1,721,023 research outputs found
Agricultural Productivity, Hired Labor, Wages, and Poverty: Evidence from Bangladesh
Full text linkThe rice yield and real agricultural wage in Bangladesh increased by 3.8 percent and 2.1 percent per annum respectively from 2000 to 2010. Over the same period, the share of hired labor in agriculture decreased from 19.4 percent to 15.5 percent. A focus of this paper is to understand if the observed changes in wages and hired labor are in part due to agricultural productivity growth as reflected in increasing rice yield. To estimate the effects of agricultural productivity, we take advantage of an Upazila (subdistrict) level panel data set from Bangladesh and exploit variations in rainfall across Upazilas and over time. We find that a positive rainfall shock has a significant positive effect on crop yields, wages, per capita household expenditure and labor supplied to market activities (including own farming). The effect on hired labor is, in contrast, negative and statistically significant. In a standard neoclassical model, higher agricultural productivity affects wages and hired labor through labor demand; a rightward (leftward) shift increases (reduces) both wages and the amount of hired labor. The finding of a negative hired labor response to agricultural productivity growth with a higher wage thus appears puzzling. We develop a model where heterogeneity in labor supply response due to differences in productivity in home goods production can lead to a decline in hired labor when agricultural productivity increases, even though the equilibrium wage increases. Since the poor in rural areas depend disproportionately on wage labor, a decline in hired labor may be interpreted by some as evidence of adverse effects on poverty and inequality. The theoretical analysis, however, shows that the poor benefit from agricultural productivity growth even when the labor supply responses result in a decline in hired labor
Review of International Economics
No full textOwing to the unavailability of time-series data on the domestic market-clearing price of imports, the estimation of notional price and income elasticities of aggregate import demand remains a daunting task for a large number of developing countries. This paper develops a structural econometric model of a two-goods representative agent economy that incorporates a binding foreign exchange constraint at the administered prices of imports. A theoretically consistent parameterization of the "virtual relative price" of imports circumvents the data problem, and thus enables the estimation of income and price responses by cointegration approach. The price and income elasticity estimates for India and Sri Lanka, in contrast to the extant literature, have correct signs, high statistical significance, and plausible magnitudes
Gender, Geography and Generations: Intergenerational Educational Mobility in Post-reform India
Full text linkIndia experienced sustained economic growth for more than two decades following the economic liberalization in 1991. While economic growth reduced poverty significantly, it was associated with an increase in inequality. Does this increase in inequality reflect deep-seated inequality of opportunity or efficient incentive structure in a market oriented economy? This paper provides evidence on economic mobility in post-reform India by focusing on the educational attainment of children. It uses two related measures of immobility: sibling and intergenerational correlations. The paper analyzes the trends in and patterns of educational mobility from 1992/93 to 2006, with a special emphasis on the roles played by gender and geography. The evidence shows that family background plays a strong role; the estimated sibling correlation in India in 2006 is higher than the available estimates for Latin American countries. There is a persistent gender gap in rural and less-developed areas. The only group that experienced substantial improvements is women in urban and developed areas, with the lower caste women benefiting the most. Almost 70 percent of the variance in children's education can be accounted for by parental education and geographic location. The authors provide possible explanations for the apparently puzzling improvements for urban women in a country with strong son preference
Microfinance, Moneylenders, and Economic Shocks: An Assessment of the Bangladesh Experience
Full text linkThe effectiveness of microfinance in improving the economic lives of the poor has been under extensive scrutiny in last two decades. Most of the studies on Bangladesh focus on the poverty and women’s empowerment impacts of microfinance. We provide a discussion on two relatively neglected aspects: the impacts on moneylenders, and the coping ability of households facing adverse shocks. The available evidence suggests that the microfinance in Bangladesh helped free many households from the “clutches” of moneylenders, contradicting the claim of some critics that microfinance exacerbates their dependence on moneylenders. The likelihood that a household takes loans from moneylenders declines by about 70 percent once it becomes a member of a microfinance program. However, the evidence also suggests that the moneylender interest rate goes up when the MFI coverage is high enough in a village, implying that the remaining clients of moneylenders suffer a negative pecuniary externality. The evidence on coping ability suggests that microfinance membership improves food security during flood and Monga. But microfinance membership does not reduce the propensity to sell labor in advance in the lean season and may not help a household undertake short-term migration to urban labor market in response to a shock
Loss Aversion, Transaction Costs, or Audit Trigger? Learning about Corporate Tax Compliance from a Policy Experiment with Withholding Regime
Full text linkWe analyze firm's tax choices facing a withholding and enforcement regime with a focus on three salient mechanisms of bunching: (i) transaction costs, (ii) withholding threshold as a reference point for taxpayer that creates a kink due to loss aversion, and (iii) withholding threshold as a reference point for audit (audit trigger model). The transaction costs model predicts that none of the firms that bunch at the withholding threshold would declare higher taxes when withholding rate is increased, as was the case in Ecuador in 2007. Evidence from a triple-difference research design shows the opposite. A prospect theoretic model with the power value function of Kahneman and Tversky (1979) does not generate bunching at the withholding threshold. While linear prospect theory (LPT) can generate bunching under certain conditions, it also yields testable predictions that are not consistent with the behavior of a significant proportion of firms. Under the LPT, given an enforcement and withholding regime, if a firm bunches in one year it should also bunch in all the following years, or if it unbunches in a following year, it should declare taxes less than the withheld amount. The evidence from panel data on the universe of all corporations in Ecuador shows very low persistence in bunching: conditional on bunching at least once, only 3-4 percent firms bunch every year before changes in the withholding rate, and among the firms that unbunch 35-40 percent declare taxes more than the withheld amount, thus contradicting the LPT model for a substantial proportion of the firms. Using the Sasabuchi t test as developed by Lind and Mehlum (2010), we find that the relation between probability of bunching and assets of a firm is inverted-U which is consistent with the audit trigger model. The evidence suggests that the behavior of the firms cannot be captured by a single model. The strength of enforcement is important in determining bunching in an LPT model which suggests cross-country differences in the role played by loss aversion in bunching of taxpayers at policy thresholds
Marketing Externalities and Market Development
Full text linkThe authors use survey data from
Bangladesh to present empirical evidence on externalities at
household level sales decisions resulting from increasing
returns to marketing. The increasing returns that arise from
thick market effects and fixed costs imply that a trader is
able to offer higher prices to producers if the marketed
surplus is higher in villages. The semi-parametric estimates
identify highly nonlinear own and cross commodity
externality effects in the sale of farm households. The
vegetable markets in villages with low marketable surplus
seem to be trapped in segmented local market equilibrium.
The analysis points to the coordination failure in farm sale
decisions as a plausible explanation for the lack of
development of rural markets even after market
liberalization policies are implemented
The Extent of the Market and Stages of Agricultural Specialization
No full textThis paper provides empirical evidence
of nonlinearity in the relationship between crop
specialization in a village economy and the extent of the
market (size of the urban market) relevant for the village.
The results suggest that the portfolio of crops in a village
economy becomes more diversified initially as the extent of
the market increases. However, after the market size reaches
a threshold, the production structure becomes specialized
again. This evidence on the stages of agricultural
diversification is consistent with the stages of
diversification identified in the recent literature for the
economy as a whole and also for the manufacturing sector.
The evidence highlights the importance of improving
farmers' access to markets through investment in
transport infrastructure and removal of barriers to trading
Replication Data and Code for: The extent of the market and stages of agricultural specialization
No full textThe data and programs replicate tables and figures from "The extent of the market and stages of agricultural specialization", by Emran and Shilpi. Please see the ReadMe file for additional details
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