200 research outputs found

    Poverty at Higher Frequency

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    Poverty is typically measured as insufficient yearly income or consumption. In practice, however, poverty is marked by seasonality, economic instability, and illiquidity across months. To capture within-year variability, we extend traditional poverty measures to include a temporal dimension. Using panel data from rural India, we show how conventional poverty measures can distort understandings of poverty: exposure to poverty is wider and more common than typically measured, and poverty entry and exit are not sharp transitions. Accounting for within-year variability improves predictions of anthropometrics, and targeting transfers to challenging periods can reduce poverty most effectively by compensating for imperfect consumption smoothing

    Poverty and Migration in the Digital Age: Experimental Evidence on Mobile Banking in Bangladesh

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    10.1257/app.20190067American Economic Journal: Applied Economics13138-7

    POVERTY AND THE POPULATION PROBLEM:EVIDENCE FROM BANGLADESH

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    Rapid population growth is often cited as an important correlate of high poverty rates in lowincome countries. As a result, much thought and many resources have been put into designing policies which address both poverty and the "population problem". We investigate the conceptual and empirical bases for these views and policy responses, drawing on a recent household-level survey from Bangladesh, one of the poorest and most densely populated countries in the world. We find that allowing for even modest returns to scale in household consumption reverses the oft-cited positive association between low income and large household size. Thus, adding children to a household in our sample is likely to be much less costly than often thought, and the deleterious consequences for poverty may be considerably overstated. The most pressing issues instead appear at the level of communities and of individuals within households. At the level of communities, available evidence suggests that pollution, congestion, and environmental degradation form a coherent basis for relating population growth to poverty; however, specific evidence for these forces remains scant. At the level of individuals, there is considerable evidence that poverty is associated with the relatively poor treatment of women and girls in Bangladesh, and this is exacerbated by high population growth. First, levels of maternal mortality are high, so the risk of death during childbirth is non-trivial. On average, between 2 and 3 women out of every 100 will die in the process of childbirth. Second, son-preference in fertility patterns is pronounced; roughly 60% .of youngest children are boys versus 50% for other children. This suggests that in many families, fertility rates are being pushed upward by son-preference. Third, rates of excess female mortality are high (as many as 8% of women are "missing"), and the rates appear to be positively associated with high overall fertility rates. Thus, high fertility is both a product and a source of gender inequality. The evidence suggests that we should shift the focus in the poverty and population growth debate to consider impacts on individuals within households

    Decentralization, Externalities, and Efficiency

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    In the competitive model, externalities lead to inefficiencies, and inefficiencies increase with the size of externalities. However, as argued by Coase, these problems may be mitigated in a decentralized system through voluntary coordination. We show how coordination is limited by the combination of two factors: respect for individual autonomy and the existence of private information. Together they imply that efficient outcomes can only be achieved through coordination when external effects are relatively large. Moreover, unlike many previous mechanism design models of bargaining, there are instances in which coordination cannot yield any improvement at all, despite common knowledge that social gains from agreement exist. This occurs when external effects are relatively small, and this may help to explain why coordination is so seldom observed in practice. When improvements are possible, we describe how simple taxes or subsidies can be used to implement second-best solutions and explain why standard solutions, such as Pigouvian taxes, cannot be used. Possible extensions to issues arising in the structure of research joint ventures, assumptions in the endogenous growth literature, and the location of environmental hazards are also described

    Earning to Give: Occupational Choice for Effective Altruists

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    Effective altruists wish to do good while optimizing the social performance they deliver. We apply this principle to the labor market. We determine the optimal occupational choice of a socially motivated worker who has two mutually exclusive options: a job with a for-profit firm and a lower-paid job with a nonprofit. We construct a model in which a worker motivated only by pure altruism will work at a relatively high wage for the for-profit firm and then make charitable contributions to the nonprofit; this represents the “earning to give” option. By contrast, the occupational choice of a worker sensitive to warm glow (“impure altruism”) depends on her income level. While the presence of “warm glow” feelings would seem to clearly benefit charitable organizations, we show that impure altruism can create distortions in labor market choices. In some cases, warm glow feelings may push the worker to take a job with the nonprofit,even when it is not optimal for the nonprofit.info:eu-repo/semantics/publishe

    Able but Unwilling to Enforce: Cooperative Dilemmas in Group Lending

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    Microfinance Games

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    Microfinance has been heralded as an effective way to address imperfections in credit markets. From a theoretical perspective, however, the success of microfinance contracts has puzzling elements. In particular, the group-based mechanisms often employed are vulnerable to free-riding and collusion, although they can also reduce moral hazard and improve selection. We created an experimental economics laboratory in a large urban market in Lima, Peru and over seven months conducted eleven different games that allow us to unpack microfinance mechanisms in a systematic way. We find that risk-taking broadly conforms to predicted patterns, but that behavior is safer than optimal. The results help to explain why pioneering microfinance institutions have been moving away from group-based contracts

    STRENGTHENING PUBLIC SAFETY NETS: CAN THE INFORMAL SECTOR SHOW THE WAY?

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    The worsening degradation of natural resources urgently requires the adoption of more sustainable management practices. This need has led to growing interest and investment in monitoring systems for tracking the condition of natural resources. Although grounded in concepts of sustainability, the application of monitoring systems has progressed little beyond the identification and measurement of large numbers of potentially interesting indicators. Most monitoring activities are also passive and do not lead to the changes needed to rectify the problems they identify. Too often monitoring becomes an end in itself and an expensive claim on public funds. This study is concerned with the design of monitoring systems that have direct relevance for the management of natural resources. We call these Policy Relevant Monitoring Systems (PRMS). Such systems have several key characteristics. They provide: a) a decision framework for selecting resource problems to monitor that offer potentially large social payoffs relative to the costs of monitoring, b) timely, including early warning information on emerging problems, c) a means of identifying the causes of an emerging problem, d) an analytical framework for identifying options for corrective action, e) an institutional framework for achieving ownership among key stakeholders (the resource users and those affected by the resource use) and agreement about emerging problems, the corrective actions to take, and effective implementation, and f) a built-in mechanism for learning from past experience to improve the performance of the monitoring system over time. The design and implementation of a PRMS is complicated in reality by the presence of multiple resource users with often conflicting interests, and by the presence of environmental externalities. The approach is developed and illustrated through detailed examination of the Arenal-Tempisque watershed in Costa Rica. This watershed exhibits classic multiple user and externality problems: deforestation by dairy and cattle farmers in the upper watershed leads to soil erosion and siltation of the various reservoirs that feed an important hydro-electric power generation system, and agro-chemical use by irrigated farmers has adverse impacts on a highly valued wetlands park and on wildlife and fishing in the lower reaches of the watershed
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