147 research outputs found
Farm Input Use in a Context of Liquidity Constraints and Contract Unenforceability
No full textThe African cash crop sector has witnessed widespread liberalisation reforms aimed at strengthening price incentives to farmers. However, some areas are confronted with a decline in input use. We have recourse to a two-stage Cournot game to account for the issue. In a context of credit rationing and imperfect contract enforceability, competition has the effect of tightening the input availability constraint while increasing the shadow value of credit. First, contrary to expectations, the impact of an extension of access to farm credit on aggregate input use, efficiency and peasants' income is shown to be ambiguous. Intuitively, relaxing the liquidity constraint entails a higher price elasticity of supply that results in a reduction of traders' profit margin. As a consequence, traders' incentives to contribute to input availability are weakened. The effects of subsidising inputs are also analysed. Second, normative insights are drawn regarding second best combinations of imperfect credit and output markets. Finally, the issue and consequences of contract unenforceability are discussed. Copyright 2009 The author 2008. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: [email protected], Oxford University Press.
The impact of liquidity constraints and imperfect commitment on migration decisions of offspring of rural households
No full textThis paper presents a non-cooperative model of intra-household decision-making regarding investment in migration. It is shown that the combination of liquidity constraints and imperfect commitment are a source of underinvestment in migration. More precisely, we highlight that, if remittances are unenforceable as a repayment for the parent’s contribution in migration transaction costs, then both the migrant and the parent’s liquidity constraints, rather than the household’s liquidity constraint as a whole, matter in determining the investment decision. Besides, the insurance motive for remittances is shown to generate divergence of interest over the characteristics of migration. This result calls for a theoretical approach that properly takes account of potential internalization problems, which the paper intends to offer. Plausibility checks of the model are provided by comparative statics whose outcomes are consistent with previous research on migration and remittances
The impact of liquidity constraints and imperfect commitment on migration decisions of offspring of rural households
No full textThis paper presents a non-cooperative model of intra-household decision-making regarding investment
in migration. It is shown that the combination of liquidity constraints and imperfect commitment are a
source of underinvestment in migration. More precisely, we highlight that, if remittances are unenforceable
as a repayment for parents contribution in migration transaction costs, then both migrant and parents
liquidity constraints, rather than households liquidity constraint as a whole, matter in determining the
investment decision. Besides, the insurance motive for remittances is shown to generate divergence of
interest over the characteristics of migration. This result calls for a theoretical approach that properly
takes account of potential internalization problems, which the paper intends to o¤er. Plausibility checks
of the model are provided by comparative statics whose outcomes are consistent with previous research
on migration and remittances
Les effets de la privatisation dans le secteur agricole: le cas de l'arachide au Sénégal
No full textA non-cooperative approach to rural development issues
No full textIn developing countries, a large fraction of the population draws its daily livelihood from small scale farming. Even in a context of poverty, the increasing pressure on agricultural resources should be a source of opportunities for farmers. However, rural households are often faced with institutional constraints that impede their ability to react to stronger economic incentives. More precisely, this work aims at highlighting the combined impact of missing markets, namely credit and insurance, and imperfect contracting on farmers' wellbeing and production decisions. This question is addressed by making use of applied non-cooperative game theory. The sources and consequences of contract unenforceability are first discussed in the specific context of export crop production and marketing. Farmers' lack of liquidity and strategic interaction among agricultural traders are shown to result in an inefficiently low level of input use. A second and central part of this work focuses on households' exposure to risk and the way production decisions and hence growth opportunities are affected by risk. It is argued that institutional substitutes to formal insurance transactions are undermined by imperfect contracting. Moreover, it is shown that poor households are more likely to suffer from a lack of informal protection. As a consequence, they are more reluctant to make risky but profitable production or technological choices and cannot escape poverty traps. On the one hand, we argue that limited commitment may hamper households' diversification strategies. Taking migration as an illustration, we argue that, if undertaking an alternative business is costly and if family members lack credible means of incentive provision, the family diversification level will prove insufficient. On the other hand, we show that, due to imperfect contracting, community risk-sharing mostly benefit to relatively rich households, better endowed in buffer stocks. Finally, vulnerability to health shocks depends on both access to and quality of health care. We therefore provide a study on how these aspects are affected by the health care provider's prescription decisions. The incentive contents of the contractual setting is properly depicted and analysed.Doctorat en sciences agronomiques et ingénierie biologique (AGRO 3)--UCL, 200
Remittances, savings and return migration under uncertainty
No full textRecent empirical evidence links migrant remittances, savings and return migration, and stresses the inaccuracy of return migration plans. This paper presents a model of endogenous remittances, savings and return decisions under uncertainty. In our framework, migrants make remittance and saving decisions at an early stage of migration, when their long term economic performance in the host country is still uncertain. Over time, information about professional prospects is acquired, and conditionally on past decisions, migrants adjust their return plans. We show that when migrants expect large gains from migration and face relatively low wage risks in the host country, they tend to remit less, save more and are less likely to return migrate. These results are in line with recent empirical evidence and provide a rationale for the support by relatives in the sending country of low-skill, illegal migration
Student and worker mobility under university and government competition
No full textWe provide a normative analysis of endogenous student and worker mobility in the presence of diverging interests between universities and governments. Student mobility generates a university competition effect which induces them to overinvest in education, whereas worker mobility generates a free-rider effect for governments, who are not willing to subsidize the education of agents who will work abroad. At equilibrium, the free-rider effect always dominates the competition effect, resulting in underinvestment in human capital. This inefficiency can be corrected under exogenous university budgets if a transnational transfer for mobile students is implemented. With endogenous income taxation, under the non-cooperative equilibrium between governments, the combination of the free-rider effect and fiscal competition leads to underinvestment in both teaching and research. Furthermore, the transnational transfer no longer restores efficiency. Instead, it can reinforce fiscal competition and imposes a tradeoff between research and human capital
Student and worker mobility under university and government competition
No full textWe provide a normative analysis of endogenous student and worker mobility in the presence of diverging interests between universities and governments. Student mobility generates a university competition effect which induces them to overinvest in education, whereas worker mobility generates a free-rider effect for governments, who are not willing to subsidize the education of agents who will work abroad. At equilibrium, the free-rider effect always dominates the competition effect, resulting in underinvestment in human capital and overinvestment in research. This inefficiency can be corrected if a transnational transfer for mobile students is implemented. With endogenous income taxation, we show that the strength of fiscal competition increases with human capital production. Consequently, supranational policies aimed at promoting teaching quality reduce tax revenues at the expense of research
Student and Worker Mobility under University and Government Competition
No full textWe provide a normative analysis of endogenous student and worker mobility in the presence of diverging interests between universities and governments. Student mobility generates a university competition effect which induces them to overinvest in education, whereas worker mobility generates a free-rider effect for governments, who are not willing to subsidize the education of agents who will work abroad. At equilibrium, the free-rider effect always dominates the competition effect, resulting in underinvestment in human capital and overinvestment in research. This inefficiency can be corrected if a transnational transfer for mobile students is implemented. With endogenous income taxation, we show that the strength of fiscal competition increases with human capital production. Consequently, supranational policies aimed at promoting teaching quality reduce tax revenues at the expense of research.student mobility, worker mobility, university competition, government competition
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