High discount rates : an artifact caused by poorly framed experiments or a result of people being poor and vulnerable?

This study revisits the issue whether poverty and shocks are associated with high discount rates by using an incentive compatible Multiple Price List approach in a poor rural population in Africa where a substantial share of the population had been affected by drought in the recent rainy season. Randomized treatments included tests for present bias, magnitude effects and time horizon effects. While the study revealed significant present bias, magnitude and time horizon effects, exposure to drought increased the average rates of time preference by 24-26% and present bias increased discount rates by 9-12% compared to one week delay.CIMMY

Can area measurement error explain the inverse farm size productivity relationship?

The existence of an inverse relationship (IR) between farm size and productivity in tropical agriculture remains a debated issue with policy relevance. Poor agricultural statistical data, including data on farm sizes and farm plot sizes that typically are self-reported by farmers, can lead to biased results and wrong policy conclusions. This study combines self-reported and GPSmeasured farm plot and farm sizes to assess how measurement error affects the IR using three rounds of farm plot and household data from Malawi. The results show that measurement error covers up more than 60% of the IR for the total sample but leads to an upward bias in the IR on farms less than one ha. Land and labor market imperfections in combination with food selfsufficiency motives appear to explain most of the IR and lead to a strong IR on farms below one ha

Street based self-employment : a poverty trap or a stepping stone for migrant youth in Africa?

A significant percentage of youth in urban Africa is employed in the informal sector. The informal sector is more accessible than the formal sector for people with low human and financial capital, such as youth migrants from rural areas. But the sector is also generally considered to provide a subsistence livelihood. This study examines whether street based selfemployment in Africa offer a stepping stone towards a better livelihood or an urban poverty trap for youth migrants. The analysis is based on data from a survey of 445 street vendors in two urban areas in Ethiopia. We found that street based self-employment is indeed dominated by migrant youth; 96% of those engaged in the street based self-employment are youth and 98% are migrants from rural areas or smaller towns. Our analysis suggests that street based selfemployment can offer a viable transitional employment for migrant youth. We found that the average monthly earning of these self-employed youth is better than the minimum wage in the public sector and much higher than the official poverty line. We found that most of the youth consider this as a transitional employment and accumulate skill and capital with a view to establishing their own enterprise or accessing skilled employment. Young women are less likely than young men to seek exit out of street based self-employment but education increases their aspiration. Youth with better-off parents back home and those with larger network in their new residence are more likely to change their current occupation. The main risk for the livelihood of youth in this type of employment is lack of legal recognition to their activities and work place, which manifest itself in the form of arbitrary eviction and displacement from their work place

Land access and youth livelihood opportunities in Southern Ethiopia

Ethiopia. Access to agricultural land is a constitutional right for rural residents of Ethiopia. We used survey data from the relatively land abundant districts of Oromia Region and from the land scarce districts of Southern Nations, Nationalities and Peoples’ (SNNP) Region. We found that youth in the rural south have limited potential to obtain agricultural land that can be a basis for viable livelihood. The law prohibits the purchase and sale of land in Ethiopia. We found that land access through allocation from authorities is virtually nonexistent while land that can be obtained from parents through inheritance or gift is too small to establish a meaningful livelihood. The land rental market has restrictions, including on the number of years land can be rented out. Perhaps as a result of limited land access, the youth have turned their back on agriculture. Our study shows that only nine percent of youth in these rural areas plan to pursue farming. The majority are planning non-agricultural livelihoods. We also found a significant rural-urban migration among the youth and especially in areas with severe agricultural land scarcity. Our econometric analyses show that youth from families with larger land holding are less likely to choose non-agricultural livelihood as well as less likely to migrate to urban areas. We suggest here some measures to improve rural livelihood such as creation of non-farm employment opportunities and improvement of land rental markets. We also argue that as a certain level of rural-urban migration is unavoidable, investigating youth migration is essential to design policies that help the migrating youth as well as the host communities.UNHABITA

Mobile phones, leadership and gender in rural business groups

Digital information and communication technologies are recognized as vital tools for empowering marginalized groups such as women in low income developing countries through reducing the costs of communication and connectivity. This study aimed at assessing the gender difference in mobile phone ownership among youth business group members, and how it affects election into leadership and group board positions in rural youth business groups in northern Ethiopia. We used instrumental variable methods on survey data on 1125 youths in 119 youth business groups where 32% of the members were female. Our results indicated that 37% of the females and 70% of the males owned mobile phones. Male members were twice as likely to become board members and five times as likely to become group leaders. Mobile phones had become instrumental for male members to become group leaders and board members while this was not the case for female members. Male members without mobile phone were not significantly more likely to become board members or group leaders than female members without and with mobile phones. The gender digital divide is thus a question of both ownership and the use of mobile phones for business and for getting positions that can empower women in business. Further research should investigate whether provision of mobile phones and training of female business members in use of mobile phones for business can lead to female empowerment and thereby eliminate or reduce the observed digital gender discrimination.publishedVersio

Endowment effects in the risky investment game?

The risky investment game of Gneezy and Potters (Q J Econ 112(2):631–645, 1997) has been proposed as a simple tool to measure risk aversion in applied settings, especially attractive in settings where participants may have limited education. However, this game can produce a significant endowment effect (attached to the initial position), so that analysis of the behavior in this game should not be done in the Expected Utility Theory (EUT) framework. The paper illustrates this point, by showing that risk tolerance can be much higher when the initial endowment concerns a risky lottery.publishedVersio

Disability types and children’s schooling in Africa

The Sustainable Development Goals (SDGs) set up by the United Nations include an overarching principle of “leaving no one behind” and aim for, among other goals, equal access to education for children with disabilities. Our study contributes to the knowledge on the school enrolment of disabled children with different disability types, with a focus here on eight countries in Sub-Saharan Africa. Comparing the situation with children without disabilities as a benchmark, we assess early school enrolment for young children below ten years old, school enrolment for older children aged 10–17 years old, and the dropout rates of children from school. We perform our analysis as a natural experiment where different types of disabilities are considered as random treatments, which allows us to assume that the average deviation in certain school performance indicators from the average for non-disabled children is a result of the disability type, specifically vision, hearing, walking, intellectual capacity, and multi-disability. Our study finds that, compared with non-disabled children, children with vision and hearing disabilities do not lag behind in school enrolment. In contrast, children with walking disability have a higher risk of starting school late. Children with intellectual disabilities are less likely to enrol in school, less likely to remain enrolled, and more likely to drop out than their counterfactual peers. Children with multiple disabilities tend to experience the most severe challenges in enrolling at school, both at a young age and later. However, once enrolled in school, children with multiple disabilities are not more likely to drop out earlier than other children. Based on the first and probably the only large-scale application to date of the standard Washington Group Child function module as a disability measurement tool, our study is the first comprehensive multi-country study of disabled children’s schooling in Sub-Saharan Africa based on recent nationally representative data

Can adoption of improved maize varieties help smallholder farmers adapt to drought? : evidence from Malawi

This study used a three-year panel dataset for 350 Malawian farm households to examine the potential for widespread adoption of drought tolerant (DT) maize varieties, a technology that holds considerable promise for helping smallholder farmers in SSA adapt to drought risk. Regression results revealed that DT maize cultivation increased substantially from 2006 to 2012, with the main driver being the Malawi Farm Input Subsidy Program. Some other key factors related to adoption were having recently experienced drought and farmer risk aversion. As far as yield performance, improved maize varieties performed significantly better than local maize during the 2011/12 drought year. However, DT maize did not perform significantly better than other improved maize varieties used in Malawi, which is in contradiction to results from on-station and on-farm trials (e.g., Magorokosho et al. 2010; Setimela et al., 2012). A plausible explanation is that farmers had inadequate training or experience to move towards the yield potentials of the DT maize varieties. Expansion of agricultural extension activities may be required to help farmers achieve the DT maize yield potentials and, subsequently, improve farmer resilience to drought.NORAD ; CIMMY

Are land-poor youth accessing rented land? Evidence from northern Ethiopia

Continued population growth in densely populated parts of Sub-Saharan Africa makes it harder for youth to choose agriculture as main source of income. We investigate whether near landless youth can access rented land as a source of income. We used data collected in 2016 (from 1138 youths in 119 youth business groups) and 2019 (from 2427 youths in 246 business groups), in five districts of Tigray region of Ethiopia. We find that 42% of the youth had access to rented land in 2016 and 47% in 2019. The average area rented land was 0.66 ha in 2016 and 0.74 ha in 2019. Access to rented land, though constrained, accounted close to 70% in 2016 and 61% in 2019 of the average operated land by youth group members. Male youth who own oxen and ploughs are much more likely to rent land whereas female youth group members appeared generally disadvantaged in their access to rented land and other complementary sources of income. Sharecropping dominated as the main from of land rental contract covering 94% of the contracts in 2016 and 90% of the contracts in 2019. Utilizing a trust game to elicit trust and trustworthiness of the youth, we found a positive association between trustworthiness and particularly accessing land from non-relatives. The prohibition of land sales limits the potential of the “agricultural ladder” to facilitate youth climbing out of poverty through purchase of land. Overall, the land rental market has become more important for land access of land-poor youth and is likely to grow in importance to facilitate rural transformation and diversification of rural livelihoods as land scarcity grows and market access improves. Thus, it appears that the land rental market has helped many of these very land-poor youth to establish sustainable land-based livelihoods. While the land rental market does not function perfectly, we recommend not to intervene to change the fundamental characteristics or to impose area restrictions in the market as has been attempted recently in Ethiopia. Such restrictions can easily cause more harm than good.publishedVersio

Endowment effects in the risky investment game?

The risky investment game of Gneezy and Potters (Q J Econ 112(2):631–645, 1997) has been proposed as a simple tool to measure risk aversion in applied settings, especially attractive in settings where participants may have limited education. However, this game can produce a significant endowment effect (attached to the initial position), so that analysis of the behavior in this game should not be done in the Expected Utility Theory (EUT) framework. The paper illustrates this point, by showing that risk tolerance can be much higher when the initial endowment concerns a risky lottery.publishedVersio