occupational choice and the process of development this paper models economic development as a process of institutional transformation by focusing on the interplay between agents occupational decisions and the distribution of wealth because of capital market imperfections poor agents choose working for a wage over self employment and wealthy agents become entrepreneurs who monitor workers only with sufficient inequality however will there be employment contracts otherwise there is either subsistence or self employment thus in static equilibrium the occupational structure depends on distribution since the latter is itself endogenous we demonstrate the robustness of this result by extending the model dynamically and studying examples in which initial wealth distributions have long run effects in one case the economy develops either widespread cottage industry self employment or factory production employment contracts depending on the initial distribution in the other example it develops into prosperity or stagnation

the political economy of rural property rights and the persistence of the dual economy abstract rural areas often have more than one regime of property rights and production large private property farms owned by powerful landowners coexist with subsistence peasants who farm small plots with limited property rights at the same time there is broad consensus that individual well specified and secure property rights over land improve economic outcomes if property rights in land are so beneficial why are they not adopted more widely i put forward a theory according to which politically powerful landowners choose weak property rights to impoverish peasants and force them to work for low wages moreover because weak property rights force peasants to stay in the rural sector protecting their property the incentives to establish poor property rights are especially salient when peasants can migrate to an alternative sector such as when urban wages increase with industrialization

how efficiently is capital allocated evidence from the knitted garment industry in tirupur this paper studies the effect of community identity on investment behaviour in the knitted garment industry in the south indian town of tirupur we document very large and systematic differences in both levels of capital stock and the capital intensity of production in firms owned by people from two different community groups we argue that the differences in investment cannot be explained by productivity differences alone we suggest that the most likely explanation is that the two communities differ in their access to capital

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

public versus private investment in human capital endogenous growth and income inequality in this paper we present an overlapping generations model with heterogeneous agents in which human capital investment through formal schooling is the engine of growth we use simple functional forms for preferences technologies and income distribution to highlight the distinction between economies with public education and those with private education we find that income inequality declines more quickly under public education on the other hand private education yields greater per capita incomes unless the initial income inequality is sufficiently high we also find that societies will choose public education if a majority of agents have incomes below average

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

why progressive redistribution can hurt the poor recent macroeconomic research discusses credit market imperfections as a key channel through which inequality retards growth with convex technologies progressive transfers increase aggregate output because marginal returns become more equalized across investment opportunities we argue that this reasoning may not hold in general equilibrium since the investment functions are concave in wealth reducing inequality increases capital demand and the interest rate hence through the impact on capital costs shifting wealth from the rich to the middle class depletes the poorest investors access to credit but because the poor face the highest marginal returns the net effect on output may be negative we find however that redistributing towards the bottom end of the distribution has a clear positive impact finally we discuss the implications of our theoretical findings for future empirical research

the long run demand for skilled and unskilled labor in colombian manufacturing plants this note estimates the long run demand for skilled and unskilled labor using panel data for colombian manufacturing plants unobserved heterogeneity and measurement error problems that commonly arise in microdata production estimates are examined output measurement errors cause ols estimators to underestimate the output and wage response of employment demand time difference estimators exaggerate the measurement error biases instrumental variable estimates of the output elasticities are 0 89 and 0 76 and own wage elasticities are 0 42 and 0 65 for skilled and unskilled labor respectively the output elasticity is larger for skilled labor whereas the wage elasticity is larger for unskilled labor in virtually every industry

informal work networks we present a model of time allocation between formal and informal labour supply where workers learn of informal job opportunities from their peers in addition to formal income taxation and enforcement individuals labour supply decisions depend on the number of their peers with informal jobs and the strength of social ties workers allocate more time to informal activities when tax enforcement is lax and job information transmission is good more connected social networks e g wheel complete feature lower average income but higher average utility than poorly connected social networks e g star empty average income may be non monotonic in tax enforcement on presente un modele d allocation du temps entre l offre de travail formel et informel dans le cas ou les travailleurs apprennent l existence de possibilites de travail informel de leurs pairs en plus de dependre de l imposition des revenus formels et de la rigueur de ce processus les decisions des individus dans leur offre de travail dependent du nombre des pairs qui ont du travail informel et de la force des liens sociaux les travailleurs allouent plus de temps aux activites informelles quand l application de la loi fiscale est rel chee et que la transmission de l information a propos du travail informel est bonne des reseaux sociaux mieux connectes e g roue complet se traduisent par un revenu moyen plus bas mais par une utilite moyenne plus elevee que des reseaux sociaux plus pauvrement connectes e g etoile vide le revenu moyen peut avoir un lien non monotone a la nature de l application de la loi fiscale

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

wages and labor management in african manufacturing using matched employer employee data on 10 african countries this paper examines the relationship beween wages worker supervision and labor productivity in manufacturing wages increase with rm size for both production workers and supervisors we develop a two tier model of supervision that can account for this stylized fact and we t the structural model to the data employee data is used to derive a rm speci c wage premium that is purged of the effect of worker observables we nd as trong effect of both supervision and wages on effort and hence on labor productivity labor management in sub saharan africa appears problematic with much higher supervisor to worker ratios than in morocco and a higher elasticity of effort with respect to supervision

real wages and the demand for skilled and unskilled male labour in ghana s manufacturing sector 1991 1995 abstract real wage rates in ghana have fallen substantially over the last 20 years in this paper survey data for the years 1991 1995 is used to assess the changes which have occurred in the 1990s it is shown that the real wage rate for the unskilled has continued to fall factor share equations for skilled and unskilled labour are estimated which show the rise in skilled wages leading to substitution to unskilled labour but no rise in the share of skilled labour in income the own price elasticities of skilled and unskilled labour are estimated at 0 44 and 0 52 respectively

skills investment and exports from manufacturing firms in africa it has been argued that africa will not be able to export manufactures as it lacks the necessary skills without an ability to export there will only be an incentive to invest in the sector if domestic demand grows rapidly comparative data for four african countries the cameroon ghana kenya and zimbabwe shows that in the early 1990s investment in manufacturing remained very low the micro evidence on manufacturing exports is wholly consistent with the macro in suggesting these are for most african countries negligible an exception is zimbabwe the paper uses a longer time series from ghana to ask how skills have impacted on manufacturing investment and exports in the 1990s two dimensions of skills are defined and measured the first is that observable in the education and experience of the workforce the second is the underlying efficiency with which the firm operates the latter is shown to be a significant determinant of both investment and exports these exports are relatively capital intensive unskilled labour intensive exports remain negligible possible reasons for these outcomes are discussed

risk and insurance in a rural credit market an empirical investigation in northern nigeria credit contracts play a direct role in pooling risk between households in northern nigeria repayments owed by borrowers depend on realizations of random shocks by both borrowers and lenders the paper develops two models of state contingent loans the first is a competitive equilibrium in perfectly enforceable contracts the second permits imperfect information and equilibrium default estimates of both models indicate that quantitatively important state contingent payments are embedded in these loan transactions but that a fully efficient risk pooling equilibrium is not achieved the research is based on a year long survey in zaria nigeria conducted by the author

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

anonymity efficiency wages and technological progress although the industrial revolution is often characterized as the culmination of a process of commercialisation the precise nature of such a link remains unclear this paper provides an analysis of one such link the role of commercialisation in raising wages as impersonal labour market transactions replace personalized customary relations in the presence of an aggregate capital externality we show that the resulting shift in relative factor prices will under certain conditions lead to higher capital intensity in the production technology and hence a faster rate of technological progress we provide historical evidence using european data to show that england was among the most urbanized and the highest wage countries at the onset of the industrial revolution the model highlights the effects of changes in the availability of information typical of a modernising country on efficiency wages and technological progress

temporary migration and endogenous risk sharing in village india when people can self insure via migration they may have less need for informal risk sharing at the same time informal insurance may reduce the need to migrate to understand the joint determinat

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

urbanization informal sector and development abstract urbanization is a universal phenomenon in the postwar world but its qualitative nature is varied across countries some nations have experienced urbanization that accompanied skill upgrading industrialization and the expansion of the urban formal modern sector but others urbanized without such modernization and underwent the expansion of the urban informal traditional sector simultaneously the question that naturally arises is what are the underlying causes for the differences the purpose of the paper is to tackle this question analytically based on a dynamic model of urbanization and development

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

can micro credit bring development abstract we examine the long run effects of micro credit on development in an occupational choice model similar to banerjee and newman jpe 1993 micro credit is modeled as a pure improvement in the credit market that opens up self employment options to some agents who otherwise could only work for wages or subsist micro credit can either raise or lower long run gdp since it can lower use of both subsistence and full scale industrial technologies it typically lowers long run inequality and poverty by making subsistence payoffs less widespread thus an equity efficiency tradeoff may be involved in the promotion of micro credit however in a worst case scenario micro credit has purely negative long run effects the key to micro credit s long run effects is found to be the graduation rate defined as the rate at which the self employed build up enough wealth to start full scale firms we distinguish between two avenues for graduation winner graduation of those who earn above average returns in self employment and saver graduation due to gradual accumulation of average returns in self employment long run development is not attainable via micro credit if winner graduation is the sole avenue for graduation in contrast if the saving rate and self employment returns of the average micro borrower are jointly high enough then micro credit can bring an economy from stagnation to full development through saver graduation thus the lasting effects of micro credit may partially depend on simultaneous facilitation of micro saving eventual graduation of the average borrower rather than indefinite retention should be the goal of micro banks if micro credit is to be a stepping stone to broad based development rather than at best an anti poverty tool

corporate environmental citizenship variation in developing countries an institutional framework this study focuses on why some companies in developing countries go beyond environmental regulations when implementing their corporate environmental social responsibilities or citizenship behavior drawing mainly upon the new institutional theory this study develops a conceptual framework to explain three institutional factors companies market orientations industrial characteristics and corporate identities accordingly we suggest that companies from developing countries that are oriented to markets in developed countries operate in highly concentrated industries and have missionary identities adopt corporate environmental citizenship behavior by going beyond environmental regulations the study also discusses the theoretical policy and managerial implications of the conceptual framework

efficient policy in a predatory economy to him who hath shall be given trade subject to predation generates externalities within and between markets efficient tax infrastructure and enforcement policies internalize the net externality more trade implies fewer predators but drawn to trade at rising cost the balance is positive negative as enforcement is weak strong dual economies pair weak periphery and strong core enforcement markets efficient taxation and infrastructure promote the core at the expense of the periphery efficient enforcement promotes both tolerance intolerance of smuggling is efficient when core enforcement is weak strong tolerance of informal market mafias that provide enforcement and infrastructure is efficient when core enforcement is strong

migration remittances and capital accumulation evidence from rural mexico this paper studies the link between migration remittances and productive assets accumulation for a panel of poor rural households in mexico over the period 19972006 in a context of nancial markets imperfections migration may act as a substitute for imperfect credit and insurance provision through remittances from migrants and thus exert a positive eect on investment however it may well be the case that remittances are channelled towards increasing consumption and leisure goods exploiting within family variation and an instrumental variable strategy we show that migration indeed accelerates productive assets accumulation moreover when we look at the eect of migration on consumption of non productive assets durable goods we nd instead a negative eect our results then suggest that

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

the own wage elasticity of labor demand a meta regression analysis firms labor demand responses to wage changes are of key interest in empirical research and policy analysis however despite extensive research estimates of labor demand elasticities remain subject to considerable heterogeneity in this paper we conduct a comprehensive meta regression analysis to re assess the empirical literature on labor demand elasticities building on 942 elasticity estimates from 105 different studies we identify sources of variation in the absolute value of this elasticity heterogeneity due to the theoretical and empirical specification of the labor demand model different datasets used or sectors and countries considered explains more than 80 of the variation in the estimates we further find substantial evidence for the presence of publication selection bias as estimates of the own wage elasticity of labor demand are upwardly inflated

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

enterprise inequality and economic development we characterize an equilibrium development process driven by the interaction of the distribution of wealth with credit constraints and the distribution of entrepreneurial skills when efficient entrepreneurs are relatively abundant a traditional development process emerges in which the evolution of macroeconomic variables accord with empirical regularities and income inequality traces out a kuznets curve if instead efficient entrepreneurs are relatively scarce the model generates long run distributional cycles driven by the endogenous interaction between credit constraints entrepreneurial efficiency and equilibrium wages

thin versus thick co2 market abstract the idea that trading is more costly the thinner the market is is common in most studies of market exchange with frictions surprisingly this element is lacking from previous attempts to allow for frictions in pollution permit markets this paper considers a co 2 cap and trade model where trading costs develop endogenously as a function of the market size the pre trade allocation of permits determines whether the market size can be strongly influenced by expectations that have a role because of adjustment costs the pre trade allocation also sets preconditions for endogenously vanishing trading costs and thus has nonstandard effects on long run trading levels and market allocations

acute morbidity and labor outcomes in mexico testing the role of labor contracts as an income smoothing mechanism abstract economic development is associated with an increase in the share of workers in salaried jobs this process may be accompanied by a reduction in wage fluctuations if labor contracts are used as income smoothing mechanisms this paper tests to what extent salaried jobs help reduce the volatility of wages by insuring workers against productivity shocks analysis of mxfls data indicates that the average contractual arrangement in mexico insures the worker against idiosyncratic productivity fluctuations associated with episodes of illness the evidence is stronger for workers in formal jobs to validate the methodology the test is also implemented on a sample of self employed workers in this case it correctly rejects the presence of insurance against productivity shocks

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

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

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

thy neighbor s keeper the design of a credit cooperative with theory and a test economists now appreciate that resource allocation in less economically developed economies is profoundly influenced by non firm economic institutions however our theories of non firm institutions often suggest different answers to many questions including those of policy this paper illustrates a method for discriminating between alternative theories using data from german credit cooperatives from the nineteenth and early twentieth century germany we build a model of credit cooperatives designed to provide monitoring incentives and test this using nineteenth century data authors

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

the ghanaian manufacturing sector 1991 95 firm growth productivity and convergence the removal of high levels of protection combined with substantial real devaluations have changed the environment in which ghanaian manufacturing firms have operated in the 1990s the changes in output composition and productivity which have occurred over this period are examined in this article survey evidence for the growth of the sector is shown to be consistent with data from sales tax returns analysis of the panel survey shows that in a comparative context the rate of job creation in ghana s manufacturing sector is high this rate is highest in medium sized firms small firms have not grown more rapidly than larger firms there has been no underlying growth in technical efficiency and output growth has been matched by a commensurate growth in labour and capital inputs labour productivity differs substantially by firm size due primarily to differences in physical not human capital endowments

the new economics of labor migration this paper reviews selected theoretical and empirical developments in the field of labor migration economics the migration behavior of individuals differs in accordance with their perceived relative deprivation those who are relatively more deprived tend to have stronger incentive to migrate than those who are relatively less deprived moreover a reference group characterized by more income inequality is likely to generate more relative deprivation highly skilled workers are also more likely to migrate migration decisions are often made jointly by the migrant and nonmigrant with a contractual arrangement regarding the sharing of costs and returns the exchange of commitments to share income provides coinsurance of particular interest are the determinants of the speed of adoption of migration as an innovation and the characteristics associated with the delay in the adoption of innovation new econometric techniques including techniques for the analysis of qualitative dependent variables techniques that correct for sample selection bias and those for the analysis of longitudinal data have substantially benefited empirical research in this area new methods that can correct for the biased estimate of the wages particular individuals would receive at 2 or more locations at the same point in time allow researchers to test locational decsion making models estimates of these structural models of labor migration support the hypothesis that individuals respond to income incentives in making the decsion to migrate further research is needed on the pazzling observation that migrant workers earn less than native born workers with similar characteristics during the 1st few years after migration but more thereafter other topics that need further research include the macroeconomic effects of migration the microeconomic and macroeconomic relationships between aging and labor migration and the migration behavior of dual earner families

when the levee breaks black migration and economic development in the american south abstract in the american south postbellum economic development may have been restricted in part by white landowners access to low wage black labor this paper examines the impact of the great mississippi flood of 1927 on black out migration and subsequent agricultural development flooded counties experienced an immediate and persistent out migration of black population over time landowners in flooded counties modernized agricultural production and increased its capital intensity relative to landowners in nearby similar non flooded counties landowners resisted black out migration however benefiting from the status quo system of labor intensive agricultural production jel j15 j43 n32 n52 n92 q54 r23

inequality and development across and within countries summary this paper provides a cross country comparison of how income inequality has evolved within countries at different levels of development it uses overlapping nonparametric regression which allows visual comparisons of inequality both within and across countries as a result the methodology allows more specific conclusions than cross country regressions and yet is more general than within country case studies the approach highlights the problematic conclusions that can arise with parametric regressions in particular with tests of the kuznets curve while some previous results are confirmed some new results on inequality across countries are also discovered

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

adverse selection and entrepreneurship in a model of development this paper presents a theory in which talented entrepreneurs are identified as the key agents driving the process of development and modernisation entrepreneurial skills are private information which prevents full risk sharing development into a modern industrial economy might fail to take place since potentially talented entrepreneurs may refrain from taking on the entrepreneurial risks as a way to avoid income shocks an interesting feature of the model is the fact that the informational asymmetries are endogenous to the process of development as they are related to the heterogeneity in entrepreneurial skills required in the manufacturing activities

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

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

peer monitoring and credit markets a major problem for institutional lenders is ensuring that borrowers exercise prudence in the use of the funds so that the likelihood of repayment is enhanced one partial solution is peer monitoring having neighbors who are in a good position to monitor the borrower be required to pay a penalty if the borrower goes bankrupt peer monitoring is largely responsible for the successful financial performance of the grameen bank of bangladesh and of similar group lending programs elsewhere but peer monitoring has a cost it transfers risk from the bank which is in a better position to bear risk to the cosigner in a simple model of peer monitoring in a competitive credit market this article demonstrates that the transfer of risk leads to an improvement in borrowers welfare

wage rigidity micro and macro evidence on labor market adjustment in the modern sector aggregate data on wages and employment may provide misleading indicators of labor market conditions they may suggest inappropriate wage policies in the face of rising unemployment experienced in many developing countries during the 1980s such increases in unemployment are often attributed to wage rigidities a cursory review of aggregate data for the modern sector in cote d ivoire would support this view suggesting that employment declined during the 1979 84 recession due to an increase in real wages examination of disaggregated data from two labor force censuses of the modern sector however shows that real wages declined for specified classes of labor the work force was characterized by greater education training and experience workers with a given level of attributes received a lower real wage by the end of the recession than before it despite this drop in real wages employment in the modern sector declined

nonhomotheticity and technological bias in production this paper develops an approach to estimating nonhomotheticity and technological bias within the class of nonhomothetic ces production functions the model is applied to cross section firm level data covering seven industries in mexico brazil colombia and four central american countries for the period 1970 74 positive nonhomotheticity higher capital intensity for larger plant size given factor price ratios is found in six industries other results are that once nonhomotheticity is accounted for technological bias is not predominantly capitalusing and equality of capital intensity between transnational and domestic firms is pervasive

family networks and school enrolment evidence from a randomized social experiment we present evidence on whether and how a household s behavior is influenced by the presence and characteristics of its extended family using data from the progresa program in mexico we exploit information on the paternal and maternal surnames of heads and spouses in conjunction with the spanish naming convention to identify the inter and intra generational family links of each household to others in the same village we then exploit the randomized research design of the progresa evaluation data to identify whether the treatment effects of progresa transfers on secondary school enrolment vary according to the characteristics of extended family we find progresa only raises secondary enrolment among households that are embedded in a family network eligible but isolated households do not respond the mechanism through which the extended family influences household schooling choices is the redistribution of resources within the family network from eligibles that receive de facto unconditional cash transfers from progresa towards eligibles on the margin of enrolling children into secondary school

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

the kuznets process and the inequality development relationship abstract in his classic paper on economic growth and income inequality kuznets discussed the process of population shift from traditional to modern activities as the basis for a theory of distributional change during the course of development in this paper we present a formalization of the kuznets process conduct a general analysis of distributional change under this process and derive the functional forms of and conditions for a turning point in the inequality development relationship for six commonly used indices of inequality the functional form appropriate to each index is then estimated using cross section data on 60 developing and developed countries finally some extensions to the initial formalization of the kuznets process are considered

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

information the dual economy and development we examine the interactions between different institutional arrangements in a general equilibrium model of a modernizing economy there is a modern sector where productivity is high but information asymmetries are large and a traditional sector where productivity is low but information asymmetries are small consequently agency costs in the modern sector make consumption lending difficult while such lending is readily done in the traditional sector the resulting trade off between credit availability and productivity implies that not everyone will move to the modern sector in fact the laissez faire level of modernization may fail to maximize net social surplus this situation may also hold in the long run in a dynamic version of the model a trickle down effect links the process of modernization with reduction in modern sector agency costs this effect may be too weak and the economy may get stuck in a trap and never fully modernize the two sector structure also yields a natural theoretical testing ground for the kuznets inverted u hypothesis we show that even within the sectoral shifting class of models this phenomenon is not robust to small changes in model specification

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

a theory of trickle down growth and development this paper develops a model of growth and income inequalities in the presence of imperfect capital markets and it analyses the trickle down effect of capital accumulation moral hazard with limited wealth constraints on the part of the borrowers is the source of both capital market imperfections and the emergence of persistent income inequalities three main conclusions are obtained from this model first when the rate of capital accumulation is sufficiently high the economy converges to a unique invariant wealth distribution second even though the trickle down mechanism can lead to a unique steady state distribution under laissez faire there is room for government intervention in particular redistribution of wealth from rich lenders to poor and middle class borrowers improves the production efficiency of the economy both because it brings about greater equality of opportunity and also because it accelerates the trickle down process third the process of capital accumulation initially has the effect of widening inequalities but in later stages it reduces them in other words this model can generate a kuznets curve

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

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

dollars dollars everywhere nor any dime to lend credit limit constraints on financial sector absorptive capacity we exploit an unexpected inflow of liquidity in an emerging market to study how capital is intermediated to firms we find that backward looking credit limit constraints imposed by banks make it difficult for firms to borrow despite readily available bank liquidity healthy aggregate demand and a sharply falling cost of capital the resulting aggregate failure to extend and retain capital in the economy suggests that agency costs that force banks to rely on sticky balance sheet based credit limits prevent emerging economies from effectively intermediating capital

debt constrained asset markets we develop a theory of general equilibrium with endogenous debt limits in the form of individual rationality constraints similar to those in the dynamic consistency literature if an agent defaults on a contract he can be excluded from future contingent claims markets trading and can have his assets seized he cannot be excluded from spot markets trading however and he has some private endowments that cannot be seized all information is publicly held and common knowledge and there is a complete set of contingent claims markets since there is complete information an agent cannot enter into a contract in which he would have an incentive to default in some state in general there is only partial insurance variations in consumption may be imperfectly correlated across agents interest rates may be lower than they would be without constraints and equilibria may be pareto ranked

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

fishing and nonfishing income decisions the role of human capital and family structure resource dependent households often diversify their income we model demand for remittances and supply of off resource labor as a joint decision and discuss household trade offs we extend the off farm labor supply literature to a rural fishery contrasting our results to common findings in the farm literature and providing empirical evidence of the interdependence between education and family structure in determining income diversification using a unique dataset from malaysia we find that more educated households are less likely to diversify their income with caveats depending on family composition policy implications for resource management in a remittance economy with alternative livelihoods are discussed