Many Sub-Saharan African countries are extremely poor. It has been argued that the marriage system -- in particular polygyny -- is one contributing factor to the lack of development in this region. Polygyny leads to low incentives to save, depressing the capital stock and output. Enforcing monogamy might seem like an obvious solution. However, such a law will have winners and losers. In this paper, we investigate the transition from a polygynous to a monogamous steady state.
Scholars of economic development have argued that war can have adverse impacts on later economic performance: war destroys physical capital and infrastructure and disrupts human capital accumulation, and it may also damage institutions by creating political instability, destroying the social fabric and endangering civil liberties (World Bank 2003). Understanding war’s impact on development is particularly important for Sub-Saharan Africa, where two-thirds of all nations suffered from armed conflict during the 1980s or 1990s. The proliferation of armed conflict in the world’s poorest region begs the question of what role conflict may be playing in Africa’s disappointing economic performance. Yet the net long run effects of war are ambiguous from the point of view of economic theory. To the extent that war impacts are limited to the destruction of capital, the neoclassical model predicts rapid economic growth postwar converging back to steady state growth. Several recent papers that study war impacts – including in Japan (Donald R. Davis and David E. Weinstein, 2002) and Vietnam (Edward A. Miguel and Gerard Roland 2005) – find few persistent local impacts of U.S. bombing, with heavily bombed areas experiencing rapid recovery to prewar population and economic trends. This is consistent with the neoclassical model if war’s main consequence is to destroy capital. War could also affect long run growth – either positively or negatively – by modifying the scale parameter in the neoclassical growth model. For example, while World Bank (2003) argues that war has adverse institutional consequences, Charles H. Tilly shows how war promoted state formation and nation building in Europe historically, ultimately strengthening institutions (Tilly 1975). 1 In this short paper, we study the aftermath of the recent civil conflict in Sierra Leone. One notable aspect of this project is the extensive household data for Sierra Leone on conflict experiences and on local institutions. Our results are complementary to the other recent studies mentioned above, none of which examines institutional impacts.
It has been well documented that segregation across schools — denying access to resources, inferior educational production functions, and so on — exacerbates racial differences in achievement. Using an individual measure of social connections within schools, we have shown that this form of segregation — Asian kids sitting together in the cafeteria — has a substantively unimportant relationship with academic achievement or social behavior in school or later in life. There are important caveats to our analysis: (a) our estimates of the relationship between within - school segregation and outcomes are not causal; and (b) friendships may not be the only relevant cross-race social interaction that occurs within a school.
Does democracy promote economic development? This paper reviews recent attempts to address this question that exploited within-country variation. It shows that the answer is largely positive, but also depends on the details of democratic reforms. First, the sequence of economic vs political reforms matters: countries liberalizing their economy before extending political rights do better. Second, different forms of democratic government lead to different economic policies, and this might explain why presidential democracy leads to faster growth than parliamentary democracy. Third, it is important to distinguish between expected and actual political reforms. Taking expectations of regime change into account helps identify a stronger growth effect of democracy.
We propose a simple model of trooper behavior to design empirical tests for whether troopers of different races are monolithic in their search behavior, and whether they exhibit relative racial prejudice in motor vehicle searches. Our test of relative racial prejudice provides a partial solution to the well-known inframarginality and omitted-variables problems associated with outcome tests. When applied to a unique dataset from Florida, our tests soundly reject the hypothesis that troopers of different races are monolithic in their search behavior, but the tests fail to reject the hypothesis that troopers of different races do not exhibit relative racial prejudice.
Colombia's PACES program provided over 125,000 poor children with vouchers that covered the cost of private secondary school. The vouchers were renewable annually conditional on adequate academic progress. Since many vouchers were assigned by lottery, program effects can reliably be assessed by comparing lottery winners and losers. Estimates using administrative records suggest the PACES program increases secondary school completion rates by 15 to 20 percent. Correcting for the greater percentage of lottery winners taking college admissions tests, the program increased test scores by two-tenths of a standard deviation in the distribution of potential test scores.
We argue that “narrow framing,” whereby an agent who is offered a new gamble evaluates that gamble in isolation, may be a more important feature of decision-making than previously realized. Our starting point is the evidence that people are often averse to a small, independent gamble, even when the gamble is actuarially favorable. We find that a surprisingly wide range of utility functions, including many nonexpected utility specifications, have trouble explaining this evidence, but that this difficulty can be overcome by allowing for narrow framing. Our analysis makes predictions as to what kinds of preferences can most easily address the stock market participation puzzle.
This paper analyzes a marked change in the evolution of the U.S. wage structure over the past fifteen years: divergent trends in upper-tail (90/50) and lower-tail (50/10) wage inequality. We document that wage inequality in the top half of distribution has displayed an unchecked and rather smooth secular rise for the last 25 years (since 1980). Wage inequality in the bottom half of the distribution also grew rapidly from 1979 to 1987, but it has ceased growing (and for some measures actually narrowed) since the late 1980s. Furthermore we find that occupational employment growth shifted from monotonically increasing in wages (education) in the 1980s to a pattern of more rapid growth in jobs at the top and bottom relative to the middles of the wage (education) distribution in the 1990s. We characterize these patterns as the %u201Cpolarization%u201D of the U.S. labor market, with employment polarizing into high-wage and low-wage jobs at the expense of middle-wage work. We show how a model of computerization in which computers most strongly complement the non-routine (abstract) cognitive tasks of high-wage jobs, directly substitute for the routine tasks found in many traditional middle-wage jobs, and may have little direct impact on non-routine manual tasks in relatively low-wage jobs can help explain the observed polarization of the U.S. labor market.
Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments: Comment by Ernst Fehr, Michael Naef and Klaus M. Schmidt. Published in volume 96, issue 5, pages 1912-1917 of American Economic Review, December 2006
Why are distortionary policies used when seemingly Pareto improvements exist? According to a standard textbook argument, a Pareto improvement can be obtained by eliminating the distortions, compensating the losers with a lump sum transfer, and redistributing the gains that are left over. We relax the assumption that winners know the losses suffered by the losers and show that the informationally efficient method of compensating losers may involve the use of seemingly inefficient (but informationally efficient) distortionary policies. The risk of overcompensating losers may make distortions informationally efficient, as there are points on the Pareto frontier where distortions are used.