Slumming
Does International Child Sponsorship Work? A Six-Country Study of Impacts on Adult Life Outcomes
Bruce Wydick, Paul Glewwe & Laine Rutledge
Journal of Political Economy, April 2013, Pages 393-436
Abstract:
Child sponsorship is a leading form of direct aid from wealthy country households to children in developing countries. Over 9 million children are supported through international sponsorship organizations. Using data from six countries, we estimate impacts on several outcomes from sponsorship through Compassion International, a leading child sponsorship organization. To identify program effects, we utilize an age-eligibility rule implemented when programs began in new villages. We find large, statistically significant impacts on years of schooling; primary, secondary, and tertiary school completion; and the probability and quality of employment. Early evidence suggests that these impacts are due, in part, to increases in children's aspirations.
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How Long Will It Take to Lift One Billion People Out of Poverty?
Martin Ravallion
World Bank Research Observer, forthcoming
Abstract:
Alternative scenarios are considered for reducing by one billion the number of people surviving on less than $1.25 a day. The low-case, "pessimistic" path to that goal envisages the developing world outside China returning to the slower pace of economic growth and poverty reduction of the 1980s and 1990s, but with China maintaining its progress. This path would take 50 years or more to lift one billion people out of poverty. A more optimistic path is identified that would maintain the developing world's (impressive) progress against absolute poverty since the turn of the century. This path would lift one billion people out of poverty by 2025-30. The optimistic path is consistent with both linear projections of the time-series data and nonlinear simulations of inequality-neutral growth for the developing world as a whole.
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The Miracle of Microfinance? Evidence from a Randomized Evaluation
Esther Duflo et al.
NBER Working Paper, May 2013
Abstract:
This paper reports on the first randomized evaluation of the impact of introducing the standard microcredit group-based lending product in a new market. In 2005, half of 104 slums in Hyderabad, India were randomly selected for opening of a branch of a particular microfinance institution (Spandana) while the remainder were not, although other MFIs were free to enter those slums. Fifteen to 18 months after Spandana began lending in treated areas, households were 8.8 percentage points more likely to have a microcredit loan. They were no more likely to start any new business, although they were more likely to start several at once, and they invested more in their existing businesses. There was no effect on average monthly expenditure per capita. Expenditure on durable goods increased in treated areas, while expenditures on "temptation goods" declined. Three to four years after the initial expansion (after many of the control slums had started getting credit from Spandana and other MFIs ), the probability of borrowing from an MFI in treatment and comparison slums was the same, but on average households in treatment slums had been borrowing for longer and in larger amounts. Consumption was still no different in treatment areas, and the average business was still no more profitable, although we find an increase in profits at the top end. We found no changes in any of the development outcomes that are often believed to be affected by microfinance, including health, education, and women's empowerment. The results of this study are largely consistent with those of four other evaluations of similar programs in different contexts.
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Changing Identity: Retiring from Unemployment
Clemens Hetschko, Andreas Knabe & Ronnie Schöb
Economic Journal, forthcoming
Abstract:
Using German panel data, we show that unemployed people are, on average, less satisfied with their life than employed people, but they report a substantial increase in their life satisfaction upon retirement. We interpret this finding using identity theory. Retirement raises the identity utility of the unemployed because it changes the social norms they are supposed to adhere to. While the social norm for people of working age prescribes that able-bodied people should be employed, the social norm for the retired does not contain such expectations. Findings for various subgroups are consistent with that interpretation.
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Poverty in Global Perspective: Is Shame a Common Denominator?
Robert Walker et al.
Journal of Social Policy, April 2013, Pages 215-233
Abstract:
Focussing on the psychosocial dimensions of poverty, the contention that shame lies at the ‘irreducible absolutist core' of the idea of poverty is examined through qualitative research with adults and children experiencing poverty in diverse settings in seven countries: rural Uganda and India; urban China; Pakistan; South Korea and United Kingdom; and small town and urban Norway. Accounts of the lived experience of poverty were found to be very similar, despite massive disparities in material circumstances associated with locally defined poverty lines, suggesting that relative notions of poverty are an appropriate basis for international comparisons. Though socially and culturally nuanced, shame was found to be associated with poverty in each location, variably leading to pretence, withdrawal, self-loathing, ‘othering', despair, depression, thoughts of suicide and generally to reductions in personal efficacy. While internally felt, poverty-related shame was equally imposed by the attitudes and behaviour of those not in poverty, framed by public discourse and influenced by the objectives and implementation of anti-poverty policy. The evidence appears to confirm the negative consequences of shame, implicates it as a factor in increasing the persistence of poverty and suggests important implications for the framing, design and delivery of anti-poverty policies.
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Childhood Neighborhood Conditions and the Persistence of Adult Income
Tonmoy Islam
Regional Science and Urban Economics, forthcoming
Abstract:
Economists have long been interested on the role of childhood neighborhood and family characteristics in explaining adult income, with some emphasizing the importance of family over neighborhood characteristics in determining income. However, they seldom include persistence as a factor that can influence income, and the few that do always treat it as homogeneous across individuals. In spite of this, the importance of persistence should not be undermined because it is vital to understanding long term effect of variables on income, in addition to explaining the likelihood of a person to be trapped in a low income trap and the time taken to recover from a negative shock. As an extension to this literature, I add individual-level heterogeneity in income persistence and show it can be affected by childhood neighborhood variables. By applying a two-step correlated random effects GMM on the Panel Study of Income Dynamics Dataset, I find that persistence is a significant factor in determining adult income, with average being about 0.38. However, I find that the poor have a higher persistence of income than the rich, implying that the poor are affected more when the macroeconomy changes. The poor also take a longer time to recover from a negative shock. Furthermore, I find that improving childhood neighborhood, especially neighborhood idleness rate, can help to increase adult income by lowering its persistence. My simulation exercise also shows that reducing idleness rate in childhood neighborhood by 1 percentage point of those earning in the bottom quartile of the income distribution can help to increase overall social welfare the most.
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Saving Response to Unemployment of a Sibling
Kiichi Tokuoka
Journal of Economic Behavior & Organization, May 2013, Pages 58-75
Abstract:
Standard theoretical models of household saving behavior do not typically assume that household perceptions of the world change in response to observed events. In light of the potential importance of such perception changes (e.g., after a financial crisis), this paper considers the hypothesis that a household's saving rate rises through informal learning after a sibling (direct or in-law) has been unemployed. The empirical results in this paper are consistent with the learning hypothesis, with coefficients estimated by the instrumental variable (IV) method implying that a household's saving rate increases by 2 - 3 percentage points if a sibling has been unemployed.
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Alessio Vieno, Michele Roccato & Silvia Russo
Journal of Community & Applied Social Psychology, forthcoming
Abstract:
Using the 2006 Eurobarometer data (representative sample of the European population, N = 16 306, 27 countries), we performed a multilevel analysis aimed at predicting fear of crime. A significant proportion of the variation in fear of crime was at country level. Of the individual predictors included, being a woman, being poorly educated, being unemployed, and being an urban dweller showed positive relations with fear of crime. Fear was highest among people who considered themselves to be socially marginal, among people with negative expectations regarding themselves and their country's future, and among people who considered their nation's welfare system to be unsatisfactory. Among the ecological predictors we took into consideration, nations' degree of economic inequality and low expenditure on education and on social protection showed a positive association with fear of crime, whereas the crime, immigration, and employment rates did not. Implications and limitations of this research are discussed.
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Paula Gilligan
Television & New Media, May 2013, Pages 244-260
Abstract:
In the aftermath of the 2011 UK riots, two main themes emerged in public discourse: (a) that the riots were criminal and materialistic in intent and linked to the reality television driven "miswanting" of poor youth and (b) that the riots were a manifestation of a national crisis generated by the absence of public and civic responsibility among (female) denizens of public housing estates. The author argues that, far from telling us about the cultures of poor youth, reality television programs, notably those produced by the BBC, elucidate the agenda of political elites driving "Austerity Britain" to "harden" the views of British citizens against the poor and marginalized. She explores the new harsh realism of Neighbourhood Watched identifying a shift from the earlier left-wing concerns of the British social-realist movement, toward a right-wing sensibility, which has coincided with significant changes to state policy toward the most vulnerable segments of Britain's population.
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Benefit Duration, Unemployment Duration and Job Match Quality: A Regression-Discontinuity Approach
Marco Caliendo, Konstantinos Tatsiramos & Arne Uhlendorff
Journal of Applied Econometrics, June/July 2013, Pages 604-627
Abstract:
We use a sharp discontinuity in the maximum duration of benefit entitlement to identify the effect of extended benefit duration on unemployment duration and post-unemployment outcomes (employment stability and re-employment wages). We address dynamic selection, which may arise even under an initially random assignment to treatment, estimating a bivariate discrete-time hazard model jointly with a wage equation and correlated unobservables. Owing to the non-stationarity of job search behavior, we find heterogeneous effects of extended benefit duration on the re-employment hazard and on job match quality. Our results suggest that the unemployed who find a job close to and after benefit exhaustion experience less stable employment patterns and receive lower re-employment wages compared to their counterparts who receive extended benefits and exit unemployment in the same period. These results are found to be significant for men but not for women.
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Bounding the Effects of Social Experiments: Accounting for Attrition in Administrative Data
Jeffrey Grogger
NBER Working Paper, February 2013
Abstract:
Social experiments frequently exploit data from administrative records. However, most administrative data systems are state-specific, designed to track earnings or benefit payments among residents within a single state. Once an experimental participant moves out of state, his earnings and benefits in his state of origin consist entirely of zeros, giving rise to a form of attrition. In the presence of such attrition, the average treatment effect of the experiment is no longer point-identified, despite random assignment. I propose a method to estimate such attrition and, for binary outcomes such as employment, to construct bounds on the average treatment effect. Results from a welfare-reform experiment considered to have sizeable effects appear quite ambiguous after accounting for attrition. The results have important implications for planning social experiments.
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Christina Robinson
Journal of Family and Economic Issues, June 2013, Pages 172-184
Abstract:
The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) is a food assistance program designed to help pregnant (or postpartum) women and young children consume a nutritious diet. With WIC's emphasis on providing healthy foods, and food being (generally) a communal commodity, age-ineligible children may benefit from living with a WIC participant. This paper used data from the third National Health and Nutrition Examination Survey to examine whether age-ineligible children who lived in WIC households were in better health than similar children who lived in households that did not participate in the program. Results suggested that older males received a health benefit as a result of living in a WIC household; however, no similar effect was found for younger males or for female children.
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Income Shocks and Adolescent Mental Health
Sarah Baird, Jacobus de Hoop & Berk Özler
Journal of Human Resources, Spring 2013, Pages 370-403
Abstract:
We investigate the effects of a positive income shock on mental health among adolescent girls using evidence from a cash transfer experiment in Malawi. Offers of cash transfers strongly reduced psychological distress among baseline schoolgirls. However, these large beneficial effects declined with increases in the transfer amount offered to the parents conditional on regular school attendance by the adolescent girls. Improved physical health, increased school attendance, personal consumption, and leisure contributed to the effects. There was also strong evidence of increased psychological distress among untreated baseline schoolgirls in treatment areas. All of these effects dissipated soon after the program ended.
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Shawn Kneipp, John Kairalla & Amanda Sheely
Social Science & Medicine, March 2013, Pages 130-140
Abstract:
The high prevalence of health conditions among U.S. women receiving Temporary Assistance for Needy Families (TANF, or ‘welfare') impedes the ability of many in this group to move from ‘welfare-to-work', and the economic recession has likely exacerbated this problem. Despite this, few interventions have been developed to improve employment outcomes by addressing the health needs of women receiving TANF, and little is known about the impact of economic downturns on the employment trajectory of this group. Using data from a recent randomized controlled trial (RCT) that tested the efficacy of a public health nursing (PHN) intervention to address the chronic health condition needs of 432 American women receiving TANF, we examine the effect of the intervention and of recession exposure on employment. We further explore whether intervention effects were modified by select sociodemographic and health characteristics. Both marginal and more robust intervention effects were noted for employment-entry outcomes (any employment, p = 0.05 and time-to-employment, p = 0.01). There were significant effects for recession exposure on employment-entry (any employment, p = 0.002 and time-to-employment, p < 0.001). Neither the intervention nor recession exposure influenced longer-term employment outcomes (employment rate or maximum continuous employment). Intervention effects were not modified by age, education, prior TANF receipt, functional status, or recession exposure, suggesting the intervention was equally effective in improving employment-entry across a fairly heterogeneous group both before and after the recession onset. These findings advance our understanding of the health and employment dynamics among this group of disadvantaged women under variable macroeconomic conditions, and have implications for guiding health and TANF-related policy.
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How Financial Incentives Induce Disability Insurance Recipients to Return to Work
Andreas Ravndal Kostøl & Magne Mogstad
NBER Working Paper, May 2013
Abstract:
Disability Insurance (DI) programs have long been criticized by economists for apparent work disincentives. Some countries have recently modified their programs such that DI recipients are allowed to keep some of their benefits if they return to work, and other countries are considering similar return-to-work policies. However, there is little empirical evidence of the effectiveness of programs that incentivize the return to work by DI recipients. Using a local randomized experiment that arises from a sharp discontinuity in DI policy in Norway, we provide transparent and credible identification of how financial incentives induce DI recipients to return to work. We find that many DI recipients have considerable capacity to work that can be effectively induced by providing financial work incentives. We further show that providing work incentives to DI recipients may both increase their disposable income and reduce program costs. Our findings also suggest that targeted policies may be the most effective in encouraging DI recipients to return to work.
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WIC in Your Neighborhood: New Evidence on the Impacts of Geographic Access to Clinics
Maya Rossin-Slater
Journal of Public Economics, forthcoming
Abstract:
A large body of evidence indicates that conditions in-utero and health at birth matter for individuals' long-run outcomes, suggesting potential value in programs aimed at pregnant women and young children. This paper uses a novel identification strategy and data from birth and administrative records over 2005-2009 to provide causal estimates of the effects of geographic access to the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). My empirical approach uses within-ZIP-code variation in WIC clinic presence together with maternal fixed effects, and accounts for the potential endogeneity of mobility, gestational-age bias, and measurement error in gestation. I find that access to WIC increases food benefit take-up, pregnancy weight gain, birth weight, and the probability of breastfeeding initiation at the time of hospital discharge. The estimated effects are strongest for mothers with a high school education or less, who are most likely eligible for WIC services.
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Redistributional consequences of early childhood intervention
Tim Lohse, Peter Lutz & Christian Thomann
European Journal of Health Economics, June 2013, Pages 373-381
Abstract:
Recently, early investment in the human capital of children from socially disadvantaged environments has attracted a great deal of attention. Programs of such early intervention, aimed at children's health and well-being, are spreading considerably in the US and are currently being tested in several European countries. In a discrete version of the Mirrlees model with a parents' and a children's generation, we model the intra-generational and the inter-generational redistributional consequences of such intervention programs. It turns out that the parents' generation loses whenever such intervention programs are implemented. Furthermore, the rich part of the children's generation always benefits. Despite the expectation that early intervention puts the poor descendants in a better position, our analysis reveals that the poor among the children's generation may even be worse off, if the effect of early intervention on their productivity is not large enough.
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Are poor people credit-constrained or myopic? Evidence from a South African panel
Erlend Berg
Journal of Development Economics, March 2013, Pages 195-205
Abstract:
Credit constraints are an almost ubiquitous assumption in development economics. Yet direct evidence for credit constraints is limited, and many observations consistent with credit constraints are equally compatible with myopic (non-forward-looking) consumption or precautionary saving. Using household panel data and a source of widely anticipated income in South Africa, this paper tests and rejects the standard consumption model with perfect capital markets. Then, myopic consumption and precautionary saving are tested as alternative explanations for the observed jumps in expenditure. The standard model with credit constraints cannot be rejected in favour of myopic consumption or precautionary saving.
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Workfare for the old and long-term unemployed
Helge Bennmarker, Oskar Nordström Skans & Ulrika Vikman
Labour Economics, forthcoming
Abstract:
We estimate the effects of conditioning benefits on program participation among older long-term unemployed workers. We exploit a Swedish reform which reduced UI duration from 90 to 60 weeks for a group of older unemployed workers in a setting where workers who exhausted their benefits received unchanged transfers if they agreed to participate in a work practice program. Our results show that job finding increased as a result of the shorter duration of passive benefits. The time profile of the job-finding effects suggests that the results are due to deterrence during the program-entry phase. We find no impact on ensuing job durations or wages, suggesting that the increased job-finding rate was driven by increased search intensity rather than lower reservation wages. A crude cost benefit analysis suggests that the reform reduced the combined cost of programs and transfers.
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Does unemployment insurance crowd out home production?
Bulent Gul & Temel Taskin
European Economic Review, forthcoming
Abstract:
In this paper, we study the interaction between self insurance and public insurance. In particular, we provide evidence on a negative correlation between unemployment insurance benefits and home production using the American Time Use Survey (ATUS) and the state-level unemployment insurance data of the U.S. The empirical results suggest that moving to a two times more generous state would decrease time spent on home production about 22% for the unemployed. Then, we pursue a quantitative assessment of this empirical finding using a dynamic competitive equilibrium model in which households do home production as well as market production. The model is able to generate the empirical facts regarding the unemployment benefits and home production. The fact that unemployment insurance benefits crowd out home production is interpreted as a substitution between the two insurance mechanisms against loss of earnings during unemployment spells.