Measuring the Impact of Globalization on the Well-being of the Poor: Methodology and an Application to Africa

Whereas a large number of empirical studies have been devoted to analyzing the relationship between measures of income and globalization (defined by openness to international trade), much less attention has been paid to the analysis of well-being for the various subgroups of population and their causal associations with globalization. To address this gap in the literature, this paper first analyzes the quality of life (QOL) of 'poor' and 'non-poor' population segments of 40 African countries over a period of 1980-2000, and then examines their causal association with openness to trade. In order to understand the impact of openness to trade on the well-being of poor, we assume the causal chain Openness_ Income_ Poverty_ Well-being of poor and empirically examine link by link for Africa. The first link of the chain is from openness to growth. The second link in the causal chain from openness to well-being is the interrelationship between growth and poverty. The third link of the chain is from reduction in poverty to improvement of well-being. The major findings of this paper are: First, nearly every well-being indicator declines as the poor's population share increases; second, the tendency for QOL to decline with increasing poor's population share is common to the African and non-African countries; third, women suffer a double QOL disadvantage in areas of health and education as the poor's share of population increases; and fourth, globalization has improved incomes of African countries, however, there is a no significant decline in poverty and improvement in well-being of the poor over the period. We discuss the key challenges faces by African countries to beneficially engage in the world economy.International Relations/Trade,

DECOMPOSING WELL-BEING INDICATORS USING DISTRIBUTIONAL DATA

This paper makes two principal contributions: first, we propose a method for representing well-being aggregates and estimating population subgroup decompositions when data is available on population distributions across subgroups; second, we analyze the Quality of Life (QOL) of 'poor' and 'non-poor' population segments of 86 countries for the years 1980s and 1990s. The three major findings of this paper are as follows: First, nearly every well-being indicator declines as poor's population share increases; second, evidence of a significant difference in the QOL-poor's population share relationship between Asian and nonAsian countries is present for only few QOL indicators. In other words, the tendency for QOL to decline with increasing poor's population share is common to the Asian and nonAsian countries; third, women suffer a double QOL disadvantage in areas of health and education as the poor's share of population increases. This is due to the existence of relatively wider gender gaps in the well-being indicators among poor populations in Asia and elsewhere.Research Methods/ Statistical Methods,

DISTRIBUTION OF HUMAN DEVELOPMENT, CHILD LABOR AND POVERTY IN INDIA

This paper contributes to the growing debate on regional economic inequality and polarization in India. The specific objectives of this paper are to: (1) analyze regional development disparities amongst various states in India to determine if they are on a convergent course; (2) analyze the evolution of regional inequalities amongst states with respect to a number of socioeconomic indicators and factors that have been suggested to affect the incidence of child labor; (3) investigate and test empirically whether polarization is taking place in Indian states; and (4) investigate whether regional indices of human development and child labor incidence follow similar patterns. Using a consistent data series and applying a number of recently developed measures, trends over the decades of 1961-1991 are documented. The results show that there is little evidence to suggest that any convergence of either the Ò or ã type is taking place amongst the states in India and while there has been no significant decrease in regional inequalities relating to human development, inequalities relating to child labor incidence have increased.Labor and Human Capital,

Bayesian Bootstrap Analysis of Systems of Equations

Research Methods/ Statistical Methods,

Inferring the Latent Incidence of Inefficiency from DEA Estimates and Bayesian Priors

Data envelopment analysis (DEA) is among the most popular empirical tools for measuring cost and productive efficiency. Because DEA is a linear programming technique, establishing formal statistical properties for outcomes is difficult. We show that the incidence of inefficiency within a population of Decision Making Units (DMUs) is a latent variable, with DEA outcomes providing only noisy sample-based categorizations of inefficiency. We then use a Bayesian approach to infer an appropriate posterior distribution for the incidence of inefficient DMUs based on a random sample of DEA outcomes and a prior distribution on the incidence of inefficiency. The methodology applies to both finite and infinite populations, and to sampling DMUs with and without replacement, and accounts for the noise in the DEA characterization of inefficiency within a coherent Bayesian approach to the problem. The result is an appropriately up-scaled, noise-adjusted inference regarding the incidence of inefficiency in a population of DMUs.Data Envelopment Analysis, latent inefficiency, Bayesian inference,Beta priors, posterior incidence of inefficiency

TRUNCATED REGRESSION IN EMPIRICAL ESTIMATION

In this paper we illustrate the use of alternative truncated regression estimators for the general linear model. These include variations of maximum likelihood, Bayesian, and maximum entropy estimators in which the error distributions are doubly truncated. To evaluate the performance of the estimators (e.g., efficiency) for a range of sample sizes, Monte Carlo sampling experiments are performed. We then apply each estimator to a factor demand equation for wheat-by-class.doubly truncated samples, Bayesian regression, maximum entropy, wheat-by-class, Research Methods/ Statistical Methods,

SIMULTANEOUS EQUATIONS BAYESIAN BOOTSTRAP

This paper introduces a semi-parametric bootstrapping approach to Bayesian analysis of structural parameters in simultaneous equation systems that extends the single and multivariate regression approaches of Heckelei and Mittelhammer (1996, 2002) to models with endogenous regressors. Monte Carlo evidence demonstrated the considerable accuracy of the procedure in approximating posterior distributions, even for small sample sizes.Research Methods/ Statistical Methods,

MARKET SEGMENTATION WITHIN CONTINGENT VALUATION

A finite probability mixture model is combined with a contingent valuation model to analyze the existence of differential market segments in a hypothetical market. The approach has at least two principle benefits. First, the model is capable of identifying market segments within the hypothetical market. Second, the model can be used to estimate WTP/WTA within each segment. The model is illustrated using a data set collected on consumer response to genetically modified foods in Norway.Agribusiness,

INFORMATION THEORETIC ALTERNATIVES TO TRADITIONAL SIMULTANEOUS EQUATIONS ESTIMATORS IN THE PRESENCE OF HETEROSKEDASTICITY

Finite sampling properties of information theoretic estimators of the simultaneous equations model, including maximum empirical likelihood, maximum empirical exponential likelihood, and maximum log Euclidean likelihood, are examined in the presence of selected forms of heteroskedasticity. Extensive Monte Carlo experiments are used to compare finite sample performance of Wald, Likelihood ratio, and Lagrangian multiplier tests constructed from information theoretic estimators to those from traditional generalized method of moments.Research Methods/ Statistical Methods,

AN IMPERFECTLY COMPETITIVE MARKET MODEL OF THE U.S. LETTUCE INDUSTRY

An econometric model was specified to represent the U.S. lettuce industry. Cursory examination of the industry structure suggests that imperfect competition may prevail in the lettuce market. Therefore, relations were specified that allowed for the possibility of imperfectly competitive behavior to affect market equilibrium outcomes. Specifically, a supply price equation was specified to account for the influence of market power of large growers, particularly during seasons of geographically concentrated production. Results do not contradict the hypothesis that imperfect competition exists in the lettuce market.Industrial Organization,