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Fixing financial markets when other key markets are broken, too: Guest post by Alex Cohen

This is the eleventh in our series of posts by students on the job market this year
Researchers, policymakers and aid organizations have devoted lots of attention to improving access to credit and, increasingly, insurance for small firms and farms in developing countries. Yet some recent papers find puzzlingly weak effects of insurance and credit on growth and profits (Cole et al. 2014, Banerjee et al. forthcoming).
 One potential explanation may be that in developing countries, it’s not just financial markets that have imperfections, but that other key markets, such as markets for labor and land, have problems, too. In particular, high costs of supervising or finding trustworthy employees may make it expensive to add labor (Eswaran and Kotwal 1986, Fafchamps 2003, Foster and Rosenzweig 2011). For farms specifically, missing land markets may further constrain expansion (Goldstein and Udry 2008, Adamopoulos and Restuccia 2014).

Weekly links December 5: how to do research, corruption at borders, work for me, and more…

David McKenzie's picture
  • From the Chronicle of Higher Education - How sociologists made themselves irrelevant -  “sociologists have become distant spectators rather than shapers of policy. In the effort to keep ourselves academically pure, we’ve also become largely irrelevant in molding the most important social enterprises of our era”. Also it ends with two smell tests that are relevant to development economists too “If you end up with findings that have policy implications that you would never dream of advocating for yourself or your loved ones, be wary of them.”

How to overcome the (almost insurmountable) task of tracking poverty trends without good consumption data?

Hai-Anh H. Dang's picture
Just imagine a scenario where your counterpart—the Minister of Economic Development in country X—is soon to present to his Congress the latest poverty trends. This is for a hearing on the country’s next 5-year (or 10-year) economic development plan. As a development practitioner, you are tasked with supporting him or her with the technical analysis, despite the notorious challenge that the most recent round of household survey data is not comparable to earlier rounds due to various changes in survey design.

Does higher pay attract better applicants? Evidence from a Ugandan NGO: Guest post by Erika Deserranno

This is the tenth in our series of posts by students on the job market this year

Personnel recruitment is a key challenge for all organizations and we know that financial incentives play an important role in determining who applies for a job (Dal Bó et al. 2013, Ashraf et al. 2014). The theoretical literature indicates that when candidates have imperfect information about a job, financial incentives can convey a signal about broader job attributes (Benabou and Tirole 2003). Paying a person a lot of money to perform a task might signal that the task is hard or unpleasant, or that it has other specific features. If these features are important to workers, then the signal conveyed by financial incentives affects selection.

In my job market paper, I study this “signal” channel of financial incentives in the context of a recruitment campaign for a newly created Community Health Promoter (CHP) position. During the recruitment process of CHPs in rural villages of Uganda, I collaborate with the NGO BRAC to create experimental variation in expected earnings for the position. I use this to estimate the effect of financial incentives on: (1) the candidates’ perception of the job, (2) the size and composition of the applicant pool, and (3) the performance of the organization.

Ending Stigma: Lessons from the AIDS Epidemic -- Guest post by Laura Derksen

This is number 9 in our series of posts by students on the job market this year.

As HIV continues to spread in sub-Saharan Africa, so does stigma. Many go to great lengths to hide their HIV status, get tested at clinics far from home to avoid being seen, and put off medical care until it's much too late. This has devastating effects. While life-saving medication is now provided for free in most parts of Southern Africa, there are still over one million AIDS deaths every year. Reluctance to seek treatment also has a negative externality. Antiretroviral drugs slow the spread of HIV dramatically, but a “treatment for prevention” strategy won’t work if people don’t seek treatment.

What causes stigma? What can we do about it?

Invisible sample selection: Why you should care about those who leave when you are interested in those left behind: Guest post by Andreas Steinmayr

This is the eighth in our series of posts by students on the job market this year.
A key problem in the literature on the economics of migration is how emigration of an individual affects the welfare of households left behind (see Antman (2013) for a literature overview). The literature has worried a lot about the possibility that households that select into migration are different from those that don’t. A whole range of different IV approaches, along with a few migration lottery experiments have tried to address this form of selection.  However, the literature has worried less about (and been less successful dealing with) a second form of selection, namely that some households do not leave any member behind. I call this invisible sample selection since these all-move households are not observed at all in the standard household surveys in origin countries used in most studies (and also not in many other datasets). But failing to account for this problem leads to biased estimates, as explained below and shown in this graphical illustration.

Weekly links: recording surveys, institutions and growth, business experimentation, and more…

David McKenzie's picture

The Hidden Local Costs of Deforestation in the Tropics. Guest post by Teevrat Garg

This is the seventh post in our series of blogs by graduate students on the job market this year.

The debate over deforestation has traditionally weighed the tradeoffs between local economic benefits and the broader ecological footprint measured in carbon emissions (Alix-Garcia et al., 2013; Foster & Rosenzweig, 2003). Consequently, this framing has led to the creation of several multi-billion dollar programs under the umbrella of the United Nations known as REDD+ or Reduced Emissions from Deforestation and Degradation. The idea is simple: in exchange for forgoing the economic benefits of logging and forest land clearing, countries that preserve forests (particularly poorer countries) receive payments from richer countries that benefit from the reduced carbon emissions associated with deforestation.

The underlying principle is that effects of deforestation related emissions are global in nature.

To the contrary, my research finds that the effects of deforestation are substantially larger at the local level due to health externalities (particularly from increased malarial incidence).  I find that local health costs of deforestation in Indonesia are an order of magnitude higher than the global carbon externalities. Thus local institutions, as opposed to external governments, may have the strongest incentives for forest preservation. Furthermore, given the productivity, morbidity, mortality and fertility costs associated with malaria (Lucas 2013, Lucas 2010), there may be a double dividend from environmental conservation currently being ignored in policy formulation.

Early Childhood Development Programs – Beyond nutrition and cognitive outcomes. Guest Post by Diana Lopez-Avila.

This is the sixth post in our series of blogs by graduate students on the job market this year.

Interventions during early childhood have begun to gain importance in the social policy agenda in developing countries. These interventions have been mostly designed to address health, nutritional and cognitive deficiencies; and have shown to positively impact children’s development and nutritional outcomes, as well as socio-emotional abilities (Schady, 2006). Less evidence exists on the impact on discipline practices and spousal violence, factors that also affect children’s development. Experiencing or witnessing violence as a child appears to have important effects latter in life (UNICEF, 2014). Children who experience violence are more likely to drop out of school, to engage in adult criminal behavior and to become maltreating parents, among others. Studies have pointed out that physical violence against children is common throughout the world, and violence at home is the most common form of violence against children (Pinhero, 2006). For the particular case of Colombia, the three most common ways parents use to discipline children are verbal reprimand (76%), hitting with objects (44%) and slaps (28%) according to the Demographic Health Survey (DHS, 2005). Despite these figures, parenting practices remains a topic that has not received a lot of attention from researchers in developing countries.

Friday links November 21

Berk Ozler's picture