risk sharing and internal migration over the past two decades more than half the population in rural tanzania migrated within the country profoundly changing the nature of traditional institutions such as informal risk sharing mass internal migration has created geographically disperse networks on which the authors collected detailed panel data by quantifying how shocks and consumption co vary across linked households they show how migrants unilaterally insure their extended family members at home this finding contradicts risk sharing models based on reciprocity but is consistent with assistance driven by social norms migrants sacrifice 3 to 7 percent of their very substantial consumption growth to provide this insurance which seems too trivial to have any stifling effect on their growth through migration

return migration uncertainty and precautionary savings this paper presents a life cycle model where migrants determine re migration and consumption simultaneously in a stochastic environment whether precautionary savings of migrants are above or below those of natives is ambiguous in general the sign depends on the risk in host and home country labor markets and on the correlation of labor market shocks furthermore the effect of an uncertain environment on migration and re migration plans cannot be unambiguously signed for the general case it depends on the size of the wage differential as well as the relative risk the migrant exhibits in the two labor markets

the effects of external migration on enrolments accumulated schooling and dropouts in punjab external migration in developing countries can relax household income constraints because of external remittances this paper looks at whether the external migration of individuals in a household has a positive effect on schooling outcomes of children as measured by school enrolments accumulated level of schooling number of days spent in school and dropouts in punjab historic migration rates were used to instrument for migration in an analysis of school outcomes for children of different ages to see which group has been most affected by external migration the results show a significantly positive impact of external migration on the enrolments of younger children whereas the accumulated level of schooling for older children increases significantly if there is an external migrant in the household

heat exposure and youth migration in central america and the caribbean emerging evidence demonstrates migration may be used by individuals in the southern hemisphere to adapt to environmental changes the authors build upon recent work in the region using a similar triple difference in difference quasi experimental design and dataset to test whether repeated and or prolonged heat exposure affect inter province migration the growth literature has pointed to numerous examples in which environmental migration contributes to urbanization the authors therefore additionally predict how gradual changes in temperature influence the skill set of who migrates and their location choice the authors further confirm using two separate datasets whether the observed mobility patterns correspond to changes in income levels by examining the gross domestic product gdp losses at the district and national levels the former may be indicative of local vulnerability while national vulnerability from prolonged heat exposure can narrow the set of employment opportunities at destinations reducing the desirability of environmental migration

migrants in a guest worker system a utility maximizing approach this paper examines the behavior of utility maximizing migrants in a system of guest worker migration their pattern of leisure and commodity consumption at home and abroad is analysed and related

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

labor migration and risk aversion in less developed countries in this paper we question the pioneering work of todaro which states that rural to urban labor migration in less developed countries ldcs is an individual response to a higher urban expected income we demonstrate that rural to urban labor migration is perfectly rational even if urban expected income is lower than rural income we achieve this under a set of fairly stringent conditions an individual decision making entity a one period planning horizon and global risk aversion we obtain the result that a small chance of reaping a high reward is sufficient to trigger rural to urban labor migration

ex ante and ex post labor supply response to risk in a low income area abstract this paper tests for ex ante and ex post labor supply responses to weather risk for rural indian farm households the analysis uses panel data on 2115 households spanning 13 states in rural india merged with a 22 year series of district level rainfall data ex ante households facing riskier distributions of rainfall are more likely to participate in the labor market ex post unexpectedly bad weather and low rainfall increase labor force participation

migration remittances and the family remittances by migrants along with migration itself are elements in a migrant familys intertemporal contractual arrangement the reasons why the migrant and his family voluntarily enter into a mutually beneficial contractual arrangement with each other rather than with a 3rd party are discussed and the conditions under which the contractual arrangement is self enforcing are identified both parties can usually benefit from a number of pareto efficient mutual contractual arrangements this gives rise to an indeterminacy problem solved through a bargaining process between the parties who consequently converge to a contractual arrangement implying a specific flow of migrant to family remittances the chosen contractual arrangement reflects the relative bargaining powers of the parties and variables impinging upon these powers thus bear upon remittances in the light of these arguments tests are conducted on observed remittance behavior across individual migrants in botswana authors

livelihoods and poverty the role of migration a critical review of the migration literature this review of the literature concludes that development studies have paid insufficient attention to labour migration and makes a plea to integrate analyses of migration within those of agricultural and rural development it emphasises that population mobility is much more common than is often assumed and that this has been so throughout human history in fact available material suggests that it is as likely that population mobility has decreased as that it has increased a review of empirical studies shows that it may not be possible to generalise about the characteristics of migrants or about the effects of migration on broader development inequality or poverty the review concludes that given the importance of migration for the rural livelihoods of many people policies should be supportive of population mobility and possibilities should be explored to enhance the positive effects of migration

savings remittances and return migration abstract using a vast west german data set the paper shows that savings and remittances of migrants can be well explained by remigration plans and economic as well as demographic variables however the planned future duration of residence in germany has a negative and significant effect only on remittances

measuring the income effects of migrant remittances a methodological approach applied to greece there is an ongoing debate on how the often voluminous migrant remittances are used and to what extent they contribute to the development of the migrant s country of origin there are surveys on how remittance recipients spend their income and discussions on how effective government policies are in attracting remittances in fact there is quite a literature often negative concerning the contribution of remittances to productive investment this literature looks at remittances in a variety of ways concerning the substance of the inquiry some of the writers investigate the impact of remittances as a compensating factor for the losses of the human capital invested in emigrants or in a more general way as a parameter in the overall impact of migration others discuss the impact of remittances alone separated from the impact of migration flows 2 from a methodological point of view some of the theoretical analyses are cast in macroeconomic terms and are based on a tradednontraded goods model in which labor is exchanged for remittances whereas capital is immobile 3 other writers examine the welfare effects of remittances alone or jointly with the effects of migration 4 most of this literature however focuses on the first round of remittance spending and ignores the diffused multiple effects thus producing inconclusive evidence on the impact of remittances on the economy 5 there is in particular little specific research on how aggregate output and employment are affected and very limited sectoral and regional investigation of the issue 6 this article attempts a disaggregated sectoral analysis of the income effects of remittances on consumption production imports em

emigration to south africa s mines this paper presents a simultaneous econometric model of both the determinants of international migration to the south african mines and of some of the economic consequences for each of the labor supplying countries not only are the short run effects of labor withdrawal on traditional crop cultivation and the domestic wage labor markets considered but also the long term effects of savings from mine earnings invested in crops and cattle in the home countries the experiences of botswana lesotho malawi mozambique and the south african homelands are compared it is shown that emigration to the south african mines has reduced crop production in the subsistence sectors of botswana lesotho malawi and the south african homelands in the short run but the results also suggest that earnings of migrants have enhanced both crop productivity and cattle accumulation in the longer run except in lesotho excerpt

immigrant decisions concerning duration of stay and migratory frequency abstract the temporary and repetitive character of contemporary labor migration is explained by assuming that immigrants have a preference for location a life cycle model of immigrant behavior is developed to determine net lifetime income total time allocated to home country and foreign country residence and the number of migratory trips because of income effects home wages and foreign wages are not symmetric in their effect on the location of work effort it is also shown that changes in travelling costs have predictable consequences for the number of border crossings but not for the total time spent in the foreign labor market

credit markets in northern nigeria credit as insurance in a rural economy this article addresses the issues of imcomplete markets and imperfect information in the context of credit markets in rural northern nigeria in much recent theoretical literature the problems of moral hazard and adverse selection are assumed to be decisive for the organization of agrarian institutions in contrast it is found that in the four villages surveyed credit transactions take advantage of the free flow of information within rural communities information asymmetries between borrower and lender are unimportant and their institutional consequences the use of collateral and interlinked contracts are absent credit transactions play a direct role in pooling risk between households through the use of contracts in which the repayment owed by the borrower depends on the realization of random production shocks by both the borrower and the lender

a comparative analysis of the nativity wealth gap this paper investigates the source of the gap in the relative wealth posi tion of immigrant households residing in australia germany and the united states our results indicate that in germany and the united states wealth difierentials are largely the result of disparity in the educational attainment and demographic composition of the native and immigrant populations while income difierentials are relatively unimportant in understanding the nativity wealth gap in contrast the relatively small wealth gap between australian and foreign born households exists because immigrants to australia do not translate their relative educational and demographic advantage into a wealth advantage on balance our results point to substantial cross national disparity in the economic well being of immigrant and native families which is largely consistent with domestic labor markets and the selection policies used to shape the nature of the immigration ow

migrants savings the probability of return migration and migrants performance this paper highlights a difference between migrants and the native born namely a positive probability of return migration the analysis demonstrates that this probability results in migrants saving more than comparable native born this differential may explain why even if all workers are perfectly homogeneous in skills migrants often outperform the native born in the receiving economy excerpt

evidence on the political economy of the urbanization process urbanization and economic development go hand in hand as a country moves from a rural agricultural base to an urban industrial base this paper argues that urbanization per se occurs in response to the basic sector shift out of agriculture and government policies such as price controls and trade protection of industry affect the process only indirectly through their effect on sector composition however urban concentration the extent to which a country s urban resources are concentrated in one or two large cities as opposed to more evenly spread is much more directly affected by policies and politics the paper finds specifically that investments in inter regional infrastructure facilitates urban deconcentration away from primate to hinterland cities as does increasing democratization or increasing fiscal decentralization the findings move beyond establishing basic correlations in the data to trying to quantify causal effects in a panel framework with instrumental variables estimation

guestworker migration remittances and the extended family evidence from pakistan the paper places migration in the context of the extended family it models informal loans between migrant and extended family for financing the costs of international labor migration to show repayments to extended family is important we trace the effects of such loans on migrant savings and remittance to the immediate family we employ a standard life cycle approach which predicts that the demand for extended family financing rises with migration costs and falls with pre migration wealth remittance to the immediate family and savings retained abroad both fall with the pre migration loan these hypotheses are tested using data from a survey of return migrants to pakistan carried out in 1986

efficiency wages and subjective performance pay i introduction how to design incentive schemes to motivate workers is an important topic in economics the shirking models of efficiency wages such as shapiro and stiglitz 1984 establish that firms need to pay a wage premium efficiency wages to motivate workers with unemployment serving as a punishment device however one shortcoming of these models is that performance pay plays no role one justification for their omission of performance pay is that individual performance may not be verifiable nevertheless if workers performance is observable and employment relationships are repeated firms can use implicit bonuses or relational contracts based on workers subjectively assessed performance to motivate workers since subjective performance pay cannot be legally enforced it has to be self enforcing given that both efficiency wages and subjective performance pay motivate workers what is the optimal wage contract from the firm s perspective will different labor markets occupations use different forms of wage contracts what are the impacts of different forms of wage contracts on unemployment and social welfare to answer these questions this paper provides a theory of contract selection in a market setting in a seminal paper macleod and malcomson 1998 mm hereafter provided a model of contract selection between efficiency wages and subjective performance pay the driving force in their model is the market condition in a market with more workers than jobs a firm can always immediately and costlessly fill its vacancy after reneging on the promised bonus therefore no subjective performance pay is credible and firms have to use solely efficiency wages to motivate workers on the other hand in a market with more jobs than workers efficiency wages are useless in providing incentives because a worker can find another job immediately after being fired as a result firms use solely subjective performance pay to motivate workers in mm there are no exogenous turnover costs complementary to mm this paper provides a model of contract selection driven by exogenous turnover costs in labor markets we focus on the situation in which unemployment always exists in labor markets thus ruling out market condition as a determinant of contract selection it turns out that turnover costs affect the amount of efficiency wages and performance pay in optimal contracts while in mm efficiency wages and subjective performance pay cannot be used together to motivate workers in our model firms are able to use combinations of both methods of payments by affecting optimal contracts turnover costs also have impacts on the equilibrium employment level and social welfare finally our model generates rich empirical implications about the relationships among turnover costs forms of employment contracts and levels of employment our basic model studies how turnover costs borne by firms affect contract selection from the firm s point of view subjective performance pay is cheaper since efficiency wages entail a wage premium thus the optimal wage contract uses the maximum amount of bonus to motivate workers however subjective performance pay may not be credible due to the firm s moral hazard problem in labor markets with positive unemployment a firm can immediately hire a new worker after reneging on the implicit bonus the presence of turnover costs can alleviate this moral hazard problem this is because a worker can punish a reneging firm by quitting and the firm has to incur turnover costs in hiring new workers therefore in the optimal contract the amount of bonus is increasing in turnover costs since subjective performance pay is cheaper as the turnover costs increase more subjective performance pay leads to a lower total wage payment after deriving the optimal contracts we turn to study market equilibrium which is determined by firms free entry condition

are international remittances altruism or insurance evidence from guyana using multiple migrant households abstract while international remittances provide significant disposable income for many households in less developed countries there is no consensus on migrants remittance motivation two principal competing explanations for remittances are altruism and risk sharing this paper employs previously unanalyzed data to bring new evidence to the debate we develop a simple theoretical model that yields distinct testable predictions for each motivation among the model s testable predictions is differential remittance behavior by migrants from households with multiple versus single migrants under altruism and risk sharing our estimation finds significant differences in remittance behavior of multiple and single migrants and these differences support the altruistic incentive to remit

temporary and permanent migration with and without an immobile factor abstract this paper develops two two country overlapping generations models one with and one without an immobile factor to study temporary and permanent migration temporary migration is shown to be equivalent to international lending and borrowing one strong result found in the literature that if natives of each country are homogeneous permanent migration leads to the migration of the entire population of the impatient country in the long run is overturned welfare effects of migration are analyzed

motivations to remit evidence from botswana in this article a theory of motivations to send remittances is described and tested with data from botswana altruism is one of the motivations tested and found to be an insufficient explanation for remittances among migrants in botswana a refinement of the model stipulates a modified altruism or enlightened self interest in this model the relationship between the migrant and family is tempered by an implicit understanding of mutual benefit the household strategy may be to encourage some members to migrate as a means of spreading risk and sharing gains the household strategy is similar to an insurance policy where migration is to places where market potential is high the risks incurred might be high the example is given of migration during a drought in botswana migrant remittances were greater in households with more cattle or households with more to lose drought alone was not statistically related to remittances increases in remittances were related to increased levels of education it is suggested that repayment was the motive for parents investment in migrants education migrants gains are identified as the potential for an inheritance the security of channeling investments through a trusted family member and security in having a home to return to it is pointed out that the altruism and family remittances from urban migration were strategies that bridged the simple dynamic of either urban development or rural development impacting on family welfare it is suggested that household models of economy adopt some measure to express the relationship of household wealth to remittances from urban migrants

group size and the efficiency of informal risk sharing this paper seeks to understand and test empirically the relationship between group size and informal risk sharing models of informal risk sharing with limited commitment and grim trigger punishments upon deviation imply that larger groups provide better insurance however when subgroups of households can credibly deviate so that sustainable informal arrangements ought to be coalition proof the relationship between group size and the amount of insurance is unclear building on genicot and ray 2003 we show that this relationship is theoretically ambiguous we then investigate it empirically using data on the size of the sibships of the household head and spouse in rural malawi to identify the relevant potential risk sharing group we exploit a social norm among the main ethnic group in our sample that the wife s brothers play a key role in ensuring her household s wellbeing we find that households where the wife has many brothers are poorly insured against crop loss events we fail to uncover a similar relationship for the wife s sisters ruling out that our findings are driven by wives with many siblings e g brothers simply having poorer extended family networks a simple calibration exercise indicates that the threat of coalitional deviations can explain our empirical findings

on the road marriage and mobility in malaysia migration choices of husbands and wives in a dynamic and developing country are studied in the context of an economic model of the household data are drawn from the second wave of the malaysia family life survey exploiting the retrospective histories we compare moves that take place before marriage with those made during the marriage among the latter moves that are made with the spouse are distinguished from those made alone the evidence indicates that male mobility is primarily economic in motivation and related to labor market factors moves by women however seem to be more closely related to fertility or family considerations migration is apparently not simply an individual decision the attributes of the spouse are an important influence on mobility albeit in an asymmetric manner moving toward a broader definition of the household we find the characteristics of the parents parents in law and also the relative age and gender of siblings all influence mobility in a rich if complex way

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

agricultural land use and asset accumulation in migrant households the case of el salvador abstract this paper examines the effect that international migration and remittances have on agricultural outcomes at the household level in el salvador panel data are used to examine land use allocations agricultural asset accumulation and agricultural input use and returns findings suggest that migration and remittances cause a household to reallocate land away from commercial cash crops toward the production of subsistence food crops there is weak evidence that migration and remittances contribute positively to agricultural asset accumulation in the form of land and livestock holdings further results suggest that migration and remittance do not affect agricultural input use and may decrease the returns to land and labour on farm as migrant households farm their land less intensively than non migrant households

child income appropriations as a disease coping mechanism consequences for the health education relationship this paper analyses the relationships between hiv aids and education taking into account the appropriative nature of child income using a theoretical model we show that considering remittances from one s child as an insurance asset can reverse the usual negative relationship between disease prevalence and educational investment this prediction confirms the results of an empirical study conducted on data compiled from the demographic and health survey dhs database for 12 sub sahara african countries for children aged between 7 and 22 years old using regional hiv prevalence as a measure of health risk we find that the sign of the slope between health risk and the enrolment of children is not constant splitting the data based on expected remittance patterns for example rural versus urban we obtain that the effect is most likely driven by household characteristics related to child income appropriation

monetary and exchange rate policies for international financial stability a proposal w v ithout a common monetary standard the remarkable integration of western european north american and the industrialized asian economies in both commodity trade and financial flows is less efficient and becoming untenable dissatisfaction with wildly fluctuating relative currency values euphemistically called floating or flexible exchange rates is a prime cause of the resurgence in protectionism in 1986 87 the overvalued yen forced japanese industrialists to close factories retire workers and write off once valuable investments in plant and equipment this parallels what their american counterparts were forced to do between 1981 and 1985 when the dollar suddenly became overvalued similarly the paring down of the british manufacturing base was precipitated when the pound unexpectedly became a strong petrocurrency in 1979 81 in agriculture japan and european countries are determined to insulate their domestic prices of farm products from unsettling international influences including volatile fluctuations in the yen dollar or mark dollar exchange rates thus unless exchange stability is first achieved the american government s attempt to broaden the general agreement on tariffs and trade to encompass agriculture and services is likely to fail but what keeps the three major industrial blocs from developing a common monetary standard to prevent exchange rate fluctuations although many people

a general equilibrium model of guest worker migration the source country perspective abstract this paper examines the problem of guest worker migration from an economy populated by identical utility maximizing individuals with finite working lives the decision to migrate the rate of saving while abroad as well as the length of a migrant s stay in the foreign country are all viewed as part of a solution to an intertemporal optimization problem in addition to studying the microeconomic aspects of temporary migration the paper analyses the determinants of the equilibrium flow of migrants the corresponding domestic wage and the level of welfare enjoyed by a typical worker effects of an emigration tax are also investigated

consumption insurance an evaluation of risk bearing systems in low income economies the hypothesis of full risk sharing can be taken to data from low income countries and evaluate formal and informal financial systems in many contexts idiosyncratic risks are high so credit insurance arrangements could be beneficial statistical tests reveal that households in southern india take advantage of these possibilities villages in cote d ivoire and countries in thailand do not do as well the paper includes an empirical description of the devices used to smooth consumption and a theoretical discussion of private information and incentives on ideal operating systems the full information and mechanism design frameworks provide benchmarks for policy analysis

migration networks as a response to financial constraints onset and endogenous dynamics abstract a migration network is modeled as a mutually beneficial cooperative agreement between financially constrained individuals who seek to finance and expedite their migration the cooperation agreement creates a network established migrants contract to support the subsequent migration of others in exchange for receiving support themselves when the model is expanded to study cooperation between more than two migrants it emerges that there is a finite optimal size of the migration network consequently would be migrants in the sending country will form a multitude of networks rather than a single grand network

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

the roles of destination gender and household composition in explaining remittances an analysis for the dominican sierra two non exclusive hypotheses about what motivates remittances sent by dominican migrants to their rural parents in the sierra are tested a an insurance contract taken by parents with their migrant children and b an investment by migrants in potential bequests results show that the relative importance of these two motives to remit is affected by destination us vs cities in the dominican republic gender and household composition the insurance function is mainly fulfilled by female migrants to the us only when a male is the sole migrant in his household does he play the role of insurer investment by contrast is pursued by both males and females but only among those migrating to the us d 2002 elsevier science b v all rights reserved

drought transfer entitlements and income distribution the botswana experience abstract using 1974 75 and 1985 86 income distribution survey data with the latter supplemented by drought relief data this paper presents an analysis of intertemporal rural household income distribution in botswana despite the fact that the 1974 75 survey was conducted during one of the best agricultural production periods on record and the 1985 86 survey was conducted in the midst of one of the worst after the rural income economy had been weakened by a severe and prolonged drought botswana s rural income inequality did not appear to have increased significantly there was no marked reduction in rural household real incomes the explanation for this outcome is found to lie in the income maintenance strategy pursued by rural households with strong support from transfer entitlement guarantees from private and public sources supplementing rural household incomes

fiscal adjustment and labor market dynamics in an open economy this paper studies the labor market effects of fiscal adjustment in a two sector three good intertemporal framework key features of the model are an informal sector minimum wages unionized labor in the formal economy imperfect labor mobility and public production of intermediate inputs bluxuryq and wait unemployment prevail in equilibrium it is shown that if unions care sufficiently about employment and if the degree of openness is high an increase in the price of government services may reduce unemployment in the steady state a similar result would hold in an efficiency wage setting if the bdisciplinary effectq of unemployment is sufficiently strong d 2004 published by elsevier b v

spatial bias and the location of footloose industry a simple regional model this paper develops a simple regional model to analyse the spatial consequences of sectoral policies the model focuses on the regional specificity and footlooseness of different sectors and shows that any policy that alters the balance between sectors in an economy inevitably alters the distribution of economic activities across regions this is true even when the effect of policy is to expand a sector in which production units are completely footloose

income transfers of chinese rural migrants some empirical evidence from jinan this paper explores the determinants of migrant remittances to rural households using data on male migrant workers drawn from the jinan municipality in shandong province in the summer of 1995 the majority of migrants are found to retain close links with their rural households with 85 remitting some income in the 12 months preceding the survey date the transfers accounted for over a third of urban labour earnings a number of models are used to undertake the estimation of remittance functions no evidence of altruistic behaviour is uncovered and evidence for exchange and coinsurance theories is mixed labour earnings proved the most robust determinant of the level of remittance and the remittance wage elasticity calculated is found to be at the top end of the range of estimates obtained in the literature

bilateral free trade agreements and customs unions the impact of the eu republic of south africa free trade agreement on botswana the eu has indicated that after 2008 its trade relationships with developing countries will be dominated by the development of preferential trade agreements although not a consequence of the cotonou agreement the free trade agreement between the eu and the republic of south africa eu rsa fta is clearly one of the first fruits of this approach to trade relationships however there is no evidence that the design of the eu rsa fta incorporated a comprehensive general equilibrium evaluation of the agreement for either the signatories or the other southern african nations the analyses reported here indicate that while the eu rsa fta may substantially benefit the signatories there are appreciable negative impacts for other states especially the rsa s immediate neighbours moreover the reluctance of the eu to fully liberalise trade in food and agriculture commodities results in a major reduction in the benefits for the rsa without ameliorating substantively the adverse implications for other nations

career duration in the nhl pushing and pulling on europeans abstractusing a panel of national hockey league players from 2000 through 2013 we analyse the determinants of career length in the league in our analysis we include both performance variables and nationality of origin to determine their importance in determining career length we find that european born players have shorter careers than north american born players holding performance constant and russian born players have even shorter careers than other europeans we further find that russian born players have even shorter careers than other players after the 2005 lockout these shorter careers are consistent with both exit discrimination against european and russian players who are pushed out of the league as well as voluntary exit by european and russian players who are pulled out of the league due to opportunities in their home countries

uncertainty and the demand for education the impact of uncertainty in future income on the demand for education from both theoretical and empirical points of view is analyzed theoretical results deviate substantially from their counterparts in models of human capital formation with certain future income the theory is tested with a sample of high school graduates that contains data on subjective expectations empirical evidence from binomial logit analysis does not entirely support the behavioral implications of the theoretical model

a theory of dual labor markets with application to industrial policy discrimination and keynesian unemployment this paper develops a model of dual labor markets based on employers need to motivate workers in order to elicit effort from their workers employers may find it optimal to pay more than the going wage this changes fundamentally the character of labor markets the model is applied to a wide range of labor market phenomena it provides a coherent framework for understanding the claims of industrial policy advocates it also can provide the basis for a theory of occupational segregation and discrimination that will not be eroded by market forces finally the model provides the basis for a theory of involuntary unemployment

the probability of return migration migrants work effort and migrants performance abstract this paper demonstrates that differences in earnings between migrants and the native population may reflect differences in incentives rather than differences in characteristics the analysis indicates that in the presence of a positive probability of return migration migrants work effort is higher than that of comparable native born workers this differential may explain why even if all workers are perfectly homogeneous in skills migrants often outperform the native born workers in the receiving economy

the imitation innovation trade off does borrowing dull the edge of husbandry this article examines the proposition that there is a trade off between imitation and innovation when state elites try to borrow institutional designs from other polities after synthesizing theoretical propositions both for and against a trade off the article develops evidence from case studies of two periods in which such institutional borrowing was widely practiced the post world war ii american occupation of germany and german reunification after 1989 it concludes that imitation sparked innovation in both periods although for two very different reasons the article emphasizes the relation of the research findings to theories of institutional creation and change

urbanization and economic development a bias toward large cities abstract we find that a nation s urban population percentage increases with gdp per capita industrialization export orientation and possibly foreign assistance it decreases with the importance of agriculture industrialization and agricultural importance have the same implications for the concentration of urban population in cities with 100 000 population as for the urban percentage greater export orientation reduces such concentration finally gdp per capita population and export orientation reduce primacy political factors such as whether a country s largest city is also its capital affect primacy our results do not seem to imply that developing country urbanization today differs fundamentally from urbanization in the past

on the causal nexus of remittances and poverty reduction in bangladesh the aim of this article is to investigate the causal relationship between remittances and poverty reduction in bangladesh over the period 1976 to 2010 this issue is of fundamental importance for the developing economy of bangladesh we apply newly developed methods by hacker and hatemi j 2006 2012 that are based on simulations and are robust to the violation of statistical assumptions especially when the sample size is small as is the case in this article our estimation results reveal that causality nexus of poverty and remittances is bi directional we also find that the causal impact of poverty reduction on remittance is stronger than the reverse impact this finding implies that bangladeshi policy makers can influence remittances through poverty reduction in the long run

growth and risk methodology and micro evidence how exposure to risk affects economic growth is a key issue in development this article quantifies both the ex ante and ex post effects of risk using long running panel data for rural households in zimbabwe it proposes a simulation based econometric methodology to estimate the structural form of a micro model of household investment decisions under risk the key finding is that risk substantially reduces growth in this particular setting the mean capital stock in the sample is in expectation 46 percent lower than in the absence of risk about two thirds of the impact of risk is due to the ex ante effect that is the behavioral response to risk which is usually not taken into account in policy design these results suggest that policy interventions that reduce exposure to shocks or that help households manage risk could be much more effective than is commonly thought

on migration and risk in ldcs the authors develop the hypothesis that aversion to risk rather than expectations of higher income is the primary motivation for rural urban migration in developing countries this hypothesis maintains that an optimizing risk averse small farmer family will try to place a family member in the urban sector in order to diversify its income portfolio an additional hypothesis related to risk is also considered at the individual rather than the family level annotation

risk sharing within the extended family evidence from the indonesia family life survey abstractin recent years there has been an increase in the availability of longitudinal household surveys in developing countries that allow the researchers to construct linkages between households with familial ties this type of data allows researchers to look at whether some household outcomes are influenced by decisions made at the extended family level this article utilizes data from two waves of the indonesia family life survey 1997 and 2000 to construct a panel of extended families in order to focus on one particular example of such outcome whether consumption risk sharing occurs among households within the extended family the findings show that after controlling for the extended family fixed effects changes in the household s own income still matter for changes in its consumption rejecting full consumption risk insurance however the coefficients on household own income are small indicating significant degrees of risk sharing results from a set of reduced form estimations suggest that ho

rural urban migration in economic development abstract this paper provides a review of the theoretical literature on rural urban migration in contemporary ldcs the paper begins with a brief discussion of the lewis model before going on to discuss the todaro and the harris todaro models and the large literature which these models have spawned the question of job search in the context of migration and the role of family members in migration decisions are considered next the paper then takes a closer look at the informal sector and also sets out alternative migration functions to the ones usually employed in the literature the paper concludes with a brief note on some of the important implications arising from our study

microeconomic implications of remittances in an overlapping generations model with altruism and a motive to receive inheritance abstract the article develops a framework to examine the interaction between the migrant and the remittance receiving relative s under non cooperative and cooperative scenarios the model has an overlapping generations structure where both parties have altruistic behavioural traits we derive the relationships between the remittances consumption labour supply savings and bequests and compare these variables under the two scenarios for both scenarios the remittances have a positive effect on the relative s leisure consumption and investment the effects of the wage and the non wage income of the relative and the migrant and the interest rate on the equilibrium level of remittances are also qualitatively similar under the two scenarios however the parties degrees of altruism as well as the discount rates have different effects on the equilibrium level and incidence of remittances for the non cooperative and cooperative interactions these shed some light on the differences in remittance behavi

explaining political and economic change in post communist eastern europe old legacies new institutions hegemonic norms and international pressures this article presents a framework for the analysis of regime change in post communist eastern europe it examines two competing approaches the legacies of the past and the imperatives of liberalization as alternative causal factors shaping the trajectories of regime change the article argues that the debate between these two approaches has important implications for comparative research methodology and design to the extent that past legacies dominate the path of post communist regime change comparisons with other regions emerging from an authoritarian past will yield less insight the authors claim however that the immediate context of norms institutions and international pressures shapes the particular way that legacies influence outcomes thus they conclude that cross regional research is likely to be fruitful and should be pursued

migration amongst the batswana the present study undertakes analysis of the effects of employment probabilities and wage alternatives on migration decisions in the context of botswana adopting micro level data both to estimate a multinomial migration function and to develop prediction equations for wages and likelihood of employment data are from the 1978 1979 national migration survey the factors that influence rural batswana adults to remain at home migrate to town on a short or long term basis move to another rural area or emigrate to south africa are examined consideration is given to the effects of employment alternatives on the rate of internal migration and the selectivity of movements with respect to personal household and locational factors excerpt

explaining african economic performance africa has had slow growth and a massive exodus of capital in many respects it has been the most capital hostile region we review and interpret the aggregate level and microeconomic literatures to identify the key explanations for this performance there is a reasonable correspondence of the two sets of evidence pointing to four factors as being important these are a lack of openness to international trade a high risk environment a low level of social capital and poor infrastructure these problems are to a substantial extent attributable to government behaviour and the paper includes a review of the political economy literature which addresses that behaviour

corrective tax and subsidy policies in economies with bertrand competition abstract this paper shows how we can correct market failure due to imperfect competition by using taxes and subsidies the analysis is carried out at the general equilibrium level and the importance of objective demand curves is stressed the main conclusions are first it is possible to tax the economy back to the walrasian equilibrium by using linear taxes and subsidies second the welfare theorem holds in an imperfectly competitive economy with corrective taxes and subsidies third a competitive equilibrium can also be achieved by the use of ad valorem taxes and specific output subsidies

spatial mismatch in search equilibrium we construct a search equilibrium model for a city with central and suburban labor markets that is consistent with the set of empirical regularities commonly associated with the spatial mismatch hypothesis a higher rate of unemployment for central city residents than suburban residents a higher job vacancy rate for suburban firms and reverse commuting and higher suburban wages the effectiveness and welfare implications of public policy programs that might be used to remedy the underlying mismatch are examined

how urbanization affect employment and social interactions we develop a model where the unemployed workers in the city can find a job either directly or through weak or strong ties we show that in denser areas individuals choose to interact with more people and meet more random encounters weak ties than in sparsely populated areas we also demonstrate that for a low urbanization level there is a unique steady state equilibrium where workers do not interact with weak ties while for a high level of urbanization there is a unique steady state equilibrium with full social interactions we show that these equilibria are usually not socially efficient when the urban population has an intermediate size because there are too few social interactions compared to the social optimum finally even when social interactions are optimal we show that there is over urbanization in equilibrium

the effects of international remittances on poverty and inequality in ethiopia abstractthe article studies the effects of international remittances on poverty and inequality in ethiopia using an urban household survey from 2004 counterfactual consumption in the hypothetical case of no remittance is estimated in a selection corrected estimation framework inequality and poverty values in the hypothetical and actual cases are then compared there is a significant reduction in poverty while inequality does not change the head count the poverty gap and the squared poverty gap ratios decreased from 0 41 to 0 38 0 14 to 0 13 and 0 064 to 0 057 respectively

migration unemployment and development a dynamic two sector analysis abstract a time minimizing problem of attaining a full employment state is solved in a dual economy model with harris todaro migration mechanism and with a positive level of urban unemployment in the starting period it appears that the optimum solution lies in the specialization of investment in the urban sector at least in the initial stage of development if the per capita capital stock in the urban sector is very small in the starting period

imperfect competition and fixprice equilibria when goods are gross substitutes it is possible in principle that the price quantity pair generated by a model of imperfect competition may satisfy the conditions voluntary trading and absence of frictions for a fixprice equilibrium it is shown that imperfect competitors will typically satisfy voluntary trading provided that appropriate gross substitute assumptions are satisfied hence such assumptions are seen to ensure that the solutions of some well known imperfectly competitive general equilibrium models are indeed fixprice equilibria thus bringing together two important traditions in theoretical microeconomics copyright 1991 by the editors of the scandinavian journal of economics

remittances and temporary migration in this paper we study the remittance behavior of immigrants and how it relates to temporary versus permanent migration plans we use a unique data source that provides unusual detail on remittances and return plans and follows the same household over time our data allows us also to distinguish between different purposes of remittances we analyze the association between individual and household characteristics and the geographic location of the family as well as return plans and remittances the panel nature of our data allows us to condition on household fixed effects to address measurement error and reverse causality we use an instrumental variable estimator our results show that changes in return plans are related to large changes in remittance flows

urban growth and uninsured rural risk booming towns in bust times abstract rapid urbanization also happens when economic growth and urban job creation are absent such as in africa and latin america during the eighties why do some countries urbanize faster while having worse economic growth this paper finds that higher aggregate agricultural risk induces rural urban migration providing an additional channel to explain the urbanization trend uninsurable expected risk will lead to rural urban migration as a form of ex ante insurance if households are liquidity constrained and cannot overcome adverse shocks the effect is robust to controlling for the traditional view of urbanization driven by industrialization and to several alternative explanations such as government spending

growth population and industrialization and urban land expansion of china china is experiencing urbanization at an unprecedented rate over the last two decades the overall goal of this paper is to understand the extent of and the factors driving urban expansion in china from the late 1980s to 2000 we use a unique three period panel data set of high resolution satellite imagery data and socioeconomic data for entire area of coterminous china consistent with a number of the key hypotheses generated by the monocentric model our results demonstrate the powerful role that the growth of income has played in china s urban expansion in some empirical models the other key variables in the monocentric model population the value of agricultural land and transportation costs also matter adapting the basic empirical model to account for the environment in developing countries we also find that industrialization and the rise of the service sector appear to have affected the growth of the urban core but their role was relatively small when compared to the direct effects of economic growth we also make a methodological contribution demonstrating the potential importance of accounting for unobserved fixed effects

what determines success examining the human financial and social capital of jamaican microentrepreneurs abstract this research examines the performance of 215 informal microenterprises in jamaica studying the influence of human capital social capital and financial capital of the owners on their business profitability understanding the importance of particular relationships that result in successful micro businesses is important for a number of reasons first among many developing countries the growth of microenterprise provides the most visibly vibrant and growing economic activity although considerable effort and resources are being directed toward microenterprise promotion schemes empirical research on the subject is quite limited second economies in developing countries mirror many of the social and institutional problems existent in urban economically disadvantaged areas of the united states and other developed countries for these areas microenterprise may be an essential component of urban renewal and community development this study helps in identifying important characteristics of social and individual attributes that may be relevant to those attempting to strengthen this subsector finally this study seeks to provide insight into a dimension of microbusiness research for which there are limited data specifically the role that social capital plays among practicing entrepreneurs and owners this research found that different structural environments even within a singular and small economy may considerably alter the rates of return to human social and financial capital as a result the analysis of enterprises includes segmentation according to both the usage or not of employees and the sophistication of the technologies used several factors were determined to enhance the profitability of the businesses in all categories vocational training for example demonstrated consistently strong and positive effects mother s high occupational status a proxy for socioeconomic status and years of experience in the business were also consistently positive and strongly associated with increasing profits although additional starting capital played an important role for both the businesses with and without employees increasing amounts failed to differentiate the success of those firms that were already operating in the higher technological tier obtaining a small business loan acted in a similar manner enhancing the profitability of all firms except those segmented into a high technological tier one interpretation of this finding is that the role of technological choice is extremely important and appears to dwarf that of varying amounts of starting capital social capital as operationalized by frequent church attendance and marital status of the owner was found generally to increase the profitability of the business the data demonstrate that social networks play an important role in the success of these businesses and that conditions in the highest tier utilize social capital in a somewhat unique manner

commodity prices and growth in africa a frican economies export primary commodities and most export little else policymakers as well as economists and historians of african economic development have seen these exports as both a hope and a curse the following parable tells the story once upon a time a servant of the ruler discovered a miraculous plant which grew readily in that country and whose seeds could be woven into fine cloth so desirable was this fabric that it became prized all over the world and fetched a high price after two score years the plant accounted for most of the country s trade with the world the ruler ordered the peasants to grow the plant paid them only a fraction of its price and he and his nobles became fabulously wealthy because the ruler wished to be remembered as a great ruler and as the father of his country he used his wealth to build a great army and brought machines from foreign countries to make the fine goods that previously could only be obtained from foreign merchants but the machines often broke down and the goods that they made were of poor quality and after the ruler died they were left to rust under the ruler s successor there was a war in a foreign land where the plant also grew so that there was a great shortage and its price increased threefold in only three seasons the new ruler spent his newfound riches on fantastic extravagance while immense sums were expended on public works after the manner of the east and on productive works carried out in the wrong way or too soon not even the threefold increase in prices could support these expenditures and the country soon found itself deeply in debt when the war ended and the price fell the country could no longer pay the interest on its debt or borrow more money even after it had sold its only useful public work to a foreign power so that power sent a mission to the country the publication of whose report from which the above

informality in developing economies regulation and fiscal policies abstract this paper proposes a unified theoretical framework where formal and informal firms coexist and face the same type of product and labor market imperfections they have monopoly power in the goods market they are subject to matching frictions in the labor market and wages are determined by bargaining between large firms and their workers through either individual or collective bargaining our model matches the main stylized facts on informality for developing countries and appears to be a good candidate for policy analysis in this framework we study the impact on informality wages and unemployment of policies that may be used to reduce informality we consider changes in product market regulation pmr and in two types of fiscal policies labor taxes and formality enforcement we find that lessening pmr decreases informality and unemployment simultaneously indicating that there is not necessarily a tradeoff between informality and unemployment the tradeoff appears when fiscal policies are used though moreover the impacts of pmr on unemployment and on wages are larger under collective than individual bargaining with respect to wage inequality lessening pmr reduces it while lower taxes tend to increase the formal sector wage premium

the missing missing middle the notion that the distribution of firm size in poor countries is characterized by a bimodal distribution with a missing middle is a widely accepted fact in development economics for example see krueger 2013 the idea of the missing middle is that there are a large number of small firms some large firms but very few medium sized firms the purported fact about the missing middle is cited as evidence for two broad stories of why many countries are poor perhaps surprisingly these models look for the cause of the missing middle in two fundamentally different places one approach suggests that small firms are disfavored in low income countries for example by a lack of access to financial capital and thus face difficulties in growing to become middle sized firms the other approach posits a dual economy of large high productivity firms and small low productivity firms and then suggests that larger firms are disfavored in low income countries for example by having to bear large fixed costs of regulation which make it difficult for middle sized firms to become established we begin by reviewing these theories of development based on the purported fact of a missing middle we then explore the evidence on distribution of firm sizes in more detail and challenge the presumption that a missing middle occurs at all we present three main facts first there is in fact no evidence of a missing middle in detailed and comprehensive data on the size of manufacturing firms in india indonesia or mexico regardless of how we slice the data to be sure there

household strategies and rural livelihood diversification this article reviews the recent literature on diversification as a livelihood strategy of rural households in developing countries with particular reference to sub saharan africa livelihood diversification is defined as the process by which rural families construct a diverse portfolio of activities and social support capabilities in order to survive and to improve their standards of living the determinants and effects of diversification in the areas of poverty income distribution farm output and gender are examined some policy inferences are summarised the conclusion is reached that removal of constraints to and expansion of opportunities for diversification are desirable policy objectives because they give individuals and households more capabilities to improve livelihood security and to raise living standards

remittances and the brain drain this trend is raising considerable concern among policymakers in developing countries wary of having to bear the cost of educating and then losing their most entrepreneurial and talented workers the possibility for educated migrants to move abroad should raise the returns to education and in the end may even lead to an increase in the number of educated workers who stay at home bhagwati and hamada 1974 bhagwati 1976 mountford 1997 stark helmenstein and prskawetz 1997 1998 the european community household panel is a closed panel and therefore cannot easily be used to study return migration the key finding table 1 column 3 is that more educated immigrants from non eu countries are less likely to drop out of the panel even after controlling for age gender employment status and length of stay in the host country the pattern of attrition in the european community household panel sample dependent variable probability that respondent does not drop out of the panel variable household siz

labor unions and the distribution of wages and employment in south africa few countries have higher wage inequality than south africa where wages of african and white workers differ by a factor of five using survey data collected in 1993 the authors analyze the complex effect of unions on this wage gap among male african workers in the bottom decile of the wage distribution union membership was associated with wages that were 145 higher than those of comparable nonunion workers and among those in the top decile the differential was 19 regression estimates also indicate that returns to observed productive characteristics of workers such as education and experience were larger for nonunion than union workers if the large union relative wage effect were cut in half the authors estimate that employment of african youth age 16 29 would increase by two percentage points and their labor force participation rate would also increase substantially

the impact of remittances on economic growth an econometric model abstract remittances in the world represent one of major international financial resources which sometimes they exceed the flows of foreign direct investment fdi for centuries there have been heated debates on the sources of economic growth in developing economies and also why some countries reflect strong economic growth comparing to others this study aims to observe the impacts of remittances on economic growth using panel data set of six high remittances receiving countries albania bulgaria macedonia moldova romania and bosnia herzegovina during the period 1999 2013 these countries have experienced a major increase in remittance inflows and at this time accounts for the bulk of total remittance receipts compared with other regions most countries remittances represent the largest source of foreign exchange earnings and represent more than 10 percent of gdp in other words the econometric analysis will be based on those six remittance receiving countries the paper is then to review the empirical literature devoted to the impact of remittances on economic growth in order to identify empirically if there are significant relationships between remittances and growth in these countries the results suggest that remittances have a positive impact on growth and that this impact increases at higher levels of remittances relative to gdp

foreign aid and illegal immigration abstract we develop a two country model of illegal immigration we analyse the effect of foreign aid on illegal immigration and consider both exogenous and endogenous income repatriation in the former an increase in aid increases illegal immigration if the total amount of aid is small a transfer of resources from border control to aid increases illegal immigration when the total amount of aid is small under endogenous income repatriation aid has no effect on illegal immigration when the preferences of the immigrants and their family members are the same if the preferences are different aid may increase illegal immigration

inheritance patterns in migration prone communities of the peruvian highlands abstract on the basis of detailed information on inheritance practices collected in the course of an in depth survey of three andean communities of peru and unlike most empirical studies which rely on remittance functions we have been able to estimate an inheritance function with a view to identifying the main factors associated with particular patterns of land bequests a central result is that the positive relationship between caring and a favourable access to land bequest indeed exists yet is only observed for migrant children whether urban or rural long distance or short distance migrants combined with other findings and observations this result strengthens the case for an interpretation based on an active role of potential heirs in the determination of inheritance outcomes it therefore calls into question the strategic bequest theory which presumes that parents are the ultimate decision makers in this matter in addition our study shows that inheritance patterns are complex besides migration and caring behavior personal characteristics of potential heirs such as gender birth order and family status having children or not do appear to influence division of parental land

migration and self protection against climate change a case study of samburu county kenya climate change will affect the livelihoods of pastoralists in arid and semi arid lands using data on agro pastoral households from northern kenya we explore whether migration of household members enhances adoption of agricultural innovations that aim to provide protection against weather shocks specifically we seek to test whether migration and adaptation are complementary mechanisms to protect the household against adverse shocks or whether they are substitutes do remittances relax capital constraints and facilitate the uptake of adaptive measures or do they render adaptation superfluous our data provide suggestive evidence that remittances from migrant household members may relax capital constraints and that remittances are an important mechanism linking migration to adoption enabling the uptake of new technologies that involve change in activities or high costs specifically migrant households adopt more adaptive measures promoting self protection and we document some support for the hypothesis that this is especially the case for high cost adaptations such as the purchasing of drought tolerant livestock these findings suggest that migration and local innovation are complementary rather than substitutive mechanisms of self protection for pastoral households in the semi arid lands of northern kenya households who have at least one member who has migrated are able to overcome barriers to employ high cost agricultural innovations through using remittances received thus enhancing their self protection against climate change related shocks