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on Development |
| By: | Giacomo De Luca (University of York, United Kingdom); Anastasia Litina (CREA, University of Luxembourg); Petros G. Sekeris (FNRS and CRED, University of Namur, Belgium) |
| Abstract: | In this paper we show that in highly unequal societies, different societal groups may support a rent-seeking dicator serving their interests better than the median voter in a democratic regime. Importantly, it is the stakes of dictator in the economy, in the form of capital ownership, that drives the support of individuals. In particular, in highly societies ruled by a capital-rich dictator endowed with the power to tax and appropriate at will, the elites support dictatorial policies that generate higher growth rates than the ones obtained under democracy. Such support arises despite the total absence of checks and balances on the dictator. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:12-13&r=dev |
| By: | M. Emranul Haque; Babar Hussain |
| Abstract: | This paper provides an explanation for recent empirical evidence on the heterogeneous effects of human capital on economic growth in developing countries. In a two-period overlapping generations economy with physical and capital accumulation, state-appointed bureaucrats are responsible for procuring productive public goods. Corruption arises because of an opportunity for bureaucrats to misappropriate public funds. The decision of the corruptible bureaucrat affects public finances and hence the capital accumulation in the economy. Alongside the positive productivity enhancing effect, human capital is assumed to increase the efficiency of corrupt bureaucrats in embezzlement. If the latter dominates the former, the incentive for bureaucrats to acquire education rises. The net effect may result in an insignificant (or even negative) effect of human capital on growth. Our main results are as follows: (1) corruption is always bad for economic development, but its effect is worse in the economy with (more) human capital; (2) the incidence of corruption may, itself, be affected by both the development and human capital level of the economy; (3) education is good for development when accompanied by good governance, but may be bad for development when governance is bad; and (4) corruption and poverty may co-exist as permanent, rather than just transitory, fixtures of an economy. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:man:cgbcrp:179&r=dev |
| By: | Xu, Yi; Foldvari, Peter; Van Leeuwen, Bas |
| Abstract: | The traditional education system in Qing China has been widely debated over the past decades. Some have argued it was efficient and furthered economic growth, while others have stressed its inefficient nature, which led to the introduction of the modern education system in the closing decades of the 19th century, followed by its total collapse in 1905. In this paper we make a first try to quantify above debate. Starting from the observation that below the well-known civil examination system there existed a whole system of popular and vocational education, we find that years of education in the population were still lower than in many European countries. More interestingly, whereas in European countries years of education increased strongly in the 19th century, our estimates of average years of education and the ABCC indices show that the level of education remained stable well into the 1920s when it accelerated. However, the main rise only occurred during the late 20th century. This finding leads to an interesting question since per capita income only started to grow significantly since the 1950s. This means that the rise of education since the mid-1920s was not as such driven by per capita income. Apparently this was the same for both the traditional and modern education since the latter had already started to transform Chinese education from the 1890s onwards. Hence, we have to look at the question why persons decided to follow education, i.e. was it individually profitable to follow education (positive private returns)? However, testing for this latter hypothesis shows that, after correction for foregone earnings, life expectancy, and probability of passing the exams, only the below shengyuan level students actually had positive returns. For an ordinary person it was therefore uneconomical to join in the civil examination system. Apparently this did not change, not even after the introduction of the modern education system, until the 1950s. |
| Keywords: | human capital; China; private returns; economic development |
| JEL: | I21 N15 |
| Date: | 2013–01–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:43525&r=dev |
| By: | Zhou, Xiangyi; Zhang, Jie; Song, Xuetao |
| Abstract: | We study gender discrimination in hiring markets by sending 19,130 fictitious matched resumes in response to professional employment advertisements posted on major Internet employment boards in China for positions such as engineers, accountants, secretaries, and marketing professionals in Beijing, Shanghai, Guangzhou, Shenzhen, Wuhan, and Chengdu. Our results show that, in general, state-owned firms tend to prefer male applicants. Foreign and private firms tend to prefer female applicants. On one hand, this evidence supports the hypothesis that economic reform and the market economy may mitigate gender discrimination. On the other hand, this evidence is consistent with statistics that describe discrimination based on gender segregation and information asymmetry that originated with higher ratios of female workers in foreign and private firms. With respect to regional income disparity, we find that the differences in gender discrimination between first- and second-tier cities are not significant. This result indicates that economic reform exerts limited mitigation effect on discrimination. We also find no evidence of taste discrimination based on traditional son preference in China. |
| Keywords: | Discrimination; Audit Study; Gender; Employment |
| JEL: | J71 O12 |
| Date: | 2013–01–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:43543&r=dev |
| By: | Tripathi, Sabyasachi |
| Abstract: | This paper measures the overall inclusive growth of a city by considering changing trends in the key economic variables based on ‘Borda ranking’ and establishes a relationship between city economic growth and overall city inclusive growth. By using data of 52 large cities in India, this paper finds that higher urban economic growth is associated with an increase in urban inequality, a reduction in urban poverty, and a lower level of overall inclusive growth of a city. |
| Keywords: | Economic Growth; Poverty; Inequality; Inclusive Growth; Urban India |
| JEL: | D63 O15 R11 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:43617&r=dev |
| By: | Mohamad Fahmi (Department of Economics, Padjadjaran University); Achmad maulana (Department of Economics, Padjadjaran University); Arief Anshory Yusuf (Department of Economics, Padjadjaran University) |
| Abstract: | We see a weakness of the merit-based government scholarship program for students from poor families, Bidik Misi, as most of them fail to meet the minimum academic requirement. This paper provide a policy simulation that compares two programs, private tutoring voucher (PTV) and conditional cash transfer (CCT), to complement the Bidik Misi scholarship to boost the number of poor students to get the support. To this end, we offer a policy targeted for second and third year high school students at public schools. The data sources that we used in this study are the Indonesia Family Life Survey (IFLS), the Indonesia Social and Economic Survey (SUSENAS), and some primary data. To choose the best alternatives, we compare the cost effectiveness of both program and we find that the cost effectiveness per student in private tutoring voucher (PTV) is lower than conditional cash transfer program. The PTV program is also more convincing than CCT as PTV could directly influence the quality of instruction. We also check the robustness of the scenario using two one way sensitivity analyses. The sensitivity analyses support our finding that PTV program has more cost effective than the CCT. |
| Keywords: | Policy simulation, Cost Effectiveness Analysis, Sensitivity Analysis, Private Tutoring Voucher, Conditional Cash Transfer |
| JEL: | I24 I28 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:unp:wpaper:201301&r=dev |
| By: | Arief Anshory Yusuf (Department of Economics, Padjadjaran University); Ahmad Komarulzaman (Department of Economics, Padjadjaran University); Muhammad Purnagunawan (Department of Economics, Padjadjaran University); Budy P. Resosudarmo (Australian National University) |
| Abstract: | In this paper, we argue that the intensification of capital use and an acceleration of real wage growth can be the main culprits of the “jobless growth” in Indonesian manufacturing sector for the period of 1999-2008, a period of recovery from the Asian Crisis. This can also endanger the poverty reduction aspiration during the same period. We simulate the situation using a Computable General Equilibrium model and find that the effect of the increased capital utilization and the acceleration of real wage growth are equally important in explaining the jobless-growth phenomenon. Increased capital utilization help the economy recover and reduces poverty but when constrained with the increasing real wage, the recovery and the rate of poverty reduction is slower. The situation is in favor of the non-poor because first, the poor is mainly dependent on non-formal employment, hence do not benefit from the increased real wage; second, the slower expansion of the manufacturing sector affect the rest of the economy affecting the real wage of the labor employed in other sectors, such as unskilled non-formal labor and agricultural labor upon which the poor are heavily dependent; and third, the income rise from increased capital utilization mainly benefits the urban non-poor. |
| Keywords: | Growth, poverty, labor market, general equilibrium, Indonesia |
| JEL: | O53 J21 I38 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:unp:wpaper:201304&r=dev |
| By: | Arief Anshory Yusuf (Department of Economics, Padjadjaran University) |
| Abstract: | Economists have long argued that to increase households’ welfare, cash transfers are more efficient than commodities subsidies. However, not many studies address the indirect or economy-wide effect of such transfers especially in the context of poverty reduction programs in developing countries. In this paper, a 50 trillion rupiahs worth of cash transfers, roughly doubling the current level of government spending on poverty reduction program is simulated using a Computable General Equilibrium model of the Indonesian economy. The result suggests that such transfers reduce Indonesian GDP especially if domestically financed through increasing value added tax. However, the GDP reduction can be reduced to around half of that when financed by reducing distortionary fuel subsidy. Moreover, a cash transfers financed by reducing fuel subsidy also give the largest reduction in inequality. Various extents of the distribution of the transfers are compared, from giving it to the poorest 10% to distribute it equally to all households. It is found that the benefit of the transfers in terms of reduced poverty and inequality is smaller when we extend the beneficiaries toward the non-poor but its economy-wide cost in terms of the reduced GDP will be smaller. Policy implications are discussed. |
| Keywords: | Cash transfer, general equilibrium, Indonesia |
| JEL: | I38 O53 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:unp:wpaper:201305&r=dev |
| By: | Hevia, Constantino; Loayza, Norman |
| Abstract: | In the aftermath of its long-standing civil war, Sri Lanka is keen to reap the social and economic benefits of peace. Even in the middle of civil conflict, the country was able to grow at rates that surpassed those of its neighbors and most developing countries. It is argued, then, that the peace dividend may bring about even higher rates of economic growth. Is this possible? And if so, under what conditions? To be sure, Sri Lanka's high growth rate in the past three decades did not come for free. It took an increasing effort of resource mobilization in the country, with a rise in national saving from 15 percent of gross domestic product in the mid-1970s to 25 percent in 2010. This rise in national saving was fundamentally fueled and sustained by the private sector. In the future, however, the private saving rate is likely to decline because the demographic transition experienced in the country is bound to produce higher old dependency rates in the next two decades. However, the public sector has much room for reducing its deficits and increasing public investment. Similarly, external investors are likely to encounter attractive and profitable investment projects in the coming years in a reformed and peaceful environment. The government of Sri Lank has two goals regarding these issues. First, increasing public saving to 1.5 percent of gross domestic product by 2013; and second, increasing international investment in the country by letting the current account deficit increase to 4-5 percent of gross domestic product in the coming years. If these goals are achieved, what can be expected for growth of gross domestic product in the country? To answer this question, this paper presents a neoclassical growth model with endogenous private saving, calibrates it to fit the Sri Lankan economy, and simulates the behavior of growth rates of gross domestic product and related variables under different scenarios. In what the authors call the Reform Scenario, total factor productivity would increase from 1 to 1.75 percent per year. This would produce a gross domestic product growth rate of about 6.5 percent in the next 5 years, 4.6 percent by 2020, and 3.5 percent by 2030, the end of the simulation period. This robust growth performance would be supported at the beginning mostly by capital accumulation but later on mainly by productivity improvements. |
| Keywords: | Economic Growth,Emerging Markets,Access to Finance,Economic Theory&Research,Achieving Shared Growth |
| Date: | 2013–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6300&r=dev |
| By: | Ghani, Ejaz; Kerr, William R.; O'Connell, Stephen D. |
| Abstract: | This paper quantifies the link between the timing of state-level implementations of political reservations for women in India with the role of women in India's manufacturing sector. It does not find evidence that overall employment of women in manufacturing increased after the reforms. However, the analysis finds significant evidence that more women-owned establishments were created in the unorganized/informal sector. These establishments were concentrated in industries where women entrepreneurs have been traditionally active and the entry was mainly found among household-based establishments. This heightened entrepreneurship does not appear linked to changes in reporting, better access to government contracts and business, or improved financing environments. One interpretation of these results is that the implementation of the political reservations inspired more women to open establishments, and they did so at a small establishment scale in industries where they had experience and/or the support networks of other women. |
| Keywords: | Access to Finance,Water and Industry,Gender and Development,Rural Development Knowledge&Information Systems,Gender and Law |
| Date: | 2013–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6307&r=dev |