12 New Papers for Development Practitioners

Academic papers can be both obscure and intimidating for development practitioners and others whose interests are rooted in practical, everyday issues, especially academic papers written by economists.  Trying to stay up on current research can seem like a waste of time.  Earlier this month 11,000 economists converged in Boston for the American Economic Association and Allied Social Science Association meetings; Boston is probably still recovering.  At this conference hundreds of papers were presented, but I wanted to choose the top 12 papers presented at the conference that I thought might be especially relevant for development practitioners.  These papers are all related to micro-development issues, touching areas such as microfinance, cash transfers, education, women’s issues, addressing conflict, and charitable giving.  Here they are with abstracts and links (where available) to the papers.  Happy reading!

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The returns to cash and microenterprise support among the ultra-poor: A field experiment

CHRISTOPHER BLATTMAN (Columbia University)

ERIC P. GREEN (Duke University)

JULIAN JAMISON (Consumer Financial Protection Bureau)

JEANNIE ANNAN (International Rescue Committee)

Do the “ultra-poor” have high returns to capital or are they otherwise constrained? Impoverished Ugandans, mostly women, were experimentally offered individual business training, $150, supervision, and business advising. We evaluated the full package plus the marginal effects of components: supervision (pressure to invest); advice; and stronger social networks (via group formation). 16 months later, microenterprise ownership and incomes double. Supervision and advice weakly increase initial investment but have little long-run impact. Group formation raised earnings through cooperative activities, suggesting social capital is an important input. Overall, the economic returns to cash appear high. We see little effect, however, on empowerment.

Household Response to Income Changes: Evidence from an Unconditional Cash Transfer Program in Kenya

JOHANNES HAUSHOFER (Massachusetts Institute of Technology)

JEREMY SHAPIRO (Massachusetts Institute of Technology)

This paper studies the response of poor rural households in rural Kenya to large temporary income changes. Using a randomized controlled trial, households were randomly assigned to receive unconditional cash transfers of at least USD 404 from the NGO GiveDirectly. We designed the experiment to address several long-standing questions in the economics literature: what is the shape of households’ Engel curves? Do household members effectively pool income? Are there constraints to savings? Do transfers generate externalities? In addition, we study in detail the effects of transfers on psychological well-being and levels of the stress hormone cortisol. We randomized at both the village and household levels; further, within the treatment group, we randomized recipient gender (wife vs. husband), transfer timing (lump-sum transfer vs. monthly installments over 9 months), and transfer magnitude (USD 404 vs. USD 1,520). We find a strong consumption response to transfers, with an increase in monthly consumption from USD 157 to USD 194 four months after the transfer ended. Implied expenditure elasticities for food, medical and education expenditures range between 0.84 and 1.47, while the point estimates are negative for alcohol and tobacco. Intriguingly, recipient gender does not affect the household response to the program. Households may face savings constraints: monthly transfers are more likely than lump-sum transfers to improve food security, while lump-sum transfers are more likely to be spent on durables. We find no evidence for externalities on non-recipients except for a significant positive spillover on female empowerment. Transfer recipients experience large increases in psychological well-being, and several types of transfers lead to reductions in levels of the stress hormone cortisol. Together, these results suggest that unconditional cash transfers have significant impacts on consumption and psychological well-being.

Reconciliation, Conflict and Development: Evidence from Sierra Leone

JACOBUS CILLIERS (University of Oxford)

OEINDRILA DUBE (New York University)

BILAL SIDDIQI (World Bank)

Can reconciliation generate social cohesion and economic development within societies emerging out of civil war? We conduct a randomized controlled trial of a community-based reconciliation intervention in post-conflict Sierra Leone. The program provides a forum for villagers to air war-time grievances, and also forges institutions designed to improve conflict resolution and build social capital. We find that individuals in treatment villages are more forgiving and charitable in their views of ex-combatants. In addition, they display greater satisfaction with conflict resolution and participate more actively in community organizations. However, there is no impact on overall levels of trust or social network formation. Most strikingly, psychological health, measured by depression, anxiety, and post-traumatic stress disorder deteriorated. Our study holds clear implications for the design of transitional justice programs, as well as programs that aim to promote institutional change.

Why Do Mothers and Fathers Spend Differently on Children’s Human Capital?

SEEMA JAYACHANDRAN (Northwestern University)

REBECCA DIZON-ROSS (Harvard University and Massachusetts Institute of Technology)

The bargaining power of mothers within the family is believed to play an important role in child well-being because mothers are believed to have a higher propensity to spend on children’s health and education. Using survey data collected from 1000 households in Uganda, we test this hypothesis using a different approach than the previous literature, namely by eliciting mothers’ and fathers’ willingness to pay for health and education goods for their children. We then examine why mother-father spending gaps exist. For example, mothers could simply be more altruistic toward their children than fathers are. Alternatively, mothers could believe the return to investing in children’s human capital is higher than fathers do, or they could expect to receive more personal benefit from these returns in the form of old age support from their children. It is also possible that parents follow norms about who should cover different types of expenses, and divergent spending patterns do not reflect divergent priorities of mothers and fathers.

Entrepreneurship and Political Stability in the Middle East and North Africa

FRANK R. GUNTER (Lehigh University)

Over the last half century, almost a third of all countries have undergone conflicts that involve more than a 1,000 violent deaths in a single year. Among the countries currently experiencing conflict in the Middle East and North Africa (MENA) region are Egypt, Iraq, Israel, Sudan, Syria, West Bank and Gaza, and Yemen. What are the salient characteristics of the demand and supply for entrepreneurship in these countries? What is the impact of increased entrepreneurship on political instability? And what can be done to encourage entrepreneurship in politically unstable states? Despite the social, political, and economic diversity of this set of nations; it is found that their political instability/conflict has produced similar barriers to entrepreneurship. And these barriers – political instability/conflict, poor governance, regulatory hostility to private business, and widespread corruption – are tightly interwoven and therefore tend to resist a piecemeal approach.

Identity and Charitable Giving

JUDD KESSLER (University of Pennsylvania and NBER)

KATHERINE L. MILKMAN (University of Pennsylvania)

How does priming identity affect charitable giving? We show that individuals are more likely to donate when a facet of their identity associated with a norm of generosity is primed in an appeal. In large charitable giving field experiments run by a large national charity, appeals that prime an individual’s identity as a previous donor to the charity or as a member of a local community generate more donations. The primes are more effective when they highlight a facet of the potential donor’s identity that we hypothesize to be more relevant to his sense of self: Priming identity as a previous donor is more effective for more regular donors and priming identity as a local community member is more effective for people in smaller communities. Together, these results elucidate the impact of identity on behavior and demonstrate how identity primes can be implemented in practice to encourage public good provision.

Developing Hope: The Impact of International Child Sponsorship on Self-Esteem and Aspirations

PAUL GLEWWE (University of Minnesota)

PHILLIP H. ROSS (Boston University)

BRUCE WYDICK (University of San Francisco)

Recent research (Wydick, Glewwe, and Rutledge, 2013) finds positive and statistically significant impacts on adult life outcomes from child sponsorship, including large impacts on schooling outcomes, the probability and quality of employment, occupational choice, and community leadership. This paper uses data from two countries to explore whether these impacts may be due not only to a relaxation of external constraints, but also to higher aspirations among sponsored children. We use survey data from Kenya and Indonesia, and psychological data from Indonesian children’s self-portraits, to test whether sponsorship significantly affects psychological variables in children that are likely to foster better economic outcomes in the future. We exploit an eligibility rule setting a maximum age for newly sponsored children. We use a child’s age at program rollout in his or her village as an instrument for sponsorship to establish a causal link between sponsorship and higher levels of self-esteem, as well as educational and occupational aspirations. We find a causal link between child sponsorship and large increases in educational and vocational aspirations among children in Kenya, and higher levels of happiness, self-efficacy, and hopefulness based on children’s self-portrait data from Indonesia.

Can Self-Help Groups Really Be “Self-Help”?

JOSEPH P. KABOSKI (University of Notre Dame)

BRIAN GREANEY (Federal Reserve Bank of St. Louis)

EVA VAN LEEMPUT (University of Notre Dame)

We provide a theoretical and experimental evaluation of a cost-reducing innovation in the delivery of “Self-Help Group” micro-finance services, in which privatized agents providing services earn payment through membership fees. Under the status quo, agents are paid by an outside donor and offer members free services. Theoretically, we show that membership fees can improve performance without sacrificing membership by mitigating adverse selection. In our randomized control, the innovation provides similar levels of services over time, but cost the donor less. Moreover the innovation provides greater benefits (borrowing, saving, and investing in business) by catering to more business-oriented households.

Saving For Agricultural Inputs: Evidence from a Randomized Evaluation in Kenya

SHILPA AGGARWAL (University of California-Santa Cruz)

PASCALINE DUPAS (Stanford University)

JONATHAN ROBINSON (University of California-Santa Cruz)

In rural Kenya, the return to agricultural inputs such as fertilizer appears to be very high but investment levels remain low. One reason for such underinvestment is that households may lack a secure place to save up money for inputs. In a pilot experiment with 77 Rotating Savings and Credit Associations (ROSCAs) in rural Kenya, we introduced an individual savings account labeled specifically for agricultural inputs. To measure impacts, all treatment and control ROSCAs were provided coupons for small discounts on the cost of inputs. Preliminary results suggest substantial demand and impact of the product: take-up was 57%, and coupon redemption increased by 10 percentage points (on a base of 26%). Our results suggest that introducing new savings products through informal savings clubs may be an effective way of increasing agricultural investment, particularly in an environment in which formal bank account usage is low due to high transaction costs and fees.

Historical Missionary Activity, Schooling, and the Reversal of Fortunes: Evidence from Nigeria

DOZIE OKOYE (Dalhousie University)

ROLAND PONGOU (University of Ottawa)

This paper shows that historical missionary activity has had a persistent effect on schooling outcomes, and contributed to a reversal of fortunes wherein historically richer ethnic groups are poorer today. Combining contemporary individual-level data with a newly constructed dataset on mission stations in Nigeria, we find that individuals whose ancestors were exposed to greater missionary activity have higher levels of schooling. This effect is robust to omitted heterogeneity, ethnicity fixed effects, and reverse causation. We find inter-generational factors and the persistence of early advantages in educational infrastructure to be key channels through which the effect has persisted. Consistent with theory, the effect of missions on current schooling is larger for population subgroups that have historically suffered disadvantages in access to education.

School-Based Management, Local Capacity, and Educational Outcomes: Lessons from a Randomized Field Experiment

MOUSSA BLIMPO (University of Oklahoma)

DAVID EVANS (World Bank)

NATHALIE LAHIRE (World Bank)

Education systems in developing countries are often centrally managed in a top-down structure. In environments where schools have different needs and where localized information plays an important role, empowerment of the local community may be attractive; however, gains from local information may be offset by low level of administrative capacity. This research evaluates the effectiveness of a comprehensive school-based management and capacity building program called Whole School Development (WSD). The WSD program provided a grant and a comprehensive school management-training program to principals, teachers, and representatives of the community. In order to parse out the effect of the grant, a second intervention consisted of the grant only with no training (Grant-only). A third group, which also serves as control group, received neither. We randomly assigned 273 Gambian primary schools to each of the three groups. Three to four years into the program, we find that the WSD intervention led to a 21% reduction in student absenteeism and a 23% reduction in teacher absenteeism, with no impact on learning outcomes measured by a comprehensive test. We found that, the effect of the WSD program on learning outcomes is strongly mediated by the baseline local capacity measured by adult literacy. This result suggests that, in villages with high literacy, the WSD program may yield gains on students’ learning outcomes. However, in villages where literacy is low, it could potentially have a negative effect. We present additional results to explore other determinants of the success of this type of interventions in low-income countries. We found no effect of the Grant-only intervention relative to the control on test score or on participation.

Returns to Schooling around the World

Link to previous book

HARRY ANTHONY PATRINOS (World Bank)

CLAUDIO E. MONTENEGRO (University of Chile)

Rates of return to investments in schooling have been estimated since the late 1950s. In the 60-plus year history of such estimates there have been several attempts to synthesize the empirical results in order to ascertain patterns. This paper presents comparable estimates using the same specification, estimation procedure, and similar data from 138 economies and 686 harmonized household surveys. This effort to compile comparable estimates holds constant the definition of the dependent variable, the set of control variables, the sample definition, and the estimation method for all the surveys in the sample. The results shows that the returns to schooling and potential experience are (i) more concentrated around their respective means than previously thought; (ii) the basic Mincerian model used is more stable that one may have expected; (iii) the returns to schooling are higher for women than for men (the opposite is true for the returns to potential experience); (iv) returns to schooling and experience are strongly and positively associated; (v) there is a decreasing pattern over time; and (iv) the returns to tertiary education are highest.

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