Government Transfers and Poverty Transition in Metro and Nonmetro Areas: A Survival Analysis

Replaced with revised version of paper 07/28/05.Public Economics,

Can US welfare programs cure persistent poverty?:

"A simple dynamic panel model is used to capture persistence in poverty. This simple model allows a more accurate derivation of the permanent level of the measure of well-being from which persistent poverty is defined. Using a longitudinal dataset from the United States of America, the results show that the variability of the measure of welfare (logarithm of income-to-needs ratio) is mainly driven by transitory shocks through unobservable individual and time-specific characteristics. Consequently, means-tested schemes such as food stamps or the Temporary Assistance to Needy Families (TANF) block grant program can easily miss genuinely eligible welfare clients. The results also suggest that the probability of exiting persistent poverty is much higher for job participants than welfare programs participants. However, compared to their employed counterparts, unemployed individuals have little or no chance of escaping persistent poverty unless they choose to participate in welfare programs." from authors' abstractWelfare economics, Poverty dynamics, Poverty reduction,

Farmers' health status, agricultural efficiency, and poverty in rural Ethiopia: A stochastic production frontier approach

"The A stochastic frontier production function is used to estimate agricultural efficiency index. Then, controlling for household characteristics and other exogenous variables, the efficiency index is regressed on the probability of being sick. Estimation is performed using the treatment effect model where the probability of being sidelined by sickness is modeled as a probit. This framework allows policy simulations that underscore the impact of farmers' health status on both agricultural efficiency and poverty reduction. Overall, regression results confirm the negative impact of health impediment on farmers' agricultural efficiency. Simulation results show that improving farmers' agricultural efficiency by investing in farmers' health may not necessarily lead to poverty reduction. Additional policy instruments may be needed to achieve simultaneous increase in agricultural productivity and reduction in poverty rate." from authors' abstracthealth, Agriculture, productivity, Poverty, Farmers, Efficiency, Stochastic, Production, Science and technology, Institutional change, Innovation,

Farmers’ health and agricultural productivity in rural Ethiopia

This paper estimates a stochastic production using household survey data to analyze the relationship between farmers’ health impediments and agricultural production efficiency in Ethiopia. The results show that healthy farmers produce more per unit of inputs, earn more income and supply more labor than farmers affected by sickness. The model results show that production inefficiency increases significantly with the number of days lost to sickness. This finding suggests that investing in the health sector in rural areas will not only improve farmers’ agricultural performance but also increase their income. Policymakers should therefore devise strategies that will maximize the contribution of health investments to agricultural productivity and the overall rural economy.health, productivity, stochastic frontier, efficiency, Ethiopia, Health Economics and Policy, Productivity Analysis,

The growth-poverty convergence agenda: Optimizing social expenditures to maximize their impact on agricultural labor productivity, growth, and poverty reduction in Africa

The need to achieve the Millennium Development Goals (MDGs) has raised the profile of social sector investments in Africa and other developing countries. As a result, many African countries are pressured to emphasize short-term concerns related to the symptoms of poverty at the expense of the longer-term needs to raise productivity and incomes, and thereby tackle the real roots of poverty. Because of scarce budget resources, there is a major challenge for African governments in terms of ensuring the necessary consistency of policies and strategies to promote long-term economic growth, raise smallholder productivity, achieve food security, and reduce poverty, while providing the social services that respond to immediate welfare requirements. The main objective of the convergence agenda exposed in this paper is to identify strategies that would allow developing countries to improve the management of public expenditures so as to raise the chances of meeting the income growth and social needs of their populations under tight budget constraints. In this paper we have (1) discussed the terminology used in describing the problem being studied and formulated the assumptions and hypotheses underlying the research; (2) defined a typology of growth–poverty pathways; (3) developed metrics to measure the strength of the relationship between growth and poverty reduction; (4) laid out the theory for the measurement of the degree of convergence of public expenditures on social services, that is, the extent to which they are optimized with respect to their impact on labor productivity and growth; and (5) outlined models for (a) the quantification of social services availability at the local level using a single-score concept, (b) the evaluation of the quality and efficiency of public expenditures in social services sectors in rural areas, and (c) the optimization of public expenditures allocation to maximize the impact on growth and poverty reduction; as well as (6) provided initial evidence proving the validity of the theory of convergence.Poverty, Expenditure, Social services, Convergence, Agriculture, Poverty overhang, Growth deficit, Public investment,

Using a spatial growth model to provide evidence of agricultural spillovers between countries in the NEPAD CAADP Framework:

The NEPAD Comprehensive Africa Agriculture Development Programme (CAADP) has been endorsed by African Heads of State and Governments as a vision for the restoration of agricultural growth, food security, and rural development in Africa. The program aims at stimulating agriculture-led development to alleviate poverty and hunger, and achieve sustainable food security. The creation of a union is often rationalized on grounds of moving the equilibrium toward the first best solution whenever independent policies generate spillovers. This arises as a common agenda can significantly reduce the scope of free-riding behavior among member countries. In addition, cross-border externalities arising out of higher levels of market integration entails countries to agree on policy coordination. Using a Spatial Durbin Model for panel data, the present study explores the extent and magnitude of agricultural production spillover that might validate the adoption of CAADP agenda among African countries, especially among Sub-Saharan African countries. Overall, our results suggest the presence of positive and significant agricultural production spillover. No evidence of beggar-thy-neighbor or negative spillover policies was found; on average, each country received 2.5 percent growth as a result of spillover. Finally, our results suggest that convergence dynamics is much stronger when spillover is accounted for which provides a rationale for a common agenda such as CAADP.Agriculture, CAADP, Convergence, Growth, production, spatial model, Spillover,

How does food price increase affect Ugandan households?: An augmented multimarket approach

"Almost unaffected by the 2008 wave of soaring world food prices, Ugandan local market prices exhibit signs of high price volatility in the first quarter of 2009. At the household level, while net producers may reap some benefits from this increase in food prices, net consumers are more likely to suffer from it. However, the net consumption impact of food price increase is not as straightforward as reported in previous studies. In this paper, we extend Singh et al. (1986) multimarket model by adding demand elasticities from the Almost Ideal Demand System (AIDS). We use the integrated Ugandan National Household Survey (UNHS) 2005/2006 to estimate a measure of net consumption impact that includes both price and profit effects. Overall, we found that household welfare is expected to decrease with loss in consumption and increase with income gain as a result of higher food prices for the cereals producers. Simulating change in cereals consumption induced by a 50 percent increase in cereals price and taking into account the profit effect, our results predict a 23 percent decrease in food consumption for net sellers, compared with 44 percent when using the consumption approach alone. Accounting for such substitution effects, our results suggest that the impact of rising food prices may be mitigated because some households will attempt to substitute more expensive food items with cheaper ones; however, this apparent coping strategy often leads to a much poorer diet. The results suggest that the majority of households with expected positive income impact, the gainers, live in rural areas. These households also tend to have better access to agricultural services than the nongainers." from authors' abstractConsumption, Elasticity, Food prices, households, Multimarket, Science and technology, Institutional change, Innovation systems, Supply and demand, Household resource allocation, Gender,

Joint estimation of farmers' stated willingness to pay for agricultural services:

In many developing countries, to sustain the provision of agricultural services to farmers, many have advocated the use of service fees. Successful implementation of such schemes requires understanding of determinants of farmers' willingness to pay. In this paper we use a multivariate probit approach to investigate farmers' stated willingness to pay for different agricultural services including soil fertility management, crop protection, farm management, improved produce quality /varieties, on-farm storage (post-harvest), improved individual and group marketing, and disease control. Data are from the Uganda National Household Survey 2005/2006. Controlling for individual characteristics and regional heterogeneity, our results suggest that farmers with access to information on proposed agricultural service are less willing to pay for it. Similarly, access to extension service tends to reduce farmers' willingness to pay. Market access plays also a significant role; farmers with available market are more willing to pay for agricultural services than those without available market. On the reverse, distance to the market is inversely correlated with the willingness to pay for agricultural services. The results also suggest that land ownership matters; indeed, increase in the size of land owned by farmers increases their willingness to pay for agricultural services. As expected, farmers' income, especially agricultural income significantly increases farmers' willingness to pay for agricultural services. Overall, decisions to pay or not for these services are not independent from each other implying that joint supply of these services should be recommended.agricultural services, Farmers, multivariate probit, willingness to pay, Markets,

Spatial price transmission and market integration in Senegal’s groundnut market

The groundnut sector is the largest of Senegal’s agricultural sectors. It has been subject to various degrees of intervention since the country’s independence. Some, including the determination of farm prices by the government have survived the wave of reforms of the 1980s. Groundnut pricing policies have been the source of major transfers from farmers to the groundnut milling industry, which until 2007, was dominated by SONACOS, a publicly owned parastatal. The state was thus a major beneficiary of the transfers. In 2007, the company was privatized and is now privately owned, raising even greater concerns about the distribution of implications of pricing policies for groundnuts. The paper examines the potential ramifications of liberalizing groundnut prices in terms of its impact on prices received by producers and paid by the milling industry. One fundamental question in the analysis is the extent to which local markets would respond to such a move. To answer this question, the paper presents a dynamic model of price formation that uses estimates of spatial integration across local markets to measure the response of local agricultural prices to policy changes. We then apply this model to simulate the impact of liberalizing groundnut prices to allow domestic prices to reflect their international levels. We find that doing so would change prices in the border city of Dakar, which happens to be the central market that determines prices in the local markets of the producing regions of Kaolack and Fatick. We also find that if markets had been fully liberalized when SONACOS was privatized in January 2007, then groundnut prices would have been higher and that the increase in prices would have been passed on almost entirely to producers in Kaolack and, to a lesser extent, to producers in Fatick. Such reforms would have reversed the longstanding discrimination of groundnut farmers. Prices received by farmers in Kaolack over a period of one year would have increased from 352 FCFA/kg to 494 FCFA/kg of shelled groundnuts. For farmers in the Fatick region, prices would increase from 389 FCFA/kg to 474 FCFA/kg.groundnuts, Liberalization, marketing integration, pricing policies, Privatization,

MODELING SPATIAL ACCESSIBILITY WITHIN DISCRETE CHOICE FRAMEWORK

Spatial accessibility is concerned with the opportunity that an individual at a given location possesses to participate in a particular activity or set of activities. The main objective of this paper is to highlight the shortcomings of traditional accessibility measures and provide some appropriate methodological suggestions for their improvement. Traditional measures derived from cumulative opportunities and gravity models focus on physical proximity leaving out individual and spatial attributes as potential explanatory variable. The improvement through random utility theory relies mainly on Multinomial logit models under Independently and Identically Distributed (IID) and individual response homogeneity assumptions that often do not hold in case of choices involving spatial units. In this paper we briefly present the process of relaxing MNL assumptions. Using the MNL, Nested logit (NL), and Mixed Multinomial logit (MMNL) models we derive related accessibility measures. The application of MNL, NL and MMNL on choice model of residential location underlines possible consequences of a misspecification of the distribution of the error term and that of model parameters. The results clearly suggest that a decision process can be corrupted, and therefore lead to erroneous policy measures because of model misspecification.Research Methods/ Statistical Methods,