Economics 220A
Development Economics
Instructor
Professor Jon Robinson
457 Engineering 2
Office hours: Tuesday 11-12,
Wednesday 3:30-4:30, or by appointment
Course Description
(syllabus also available at http://people.ucsc.edu/~jmrtwo/teaching)
This course will cover the microeconomics
of development. The first part of the class will focus on some important key
topics in micro development: health, education, risk-coping, savings, credit,
and household economics. Towards the end of the class, we will hopefully have
time to cover some other topics that might be of interest, including contract
enforceability and informal institutions, corruption, the economics of
HIV/AIDS, and some recent papers at the intersection of behavioral economics
and development. The papers covered in these later topics will tend to be more
recently written than those from the earlier topics, so they should give you an
idea about what people are currently researching (if we get to them!).
Since development is a field
with a strong empirical tradition, we will spend a fair amount of time
discussing and evaluating the empirical strategies used in the papers on the
reading list one goal of this class will be to gain some insight into what
makes a good empirical study. Several of the papers on the reading list employ
natural experiments or field experiments and many involve primary data
collection, which I think is generally reflective of the present state of the
field.
Grading
Grading will consist of 2
problem sets, 2 referee reports on recent working papers (usually by recent development
job market candidates), a short research proposal (10 pages or so), and a final
exam. The point of the referee reports and the research proposal is to get you
to think about what kind of research is currently being conducted, and to think
about how an idea you might have could fit into the literature. Whether you end
up doing research in development or not, it's good to think about what could
actually be done rather than to just point out the flaws in whatever paper
you're reading.
Referee Reports
Each referee report should be
2-4 pages long (double-spaced). The first paragraph or two should summarize the
paper. Follow this with any "big-picture" comments that you might
have (for instance, about whether you think that the paper is on an important
topic or questions you might have about the identification strategy that is
utilized), and then get into specific major points that you have. Conclude with
more minor remarks. Also, even though these aren't real referee reports, try to
use a neutral tone in all of your comments.
The first referee report must
be chosen from one of the following papers:
Dave Donaldson (2008), Railroads of the
Raj: Estimating the Impact of Transportation Infrastructure, mimeo, LSE.
James Berry (2008), Child Control in Education Decisions:
An Evaluation of Targeted Incentives to Learn in India, mimeo, MIT.
Greg Fischer (2008), Contract
Structure, Risk Sharing and Investment Choice, mimeo, LSE.
The second referee report
must be chosen from one of the following papers:
Nathan Nunn and Diego Puga
(2007), Ruggedness:
The Blessing of Bad Geography in Africa, mimeo, Harvard.
Lori Beaman (2008), Social
Networks and the Dynamics of Labor Market Outcomes: Evidence from Refugees Resettled
in the U.S., mimeo Northwestern.
Taryn Dinkelman (2008), The Effects of
Rural Electrification on Employment: New Evidence from South Africa,
mimeo,
Bobonis, Gustavo (2008), Is the
Allocation of Resources within the Household Efficient? mimeo,
Research Proposal
Since the research proposal
is so short, it should be tightly focused and to the point. The proposal should
(very briefly) motivate an empirical research question and then move directly
into the logistics of how the project would work. For instance, describe the
data that you would use, the estimation strategy you would employ, the
specifications you would run, etc. I will give more details on the proposal as
the quarter moves on.
Reading List
There is no textbook for the
course, though good references are:
Pranab Bardhan and Chris
Udry, Development Microeconomics
Angus Deaton, The Analysis
of Household Surveys
A good reference at the
undergraduate level is Debraj Ray, Development Economics.
The Bardhan and Udry and
Deaton books are on reserve at the Engineering Library. If youd like to
consult the Debraj Ray book, Id be happy to lend you one of mine (just send me
an e-mail).
Required readings are marked
with a **, those with a * are highly recommended though not required, and all
others are useful for those interested in the subject matter. Note: the
required readings are subject to change during the term, as we will read papers
in part based on class interest.
Ive tried to mix in some
recent papers into the syllabus as well. We will cover these papers as time
allows; otherwise, they make a good starting place for those interested in
further reading.
Topics
1. Background
**Banerjee, Abhijit, and Esther
Duflo (2007), The Economic Lives
of the Poor, Journal of Economic Perspectives 21 (1): 141-167.
[Link is to the working paper
version, which has more tables. The published version without tables is at http://www.anderson.ucla.edu/faculty/bhagwan.chowdhry/Banerjee-Duflo.pdf]
2. Tools
**Duflo, Esther, Rachel
Glennerster, and Michael Kremer (2005), Using
Randomization in Development Economics: A Toolkit, mimeo, MIT Poverty
Action Lab.
Freeman, David A. (1991), Statistical
Model and Shoe Leather,Journal
of the American Statistical Association 21 (1991): 291-313.
*Angrist, Joshua and Alan Krueger (1999, Empirical Strategies in
Labor Economics, in Handbook of
Labor Economics, 3 (1): 1-90.
3. Health & Nutrition
**Dasgupta, Partha and
Debraj Ray (1986), Inequality
as a Determinant of Malnutrition and Unemployment: Theory, Economic Journal 96
(384): 1011-1034.
*Ray, pp. 272-279, 489-504.
Stiglitz, Joseph (1976), The
Efficiency Wage Hypothesis, Surplus Labor, and the Distribution of Income in
L.D.C.s,
*Strauss, John (1986), Does
Better Nutrition Raise Farm Productivity? Journal of Political Economy 94 (2): 297-320.
**Subramanian, Shankar and Angus
Deaton (1996), The
Demand for Food and Calories, Journal
of Political Economy 104 (1): 133-162.
**Thomas, Duncan et al. (2006),
Causal
Effect of Health on Labor Market Outcomes: Experimental Evidence,"
mimeo, UCLA.
Thomas, Duncan and Elizabeth
Frankenberg (2002), Health,
Nutrition, and Prosperity: A Microeconomic Perspective, Bulletin of the
World Health Organization 80 (2): 106-113.
References
Strauss, John and Duncan Thomas (1995), Human
Resources: Empirical Modeling of Household and Family Decisions, Handbook of Development Economics 3 (1):
1883-2023.
*Strauss, John and Duncan Thomas (1998), Health,
Nutrition, and Economic Development, Journal of Economic
Literature 36 (2): 766-817.
4. Education
4.1
Returns to Education in Developing Countries
**Psacharopoulos, George (1994), Returns
to Investment in Education: A Global Update, World Development 22 (9): 1325-1343.
**Duflo, Esther (2001), Schooling
and Labor Market Consequences of School Construction in Indonesia: Evidence
from an Unusual Policy Experiment, American Economic Review 91
(4): 795-813.
Rosenzweig, Mark (1995), Why
Are There Returns to Schooling? American
Economic Review P&P 85 (2): 153-158.
*Card,
David (1999), The
Causal Effect of Education on Earnings, Handbook of Labor Economics 3 (1):
1801-1863.
4.2 The Interaction
Between Health and Education
**Miguel, Ted and Michael
Kremer (2004), Worms:
Identifying Impacts on Education and Health in the Presence of Treatment
Externalities," Econometrica 72 (1): 159.217.
*Schultz, T. Paul (1999), Health
and Schooling Investments in Africa, Journal of Economic
Perspectives 13 (3): 67-88.
Luke, Nancy and Kaivan Munshi (2007), Social Affiliation and
the Demand for Health Services: Caste and Child Health in South India, Journal of Development Economics 83 (2):
256-279.
*Grossman,
Michael (2000), The
Human Capital Model of the Demand for Health, Handbook of Health
Economics 1 (1): 347-408.
4.3 Interventions
Duflo,
Esther, Pascaline Dupas, and Michael Kremer (2008), Peer
Effects and the Impact of Tracking: Evidence from a Randomized Evaluation in
Kenya, mimeo, UCLA.
5.
Informal Insurance and Risk-Coping
5.1 Is Insurance Efficient?
Bardhan and Udry, Chapter 8.
**Townsend, Robert (1994),
Risk
and Insurance in Village India, Econometrica 62 (3): 539-591.
**Udry, Christopher (1994),
Risk
and Insurance in a Rural Credit Market: An Empirical Investigation in Northern
Nigeria, Econometrica 62 (3): 539-591.
Fafchamps, Marcel and Susan
Lund (2003), Risk
Sharing Networks in Rural Philippines, Journal
of Development Economics 71 (2): 261-287.
*Udry, Christopher (1990), Credit Markets in
Northern Nigeria: Credit as Insurance in a Rural Economy, World Bank
Economic Review 4 (3): 251-269.
Platteau, Jean-Philippe and
Anita Abraham (1987), An
Inquiry into Quasi-Credit Contracts: The Role of Reciprocal Credit and
Interlinked Deals in Small-Scale Fishing Communities, Journal of
Development Studies 23 (4): 461-490.
*Morduch, Jonathan (1995), Income
Smoothing and Consumption Smoothing, Journal of Economic
Perspectives 9 (3): 103-114.
Rosenzweig, Mark R. and Oded Stark (1989), Consumption
Smoothing, Migration, and Marriage: Evidence from Rural India, Journal of Political Economy 97 (4):
905-926.
Fafchamps, Marcel and Flore
Gubert (2007), The
Formation of Risk Sharing Networks, Journal of Development Economics 83 (2): 326-350.
Rosenzweig, Mark R. (1988), Risk,
Implicit Contracts and the Family in Rural Areas of Low-Income Countries,
The Economic Journal 98 (393):
1148-1170.
For reviews, see:
Townsend, Robert (1995), Consumption
Insurance: An Evaluation of Risk-Bearing Systems in Low-Income Economies,
Journal of Economic Perspectives 9 (3): 83-102.
Dercon, Stefan (2002), Income
Risk, Coping Strategies, and Safety Nets, World Bank Research Observer 17
(2): 141-166.
5.2 Limits to Insurance
*Ligon, Ethan, Jonathan P.
Thomas and Tim Worrall (2002), Informal
Insurance Arrangements with Limited Commitment: Theory and Evidence from
Village Economies, Review of Economic Studies 69 (1):
209-244.
Coate,
Stephen and Martin Ravallion (1993), Reciprocity
without Commitment: Characterization and Performance of Informal Insurance
Contracts, Journal of Development Economics 40
(1): 1-24.
6. Savings
6.1 Consumption Smoothing
**Paxson, Christina (1992), Using
Weather Variability to Estimate the Response of Savings to Transitory Income in
Thailand, American Economic Review 82 (1): 15-33.
*Rosenzweig, Mark and Kenneth
Wolpin (1993), Credit
Market Constraints, Consumption Smoothing, and the Accumulation of Durable
Production Assets in Low-Income Countries: Investments in Bullocks in India,
Journal of Political Economy 101 (2):
223-244.
*Udry, Christopher (1995), Risk
and Savings in Northern Nigeria, American Economic Review 85 (5): 1287-1300.
Fafchamps, Marcel, Christopher Udry, and Katherine
Czukas (1998), Drought
and Saving in West Africa: Are Livestock a Buffer Stock? Journal of Development Economics 55 (2):
273-305.
Kazianga, Harounan and
Christopher Udry (2006), Consumption
Smoothing? Livestock, Insurance, and
Drought in Rural Burkina Faso, Journal
of Development Economics 79 (2): 413-446.
Kochar,
Anjini (1999), Smoothing
Consumption by Smoothing Income: Hours-of-Work Responses to Idiosyncratic
Agricultural Shocks in Rural India, Review
of Economics and Statistics 81 (1): 50-61.
6.2 Informal Savings Mechanisms: ROSCAs
*Besley, Timothy, Stephen
Coate, and Glenn Loury (1993), The
Economics of Rotating Savings and Credit Associations, American
Economic Review 83 (4): 792-810.
*Gugerty,
Mary Kay (2007), You
Cant Save Alone: Commitment in Rotating Savings and Credit Associations in
Kenya, Economic Development and
Cultural Change 55 (2007): 251-282.
Anderson,
Siwan, and Jean-Marie Baland (2002), The
Economics of ROSCAs and Intra-Household Resource Allocation, Quarterly Journal of Economics 117 (3): 963-995.
6.3 Formal Banking
*Dupas,
Pascaline and Jonathan Robinson (2008), Savings Constraints
and Microenterprise Development: Evidence from a Field Experiment in Kenya,
mimeo, UCLA and UCSC.
*Burgess,
Robin and Rohini Pande (2005), Do
Rural Banks Matter? Evidence from the
Indian Social Banking Experiment, American
Economic Review 95 (3): 780-795.
7. Credit
7.1
Individual Level Credit
Banerjee, Abhijit (2004), Contracting
Constraints, Credit Markets, and Economic Development, in M.
Dewatripoint, L. Hansen and
**Karlan,
Dean and Jonathan Zinman (2007), Observing
Unobservables: Identifying Information Asymmetries with a Consumer Credit Experiment, forthcoming, Econometrica.
*Karlan, Dean and Jonathan
Zinman (2008), Expanding
Credit Access: Using Randomized Supply Decisions to Estimate the Impacts,
forthcoming, Review of Financial Studies.
*Aleem, Irfan (1990), Imperfect
Information, Screening, and the Cost of Informal Lending: A Study of a Rural
Credit Market in Pakistan, World Bank Economic Review 4 (3):
329-349.
7.2 Micro-credit
**Morduch, Jonathan (1999), The
Microfinance Promise, Journal of Economic Literature 37 (4):
159-1614.
**Morduch,
Jonathan (1998), Does
Microfinance Really Help the Poor? mimeo, NYU.
*Pitt, Mark and Shahidur R.
Khandker (1998), The
Impact of Group-Based Credit Programs on Poor Households in Bangladesh: Does
the Gender of Participants Matter? Journal of Political Economy 106 (5): 958-996
Karlan, Dean (2007), Social Connections and Group
Banking, Economic Journal 117 (517): F52-F84.
7.3 Returns to Capital
Banerjee,
Abhijit and Esther Duflo (2008), Do
Firms Want to Borrow More? Testing
Credit Constraints Using a Directed Lending Program, mimeo, MIT.
**de
Mel, Suresh, David McKenzie and Christopher Woodruff (2008), Returns
to Capital in Microenterprises: Evidence from a Field Experiment, Quarterly Journal of Economics 123 (4):
1329-1372.
8.
Household Models
**Benjamin,
Dwayne (1992), Household
Composition, Labor Markets, and Labor Demand: Testing for Separation in
Agricultural Household Models, Econometrica 60 (2): 287-322.
Binswanger,
Hans and Mark Rosenzweig (1993), Wealth,
Weather Risk and the Composition and and Profitability of Agricultural
Investments, Economic Journal 103 (416): 56-78.
**Thomas,
**Duflo, Esther (2003), Grandmothers
and Granddaughters: Old-Age Pensions and Intrahousehold Allocation in South
Africa, World Bank Economic Review 17 (1): 1-25.
Browning, Martin and
Pierre-Andre Chiappori (1992), Efficient
Intra-Household Allocations: A General Characterization and Empirical Tests,
Econometrica 66 (6): 1241-1278.
Chiappori, Pierre-Andre
(1992), Collective
Labor Supply and Welfare, Journal of Political Economy 100
(3): 437-467.
Browing, Martin, Francois
Bourguignon, Pierre-Andre Chiappori and Valerie Lechene (1994), Income
and Outcomes: A Structural Model of Intrahousehold Allocation, Journal
of Political Economy 102 (6): 1067-1096.
*Dercon, Stefan and Pamela
Krishnan (2000), In
Sickness and in Health: Risk Sharing within Rural Households in Rural Ethiopia,
Journal of Political Economy 108 (4): 688-727.
**Udry, Christopher (1996), Gender,
Agricultural Productivity, and the Theory of the Household, Journal
of Political Economy 104 (5): 1010-1046.
*Duflo,
Esther and Christoper Udry (2004), Intrahousehold
Resource Allocation in Cote D'Ivoire: Social Norms, Separate Accounts, and
Consumption Choices, mimeo, Yale and MIT.
Robinson,
Jonathan (2007), Limited
Insurance within the Household: Evidence from a Field Experiment in Western
Kenya, mimeo, UC Santa Cruz.
Other
possible topics
9.
Contract Enforcement and Informal Institutions
*Tirole,
Jean (1997), A
Theory of Collective Reputations (with Applications to the Persistence of
Corruption and to Firm Quality, Review of Economic Studies 63 (1): 1-22.
**Greif, Avner (1993), Contract
Enforceability and Economic Institutions in Early Trade: the Maghribi Traders'
Coalition, American Economic Review 83 (3): 525-548.
Bigsten, Arne et al. (2000), Contract
Flexibility and Dispute Resolution in African Manufacturing, Journal of
Development Studies 36 (4): 1-37.
*McMillan, John and
Christopher Woodruff (1999), Interfirm
Relationships and Informal Credit in Vietnam, Quarterly Journal
of Economics 114 (4): 1285-1320.
10. HIV/AIDS
*Philipson, Tomas and Richard
A. Posner (1995), The
Microeconomics of the AIDS Epidemic in Africa, Population and
Development Review 21 (4): 835-848.
*Kremer,
Michael (1996), Integrating
Behavioral Choice into Epidemological Models of AIDS, Quarterly Journal
of Economics 111 (2): 549-573.
*Dupas, Pascaline (2007), Relative
Risks and the Market for Sex: Teenage Pregnancy, HIV, and Partner Selection in
Kenya, mimeo, UCLA.
*Robinson, Jonathan and Ethan
Yeh (2008), Transactional
Sex as a Response to Risk in Western Kenya, mimeo, UC Santa Cruz.
*Magruder, Jeremy (2008), Marital Shopping and
Epidemic AIDS, mimeo, UC Berkeley.
11. Corruption
**Shleifer, Andrei and Robert
Vishny (1993), Corruption,
Quarterly Journal of Economics 108 (3): 599-617.
*Claudio Ferraz and Frederico
Finan (2008), Exposing
Corrupt Politicians: The Effects of Brazil's Publicly Released Audits on
Electoral Outcomes Quarterly Journal
of Economics 123 (2): 703-745.
Khwaja, Asim Ijaz and Atif Mian
(2005), Do
Lenders Favor Politically Connected Firms?
Rent Provision in an Emerging Financial Market, Quarterly
Journal of Economics 118 (1): 207-230.
*Wade, Robert (1982), The
System of Administrative and Political Corruption: Canal Irrigation in South
India, Journal of Development Studies 18 (3): 287-328.
**Olken, Ben (2007), Monitoring
Corruption: Evidence from a Field Experiment in Indonesia, Journal of
Political Economy 115 (2): 200-249.
*Fisman, Raymond (2001), Estimating
the Value of Political Connections, American Economic Review 91
(4): 1095-1102.
12. New Approaches to
Development: Behavioral Economics
*Ashraf, Nava, Dean Karlan,
and Wesley Yin (2006), Tying
Odysseus to the Mast: Evidence from a Commitment Savings Product in the
Philippines, Quarterly Journal of Economics 121 (2): 635-672.
*Duflo, Esther, Michael
Kremer, and Jonathan Robinson (2008), Nudging Farmers to Use Fertilizer:
Evidence from Field Experiments mimeo, MIT, Harvard, and UCSC.
Not yet available online,
will be distributed in class
Bertrand, Marianne, Dean
Karlan, Sendhil Mullainathan, Eldar Shafir, and Jonathan Zinman (2008), What's Advertising
Content Worth? Evidence from a Consumer Credit Marketing Field Experiment,
mimeo, Yale.
*Banerjee, Abhijit and
Sendhil Mullainathan (2007), Climbing out of
Poverty: Long Term Decisions under Income Stress, mimeo, BREAD.