Ageing, Poverty, and the Role of a Social Pension in Vietnam

経済学 / EconomicsBy using the Vietnam Household Living Standard Survey in 2004, this paper seeks to quantify the potential role and impacts of a social pension scheme for reducing elderly poverty in Vietnam. We simulate how the poverty rate, poverty gap, and poverty severity of the elderly would have been changed in the counterfactual situation that such a scheme had been introduced to Vietnam in the past. We consider a number of categorical targeting groups of elderly people along with various transfer parameters to assess the impacts of the scheme on social welfare. We find that, depending on the characteristics of the social pension, there would be beneficial poverty reductions, but also large leakages to the non-poor people. For a variety of measures, our results suggest that targeting the elderly in rural areas might be the most effective use of limited resources. Also, simulations for different budgetary constraints show that, even with limited budgeting, a social pension scheme would significantly reduce poverty incidence for the elderly. We also find that for a given program cost, combining lower benefits with lower eligibility requirements is more effective at reducing poverty than providing larger benefits to a more limited group of recipients.JEL Classification Codes: H55, I32, I38Published as: Giang, L. T., and W. D. Pfau. “Aging, Poverty, and the Role of Social Pensions in Vietnam,” Development and Change. Vol. 40, No. 2 (March 2009), p. 333-360

Default Effects, Transaction Costs, and Imperfect Information

経済学 / EconomicsWe develop a decision framework with imperfect information to analyze the effects of transaction costs on the tendency for individuals to remain with a default option. We demonstrate how transaction costs can be a more important source of such default effects than commonly thought. A further, potentially surprising result shows that transaction costs are able to explain why some forms of default effects increase with the number of options.JEL Classification Codes: D03, D83http://www.grips.ac.jp/list/jp/facultyinfo/munro_alistair

Children of Migrants: The Cumulative Impact of Parental Migration on their Children\u27s Education and Health Outcomes

In the past 15 years, around 160 million Chinese rural workers migrated to cities for work. Because of restrictions on migrant access to local health and education system, many migrant children are left-behind in rural villages and growing up without parental care. This paper examines how parental migration affects children\u27s health and education outcomes in the long run. Using the Rural-Urban Migration Survey in China (RUMiC) data, we measure the share of children\u27s lifetime during which parents were away from home. We instrument this measure of parental absence with weather changes in their home villages when parents were aged 16-25, or when they were most likely to initiate migration. Results show a sizable adverse impact of exposure to parental migration on the health and education outcomes of children, in particular boys. We also find that what the literature has always done (using contemporaneous measure for parental migration) is likely to underestimate the effect of exposure to parental migration on children\u27s outcomes.JEL Classification Codes: J38, I28http://www.grips.ac.jp/list/jp/facultyinfo/yamauchi_chikako

Understanding Pastoralists’ Dynamic Insurance Uptake Decisions: Evidence from Four-year Panel Data in Ethiopia

Using a unique data set covering four years and six semi-annual sales periods of an index-based livestock insurance (IBLI) product in southern Ethiopia, we examine the dynamics of pastoralists’ demand for IBLI. We find that: (1) there is intertemporal dependence of an uptake decision, represented by correlations of unobserved household factors over time; (2) conditional on previous purchase decisions, factors related to continuing the purchase of IBLI to augment existing coverage and replace lapsing contracts differ significantly; (3) controlling for time-invariant household-fixed effects, neither a one-shot subsidy nor the uptake of others in one’s social network influence subsequent demand, whereas less vegetation and reduced insurance premiums induce households to purchase IBLI. Overall, our study provides rigorous micro-evidence to better understand the dynamic uptake of IBLI and signifies the importance of an empirical analysis that takes into account the dynamic demand structure.JEL Classification Codes: D12, D14, D81, G22, O12This work was made possible by the financial support provided by Cornell University, National Graduate Institute for Policy Studies (GRIPS), the International Livestock Research Institute (ILRI), the JSPS Grant-in-Aid for Scientific Research (B)-26301021, the US Agency for International Development (USAID) Agreement No. LAG-A-00-96-90016-00 through the Broadening Access and Strengthening Input Market Systems Collaborative Research Support Program (BASIS AM) Innovation Lab, the Department of Foreign Affairs and Trade through the Australia Development Research Awards Scheme, and the CGIAR Research Programs on Climate Change, Agriculture and Food Security, and on Dryland Systems.https://www.grips.ac.jp/list/jp/facultyinfo/takahashi-kazushi

Incentivising the Social Discounting Task: A laboratory experiment

Altruism is one of the single most important social preferences driving human behaviour. In Psychology experiments, the Social Discounting Task is employed as a measure of altruism. A conventional laboratory experiment was conducted with 117 undergraduate students, with students randomly assigned to complete an incentivized and un-incentivized Social Discounting Task. In accordance with the 1/d law of giving, the results exhibit the expected inverse relationship between social distance and altruism. There is weak evidence that incentivizing the Social Discounting Task impacts the measurement of altruism in a student population. More specifically, subjects are more altruistic when incentivized, possibly due to enforced reciprocity. At the same time, making payments real influence the identity of the target recipients: paying makes subjects more likely to choose people who are physically and psychologically close at high ranks, and more likely to report greater physical and psychological distance to subjects at lower ranks. Further research is required to verify the robustness of this result. The study also shows that among students family members are more altruistic toward each other as are those exhibiting greater intergenerational solidarity. Preferences for altruism in this student population is no different from WEIRD subject populations.JEL Classification Codes: C91, D64http://www.grips.ac.jp/list/jp/facultyinfo/munro_alistair

Population, Technological Progress and the Welfare of the North-South Trade: A Revisit of the Classic Ricardian Model

This paper analyzes how the technology progress of the South country affects the welfare of the North country in a free trade world. Using the standard Ricardian model of the North-South trade, we show that, import biased technological progress of the South will undermine the welfare of the North, once the cumulative technological progress of the South exceeds a threshold. The relative population size of the South to North affects the threshold. Generally, a relatively larger South country has a lower threshold and the technological difference between the two countries remains even beyond the threshold. To a certain extent, the findings of the paper offer an theoretical explanation about the concerns of rising China in an integrated world economy.JEL Classification Codes: F1http://www.grips.ac.jp/list/jp/facultyinfo/xing_yuqing

Cooperation in Repeated Prisoner’s Dilemma with Outside Options

経済学 / EconomicsIn many repeated interactions, repetition is not guaranteed but instead must be agreed upon. We formulate a model of voluntary repetition by introducing outside　options to a repeated Prisoner’s Dilemma and investigate how the structure of outside options affects the sustainability of mutual cooperation. When the outside　option is deterministic and greater than the value of mutual defection, the lower bound of the discount factors that sustain repeated cooperation is greater than the　one for ordinary repeated Prisoner’s Dilemma, making cooperation more difficult. However,stochastic outside options with the same mean may reduce the lower　bound of discount factors as compared to the deterministic case. This is possible when the stochasticity of the options increases the value of the cooperation phase　more than the value of the punishment phase. Necessary and sufficient conditions for this positive effect are given under various option structures.JEL Classification Codes: C73http://www.grips.ac.jp/list/jp/facultyinfo/yasuda_yosuke

Optimal Bandwidth Selection for the Fuzzy Regression Discontinuity Estimator

A new bandwidth selection method for the fuzzy regression discontinuity estimator is proposed. The method chooses two bandwidths simultaneously, one for each side of the cut-off point by using a criterion based on the estimated asymptotic mean square error taking into account a second-order bias term. A simulation study demonstrates the usefulness of the proposed method.JEL Classification Codes: C13, C14http://www.grips.ac.jp/list/jp/facultyinfo/arai_yoichi

Domestic Value Added of Chinese Brand Mobile Phones

In this paper, we evaluate the domestic value added of Chinese brand mobile phones using the teardown data of two sample phones: Xiaomi MIX 2 and OPPO R11s. For calculation of the distribution of value added by country, we adopt two benchmarks: production cost and retail price. In terms of the production cost of the sample phones, which consists of bill of materials, manufacturing cost and royalty, Chinese domestic value added embedded in the MIX 2 is 15.4% and 16.7% in the R11s. The teardown analysis reveals that no indigenous Chinese firms are involved in the manufacture of the printed circuit board assembly, which explains the relatively low Chinese domestic value added. Using retail price to measure total value added, we find that the domestic value added of the MIX 2 to be 41.7% while that of the R11s to be 45.3%. The cost of retail services and gross marginal profits contribute most to the increase, which implies that nurturing mobile phone brands has not only enabled the Chinese mobile phone industry to move up ladder of value chains, but also to improve domestic value added.JEL Classification Codes: L63, F23http://www.grips.ac.jp/list/jp/facultyinfo/xing_yuqing