An Unconditional Quantile Regression Based Decomposition of Spatial Welfare Inequalities in Ghana

Ghana has witnessed tremendous economic growth since the 1990s and attained the Millennium Development Goals target of halving poverty. This notwithstanding, inequality in Ghana increased over the same period, suggesting growth benefits were not equitably distributed. This study provides evidence on the determinants of household consumption expenditure and factors that explain rural-urban welfare gaps between 1998 and 2013. The study employs an unconditional quantile regression and recently proposed decomposition technique based on re-centred influence functions. We find significant spatial differences in consumption expenditure across selected quantiles, with rural-urban inequalities driven largely by differences in returns to households’ endowments.     

The Bang for the Birr: Public Expenditures and Rural Welfare in Ethiopia

This article explores the impact of different types of public spending on rural household welfare in Ethiopia. The analysis reveals that public spending on road infrastructure is characterised by relatively high, but regionally strongly concentrated, returns in terms of rural household welfare. This is quite in contrast to the returns to public expenditures in education, which have attributes of much wider reach but less intensity. Public investments in agriculture show results that are low in magnitude and in statistical significance, mostly due to a poor link between public expenditures in agriculture and productivity in the sector.     

The Impact of Bt Cotton on Poor Households in Rural India

The impact of genetically modified (GM) crops on the poor in developing countries is still the subject of controversy. While previous studies have examined direct productivity effects of Bacillus thuringiensis (Bt) cotton and other GM crops, little is known about wider socioeconomic outcomes. We use a microeconomic modelling approach and comprehensive survey data from India to analyse welfare and distribution effects in a typical village economy. Bt cotton adoption increases returns to labour, especially for hired female workers. Likewise, aggregate household incomes rise, including for poor and vulnerable farmers. Hence, Bt cotton contributes to poverty reduction and rural development.     

The effectiveness of rural versus urban nonprofit organisations in the Democratic Republic of Congo

The Democratic Republic of Congo (DRC) is a country with high natural resources, but it has suffered from decades of civil wars and social turmoil, being heavily aid-dependent. In the DRC, several Nonprofit Organisations (NPOs) are major players in fighting poverty and enhancing welfare. This research aims to analyse the effectiveness of small NPOs in improving poor peoples’ lives through health, education, and economic activities. Two NPOs working in the DRC, one in a rural and the other in an urban area, are compared by researching the aid sites and surveying 201 households (aid beneficiaries). Our case observations and the survey results facilitate analysing the mission accomplishment, effectiveness, and accountability of the NPOs although we admit that the DRC conditions make exact measurements difficult. Multivariate analyses are used to study the differences in aid impacts. There are significant differences in the beneficiaries’ perception of the NPO effectiveness in improving health while no significant differences in education impact were found. This is probably because both case NPOs have succeeded in getting a large proportion of the children of their area registered in the education centres created by the NPOs. Differences were observed in the accountability and reporting style of the NPOs.     

Remittances,Poverty, Inequality and Welfare: Evidence from the Central Plateau of Burkina Faso

This paper applies Gini and concentration coefficient decomposition as well as the Foster-Greer-Thorbecke poverty index and the Stark-Yitzhaki welfare index to new data from four villages in Burkina Faso, to compare the marginal effects of remittances from intercontinental and intra-African migration on inequality, poverty and social welfare. Evidence is found that intra-African remittances reduce inequality while intercontinental remittances have the opposite effect. Also, it is found that although remittances from intercontinental migration are associated with much lower incidence, depth and severity of poverty, the marginal impact of remittances from this form of migration on social welfare is limited because recipients do not include the rural poor.     

Microeconomic Determinants of Income Inequality in Rural Pakistan

Inequality matters for poverty reduction. However, it is often unclear what policy could do to change the distribution of income as to date there is little quantitative evidence about the household characteristics that determine the level of income inequality and its changes over time. This paper sets out to identify these determinants by adapting a regression-based inequality decomposition technique and applying it to panel data from rural Pakistan. Land ownership is key to explaining the level of inequality, but not its changes. In contrast, higher education drives changes, but not the level of inequality. Household location affects both, reflecting growing differences in market access across regions.     

Determinants of Income Mobility and Household Poverty Dynamics in South Africa

This article analyses household income mobility among Africans in South Africa's most populous province, KwaZulu-Natal, between 1993 and 1998. Compared to industrialised and most developing countries, mobility has been quite high, as might have been expected after the transition in South Africa. This finding is robust when measurement error is controlled for. When disaggregating the sources of mobility, it is found that demographic changes and employment changes account for most of the mobility observed which is related to rapidly shifting household boundaries and a very volatile labour market in an environment of high unemployment. Using a multivariate analysis, it can be seen that transitory incomes play a large role. Four types of poverty traps are found, associated with large initial household size, poor initial education, poor initial asset endowment and poor initial employment access that dominate the otherwise observed regression towards the mean.     

Does Access to Formal Finance Matter for Welfare and Inequality? Micro Level Evidence from Nigeria

Using a treatment effects model, decomposition techniques and representative household data from Nigeria, we study the welfare and inequality implications of access to formal finance. While improving household welfare, formal access to finance increases inter-household inequalities, despite ameliorating the inequality enhancing effect of urban residence and enhancing the inequality ameliorating effect of greater educational attainment. The positive effect of access to formal finance on inequality is smaller than the effect of unobserved household characteristics, indicating that welfare and equality enhancing strategies should follow a holistic approach as opposed to one focusing on one isolated policy variable at a time.     

Rethinking the Effects of Microcredit on Household Welfare in Cambodia

This article analyses the effects of microcredit on household welfare in terms of household expenditure per capita in Cambodia, with data from the Cambodia Socio-Economic Survey carried out in 2014. The analysis describes the effects via formal and informal lending sectors, accounting for endogenous selection bias arising from unobserved factors and for structural differences between borrowers and non-borrowers in terms of expenditure functions. The findings suggest that microcredit in both sectors reduces household expenditure.     

Food energy intake and cost of basic needs: Measuring poverty in Bangladesh

Past estimates of poverty in Bangladesh based on the food energy intake method found decreasing poverty over time and similar poverty in urban and rural areas. Using the cost of basic needs method, we find increasing poverty for 1984–92 and higher poverty in rural than urban areas. Examples of lack of consistency in past estimates are highlighted. A method is introduced to assess the gap narrowing and re‐ranking impacts on poverty measures of changes in poverty lines. The article also estimates the marginal impact of household characteristics such as household size, education, occupation and land ownership on the probability of being poor.     

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.     

Welfare Dynamics in Pakistan and Ethiopia – Does the Estimation Method Matter?

Identifying household-level welfare dynamics and associated dynamic poverty trap thresholds can have important implications for the targeting of poverty reduction policies. The small existing empirical microeconomic literature has found evidence both for and against poverty traps. Using household panel data from rural Pakistan and Ethiopia, this article examines whether these different results are likely driven by differences in estimation methods or whether they reflect actual differences across settings. It applies the estimation methods from the existing literature to the same two datasets and also proposes a novel semiparametric panel data estimator that combines the advantages of the previous fully parametric and nonparametric approaches. The results suggest that absent any dynamic poverty trap thresholds the effect of using different estimation methods is secondary, having a small influence on the estimated long-term level of household well-being but not the identification of multiple dynamic welfare equilibria and associated dynamic poverty thresholds. Households in rural Pakistan and Ethiopia seem to be stuck in a static, structural-type poverty trap facing an expected level of long-term well-being that places them squarely in poverty.     

The importance of household asset diversity for livelihood diversity and welfare among small farm colonists in the Amazon

Taking a small farm colony on the Amazon frontier as a case study, this article examines the relationships among household assets, livelihood diversity and welfare. The findings show that: (1) few households diversified into non-agricultural income sources, but those that did also had agricultural incomes comparable to households primarily reliant on agriculture; (2) distinct household assets influence the extent of agricultural and non-agricultural diversity, implying that households with combinations of specific assets were best able to diversify their livelihoods, and (3) while specific types of household assets influence household welfare, livelihood diversity does not exert an additional effect on welfare. A key issue that emerges is that different arrays of assets are important for agricultural and non-agricultural diversity as well as for household welfare, implying that households need diverse assets for diverse livelihoods as well as better welfare.     

The role of education in facilitating risk-taking and innovation in agriculture

The impact of education on farmers' attitudes toward endogenous risk (measured using an attitude survey instrument) is estimated with household data from rural Ethiopia. Education of the household head is found to decrease risk-aversion. Next, the effects of education and risk attitudes on technology adoption are estimated. Schooling encourages farmers to adopt innovations, whereas risk-aversion reduces the probability of adoption. Thus, we find that schooling encourages innovation, a potentially risky undertaking, not only directly but also indirectly, through its effect upon attitudes toward risk. To the extent that educated farmers are early innovators and are copied by those with less schooling (as other research on the same data has shown), the reduction of riskaversion not only has private benefits for those with education but also may have externality benefits.     

The dynamics of welfare gains and losses: An African case study

This article uses panel survey data for Côte d'Ivoire to investigate the determinants of welfare gains and losses of households over time. A first‐difference model is estimated which takes account of initial conditions. For urban areas, it was found that human capital is not only a key explanatory factor for levels of welfare, but also the most important endowment to explain welfare changes over time. In rural areas, physical capital, especially land and farm equipment, mattered most. Household size and composition and socioeconomic characteristics of the household also affected welfare changes. Policy implications are discussed.     

Education and Household Inequality Change: A Decomposition Analysis for India

Rising returns to education have increased wage inequality in many developing countries, but their impact on inequality between households is less clear. This study asks how education contributed to household inequality in India during the period 1993–2004, using a regression based decomposition method. We find that rising returns to education of employees did not increase household inequality, because many household heads are self-employed. Instead, rising inequality in education contributed to higher inequality, partly because fertility declined more slowly among illiterates. These new insights into the education-inequality relationship in India underline the importance of household-level analysis to complement earnings inequality research.     

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.     

Does Observance of Religious Holidays Affect Agricultural Productivity and Household Welfare? Evidence from Rural Ethiopia

This study examines whether traditional customs affect household's welfare by taking the case of the work prohibition related with religion in rural Ethiopia. Although the anecdotal evidence suggests that work prohibition by the Ethiopian Orthodox Church, to observe the religious holidays, is one of the reasons for the high poverty incidence in Ethiopia, the estimation results do not show that there is a significant effect of the number of religious holidays observed on agricultural productivity and household welfare. Observance of religious holidays affects crop choice and income source.     

Overurbanization and underdevelopment in Sub-Saharan Africa: A cross-national study

"This paper discusses both the urban bias and world-system theories of overurbanization and presents a cross-national analysis of 32 African nations to test these perspectives. The analysis is divided into three parts. First, the effects of urban bias (i.e., the disparity in welfare between rural and urban areas) and economic dependence on overurbanization are examined. Next, the association between overurbanization and (1) the structure of the labor force and (2) economic growth is tested. Finally, the relationship between the structure of the labor force and economic growth is evaluated." The results indicate that "the rural-urban disparity and foreign investment facilitate overurbanization, and that an increase in level of overurbanization has a deleterious impact on both the structure of the labor force and economic growth. Furthermore, there is strong evidence indicating that an increase in service-sector employment has a negative effect on economic growth."     

Fair Trade-Organic Coffee Cooperatives,Migration, and Secondary Schooling in Southern Mexico

We explore three trends in rural southern Mexico (Fair Trade coffee, migration, and conditional cash transfers) that could explain the rapid rise in education from 1995–2005 using survey data from 845 coffee farming households in Oaxaca and Chiapas, Mexico. Results from a household fixed-effects model show that household participation in a Fair Trade-organic cooperative contributed to about a 0.7 year increase in schooling for girls. US migration opportunities appear to have even stronger positive impacts on schooling for females. Although participation in Fair Trade-organic cooperatives appears also to have increased male schooling, increased migration opportunities have had an indeterminate effect for males.