international labor and capital flows complements or substitutes in a global context foreign direct investment fdi and migration substitute one another in the matching process between workers and firms yet migrants provide information about future investment opportunities in their country of origin evidence from u s data is consistent with contemporaneous substitutability and dynamic complementarity between migration and fdi

risk taking and taxation an alternative perspective abstract the analysis of risk taking and taxation has almost invariably been in a portfolio choice framework this paper presents the alternative perspective of an occupational choice framework where risk taking involves the additional element of discrete choice between safe and risky activities it is shown that the specification of equilibrium must of necessity have a general equilibrium character in this setting the paper develops rules for government intervention in the market equilibrium and analyses the effects of taxation on risk taking

grain transport and rural credit in mozambique solving the space time problem this paper shows how credit market failures can lead to large welfare losses in grain markets by inducing increased transport for seasonal storage in locations with low credit costs the burden of these welfare losses falls primarily on rural households these conclusions are obtained from a spatial temporal model solved using a mixed complementarity formulation that easily handles interest rate differentials across space efforts to address credit market failures and to improve the efficiency of rural storage should be given priority as opposed to the creation of large formal sector grain collection centers

united states export subsidies in wheat strategic trade policy or expensive beggar thy neighbor tactic this paper examines the domestic and international impacts of the u s export enhancement program eep for wheat eep uses targeted in kind subsidies to expand u s exports and was designed specifically to compete with subsidized exports from the european community ec we argue eep cannot be welfare improving for the u s even considering strategic trade theory we then model eep as an in kind constrained targeted export subsidy and determine its price quantity and budgetary effects empirical results show that no exporting country gains from eep and that the intended loser the ec is only slightly harmed we find the export subsidies generate only a small increase in u s wheat exports eep is an expensive program based on our estimates for 1988 government cost of additional wheat exports under eep reached 469 per metric ton

migration remittances and poverty in ecuador abstractwe analyse the influence of the recent wave of migration on the incidence of poverty among stayers in ecuador we draw our data from a survey that provides detailed information on migrants the analysis reveals a significant negative effect of migration on poverty among migrant households this effect is substantially smaller than the one that we find focusing on recipient households we explore the factors that account for this divergence our analysis entails that the existing empirical evidence on the relationship between remittances and poverty does not need to be informative about the size of the direct poverty reduction potential of migration

cheap children and the persistence of poverty this paper develops a theory of fertility that offers an explanation for the persistence of poverty within and across countries if educated individuals have a comparative advantage in raising educated children then parental fertility choice is shown to give rise to a poverty trap in which the poor choose high fertility rates with low investment in child quality moreover the impact of child quality choice on economic performance is amplified by the diluting effect of higher fertility on physical capital accumulation the theory proposes insights regarding the effects of inequality globalisation and life expectancy on economic growth and demographic transitions this paper develops a theory of fertility and child educational choice that offers an explanation for the persistence of poverty within and across countries the joint determination of the quality education and quantity of children in a household is studied under the key assumption that individuals productivity as teachers increases with their own human capital in contrast the minimum time cost associated with raising a child regardless of the child s quality the quantity cost is not affected by parental education as a result the price of child quantity relative to the price of child quality increases with individuals wages in particular for low wage individuals for whom the opportunity cost of time is low children of minimal quality are cheap this assumption therefore generates a comparative advantage for the poor in child quantity whereas high wage educated individuals have a comparative advantage in raising quality children consistent with the well known evidence poor households thus choose relatively high fertility rates with relatively low investment in their offspring s education and therefore their offspring are poor as well in contrast high income families choose low fertility rates with high investment in education and therefore high income persists in the dynasty evidence from the us provided by hanushek 1992 suggests that a trade off between quantity and quality of children does indeed exist hanushek argues that movements in family size could explain over half the variance in some test scores and that the elasticity of achievements with respect to the number of children in the family is 0 03 implying that the annual achievement growth of each child in a family will fall about 2 when a second child is added and about 0 5 when a sixth child is added 1

population concentration urbanization and demographic transition abstract this paper investigates how urbanization and demographic transition interrelate with each other via merits agglomeration economies and demerits congestion diseconomies of population concentration it reveals the mechanism by which agglomeration economies and congestion diseconomies affect the fertility rate furthermore analysis also shows that by assuming declines in infant and child mortality rate the model developed in this paper can replicate the following well known historical patterns i advances in urbanization ii rises in the wage rate iii declines in fertility and iv rises followed by declines in the population growth rate the inverted u shaped demographic transition

the impact of transport and transaction cost reductions on food markets in developing countries evidence for tempered expectations for burkina faso reductions in transport and transaction costs are expected to have a major effect on the functioning of food markets in developing countries for burkina faso this is a relevant issue as it may have important consequences for the food markets in urban and rural deficit areas a partial equilibrium model is presented to analyze the short term effects of reduced costs on price formation inter regional cereal trade and farmers and traders storage strategies our results show that the high expectations with regard to the direct effects of cost reductions on food prices and food availability require some nuance the effects of a reduction of transport costs will be small moreover also the unintended negative consequences on the competitive position of farmers and traders in other regions that do not profit from road construction should be taken into account finally it is concluded that only if transport and transaction costs are reduced simultaneously will both the consumers and farmers benefit significantly c 2004 elsevier b v all rights reserved

optimal input trade policy under economic uncertainties in a small open economy this article theoretically analyses optimal input trade policy under economic uncertainties in a small open economy the benchmark model explains both key business cycle moments and asset prices of

alternative models of spatial competition the concept of a spatial price equilibrium underlies most studies of spatial movement and competition however this concept is based upon a notion of perfectly competitive markets that is often unrealistic for many markets such as the markets for oil and coal and ignores the existence of local spatial monopolies this paper presents alternative economic models of spatial competition and shows how all of these models can be solved with essentially the same solution algorithm specifically after reformulating the classical spatial price equilibrium model and two extensions of takayama and judge s monopoly model we state and analyze a cournot nash model and discuss solution algorithms we then generalize these models and algorithms to multiple commodities and networks with transshipment nodes we conclude with a brief discussion of possible extensions of this class of models and associated algorithms

stochastic trade policy with asset markets abstract this paper uses a stockman dellas type two country two good stochastic general equilibrium model to consider the effects of commercial policy when asset markets are complete we show that i import and export tariffs do not have symmetric effects because interstate relative prices depend on the entire tariff structure ii when commercial policy is random and exogenously determined the ex post comparison of utility across states depends upon whether import or export tariffs are used and iii when endowments are random implying the optimal tariff varies across states the introduction of asset markets may be welfare reducing when only import tariffs are used

migration policy african population growth and global inequality according to recent un projections more than 50 per cent of the growth in world population over the next half century will be due to population growth in africa given this any policy that influences african demography will have a significant impact on the world distribution of income in this study we discuss the potential for migration policies to affect fertility and education decisions and hence population growth in africa we present the results from different scenarios for more or less restrictive selective migration policies and derive their implications for the evolution of world inequality

does emigration reduce corruption we study the effects of emigration on bribery experience and attitudes towards corruption in the migrants countries of origin using data from the gallup balkan monitor survey and instrumental variable analysis we find that having relatives abroad reduces the likelihood of bribing public officials renders bribe taking behavior by public officials less acceptable and reduces the likelihood of being asked for bribes by public officials receiving monetary remittances does not change the beneficial effects regarding bribe paying and attitudes toward corruption however remittances counteract the beneficial effect on bribe solicitations by public officials overall our findings support the conjecture that migration contributes to the transfer of norms and practices from destination to source countries

panterritorial versus regional pricing for maize in zimbabwe abstract this paper presents a spatial equilibrium model of zimbabwe s maize market designed to compare the current system of panterritorial prices with the pareto optimal pattern of regional price variation that would occur in a competitive market the model shows that under baseline 1988 conditions competitive pricing would raise aggregate welfare by about us 14 million annually about 4 of producer plus consumer surplus while improving income distribution by favoring the majority of smallholder farmers in southern deficit areas and urban consumers in northern surplus areas thus the model suggests that liberalization could improve both efficiency and equity administered regional prices in a controlled market could yield some of these gains to the extent that production and processing were brought closer to consumers

restricted stock markets in simple general equilibrium models with production uncertainty it is shown that in a two sector production model with uncertainty analogous to work of batra and sakai there exists an implicit and arbitrarily restricted stock market interpretation of the model and that the appropriate duality lies between the relation of factor endowments and equity outputs and the relation of factor prices and equity prices these observations permit a generalization of the batra sakai assumption of maximization of expected utility of profits this is accompanied by an extensive characterization of the implicit market and several of its comparative statics properties a 2 2 2 2 joint production formulation is developed to examine stability properties

trade taxes and the current account abstract we show that under some conditions a temporary import tariff improves the current account whereas a temporary export tax deteriorates it permanent import tariffs and export taxes have an identical although ambiguous effect on the current account

brain drain and human capital formation in developing countries winners and losers using new data on emigration rates by education level we examine the impact of brain drain migration on human capital formation in developing countries we find evidence of a positive effect of skilled migration prospects on gross human capital formation in a cross section of 127 countries for each country of the sample we then estimate the net effect of the brain drain using counterfactual simulations countries combining relatively low levels of human capital and low emigration rates are shown to experience a beneficial brain drain and conversely there are more losers than winners and the former tend to lose relatively more than what the latter gain

migration and development research is moving far beyond remittances research on migration and development has recently changed in two ways first it has grown sharply in volume emerging as a proper subfield second while it once embraced principally rural urban migration and international remittances migration and development research has broadened to consider a range of international development processes these include human capital investment global diaspora networks circular or temporary migration and the transfer of technology and cultural norms for this special issue we present a selection of frontier migration and development research that instantiates these trends

migration and the skill composition of the labour force the impact of trade liberalization in ldcs the purpose of this paper is to shed some light on the conditions under which trade liberalization in the developing countries is likely to cause an increase or a decrease in out migration we also examine the impact of trade liberalization on the skill composition of migration and of the labour force for this purpose we explicitly incorporate four additional features in the heckscher ohlin model heterogeneity of labour skills international migration migration costs and constraints on financing migration excerpt summary in fre

on the economic geography of international migration we exploit the bilateral and skill dimensions from recent data sets of international migration to test for the existence of zipf s and gibrat s laws in the context of aggregate and high skilled international immigration and emigration using graphical parametric and non parametric analysis the top tails of the distributions of aggregate and high skilled immigrants and emigrants adhere to a pareto distribution with an exponent of unity i e zipf s law holds we find some evidence in favour of gibrat s law holding for immigration stocks i e that the growth in stocks is independent of their initial values and stronger evidence that immigration densities are diverging over time conversely emigrant stocks are converging in the sense that countries with smaller emigrant stocks are growing faster than their larger sovereign counterparts lastly high skilled immigration and emigration stocks expressed in levels or as densities all exhibit signs of convergence we conclude by discussing some competing mechanisms that could be driving the observed patterns including differing fertility rates reductions in emigration restrictions migrant sorting and selective immigration policies immigrant networks and persisting wage differentials

migration and institutions exit and voice from abroad a rapidly growing body of research examines the relationship between migration and institutions three strands of studies can be distinguished some studies focused on the role of domestic and foreign institutions in the decision to migrate others were interested by the impact of migration on institutional reforms in migrants countries of origin while the effect of migration on destination countries is largely documented recent studies focus on how migrants affect social and informal institutions in the destination countries this survey puts together these three strands of literature with three purposes first we offer a short definition and synthetic typology of institutions which provide a guide to understand several studies summarized and their results second our analysis is presented following the analytic framework exit voice and loyalty of hirschman in order to highlight the brain grain phenomenon for developing countries from an institutional point of view third we review the limited existing work on the very timely topic whether migrants are harmful or not to institutions in the host countries

international trade and incomplete markets trade theorists since the influential paper by helpman and razin 1978 have considered the impact of uncertainty and international trade in securities from the point of view of available risk markets helpman and razin elegantly showed that in a model with multiplicative production uncertainty the validity of the traditional theorems of international trade follows from the existence of domestic securities markets and international trade in securities under their assumptions output was written

targeted agricultural export subsidies and social welfare global export subsidies are known to be welfare reducing this paper demonstrates that a small targeted subsidy can increase the welfare of the subsidizing country by exploiting differences in excess demand elasticities targeted export subsidies can also increase the subsidizing country s welfare by exploiting transportation cost differences excess supply elasticities of competitors or excess demand elasticities of markets supplied by competitors when markets are shared an empirical model of the world wheat market illustrates the theoretical conclusions an optimal targeted subsidy scheme causes a small increase in u s welfare but with major disruptions in world trade flows

public versus private education when differential fertility matters we assess the merits of different education systems in a framework that accounts for the joint decision problem of parents regarding fertility and education specifically we compare the implications of a public and a private schooling regime for economic growth and inequality we find that private schooling leads to higher growth when there is little inequality in human capital endowments across families in contrast when inequality is high public education yields higher growth by reducing fertility differentials in addition public schooling leads to income convergence while private schooling can result in ever increasing inequality our analysis highlights theimp ortanceof accounting for endogenous fertility differentials when analyzing educational policies

consumer s surplus without apology reply i began my article consumer s surplus without apology henceforth cswa with the words the purpose of this paper is to settle the controversy surrounding consumer s surplus p 589 that is my purpose here as well however george mckenzie s published comments have taught me that if articles and careful analyses settle controversies they only do so very slowly mckenzie makes sweeping and attacking statements about cswa but fails to substantiate them he scatters birdshot criticisms at cswa that are based on misreadings of rather clear material he offers an example in which he miscalculates multiproduct consumer s surplus finally he contends that his own with ivor f pearce approach to welfare analysis is preferable to the consumer s surplus approach in this reply to keep the record straight i show in section i that each of mckenzie s strongly worded attacks is unsubstantiated and invalid and that each of his more technical sounding criticisms rests only on misreadings of cswa more interestingly in section ii i summarize some of the theory of multiproduct consumer s surplus that is needed to understand the calculatiop error in and proper interpretation of the example that mckenzie proffers in section iii i argue that the approach to welfare analysis advocated by mckenzie and pearce is far less useful than the consumer s surplus methodology

convenience yield without the convenience a spatial temporal interpretation of storage under backwardation a mathematical programming model of the wheat marketing system of western australia manifests a typical pattern of regionwide stocks held at a negative intertemporal spread measured at the port no stocks are held at a monetary loss in terms of local prices any apparent loss is an illusion from spatial aggregation of stocks and attribution of incentives at one locality to storers at all locations moreover as the premium for immediate delivery at the port rises stocks increase at relatively inaccessible inconvenient locations where prices are low allowing more to be shipped from locations more convenient to the port

international migration transfers of norms and home country fertility this paper examines the relationship between international migration and source country fertility the impact of international migration on source country fertility may have a number of causes including a transfer of destination countries fertility norms and an incentive to acquire more education it provides provide a rigorous test of the diffusion on of fertility norms using original and detailed data on migration the results provide evidence of a significant transfer of fertility norms from migrants to their country of origin a one percent decrease in the fertility norm to which migrants are exposed reduces home country fertility by about 0 3 percent for origin countries

brain drain and economic growth theory and evidence we focus on the impact of migration prospects on human capital formation and growth in a small open developing economy we assume that agents are heterogeneous in skills and take their educational decisions in a context of uncertainty regarding future migrations we distinguish two growth effects an ex ante brain effect migration prospects foster investments in education because of higher returns abroad and an ex post drain effect because of actual migration flows the case for a beneficial brain drain bbd emerges when the first effect dominates i e when the average level of human capital is higher in the economy opened to migrations than in the closed economy we derive the theoretical conditions required for such a possibility to be observed using cross section data for 37 developing countries we find that the possibility of a bbd could be more than a theoretical curiosity

the new economic case for migration restrictions an assessment abstract migration barriers tend to reduce global production by impeding efficient spatial reallocation of labor recent research argues for a countervailing effect of barriers tending to raise global production by preventing the spread of impoverishing institutions from poor to rich countries while evidence of this mechanism is scarce it is theoretically plausible at high migration rates we propose and calibrate a simple model of dynamically efficient migration when migrants spread economic institutions between countries the net effect of migration depends on three parameters transmission the degree to which origin country total factor productivity is embodied in migrants assimilation the degree to which migrants productivity determinants become like natives over time in the host country and congestion the degree to which transmission and assimilation change at higher migrant stocks on current evidence about the magnitudes of these parameters dynamically efficient policy would not imply open borders but would imply relaxation of current restrictions

temporary emigration and welfare the case of low skilled labor this article studies the implications of temporary emigration for the welfare of a source country the framework is one of general equilibrium where the economy s stocks of both capital and labor are endogenously determined by the saving and migration decisions of optimizing agents simulations of the model suggest that for realistic values of the parameters welfare of nonmigrants of the source country is maximized when the migrants are employed abroad for a period in the range of roughly 8 12 years the ideal duration is found to be an increasing function of the international wage differential migration costs and the degree to which the rights of migrants are protected in the host country

immigrant links to the home country empirical implications for u s bilateral trade flows immigrants ties to their home countries can play a key role in fostering bilateral trade linkages immigrant ties include knowledge of home country markets language preferences and business contacts that have the potential to decrease trading transaction costs empirical results for the united states suggest that immigrant links have historically been important in increasing bilateral trade flows with immigrants home countries copyright 1994 by mit press

constant increasing and decreasing risk aversion with many commodities the arrow 1971 pratt 1964 theory of risk aversion has achieved important successes in the study of economic responses to risk this theory applies to a special class of cases in which the von neumann morgenstern expected utility hypothesis is used to explain these responses under this hypothesis individuals who maximize the expected utility of different utility functions will in general make different choices in the face of uncertainty for the purpose of predicting which of two different utility functions will lead to locally more risk averse economic behaviour the essential feature of these functions is their associated arrow pratt absolute risk aversion measures in fact the local comparisons can be extended to global comparisons if the arrow pratt absolute measures are uniformly comparable the arrow pratt measure of absolute risk aversion and a closely related measure of relative risk aversion also play crucial roles in the investigation of changes induced by wealth increases in the risk taking behaviour of a single expected utility maximizing individual this study has resulted in a satisfactory theory of increasing decreasing and constant absolute and relative risk aversion the special cases to which the arrow pratt theory is directly applicable are those in which the utility functions in question are functions of a single variable e g wealth unfortunately the models required to explain many economic decisions employ a version of the expected utility hypothesis in which the argument of the utility function is a multidimensional vector one example arises in the study of the consumption savings decision another occurs in the analysis of the combined consumption savings portfolio decision a final example is obtained in the investigation of demand for goods of uncertain quality the papers of kihlstrom mirman 1974 and diamond stiglitz 1974 have suggested a partial generalization of the arrow pratt theory of absolute risk aversion this

the heckscher ohlin and travis vanek theorems under uncertainty abstract the heckscher ohlin theorem is valid under uncertainty of the special benchmark sort modelled by helpman razin their pessimism over its validity is vanquished by more structure rational expectations are imposed on consumers and identical and constant relative aversion to income risk is assumed under these circumstances with free commodity trade the heckscher ohlin theorem holds for the international exchange of equities

a note on the protective effect of tariffs and quotas under uncertainty abstract sufficient conditions are given for any tariff or quota to be protective under uncertainty where assets are not traded internationally and commodities are traded it is shown that if both goods are normal goods then any small tariff or quota is protective even if it varies with the random state of nature a sufficient condition is also given for large trade restrictions to be protective under uncertainty these results thus generalize those of helpman and razin who showed that when both goods are normal goods a small ad valorem tariff which is independent of the state of nature is protective

can a brain drain be good for growth in the source economy this paper analyzes the interaction between income distribution human capital accumulation and migration it shows that when migration is not a certainty a brain drain may increase average productivity and equality in the source economy even though average productivity is a positive function of past average levels of human capital in an economy it is also shown how the temporary possibility of emigration may permanently increase the average level of productivity of an economy

asset markets tariffs and political risk abstract this paper examines a simple model in which exogenous political risk creates uncertainty about tariffs the model predicts a relation between consumption and tariffs that differs radically from that implied by models without asset markets or political risk given the probability distribution of tariffs domestic consumption and utility ex post are lower in states of the world with a domestic tariff and no foreign tariff than with a foreign tariff and no domestic tariff this conclusion emerges despite the fact that the opposite would be obtained in the absence of asset markets so economists should not be surprised if observed relations between consumption and tariffs differ from the predictions of static theory in either time series or cross sections

peasant household behaviour with missing markets some paradoxes explained a model of peasant household behavior under varying degrees of household specific food and labor market failures is constructed to show that these structural features can explain several well known patterns of peasant response which have often been attributed to peculiar motives presumed specific to peasants the model explains sluggish response to cash crops prices and high instability in perceived food and labor scarcities the key role of manufactured consumer goods prices in stimulating peasants effort in cash crops production the effectiveness of taxation as opposed to incentives in stimulating cash crops production and the key role of technological change in food production to enhance cash crop production results are obtained analytically in the case of one market failure and by numerical simulation with more than one

the seasonal and spatial dimensions of sorghum market liberalization in mexico mexico s attempt to deregulate its sorghum market in 1990 was unsuccessful because policy analysts failed to consider the seasonal and spatial dimensions of trade in this paper i present a detailed seasonal and spatially dissaggregated nonlinear programming model of the mexican sorghum market calibrated with survey data of storage and transport costs in mexico and compare the results obtained with models that ignore these characteristics the comparison demonstrates that the failure to incorporate these costs in trade models may lead to misleading conclusions and inappropriate policies

determinants and effects of income diversification amongst farm households in burkina faso using four years of household data from three agroecological zones in burkina faso sahelian sudanian and guinean the article examines the determinants and effects of household income diversification harvest shortfalls and terms of trade are found to drive diversification but land constraints do not income diversification is associated with higher incomes and food consumption and more stable income and consumption over years

a spatial analysis of maize marketing policy reforms in zambia in this study we analyze recent and proposed maize marketing reforms in zambia to capture the effects of changing transport systems we use a continuous space model in place of the traditional point representation model of takayama and judge this method permits us to use prereform data on supply demand and transport costs to infer both intra and interregional effects of liberalization and shows that the welfare gains from liberalization are larger than commonly thought these results provide policy makers with estimates of the magnitude of change associated with alternative reform programs beyond what would be available from a conventional approach

imperfect competition and exchange rate pass through in the food processing sector imperfect competition has become an important dimension of international trade theory helpman and krugman product differentiation and economies of scale are explicitly incorporated in the new trade theory policy prescriptions following from these models hinge critically on underlying assumptions particularly the form of strategic firm behavior competitive cournot or bertrand unfortunately these models do not lend themselves easily to empirical testing also little empirical information exists on the strategic behavior of firms in international markets thus various models and tests on different aspects of imperfect competition in trade have been proposed and implemented one form of imperfect competition in international trade that has received attention re

dynamic stability and international trade under uncertainty in the presence of output or price uncertainty the heckscher ohlin samuelson h o s model with incomplete risk markets has been shown to exhibit a wide range of perverse comparative statics responses which contradict the predictions d la stolper samuelson and rybczynski and opens up the possibility of perverse price output responses this paper revisits the question raised by neary 1978 and examines the dynamic stability properties of an h o s model under uncertainty in relation to the conditions under which these perverse responses emerge the findings suggest that once the risk attitudes of the representative entrepreneur is appropriately accounted for in the specification of value factor intensities dynamic stability with respect to a marshallian adjustment process is necessary and sufficient for the normality of all of the standard comparative statics responses except for the rybczynski result the basic analytics are then applied to various existing setups of the h o s model under uncertainty in each case the applicability of the stability condition in precluding comparative static responses that violate standard predictions is examined

democracy and foreign education despite the large amount of private and public resources spent on foreign edu cation there is no systematic evidence that foreign educated individuals foster democracy in their home countries using a unique panel dataset on foreign stu dents starting in the 1950s i show that foreign educated individuals promote democracy in their home country but only if the foreign education is acquired in democratic countries the results are robust to several estimation techniques to different definitions of democracy and to the inclusion of a variety of control variables including democracy in trading partners neighboring countries level of income and level and stock of education jel d72 121 015 do foreign educated individuals play a role in fostering democracy in their home countries despite the large amount of resources spent on financing foreign education there is no systematic study on the effects of foreign education on democracy this paper fills this gap using a dataset on foreign students that includes almost all host and sending countries and spans over 50 years numerous policy initiatives and large investment in the united states are based on the notion that foreign educated students promote democracy in their countries of origin through the fulbright program the us government has financed more than 158 000 foreigners studying in the united states 1 the us government not only finances the education of foreign students but also annually issues more than 250 000 nonimmigrant visas for foreign students more than five million individuals have received visas to study in the united states since 1971 2 us efforts to educate foreign students have produced impressive results 46 current and 165 former heads of governments are products of us higher education foreign leaders educated in the united

a spatial equilibrium model for imperfectly competitive milk markets a generalization of takayama and judge s spatial equilibrium model that allows for any degree of market structure is presented the model is applied to the japanese dairy industry to examine interregional milk movements generated under alternative assumed degrees of market competition the results indicate that the perfect competition and monopoly equilibrium solutions result in a lower and a higher price respectively than actual price levels on the other hand the cournot nash equilibrium solutions are the most similar to actual observations and the actual interregional milk movements are best explained by imperfectly competitive behavior

bringing it all back home return migration and fertility choices summary return migration exerts a wide ranging influence upon the countries of origin of the migrants we analyze whether returnees adjust their fertility choices to the norms that prevail in their previous countries of destination using egyptian household level data egyptian men migrate predominantly toward other arab countries characterized by a higher number of children per woman relying on a two step instrumental variable approach to control for the endogeneity of the migration decisions we show that return migration has a positive and significant influence on marital childbearing

south south migration and discrimination against women in social institutions a two way relationship summary using the social institutions and gender index sigi from the oecd development centre this paper provides evidence on the two way relationship between discrimination against women in social institutions and south south migration on the one hand discriminatory social institutions in both origin and destination countries are an additional determinant of female migration on the other hand migration implies changes in discrimination against women according to the level of gender inequalities at destination specifically migration toward countries with low levels of discrimination promotes gender equality in social institutions at home while migration toward destinations with high levels of discrimination has the reverse effect

government spending growth and poverty in rural india using state level data for 1970 93 a simultaneous equation model was developed to estimate the direct and indirect effects of different types of government expenditure on ruralpoverty and productivity growth in india the results show that in order to reduce rural poverty the indian government shoul d give highest priority to additionalinvestments in ruralroads and agricul turalresearch these types of investment not only have much larger poverty impacts per rupee spent than any other government investment but also generate higher productivity growth apart from government spending on education which has the third l argest marginalimpact on ruralpoverty and produc

inventory dynamics under transaction costs a conceptual model of storage behavior is developed optimal intertemporal pricing is derived to analyze the effects of transaction costs on storage andarbitrage pricing it is shown how transaction costs can rationalize the existence of an inverse carrying charge for inventory the model is applied to u s soybeans stocks for the period 1960 95 the empirical results suggest that transaction costs have a significant influence on storage behavior andintertemporal arbitrage pricing copyright 2000 oxford university press

bayesian learning in an infant industry model abstract most analyses of the infant industry argument assume that production early on benefits subsequent production in deterministic fashion this paper presents an alternative framework for evaluating the infant industry argument that focuses on imperfect information as a barrier to entry initial entrants provide information of social value by reducing uncertainty for potential followers about the suitability of local conditions in contrast to earlier work i show that factors that increase the informational barrier to entry may lower the optimal subsidy to the infant industry and that the standard test of the success of infant industry policy is not always valid 1997 elsevier science b v

beyond export led growth abstract in light of the adverse conditions in the current international economic environment this paper reassesses the feasibility of continuing to rely on manufacturing export led growth as the major development dynamic for most ldcs during the next decade this paper argues that after the initial stages of industrial development the emphasis in policy toward agriculture should shift from surplus extraction to surplus creation and to the generation of demand linkages with the rest of the economy the author compares the relative merits of two alternative open development strategies export led industrialization and agricultural demand led industrialization adli by means of several simulation experiments the experiments are performed with a computable general equilibrium model of a small low income semi industrial open economy which is a stylization of south korea of 1963 they are carried out in an international environment assumed to represent the next decade based on a rate of growth of international demand for imports of about half the 1960 1973 rate the results support the adli approach on all counts

can parental migration reduce petty corruption in education the income generated from parental migration can increase funds available for children s education in countries where informal payments to teachers are common migration could therefore increase petty corruption in education this hypothesis is tested by investigating the effect of migration on educational inputs an instrumental variables approach is used on survey data and matched administrative records from the world bank s open budget initiative boost from moldova one of the countries with the highest emigration rates contrary to the positive income effect the strongest migration related response in private education expenditure that is found is a substantial decrease in informal payments to public school teachers any positive income effect due to migration must hence be overcompensated by some payment reducing effects a number of potential explanations at the family level school level or community level are discussed several of these explanations ruled out and possible interpretations for future research highlighted

a reexamination of the neoclassical trade model under uncertainty abstract this paper presents a model that pinpoints the exact places and reasons that the propositions of the heckscher ohlin samuelson model break down under uncertainty within the model if preferences exhibit decreasing absolute risk aversion i a capital poor country tends to obtain lower revenues from its resources than the same resources would yield in capital rich countries ii if there is one riskless and one risky sector a capital abundant country tends to have a comparative advantage in the risky sector and iii the pattern of trade depends on the intra national as well as the inter national distribution of endowments

spot market risk market interaction and the protective effects of a tariff under uncertainty this paper discusses the interaction between commodity spot prices and secu rity risk prices in determining the effectiveness of a protective tariff the problem i address is that of an open economy facing price and production uncertainty in trade and having access to a securities market where claims to firms are traded such a description applies for example to europe japan the united states and many of the nations in africa and latin america for these economies security prices determine industry supply decisions through their effect on market value the paper therefore describes how risk prices are formed as distinct from commodity prices and describes their influence on tariff effectiveness in conjunction with spot prices the model is the standard two sector heckscher ohlin model of trade except that i introduce an explicit financial sector in the market for firm securities and allow for technological uncertainty of the form

marketing margins and agricultural technology in mozambique improvements in agricultural productivity and reductions in marketing costs in mozambique are analysed using a computable general equilibrium cge model the model incorporates detailed marketing margins and separates household demand for marketed and home produced goods individual simulations of improved agricultural technology and lower marketing margins yield welfare gains across the economy in addition a combined scenario reveals significant synergy effects as gains exceed the sum of gains from the individual scenarios relative welfare improvements are higher for poor rural households while factor returns increase in roughly equal proportions an attractive feature when assessing the political feasibility of policy initiatives

consumer s surplus without apology the purpose of this paper is to settle the controversy surrounding consumer s surplus and by so doing to validate its use as a tool of welfare economics i will show that observed consumer s surplus can be rigorously utilized to estimate the unobservable compensating and equivalent variations the correct theoretical measures of the welfare impact of changes in prices and income on an individual i derive precise upper and lower bounds on the percentage errors of approximating the compensating and equivalent variations with consumer s surplus these bounds can be explicitly calculated from observable demand data and it is clear that in most applications the error of approximation will be very small in fact the error will often be overshadowed by the errors involved in estimating the demand curve the results in no way depend upon arguments about the constancy of the marginal utility of income consequently this paper supplies specific empirical criteria which can replace the apologetic caveats frequently employed by those who presently apply consumer s surplus moreover the results imply that consumer s surplus is usually a very good approximation to the appropriate welfare measures to preview below i establish the validity of these rules of thumb for a

can internal migration foster the convergence in regional fertility rates evidence from 19th century france this paper offers an explanation for the convergence of fertility rates across french departements in the second half of the nineteenth century that emphasises the diffusion of information through internal migration it tests how migration affected fertility by building a decennial bilateral migration matrix between french departements for 1861 1911 the identification strategy uses exogenous variation in transportation costs resulting from the construction of railways the results suggest that the convergence towards low birth rates can be explained by the diffusion of cultural and economic information pertaining to low fertility behaviour by migrants especially by migrants to and from paris

a theory of commodity price fluctuations this paper studies the price fluctuations of storable commodities that are traded in open markets and are subject to random shocks to demand or more particularly to supply it relaxes the common assumption that the shocks are identically and independently distributed in favor of temporally dependent and periodic disturbances the existence of a unique stationary rational expectations equilibrium is demonstrated for each of the models analyzed and testable implications of the models are derived an illustrative empirical investigation is then undertaken for the model with periodic disturbances using monthly time series observations for seven commodities over the period 1960 93

optimal storage and marketing over space and time borrowing from the theory of optimal resource extraction we develop the mechanism guiding efficient commodity storage and marketing over producing regions through the crop year optimal storage occurs at producing areas and time in storage varies directly with distance to market prices grow with interest rates in locations where storage is efficient but more slowly elsewhere which explains why market prices i e prices at the market grow more slowly than interest rates the model is empirically supported by examining storage in the corn belt rates of price growth at various points and quarterly grain marketings

five questions on international migration and development the movement of people in search of better economic conditions and a more secure environment is as old as human history such movements not only profoundly affect the lives of the migrants but also lead to significant economic and social transformations in migrants countries of origin and destination in recent years a significant increase in the growth of international migration and remittance flows and in awareness of their development impact has led to a resurgence of interest by academics policymakers and analysts in what has been referred to as the third leg of globalization the other two being international trade and international capital flows this symposium issue gathers some of the papers presented at the second international migration and development conference held at the world bank on september 10 11 2009 the five articles in this symposium issue fall into two groups

economic geography fertility and migration abstract this paper analyzes the relationship among economic geography fertility and migration the empirical evidence presented reveals that persistent regional variations in fertility exist within a country and that regional total fertility rates are negatively related to regional population density a two period overlapping generations model of endogenous fertility incorporating n regions agglomeration economies and congestion diseconomies is constructed to explain this negative relationship while agglomeration economies have both positive income and negative substitution effects on fertility congestion diseconomies have a negative income effect on it combined with the mobility of people interaction among these effects generates the negative relationship as a steady state equilibrium outcome it is also shown that net migration from regions with lower population density to regions with higher population density occurs in an equilibrium which in turn maintains the regional variations in fertility

emigration and democracy migration is an important yet neglected determinant of institutions this paper documents the channels through which emigration affects home country institutions and considers dynamic panel regressions for a large sample of developing countries the authors find that emigration and human capital both increase democracy and economic freedom this implies that unskilled skilled emigration has a positive ambiguous impact on institutional quality simulations show an impact of skilled emigration that is generally positive significant for a few countries and for many countries once incentive effects of emigration on human capital formation are accounted for

competitive storage and commodity price dynamics by buying cheap and selling dear risk neutral commodity speculators can smooth commodity prices and induce serial dependence in price even when none would exist under a simple process of supply and demand commodity prices are variable and strongly positively correlated from one year to the next the variability is often explained by supply factors and the autocorrelation by the activities of speculators we show that this explanation is not consistent with the evidence speculation can substantially increase autocorrelation for prices that are weakly autocorrelated in its absence but not to the high levels that are observed in the data

trade patterns under uncertainty with country specific shocks the helpman razin model of international trade under uncertainty is extended to allow for country specific productivi ty shocks it is shown that for the multiple sector multiple factor case there exists a set of interesting sufficient conditions under w hich it is possible to predict the pattern of international trade in securities goods and factor content on the basis of cross country d ifferences in factor endowments it is shown that under these circum stances some well known empirical tests have to be modified copyright 1988 by the econometric society

potential impacts of the proposed west african monetary zone on cowpea trade member countries of the economic community of west african states ecowas are expected to form a west african monetary zone wamz by december 2009 whereby members would use a common currency in an attempt to promote regional integration evidence suggests that reduction in transaction cost as a result of a decrease or elimination of nontariff barriers ntbs and real interest rates in response to elimination of exchange rate differentials positively influence trade the objective of this study is to quantify the effects of a a 7 real interest rate on capital and b zero ntbs within ecowas countries on cowpea vigna unguiculata l walp trade to provide a measure of the potential impacts of the wamz on grain trade the study applies a spatial and temporal price equilibrium model formulated in a mixed complementary programming mcp framework and solved using gams path the focus is on the nigerian cowpea grainshed ncg comprising benin burkina faso cote d ivoire ghana mali niger nigeria and togo in ecowas and cameroon chad and gabon in the central african economic and monetary community caemc the results show that if wamz results in reduced real interest rates within ecowas the larger of the two monetary unions consumers in the relatively larger coastal economies and producers in the smaller sahelian economies would benefit while all others lose however net social welfare would increase by 0 19 over the base case of 6 3 billion us bus removing ntbs among countries in the larger trading bloc may alter the pattern of cowpea flows with total trade volume increasing by 3 but inter bloc trade decreasing by about 8 the net total regional social welfare would increase by 0 14 or 15 million us mus benefiting only consumers in importing countries and producers in exporting countries the results emphasize the importance of specialization based on regional comparative advantage but also draw attention to the need to devise ways to ensure acceptable welfare distribution among producers and consumers in line with policy objectives of the individual countries within the proposed wamz finally this article contributes to the literature on the application of spatial and temporal models incorporating both ad valorem tariffs and differential interest rates in developing economies

urban bias in price risk the geography of food price distributions in low income economies the geography of agricultural marketing has important implications for the stochastic distribution of agricultural commodity prices this article proposes that objective food price risk differs between rural and urban areas of infrastructure poor economies characterised by spatially concentrated patterns of foodgrains storage this difference implies an urban bias having adverse welfare effects for peasants who seasonally switch between net food seller and net food buyer positions empirical analysis of rice price data from madagascar suggests that price variability and skewness indeed differ between rural and urban areas in ways that adversely influence the relative welfare of rural peasants

inequality and growth why differential fertility matters we argue that inequality and growth are linked through differential fertility and the accumulation of human capital we build an overlapping generations model in which dynasties differ in their initial endowment with human capital growth the income distribution and fertility are endogenous due to a quantiy quality tradeoff families with less human capital decide to have more children and invest less in education when initial inequality is high large fertility differentials lower the growth rate of average human capital since poor families who invest little in education make up a large fraction of the population in the next generation a calibrated model shows that this fertility differential effect is quantitatively important we also provide empirical evidence to confirm the links between inequality differential fertility and growth suggested by the model

transfer costs spatial arbitrage and testing for food market integration conventional tests for food market integration ask often misleadingly whether prices in different locations move together in this paper an alternative methodology the parity bounds model pbm is developed which uses information on transfer costs in addition to food prices to assess the efficiency of spatial arbitrage monte carlo experiments using data generated by a point space spatial price equilibrium model show the pbm to be statistically reliable an application to philippine rice markets demonstrates that the pbm detects efficient arbitrage when other tests do not

raising offtake from cattle grazed on natural rangelands in sub saharan africa a transaction cost economics approach farmers in sub saharan africa are constrained by large transaction costs associated with marketing of their livestock however transaction costs are often not taken into account in the analysis of factors hampering the development of livestock marketing in this region this article empirically measures the influence of transaction costs on the offtake from cattle grazed on natural rangelands in uganda the study is based on the monitoring of 696 cattle transactions in three districts of uganda from august 2004 to august 2005 the estimated models suggest that proportional transaction costs represented by the state of roads distance to markets and time taken to reach the market are important variables constraining market participation in order to raise offtake from the national herd it is essential to explicitly address these costs one potential solution is collective action in marketing of livestock in which proportional and fixed transaction costs are reduced and shared among the group members

informal barriers and agricultural trade does monetary integration matter eu enlargement and the recent sovereign debt crisis of euro zone countries have revived the debate around the european monetary union emu in this article we ask how informal barriers to agricultural and food trade have changed since the introduction of the common european currency and whether this evolution can be attributed to monetary integration we focus on the foreign trade of the 11 emu founder countries over a nine year period covering the creation of the emu and find a diminishing marginal trade impact of both information and institutional barriers we find a lower level of trade barriers but cannot attribute this outcome to the introduction to the euro

is migration a good substitute for education subsidies assuming a given educational policy the recent brain drain literature reveals that skilled migration can boost the average level of schooling in developing countries this paper introduces educational subsidies determined by governments concerned by the number of skilled workers remaining in the country the theoretical analysis shows that developing countries can benefit from skilled emigration when educational subsidies entail high fiscal distortions however when taxes are not too distortionary it is desirable to impede emigration and subsidize education the authors investigate the empirical relationship between educational subsidies and migration prospects obtaining a negative relationship for 105 countries based on this result the analysis revisits the country specific effects of skilled migration upon human capital the findings show that the endogeneity of public subsidies reduces the number of winners and increases the magnitude of the losses

does arbitraging matter spatial trade models and discriminatory trade policies when modeling discriminatory trade policies such as targeted embargoes or targeted subsidies failure to explicitly include assumptions about the possibility of simultaneous exporting and importing may yield misleading results nonlinear programming and vector sandwich models implicitly set rules regarding arbitraging which may be at variance with actual policies and or country behavior the paper introduces an alternative spatial model which allows the researcher to explicitly incorporate her own assumptions about arbitraging an analysis of the 1980 u s embargo to the ussr shows how the proposed model performs relative to the most frequently used spatial trade models

spatial price efficiency in mozambique s post reform maize markets maize zea mays shortages and maize price instability continue to occur in mozambique in spite of policy reforms and great capacity for increased production in northern mozambique this study measured the efficiency of spatial maize price arbitrage in mozambique s post reform period spatial price inefficiency does not seem to explain why food shortages continue to occur in mozambique suggesting nonprice market constraints such as poor infrastructure and poor market institutions as more likely explanations baulch s spatial efficiency test indicated that it is not profitable to ship maize from northern surplus maize regions to southern mozambique records of interregional maize shipments show that indeed grain is not being shipped from the north to the south market liberalization may have improved spatial price efficiency but high transfer costs still limit trade and potential benefits from freeing markets under these circumstances food shortages and price instability are likely to continue

reprint of migration and development research is moving far beyond remittances summary research on migration and development has recently changed in two ways first it has grown sharply in volume emerging as a proper subfield second while it once embraced principally rural urban migration and international remittances migration and development research has broadened to consider a range of international development processes these include human capital investment global diaspora networks circular or temporary migration and the transfer of technology and cultural norms for this special issue we present a selection of frontier migration and development research that instantiates these trends