International migration and local employment: analysis of self-selection and earnings in Tajikistan

This paper addresses the issue of self-selection of individuals in international labour migration, non-agricultural and agricultural employment in Tajikistan and its link to earnings from these activities. Unlike most empirical studies, we could attribute selection bias on unobservable characteristics to the allocation of individuals to alternative employment sectors and analyse its impact on earnings abroad and at home. We have found positive selection in migration against local non-agricultural activities and positive selection in local non-agricultural activities against local agricultural activities. This indicates that the most capable individuals with regards to unobservable characteristics choose to migrate, while the somewhat less able choose non-agricultural activities, and individuals with the worst capabilities stay in poorly-paid agricultural activities. Controlling for self-selection, labour income returns to education of migrants and individuals in non-agricultural activities are slightly lower than those from Ordinary Least Squares (OLS).international migration, self-selection, earnings, Tajikistan

Poverty and the Rural Non-Farm Economy in Oromia, Ethiopia

The rural non-farm sector has gained increasing importance over the past decades. In much of Africa, this has had limited effect on the poor, who face entry barriers to non-farm activities. As a result, the nonfarm economy does not reduce poverty but increases inequality instead. Some, but not all, evidence for Ethiopia, however, contradicts this general pattern: the poor do participate in the nonfarm economy, but apparently this does not lift them out of poverty. The present paper analyses the relation between non-farm income and inequality in Oromia, the largest state of Ethiopia, where most households rely on rainfed agriculture for their livelihood. The traditional development approach of providing technology and infrastructure to increase agricultural production has not succeeded in curbing the trend of increasing poverty, and alternative sources of productive employment must be sought in order to support the additional workforce created by population growth. The question is whether the focus of policy should be on improving access of the poor to existing nonfarm activities or on improving the profitability of these activities. We use two complementary methodologies to answer this question: i) econometric estimates of household participation in the non-farm sector; and ii) Gini decomposition of income inequality by sou rce. The results indicate that general growth in the non-farm sector will benefit the poor and that no targeted measures ro increase access of the poor are required.Food Security and Poverty, J23, J32, O15, Q12,

The impact of Micro-credit and Informal Credit on Poverty and Inequality in Vietnam

This study finds a very small effect of micro-credit on income and consumption of the borrowers in the short-term. Although the effect estimates on poverty and inequality are negative, they are very small and not statistically significant. This might be because both income and credit in these survey are defined for the past 12 months. Micro-credit tends to be used in production and investment, which often require long period to be effective in increasing income and expenditure. Meanwhile, although informal credit has negative and not statistically significant impact on per capita income, it has positive and statistically significant impact on per capita expenditure. As a result, informal credit helps borrowers reduce expenditure poverty. Due the informal credit, the poverty incidence of the borrowers was reduced by around 1.6 and 1.4 percentage points in 2004 and 2006, respectively

The Impact of Public Transfers on Poverty and Inequality: Evidence from rural Vietnam

Vietnam’s extensive social security system is claimed to have played a key role in the extraordinary poverty decline over the past decades. This claim is, however, not substantiated by empirical evidence. In this study, we investigate how well contributory pensions and social allowances reached the poor and to which extent these transfers affected poverty and inequality in the early 2000s. Using fixed-effect regression to avoid endogeneity bias and allowing for different effects of different types of transfers, we find that the impact of these transfers on poverty and inequality was low, due to low coverage of poor and relatively low amounts transferred to the poor. Contrary to studies for other countries, our estimates suggest that public transfers did not crowd out private transfers nor did they result in a decrease in work effort. We do find weak evidence for multiplier effects for social transfers, but not for pensions

The Impact of Public Transfers on Poverty and Inequality: Evidence from rural Vietnam

Vietnam’s extensive social security system is claimed to have played a key role in the extraordinary poverty decline over the past decades. This claim is, however, not substantiated by empirical evidence. In this study, we investigate how well contributory pensions and social allowances reached the poor and to which extent these transfers affected poverty and inequality in the early 2000s. Using fixed-effect regression to avoid endogeneity bias and allowing for different effects of different types of transfers, we find that the impact of these transfers on poverty and inequality was low, due to low coverage of poor and relatively low amounts transferred to the poor. Contrary to studies for other countries, our estimates suggest that public transfers did not crowd out private transfers nor did they result in a decrease in work effort. We do find weak evidence for multiplier effects for social transfers, but not for pensions

The impact of Informal Credit on Poverty and Inequality: The Case of Vietnam

The informal credit market remains an important source of finance for the poor in Vietnam. Yet, little if anything is known about the ultimate impact of informal loans on poverty and inequality. If informal credit is an important means to decrease poverty, the government may want to reconsider its policy focus. Although it is possible to stimulate the availability of informal credit, the Vietnamese government has no policies to do so and focuses solely on direct provision of microfinance. In this paper we therefore estimate the average effect of informal credit on expenditures of borrowing households, and subsequently assess its impact on poverty and inequality. By using fixed-effect regressions with instrumental variables, we intend to eliminate the potential bias caused by differences between participants and non-participants in credit markets. We find that the poor borrowed proportionally more from informal sources than the non-poor and that informal credit was quite effective in decreasing poverty: it reduced the poverty incidence of borrowers by 8 percentage points and the overall poverty incidence of population by 1.4 percentage points in 2006. Similarly, informal credit significantly decreased the poverty gap index and the poverty-severity index. The effects on expenditure inequality were small

The impact of Informal Credit on Poverty and Inequality: The Case of Vietnam

The informal credit market remains an important source of finance for the poor in Vietnam. Yet, little if anything is known about the ultimate impact of informal loans on poverty and inequality. If informal credit is an important means to decrease poverty, the government may want to reconsider its policy focus. Although it is possible to stimulate the availability of informal credit, the Vietnamese government has no policies to do so and focuses solely on direct provision of microfinance. In this paper we therefore estimate the average effect of informal credit on expenditures of borrowing households, and subsequently assess its impact on poverty and inequality. By using fixed-effect regressions with instrumental variables, we intend to eliminate the potential bias caused by differences between participants and non-participants in credit markets. We find that the poor borrowed proportionally more from informal sources than the non-poor and that informal credit was quite effective in decreasing poverty: it reduced the poverty incidence of borrowers by 8 percentage points and the overall poverty incidence of population by 1.4 percentage points in 2006. Similarly, informal credit significantly decreased the poverty gap index and the poverty-severity index. The effects on expenditure inequality were small

The Impact of International Remittances on Income, Work Efforts, Poverty and Inequality: Evidence from Vietnam

This study provides new empirical evidence on the impact of international remittances. Using data from the two most recent Vietnam Household and Living Standard Surveys, the paper estimates the effect of remittances on per capita income, per capita expenditure, work efforts, poverty and inequality. The estimates suggest that a rise in international remittances in Vietnam increases household income and expenditure. Yet, the study also finds evidence that international remittances may create a moral hazard problem by inducing disincentives to work. Moreover, the study suggests that international remittances, at the least in the short run, do not reduce poverty. They may even lead to an increase in inequality. Overall, the study casts doubts on the view that international remittances may play a crucial role in reducing poverty in developing countries

The Impact of International Remittances on Income, Work Efforts, Poverty and Inequality: Evidence from Vietnam

This study provides new empirical evidence on the impact of international remittances. Using data from the two most recent Vietnam Household and Living Standard Surveys, the paper estimates the effect of remittances on per capita income, per capita expenditure, work efforts, poverty and inequality. The estimates suggest that a rise in international remittances in Vietnam increases household income and expenditure. Yet, the study also finds evidence that international remittances may create a moral hazard problem by inducing disincentives to work. Moreover, the study suggests that international remittances, at the least in the short run, do not reduce poverty. They may even lead to an increase in inequality. Overall, the study casts doubts on the view that international remittances may play a crucial role in reducing poverty in developing countries