LSMS Data Quality in Maoist Influenced Areas of Nepal

The first round of the Nepal Living Standards Survey (NLSS1) is a high quality data source that has been applied for a number of empirical studies. Data were collected in 1995/96, prior to the civil war in Nepal. The Maoist party of Nepal started the so called People's war in 1996, and gradually extended their influence in the rural areas. Eight years into the war, in 2003/04, the Central Bureau of Statistics, in collaboration with the World Bank, conducted the second round of the Nepal Living Standards Survey (NLSS2). We investigate to what extent the quality of the NLSS2 data has been affected by the Maoists. We find, if any, only minor support for the hypothesis. Furthermore, the Maoists have less control in the plains (terai), where a majority of the population lives, so data from the terai sub-sample of NLSS2 is, in particular, not likely to be biased by the Maoists.  Household survey Civil war JEL classification: C810, O120

Regional variation in livelihood strategies in Malawi

Livelihood strategies are identified at the household level as a function of assets held, using survey data. Only endowments that are likely to be predetermined are included in the empirical analysis. As expected, land, household size, age and primary education turn out to be important determinants of livelihood strategies. It appears that the relatively equal land-distribution among small-holders in Malawi still allows some wealthier households, and force others, to do non-farm activities. This, in turn, may lead to small-scale development within villages. Furthermore, investment in primary education, taking into account the low initial level of education in Malawi, is probably a good investment for rural development. And, we find it promising that younger people are able to find non-farm livelihoods. It also turns out to be significant regional variation in livelihood strategies, with more diversification in the Southern region, and with regional variation in the role of ethnic and religious identity as determinants of livelihood strategies. It appears that lack of agricultural opportunities in the south imply that households do, maybe more low-status, salaried work and household businesses in this region. For some households this may still be a way out of poverty. The policy implications for the poorer Southern region are not obvious. But, to the extent feasible, the farmers may learn from the more productive farmers in the Central region, where there is more emphasize on cash-crop production.Livelihoods Non-farm employment Multinomial-logit Malawi

The effects of agrarian contracts of a governmental intervention into bonded labor in the western terai of Nepal

We study an effective intervention into a specific form of bonded labor. The intervention led to a shift in agrarian contracts, from bonded labor to sharecropping. By comparing the pre- and post-liberation contracts we evaluate theoretical models of agrarian contracts. We suggest three mechanisms that jointly explain why landlords offered bonded labor contracts pre-liberation. One mechanism we apply to define bonded labor in contrast to tied labor. The mechanism, where the outside option as casual labor is endogenously determined by the choice of long-term contract, implies a trade-off for the landlord between efficiency and redistribution of surplus.Tied labor Agrarian institutions Nepal

Triadic Power Relations with Production, External Markets and Multiple Agents

We discuss whether Basu's (1986) model of triadic power relations is robust to generalizations where we allow multiple landlords, merchants and laborers. In the special case of one landlord and multiple merchants we show that the landlord's threat towards any laborer becomes credible even in the original stage game model. For the case of multiple landlords we need to generalize more recent solution concepts. We add realism by allowing the laborers' reservation utilities to vary with the costs of trading in external markets and the characteristics of the laborers. We allow production by landlords and merchants, as well as Cournot competition among merchants. In equilibrium the rural wages are a function of the number of landlords and merchants, the characteristics of the laborers and distance to external markets. We estimate the model, using household survey data from Nepal, and find strong support for the triadic model.

Attached Labor in Nepal: A Field-Study of Landlord-Labor Relations that are Misrepresented in the Nepal-LSMS data

Abstract: In the LSMS data for Nepal most agricultural laborers report daily wages, while econometric analysis on the data indicates that, for many villages, the laborers actually have long-term contracts. We have visited some of the villages to solve this puzzle. We find that in some cases the daily wages are actually part of attached labor contracts that are not reported in the LSMS data. We go on to describe the variation in benefits and threats landlords apply to keep the laborers at a wage below the competitive wage, and we discuss a policy implication of the misrepresentation of data.Qualitative data; tied labor

Explaining Maoist control and level of civil conflict in Nepal

Does poverty or inequality explain the Maoist insurgency in Nepal? In contrast to previous studies we limit the analysis to the hill/mountain districts of Nepal as very few terai (plains) districts are classified as Maoist. And we conduct separate analyses for Maoist control and level of conflict. We find that income poverty and land-inequality are main determinants of Maoist influence, while the less visible income inequality is not so important. We also demonstrate that previous findings by Murshed and Gates (2005), where landlessness appears to be important, are due to two outliers that are the core Maoist districts. Without the outliers landlessness is negatively, and not positively, correlated with Maoist influence

The Effects on Agrarian Contracts of a Governmental Intervention into Bonded Labor in the Western Terai of Nepal

We study an effective intervention into a specific form of bonded labor. The intervention led to a shift in agrarian contracts, from bonded labor to sharecropping. By comparing the pre- and post-liberation contracts we evaluate theoretical models of agrarian contracts. We suggest three mechanisms that jointly explain why landlords offered bonded labor contracts pre-liberation. One mechanism we apply to define bonded labor in contrast to tied labor. The mechanism, where the outside option as casual labor is endogenously determined by the choice of long-term contract, implies a trade-off for the landlord between efficiency and redistribution of surplus

Caste, local networks and lucrative jobs: Evidence from rural Nepal

We study how local connections to persons in influential positions affect access to lucrative international migrant jobs and attractive government employment. In rural Nepal, it would not be surprising if social status, captured by a household’s caste but also by wealth or education, strongly influenced or perhaps even exclusively determined the access to attractive labour market opportunities.  This is not the case. Although much of the variation in migration can be attributed to wealth, education and social identity, household networks have a separate impact on external employment. Well-connected households are more likely to get government jobs and appear to have favorable access to the manpower agencies and the informal loans required to finance migration to the Persian Gulf or Malaysia.  

Caste, local networks and lucrative jobs: Evidence from rural Nepal

Abstract: We study how local connections to persons in influential positions affect access to migrant jobs and government employment. In rural Nepal, it would not be surprising if social status strongly influenced the access to attractive labor market opportunities. This is not the case. Although much of the variation in migration can be attributed to wealth, education and social identity, household networks have a separate impact on external employment. Wellconnected households are more likely to get government jobs and appear to have favorable access to the manpower agencies and informal loans required to finance migration to the Persian Gulf or Malaysia.Geographic labor Mobility; Immigrant Workers; Model Construction and Estimation; Regional Migration; Regional Markets; Population; Neighborhood Characteristics

Usufructuary Mortgages as a Source of Funds in Need: Some Theory and an Empirical Investigation

The usufruct mortgage has received little attention from economists. This paper develops and analyzes a theoretical framework in which the borrower, who mortgages out, and the lender, who mortgages in, a parcel of land reach their decisions in a risky environment when credit and land markets function imperfectly. It yields some results concerning what conditions and factors govern the decision to contract in the first place and, subsequently, when and whether to repay or agree to a sale. These findings underpin and structure an empirical investigation of such contracting in upland Orissa, based on a panel survey of 279 households over the period 2000-2013. Almost 20 percent had contracts in 2013, the borrowers’ chief need being to marry off a daughter, followed by coping with serious illness and bad harvests. The sums involved were quite large, indicating that such contracts expand households’ opportunities beyond those offered by standard informal and formal credit transactions. Mortgage contracting also appears frequently to lead to the full transfer of ownership rights from relatively land-rich to land-poor households