Research Round-Up

a couple of working papers:

1. Disease and Development: A Reply to Bloom, Canning, and Fink by Daron Acemoglu & Simon Johnson
“Bloom, Canning, and Fink (2014) argue that the results in Acemoglu and Johnson (2006, 2007) are not robust because initial level of life expectancy (in 1940) should be included in our regressions of changes in GDP per capita on changes in life expectancy. We assess their claims controlling for potential lagged effects of initial life expectancy using data from 1900, employing a nonlinear estimator suggested by their framework, and using information from microeconomic estimates on the effects of improving health. There is no evidence for a positive effect of life expectancy on GDP per capita in this important historical episode.”

2. The colonial legacy: Income inequality in former British African colonies by A.B. Atkinson
“This paper examines the distribution of top incomes in 15 former British colonies in Africa, drawing on evidence available from income tax records. It seeks to throw light on the position of colonial elites during the period of British rule. Just how unequal were incomes? How did the position of the rich in the colonies compare with that of the rich in the United Kingdom? It investigates how income concentration evolved in the last years of colonial rule, as the British government became more concerned with development, and establishes the degree of inequality at the time of independence in the late 1950s and early 1960s. What was the colonial legacy? How far did colonial inequality persist post-independence?”

 

and a couple of papers in the May issue of the Journal of Development Economics:

1. Do high-income or low-income immigrants leave faster? by Govert E. Bijwaarda and Jackline Wahbab

“We estimate the impact of the income earned in the host country on return migration of labor migrants from developing countries. We use a three-state correlated competing risks model to account for the strong dependence of labor market status and the income earned. Our analysis is based on administrative panel data of recent labor immigrants from developing countries to The Netherlands. The empirical results show that intensities of return migration are U-shaped with respect to migrants’ income, implying a higher intensity in low- and high- income groups. Indeed, the lowest-income group has the highest probability of return. We also find that ignoring the interdependence of labor market status and the income earned leads to an overestimating the income effect on departure.”

2. The efficiency of human capital allocations in developing countries by Dietrich Vollrath

“For a set of 14 developing countries I evaluate whether differences in wage gaps between sectors – estimated from individual-level wage data – have meaningful effects on aggregate productivity. Under the most generous assumptions regarding the homogeneity of human capital, my analysis shows that eliminating wedges between wages in different sectors leads to gains in output of less than 5% for most countries. These estimated gains of reallocation represent an upper bound as some of the observed differences in wages are due to unmeasured human capital. Under reasonable assumptions on the amount of unmeasured human capital the gains from reallocation fall well below 3%. Compared to similar estimates made using data from the U.S., developing countries would gain more from a reallocation of human capital, but the differences are too small to account for a meaningful portion of the gap in income per capita with the United States.”

3. The minimal impact of a large-scale financial education program in Mexico City by Miriam Bruhn, Gabriel Lara Ibarra, and David McKenzie

“We conduct randomized experiments around a large-scale financial literacy course in Mexico City to understand the reasons for low take-up among a general population, and to measure the impact of this financial education course. Our results suggest that reputational, logistical, and specific forms of behavioral constraints are not the main reasons for limited participation, and that people do respond to higher benefits from attending in the form of monetary incentives. Attending training results in a 9 percentage point increase in financial knowledge, and a 9 percentage point increase in some self-reported measures of saving, but in no impact on borrowing behavior. Administrative data suggests that any savings impact may be short-lived. Our findings indicate that this course which has served over 300,000 people and has expanded throughout Latin America has minimal impact on marginal participants, and that people are likely making optimal choices not to attend this financial education course.”  [The part about people making optimal choices by not attending cracked me up–kudos to the authors for such a great abstract]

 

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