Differential adoption of modern rice technology and regional wage differential in Nepal

In Nepal, which consists of ecologically distinct regions, the concentration of the adoption of modern rice varieties in the favourable rice growing areas of the country has raised fears that regional income disparities have widened. This study shows that greater demand for hired labour due to the adoption of modern rice varieties has induced permanent and seasonal migration from unfavourable to favourable areas. This appears to have largely equalised average wage rates across different production environments. Thus, as far as labour income is concerned, benefits from the modern varieties have been widely shared.     

The Welfare Effects of Balance of Payments Reform: A Micro-Macro Simulation of the Cost of Rent-Seeking

This article proposes a methodology for analysing the effect of balance of payments liberalisation on measures of poverty and distribution and applies it to the case of Jamaica in the 1990s. The methodology consists of a macro-micro simulation in which a CGE model provides labour market outcomes, which in turn are used to manipulate the sectoral allocation of employment to generate the income distribution consistent with the new labour market outcome. In the application to Jamaica, we find that the reallocation of resources away from rent-seeking activities in the presence of exchange controls is significant and has large macroeconomic effects. Opening up of the current account has little effect on poverty, but liberalisation of the capital account reduces poverty, especially amongst the very poor. Neither policy change taken separately, nor the combination of the two, has more than a negligible effect on the distribution of income.     

A Little Help May Be No Help at All: Size of Scholarships and Child Labour in Nepal

In the empirical literature on child labour and income transfer programmes, evidence has been lacking on whether (and how) the size of transfer influences the impact on child labour. This paper finds significant size effects in the impact of scholarship-based transfers on child labour in Nepal. High-value scholarships decrease 8–16 year-old girls’ total work hours by one-third, largely reducing their hours in paid and unpaid economic activities with little impact on domestic chores. Low-value scholarships have no impact at all. The findings elucidate the scope for calibrating transfer size to achieve greater child labour impacts in developing countries.     

Household income dynamics: a four-country story

In this article, we analyse the dynamics of household per capita incomes using longitudinal data from Indonesia, South Africa, Spain and Venezuela. We find that in all four countries reported initial income and job changes of the head are consistently the most important variables in accounting for income changes, overall and for initially poor households. We also find that changes in income are more important than changes in household size and that changes in labour earnings are more important than changes in other sources of household income.     

The personal and the factor distributions of income in a cross-section of countries

The shares of capital and labour in national income vary substantially both over time and across countries. This paper shows that the factor distribution of income is an essential determinant of the personal distribution of income. We use cross-country and panel data for a group of developed and developing countries to show that a larger labour share is associated with a lower Gini coefficient of personal incomes. This effect is not only statistically significant but also economically important. An increase in the labour share in Mexico to that observed in the US would reduce the Gini coefficient of the former by between two and five points.     

Changes in human capital and earnings inequality: Recent evidence from Brazil 1

Abstract

This paper estimates changes in the rates of return to human capital across the earnings distribution using data from over a 10-year period for Brazil. It uses these estimates to simulate the separate impacts of changes in returns to skills and changes in the supply of skills on earnings inequality. Evidence points strongly to growing inequality in rates of return to education in Brazil. This finding suggests that recent macroeconomic and trade reforms have been of most benefit to the skilled rather than the unskilled. Supporting evidence points to an improved competitiveness in the labour market, with workers increasingly rewarded for productivity. However, although increases in returns to education are more pronounced at the top of the earnings distribution, this did not in practice led to increased inequality. This is because levels of education and other labour market-rewarded endowments have increased and offset the rate of return effect. Appropriate education policy is therefore an essential partner for macroeconomic and trade reform if a developing economy is to avoid worsening income inequality.     

Changes in earnings inequality and labour market segmentation: Metropolitan Santiago 1969–78

Changes in earnings inequality are examined in this article through an eclectic approach allowing for differences in human capital earnings function by labour market segments. Several findings are of interest. The first are the components of earnings inequality changes, these being, in order of importance: changes in the within segments inequality, changes in the relative share of the informal sector segment, and changes in relative income between segments. Second, these changes are found to be the result of labour market liberalisation policies such as abolition of both minimum wages and labour turnover legislation in the formal sector, the promotion of self‐employed activities in the informal sector, and, the selective mobility pattern between segments.     

In the Same Boat,but not Equals: The Heterogeneous Effects of Parental Income on Child Labour

This paper examines the impact of parental income on child labour. The empirical literature has found conflicting results regarding whether poverty leads parents to send their children to work. Most of this literature, however, treats child labourers as a single homogeneous group, ignoring differences among working children in work intensity, hazard exposure, and type of employer. This paper argues that accounting for the heterogeneity in child’s working conditions may explain the conflicting results in the literature. Specifically, the existence of this heterogeneity may reflect heterogeneity in parents’ perceptions about the returns to child’s work, and hence in parental reasons to send their children to work. To test this hypothesis, I estimate the effects of parental income on child labour for various working conditions, using data from the 2010 Egypt National Child Labour Survey. This dataset provides rich information on the working conditions of child labourers. The findings show that the effect of parental income on child labour is minimal among children who work in non-hazardous jobs, jobs that are not highly physical, or in family businesses. In contrast, higher parental income does decrease the likelihood of child labour in market work, jobs that are physical and hazardous jobs.     

Self-employment earnings and returns to education in rural Peru

This article estimates the returns to education for households who derive part of their income from household based non-farm self-employment ventures in rural Peru. While education is an individual level variable, earnings are observed at the household level. This asymmetry complicates both the estimation and the interpretation of the returns to education. This article is the first jointly to incorporate three channels through which education affects household earnings. Education affects earnings through the marginal productivity of labour (worker effect), labour allocation across activities (between-activity allocative effect) and its production externality effect (spillover effect). The results suggest that the between-activity allocative effects of education dominate the returns. This article also makes novel use of economic geography to proxy for the role that access to markets plays in determining these returns. In particular, altitude is a strong predictor of activity choice and the returns to education in this mountainous country.     

Is There a Social Kuznets Curve? The Influence of Labour Standards on Inequality

This study empirically investigates the impact of core labour standards on income inequality for a range of 90 countries from 1990–2000. A synthetic index of labour standards is computed by means of a Multiple Correspondence Analysis and no significant correlation is found with the Gini index. One of the reasons pointed out is that the effective implementation of core labour standards depends on the quality of the country's political and legal systems. Using instrumental variables in a TSLS model, we found an inverse ‘U’ shaped curve between the new endogenous index of core labour standards and income inequality.     

Short‐run changes in rural income inequality: A decomposition analysis

This paper quantitatively assesses the principal determinants of the rather dramatic decline in income inequality observed in rural India between 1968–69 and 1970–71. A simple form of decomposition analysis is used to demonstrate that the most important effects of changes in weather, in technology, and in other factors on income distribution are those which occur rather indirectly as a result of overall tightening of the labour market. Whereas in periods of generally bad weather, workers from high‐income households apparently ‘crowd‐out’ those from low‐income households, in periods of good weather income effects induce the former to consume leisure, thereby opening up more jobs for workers from low‐income households.     

The Intergenerational Effects of Political Influence: Evidence from China

This paper considers the effects of fathers’ political influence on their offspring’s labour market outcomes in China. Political influence refers to the ability to convert political power into economic benefits. This study identifies the dissolution of political influence by exploiting an age-based mandatory retirement rule in urban China. It exploits the variation of political influence in three dimensions: bureaucrat status, retirement status, and offspring gender. A difference-in-differences approach shows that the retirement of a bureaucrat translates into a 13 per cent decrease in offspring’s income. A triple-differences approach suggests retirement of a bureaucrat father translates into a 27 per cent decrease in earnings among sons. Retirement of a bureaucrat father is associated with larger income losses for offspring working in the same industry sector as their father and in industries that have a high concentration of assets or that are controlled by the state. This paper adds evidence to the growing literature estimating the economic benefits of political connections.     

Urban Proximity and Spatial Pattern of Land Use and Development in Rural India

Using non-parametric methods and India Human Development Survey 2004–2005, this study analyses the effect of urban proximity in terms of distance and connectivity on spatial pattern of land-use and development in the context of rural India. We find that, in urban surroundings, rural areas have diversified economic activities, intensive agriculture with higher spending on various inputs, higher economic wellbeing in terms of wages, income and consumption expenditure. We also document that transport and tele-connectivity are important for improved rural-urban linkages and changing rural landscape. These findings suggest that urban settlements are keys to development and inclusive growth in rural areas.     

Disease,Microdams and Natural Resources in Tigray,Ethiopia: Impacts on Productivity and Labour Supplies

We examine the effects of water microdams and ensuing waterborne diseases on household decisions in Tigray, Ethiopia, where the government implemented a water resource development programme two decades ago. We find microdams increase productivity of both fuelwood collection and crop production, but the costs of these dams to households can be significant. In villages close to dams, disease prevalence is higher and all household labour categories spend more time sick, and more time is spent by male and female adults caring for sick family members. These can cost the household anywhere in the region of 150–250 Birr per season, depending on the type of labour diversion and the productivity of labour. Males are most significant here. Removing their time from production results in 40–60 per cent higher productivity and income losses compared to diversion of female labour. Sick households also spend significantly more money on health care, especially when male and female adults are sick.     

Redistribution,consumer demand and employment in Kenyan furniture‐making

Earlier macro‐level studies of the secondary employment and income effects of an income redistribution ignored a key element in the income distribution‐technology‐employment hypothesis. No account was taken of the diversity of factor proportions within each industry, which is reflected in the size distribution of firms. This case study has been addressed at the level of a particular product group. From an expenditure survey the poor of Kenya are revealed to buy furniture predominantly from the smaller, more labour‐intensive firms in the industry. Consequently, a policy of income redistribution through growth will further the expansion of employment and earnings opportunities in the low income sector of the industry.     

Natural Disasters,Gender and Handicrafts

Using original post-disaster household survey data gathered in rural Fiji, this article explores the disaster–gender nexus. Female-headed households are disadvantaged, not because of bias against them in disaster damage or relief, but because of a newly emerging gendered division of labour for dwelling rehabilitation that tightens their constraints on intra-household labour allocation. Female-headed households with damaged dwellings resort to female labour activities connected with informal risk sharing – augmenting production of handicrafts for kava rituals in exchange for male-labour help. Female-headed households without male-adult members resort to such activities more than those with them, because of their distinctly different decision-making processes.     

What's Different about Exporters? Evidence from Colombian Manufacturing

Using a large panel of Colombian manufacturing plants, this paper finds that exporters are significantly larger, more capital intensive, have higher labour productivity, and pay higher wages than nonexporters three years before exporting for the first time. The differential in performance increases in the years leading to entry in the export market. After entry, sales, employment, and the proportion of skilled workers in the labour force keep growing significantly faster for exporters, but the growth of labour productivity and capital intensity is indistinguishable for exporters and nonexporters.     

How Accurate is Food-for-Work Self-Targeting in the Presence of Imperfect Factor Markets? Evidence from Ethiopia

Effective targeting of transfers is a key issue in public policy to combat poverty. Much faith is presently placed in self-targeting mechanisms such as public employment schemes supported by food-for-work transfers. Where targeting errors have been observed, these are usually attributed to mismanagement of key operational details, such as the project's wage rate. Using a unique data set from rural Ethiopia, we demonstrate that targeting errors may also have structural causes in some low-income countries. We hypothesise that imperfect factor markets generate a predictable dispersion across households in reservation wage rates that breaks down the unconditionally positive relation between income and shadow wages on which the theory of self-targeting public employment programmes rests. Our results confirm that the inaccuracy of FFW targeting stems from the fact that, in rural Ethiopia, higher income households are endowed with more labour per unit of land or animal. Due to poor factor markets in land and livestock these labour-abundant households have lower marginal labour productivity on farm, thereby depressing the reservation wage rates they find acceptable for FFW participation.     

The Gender Gap in Agricultural Productivity: The Role of Market Imperfections

This paper hypothesises that labour and credit market imperfections – by discouraging off-farm income-generating activities and restricting access to inputs, respectively – affect female farm productivity more deeply than male productivity. The paper develops a theoretical model, which decomposes the contribution of various market imperfections to the gender productivity gap. Empirically we show that agricultural labour productivity is, on average, 44 per cent lower on female-headed plots than on those managed by male heads. 34 per cent of this gap is explained by differences in labour market access and 29 per cent by differences in credit access.     

In Times of Sickness: Intra-household Labour Substitution in Rural Indonesian Households

In many developing countries, households with ill adults suffer not only from diminished labour supply but also from an inability to borrow against future labour income. Intra-household labour substitution may be an important coping strategy for these households. Using information about individual health status provided by Indonesia Family Life Survey, this study finds some evidence that Indonesian farm households cope with chronic illnesses of male adults through intra-household labour substitution. Yet, the results show that this strategy is not effective in the case of severe health shocks and that these households are unable to keep their family farm profits stable.