Harmful Freedom of Choice: Lessons from the Cellphone Market

This article focuses on the relationship between provider and customer, specifically on the complexity of available contracts in the cellphone market and the ways this complexity might be harmful to consumers. This article aims to elucidate the issues, fleshing them out both as a general phenomenon and as a specific implementation in the cellphone context. The aim is not to provide ultimate solutions, but to show the directions these solutions might take and the difficulties involved

Growth, Inequality and Labor Markets in LDCs: A Survey

This paper surveys the empirical literature on the association between growth on inequality in less developed countries, with a particular emphasis on labor market inequality. Cross-country studies failed to find a clear link from growth to inequality. Country-specific studies that focused on labor market inequality have shown that, with a few exceptions, wage inequality increases with growth. The paper argues that the methodologies used in many of the empirical applications, designed to investigate changes in labor market inequality in developed economies, should be adjusted to account for the unique properties of labor markets in LDCs.growth, inequality, labor markets

Demand for On-Farm Permanent Hired Labor in Family Holdings: A Comment

This comment critically discusses the theoretical and empirical treatment of corner solutions in the analysis of labor decisions on farm households. As more and more labor decisions are analyzed jointly, the more ambitious becomes the theoretical justification of empirical applications. "Cutting corners" in theoretical models puts the validity of empirical conclusions in doubt. In such cases relying on intuitive theoretical justification of empirical modeling is preferred.Community/Rural/Urban Development,

Economic Well-Being in Rural Communities: The Role of Agriculture

Throughout the developed world, the share of agriculture in total income of the rural population is declining. This is due to push and pull factors. On one hand, terms of trade of agriculture are falling and farmers are forced to seek additional income sources. On the other hand, population expansion in rural areas, including an important component of urban-to-rural migration, creates attractive opportunities for alternative income-generating activities. The question is whether agriculture is good or bad for rural well-being. Are communities with more agriculture composed of stronger farms that enhance economic well-being, or perhaps more agriculture means lack of alternatives, in which case the outcome is the opposite? The answer has important implications for agricultural and rural policy. This paper attempts to answer this question in the context of Israeli Moshav semi-cooperative villages. These villages were established by farmers but have experienced a rising trend of exodus from farming in recent years and an inflow of non-farm population. We use village-level data derived from Censuses of Population and Censuses of Agriculture to study three complementary measures of well-being: income per-capita, housing spaciousness, and automobile ownership. We estimate a recursive system of simultaneous equations in which housing spaciousness and automobile ownership depend on income per-capita. The fraction of agriculture in total income in each village is the central explanatory variable. We also use explanatory variables representing demographic and economic characteristics of the villages, as well as geographic location and institutional affiliation. The results show that agriculture has a significantly negative effect on income per-capita. Income per-capita is also affected positively by the fraction of the population in the labor force, by the fraction of self-employed, and by the fraction of the population holding academic degrees. It is affected negatively by the distance from Tel-Aviv (the economic center of the country). Housing spaciousness and automobile ownership are affected positively by income per-capita. Holding income per-capita constant, housing spaciousness and automobile ownership are affected positively by the importance of agriculture. Housing spaciousness is also affected positively by median age in the village and the dependency ration, and negatively by household size. Automobile ownership is affected positively by household size and negatively by the dependency ratio. We conclude that rural communities that rely more heavily on agriculture are worse off in terms of income per-capita, but this adverse effect on well-being is partially offset by opposite results with respect to housing spaciousness and automobile ownership. The decline of agriculture is clearly not fully compensated by alternative sources of income. Provided that the global decline of agriculture will continue, the challenge of the authorities is to promote sufficiently attractive employment opportunities in rural areas that will smooth the occupational migration out of farming and prevent rural poverty.Community/Rural/Urban Development,

Can Female Non-Farm Labor Income Reduce Income Inequality? Evidence from Rural Southern Ethiopia

This article examines the importance of non-farm income in reducing per-capita income inequality among agricultural households in southern Ethiopia, with an emphasis on the gender dimension. Using a modified technique of inequality decomposition by income sources applied to household survey data, it was found that female non-farm labor income is the only income source that significantly reduces per-capita income inequality. More precisely, a uniform increase in female non-farm labor income, among households that already have income from this source, reduces inequality. Encouraging women to devote more time to non-farm income-generating activities, and creating market mechanisms that increase earnings in these activities, could potentially lift households out of poverty and at the same time reduce income inequality as a whole. The impact on inequality could be stronger if policies are directed at asset-poor households and less-educated households in particular. One of the policies that could be useful in this regard is female educational enhancements. This could open more opportunities for women in the hired labor market, improve women's position within the household, and promote overall income inequality as well as gender equality.Labor and Human Capital,

DOES LAND REFORM IN TRANSITION COUNTRIES INCREASE CHILD LABOR? EVIDENCE FROM THE REPUBLIC OF GEORGIA

This paper investigates the issue of child labor in the context of land reforms in transition economies, using farm household data from the Republic of Georgia. The results show that an increase in landholdings as an outcome of the land reform can, in the presence of market imperfections, lead to an increase in child labor. This is because the increased demand for labor on the family farm is stronger than the wealth effect generated by the land reform. However, this result is not uniform across farm families. First, it is only relevant for boys, because girls tend to assist in household activities rather than in farm work. Second, larger households are able to meet the increased demand for farm labor without the need for additional child labor. To the extent that smaller households tend to be poorer, it is mostly the poor households that sacrifice the future wellbeing of their male children in order to satisfy current needs. In this sense, the land reform may lead to a higher rural inequality in the long run. The policy implications are that land reforms in transition countries should include, as an integral ingredient, the development of rural land, labor and credit markets, in order to avoid the repercussions associated with increased child labor.Labor and Human Capital, Land Economics/Use,

Land Reform and Farm-Household Income Inequality: The Case of Georgia

The income inequality implications of land reform are examined for the case of Georgia using regression-based inequality decomposition techniques. An egalitarian land redistribution is likely to equalize per-capita income among farm households, implying that continuing the land reform process in Georgia is likely to benefit poorer households, relatively speaking. However, land fragmentation was found to be disequalizing, and therefore land market developments that enable plot consolidation are not less important for inequality than the land redistribution itself. Both landholdings and farm assets have favorable inequality implications not only through farm income but also through non-farm income, implying that these productive assets increase the economic opportunities of rural households in the non-farm sector as well, perhaps by easing borrowing constraints.income inequality, land reform, inequality decomposition, Agricultural Finance, Consumer/Household Economics, Farm Management, Land Economics/Use,

OFF-FARM PARTICIPATION AND FAMILY COMPOSITION: COMPARING 1995 WITH 1981 IN MOSHAVIM

Consumer/Household Economics,

FAMILY COMPOSITION AND OFF-FARM PARTICIPATION DECISIONS IN ISRAELI FARM HOUSEHOLDS

This paper studies the dependence of the off-farm participation behavior of farm operators and their spouses on the demographic composition of the household. Specifically, we focus on farm families without parents, siblings or partners, and examine the effects of the existence and work decisions of elderly children of the farm couple. We find that both the father and the mother tend to reduce their participation in off-farm work as the number of elderly children rises. This result holds even after controlling for observed characteristics. We also find that the effect of elderly children stems from considerations related to both farm production and household production.Consumer/Household Economics,