Mass Education or a Minority Well Educated Elite in the Process of Development: the Case of India

This paper analyses whether in developing countries mass education is more growth enhancing than to have a minority well educated elite. Using the Indian census data as a benchmark and enrollment rates at different levels of education we compute annual attainment levels for a panel of 16 Indian states from 1961 to 2001. Results indicate that if the reduction of illiteracy stops at the primary level of education, it is not worthwhile for growth. Instead, the findings reveal a strong and robust significant effect on growth of a greater share of population completing tertiary education. The economic impact is also found to be very large: if one percent of the adult population were to complete tertiary education instead of completing only primary, the annual growth rate could increase by about 4 percentage points. Moreover, we find that a one percentage change in tertiary education has the same effect on growth as a decrease in illiteracy by 13 percentage points. A sensitivity analysis shows the results are unlikely to be driven by omitted variables, structural breaks, reverse causation or atypical observations.Distribution of education, attainment levels, economic growth, panel data

Multidimensions of Urban Poverty - Evidence from India

Content of abstract This paper provides a robust multidimensional evaluation of intra -urban differences. The hypothesis that joint consumption of public goods of individuals in non slum urban India dominates those of individuals living in slums is accepted while the hypothesis that consumption of private goods of individuals in non slum urban India dominates those of individuals living in slums is rejected.Urban, poverty, Slums, India, Intra Urban Differences, Multidimensional, Dominance

Poverty in Indian cities during the reforms era

This paper seeks to understand temporal changes in poverty and well-being in Indian cities during the era of economic reforms. The evidence on improvements in well being is mixed. During this period, there was an increase in the number of urban poor. Using two nationally representative samples, we compare the joint distribution of monthly per capita expenditure (a private good) and access to drainage (a public good) in slums and non-slum areas of Indian cities to understand changes in well being. A comparison at two points in time, 1993 and 2002, suggests that the share of slum dwellers in urban poor has declined. However, we do not find evidence for improvement in the well-being of slum dwellers over time. We do find that non-slum urban dwellers are better off in 2002 compared to 1993

Trade with Labor Market Distortions and Heterogeneous Labor: Why Trade Can Hurt

This paper explains the differential impacts of trade on countries in terms of institutional differences which result in factor market distortions. We modify the Ricardian, Specific Factor and Hecksher Ohlin models of trade to capture these. Trade has both terms of trade effects and output effects. Both work to raise welfare in an undistorted economy. In a distorted economy, price effects work to improve welfare, while output effects work to reduce it. Large distorted countries are more likely to lose from trade as beneficial price effects are lower. In addition the greater the substitutability between goods, the more likely it is that welfare rises through trade.

Do security deposit rates matter: Evidence from a secondary market

In the recent past, many economies, attempting to become more open, have adopted policies fostering a less restrictive trade regime. In their attempts to become more open, policy makers can, with the best of intentions, adopt policies that have unforeseen and often undesirable side effects. In the 1980s, Australia was in the process of converting quotas to tariffs. In the process they auctioned off import quota licenses in order to use the submitted bids to calculate equivalent tariff rates. A security deposit was charged to prevent frivolous bidding. The collection of security deposits may be seen as a harmless policy with the only discernable cost being the opportunity cost of the funds while they are on deposit. We argue that, at least in the Australian context, this is not so. Using data from a middleman in the secondary market for these licenses, we show that the policy may have led to welfare losses in the secondary market.

Negative Reality of the HIV Positives: Evaluating Welfare Loss in a Low Prevalence Country

Using primary household data from India we estimate family utility function parameters that measure the relative importance of consumption, schooling of children and health (both physical and mental) and find that mental health is far more important than consumption or children’s schooling in determining household utility. We then estimate that the monetary equivalent of the welfare loss to an HIV family is Rs. 66,039 per month, whereas the losses to an HIV male and female are Rs. 67,601 and Rs. 65,120 per month respectively. These figures are huge given that the average per capita consumption expenditure of the families in our sample is just Rs. 1,019 per month. This huge magnitude is not surprising as it includes private valuation of one’s own life as well as the cost of stigma for being HIV positive. In addition, the annual loss from external transfers (through debt, sale of assets and social insurance) accounts for 2.6% of annual health expenditure and 0.12% of GDP in 2004. The significance of mental health in welfare evaluation can be gauged from the fact that, for an average HIV family, a whopping 74% of the welfare loss comes from aspects of mental health.HIV/AIDS; Mental Health; Physical Health; Welfare Loss; Family Preference

Negative reality of the HIV positives: Evaluating welfare loss in a low prevalence country

Using primary household data from India we estimate family utility function parameters that measure the relative importance of consumption, schooling of children and health (both physical and mental) and find that mental health is far more important than consumption or children's schooling in determining household utility. We then estimate that the monetary equivalent of the welfare loss to an HIV family is Rs. 66,039 per month, whereas the losses to an HIV male and female are Rs.67,601 and Rs. 65,120 per month respectively. These figures are huge given that the average per capita consumption expenditure of the families in our sample is just Rs.1,019 per month. This huge magnitude is not surprising as it includes private valuation of one's own life as well as the cost of stigma for being HIV positive. In addition, the annual loss from external transfers (through debt, sale of assets and social insurance) accounts for 2.6 of annual health expenditure and 0.12 of GDP in 2004. The significance of mental health in welfare evaluation can be gauged from the fact that, for an average HIV family, a whopping 74 of the welfare loss comes from aspects of mental health.

Integrating Mental Health in Welfare Evaluation: An Empirical Application

This paper presents simple measures of individual and family mental health indices based on axiomatic foundations and integrates mental health into a neoclassical model that allows for proper substitution possibilities in the family preferences and quantifies its significance in family utility. We find that mental health effects are far more important than the effect of consumption or children’s schooling in determining family utility. We illustrate the usefulness of our approach by considering the case of HIV/AIDS experience in India. Using our approach, we find that while there are no significant differences in per capita consumption and schooling between HIV and NON HIV families, the cost of HIV/AIDS are still considerably large due to the inclusion of mental health. Integrating mental health in a utility maximization framework helps us quantify these costs.

Integrating mental health in welfare evaluation: An Empirical application

This paper presents simple measures of individual and family mental health indices based on axiomatic foundations and integrates mental health into a neoclassical model that allows for proper substitution possibilities in the family preferences and quantifies its significance in family utility. We find that mental health effects are far more important than the effect of consumption or children's schooling in determining family utility. We illustrate the usefulness of our approach by considering the case of HIV/AIDS experience in India. Using our approach, we find that while there are no significant differences in per capita consumption and schooling between HIV and NON HOV families, the cost of HIV/AIDS are still considerably large due to the inclusion of mental health. Integrating mental health in a utility maximization framework helps us quantify these costs.

Tertiary education and prosperity: Catholic missionaries to luminosity in India

This paper estimates the causal impact of tertiary education on luminosity across Indian districts. We address the potential endogeneity of tertiary education using the location of Catholic missionaries in 1911 as an instrument for current tertiary education. We find Catholic missionaries have a large and positive impact on tertiary education. Catholics were not at the forefront of tertiary education in colonial India, but they established many high quality colleges following Indian independence. Controlling for a rich set of geographical and historical characteristics, we find a positive causal effect of tertiary education on development, as measured by light density at night. The findings are robust to different measures of development, and are not driven by alternative channels through which missionaries could impact current income.We acknowledge the financial support from the Spanish Ministry of Economy and Competitiveness through ECO2011-29283 project, and the Planning and Policy Research Unit at the Indian Statistical Institute (Delhi