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In addition to the table of reading assignments, please see the lists of required and suggested readings below.
| 1 | Introduction: The Vicious Circle of Poverty
(a) World Development Report
(b) A Quiet Violence: View from a Bangladesh Village Ch: 12, The Trials of a Poor Peasant Family: Hartmann (1983). Readings Hartmann, Betsy. "The Trials of a Poor Peasant Family." Chapter 12 in A Quiet Violence: View from a Bangladesh Village. London: Zed Press, 1983. |
| 2-3 | Nutrition and Productivity: Interrelationships
(a) Theoretical model; Ray, pp. 272-279, 489-504.
Poor nutrition leads to low productivity. Low productivity leads to unemployment and low incomes. Low income leads to poor nutrition. This theoretical model can be applied to education, health, nutrition, gender and inter-generational discrimination, and many other issues.
(b) Empirical evidence
i. From income to nutrition:
A. Income - Nutrition: A study of Maharashtra, India. Subramanian and Deaton (1996).
B. Monetary transfer to the elderly can lead to better nutrition for the children. A study of old age pension in South Africa: Duflo (2003).
ii. From nutrition to income:
A. Ray, chapter 8. In particular sections 8.3 and 8.4. Readings Ray, Debraj. Development Economics. Princeton: Princeton University Press, 1998. ISBN: 0691017069. Subramanian, Shankar, and Angus Deaton. "The Demand for Food and Calories." Journal of Political Economy 104, no. 1 (1996): 133–162. Duflo, Esther. "Grandmothers and Granddaughters: Old-age Pensions and Intrahousehold Allocation in South Africa." World Bank Economic Review 17, no. 1 (2003): 1–25. |
| 4 | Health
(a) Health Status in Rajasthan: Banerjee and Duflo (2003).
(b) Children are more likely to go to school if they are not sick. An experiment conducted by a NGO in Kenya: Miguel and Kremer (2004). Readings Banerjee, Abhijit V., Angus Deaton, and Esther Duflo. "Wealth, Health and Health Services in Rural Rajasthan." American Economic Review 94, no. 2 (2004): 326-330. Miguel, Edward, and Michael Kremer. "Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities." Econometrica 72, no. 1 (2004): 159–218. |
| 5-8 | Education
(a) The Probe Report on Basic Education in India (1999).
Educational choice in India: why are the levels of education so low? Do parents care about education? Can they afford it? What is education good for?
(b) Are textbooks really important? An experiment conducted by an NGO in Kenya: Kremer, Glewwe and Moulin (1998).
(c) An example of an effective program of school construction in Indonesia: Duflo (2001). Readings De, Anuradha, and Jean Drèze, et. al. Public Report of Basic Education in India. Oxford: Oxford University Press, 1999. ISBN: 0195648706. Kremer, Michael, Paul Glewwe, and Sylvie Moulin. "Textbooks and Test Scores: Evidence from a Prospective Evaluation in Kenya." Mimeo, Cambridge, MA: Harvard University, 1998. Duflo, Esther. "Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment." American Economic Review 91, no. 4 (2001): 795–813. |
| 9 | The Economics of Child Labor
(a) Why does child labor exist? What policy can help to suppress it? Basu and Van (1998).
(b) Income Effects on Child Labor and School Enrollment in Brazil: Carvalho (2000). Readings Basu, Kaushik, and Pham Hoang Van. "The Economics of Child Labor." American Economic Review 88, no. 3 (1998): 412–427. Carvalho, Irineu E., "Household Income as a Determinant of Child Labor and School Enrollment in Brazil: Evidence from a Social Security Reform" (November 30, 2000). |
| 10-11 | Gender Discrimination
(a) Evidence of gender discrimination in India: Dreze and Sen (1995).
(b) Gender discrimination can arise due to economic reasons: Ray, pp. 279-288.
(c) How can we prove that there is gender discrimination in everyday life? Deaton (1997).
(d) Consumption Smoothing and Excess Female Mortality in Rural India: Rose (1999).
(e) The "marriage market": Rao (1993).
(f) Resource constraints lead to 'Sibling Rivalry': Garg and Morduch (1998). Readings Dreze, Jean, and Amartya Sen. "Gender Inequality and Women's Agency." Chapter 7 in India: Economic Development and Social Opportunity. Delhi: Oxford University Press, 1995, pp. 140–178. Ray, Debraj. Development Economics. Princeton: Princeton University Press, 1998. ISBN: 0691017069. Deaton, Angus. The Analysis of Household Surveys. World Bank, International Bank for Reconstruction and Development, 1997. Rose, Elaina. "Consumption Smoothing and Excess Female Mortality in Rural India." Review of Economics and Statistics 81, no. 1 (1999): 41–49. Rao, Vijayendra. "The Rising Price of Husbands: A Hedonic Analysis of Dowry Increases in Rural India." Journal of Political Economy 101, no. 4 (1993): 666–677. Garg, Ashish, and Jonathan Morduch. "Sibling rivalry and the gender gap: Evidence from child health outcomes in Ghana." Journal of Population Economics 11, no. 4 (1998): 471-493. |
| 12-13 | Bargaining within Families
(a) Income is not spent in the same way by women and by men: Evidence from Brazil (Thomas (1990)), the United Kingdom Child Benefit allowance (Lundberg, Pollak and Wales (1996)), a pension program in South Africa (Duflo (2003)).
(b) Competition within the family is not limited to sharing the resources. It leads to lower productivity and lower welfare for all members in the family: Udry (1996). Readings Thomas, Duncan. "Intra-household Resource Allocation: An Inferential Approach." Journal of Human Resources25, no. 4 (1990): 635–664. Lundberg, Shelly J., Robert A. Pollak, and Terence J. Wales. "Do Husbands and Wives Pool their Resources? Evidence from the United Kingdom Child Benefit." Journal of Human Resources 32, no. 4 (1996): 463–480. Duflo, Esther. "Grandmothers and Granddaughters: Old-age Pensions and Intrahousehold Allocation in South Africa." World Bank Economic Review 17, no. 1 (2003): 1–25. Udry, Christopher. "Gender, Agricultural Production, and The Theory of the Household." Journal of Political Economy 101, no. 5 (1996): 1010–1045. |
| 14 | Midterm |
| 15 | Savings
(a) Do poor people save in good times in anticipation of bad times? Savings by rice farmers in Thailand: Paxson (1992).
(b) Have poor people access to savings instruments: A micro-savings experiment in Mexico: Aportela (1998). Readings Paxson, Christina H. "Using Weather Variability to Estimate the Response of Savings to Transitory Income in Thailand." American Economic Review 82, no. 1 (1992): 15–33. Aportela, Fernando. "The Effects of Financial Access on Savings by Low-Income People." Paper presented at the annual meeting of the Latin American and Caribbean Economic Association, Rio de Janeiro, Brazil, October 2000. |
| 16-17 | Land
(a) Theoretical background: Ray, chapter 12.
(b) Why land reform? Banerjee (1999).
(c) A successful limited land reform in India: Banerjee and Ghatak (2002). Readings Ray, Debraj. Development Economics. Princeton: Princeton University Press, 1998. ISBN: 0691017069. Banerjee, Abhijit V., "Land Reforms: Prospects and Strategies" (April 1999). Conference Paper, Annual World Bank Conference on Development Economics, Washington D.C.; and MIT Department of Economics Working Paper No. 99-24. Banerjee, Abhijit V., Paul Gertler, and Maitreesh Ghatak. "Empowerment and Efficiency: Tenancy Reform in West Bengal." Journal of Political Economy 110, no. 2 (2002): 239–280. |
| 18-19 | Insurance
Agricultural incomes fluctuate enormously during the year and from year to year. Do consumption and investments fluctuate as well, or are households protected from these fluctuations?
(a) Ray, chapter 15.
(b) Insurance is only partial: the consumption of household members in Cote d'Ivoire is linked to their income: Deaton (1997), pp 372-383.
(c) In bad times are children taken out of school, and given less to eat? An example from Cote d'Ivoire: Jensen (2000).
(d) In West Africa, villagers lend to each other and achieve a certain degree of insurance: Udry (1990).
(e) Mutual insurance in the village does not happen in the void. It depends on the strength of local institutions: Townsend (1995). Readings Ray, Debraj. Development Economics. Princeton: Princeton University Press, 1998. ISBN: 0691017069. Deaton, Angus. The Analysis of Household Surveys. Washington: World Bank, International Bank for Reconstruction and Development, 1997. Jensen, Robert. "Agricultural Volatility and Investments in Children." American Economic Review 90, no. 2 (2000): 399–405. Udry, Christopher. "Credit Markets in Northern Nigeria: Credit as Insurance in a Rural Economy." World Bank Economic Review 4, no. 3 (1990): 251–69. Townsend, Robert. "Financial Systems in Northern Thai Villages." Quarterly Journal of Economics 110, no. 4 (1995): 1011–1046. |
| 20-21 | Credit Markets
Why does formal credit fail to reach the poor? Why has targeted lending organized by the government not worked? Why do the poor borrow from local money lenders at very high rates?
(a) Theoretical background: Ray, chapter 14.
(b) Why do informal money lenders charge interest rates that are so high? Aleem (1990).
(c) An innovative form of lending: micro-credit: Morduch (1999). Readings Ray, Debraj. Development Economics. Princeton: Princeton University Press, 1998. ISBN: 0691017069. Aleem, Irfan. "Imperfect Information, Screening and The Costs of Informal Lending: A Study of a Rural Credit Market in Pakistan." World Bank Economic Review 3 (1990): 329–349. Morduch, Jonathan. "The Microfinance Promise." Journal of Economic Literature 37, no. 4 (1999): 1569–1614. |
| 22-24 | Formal and Informal Institutions
(a) Social networks
No policy happens in the void.... What role do informal institutions and norms play?
i. Norms helped to sustain long distance trade among Maghribi traders: Greif (1993).
ii. However, successful informal institution can be an obstacle to the development of formal institutions: Greif (1994).
iii. Social norms as an obstacle to the demographic transition: Munshi (2000).
(b) Formal Institutions
i. Institutions differ widely around the world: La Porta and Vishny (1998).
ii. Good institutions are important for economic performance: aggregate approach: Acemoglu and Robinson (2001).
iii. Historical approach: In India, colonial history continues to impact today's outcomes Banerjee and Iyer (2002), Iyer (2003).
iv. The mechanics of why institutions matter. A poor institutional environment may makes business difficult. A study of contracting and reputation in the Indian Software industry: Banerjee and Duflo (2000). Readings Greif, Avner. "Contract Enforceability and Economic Institution in Early Trade: The Maghribi Traders Coalition." AER 83, no. 3 (1993): 525–548. ———. "Cultural Beliefs and the Organization of Society: A Historical and Theoretical Reflection on Collectivist and Individualist Societies." Journal of Political Economy 102, no. 5 (1994): 912–950. Munshi, Kaivan. "Social Norms and Individual Decisions During a Period of Change : An Application to the Demographic Transition." Mimeo, Philadelphia: University of Pennsylvania, 2000. La Porta, Rafael, Florencio Lopez-de-Silanes Andrei Shleifer, and Robert Vishny. "Law and Finance." Journal of Political Economy 106, no. 6 (1998): 1113–1155. Acemoglu, Daron, Simon Johnson, and James Robinson. "The Colonial Origins of Comparative Development: An Empirical Investigation." American Economic Review 91, no. 5 (2001): 1369–1401. Banerjee, Abhijit V. and Iyer, Lakshmi, "History, Institutions and Economic Performance: The Legacy of Colonial Land Tenure Systems in India" (June 2002). MIT Department of Economics Working Paper No. 02-27. Iyer, Lakshmi. "The Long-term Impact of Colonial Rule: Evidence from India." Mimeo, Cambridge, MA: MIT, 2003. Banerjee, Abhijit V., and Esther Duflo. "Reputation Effects and the Limits of Contracting: A Study of the Indian Software Industry." Quarterly Journal of Economics 115, no. 3 (2000): 989–1017. |
| 25-26 | Limits to Social Policy: Corruption
(a) Why is corruption costly? Shleifer and Vishny (1993).
(b) Why is corruption illegal? Why does corruption and red tape go hand in hand? Banerjee (1997).
(c) Corruption and the diversion of social policies. The example of canal irrigation in South India: Wade (1982). Readings Shleifer, Andrei, and Robert W. Vishny. "Corruption."The Quarterly Journal of Economics (1993). Banerjee, Abhijit V. "A Theory of Misgovernance." Quarterly Journal of Economics 112, no.4 (1997): 1289–1332. Wade, Robert. "The System of Administrative and Political Corruption: Canal Irrigation in South India."Journal of Development Studies 18, no. 3 (1982): 287–328. |
Required Readings
Acemoglu, Daron, Simon Johnson, and James Robinson. "The Colonial Origins of Comparative Development: An Empirical Investigation." American Economic Review 91, no. 5 (2001): 1369-1401.
Aleem, Irfan. "Imperfect Information, Screening and The Costs of Informal Lending: A Study of a Rural Credit Market in Pakistan." World Bank Economic Review 3 (1990): 329-349.
Banerjee, Abhijit V., "Land Reforms: Prospects and Strategies" (April 1999). Conference Paper, Annual World Bank Conference on Development Economics, Washington D.C.; and MIT Department of Economics Working Paper No. 99-24.
Banerjee, Abhijit V., Angus Deaton, and Esther Duflo. "Wealth, Health and Health Services in Rural Rajasthan." American Economic Review 94, no. 2 (2004): 326-330.
Dreze, Jean, and Amartya Sen. "Gender Inequality and Women's Agency." Chapter 7 in India: Economic Development and Social Opportunity. Delhi: Oxford University Press, 1995, pp. 140-178.
Paxson, Christina H. "Using Weather Variability to Estimate the Response of Savings to Transitory Income in Thailand." American Economic Review 82, no. 1 (1992): 15-33.
Probe Team. "The School Environment." Chapter 4 in Public Report on Basic Education in India. Delhi: Oxford University Press, 1999a.
———. "Schooling and The Family." Chapter 3 in Public Report on Basic Education in India. Delhi: Oxford University Press, 1999b.
Udry, Christopher. "Credit Markets in Northern Nigeria: Credit as Insurance in a Rural Economy." World Bank Economic Review 4, no. 3 (1990): 251-69.
———. "Gender, Agricultural Production, and The Theory of the Household." Journal of Political Economy 101, no. 5 (1996): 1010-1045.
Wade, Robert. "The System of Administrative and Political Corruption: Canal Irrigation in South India." Journal of Development Studies 18, no. 3 (1982): 287-328.
Suggested Readings
Aportela, Fernando. "The Effects of Financial Access on Savings by Low-Income People." Paper presented at the annual meeting of the Latin American and Caribbean Economic Association, Rio de Janeiro, Brazil, October 2000.
Banerjee, Abhijit V. "A Theory of Misgovernance." Quarterly Journal of Economics 112, no. 4 (1997): 1289-1332.
Banerjee, Abhijit V., and Esther Duflo. "Reputation Effects and The Limits of Contracting: A Study of The Indian Software Industry." Quarterly Journal of Economics 115, no. 3 (2000): 989-1017.
Banerjee, Abhijit V., Paul Gertler, and Maitreesh Ghatak. "Empowerment and Efficiency: Tenancy Reform in West Bengal." Journal of Political Economy 110, no. 2 (2002): 239-280.
Basu, Kaushik, and Pham Hoang Van. "The Economics of Child Labor." American Economic Review 88, no. 3 (1998): 412-427.
Carvalho, Irineu E., "Household Income as a Determinant of Child Labor and School Enrollment in Brazil: Evidence from a Social Security Reform" (November 30, 2000).
Deaton, Angus. The Analysis of Household Surveys. Washington: World Bank, International Bank for Reconstruction and Development, 1997.
Duflo, Esther. "Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from An Unusual Policy Experiment." American Economic Review 91, no. 4 (2001): 795-813.
———. "Grandmothers and Granddaughters: Old-age Pensions and Intrahousehold Allocation in South Africa." World Bank Economic Review 17, no. 1 (2003): 1-25.
Garg, Ashish, and Jonathan Morduch. "Sibling rivalry and the gender gap: Evidence from child health outcomes in Ghana." Journal of Population Economics 11, no. 4 (1998): 471-493.
Greif, Avner. "Contract Enforceability and Economic Institution in Early Trade: The Maghribi Traders Coalition." American Economic Review 83, no. 3 (1993): 525-548.
———. "Cultural Beliefs and The Organization of Society: A Historical and Theoretical Reflection on Collectivist and Individualist Societies." Journal of Political Economy 102, no. 5 (1994): 912-950.
Hartmann, Betsy. "The Trials of A Poor Peasant Family." Chapter 12 in A Quiet Violence: View from a Bangladesh Village. London: Zed Press, 1983.
Jensen, Robert. "Agricultural Volatility and Investments in Children." American Economic Review 90, no. 2 (2000): 399-405.
Kremer, Michael, Paul Glewwe, and Sylvie Moulin. "Textbooks and Test Scores: Evidence from a Prospective Evaluation in Kenya." Mimeo, Cambridge, MA: Harvard University, 1998.
Kremer, Michael, and Edward Miguel. "Health and School Participation: The Primary School Deworming Project in Kenya." Mimeo, Cambridge, MA: Harvard University, 1999.
La Porta, Rafael, Florencio Lopez-de-Silanes Andrei Shleifer, and Robert Vishny. "Law and Finance." Journal of Political Economy 106, no. 6 (1998): 1113-1155.
Lundberg, Shelly J., Robert A. Pollak, and Terence J. Wales. "Do Husbands and Wives Pool their Resources? Evidence from The United Kingdom Child Benefit." Journal of Human Resources 32, no. 3 (1996): 463-480.
Morduch, Jonathan. "The Microfinance Promise." Journal of Economic Literature 37, no. 4 (1999): 1569-1614.
Munshi, Kaivan. "Social Norms and Individual Decisions During a Period of Change: An Application to The Demographic Transition." Mimeo, University of Pennsylvania, 2000.
Rao, Vijayendra. "The Rising Price of Husbands: A Hedonic Analysis of Dowry Increases in Rural India." Journal of Political Economy 101, no. 4 (1993): 666-677.
Rose, Elaina. "Consumption Smoothing and Excess Female Mortality in Rural India." Review of Economics and Statistics 81, no. 1 (1999): 41-49.
Shleifer, Andrei, and Robert W. Vishny. "Corruption." The Quarterly Journal of Economics 108, no. 3 (1993): 599-617.
Subramanian, Shankar, and Angus Deaton. "The Demand for Food and Calories." Journal of Political Economy 104, no. 1 (1996): 133-162.
Thomas, Duncan. "Intra-household Resource Allocation: An Inferential Approach." Journal of Human Resources 25, no. 4 (1990): 635-664.
Townsend, Robert. "Financial Systems in Northern Thai Villages." Quarterly Journal of Economics 110, no. 4 (1995): 1011-1046.