Does AIDS-Related Mortality Reduce Per-Capita Household Income? Evidence from Rural Zambia.

This paper evaluates the effect of AIDS-related mortality on per-capita incomes of surviving household members, using a large nationally representative sample of rural households from Zambia. To minimize selection bias that may arise because AIDS is likely to be the endogenous outcome of individual behavior, we employ a difference-in-difference propensity score matching estimator. We find that the death of a prime-age member has no significant impact on per-capita household income. This result continues to hold when we control for spillover effects by excluding households from the control group if members departed or joined for reasons related to AIDS. A likely explanation for this finding is that surviving household members pursue a mix of income and demographic coping strategies that prevents income losses in the short to medium run.

The Economic Drivers of Human Trafficking: Micro-Evidence from Five Eastern European Countries..

Human trafficking is a humanitarian problem of global scale, but quantitative research on the issue barely exists. This paper is a first attempt to explore the economic drivers of human trafficking and migrant exploitation using micro data. We argue that migration pressure combined with informal migration patterns and incomplete information are the key determinants of human trafficking. To test our argument, we use a unique new dataset of 5513 households from Belarus, Bulgaria, Moldova, Romania, and Ukraine. The main result is in line with our expectations: Migrant families in high-migration areas and with larger migrant networks are much more likely to have a trafficked victim among their members. Our results also indicate that illegal migration increases trafficking risks and that awareness campaigns and a reduction of information asymmetries might be an effective strategy to reduce the crime.Human Trafficking; Migrant Exploitation; Illegal Migration; Migration Networks; Eastern Europe;

Orphanhood and Critical Periods in Children's Human Capital Formation: Long-Run Evidence from North-Western Tanzania

Losing a parent is a trauma that has consequences for human capital formation. Does it matter at what age this trauma occurs? Using longitudinal data from the Kagera region in Tanzania that span thirteen years from 1991-2004, we find considerable impact heterogeneity across age at bereavement, but less so for the death of opposite-sex parents. In terms of long-term health status as measured by body height, children who lose their same-sex parent before teenage years are hit hardest. Regarding years of formal education attained in young adulthood, boys whose fathers die before adolescence suffer the most. Maternal bereavement does not fit into this pattern as it affects educational attainment of boys and girls in a similar way. The generally strong interaction between age at parental death and sex of the late parent suggests that the preferences of the surviving parent partly protect same-sex children from orphanhoods detrimental effects on human capital accumulation. --orphans,health,education,timing of parental death,child development,HIV/AIDS

Identifying the Motives of Migrant Philanthropy

Donations by migrants to community projects in their home countries ("collective remittances") help to provide local public goods and may promote economic development. We draw on the literatures on migrant remittances and on philanthropy in general to identify possible motives for collective remittances

Boda-bodas Rule: Non-agricultural Activities and Their Inequality Implications in Western Kenya

Engagement in non-agricultural activities in rural areas can be classified into survival-led or opportunity-led. Survival-led diversification would decrease inequality by increasing the incomes of poorer households and thus reduce poverty. By contrast, opportunity-led diversification would increase inequality and have a minor effect on poverty, as it tends to be confined to non-poor households. Using data from Western Kenya, we confirm the existence of the differently motivated diversification strategies. Yet, the poverty and inequality implications differ somewhat from our expectations. Our findings indicate that in addition to asset constraints, rural households also face limited or relatively risky high-return opportunities outside agriculture.Income diversification, non-agricultural activities, inequality, poverty, sub-Saharan Africa, Kenya

Boda-bodas rule: Non-agricultural activities and their inequality implications in Western Kenya

Diversification into non-agricultural activities in rural areas can be broadly classified as either survival-led or opportunity-led. The existence of these two types of non-agricultural activities implies a U-shaped relationship between the share of income derived from non-agricultural activities and household wealth as well as total household income. Survival-led engagement in non-agricultural activities would be inequality-decreasing through increasing the incomes of the poorer parts of the population and would reduce poverty. Opportunity-led diversification, by contrast, would increase inequality and have a minor effect on poverty, as it tends to be confined to non-poor households. Using data from a household survey conducted by ourselves in Western Kenya, we find the overall share of non-agricultural income in this very poor region to be important, but below the sub-Saharan African average. Multivariate analyses confirm the existence of both survival-led and opportunity-led diversification. Yet, the poverty and inequality implications of the differently motivated diversification strategies differ somewhat from our expectations. As expected, we find high-return activities to be confined to richer households, while both rich and poor households are engaged in low-return activities. Very poor households even appear to be excluded from the latter. Simple simulation exercises illustrate the inequality-increasing and very limited poverty effects of increases in high-return income, whereas increased low-return income shows substantial poverty reduction leverage. Our findings indicate that rural households do not only face asset constraints, but also very limited or relatively risky high-return opportunities outside agriculture. --Income diversification,Non-agricultural activities,Inequality

International labor migration and remittances: Towards development-friendly migration policies.

Risk evaluation is crucial for practitioners as it allows them to make better investment decisions. However, the recently witnessed financial turmoil has demonstrated the inadequacy of many models for preventive risk evaluation. In particular, it is now evident that new methods are needed to anticipate and manage risk in asset markets more accurately. In this article we discuss some of the "blind spots" in risk management uncovered by the financial crisis and suggest alternative models for the evaluation and prevention of risk that can be useful for the new "toolkit" of financial practitioners and regulators.Internationale Arbeitsmobilität; Rücküberweisung (Migranten); Entwicklung; Wirtschaftskrise; Migrationspolitik;

Shocks, Income Diversification and Welfare in Developing and Transition Countries

This dissertation takes a welfare perspective to analyze how rural households in developing countries manage risks ex-ante and cope with shocks ex-post. The first part looks at risk-coping strategies and analyzes the socio-economic consequences of AIDS-related mortality in rural sub-Saharan Africa. Chapter 2 shows that households in rural Zambia are able to stabilize their per-capita incomes after the death of a prime-age member. Yet, risk-sharing arrangements appear to spread the burden beyond directly afflicted households. Chapter 3 demonstrates for North-Western Tanzania that the age at parental bereavement has important consequences for children’s long-term capital accumulation in terms of both health and education. These effects, however, depend on the gender of the deceased parent. Preferences of the surviving parent partly protect same-sex children from the detrimental effects of orphanhood, suggesting that risks are not equally shared within households. The second part of the dissertation explores risk-management strategies and investigates the income diversification patterns of farm households in sub-Saharan Africa. Chapter 4 analyzes the dichotomy of the non-agricultural sector in Western Kenya and the resulting poverty and inequality implications. The results show that only rich households are able to overcome the entry barriers into high-return activities. Low-return activities, however, are not concentrated among the poor. The chapter also provides evidence that high-return non-agricultural activities are associated with increased agricultural productivity. Chapter 5 examines the determinants of diversification in Burkina Faso between 1994 and 2003. Diversification into non-agricultural activities appears to be mainly motivated by insurance motives. Yet, the patterns of diversification also reflect structural change offering better opportunities in the non-farm sector. The final part of the dissertation concentrates on Eastern Europe and looks at the welfare implications of international migration for those who stay behind and the migrants themselves. Chapter 6 examines the reasons for reduced labor supply of migrant-sending households in Moldova. The findings do not support the common view that decreased labor market activity is the result of remittances-driven leisure consumption. Instead, the departure of a migrant appears to raise remaining members’ productivity in home production. In addition, young adults in migrant families are substantially more likely to pursue higher education. Chapter 7 investigates the economic drivers of human trafficking. Based on a household survey on human trafficking from Belarus, Bulgaria, Moldova, Romania and Ukraine, the analysis finds that the individual risk of falling victim to human trafficking is closely related to the size of regional migration flows. The reasons are lower recruitment costs for traffickers and, to a lesser extent, negative self-selection into migration. Together, these findings illustrate that rural households in the developing world have developed various informal strategies to cope with shocks and reduce their exposure to risks. While these strategies help households to temporarily smooth income or consumption, they are likely to perpetuate poverty and reduce economic growth in the longer run. Consequently, measures that protect households from risks should play a prominent role in rural development strategies

International labor migration and remittances beyond the crisis: Towards development-friendly migration policies.

Internationale Arbeitsmobilität; Rücküberweisung (Migranten); Entwicklung; Wirtschaftskrise; Migrationspolitik; Welt;