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<mark>Edmonds, Eric V., and Norbert Schady. 2012. “Poverty Alleviation and Child Labor.”</mark> _<mark>American</mark>_ _<mark>Economic Journal: Economic Policy</mark>_ <mark>4 (4): 100–24.</mark> <mark>Edmonds, Eric V., and Maheshwor Shrestha. 2014. "You get what you pay for: Schooling</mark> <mark>incentives and child labor."</mark> _<mark>Journal of Development Economics</mark>_ <mark>111: 196-211.</mark> <mark>Evans, David K., and Edward Miguel. 2007. “Orphans and Schooling in Africa: A Longitudinal Analysis.”</mark> _<mark>Demography</mark>_ <mark>, 44 (1): 35-57.</mark> Ferreira, Francisco H. G., Deon Filmer, and Norbert Schady. 2009. “Own and Sibling Effects of Conditional Cash Transfer Programs.” World Bank Policy Research Working Paper 5001. Ferro, Andrea R., Ana Lucia Kassouf, and Deborah Levison. <mark>2010. “The impact of conditional cash</mark> <mark>transfer programs on household work decisions in Brazil.” In</mark> _Child Labour and the_ _Transition between School and Work (Research in Labour Economics, Volume 31_ _<mark>)</mark>_ <mark>, eds. Randall K.Q. Akee, Eric V. Edmonds, and Konstantinos Tatsiramos, 193–218. Bingley: Emerald Group Publishing Limited.</mark> Fiszbein, Ariel, and Norbert Schady. 2009. _Conditional Cash Transfers: Reducing Present and Future Poverty_ . World Bank, Washington DC.

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3 economic inequalities between groups may engender conflict in a society by consolidating and reinforcing ethnic and class differences (Blau & Blau, 1982).

In this paper, using data on crime and estimates of welfare measures by police station jurisdiction in South Africa, we consider three questions. First, we examine the extent to which economic versus sociological theories explain the variation in crime rates, by comparing the implications of various theories for violent crime and property crime separately. Next, we consider how the relative position of a community among neighboring areas may be associated with crime. Finally, we examine whether crime is particularly prevalent in areas with high inequality between racial groups.

The next section discusses the reasons why there might be an association between economic welfare and crime at the community level. Section m summarizes the empirical literature on inequality and crime and explains the contribution of this paper. Section IV briefly outlines the empirical approach and describes our data sources. Section V presents the regression results for various types of crime and Section VI concludes.

# II. **Crime and Economic Welfare**

There are a number of reasons why the local distribution of economic welfare might be associated with the prevalence of crime. Various arguments have been made by economists, sociologists, and public health specialists.

First, community welfare measures may be associated with crime levels via a relationship with the returns from crime and non-crime activities. In his seminal work, Becker (1968) proposes an occupational choice model in which the incentives for
**Automobile Parts.** While SMEs in the auto parts sector frequently introduce new products to meet the demands of assemblers and keep up with changing auto technology, the stimulus for these new products comes largely from the auto assembly firms that place orders with the SMEs, rater than from within **the** firm. This lack of in-house technological expertise among auto parts SMEs is evident from Table II.3, which shows only moderate levels of product newness and originality. Assemblers rely heavily on Japanese suppliers for more technologyintensive parts and components.

There are, however, clear indications that Korean auto parts SMEs are making strong efforts to upgrade their technological capability. For instance, all of the 20 sample SMEs in this sector made use of one or more of the sources of technical support identified in Tables A.4 and E.5 for product and process improvements. As with woven textiles, order-placing firms (who are final assemblers in this case) were used most frequently. Unlike the woven textiles sector, however, the order-placing final assemblers provide active technical assistance to auto parts firms in order to ensure the quality of their parts. The assemblers are more effective in assisting SMEs in product improvement than in process upgrading, since their processes differ significantly from those used by parts manufacturers. Since technical specifications are determined by the final assemblers, interational exhibitions and other imitative forms of technical assistance are of **little** value to auto parts makers.

Auto parts SMEs also tned to collective technical support agencies for help with product and process improvement more frequently than SMEs in the other sectors. Foreign technology transfer (usually via licensing) was also used relatively frequently, and evaluated relatively highly, by the auto parts firms.'<sup>4</sup> A variety of technical support agencies were used by auto parts SMEs seeking technical information, technical assistance, taining, and joint/contractual research (see Table **m.6).** In terms of specific agencies, the SMIPC as well as the IAA (in the form of the NMI 14 The finding that foreign equipment suppliers are important sources of technology is consistent with other studies. For instance Kim and his associates (e.g., Kim, 1991 and Kim and Kim, 1985) consistently show that foreign equipment buppliers play a crucial role in transferring product and process technologies. Their expertise and experience enable them to provide users with crucial product information.

18
38

**Table 10. Marginal Effects for Labor Force Participation, Cambodia**

||1996|1999|2004|2007|2008|2009|2010|2011|
|---|---|---|---|---|---|---|---|---|
|Female dummy|-0.086***|-0.108***|-0.089***|-0.077***|-0.126***|-0.087***|-0.105***|-0.090***|
||(0.006)|(0.007)|(0.004)|(0.010)|(0.012)|(0.006)|(0.009)|(0.009)|
|Age (years)|0.018***|0.021***|0.027***|0.025***|0.030***|0.034***|0.041***|0.040***|
||(0.001)|(0.002)|(0.001)|(0.003)|(0.003)|(0.001)|(0.002)|(0.002)|
|Age squared|-0.000***|-0.000***|-0.000***|-0.000***|-0.000***|-0.000***|-0.001***|-0.001***|
||(0.000)|(0.000)|(0.000)|(0.000)|(0.000)|(0.000)|(0.000)|(0.000)|
|Education (years)|0.004***|0.032***|0.003***|0.026***|0.017***|0.010***|0.013***|0.016***|
||(0.001)|(0.001)|(0.000)|(0.001)|(0.001)|(0.001)|(0.001)|(0.001)|
|Married dummy|0.091***|-0.108***|-0.101***|-0.118***|-0.097***|-0.104***|-0.099***|-0.137***|
||(0.009)|(0.012)|(0.006)|(0.016)|(0.018)|(0.009)|(0.013)|(0.014)|
|Widowed dummy|0.255***|0.002|0.044|-0.002|-0.004|0.017|0.031|0.006|
||(0.036)|(0.043)|(0.046)|(0.034)|(0.046)|(0.022)|(0.030)|(0.031)|
|Divorced dummy|0.258***|-0.002|-0.031***|-0.006|-0.027|-0.003|-0.012|-0.019|
||(0.019)|(0.017)|(0.008)|(0.025)|(0.030)|(0.017)|(0.022)|(0.023)|
|Observations|21,629|15,368|46,118|8,934|5,595|19,940|11,801|11,696|

_Source:_ Calculations based on the Cambodian Socio-Economic Surveys 1996, 1999, 2004, 2007, 2008, 2009, 2010, and 2011. _Note:_ Marginal effects of the labor force participation are evaluated at the mean of the independent variables. Standard errors are in parentheses. Never married is an omitted category for marital status. Standard errors are reported below the estimated coefficients. Statistically significant coefficients at the 10, 5, and 1 percent level are indicated by one, two, and three asterisks respectively.
recently, with increasing legal literacy, smaller families, migration of both sons and daughters, fragmentation of land and the growing unprofitability of peasant agriculture.

**Table 2. Form of Acquisition of Land Ownership by sex in six Latin American countries (percent)**

||**Inheritance**|**Community**|**State**|**Market**|**Other**|**Total**|**Sample**<br>**size**|
|---|---|---|---|---|---|---|---|
|Brazil||||||||
|Women|54.2|--|0.6|37.4|7.8|100|4,345|
|Men|22.0|--|1.0|73.1|3.9|100|34,593|
|Chile||||||||
|Women|84.1|--|1.9|8.1|5.9|100|271|
|Men|65.4|--|2.7|25.1|6.8|100|411|
|Ecuador||||||||
|Women|42.5|—|5.0|44.9|7.6|100|497|
|Men|34.5|—|6.5|43.3|15.6|100|1,593|
|Mexico||||||||
|Women|81.1|1.8|5.3|8.1|3.7|100|512|
|Men|44.7|14.8|19.6|12.0|8.9|100|2,547|
|Nicaragua||||||||
|Women|57.0|—|10.0|33.0|—|100|125|
|Men|32.0|—|16.0|52.0|—|100|656|
|Peru||||||||
|Women|75.2|1.9|5.2|16.4|1.3|100|310|
|Men|48.7|6.3|12.4|26.6|6.0|110|1,512|
|Couples|37.3|1.6|7.7|52.6|0.8|100|247|

_Note_ : Distribution by gender is in each case is statistically significant at the 99 percent level of confidence _Source:_ Deere and León (2003), based on data cited therein.

Land is also primarily acquired through inheritance in South Asia, which in most places is passed through the male line (although there are areas where ancestral property is passed through the female line; see Agarwal 2002a).<sup>16</sup> During the late twentieth century women’s organizations teamed up with lawyers and social reformers to advocate for more gender-equitable inheritance laws, but women are still disadvantaged.<sup>17</sup> In India Hindu women's inheritance in tenancy land depends on state-level tenure laws. Most northwestern states specify an order of inheritance that strongly favors men, and these inequalities cannot be challenged on constitutional grounds. Muslim women continue to be disadvantaged in the share of family property they inherit. In Sri Lanka, which has the most favorable inheritance laws in the region, the General Law offers equal inheritance of parental property to women and men, allows for widows to inherit all of the deceased husband’s property in the absence of descendants, and gives married women complete rights to acquire and dispose of their individually owned property.<sup>18</sup> Inheritance practices throughout the Middle East and North Africa region are based largely on _Shari’a_ law, which grants wives and daughters the right to inherit and defines the shares that go to them. Generally, upon the death of a husband, widows inherit one quarter of the estate if there are no children and one-eighth if there are children. Among children, males receive twice as much as females. The extent to which these rules are implemented, however, varies widely across countries (COHRE 2006).

14
more credit constrained and to be within their desired ̳optimal‘ amount of spending on education, then we would expect that they would offset less of the value of the grant and that the grant would have a larger impact on learning outcomes of poorer households. This suggests that even poor households were spending enough on education so as to almost completely substitute away the value of the school grant from their own spending.

# **5 Robustness and Interpretation**

We find strong suggestive evidence from two different low-income countries for a model in which households respond to anticipated school funding. The crowding out of private spending is sufficiently substantial to lead to no impact on test scores from anticipated school grants, while unanticipated changes positively impact the growth of test scores of children. In this section, we discuss the robustness of our results and its interpretation.

# **5.1 What Are the Components of Spending?**

One possible concern regarding our interpretation of the results is that the lack of responsiveness by households to unanticipated funds arises because schools spend these funds on different inputs with different parameters of (technical) substitution between household and school funding. Simply put, it is possible that all the unanticipated grants were spent on hiring teachers (who households cannot substitute for) and all the anticipated grants on textbooks (which they can). We compare patterns of spending across various spending categories, and show that this is not the case. In AP, the pattern of spending across various categories is almost identical between the first and second years of the project (Table 7), and it seems clear that the funds were spent on the same type of inputs both when they were unanticipated (first year) and anticipated (second year). In Zambia, we cannot attribute school spending to specific sources of funding (discretionary vs. rule-based). However, the total shares spent on those items most suitable for substitution (books, chalks, and stationary) add up to 57% and 47% respectively for schools without and with discretionary funding, suggesting that in both cases, substantial and similar spending occurs on items that could be substituted by households.

This also helps rule out explanations based on diminishing returns to the items procured or the durable nature of school materials. In both countries, the majority of the grant is spent on material that is used up during the school year (stationery, notebooks, practice books, etc). In the AP experiment, it is possible that some of the classroom materials purchased may be durable, 24
6 In sum, useful indicators of an education system that contributed to sustained growth include coordination of the level and quality of education with the economy’s stage in the industrialization and modernization process; paying attention to the types of subjects that students are learning and the quality of their education – both at entry and at upper levels; paying attention to skills gaps as reflected by labor market demand for skills; and finally, ensuring equal access by different income and population groups.

In the next section we use these indicators to benchmark the systems in Malaysia and Thailand against that of South Korea.

# **The Cases of Malaysia and Thailand: Where Do They Stand?**

Malaysia and Thailand have accomplished much in the past 30 years in moving from lower- to upper-middle-income status. But there are also some worrying economic signs that their trajectories are not following the steady rise seen in the East Asian Tigers like South Korea. In light of the preceding analysis we now examine whether the systems in these two countries are producing the ‘right’ skills using the indicators that we have defined.

We rely on such indicators as enrollment rates and years of schooling to measure the quantity of education and international assessments to measure quality. These assessments include the Programme for International Assessment (PISA); Trends in International Mathematics and Science Study (TIMSS); and the cognitive skills and the quality of education perceived by employers from surveys by the World Economic Forum.

# _Access to education_

Malaysia and Thailand have a relatively good track record on access to basic education—both countries have achieved universal primary school since the 1980s. But school enrollment rates at secondary and tertiary levels remain below what might be expected. In 2009, Malaysia and Thailand’s gross secondary enrollment rates were 68 and 76 percent, respectively, compared to the average of 83 percent for upper middle-income countries and 101 percent for high-income OECD countries. Tertiary gross enrollment rates for the two countries (36 and 45 percent) remained below the high-income OECD average (72 percent) and considerably below Korea (100 percent) (UNESCO Institute of Statistics). While the correlation between education and growth does not imply causality, the historical comparison of Barro-Lee years of schooling is indicative. It shows that Koreans in the 1960s and 1970s, when GDP per capita was about the same as Malaysia and Thailand, had about 1.5 more years of schooling (see Figure 2). This gap widened overtime as Korea continued to expand its education system at the secondary and tertiary level (see Figure 3).
|Betel leaf- betel leaf|−0.04|0.00|−16.76|0.00|−0.05|−0.04|
|---|---|---|---|---|---|---|
|Betel nut- betel leaf|−0.03|0.00|−15.46|0.00|−0.04|−0.03|
|Rolled betel leaf- betel leaf|0.05|0.00|12.54|0.00|0.04|0.05|
|Betel nut- betel nut|0.00|0.00|−1.48|0.14|−0.01|0.00|
|Betel nut- Rolled betel leaf|0.00|0.00|1.14|0.25|0.00|0.01|
|Rolled betel leaf- Rolled betel leaf|−0.23|0.01|−20.30|0.00|−0.25|−0.21|
|**Lambda**|||||||
|Cigarettes|0.01|0.00|10.62|0.00|0.01|0.01|
|Bidis|−0.02|0.00|−17.03|0.00|−0.02|−0.01|
|Betel leaf|−0.01|0.00|−17.07|0.00|−0.01|−0.01|
|Betel nut|−0.01|0.00|−15.02|0.00|−0.01|−0.01|
|Rolled betel leaf|0.02|0.00|27.54|0.00|0.02|0.02|
|**Eta**|||||||
|Cigarettes: Household size|−0.01|0.00|−8.99|0.00|−0.01|−0.01|
|Bidis: Household size|0.00|0.00|4.38|0.00|0.00|0.00|
|Betel leaf: Household size|0.01|0.00|11.46|0.00|0.00|0.01|
|Betel nut: Household size|0.00|0.00|11.95|0.00|0.00|0.01|
|Rolled betel leaf: Household size|0.00|0.00|−8.95|0.00|−0.01|0.00|
|Cigarettes: Number of males 15+|0.01|0.00|4.23|0.00|0.00|0.01|
|Bidis: Number of males 15+|0.00|0.00|−2.54|0.01|−0.01|0.00|
|Betel leaf: Number of males 15+|0.00|0.00|−4.43|0.00|−0.01|0.00|
|Betel nut: Number of males 15+|0.00|0.00|−4.17|0.00|0.00|0.00|
|Rolled betel leaf: Number of males 15+|0.00|0.00|2.59|0.01|0.00|0.00|
|Cigarettes: Education of household head|0.00|0.00|12.34|0.00|0.00|0.01|
|Bidis: Education of household head|0.00|0.00|−20.28|0.00|−0.01|0.00|
|Betel leaf: Education of household head|0.00|0.00|−2.44|0.02|0.00|0.00|
|Betel nut: Education of household head|0.00|0.00|−4.17|0.00|0.00|0.00|
|Rolled betel leaf: Education of household head|0.00|0.00|7.09|0.00|0.00|0.00|
|Cigarettes: Gender of household head|−0.05|0.00|−11.49|0.00|−0.05|−0.04|
|Bidis: Gender of household head|−0.02|0.00|−6.29|0.00|−0.03|−0.02|
|Betel leaf: Gender of household head|0.06|0.00|20.66|0.00|0.05|0.07|
|Betel nut: Gender of household head|0.05|0.00|21.45|0.00|0.05|0.06|
|Rolled betel leaf: Gender of household head|−0.04|0.00|−13.69|0.00|−0.05|−0.04|
|Cigarettes: Age of household head|0.00|0.00|−16.71|0.00|0.00|0.00|
|Bidis: Age of household head|0.00|0.00|9.10|0.00|0.00|0.00|
|Betel leaf: Age of household head|0.00|0.00|22.21|0.00|0.00|0.00|
|<br>Betel nut: Age of household head|0.00|0.00|20.07|0.00|0.00|0.00|
|<br>Rolled betel leaf: Age of household head|0.00|0.00|−19.88|0.00|0.00|0.00|
|Cigarettes: Religion of household head|0.00|0.00|0.59|0.55|0.00|0.01|
|Bidis: Religion of household head|0.00|0.00|1.92|0.06|0.00|0.01|
|Betel leaf: Religion of household head|−0.01|0.00|−5.66|0.00|−0.01|0.00|
|Betel nut: Religion of household head|0.00|0.00|−3.34|0.00|−0.01|0.00|
|Rolled betel leaf: Religion of household head|0.01|0.00|4.62|0.00|0.00|0.01|

23
gasoline, on average, 2.6 cents per gallon. However, a recent paper (Aydemir 2002) presents different results. When estimating the competitive effects of vertical integration of gasoline refineries and retailers in the U.S., Aydemir found that the foreclosure effect dominates the efficiency benefits, increasing wholesale prices of refined gasoline by 0.2 to 0.6 cents per gallon. Hastings (2002) examines the effects of changes in different vertical contract types on local retail prices. Using detailed station-level data in the Los Angeles and San Diego Metropolitan areas she found that a change in the market share of oil company-owned and dealer-owned gasoline stations does not have a significant impact on local market price. She suggests that this result argues against divorcement rules in gasoline markets.

Why did the SDCyC suggest a 40% limit to the quantity of company-owned gasoline stations that can operate under a brand, knowing that only 10% of the gasoline stations were company-owned in 2000? There are two possible explanations for this number. The first is that the SDCyC looked at the European statistics which show that 35% of the gasoline stations operate in a COCO arrangement. Given that the SDCyC recommended the same limit to the duration of contracts, it may have assumed that oil companies would follow the same strategy as in Europe, especially RepsolYPF, and so recommended a limit to vertical integration that resembles the European data for 1999. The second explanation relies on a political economy argument. The SDCyC faced two groups with conflicting interests<sup>2 5</sup> . On one side, the oil companies that pressured to maintain with the status quo. On the other side, the associations of gasoline stations owners had been lobbying the Argentine Congress to approve a divorcement law for the gasoline market. It seems that the SDCyC wanted to accommodate the demands of these two groups and reduce the resistance to the implementation of its policy recommendations. To reach this objective, the SDCyC won the partial support of the association of gasoline station owners by limiting the duration of contracts and reduced the resistance of the oil companies by letting them embark in a process of vertical integration that would allow them to assure the control of a significant share of their distribution network.

> **25** The recommendations faced some hard criticisms. The Senate, controlled by the opposition (peronist) party repealed the Presidential Decree 1060 but it is still in effect because the House of Representatives tacitly approved it.

26