration to urban areas helped the pattern of growth mattered rural economic growth was far more important to national poverty reduction than urban economic growth agriculture played a far more important role than the secondary or tertiary sources of gross domestic product gdp rising inequality within the rural sector greatly slowed poverty reduction provinces starting with relatively high inequality saw slower progress against poverty due both to lower growth and a lower growth elasticity of poverty reduction taxation of farmers and inflation hurt the poor external trade had little short term impact

households saving in china china in recent years the world s largest and fastest growing economy also has national saving rates that are among the highest in the world this article considers a variety of statistical issues that cloud the measurement of aggregate and household saving in china it also provides new empirical evidence on the importance of intertemporal considerations in explaining the variation in household saving across china s provinces given china s size and its high saving rates it is not surprising that in recent year s considerable theoretical and empirical effort has been devoted to understanding its saving behavior this research can be divided into two broad strands the first emphasizes the relevance for china of traditional equilibrium theories of saving ranging from simple keynesian consumption saving functions to variants of the life cycle and permanent income hypotheses the second argues that equilibrium theories of saving are unlikely to be relevant in an economy in transition from plan to market instead disequilibrium factors especially shortages and rationing in goods and credit markets explain china s saving experience more broadly china s saving rate remains unusually high relative to international experience even after controlling for some of the determinants of saving

behavioral responses to risk in rural china does risk perpetuate poverty in a credit constrained economy jalan and ravallion study portfolio and other behavioral responses to measured risk using household panel data for rural china one quarter of wealth is held in unproductive liquid forms but only a small share of this appears to be a precaution against income risk the authors estimate that eliminating income risk would reduce the share of wealth held in liquid form by less than 1 percentage point moreover that effect is confined largely to middle income groups high income households do not it seems need to hold unproductive cautionary wealth and the poor probably cannot afford to do so the authors find no evidence that income risk discourages schooling but risk does inhibit the out migration of labor generally the results provide only limited support for the idea that uninsured risks promote unproductive portfolio behavior in this setting there is such an effect but it is small in magnitude and cannot be deemed an important cause of poverty

implementation via nash equilibria this paper is concerned with a problem of implementation of a given social choice correspondence the authors introduces an essential monotonicity condition and show that any implementable social choice correspondence satisfies this condition conversely in a case of three or more participants any essentially monotone social choice correspondence is implementable in a case of two participants the essential monotonicity condition must be completed by a requirement that the social choice correspondence is close to an individually rational correspondence copyright 1992 by the econometric society

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

precautionary savings a panel study theoretical literature shows that income uncertainty boosts saving yet empirical work is incomplete i test for the precautionary motive for saving using panel data knowing this motive s size is important for gauging the responsiveness of saving to government programs that reduce uncertainty and for comparison to other motives such as bequests most empirical studies of precautionary saving use either aggregate time series or cross sectional data which cannot capture the effects of individual income uncertainty i derive measures of total permanent and transitory income uncertainty from panel data the national longitudinal survey and find a strong precautionary motive a doubling of uncertainty increases the ratio of wealth to permanent income by 29

are there dynamic gains from a poor area development program poor area development programs in which the government transfers extra resources to unusually poor areas have been widely used to fight poverty there has been some research on such programs but little is known about their impact on household living standards over time the authors address the issue for a sizable poor area development program in rural china china s program had a significant impact on rural living standards in the targeted areas of the sample the consumption growth model suggests that households living in the targeted areas had a higher rate of consumption growth than one would have otherwise expected nonetheless the authors found that while the gains in growth were enough to prevent an absolute decline in average living standards they were not enough to reverse the strong underlying divergent tendencies in the rural economy

the nature of precautionary wealth abstract this paper uses the panel study of income dynamics to provide some of the first direct evidence that wealth is systematically higher for consumers with predictably greater income uncertainty however the apparent pattern of precautionary wealth is not consistent with a standard parameterization of the life cucle model in which consumers are patient enough to begin saving for retirement early in life wealth is estimated to be far less sensitive to uncertainty than implied by that model instead our results suggest that over most of their working life time consumers behave in accordance with the buffer stock models of saving described in carroll 1992 1997 or deaton 1991 in which consumers hold wealth principally to insulate consumption against near term fluctuations in income

nash implementation using undominated strategies we study the problem of implementing social choice correspondences using the concept of undominated nash equilibrium i e nash equilibrium in which no one uses a weakly dominated strategy we show that this mild refinement of nash equilibrium has a dramatic impact on the set of implementable correspondences our main result is that if there are at least three agents in the society then any correspondence which satisfies the usual no veto power condition is implementable unless some agents are completely indifferent over all possible outcomes many common welfare criteria such as the pareto correspondence and several familiar voting rules such as majority and plurality rules satisfy our conditions this possibility result stands in sharp contrast to the more restrictive findings with implementation in either nash equilibrium or subgame perfect equilibrium we present several examples to illustrate the difference between undominated nash implementation and implementation with alternative solution concepts

saving and economic shocks in rural pakistan abstract this paper adapts the recent methodology of paxson to study saving rates in rural pakistan particular attention is paid to differences in marginal rates of financial and physical saving and how these vary across income groups and by direction of income shocks households exhibit more difficulty in smoothing consumption after successive shocks than with a single shock the study also observes marginal rates of saving out of international remittances and lump sum pensions unlike domestic remittances international remittances appear to be treated much as transitory income shocks

macroeconomic policy in britain 1974 1987 a j c britton cambridge university press 1991 pp 365 price 30

contractual contingencies and renegotiation in a dynamic model of asymmetric information between the owner of a firm and a manager we investigate the optimal set of contingencies on which an incentive contract should depend when renegotiation is possible in particular we characterize the circumstances in which the contracting parties find it desirable to deliberately restrict what the owner can monitor thereby limiting the contractible contingencies our findings thus provide an endogenous explanation for contract simplicity in contrast to those based on transactions costs or bounded rationality

consumption and income seasonality in thailand many households in developing countries rely on seasonal agriculture for their incomes this paper investigates whether household consumption expenditure tracks income across seasons using data from thailand i contrast the seasonal consumption patterns of households with different seasonal income patterns and estimate the responsiveness of seasonal consumption to seasonal income i find little evidence that consumption tracks income over the course of the year the findings suggest that observed seasonal consumption patterns are the result of seasonal variations in preferences or prices common to all households rather than an inability of households to use savings behavior to smooth consumption

collusion delegation and supervision with soft information this paper derives an equivalence principle between organizational forms of supervisory and productive activities we consider an organization with an agent privately informed on his productivity and a risk averse supervisor getting signals on the agent s type in a centralized organization the principal can communicate and contract with both the supervisor and the agent however these two agents can collude against the principal in a decentralized organization the principal only communicates and contracts with the supervisor who in turn sub contracts with the agent we show that the two organizations achieve the same outcome we discuss this equivalence and provide various comparative statics results to assess the e ciency of supervisory structures

economic and social impacts of an innovative self help group model in india summary we assess the impact of an approach in the indian state of andhra pradesh that combines micro credit with efforts to target the poor address their specific needs and enhance their economic potential our results support the pro poor nature of the program and point toward benefits in terms of female empowerment and nutritional intake but not asset formation or income for program participants and other villagers while study of longer term effects is desirable this suggests that even in the short term the program helped improve consumption smoothing and income diversification

saving and liquidity constraints this paper is concerned with the theory of saving when consumers are not permitted to borrow and with the ability of such a theory to account for some of the stylized facts of saving behavior the models presented in the paper seem to account for important aspects of reality that are not explained by traditional life cycle models copyright 1991 by the econometric society

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

evaluating china s poverty alleviation program a regression discontinuity approach abstract this paper evaluates the impact of the 8 7 plan the second wave of china s poverty alleviation program on rural income growth at the county level over the program s disbursement period from 1994 to 2000 program participation was largely determined by whether a county s pre program income fell below a given poverty line hence a regression discontinuity approach is employed to estimate the causal effects of the program using a panel data set we find that the 8 7 plan resulted in an approximately 38 percent increase in rural income for counties that were treated between 1994 and 2000 our empirical results also suggest the important role of initial endowments in the path toward economic development

wealth weather risk and the composition and profitability of agricultural investments despite the growing evidence that farmers in low income environments are risk averse there has been little empirical evidence on the importance of risk in shaping the actual allocation of production resources among farmers differentiated by wealth the authors use panel data on investments in rural india to examine how the composition of productive and nonproductive asset holdings varies across farmers with different levels of total wealth and across farmers facing different degrees of weather risk income variability is a prominent feature of the experience of rural agents in low income countries the authors report evidence based on measures of rainfall variability that the agricultural investment portfolio behavior of farmers in such settings reflects risk aversion due evidently to limitations on consumption soothing mechanisms such as crop insurance or credit markets the authors results suggest that uninsured weather risk is a significant cause of lower efficiency and lower average incomes a one standard deviation decrease in weather risk measured by the standard deviation of the timing of the rainy season would raise average profits by up to 35 percent among farmers in the lowest wealth quartile moreover rainfall variability induces a more unequal distribution of average incomes for a given distribution of wealth wealthier farmers are willing to absorb significant risk without giving up profits to reduce production risk smaller farmers have to invest their limited wealth in ways that reduce their exposure to risk at the cost of lower profit rates the authors found that at high levels of rainfall variability differences in rates of profit per unit of agricultural assets were similar across classes of wealth but over the sample range of rainfall variability these rates of profit were always higher for the poorer farmers than for the wealthier ones suggesting that the disadvantages of small farmers in risk diffusion are more than offset by their labor cost advantage

regional poverty targeting in china we evaluate the effectiveness of regional targeting in china s large scale poverty alleviation program begun in 1986 by analyzing a panel data set of all counties in china for the period 1981 1995 estimates of models of poor county designation and poverty fund allocation and newly defined targeting gap and targeting error measures show that political factors have affected targeting and that leakage has increased while coverage has improved only one of the three main programs is progressive growth model estimates find that poor county designation increased incomes per capita by 2 28 per year during 1985 1992 and 0 91 during 1992 1995 these results are relatively robust to redefining control groups using propensity score matching methods

wealth risk and activity choice cattle in western tanzania abstract imperfect credit markets force households to use their savings for investment profitable activities often require lumpy investments limiting entry by poorer households resulting in increasing welfare differences in tanzania cattle are a profitable but lumpy investment and a liquid asset for consumption smoothing richer households own substantial cattle herds while poorer households specialize in low return low risk activities a dynamic programming model and simulations are presented to analyze entry into asset accumulation under income risk the evidence suggests that households with lower endowments are less likely to own cattle and returns to their endowments are lower

re evaluating microfinance evidence from propensity score matching this paper evaluates effectiveness of microfinance using propensity score matching psm method applied to data collected in a recent randomized control trial this method allows one to answer an additional set of questions not answered by the original study and provide more nuanced evidence by comparing microfinance institution mfi borrowers to those without any loans and those with prior loans from other sources it is argued that this unique setting with two comparison groups allows us to shed light on the unobservable entrepreneurial spirit bias and provides upper and lower bounds on the true microfinance impact the results suggest that microfinance can make a modest difference for some households in several expenditure categories

how does future income affect current consumption this paper tests a straightforward implication of the basic life cycle model of consumption that current consumption depends on expected lifetime income the paper projects future income for a panel of households and finds that consumption is closely related to projected current income but unrelated to predictable changes in income however future income uncertainty has an important effect consumers facing greater income uncertainty consume less the results are consistent with buffer stock models of consumption like those of deaton 1991 or carroll 1992a 1992b where precautionary motives greatly reduce the willingness of prudent consumers to consume out of uncertain future income

the road to specialization in agricultural production evidence from rural china summary many rural poor in developing countries live in areas far away from markets and isolation is a key limiting factor to their livelihood in this paper we use four waves of a primary panel household survey conducted in 17 remote natural villages in china to study how road access shapes farmers production patterns input use and rural poverty we adopt a difference in difference approach by comparing the outcomes of the households in villages with and without road access before and after the introduction of each road our results show that access to roads facilitates specialization in agricultural production in natural villages with better road access farmers plant fewer numbers of crops purchase more fertilizer and hire more labor consequently road connections improve household agricultural income and reduce poverty in addition road access significantly increases local nonfarm income for the relatively poor households but not the rich overall our research provides empirical justification on the importance of rural road on agricultural specialization and poverty reduction especially in isolated and impoverished regions

serial correlation and the fixed effects model this paper generalizes the durbin watson type statistics to test the ols residuals from the fixed effects model for serial independence also generalized are the tests proposed by sargan and bhargava for the hypothesis that the residuals form a random walk a method for efficient estimation of the parameters is also developed finally an earnings function is estimated using the michigan survey of income dynamics in order to illustrate the uses of the tests and the estimation procedures developed in this paper

resource fungibility the flypaper effect and the expenditure impact of grants in aid the typical assumption that intergovernmental grants in aid alter a recipient s budget constraint according to the legal provisions of grant programs was first challenged by mcguire 1975 1978 in a model where local officials are able to convert some fraction of conditional aid into pure fungible resources this paper develops a model of local government expenditure decisions based on mcguire s original work and applies it to data for large u s city governments the results lend strong support to the fungibility hypothesis additionally and importantly the results provide very little evidence in support of the so called flypaper effect of unconditional grants this is due to a more appropriate specification of the unconditional aid variable

using weather variability to estimate the response of savings to transitory income in thailand this paper measures the extent to which farmers are able to use savings and dissavings to smooth consumption in response to unexpected shocks to income time series information on regional rainfall is used to construct estimates of transitory income due to rainfall shocks the relationship between these measures of transitory income and savings indicates that farm households save a significantly higher fraction of transitory income than nontransitory income jel d91 016 the incomes of farm households in developing countries are notorious for being both low and uncertain policies that increase the incomes of farmers may well be different

consumption puzzles and precautionary savings abstract when marginal utility is convex agents accumulate savings as a precautionary measure against labor income eventualities this paper shows that precautionary savings can go a long way in making the excess growth excess smoothness and excess sensitivity features of consumption consistent with the stochastic processes of labor income observed in the u s at the microeconomic level

guaranteed employment or guaranteed income abstract the paper critically reviews the arguments for and against both employment guarantees and income guarantees when viewed as rights based policy instruments for poverty reduction in a developing economy decentralized implementation of the right to work poses serious challenges in poor places evidence on india s national rural employment guarantee act does not suggest that the potential for either providing work when needed or reducing current poverty is realized despite pro poor targeting instead work is often rationed by local leaders and the poverty impact is small when all the costs are considered the option of income support using cash transfers also has both pros and cons widely used methods for finely targeting cash transfers tend to miss many poor people and can discourage those reached from earning extra income yet it cannot be presumed that switching to a universal basic income will reduce poverty more than workfare or finely targeted transfers that is an empirical question and the answer will undoubtedly vary across settings belying the generalizations often heard from advocates nonetheless more incentive neutral universal and or state contingent transfer schemes merit consideration in settings in which existing public spending is skewed against poor people and or there is scope for raising taxes on the rich

fighting poverty one experiment at a time poor economics a radical rethinking of the way to fight global poverty review essay abhijit banerjee and esther duflo offer a coherent vision for an economics of poverty and antipoverty policy their economics is grounded in an effort to understand the economic and psychological complexities in the lives of poor people informed by social experiments and field observations their preferred policies entail small reforms at the margin also informed by experiments specifically randomized control trials while the book provides some interesting insights i question how far its approach will get us in fighting global poverty jel i32 i38 o15 p36

implementation in undominated strategies a look at bounded mechanisms this paper examines the impact of placing natural restrictions on the mechanisms considered for implementation problems it is shown that if all mechanisms are considered and preferences satisfy a basic condition then any social choice correspondence can be implemented in undominated strategies an example points out that the strength of this result derives from the use of mechanisms with questionable features in part of the message space the agent who announces the highest integer is rewarded this sort of tail chasing construction common in the constructive proofs of the literature is used to assure that undesired strategy combinations do not form an equilibrium if such mechanisms are ruled out then the social choice correspondences which can be implemented in undominated strategies satisfy an incentive compatibility type condition called strategy resistence for social choice functions this is equivalent to strategy proofness this contrast suggests that this issue should be examined as it applies to other solution concepts used in implementation theory the last portion of the paper begins to explore the issue as it relates to nash implementation and undominated nash implementation

hidden impact household saving in response to a poor area development project abstract the possibility that poor households may prefer to save the income gains from a development project raises concerns about how well standard evaluation methods using data collected over relatively short periods can capture the true welfare impacts by the widely used difference in difference method the southwest china poverty reduction project had little current impact on the proportion of people in beneficiary villages consuming less than us 1 day despite a public outlay of us 400 million however the program had much larger impacts on incomes than consumptions uncertainty about the project s future impact probably made it hard for participants to infer the gain in permanent income so they saved a high proportion of the current income gains

does child labour displace schooling evidence on behavioral responses to an enrollment subsidy this brief summarizes the results of a gender impact evaluation study entitled does child labour displace schooling evidence on behavioral responses to an enrollment subsidy conducted between 1995 and 1996 in bangladesh the study observed that the subsidy increases schooling but its effect on child labour is ambiguous the subsidy increased schooling by far more than it reduced child labour substitution effects helped protect current incomes from the higher school attendance induced by the subsidy substitution effects helped protect current incomes from the higher school attendance induced by the subsidy the reduction in the incidence of child labour by boys girls represents about one quarter eighth of the increase in their school enrollment rate

risk financial markets and human capital in a developing country this paper explores the link between financial market incompleteness and human capital accumulation we examine how child school attendance responds to seasonal fluctuations in the income of agrarian households using panel data from rural india to pinpoint market imperfections we study responses to aggregate and idiosyncratic as well as to anticipated and unanticipated income shocks our main finding is that seasonal fluctuations in school attendance are a form of self insurance but one which does not result in a substantial loss of human capital on average

direct and indirect effects of malawi s public works program on food security labor intensive public works programs are important social protection tools in low income settings intended to supplement income of poor households and improve public infrastructure in this evaluation of the malawi social action fund an at scale government operated program across and within village randomization is used to estimate effects on food security and use of fertilizer there is no evidence that the program improves food security and some negative spillovers to untreated households these disappointing results hold even under modifications to the design of the program to offer work during the lean rather than harvest season or increase the frequency of payments

village political economy land tenure insecurity and the rural to urban migration decision evidence from china this paper investigates the impact of land tenure insecurity on the migration decisions of china s rural residents a simple model first frames the relationship among these variables and the probability that a reallocation of land will occur in the following year after first demonstrating that a village leader s support for administrative land reallocation carries with it the risk of losing a future election the paper exploits election timing and village heterogeneity in lineage group composition and demographic change to identify the effect of land security in response to an expected land reallocation in the following year the probability that a rural resident migrates out of the county declines by 2 8 percentage points which accounts for 17 5 percent of the annual share of village residents aged 16 to 50 who worked as migrants during the period this finding underscores the potential importance of secure property rights for facilitating labor market integration and the movement of labor out of agriculture

the impact of state aid on the survival and financial viability of aided firms we estimate the causal impact of restructuring aid granted by the european commission between 2003 and 2012 on the survival and financial viability of aided firms using a comprehensive dataset we find that restructuring aid increases a firm s average survival time by 8 to 15 years and decreases the hazard rate by 58 to 68 percent depending on the definition of firm survival further analysis finds strong support that in the longer run aid receiving firms have a significantly higher probability to improve their financial viability than the counterfactual group

are the poor less well insured evidence on vulnerability to income risk in rural china the authors test how well consumption is insured against income risk in a panel of sampled households in rural china they estimate the risk insurance models by generalized method of moments treating income and household size as endogenous insurance exists for all wealth groups although the hypothesis of perfect insurance is universally rejected those in the poorest wealth decile are the least well insured with 40 percent of an income shock being passed on to current consumption by contrast consumption by the richest third of households is protected from almost 90 percent of an income shock the extent of insurance in a given wealth stratum varies little between poor and nonpoor areas

geographic poverty traps a micro model of consumption growth in rural china how important are neighbourhood endowments of physical and human capital in explaining diverging fortunes over time for otherwise identical households in a developing rural economy to answer this question we develop an estimable micro model of consumption growth allowing for constraints on factor mobility and externalities whereby geographic capital can influence the productivity of a household s own capital our statistical test has considerable power in detecting geographic effects given that we control for latent heterogeneity in measured consumption growth rates at the micro level we find robust evidence of geographic poverty traps in farm household panel data from post reform rural china our results strengthen the equity and efficiency case for public investment in lagging poor areas in this setting copyright 2002 john wiley sons ltd

the spatial contribution to income inequality in rural china an income function analysis is conducted of the 2 400 rural counties of china using cross section data income inequality among counties is considerable and accounts for the major part of inequality among rural households in china county income per capita is well explained by province terrain agricultural type location and the relative importance of non agriculture non agricultural activity in turn is strongly assisted by agricultural success an analysis of time series data suggests that a process of cumulative causation operated in the decade after the rural reforms of 1978 increasing spatial inequality in rural investment industrialization and income fiscal redistribution from richer to poorer areas weakened the process but failed to stem it copyright 1993 by oxford university press

can we trust shoestring evaluations many more impact evaluations could be done and at lower unit cost if evaluators could avoid the need for baseline data using objective socio economic surveys and rely instead on retrospective subjective questions on how outcomes have changed asked post intervention but would the results be reliable this paper tests a rapid appraisal shoestring method using subjective recall for welfare changes the recall data were collected at the end of a full scale evaluation of a large world bank supported poor area development program in china qualitative recalls on how living standards have changed are found to provide only weak and biased signals of the changes in consumption as measured from contemporaneous surveys importantly the shoestring method was unable to correct for the selective placement of the program favoring poor villages the results of this case study are not encouraging for future applications of the shoestring method although similar tests are needed in other settings

are there lasting impacts of aid to poor areas abstract the paper re visits the site of a large world bank financed rural development program in china 10 years after it began and four years after disbursements ended the program emphasized community participation in multi sectoral interventions including farming animal husbandry infrastructure and social services data were collected on 2000 households in project and non project areas spanning 10 years a double difference estimator of the program s impact on top of pre existing governmental programs reveals sizeable short term income gains that were mostly saved only small and statistically insignificant gains to mean consumption emerged in the longer term though in rough accord with the average gain to permanent income the use of community based beneficiary selection greatly reduced the overall impact given that the educated poor were under covered the main results are robust to corrections for various sources of selection bias including village targeting and interference due to spillover effects generated by the response of local governments to the external aid

socio economic impacts of jeevika a large scale self help group project in bihar india summary policymakers have invested billions of dollars over the past two decades on projects which target poverty reduction by institutional mobilization of the poor unfortunately evidence on the efficacy of such projects is few and far between this is an outcome of the complexity of these projects we consider results from jeevika a large scale rural livelihoods program in bihar india we use a retrospective survey instrument coupled with psm techniques to find that jeevika has engendered some significant results in restructuring the debt portfolio of these households additionally there is evidence on women s empowerment as measured by various dimensions

is foreign aid fungible the case of indonesia this paper considers whether foreign aid given for specific categories of expenditure is fungible among them and whether aid reduces tax effort by the recipient government models developed to analyze the fiscal relations among different levels of government in the united states are applied to analysis of the impact of foreign aid econometric analysis of data for indonesia reveals that aid is largely spent as the donors intended that aid does not lead to a reduction in tax effort and that aid is not diverted to nondevelopment current expenditures copyright 1990 by royal economic society

arm s length relationships we show that lowering the cost of acquisition of information that a principal obtains about the performance of an agent may make it more difficult for the principal to commit to threats hence it will weaken incentives and can therefore be counterproductive this phenomenon is explored in a framework where improving the quality of information makes a commitment not to renegotiate less credible applications to the theory of the firm are briefly explored

nash equilibrium and welfare optimality if is a set of social alternatives a social choice rule scr assigns a subset of a to each potential profile of individuals preferences over a where the subset is interpreted as the set of welfare optima a game form or mechanism implements the social choice rule if for any potential profile of preferences 1 any welfare optimum can arise as a nash equilibrium of the game form implying in particular that a nash equilibrium exists and 2 all nash equilibria are welfare optimal the main result of this paper establishes that any scr that satisfies two properties monotonicity and no veto power can be implemented by a game form if there are three or more individuals the proof is constructive

precautionary saving in the small and in the large the theory of precautionary saving is shown to be isomorphic to the arrow pratt theory of risk aversion making possible the application of a large body of knowledge about risk aversion to precautionary saving and more generally to the theory of optimal choice under risk in particular a measure of the strength of the precautionary saving motive analogous to the arrow pratt measure of risk aversion is used to establish a number of new propositions about precautionary saving and to give a new interpretation of the dreze modigliani substitution effect copyright 1990 by the econometric society

the world bank why it is still needed and why it still disappoints poor people find it harder to save so poor countries can find it difficult to finance needed investments from domestic savings alone in an ideal world this would not be a problem capital would flow from high income capital rich countries to low income capital poor countries because the marginal return should be higher in countries where capital is relatively scarce but that was not what people saw happening in the world 70 years ago in the years just after world war ii global capital markets were thin and not trusted as a source of finance it seemed that new institutions were needed in response delegates from 44 countries met in 1944 at a hotel in bretton woods new hampshire and agreed to create the international monetary fund imf and the international bank for reconstruction and development ibrd the latter is a core component of what came to be known as the world bank group or more often the world bank the imf was charged with managing imbalances of payments to avoid destabilizing currency devaluations while the world bank was to be the channel for longer term development finance much has changed since then there have been prominent calls for radically reforming the world bank or even closing it two main concerns have been raised by the bank s critics the first is that the bank s efforts are largely wasted because poor countries face nonfinancial constraints that limit their development the second is