The quality of foreign aid : country selectivity or donors incentives?

The author investigates the determinants of foreign aid quality. He shows that design effects are a crucial component of quality. He thus establishes that donors have an impact on the quality of the foreign assistance they provide. The author also shows both theoretically and empirically that the quality of aid is endogenous to the relationship between the donor agency and the recipient government. Highly capable and accountable governments accept only well-designed projects, whereas governments with low accountability may accept poor quality projects either because they are unable to assess the worth of the projects or they will benefit personally.Banks&Banking Reform,Development Economics&Aid Effectiveness,Decentralization,Poverty Monitoring&Analysis,Public Health Promotion,Development Economics&Aid Effectiveness,Banks&Banking Reform,Poverty Monitoring&Analysis,Health Economics&Finance,Health Monitoring&Evaluation

The optimal income tax when poverty is a public"bad"

The author considers poverty as an aggregate negative externality that affects people in different ways, depending on their aversion to poverty. If society is on average averse to poverty, then the optimal income tax schedule displays negative marginal tax rates, at least for less skilled individuals. Negative marginal tax rates play the role of a Pigouvian earnings subsidy, fostering the supply of poor individuals to provide labor. The result of no distortion at the endpoints, which is therefore violated, can be restored once the focus is shifted from individual to social distortions.Environmental Economics&Policies,Economic Theory&Research,Health Economics&Finance,Achieving Shared Growth,Safety Nets and Transfers

Tax evasion, corruption, and the remuneration of heterogeneous inspectors

The author develops a general model for addressing the question of how to compensate tax inspectors in an economy where corruption is pervasive - a model that considers the existence of strategic transmission of information. Most of the literature on corruption assumes that the taxpayer and the tax inspector jointly decide on the income to report, which also determines the size of the bribe. In contrast, this model considers the more realistic case in which the taxpayer unilaterally chooses the income to report. The tax inspector cannot change the report and is faced with a binary choice: either he negotiates the bribe on the basis of the income report or he denounces the tax evader and therefore renounces the bribe. In his model, the optimal compensation scheme must take into account the strategic interaction between taxpayers and tax inspectors: a) Pure"tax farming"(paying tax inspectors a share of their tax collections) is optimal only when all tax inspectors are corruptible. b) When there are both honest and corruptible inspectors, the optimal compensation scheme lies between pure tax farming and a pure wage scheme. c) Paradoxically, when inspectors are hired beforehand, it may be optimal to offer contracts that attract corruptible inspectors but not honest ones.Banks&Banking Reform,Environmental Economics&Policies,Poverty Impact Evaluation,Economic Theory&Research,Business Environment,Environmental Economics&Policies,Business Environment,Economic Theory&Research,Poverty Impact Evaluation,Banks&Banking Reform

Leakage of Public Resources in the Health Sector: An Empirical Investigation of Chad

In the public sector in developing countries, leakage of public resources could prove detrimental to users and affect the well-being of the population. In this paper, we empirically examine the importance of leakage of government resources in the health sector in Chad and its effects on medication mark-up. We make use of data collected in Chad as part of a Health Facilities Survey organized by the World Bank in 2004. The survey covers 281 primary health care centers and hospitals and contains information on the provision of medical material, financial resources and medication allocated by the Ministry of Health (MoH) to the regional administration and primary health centers. While the regional administration is officially allocated 60% of the MoH’s non-wage recurrent expenditures, the share of the resources that actually reach the regions is estimated to be 18%. The health centers, which are the frontline providers and the entry point for the population, receive less than 1% of the MoH’s non-wage recurrent expenditures. Accounting for the endogeneity of the level of competition among health centers, we observe that leakage of government resources has a significant and negative impact on the mark-up health centers charge patients on drugs sales. Furthermore, it is estimated that had public resources earmarked for frontline providers reached them in their entirety, the number of patients seeking primary health care in Chad would have more than doubled.Corruption, public expenditure, primary health care

Populist fiscal policy

Political economy explanations for fiscal profligacy are dominated by models of bargaining among organized interest groups over group-specific targeted benefits financed by generalized taxation. These models predict that governments consisting of a coalition of political parties spend more than single-party regimes. This paper presents an alternative model-that of populist pressure on political parties to spend more on the general public good, financed by costly income taxation-and obtains the opposite prediction. According to this model, public spending and taxes are lower under coalition governments that can win elections more cheaply. Indeed, in order to win elections, coalition partners need to satisfy a smaller share of swing voters than does a single-party government that enjoys narrower support from its core constituency. A coalition government therefore spends less on the public good to capture the share of the swing vote necessary for re-election. Using data from more than 70 countries during the period 1970-2006, the paper provides robust supporting evidence for this alternative model.Parliamentary Government,Public Sector Economics&Finance,Debt Markets,Economic Theory&Research,E-Government

Informal payments and moonlighting in Tajikistan's health sector

This paper studies the relationship between gender and corruption in the health sector. It uses data collected directly from health workers, during a recent public expenditure tracking survey in Tajikistan's health sector. Using informal payments as an indicator of corruption, women seem at first significantly less corrupt than men as consistently suggested by the literature. However, once power conferred by position is controlled for, women appear in fact equally likely to take advantage of corruption opportunities as men. Female-headed facilities also are not less likely to experience informal charging than facilities managed by men. However, women are significantly less aggressive in the amount they extract from patients. The paper provides evidence that workers are more likely to engage in informal charging the farther they fall short of their perceived fair-wage, adding weight to the fair wage-corruption hypothesis. Finally, there is some evidence that health workers who feel that health care should be provided for a fee are more likely to informally charge patients. Contrary to informal charging, moonlighting behavior displays strong gender differences. Women are significantly less likely to work outside the facility on average and across types of health workers.Health Monitoring&Evaluation,Gender and Health,Access to Finance,Health Law,Health Economics&Finance

Leakage of public resources in the health sector : an empirical investigation of Chad

In the public sector in developing countries, leakage of public resources could prove detrimental to users and affect the well-being of the population. This paper empirically examines the importance of leakage of government resources in the health sector in Chad, and its effects on the prices of drugs. The analysis uses data collected inChad as part of a Health Facilities Survey organized by the World Bank in 2004. The survey covered 281 primary health care centers and contained information on the provision of medical material, financial resources, and medicines allocated by the Ministry of Health to the regional administration and primary health centers. Although the regional administration is officially allocated 60 percent of the ministry's non-wage recurrent expenditures, the share of the resources that actually reach the regions is estimated to be only 18 percent. The health centers, which are the frontline providers and the entry point for the population, receive less than 1 percent of the ministry's non-wage recurrent expenditures. Accounting for the endogeneity of the level of competition among health centers, the leakage of government resources has a significant and negative impact on the price mark-up that health centers charge patients for drugs.Health Monitoring&Evaluation,Health Systems Development&Reform,Public Sector Expenditure Analysis&Management,Health Economics&Finance,Population Policies

What do teachers know and do? Does it matter? : evidence from primary schools in Africa

School enrollment has universally increased over the past 25 years in low-income countries. However, enrolling in school does not guarantee that children learn. A large share of children in low-income countries learn little, and they complete their primary education lacking even basic reading, writing, and arithmetic skills—the so-called "learning crisis." This paper uses data from nationally representative surveys from seven Sub-Saharan African countries, representing close to 40 percent of the region's total population, to investigate possible answers to this policy failure by quantifying teacher effort, knowledge, and skills. Averaging across countries, the paper finds that students receive two hours and fifty minutes of teaching per day—or just over half the scheduled time. In addition, large shares of teachers do not master the curricula of the students they are teaching; basic pedagogical knowledge is low; and the use of good teaching practices is rare. Exploiting within-student, within-teacher variation, the analysis finds significant and large positive effects of teacher content and pedagogical knowledge on student achievement. These findings point to an urgent need for improvements in education service delivery in Sub-Saharan Africa. They also provide a lens through which the growing experimental and quasi-experimental literature on education in low-income countries can be interpreted and understood, and point to important gaps in knowledge, with implications for future research and policy design