In sickness and in health ... risk-sharing within households in rural Ethiopia

To investigate risk-sharing within the household, we model nutritional status as a durable good and we look at the consequences of individual health shocks. For household allocation to be pareto-efficient, households should pool shocks to income. We also investigate whether households can smooth nutritional levels over time. Using data from rural Ethiopia on adult nutritional status, we find that poor households are affected by idiosyncratic agricultural shocks, while richer households are more successful in smoothing nutritional levels. All individuals adjust to predictable changes in earnings and the nutritional status of poor individuals is responsive to seasonal food price fluctuations. Poor southern households are not sharing risk; women in these households bear the brunt of adverse shocks. Finally, we look at the role of inside and outside options in determining the intrahousehold allocation of nutrition of married couples. We find that wives’ relative position improves with a smaller age gap between partners, in younger marriages, as well as by favourable customary laws on settlements upon divorce – but the most important variable affecting allocation is household wealth.

Identifying Supply and Demand Elasticities of Agricultural Commodities: Implications for the US Ethanol Mandate

We present a new framework to identify demand and supply elasticities of agricultural commodities using yield shocks - deviations from a time trend of output per area, which are predominantly caused by weather fluctuations. Demand is identified using current-period shocks that give rise to exogenous shifts in supply. Supply is identified using past shocks, which affect expected future prices through inventory accretion or depletion. We use our estimated elasticities to evaluate the impact of ethanol subsidies and mandates on world food commodity prices, quantities, and food consumers' surplus. The current US ethanol mandate requires that about 5 percent of world caloric production from corn, wheat, rice, and soybeans be used for ethanol generation. As a result, world food prices are predicted to increase by about 30 percent and global consumer surplus from food consumption is predicted to decrease by 155 billion dollars annually. If a third of the biofuel calories are recycled as feed stock for livestock, the predicted price increase scales back to 20 percent. While commodity demand is extremely inelastic, price response is muted by a significant supply response that is obscured if futures prices are not instrumented. The resulting expansion of agricultural growing area potentially offsets the CO2 emission benefits from biofuels.

Increasing Returns and All That: A View From Trade

Do scale economies contribute to our understanding of international trade? Do international trade flows encode information about the extent of scale economies? To answer these questions we examine the large class of general equilibrium theories that imply Helpman-Krugman variants of the Vanek factor content prediction. Using an ambitious database on output, trade flows, and factor endowments, we find that scale economies significantly increase our understanding of the sources of comparative advantage. Further, the Helpman-Krugman framework provides a remarkable lens for viewing the general equilibrium scale elasticities encoded in trade flows. In particular, we find that a third of all goods-producing industries are characterized by scale. (The modal range of scale elasticities for this group is 1.10-1.20 and the economy-wide scale elasticity is 1.05.) Implications are drawn for the trade-and-wages debate (skill-biased scale effects) and endogenous growth.

Three essays on agriculture and economic development in Tanzania

One cannot study poverty in Tanzania without understanding the agricultural sector, which employs more than two-thirds of the population and accounts for nearly a quarter of national GDP. This thesis examines three themes that focus on the difficulties that rural Tanzanians face in achieving a reasonable livelihood: the adverse legacy of a failed historical policy, a difficult climate, and market failures. The first empirical chapter examines the legacy of the villagization program that attempted to transform the predominantly agricultural and rural Tanzania. Between 1971 and 1973, the majority of rural residents were moved to villages planned by the government. This essay examines if the programs e↵ects are persistent and have had a long-run legacy. It analyzes the impact of exposure to the program on various outcome measures from recent household surveys. The primary finding of this study is that households living in districts heavily exposed to the program have worse measures of various current outcomes. The second empirical chapter examines the role of reliability of rainfall, which is important in Tanzania as agriculture is predominantly rain-fed and a small fraction of plots are irrigated. This chapter investigates if households cope with this major risk to income by re-allocating their labor supply between agriculture, wage labor, and self-employment activities. This chapter combines data on labor allocation of households within and outside of agriculture from the National Panel Survey with high-resolution satellite-based rainfall data not previously used in this literature. The primary finding of this study is that households allocate more family labor to agriculture in years of good rainfall and more labor to self-employment activities in years of poor rainfall. Market failures are often cited as a rationale for policy recommendations and government interventions. The third chapter implements four tests of market failures suggested in the literature, all of which rely on the agricultural household model but di↵er in how market failures are manifested. The common finding of these tests is that market failures exist in agricultural factor markets in Tanzania, although significant heterogeneity exists. Markets are more likely to fail in rural areas, remote locations, and are more likely to affect female-headed households. Households are also more likely to face market failure when they try to supply labor to the market than when they try to hire labor from the market

Ethiopian Youth in Agriculture: Relative Deprivation, Well-being and Occupational Choices

Africa has the highest share of young people in the world relative to the total population, with the median age of the population under 25 years old, which is not expected to change in the coming decades. This high proportion of young people, combined with other factors, has prompted a sharp rise in youth unemployment in many Sub-Saharan African countries, including Ethiopia, with implications for Africa’s social and economic future. This thesis examines the current dynamics of youth employment, occupational choices, and factors driving these dynamics within the agricultural sector in Ethiopia across space, time, and gender. Using gender and age specific values of agricultural labor return from farm-level panel data collected from a sample of youth and households, the second chapter econometrically investigates the effect of marginal products of labor (or shadow wages) on youth agricultural labor supply across gender and farm locations. I show that changes in economic incentives (or shadow wages) matter for youth’s involvement in agriculture, but their impact differs for young men and women. Relative concerns are one mechanism through which income or wealth inequality is hypothesized to affect human behaviour, with consequences on well-being. Employing survey experimental methods and a socio-demographic survey, the third chapter finds that positional concerns for income vary across household members (youth, mothers and fathers) impacting on the youth’s well-being. Chapter four extends the analysis of relative concerns from income per se to consider social as well as assets (non-monetary) RD, using objective and subjective measures. The evidence suggests that while income RD has a motivational impact (resulting from a “positive externality”), assets, and social capital RD have deterrent impacts (resulting from a “status effect”) on the well-being of youth, though this varies across young men and women. The thesis also aids understanding of the implications of different forms of RD by examining their interactions with both the underlying drivers of occupational choices of young people and the occupational choices themselves. Using different estimation techniques, chapter five finds that RD is a strong predictor of occupational choices of the rural youth and their engagement in agriculture (irrespective of the RD and occupational choice indicators employed), together with an influence of the preferences and attributes of the parents.Afrika hat weltweit den höchsten Anteil junger Leute an der Gesamtbevölkerung; der Altersme dian der Gesamtbevölkerung liegt bei unter 25 Jahren . An diesem Trend dürfte sich laut aktuellen Prognosen auch in den nächsten Jahrzehnten nichts ändern. Dieser hohe Anteil an jungen Leuten hat , zusammen mit anderen Faktoren, zu einem starken Anstieg der Jugendarbeitslosigkeit in zahlreichen Ländern südlich der Sahara, so auch in Äthiopien, geführt – mit Folgen für Afrikas soziale und ökonomische Zukunft. Diese Arbeit untersucht die aktuelle Dynamik in der Beschäftigungssituation der Jugend, ihre Berufswa hl sowie die Treiber und Bedeutung dieser Entwicklung für die Landwirtschaft in Äthiopien, und zwar im Hinblick auf Raum, Zeit und Geschlecht. Das zweite Kapitel untersucht ökonometrisch die Auswirkungen von Grenzprodukten der Arbeit (Schattenlöhnen) auf das Arbeitsangebot junger Menschen in der Landwirtschaft, und zwar unter Berücksichtigung von Geschlecht, Zeit und des Orts der einzelnen Bauernhöfe. Dabei legen wir geschlechts - und altersspezifische Werte des Ertrags landwirtschaftlicher Arbeit (Schatte nlöhne) zugrunde, die aus einer Panelerhebung unter Jugendlichen und Haushalten auf Bauernhof - Ebene im ländlichen Äthiopien stammen. Die Ergebnisse, die wir mit der Fixen - Effekte - Methode und der Instrumentvariablenschätzung (IV - Schätzung) mit fixen Effekte n ermittelt haben, zeigen, dass Veränderungen bei ökonomischen Anreizen – wie sie Schattenlöhne darstellen – bei der Beteiligung Jugendlicher in der Landwirtschaft durchaus eine Rolle spielen. Dabei gibt es jedoch Unterschiede zwischen jungen Männern und j ungen Frauen. Die Ergebnisse legen Folgendes nahe: Wenn die Landwirtschaft für die Jugend attraktiver werden soll, müssen Arbeitsproduktivität und Arbeitsmöglichkeiten gefördert werden. Zudem ist eine strukturelle Transformation vonnöten, um die Unzulängli chkeiten und Starre des Arbeitsmarktes und anderer Märkte aufzubrechen. Jüngere empirische Studien zeigen, dass Menschen aufgrund einer Sorge um ihre eigene Stellung in der Gesellschaft aktiv werden. Aktuelle theoretische Arbeiten führen aus, dass der Erk lärungsanteil in ökonometrischen Analysen größer wird, wenn wir uns jenseits gängiger (rationaler) Entscheidungsmodelle bewegen und auch Relativinteressen berücksichtigen. Bezieht man relative Deprivation – also Entbehrungen – in die Berufswahl von Jugendl ichen mit ein, erhält man einen zusätzlichen Erklärungsanteil – wenn nicht gar einen alternativen Erklärungsansatz, um die Entscheidungen für die Berufswahl von Jugendlichen im ländlichen Äthiopien sowie die Ursachen der ländlichen Unterentwicklung in Äthi opien zu verstehen. Es wird angenommen, dass relative Einkommensinteressen (oder die Position betreffende Einkommensinteressen) bei Einkommens - oder Wohlstandsungleichheit das menschliche Verhalten beeinflussen – mit allen Folgen für das Wohlbefinden der I ndividuen. Kapitel 3 arbeitet mit einer soziodemografischen Umfrage sowie mit umfrage - experimentellen Methoden heraus, dass sich die Sorge um die eigene Stellung bezüglich des Einkommens unter den Haushaltsmitgliedern (Jugendliche, Mütter, Väter) untersche idet, was sich auf das Wohlergehen der Kinder auswirkt. Kapitel 4 weitet die Analyse der relativen Interessen vom reinen Einkommensbezug aus auf Aspekte sozialer Entbehrung sowie auf nicht - monetäre Faktoren (vermögensbezogene Deprivation), wobei objektive und subjektive Maße relativer Deprivation eingesetzt werden. Die Ergebnisse legen nahe, dass einkommensbezogene Deprivation einen motivierenden Einfluss hat (der von "positiven Außeneffekten" oder "Signaleffekten" herrührt). Demgegenüber wirken sich Entbeh rungen, die das Vermögen oder das soziale Kapital betreffen (und sich aus dem Statuseffekt ergeben), eher negativ auf das Wohlbefinden der Jugend aus; dabei fallen die Aussagen nach Geschlecht unterschiedlich aus. Ein Kanal, über den sich relative Entbehru ngen im menschlichen Verhalten ausdrücken, sind menschliche Entscheidungen, zum Beispiel die Berufswahl betreffend. Das Hauptziel dieser Arbeit ist es schließlich, die Auswirkungen unterschiedlicher Formen relativer Deprivation zu verstehen, indem deren We chselwirkungen untersucht werden – und zwar sowohl jene mit den Treibern, die der Berufswahl junger Leute zugrunde liegen, als auch solche mit den Berufswahlmöglichkeiten und Entscheidungen selbst. Kapitel 5 bezieht die tatsächlichen Berufe in die Analyse ein. Dabei stellt sich heraus, dass die relative Deprivation ein starker Prädiktor für die Berufswahl sowie das Engagement in der Landwirtschaft der ländlichen Jugend ist – und zwar unabhängig davon, welche Indikatoren relativer Deprivation und Berufswahl angewendet werden. Dabei ist ein Einfluss der Präferenzen und Merkmale der Eltern zu verzeichnen. Diese Arbeit kommt zu dem Schluss, dass die Beschränkung relativer Deprivation auf die monetäre Ebene in die Irre führen kann. Wer dies tut, erfasst nicht die tatsächlichen Effekte, die relative Entbehrungen auf das Wohlbefinden, die Berufswahl oder auch auf Arbeitsmarktanalysen haben. Außerdem deckt die Verwendung multipler Referenzgruppen und unterschiedlicher Messmethoden bezüglich des relativen Status mögli che Interventionsfelder auf, um positive externe Effekte zu verstärken. Dies ist mit konventionellen Forschungsansätzen nicht möglich. Zuletzt macht diese Arbeit deutlich, dass die gleichzeitige und kritische Berücksichtigung väterlicher und mütterlicher A ttribute die Wirkung einiger wichtiger Variablen beeinflusst – und dass die Indikatoren tatsächlichen und geplanten Engagements in der Landwirtschaft stark variieren. Studien, die derartige Daten für die Analyse arbeitsmarkt - oder migrationspolitischer Ents cheidungen verwenden, sollten diese Variationen und Einflüsse berücksichtigen

Investing cash transfers to raise long term living standards

The authors test whether poor households use cash transfers to invest in income generating activities that they otherwise would not have been able to do. Using data from a controlled randomized experiment, they find that transfers from the Oportunidades program to households in rural Mexico resulted in increased investment in micro-enterprise and agricultural activities. For each peso transferred, beneficiary households used 88 cents to purchase consumption goods and services, and invested the rest. The investments improved the household's ability to generate income with an estimated rate of return of 17.55 percent, suggesting that these households were both liquidity and credit constrained. By investing transfers to raise income, beneficiary households were able to increase their consumption by 34 percent after five and a half years in the program. The results suggest that cash transfers to the poor may raise long-term living standards, which are maintained after program benefits end.Economic Theory&Research,Small Area Estimation Poverty Mapping,Municipal Housing and Land,Land and Real Estate Development,Real Estate Development

Markets, Human Capital, and Inequality: Evidence from Rural China

Market reforms are generally credited with the rapid growth enjoyed by China's rural sector. This growth has not been without some cost, however, as inequality has also increased. Estimates suggest that the Gini rose from less than 0.20 to over 0.40 during this period. In this paper we go behind these numbers to explore the nature and causes of this inequality. To begin, we find that a considerable share of rural inequality is driven by local differences in household incomes, as opposed to regional income differences, that have been the focus of the previous literature. We then examine inter-household income differentials at the village level, exploring the links between education, market development, non-agricultural employment, and household income. To address these questions, we draw on a recently collected data set from Northeast China, that was collected by two of the authors in collaboration with Chinese colleagues in Hebei and Liaoning provinces in 1995. For purposes of comparison, we also draw on the Chinese Health and Nutrition Survey. We find that indeed, increasing rates of return to education and unevenly developed non-agricultural business opportunities contribute to the high levels of inequality in the countryside. Of most interest, however, is the implication that simultaneous improvements in educational attainment and off-farm market-development would allow more households to share in the rapid growth in rural China.http://deepblue.lib.umich.edu/bitstream/2027.42/39682/3/wp298.pd

Assets as a Measure of Household Welfare in Developing Countries

This paper was commissioned for Inclusion in Asset Building: Research and Policy Symposium, an event hosted in September 2000 by the Center for Social Development at Washington University in St. Louis. The paper identifies and explores the use of an asset-based metric of welfare. The metric relies on assets data that are easy to collect and analyze. The authors demonstrate that the asset index functions well in identifying and profiling the poor, in targeting transfers, and even in estimating demand or production functions for outcomes that are useful for designing programs and policy

Markets, Human Capital, and Inequality: Evidence from Rural China

Market reforms are generally credited with the rapid growth enjoyed by China's rural sector. This growth has not been without some cost, however, as inequality has also increased. Estimates suggest that the Gini rose from less than 0.20 to over 0.40 during this period. In this paper we go behind these numbers to explore the nature and causes of this inequality. To begin, we find that a considerable share of rural inequality is driven by local differences in household incomes, as opposed to regional income differences, that have been the focus of the previous literature. We then examine inter-household income differentials at the village level, exploring the links between education, market development, non-agricultural employment, and household income. To address these questions, we draw on a recently collected data set from Northeast China, that was collected by two of the authors in collaboration with Chinese colleagues in Hebei and Liaoning provinces in 1995. For purposes of comparison, we also draw on the Chinese Health and Nutrition Survey. We find that indeed, increasing rates of return to education and unevenly developed non-agricultural business opportunities contribute to the high levels of inequality in the countryside. Of most interest, however, is the implication that simultaneous improvements in educational attainment and off-farm market-development would allow more households to share in the rapid growth in rural China.

Institutions, violent conflict, windfall gains and economic development in Africa

cum laude graduation (with distinction