One of the oldest and most studied questions in development is whether the resource and environmental conditions faced by households in low-income rural areas significantly affect productivity.' The reason for this interest is clear: if productivity is significantly constrained by these factors, then the returns to investment in the form of human capital are likely to be high, and under certain conditions there may be scope for efficiency-improving policies and programs. Given this motivation it may at first seem surprising that most of the existing literature focusing on the health-productivity relationship concentrates on the effects of nutrition. While nutrition is an important contributor to good health, other components of health, especially illness, may also influence worker productivity. Moreover, in contrast to the case of nutrition, over which households have direct control, illness is affected by exposure to pathogens, something over which individual households may have little control. This public aspect of illness makes an examination of the effects of illness on productivity particularly important from a policy perspective. This distinction between the private nature of nutrition and the public nature of illness may at least in part be evident in Tables 1 and 2. These tables present the distribution of illness and calories, respectively, by wealth quartiles in three Asian countries. What is most striking about these tables is the fact that despite clear evidence that calories are importantly associated with wealth in at least two of the countries (Bangladesh and Pakistan) there is little systematic relationship between illness and wealth in any of the countries. For example, in Bangladesh, the top quartile (in terms of wealth) of the population of men and women consumes 6 percent and 8 percent more calories, respectively, than the lowest quartile. By contrast, Bangladeshi males in the upper quartile experience 19-percent more days ill over the same period than do those in the lower quartile; the figures for the women are identical. There are several possible reasons for this pattern. As suggested earlier, one possibility is that households have little control over their exposure to illness. If this is the case, then one might well conclude that the distributional effects of illness are quite limited. A second plausible explanation is that illness is measured or reported differently for better-off households. For example, a better-off individual who is generally healthy may be more readily able to identify when he or she is ill than a poor individual with low caloric intake. Moreover, to the extent that illness is measured as an alternative to work (as is the case for the Pakistani data set), a wealthier individual may be more willing to skip work on a day that he or she is ill. If this latter point is true, then the distributional consequences of illness could be quite important despite what is evident in Table 1.2 In this paper I address these and other related issues using two of the longitudinal data sets from rural Asia from which these tables were derived. In the first section of

In the presence of imperfect information, voluntary certification can provide an important complement to mandatory inspections as a basis for environmental regulation in low income countries. Using data from Mexico's Clean Industry Program, we show that patterns of compliance and certification by sector are consistent with a model in which selection into the voluntary program permits more efficient targeting of regulator effort. As expected given the informational role played by certification in the model, we also find evidence, for a sample of publicly traded firms, of positive stock price deviations linked to the announcement of certification.

Andrew D. Foster, Mark R. Rosenzweig; Household Division and Rural Economic Growth, The Review of Economic Studies, Volume 69, Issue 4, 1 October 2002, Pages 83

We use data from an agricultural labour market in which workers receive both time- and piece-rate wages and shift frequently among employers and tasks, to assess the roles of comparative advantage, information problems and preferences in determining the allocation of workers. The estimates which impose minimal structure not implied by economic theory are consistent with a one-factor productivity model, and indicate that information asymmetries are present but workers are sorted according to comparative advantage. In particular, the disproportionate presence of female workers in weeding activities is due not to worker or employer preferences but to comparative advantage and statistical discrimination.

In this paper, we examine empirically whether risk pooling is more advantageous among altruistic compared to selfish agents in a framework where individuals cannot make binding commitments. In particular, we incorporate altuism into a model of risk sharing under imperfect commitment and use simulation methods to establish tests of the roles of both altruism and commitment problems in determining the extent of insurance and the intertemporal movements in interhousehold transfers. The tests are carried out using three panel data sets from two countries of rural South Asia that provide detailed information on transfers and enable the measurement of income shocks. The estimates provide strong support for the notion that imperfect commitment substantially constrains informal transfer arrangements, whether kin-based or not, but also provide evidence that altruism plays an important role in ameliorating commitment constraints and thus in increasing the gains from income pooling.

Andrew D. Foster, Mark R. Rosenzweig, A Test for Moral Hazard in the Labor Market: Contractual Arrangements, Effort, and Health, The Review of Economics and Statistics, Vol. 76, No. 2 (May, 1994), pp. 213-227

Panel and time-series data describing the green-revolution period in India are used to assess the effects of exogenous technical change on the returns to schooling, the effects of schooling on the profitability of technical change, and the effects of technical change and school availability on household schooling investment. The results indicate that the returns to (primary) schooling increased during a period of rapid technical progress, particularly in areas with the highest growth rates. Such increases induced private investment in schooling, net of changes in wealth, wages, and the availability of schools, and school expansion importantly increased levels of schooling. Copyright 1996 by American Economic Association.

The increasing body of evidence from high income countries linking pollution to health outcomes (Ken Chay and Michael Greenstone 2003; Janet Currie and Matthew Neidell 2004), has raised concerns about the health impact of adverse air quality in developing countries, where, in general, environmental regulation is less stringent and health monitoring and treatment are less accessible. These concerns have, in turn, encouraged consideration of the effectiveness of alternative mechanisms for improving air quality while limiting the adverse impact on economic growth. However, the analysis of both the effects of pollution on health and the effectiveness of pollution abatement policies faces particular empirical challenges in low- and middle-income contexts, given the scarcity of reliable measures of pollution concentrations. The primary source of good quality data on air quality, ground monitoring, tends to be limited to larger metropolitan areas with monitors placed at sentinel sites that may or may not yield a representative picture of population exposure. This paper calls attention to, and makes use of, newly available procedures for extracting measures of air quality from satellite imagery. In particular, satellite-based measures of aerosol optical depth (AOD) are used to obtain estimates of air quality for the whole Mexican territory at a detailed geographic scale, and these estimates are related to measures of participation in a voluntary certification program at the level of the county. The resulting estimates are then combined with estimates of the relationship between participation in the certification program and infant mortality due to respiratory causes to obtain a rough estimate of the relationship between air quality and infant health in Mexico.

We show that labor market transaction costs explain why the smallest farms are more efficient than slightly larger farms in most low-income countries and that increases in machine capacity with operational scale result in the globally observed rising upper tail of productivity. We find evidence consistent with these mechanisms using Indian data, and we show that if all Indian farms were at the minimum scale required to maximize the return on land, the number of farms would be reduced by 82% and income per farm worker would rise by 68%.

Household-level panel data from a nationally representative sample of rural Indian households describing the adoption and profitability of high-yielding seed varieties (HYVs) associated with the Green Revolution are used to test the implications of a model incorporating learning by doing and learning spillovers. The estimates indicate that imperfect knowledge about the management of the new seeds was a significant barrier to adoption; this barrier diminished as farmer experience with the new technologies increased; own experience and neighbors' experience with HYVs significantly increased HYV profitability; and farmers do not fully incorporate the village returns to learning in making adoption decisions. Copyright 1995 by University of Chicago Press.