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 Impact of Trade Liberalisation on Household Welfare in a Developing Country with Imperfect Labour Markets

Abstract

I develop an empirical methodology to assess the distributional impact of trade-induced price shocks when labour markets are imperfect. The proposed methodology relates exogenous variations in prices to changes in household welfare using a separable agricultural household model that flexibly allows the data to determine the degree of labour market imperfections. Applying this approach to Vietnam, I investigate the impact of agriculture trade liberalisation between 1993 and 1998 on overall household welfare, measured using per capita household expenditure. I find that accounting for labour market imperfections results in welfare gains that are nearly four times larger than those found when assuming complete labour markets.     

Short notes on some books received

China's rural enterprises are economic units established by local government in the countryside or by the peasants and they operate outside the planning system. Rural enterprises have grown twice as fast as the rest of the economy since 1984. The rural enterprise sector has so far challenged the urban economy, in both product markets and markets for raw materials. What are the prospects for their relationship ‐ competition or cooperation? To answer the question, we develop a well‐specified but simple model of the rural and urban economies. The rural enterprise boom was caused in this model by the presence of barriers to factor mobility within China, price distortions and the pool of available labour in the countryside. The origins of the boom imply that rural enterprise exports tend to be relatively labour intensive. The complementarities between rural and urban enterprises are likely to dominate their future economic relationship and lead to further growth in the rural enterprise sector.     

Fairtrade and Labour Markets in Ethiopia and Uganda

Drawing on four years of fieldwork in Ethiopia and Uganda, this paper addresses gaps in knowledge about the mechanisms linking agricultural exports with poverty reduction, the functioning of rural labour markets, and the relevance to the lives of the poorest people of Fairtrade. Statistical analysis of survey evidence, complemented by qualitative research, highlights the relatively poor payment and non-pay working conditions of those employed in research sites dominated by Fairtrade producer organisations. We conclude that Fairtrade is not an effective way to improve the welfare of the poorest rural people.     

Localising Globalisation: Gendered Transformations of Work in Emergent Economies

This introduction identifies central traits of the contemporary labour situation in emergent economies of the global South, and situates the articles for the special section within this broader context. The focus is on the ways changes in labour produce reconfigurations of gender and power relations, and on how local models of gender shape new forms of labour and emerging labour markets. The object of study is thus the complexities different forms of capitalist integration pose in specific socio-historical localities and moments where people’s ‘work membership’ in society is becoming actualised in new ways.     

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.     

Eastward bound: A case study of post-soviet labour migration from a rural Ukrainian town

This case study uses ethnographic interviews and survey data to explore temporary work migration from Komsomolsk, a rural town in central Ukraine. At the time of the Soviet collapse, experts expected temporary work migrants to orient toward labour markets in Western Europe but our data show that in 2002 the majority of temporary migrants made trips to Russia and parts of the former Soviet Union from Komsomolsk. Women were less likely than men to engage in temporary work migration, yet those women who did migrate for work were more likely to migrate west. Men, particularly older, ethnically Russian men, sought work in the east. Ethnographic data indicate language skills and knowledge of the Russian labour market influenced migrants' choice of destination. Social contacts, such as recruiters from Russian construction firms, helped to bring Ukrainian workers east. Survey data show that younger ethnic Russians and ethnic Ukrainians from all age groups were more likely to seek work within the country or in Western job markets than in Russia.     

Inequality,earnings and participation among the poor in rural India

Emphasising that there is a relative dimension to deprivation, an attempt is made here to decompose income inequality among the rural poor into inequality in earnings per worker, in participation rate and covariance of earnings per worker and participation rate. From this decomposition, the effects of (small) changes in inequality in earnings per worker and in participation rate on income inequality are evaluated. The analysis is based on a cross‐section of rural households in 1970–71. The samples of poor cultivating households and poor casual agricultural labour households are analysed separately for each of two regions, based on a classification of villages in terms of technological advancement.     

Rural Roads and Local Market Development in Vietnam

We assess impacts of rural road rehabilitation on market development at the commune level in rural Vietnam and examine the geographic, community, and household covariates of impact. Double difference and matching methods are used to address sources of selection bias in identifying impacts. The results point to significant average impacts on the development of local markets. There is also evidence of considerable impact heterogeneity, with a tendency for poorer communes to have higher impacts due to lower levels of initial market development. Yet, some poor areas are also saddled with other attributes that reduce those impacts.     

Transnational processes,development studies and changing social hierarchies in the world system: A Central American case study

Globalisation is bringing about changes in social hierarchies in the world capitalist system which traditional categories and frameworks in development studies and macro-sociologies are unable to capture. Under globalisation processes of uneven accumulation are unfolding in accordance with a social and not a national logic. The increasing subordination of the logic of geography to that of production and the rising disjuncture between the fortunes of social groups and of nation-states, among other processes, demand that we rethink development. The social configuration of space can no longer be conceived in the nation-state terms that development theories posit but rather as processes of uneven development denoted primarily by social group rather than territorial differentiation. Social polarisation, the fragmentation of national economies, and the select integration of social groups into transnational networks, suggest that development may be reconceived not as a national process, in which what 'develops' is a nation, but in terms of developed, underdeveloped and intermediate population groups occupying contradictory or unstable locations in a transnational environment. The shift to flexible accumulation worldwide and from an international to a global division of labour result in an increasing heterogeneity of labour markets in each locale. Labour market participation becomes a key determinant of new social hierarchies and of development conceived in social groups terms. Local and national labour markets are themselves increasingly transnationalised, part of a global labour market, in which differentiated participation determines social development. This article applies these propositions to a case study of Central America, examining the changing fortunes of one particular region under global capitalism and the lessons it offers for changing social hierarchies in the world capitalist system and for a renewal of the sociology of development.     

Manpower planning and labour markets in developing countries: A case study of west Malaysia

In the past, aggregative studies and forecasts have dominated manpower planning in developing countries. Such exercises, however, tend to assume away or ignore a host of institutional factors that have far‐reaching influences on the determination of wages and employment and on the efficiency of labour markets. Consequently, this paper argues that disaggregated manpower research, focussed on current problems and conditions in employment markets, would be far more useful to economic development policies than the sort of abstract macro‐planning aimed at forecasts of long‐term manpower requirements which has been highly fashionable during the last decade.

The theme of the paper is substantiated with reference to the organization and workings of labour markets in West Malaysia. It is found that institutional and economic factors peculiar to that country have resulted in three ‘insulated’ labour markets, one each for Malays, Chinese and Indians, with practically no mobility of labour across insulated markets, even in widely divergent supply‐demand conditions. The final sections of the paper briefly examine the implications of insulated markets for manpower and economic policies.     

Beyond privatisation and cost savings: alternatives for local government reform

Unsatisfactory results from privatisation have caused local governments to seek alternative reforms. Inter-municipal cooperation, mixed public/private delivery and contract reversals are three alternatives that have gained traction in the last decade. These alternatives help local governments manage markets for public service delivery as a dynamic process. They maximise government/market complementarities and address a wider array of public goals beyond cost efficiency concerns. The alternative reforms show how local governments balance citizen, labour and community interests to ensure efficiency, coordination and stability in public service delivery.     

Urban Wage Behaviour and Food Price Inflation in Ethiopia

Theoretically, increases in food prices could benefit the poor by increasing the demand for unskilled labour, and hence their wages. This paper tests this hypothesis in urban Ethiopia. We exploit a unique panel of monthly price and wage data from 111 urban markets to first construct welfare-relevant measures of real wages, before employing various panel estimators to formally test wage-food price integration. We find moderate rates of long-run adjustment to increases in food prices, but that adjustment is very slow. This implies highly adverse short-run welfare impacts of higher food prices on the urban poor.     

Seasonality,differential access and interlinking of labour and credit

This article explains the interlinking of rural labour and credit transactions in terms of differential access to credit markets and seasonality. A model is developed which incorporates not only seasonality and differential access but also several other explanations for interlinking suggested in the literature. Moreover, it allows one to test the sensitivity of the results to differing powers on the part of landowners relative to working households.     

Schooling Costs and Child Work in Rural Pakistan

A conventional argument in the child–labour debate is that improvements in access to schools are an effective way to reduce the labour force participation of children. It is argued that schooling competes with economic activity in the use of children's time, and enhanced access to schools, interpretable as reduction in schooling costs, may raise school attendance at the expense of child labour. In this article, we draw a distinction between child labour within the household (intra-household) and child work in the labour market (extra-household), and examine the separate effects of schooling costs upon these two types of child labour in rural Pakistan. Consistent, at least in part, with our theoretical framework, we find that extra-household child labour and schooling costs are positively related whereas intra-household child labour is insensitive to changes in the costs of schooling. Our results suggest that reduction in schooling costs will have limited success in the abatement of child labour in rural Pakistan.     

Extractive peasants: reframing informal artisanal and small-scale mining debates

This paper explores the ongoing reconfiguration of peasant labour processes from agriculture to informal mineral extraction, outlining the motivations of the rural poor in adopting mining and quarrying, and discusses how social sciences can best account for this significant shift towards extractive livelihoods. It argues that the ‘extractive peasants’ best explain the contemporary changes in rural, mineral-rich tracts throughout the Global South, and peasant mining practices are part of the informal economies. The extractive peasants return intellectual attention to practices that disrupt contemporary global mineral production and place the politics of the poor within broader debates on resource politics.     

Coordination Risk and Cost Impacts on Economic Development in Poor Rural Areas

This paper addresses issues relevant to a critical problem in economic development: how to get rapid pro-poor economic growth in poor rural areas in Africa and South Asia where most of the world's dollar a day poor live. It examines constraints to the development of coordinated exchange systems in poor rural areas, focusing on the core problem of thin markets and low density of economic activity in these areas. Transaction cost and risk analysis is integrated into a conventional neoclassical production economics framework to describe the existence of low level equilibrium traps in transactions and supply chains and to generate important insights for development policy.     

Agrarian reform and seasonal employment in coastal Peruvian agriculture

This article attempts (i) to estimate intra‐year casual labour supply functions (ICLSF) for single field tasks to selected agricultural production cooperatives in Northern Peru; (ii) to explain the marked seasonal variation in wage rates paid by these cooperatives to casual workers; (iii) to evaluate the relevance of minimum wage legislation for casual labourers on these enterprises, and (iv) to assess the degree of labour market integration both within and between production cooperatives. Two types of labour supply function were identified: (a) perfectly elastic at the minimum wage, and (b) kinked ICLSF. Wage rates set in the cooperative's external labour market affect wage determination in its internal labour market. The casual labour markets in two valleys were found to be poorly integrated.     

How Resilient are Labour Markets to Natural Disasters? The Case of the 1998 Bangladesh Flood

Natural disasters devastate economies as they impede capital accumulation. The resilience of labour markets is crucial for the poor who rely on labour to reduce risk. We evaluate how the 1998 ‘flood of the century’ affected wages in Bangladesh. We find short-term declines in agricultural and non-agricultural wages. Agricultural workers who moved towards non-agricultural employment to cope benefitted through a lower percentage reduction in short-term wages. Endowed with human capital, salaried workers were unable to mitigate income risk. Extending the eligibility of credit access or relief programmes may preserve local businesses and their employees in the years following a flood.     

The Political Economy of Improving Health Care for the Poor in Rural Africa: Institutional Solutions to the Principal–Agent Problem

Both governments and private for-profit markets have been disappointing in meeting the needs of the African poor for health care. NGO services provide a much more attractive alternative for this clientele, despite the fees they charge. They do so because they represent an institutional solution to the ‘imperfect information’ problem in health care. Through simulations based on data from Cameroon, we demonstrate that if fee-charging NGOs replace the highly subsidised but poorly managed facilities operated by African governments the poor would be better off. Those NGOs that are decentralised in their financial and personnel management are most effective. The politics of making the recommended changes are assessed.