ECON 7351.  Development Economics: Microeconomic Issues

Fall 2007 Course Syllabus

Mondays and Wednesdays 10:00-11:30am, McElhinney Hall Room 107

 

 

Professor Aimee Chin

University of Houston Department of Economics

Office: McElhinney 221B; e-mail: achin@uh.edu; phone: 713-743-3761

Office hours: Wednesdays 2:45-4:45pm (no appointment needed during this time).  Meetings at any other time must be arranged in advance via e-mail or phone.

Course homepage: http://www.uh.edu/~achin/devel for announcements and assignments

 

Description

This course provides an overview of the current literature on the microeconomics of development in poor countries.  Topics covered include the role of human capital (health, education), the internal structure of households (neoclassical, bargaining), the functioning of factor markets (land, credit and insurance), and the role of institutions in mediating change.  On the methodological side, we will examine econometric techniques that researchers have used to identify causal relationships (panel data, instrumental variables, randomized experiments, regression discontinuity design). 

 

Learning Outcomes

  • Students will attain, through lectures, readings and problem sets, knowledge of the microeconomic foundations of development economics.
  • Students will be able to critically assess research papers.
  • Students will be able to perform econometric techniques that researchers have used to identify causal relationships.

Prerequisites

You must have completed the first-year graduate sequences in microeconomics and econometrics. 

 

Requirements and Grading

1)  6 problem sets

8% each

48%

3)  final exam

In-class given in two independent parts, one on November 26 and the second on November 28

38%

4)  class participation

Combination of attendance, preparedness for class and quality of classroom comments

14%

 

Problem Sets: For the data exercises, we will use Stata.  Students are encouraged to work together on problem sets.  However, each student must write up his/her own problem set.  No copies will be accepted, and this includes programs. 

 

Final Exam: There will be a closed-book exam during our last two class meetings covering all the materials of the course.

 

Class Participation: Students are expected to attend every lecture, complete the readings in advance of the lecture, and participate in classroom discussion.

 

There will be no make-ups or extensions given for exams and assignments except with prior consent from me or in the event of an unexpected emergency.

 

General Readings

Readings associated with each lecture are given in the “Course Schedule” section.  This section lists some general references for students of micro development.

 

The following two papers describe the econometric tools we will be using in this course:

Duflo, Esther, Rachel Glennerster and Michael Kremer (2007), “Using randomization in development economics research: a toolkit,” CEPR Discussion Paper No. 6059.  Find it at the following URL: http://econ-www.mit.edu/faculty/eduflo/papers

 

Angrist, Joshua D. and Alan B. Krueger (1999), “Empirical strategies in labor economics,” Handbook of Labor Economics, Volume 3, Ashenfelter, A. and D. Card, eds., Amsterdam: Elsevier Science.

URL: http://www.irs.princeton.edu/pubs/pdfs/401.pdf

 

Angrist, Joshua D. and Alan B. Krueger (2001), “Instrumental variables and the search for identification: from supply and demand to natural experiments,” Journal of Economic Perspectives, 13(2):69-85.  (JSTOR)

 

Our course will not use a textbook, but the following books may be of interest to you:

Bardhan, Pranab and Christopher Udry (1999), Development Microeconomics, Oxford: Oxford University Press. 

 

Deaton, Angus (1997), The Analysis of Household Surveys: A Microeconometric Approach to Development Policy, Baltimore: Johns Hopkins University Press. 

 

Ray, Debraj (1998), Development Economics, Princeton: Princeton University Press. 

 

 

Course Schedule (subject to change)

 

I.  Introduction (Lecture 1)

 

World Bank (2003), World Development Report 2004: Making Services Work for Poor People, Washington DC: The World Bank.  Take a look at the overview chapter and the chapter on selected world development indicators at following URL: http://econ.worldbank.org/WBSITE/EXTERNAL/EXTMODELSITE/EXTWDRMODEL/0,,ImgPagePK:64202988~entityID:000090341_20031007150121~pagePK:64217930~piPK:64217936~theSitePK:477688,00.html

 

The World Bank website has lots of content that may be(come) of interest to you, with not only World Development Reports but also research papers and data sets.  You will probably want to check it out from time to time in the future.

 

Banerjee, A. and E. Duflo (2007), “The economic lives of the poor,” forthcoming in Journal of Economic Perspectives.  Find it at the following URL:

      http://econ-www.mit.edu/faculty/eduflo/papers

 

 

II.  Land (3 lectures, Lectures 2-4)

 

Banerjee, Abhijit (2000) "Land Reforms: Prospects and Strategies," in B. Pleskovic and J. Stiglitz (eds.), Annual World Bank Conference on Development Economics 1999. Washington, DC: World Bank, pp. 253-284.  This can be found at the following URL (it is the second paper under the “Conference” section):

http://web.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRABCDEWASHINGTON1999/0,,contentMDK:20289127~menuPK:554062~pagePK:64168445~piPK:64168309~theSitePK:554047,00.html

 

Shaban, Radwan Ali (1987), “Testing between competing models of sharecropping,” Journal of Political Economy 95: 893-920.  (JSTOR)

 

Banerjee, Abhijit V., Paul J. Gertler and Maitreesh Ghatak (2002), “Empowerment and efficiency: tenancy reform in West Bengal,” Journal of Political Economy 110, no. 2: 239-280.  (Available through UH Library website, find journals, locate individual journals, choose “Business Source Complete” after searching for Journal of Political Economy, then search electronic edition to find this article.)

 

Field, Erica (2007), “Entitled to work: Urban property rights and labor supply in Peru,” forthcoming in Quarterly Journal of Economics.  Find it at the following URL:

      http://post.economics.harvard.edu/faculty/field/papers.html

 

 

III.  Credit, Savings and Risk (7 lectures, Lectures 5-11)

 

Banerjee, Abhijit (2004) "Contracting constraints, credit markets, and economic development," in M. Dewatripoint, L. Hansen and S. Turnovsky, eds. Advances in Economics and Econometrics: Theory and Applications, Eight World Congress of the Econometric Society, Volume III. Cambridge University Press, pp. 1-46.

      URL: http://web.mit.edu/14.771/www/con-dev-april-2002-v-6-23.pdf

 

Aleem, Irfan (1990), “Imperfect information, screening and the costs of informal lending: a study of a rural credit market in Pakistan,” World Bank Economic Review 4: 329-349.

 

Burgess, Robin and Rohini Pande (2005), “Do rural banks matter?  Evidence from the Indian social banking experiment,” American Economic Review 95, no. 3: 780-795. (Available through UH Library website, find journals, locate individual journals, choose “Business Source Complete” after searching for American Economic Review, then search electronic edition to find this article.)

 

Khawaja, Asim Ijaz and Atif Mian (2005), “Do lenders favor politically connected firms?  Rent provision in an emerging financial market,” Quarterly Journal of Economics 120, no. 4: 1371-1411. (Available through UH Library website, find journals, locate individual journals, choose “Business Source Complete” after searching for Quarterly Journal of Economics, then search electronic edition to find this article.)

 

Cole, Shawn (2007), “Fixing Market Failures or Fixing Elections? Elections, Banks and Agricultural Lending in India” Find it at the following URL: http://drfd.hbs.edu/fit/public/facultyInfo.do;jsessionid=GY8xJ9vhbxnhbLPG8ZHQyZXDpm7vJwRpjN7JMJqp16wZVzyYFLCT!964040392!-947129631?facInfo=pub&facEmId=scole%40hbs.edu

 

Morduch, Jonathan (1999), “The microfinance promise,” Journal of Economic Literature 37: 1569-1614. (JSTOR)

 

Karlan, Dean S. (2007), “Social connections and group banking,” Economic Journal 117: F52-F84.  This can be found at the following URL (it is under the “Published” section): http://research.yale.edu/karlan/deankarlan/papers/index.php

 

Banerjee, Abhijit, Esther Duflo and Kaivan Munshi (2003), “The (mis)allocation of capital” Journal of the European Economic Association 1, no. 2/3: 484-494.  (Available through UH Library website, find journals, locate individual journals, choose “Business Source Complete” after searching for Journal of the European Economic Association then search electronic edition to find this article.)

 

Banerjee, Abhijit and Kaivan Munshi (2004), “How efficiently is capital allocated?  Evidence from the knitted garment industry in Tirupur” Review of Economic Studies 71, issue 246: 19-42.  (Available through UH Library website, find journals, locate individual journals, choose “Business Source Complete” after searching for Review of Economic Studies, then search electronic edition to find this article.)

 

Banerjee, Abhijit and Esther Duflo (2004), “Do firms want to borrow more?  Testing credit constraints using a directed lending program,” Mimeo, MIT, August.

      URL: http://econ-www.mit.edu/faculty/download_pdf.php?id=434

 

Paxson, Christina H. (1992), “Using weather variability to estimate the response of savings to transitory income in Thailand,” American Economic Review 82: 15-33.  (JSTOR)

 

Rosenzweig, Mark R. and Kenneth I. Wolpin (1993), “Credit market constraints, consumption smoothing and the accumulation of durable production assets in low-income countries: Investments in bullocks in India,” Journal of Political Economy 101: 223-244.  (JSTOR)

 

Frankenberg, Elizabeth, James P. Smith and Duncan Thomas (2003), “Economic shocks, wealth and welfare,” Journal of Human Resources 38(2): 280-321.  (Available through UH Library website, find journals, locate individual journals, choose “From Wilson” after searching for Journal of Human Resources, then search to find this article.)

 

Townsend, Robert M. (1995), “Consumption insurance: An evaluation of risk-bearing systems in low-income economies,” Journal of Economic Perspectives 9: 83-102.  (JSTOR)

 

Udry, Christopher (1994), “Risk and insurance in a rural credit market: an empirical investigation in northern Nigeria,” Review of Economic Studies 61: 495-526.  (JSTOR)

 

Rosenzweig, Mark R. and Oded Stark (1989), “Consumption smoothing, migration and marriage: Evidence from rural India,” Journal of Political Economy 97: 905-926.  (JSTOR)

 

 

IV.  Gender and Family (3 lectures, Lectures 12-14)

 

Thomas, Duncan (1990), “Intra-household resource allocation: an inferential approach,” Journal of Human Resources 25: 635-664.  (JSTOR)

 

Duflo, Esther (2003), “Grandmothers and granddaughters: old age pension on child and intra-household allocation in South Africa,” World Bank Economic Review 17: 1-25.

URL: http://papers.nber.org/papers/w8061.pdf

 

Udry, Christopher (1996), “Gender, agricultural production and the theory of the household,” Journal of Political Economy 101: 1010-1045.  (JSTOR)

 

Qian, Nancy (2006), “Missing women and the price of tea in China: The effect of sex-specific income on sex imbalance,” Mimeo, Brown.  This can be found at the following URL:

http://www.econ.brown.edu/fac/Nancy_Qian/Research.html

 

Robinson, Jonathan (2007), “Limited insurance within the household: Evidence from a field experiment in western Kenya,” Mimeo, Princeton.  At the time I am writing this syllabus, it is available at the following URL, but by the time we get to this, you may have to look on the University of California, Santa Cruz Economics Department website:

      http://www.princeton.edu/~jmrtwo/

 

 

V.  Health and Nutrition (3 lectures, Lectures 15-17)

 

Dasgupta, Partha and Debraj Ray (1986), “Inequality as a determinant of malnutrition and unemployment: theory,” Economic Journal 96(384): 1011-1034.  (JSTOR)

 

Strauss, John and Duncan Thomas (1998), “Health, nutrition and economic development,” Journal of Economic Literature 36: 766-817.  (JSTOR)

 

Strauss, John (1986), “Does better nutrition raise farm productivity?,” Journal of Political Economy 94: 297-320.  (JSTOR)

 

Subramanian, Shankar and Angus Deaton (1996), “The demand for food and calories,” Journal of Political Economy 104(1): 133-162.  (JSTOR)

 

Miguel, Edward and Michael Kremer (2004), “Worms: Identifying impacts on education and health in the presence of treatment externalities,” Econometrica 72(1): 159-217. 

URL: http://emlab.berkeley.edu/users/emiguel/miguel_worms.pdf

 

Bleakley, Hoyt (2007), “Disease and development: Evidence from the hookworm eradication in the American South,” Quarterly Journal of Economics 122(1): 73-117.  (Available through UH Library website, find journals, locate individual journals, choose “MIT Press” after searching for Quarterly Journal of Economics, then search electronic edition to find this article.)

 

Chaudhury, Nazmul, Jeffrey Hammer, Michael Kremer, Karthik Muralidharan, and F. Halsey Rogers (2006), “Missing in action: Teacher and health worker absence in developing countries,” Journal of Economic Perspectives 20(1): 91-116.  This can be found at the following URL:

http://www.economics.harvard.edu/faculty/kremer/papers.html

 

 

VI.  Education (3 lectures, Lectures 18-20)

 

Duflo, Esther (2001), “Schooling and labor market consequences of school construction in Indonesia: evidence from an unusual policy experiment,” American Economic Review 91: 795-813.  (JSTOR)

 

Kremer, Michael (2003), “Randomized evaluations of educational programs in developing countries: some lessons” American Economic Review Papers and Proceedings 93(2): 102-106.  (JSTOR)

 

Banerjee, Abhijit, Shawn Cole, Esther Duflo and Leigh Linden, “Remedying education: evidence from two randomized experiments in India,” forthcoming in Quarterly Journal of Economics.  This can be found at the following URL:

http://www.columbia.edu/~ll2240/Research.htm

 

Schultz, T. Paul (2004), “School subsidies for the poor: evaluating the Mexican Progresa poverty program,” Journal of Development Economics 74(1): 199-250.  An earlier version is available at:  http://www.econ.yale.edu/growth_pdf/cdp834.pdf

 

Angrist, Joshua D. and Victor Lavy (1999), “Using Maimonides’ Rule to estimate the effects of class size on scholastic achievement,” Quarterly Journal of Economics 114: 533-575.  (JSTOR)

 

 

VII.  Technology Adoption and Social Learning (2 lectures, Lectures 21-22)

 

Foster, Andrew G. and Mark R. Rosenzweig (1995), “Learning by doing and learning from others: human capital and technical change in agriculture,” American Economic Review 103: 1176-1209.  (JSTOR)

 

Conley, Timothy G. and Christopher R. Udry (2005), “Learning about a new technology: Pineapple in Ghana,” mimeo, Yale, July.  This can be found at the following URL:

      URL: http://www.econ.yale.edu/~cru2//papers.html

 

Munshi, Kaivan and Jacques Myaux (2005), “Social norms and the fertility transition,” Journal of Development Economics 70, no. 1: 1-38.  This can be found at the following URL: http://www.econ.brown.edu/fac/Kaivan_Munshi/

 

VIII.  Other Possible Topics (time permitting)

 

A.  Democracy

Besley, Timothy and Robin Burgess (2002), “The political economy of government responsiveness: theory and evidence from India," Quarterly Journal of Economics 117(4): 1415-1451.  (Available through UH Library website, find journals, locate individual journals, choose “MIT Press” after searching for Quarterly Journal of Economics, then search to find this article.)

 

Chattopadhyay, Raghabendra and Esther Duflo (2004), “Women as policymakers: evidence from a randomized policy experiment in India,” Econometrica 72(5): 1409-1443.  (JSTOR)

 

Pande, Rohini (2003), “Can mandated political representation increase policy influence for disadvantaged minorities?  Theory and evidence from India,” American Economic Review 93: 1132-1151.  (JSTOR)

 

Khwaja, Asim (2004), “Is increasing community participation always a good thing?,” Journal of the European Economic Association 2(2-3):427-436.  (Available through UH Library website, find journals, locate individual journals, choose “Business Source Complete” after searching for Journal of the European Economic Association then search electronic edition to find this article.)

 

B.  Corruption

Mauro, Paolo (1995), “Corruption and growth," Quarterly Journal of Economics 110: 681-712.  (JSTOR)

 

Olken, Benjamin A. (2007), “Monitoring corruption: Evidence from a field experiment in Indonesia,” Journal of Political Economy 115(2): 200-249.  This can be found at the following URL: http://www.nber.org/~bolken/

 

Yang, Dean. (2006), “Can enforcement backfire?  Crime displacement in the context of customs reform in the Philippines,” forthcoming in Review of Economics and Statistics.  This can be found at the following URL:

http://www-personal.umich.edu/%7Edeanyang/papers/papers.html

 

Ferraz, Claudio and Frederico Finan (2007), “Exposing Corrupt Politicians: The Effect of Brazil’s Publicly Released Audits on Electoral Outcomes,” mimeo, UCLA.  This can be found at the following URL: http://www.econ.ucla.edu/ffinan/