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This paper empirically evaluates the impacts of China's exchange rate regime reform in 2005 on its macroeconomy. We propose to use a new counterfactual policy evaluation method that is robust to the choice of control group. Using the new method, we find that China's exchange rate regime reform in 2005 mildly reduces the Consumer Price Index, has a substantial damping effect on export, significantly increases employment, and has negligible impact on industrial production. [ABSTRACT FROM AUTHOR]

This paper analyzes whether fiscal policy in South Asia amplifies or smoothens business cycle fluctuations. It estimates several econometric models to explore the cyclicality of government spending and tax buoyancy. In South Asia, tax revenue increases less than one to one with changes in gross domestic product (GDP), but public spending increases more than proportionally. For each percentage point change in GDP growth, government expenditure changes by 1.3 percentage points. While changes in tax revenue have no significant impact on economic activity, the government spending multiplier is positive and significant: each additional US dollar (USD) of spending leads to an immediate increase in GDP of 0.2 USD and to an increase of 0.4 USD in the medium run. The impact of public spending on economic activity is entirely due to capital expenditure, which is also more procyclical. Procyclical public spending and a positive expenditure multiplier imply that fiscal policy in South Asia amplifies boom‐and‐bust cycles. These results are in line with those of other emerging markets and developing economies and robust to different model specifications and estimation strategies. [ABSTRACT FROM AUTHOR]

How housing costs would influence the job‐housing choice of talent and associated city‐level innovation performance is a question of interest for urban development policies. Recently, considerable attention has been paid to the influence of rising housing prices on the attraction of talent and the associated innovation output in major Chinese cities. In this paper, we use the housing price data of 51 cities from the China Real Estate Index System database and the corresponding macro data of China City Statistical Yearbooks from 2005 to 2014 to analyze this focal research question. The empirical analysis shows that the increase in city housing prices generally correlates positively with city innovation outcome and talent attraction, suggesting no crowding‐out effect on the innovative performance of the city. However, the positive association between housing prices and innovation outcome and talent attraction has started to disappear in first‐tier cities in recent years, suggesting potential crowding‐out effect if the increasing housing prices transform to bubbles. This research thus provides considerable policy implications concerning the impacts of housing prices on talent movement and innovation output. [ABSTRACT FROM AUTHOR]

How persistent are teacher effects on student outcomes? In this paper we present estimates of teacher effects on long‐run student outcomes from two low‐ and middle‐ income countries. We first estimate teacher value‐added using the Young Lives School Survey data from Ethiopia and Vietnam. We then track students taught by these teachers 2 and 5 years later and use data from the Young Lives Household Surveys to estimate the effects of teacher quality. We find no persistent effect after 2 years, but better mathematics (0.08σ) and reading (0.06σ) test scores after 5 years, from being taught by a 1σ better Grade 5 teacher. We find no persistent effects of good teachers on measures of more "generalized" cognitive ability, aspirations, well‐being, or "grit." [ABSTRACT FROM AUTHOR]

Childhood obesity in developing countries is a topic that has not yet been adequately covered in the literature. Although obesity is rising worldwide and is very present even among the poorest of households in developing countries, most of the attention is still given to industrialized ones. This exploratory paper utilizes the South African National Income Dynamics Study panel data set to highlight some of the aspects policymakers should bear in mind. In particular, policy options targeting mothers may not be appropriate in a developing setting. Higher attention should be given to caregivers instead. The results of the fixed effects probability regressions indicate that having a nonobese, well‐educated caregiver could potentially reduce the probability of a child being obese, thus informing policymakers about potential target groups and channels. [ABSTRACT FROM AUTHOR]

The debate between balanced and unbalanced growth doctrines generated much heat after the publication of Rosenstein‐Rodan's seminal work in 1943, but it vanished in the early 1980s. This paper empirically revisits this forgotten debate by first compiling a harmonized international data set that contains sectoral value‐added data for up to 177 countries over 45 years. This data set enables us to construct indices of sectoral growth imbalances for each country, which further allows us to update the key empirical tests for the balanced and unbalanced growth hypotheses that featured in the original debate. Moreover, we also conduct a panel regression analysis to systematically examine the association between sectoral balance (or imbalance) and per capita income growth. Overall, we find empirical support for the balanced growth hypothesis. [ABSTRACT FROM AUTHOR]

Adding to the literature on factors driving corruption and bribery, this paper examines the effect of contestability in business operations on bribe solicitations. Contestability undermines the bureaucratic rent‐seeking potential, whereas bureaucratic holdup increases it. This paper tries to capture these influences empirically using cross‐country survey data. The results show that the relatively greater contestability of business startup procedures compared to startup regulatory times led to fewer bribe demands; however, property registration regulations with lower relative contestability led to more bribe demands, especially for import licenses. We find relatively greater support for bureaucratic holdup (i.e., time taken by bureaucratic clearances) in startup procedures than with import licenses. Finally, older and larger firms received lower bribe demands, ceteris paribus. [ABSTRACT FROM AUTHOR]

Abstract: In this paper I use a panel of 133 developing countries for the period 1972 to 2012 to estimate the effect of workers’ remittances on the size of government. Controlling for country and period fixed effects that jointly affect workers’ remittances and government size, the paper finds that workers’ remittances are associated with larger government. The paper further examines whether democratic institutions mediate the relationship between workers’ remittances and government size. Democratic institutions do not significantly mediate the effect that workers’ remittances have on the size of government. [ABSTRACT FROM AUTHOR]

Abstract: This paper empirically tests how the magnitude of trade promotion effects of mutual recognition agreements (MRAs) varies with various mediums. The main rationale for the research is that because an MRA eliminates technical barriers to trade (TBT), the trade promotion effects of MRAs are inversely much stronger if TBT originally restricted trade before their entry into force. Using data on MRAs and international trade in 34 countries and 22 manufacturing sectors covering 1995 to 2009, the paper empirically shows that the trade promotion effects of MRAs can be much stronger, depending on the type of contract, time period after the entry into force, components of exports, and country and industry characteristics such as technology level and global competitiveness. The results will provide insight for policy makers and stakeholders who cooperate with foreign countries in various regulations, especially in developing countries that have low levels of technology, competitiveness, and regulatory governance capacity. [ABSTRACT FROM AUTHOR]

Abstract: This paper analyzes how factor‐biased public infrastructure affects the skilled–unskilled wage inequality. In the basic model with a full employment economy, we find that when the weighted dependence of skilled labor and capital in the urban skilled sector on public infrastructure is large enough relatively to that of unskilled labor and capital in the urban unskilled sector, the wage inequality will be expanded. We also discuss labor‐biased and capital‐biased public infrastructure in our framework, and find that the relative dependences of relevant labor or capital on public infrastructure are important determinants of wage inequality. In the extended models, we analyze separately the issue of wage inequality in the economy with unemployment and the totally open capital market, and find the results of the basic model almost still hold. [ABSTRACT FROM AUTHOR]

Abstract: A stable labor market is a policy priority for most countries, especially after the burst of the global financial crisis. Unlike most countries, the labor market in China appears to be holding up well, despite sharp slowdown in economic growth. This paper argues that there are underlying fundamental mechanisms that help explain the resilience of China's labor market. The key to understanding labor market dynamics in China is that rural‐to‐urban migrant flows are more sensitive to growth than urban workers in the process of fast urbanization, which serves as a main shock absorber to buffer employment against adverse shocks. Therefore, we propose a generalized Okun's Law (GOL) that incorporates migrant flows with unemployment rates to capture the relation between labor market dynamics and economic cycles. The original Okun's Law can be regarded as a special case of the GOL for developed countries that have already completed urbanization. Conducting empirical analysis with both China's national‐ and city‐level data and cross‐country panel data, we find strong evidence supporting the GOL theory. Findings in the paper have implications for a deeper understanding of the wisdom of Okun's Law and its application in labor market policies. [ABSTRACT FROM AUTHOR]

Abstract: Using data from the Peruvian sample of the Young Lives study, this paper investigates the association between maternal group participation and child nutritional status at the ages of 1 and 5 years. This study finds that the relationship between child nutrition and maternal group participation depends on the level of maternal education. In fact, maternal group participation is positively associated with child height‐for‐age when children were 1 year old, for those children whose mothers had had no formal education. This same association fades at 5 years of age. Maternal group participation may affect child nutrition through a number of mechanisms. This paper provides suggestive evidence on the positive role that this participation might play in promoting better breastfeeding practice and a more secure mother–child bond and in easing mothers’ access to additional resources and support. [ABSTRACT FROM AUTHOR]

Abstract: In this paper we compute inequality measures over the distribution of a subjective well‐being variable constructed from a life satisfaction question included in the Gallup World Poll in almost all countries in the world. We argue that inequality in subjective well‐being may be a better proxy for the degree of unfairness in a society than income inequality. We find evidence that inequality in subjective well‐being has an inverse‐U relationship with per capita GDP, but it is monotonically decreasing with respect to mean subjective well‐being. We argue that this difference might be associated to inequality aversion in the space of utility. [ABSTRACT FROM AUTHOR]

Abstract: This paper investigates whether there is an S‐curve in Colombia using bilateral and disaggregated quarterly data for the period 1991 to 2014. More precisely, the short‐run effects of a depreciation on the trade balance (TB) are analyzed in 27 industries covered by the Pacific Alliance Group free trade agreement. The S‐curve found in sectors representing 30 percent of total industrial production suggests that in these cases competitive devaluations have a positive effect on the TB in the short run. Our findings have important policy implications: since only large competitive devaluations can restore TB equilibrium, industrial restructuring would appear to be a more sensible strategy, though this cannot be achieved in the short run and is instead a medium‐ to long‐term goal. [ABSTRACT FROM AUTHOR]

Abstract: This paper extends a two‐period overlapping generations model of endogenous growth where the interactions between public infrastructure and human capital with research and development (R&D) activities and growth are studied. The paper makes two important contributions. First, it accounts for the spillover effect of the stock of ideas on learning, which in turn promotes the production of innovative technologies. In doing so, it brings to the fore a two‐way interaction between human capital and innovation. The paper then applies various econometric methods which confirm the above theoretical thesis. Second, the solutions of the model emphasize the important role public spending on infrastructure, human capital and R&D can play in promoting economic growth. However, the findings also show that trade‐offs in the allocation of public spending may inevitably emerge. In particular, investment in public infrastructure at the expense of spending on R&D is less likely to succeed in promoting economic growth, whereas it may be more effective to foster growth through an offsetting cut in another productive component, namely, education. In light of these potential trade‐offs, governments in low‐income countries need to use their limited budgets as part of holistic measures in order to achieve efficient outcomes. [ABSTRACT FROM AUTHOR]

Some micro level empirical studies found child labor incidence increasing even with improvement in the economic conditions of the poor. This paper provides a possible explanation as to why increase in absolute income may not be sufficient to solve the problem of child labor. We argue that people in general are not just concerned about their own consumption; they are very much affected by the consumption of their peers. While taking decisions regarding the time allocation of their children between work and leisure, parents do keep an eye on their relative position in the society. We develop a theoretical model of household decision making to show that child labor supply from a poor family can increase even with improvements in its economic conditions, if the family's relative position in the society deteriorates and if the relative status effect is sufficiently strong. [ABSTRACT FROM AUTHOR]

In a Ramsey-Cass-Koopmans growth framework it is shown that for an optimum a benevolent social planner cannot have an excessive "love of wealth". With a "right" "love of wealth" an optimum exists and implies higher long-run per-capita capital, income, and consumption relative to the standard model. This has important implications for comparative development trajectories. The optimum implies dynamic efficiency with the possibility of getting arbitrarily close to the golden rule where long-run per-capita consumption is maximal. It is shown that the optimal path attains its steady state more slowly. Thus, the beneficial effects of love of wealth materialize later than in the standard model. Furthermore, the economy can be decentralized as a competitive private ownership economy. One can then identify "love of wealth" with the "spirit of capitalism." The paper thus implies that one needs a "right" level of the "spirit of capitalism" to realize any beneficial effects for the long run. [ABSTRACT FROM AUTHOR]

Successful latecomers have certain stylized facts: an inverse U-shaped GDP and capital per capita growth rates, high growth rates during the catch-up period, and rapid structural changes. This paper proposes a general equilibrium framework and documents a catch-up cycle that successful latecomers are likely to experience. Technology adoption or imitation and the diminishing marginal return to capital are the two driving forces of the catch-up cycle. Technical gap and speed/efficiency of technical catching-up are two fundamental determinants for successful catching-up. Market competition, a beneficial financial system for resource allocation and openness are essential factors associated with speed/efficiency of technical catching-up and thus with successful catchingup. This paper concludes by a case study of China and sheds light on the different policy choices in various stages of the catch-up cycle. [ABSTRACT FROM AUTHOR]

This paper uses the 2015 version of the Organisation for Economic Co‐operation and Development (OECD) and World Trade Organization (WTO)'s Trade in Value‐added (TiVA) database to estimate China's value‐added exports to gross exports ratio (VAER), and calculate and compare China's bilateral gross trade imbalances and value‐added trade imbalances with its major trading partners at the aggregate and sector level, respectively. During the period from 1995 to 2011, China's value‐added exports were around 35% less than gross exports at the aggregate level, and around 60% and 80% for manufacturing sectors and tech‐intensive sectors, respectively. Compared with those based on conventional gross trade statistics, our estimates based on trade in value‐added cut China's overall trade imbalances substantially. China's value‐added trade surplus for manufacturing sectors, especially for the so‐called tech‐intensive sectors, was around 45% and over 85% less than gross trade surplus, respectively. China–U.S. value‐added trade surplus was 28–45% less than gross trade surplus during the period from 1995 to 2011. On the contrary, China's value‐added trade deficit with East and Southeast Asian economies is 71–99% and 59–93% less than gross trade deficit during the period from 2005 to 2011, respectively. [ABSTRACT FROM AUTHOR]

Using a panel data set of 160 economies from 1950 to 2018, this paper examines the relationship between military expenditures and economic, health‐related, education, environmental, and social indicators of sustainable development. The results generally suggest that the size of the military expenditures is negatively associated with educational attainment, life expectancy, infant and maternal mortality rates, female labor force participation, gender equality, and access to safe drinking water, electricity, basic sanitation, and positively correlated with mortality and poverty rates and air pollution. The findings are generally robust to different specifications and interact with GDP per capita; that is, the association of military spending with the development indicators is stronger (weaker) in less (more) developed economies. [ABSTRACT FROM AUTHOR]

This paper aims at modeling the dynamics of oil and agricultural commodity price nexus in linear and nonlinear frameworks in the Indian context. Monthly prices of agricultural commodities from 1982:M04 to 2021:M05 for 37 agricultural commodities under 12 clusters have been considered in the study. For the symmetric and asymmetric impacts of oil prices on agricultural commodity prices, advanced econometric approaches, autoregressive distributed lag and nonlinear autoregressive distributed lag, have been applied, respectively. The results reveal that in the case of aggregate analysis, oil prices have an asymmetric impact on 10 clusters of agricultural commodities in the long run, while disaggregate analysis suggests that oil prices have a long‐run positive elasticity with 29 of 37 agricultural commodity prices. Further, the asymmetric causality approach indicates that positive and negative shocks in oil prices Granger cause the prices of 34 agricultural commodities in the short run. The study has significant implications for policymakers, individual and institutional investors, wholesale producers, and primary producers (farmers). [ABSTRACT FROM AUTHOR]

Overeducation and skill mismatch have become crucial issues in the modern labor market. Taiwan's rapid structural transformation under industrialization since 1980 followed by the policy of expanding higher education after 1990 provides an excellent scenario for investigating the issues of overeducation and skill mismatch. Utilizing data from the Taiwan Education Panel Survey (TEPS) and its follow‐up survey (TEPS‐B), this paper develops an empirical strategy to test the effect of overeducation and skill mismatch on wage and job satisfaction for university graduates. As in the literature, Taiwan shows significant wage loss for both overeducation and skill mismatch and the wage penalty is higher for overeducation than for skill mismatch. Results from wage performance and job satisfaction estimations suggest both overeducation and job mismatch caused efficiency loss; however, the high wage loss and lower job dissatisfaction for overeducation imply overeducation may arise because of self‐selection under individual heterogeneity, which is not purely an efficiency loss. Therefore, the policy goal should properly focus on mitigating skill mismatch rather than overeducation. [ABSTRACT FROM AUTHOR]

Using nationally representative data from the 2017 National Internal Migrants Dynamic Monitoring Survey, this paper examines the nexus between social integration and the political participation of internal migrants in China. We document a positive association between social integration status and internal migrants' political participation. The study further examines the political participation differentials from two perspectives: between migration types and between migration distances. Our Oaxaca–Blinder decomposition analysis suggests that while only about 5.2% of the political participation differential between urban‐to‐urban migrants and rural‐to‐urban migrants is attributable to the difference in social integration status, the difference in social integration status explains about 12.0% of the participation gap between intra‐provincial migrants and inter‐provincial migrants. Our findings suggest that regionally diverse social integration policies may have unintended consequences for the political participation of migrant workers in China. [ABSTRACT FROM AUTHOR]

Engel's law states that the proportion of food in total consumption expenditure is negatively associated with household income. Different from other studies with time series, this paper investigates the applicability of Engel's law in China, with a sample of cross‐sectional data in 2016 covering the 31 provincial regions of China. The empirical results support Engel's law, and, especially after the consideration of food prices, which is represented by regional food purchasing power parities, the negative impact of income on Engel's coefficient becomes more statistically significant. Meanwhile, Engel's coefficient is positively related to the food price. According to different types of income elasticity, food is divided into two groups: life necessities and life nonnecessities. Then, the inferior Engel's coefficient (IEC) and superior Engel's coefficient (SEC) are calculated with the expenditures of necessary and nonnecessary food, respectively, and a further study shows that the negative relationship between income and the SEC is much weaker than that between income and the IEC. Besides, Engel's coefficient is more strongly affected by the price of food necessities than by that of food nonecessities. [ABSTRACT FROM AUTHOR]

This paper investigates how housing demolition affects labor supply using the China Family Panel Studies, a nationally representative household survey from China. We argue that housing demolition is likely to be random across households within the same community. We find that housing demolition reduces overall labor force participation by ~3.3 percentage points and farm work participation by ~4.4 percentage points. We also find that the negative impact on labor force participation is mainly driven by older people, women, less‐educated people, and people living in rural regions. The negative impact of housing demolition on labor force participation persists over time. [ABSTRACT FROM AUTHOR]

Poverty alleviation remains one of the most pressing problems, and China has made considerable advancements toward poverty alleviation in recent years. Considering village as a random effect, this paper proposes a linear quantile mixed model to analyze the effects of household type, village type, and their interactions on household income, suggesting a test of who benefits more or less from anti‐poverty policies. Results indicate that there has been a somewhat unbalanced development between poverty‐stricken households who are scheduled to be out of poverty earlier and poverty‐stricken households who are scheduled to be out of poverty later. The imbalance is slightly different across village types. Results also show that anti‐poverty policies have been equally implemented among village types, but there is some unbalanced development of poverty‐stricken and non‐poverty‐stricken households at lower income distribution quantiles depending on village type. Previously unidentified, marginally non‐poor households are found to benefit disproportionately less from policy measures irrespective of village type. [ABSTRACT FROM AUTHOR]

This paper estimates the effects of trade liberalization on household income inequality and investigates whether trade liberalization or domestic reforms are the main factors influencing increasing inequality in Taiwan, a middle‐income open economy. We construct an empirical model by decomposing the sources of household disposable income in the quintile ratio and separate trade partners into OECD (Organisation for Economic Co‐operation and Development) and non‐OECD countries. Using time‐series data to estimate the long‐run effect, we find that net exports to OECD countries increase inequality, whereas net exports to non‐OECD countries insignificantly decrease inequality. This finding diverges from the prediction based on the Stolper–Samuelson theorem. Overall, trade liberalization increases income inequality, and the effect is mainly attributed to net exports to OECD countries. Moreover, we provide evidence that domestic reforms, particularly technological progress in favor of skilled labor and industrial structural change, rather than trade liberalization, are the main driving forces of income inequality. [ABSTRACT FROM AUTHOR]

We explain periods of financial instability following drastic policy shifts within a Hayekian framework. Hayek emphasized that prices, established via the market process, help market participants to form coherent expectations about the future and coordinate plans with one another. In this paper, we elaborate on how policy shifts may undermine planning based on price signals and exacerbate uncertainty about the future, which can contribute to financial instability. Based on our postulated framework, we clarify how financial liberalization in the 1980s/1990s and the recent discretionary monetary policies in the advanced economies may have contributed to recurring episodes of financial instability in emerging markets. In particular, this paper provides an explanation for (1) why we observe financial instability mainly shortly following financial liberalization, and (2) why financial developments in the emerging markets are sensitive to unexpected monetary policy changes in the advanced countries in the current zero-interest rate environment. [ABSTRACT FROM AUTHOR]

This paper tests if the adequacy of reserves helps reduce exchange rate volatility in an environment of financial globalization, market-determined exchange rate and macroeconomic imbalances. It exploits the difference in the period after 2010 when India did not accumulate reserves but faced higher capital flow pressures, relative to a previous managed-float period marked by significant absorption of surplus capital flows. Along with other determinants, the sensitivity of rupee volatility is examined. The paper finds that adequate reserve holdings significantly reduce exchange rate volatility irrespective of the exchange rate regime; the effect is more through influence upon market sentiment and confidence than actual intervention. It contributes to existing evidence on the role of reserves in mitigating exchange rate volatility amid capital flow swings and offers insights into the policy environment depicted in the trilemma. [ABSTRACT FROM AUTHOR]

This paper reviews the impact of interest rate controls in Kenya, introduced in September 2016. The intent of the controls was to reduce the cost of borrowing, expand access to credit, and increase the return on savings. However, we find that the law on interest rate controls has had the opposite effect of what was intended. Specifically, it has led to a collapse of credit to micro‐, small‐, and medium‐sized enterprises; shrinking of the loan book of the small banks; and reduced financial intermediation. Because of their adverse effects on bank lending, we estimate that the interest rate controls have reduced economic growth by ¼–¾ percentage points on an annual basis. We also show that interest rate caps reduced the signaling effects of monetary policy. These suggest that (1) the adverse effects could largely be avoided if the ceiling was high enough to facilitate lending to higher‐risk borrowers and (2) alternative policies could be preferable to address concerns about the high cost of credit. [ABSTRACT FROM AUTHOR]

This paper describes the structure and estimation of a Social Accounting Matrix (SAM) of Kenya for the year 2014. Among its specificities, this SAM includes a very high disaggregation of the agri‐food sector and accounts for the double role of households as producers and consumers. Accounting for these characteristics is crucial to provide robust socioeconomic analysis in the context of developing countries. Indeed, this type of database is valuable to perform ex‐ante evaluations of economic policies with various economic models and techniques. In this paper, we present an application with a linear multiplier analysis (backward linkages and value chain decomposition). The results show the capacity of the primary sector in Kenya to generate value added and employment, with this growth distributed more intensely in rural households whose main livelihood is semi‐subsistence agriculture. [ABSTRACT FROM AUTHOR]

This paper analyzes the inter‐relationships between entrepreneurial propensity, fear of failure (FoF), and gender in Palestine, using the Global Entrepreneurship Monitor (GEM) adult population survey (APS) data for 2009, 2010, and 2012, and it is the first that addresses Gender, fear of failure, and entrepreneurship for Palestine. The paper extends the analysis of the endogeneity issue of FoF by using the conditional mixed process (CMP), which improves the efficiency of the estimates. The results show that the fear of failure negatively affects entrepreneurial status, while skill perception does the opposite. It is also found that fear of failure is higher among women, although this result is not stable over time. Using the CMP specification, we find that gender and fear of failure both reduce the predicted probability of entrepreneurship consistently over time. The only variable that consistently predicts fear of failure and is significant is skill perception, which has a negative impact. Policy implications of this research point to the importance of reducing the gender gap in entrepreneurship. In particular, there is a need to improve their skill perception in order to encourage more females to be entrepreneurs. Networking, vocational education and media coverage of success stories are among the tools that could potentially achieve this result. [ABSTRACT FROM AUTHOR]

This paper compares the effects of government consumption and government debt on economic growth using data from 83 countries, including both developed and developing markets, over the period from 1960 to 2014. Linear regressions reveal that the negative effects of government consumption are relatively higher than the negative effects of government debt. A nonlinear investigation further suggests that the restrictions on government expenditure to prevent negative growth are more important for countries with lower trade openness, lower inflation, or greater financial depth, whereas the restrictions on government debt are shown to be more important for countries with higher trade openness, lower inflation or greater financial depth. [ABSTRACT FROM AUTHOR]

Using a two‐country, two‐good model of international trade, we examine gains from trade and strategic interaction in resource management among countries that share renewable resources such as fishery stocks. Two goods are a resource good, which is the harvest of the shared stock, and some other good that may be thought of as manufactures. The productivity of the resource good depends on harvesting technology and the stock level. This paper focuses on technology standards (e.g., restrictions on fishing gears, vessels, areas, and time) over other methods for resource management because they are most commonly implemented in fisheries. Technology standards are modeled as a restriction on the harvesting technology; that is, under strict technology standards, firms exploit resources as if they are using inferior harvesting technology. We show that an opening up of trade may reduce the shared stock and cause steady‐state utility to decrease in a resource‐good importing country and increase in a resource‐good exporting country. Strikingly, when the shared stock is in jeopardy (a high demand for the harvest), steady‐state harvest is maximized after an opening up of trade by what we call multilateral resource management in this paper and both countries gain from trade. [ABSTRACT FROM AUTHOR]

High‐speed rail (HSR) has led to a transportation revolution in China. This paper uses the county‐level panel data of China's Yangtze River Delta to investigate the effect of HSR connection on local economy. To address the issue of endogenous HSR route placement, we use a straight‐line strategy to construct potential HSR connection variables as instrumental variables of the actual HSR connection. Both the difference‐in‐differences and instrumental variable methods show that HSR connection impedes local economy, especially in peripheral regions. The impediment effect is channeled through population reallocation from peripheral to core areas and the restructuring of industries. [ABSTRACT FROM AUTHOR]

This paper investigates how the costs of innovation in the formal sector temper or magnify the impacts of traditional policy levers such as taxation on sectoral choice. I embed a decision whether to operate formally or informally into a richer, general equilibrium model. Formal firms are subject to taxation, but they can improve their productivity through process innovation. Informal firms can potentially avoid taxation, and their productivity is determined by productivity growth in the formal sector. I find that changing tax rates from 50% to 60% decreases formal‐sector participation by 20.9%; however, this percentage falls by 10% when the cost of innovation is lower in the formal sector. The model also illustrates how changes in tax policy affect total factor productivity growth by limiting both the number of formal‐sector firms and the intensity of innovation. These results indicate a potential mechanism to induce firms to operate formally or mitigate harmful impacts of necessary tax changes. [ABSTRACT FROM AUTHOR]

What are the common characteristics among individuals who justify attacks on civilians? Using nationally representative Gallup World Poll surveys of 30,787 individuals from 27 developing countries in different parts of the world, this paper identifies the partial correlates of extremism. The results suggest that the typical extremist who supports attacks on civilians is more likely to be young, unemployed, and struggling to make ends meet, relatively uneducated, and not as religious as others, but more willing to sacrifice own life for his or her beliefs. Gender and marital status are not found to explain the individual‐level variation in attitudes toward extremism. These results are robust to various sensitivity analyses, although some of them vary in magnitude and significance across countries and geographic regions. [ABSTRACT FROM AUTHOR]

This paper explores how urban bias affects skilled–unskilled wage inequality through building several general equilibrium models. In the basic model, we find that an increase in the degree of urban bias will widen wage inequality if the unskilled sector is more capital intensive than the skilled sector and reduce wage inequality if the skilled sector is more capital intensive than the unskilled sector. In the extended models, we find that the conclusion obtained in the basic model almost still holds under different conditions. [ABSTRACT FROM AUTHOR]

This paper examines the labor market impacts of the Philippine Dual Training System (DTS), a vocational training program that combines firm‐based on‐the‐job training (OJT) and conventional institution‐based training, using a recent survey that tracked graduates from DTS and regular institution‐based programs. The estimation results using fuzzy regression discontinuity design show a significantly positive impact on the most recent monthly earnings. The impact significantly increases with the OJT intensity, measured by the number of hours a week in OJT. The above results imply that vocational training has to be aligned with actual production technologies and work practices to narrow skill gaps and create positive returns. [ABSTRACT FROM AUTHOR]

Since little is known about the effects of free textbooks on compulsory school students in China, this paper examines the effects of free textbooks on the academic performance of Chinese middle school students. It combines propensity score matching and difference‐in‐difference estimation to control for both observable and unobservable factors that affect the probability of obtaining free textbooks as well as students' academic performance. Results indicate that free textbooks significantly improve the midterm scores of girls and rural students, and the effects vary across different subjects. Moreover, the impact mechanisms of free textbooks are different for different groups and different subjects. [ABSTRACT FROM AUTHOR]

The rising incidence of credit defaults may cause credit crunch. This affects the ability of firms to finance working capital and also fixed capital formation. Naturally, this is a major macroeconomic shock. This paper is an attempt to address the microeconomic foundation of such macroeconomic shock. We provide a theoretical framework to explain the economic rationale behind 'wilful corporate defaults' and 'financial corruption' in the specific context of trade liberalization. First, we model the behavioural aspects of wilful corporate defaulters and bank officials to determine the bank bribe rate as an outcome of the Nash bargaining process in a two‐stage sequential move game. Based on the results of the partial equilibrium framework, we examine aspects of trade liberalization in an otherwise 2 × 2 general equilibrium framework. We also compare the efficacy of punishment strategies to economic incentives to deter credit defaults and banking sector corruption. Methodologically, our analytical model integrates finance capital distinctly from physical capital in Jonesian general equilibrium framework. Interestingly, our findings indicate that there exists a trade‐off at equilibrium between curbing credit defaults and bribery. We also find that not all punishment strategies are equally effective at deterring credit defaults if general equilibrium interlinkage effects are carefully dealt with. [ABSTRACT FROM AUTHOR]

With production increasingly fragmented across borders, global value chains (GVCs) form a key feature of the world economy. A rising body of literature has documented productivity gains from linking into GVCs for developed‐country firms, but studies on the same for developing countries are scant. In this paper, we empirically examine whether GVCs can increase total factor productivity (TFP) in developing countries, using an unbalanced panel of Indian manufacturing firms in the period 2000/2001–2014/2015 from the Prowess data set. To address econometric issues of self‐selection and endogeneity, we use a two‐stage empirical strategy of propensity score matching and system generalized method of moments. The results indicate that linking into GVCs has a positive and significant impact on firm TFP, even after accounting for self‐selection of more productive firms into GVCs. Once linked, increasing GVC embeddedness, captured through firm‐level vertical specialization, also has a positive and significant impact on firm productivity. But productivity gains are not homogenous; GVC firms that link into relational governance chains, captured through the share of skilled workers and infrastructure and communication index relative to industry, have 20% higher productivity growth than firms in other chains. Older and more liquid GVC firms are also more productive. Designing policies to facilitate GVC linkages and firm technological capabilities can thus foster productivity gains in developing countries. [ABSTRACT FROM AUTHOR]

This paper calculates poverty and inequality elasticities using the latest‐available World Bank primary survey household consumption expenditure data for the rapidly growing urban sectors of India, Indonesia, and China. Our approach compares the conventional use of the overly simple headcount measure to the poverty gap squared (PG2) measures of poverty and focuses the effectiveness of reducing inequality on the disutility of the poor using a microeconomic utility‐based point elasticity measure of poverty loss. The calculations show that reducing urban inequality is more effective in reducing (1) urban poverty than promoting growth and (2) poverty distress more than that in the rural sector. The optimal policy prescription is to reduce urban inequality by targeting the urban very poor using the PG2 measure. Further research is required to identify and quantify the determinants of the point elasticity magnitudes and the possible directions of causation. [ABSTRACT FROM AUTHOR]

In this paper, we investigate the effect of corruption on the economic development of the Latin American and Caribbean countries. Using panel data covering the period from 2000 to 2018 and leveraging on two‐way fixed‐effect and system generalized method of moments estimators, we show that a one standard deviation increase in corruption, as measured by the reversed Transparency International's corruption perception index, is associated with a decrease of 12.2% in gross domestic product per capita and a decrease of 3.05% in economic growth. This supports the view that corruption "sands the wheels" of the development of Latin American and Caribbean countries rather than "grease the wheels" perspective that corruption may help compensate for bad governance. We also assess the potential mechanisms through which corruption affects economic performance, providing evidence that corruption is associated with lower investment in physical capital and lower foreign investment flow. Finally, a panel Granger causality test indicates a bidirectional causality between higher corruption and lower economic development. [ABSTRACT FROM AUTHOR]

The informal sector is dominant in developing economies, and the vast majority of the poor rely on it. There is much to learn about informal firms—the "businesses of the poor"—as little is known about the drivers of their performance. The present paper attempts to fill this gap in the literature by analyzing how labor productivity of informal firms in developing countries depends on the level of education of the manager or the main decision‐maker of the firm. Using survey data for 3,854 informal or unregistered firms in 18 countries in Africa, Asia, and Latin America, we find that labor productivity is 28% to 33% higher when the manager has secondary or higher education versus only primary education or no education. The finding is robust to various robustness checks including parametric and semi‐parametric specifications and confirmed using instrumental variables estimation. [ABSTRACT FROM AUTHOR]

Education has been proved to be one of the most important variables influencing intergenerational income mobility. Existing literature decomposes the indirect effect of education on intergenerational income mobility into two components: the effect of the correlation between a parents' income and their children's education, and the effect of the return to education. Basing on the framework of existed studies, this paper explores a beneficial application to measure the two components, and checks which effect is more important in explaining the inter‐generational income mobility in Chinese society. Using data from the China Health and Nutrition Survey (CHNS), the research analyzes how education affects inter‐generational income mobility, and estimates the respective contributions of the two effects of education. The empirical results show that the effect of education is of importance in explaining the increase in the intergenerational income correlation for 1960s, 1970s and 1980s of Chinese age groups. Meanwhile, after decomposing the effect of education, we find that the return on education has stronger explanatory power on intergenerational income mobility than the correlation between a father's income and his child's education. Therefore, the return to education should be the center of policy design for the Chinese government. [ABSTRACT FROM AUTHOR]

Individual decisions such as migration can be influenced by different types of social networks. This paper examines strong and weak network effects on internal migration in China by distinguishing between first‐time migrants and experienced migrants. Strong networks are constructed by household members, while weak networks are determined by the village in which the individual resides. By employing spatial econometrics tools, we show that strong networks have a significant positive effect on the first‐time migration decision, while weak network effects vary across home provinces and are significant and positive only for some provinces. We also classify the sample to explore the network effects within the household and find that the effects are larger among siblings, especially among siblings of the same gender. In contrast, strong networks have a smaller impact, and weak networks appear to encourage migration after people have migration experience. Similar findings also apply to the choice of destination, months worked away from home, and migration earnings. [ABSTRACT FROM AUTHOR]

In a seminal paper, Martin, Mayer, and Thoenig, The Review of Economic Studies, 2008, 75(3), 865–900, show that bilateral trade decreases the probability of a militarized interstate dispute (MID), while multilateral trade increases it by allowing countries to decrease the opportunity cost of conflict through trade diversification. Lee and Pyun (2016) challenge this assertion by showing that both bilateral and multilateral trade flows reduce the likelihood of MID. This study develops an alternative measure of trade diversification based on Hirschman's (National power and the structure of foreign trade, 1945, Berkley: University of California Press) market concentration index and estimates its effect on the probability of MID. We find that the estimated impact of trade diversification on MID depends crucially on the model's inclusion of the trade–distance interaction terms. [ABSTRACT FROM AUTHOR]

Understanding the dynamics of interregional inequality in Africa is important when formulating development policies. In this paper, we investigate the convergence pattern of regional inequality within 49 African countries over the period 1992–2012 using satellite night‐light‐based inequality proxies. We find evidence of multiple equilibria in regional income inequality. Countries belonging to clubs with high regional inequality level do not show any tendency to converge toward the clubs with low regional inequality, indicating that these countries are indeed stuck in regional income inequality traps. The idea of regional income inequality traps is also confirmed by a distributional dynamic analysis that uncovered evidence of regional income inequality persistence with a limited degree of mobility between convergence clubs. From the convergence analysis, we found that the initial conditions in the economic development, natural resource rent, urbanization, political institutions, development aid programs, and infrastructure are very important determinants of regional income inequality. Our findings provide policy makers some direction for future economic policies. [ABSTRACT FROM AUTHOR]