Economic Development

Portfolios of the Poor: How the World's Poor Live on $2 a Day

Portfolios of the Poor: How the World's Poor Live on $2 a Day
Arabic translation.

Jonathan Morduch, Daryl Collins, Stuart Rutherford, & Orlanda Ruthven
05/24/2016

Portfolios of the Poor: How the World's Poor Live on $2 a Day (Princeton University Press, 2009) tackles the fundamental question of how the poor make ends meet. Over 250 families in Bangladesh, India, and South Africa participated in this unprecedented study of the financial practices of the world's poor.

These households were interviewed every two weeks over the course of a year, reporting on their most minute financial transactions. This book shows that many poor people have surprisingly sophisticated financial lives, saving and borrowing with an eye to the future and creating complex "financial portfolios" of formal and informal tools.

Indispensable for those in development studies, economics, and microfinance, Portfolios of the Poor will appeal to anyone interested in knowing more about poverty and what can be done about it.

Failure vs. Displacement: Why an Innovative Anti-Poverty Program Showed no Net Impact in South India

Failure vs. Displacement: Why an Innovative Anti-Poverty Program Showed no Net Impact in South India
September 2015. Journal of Development Economics 116: 1-16.

Jonathan Morduch, Jonathan Bauchet, & Shamika Ravi
05/24/2016

We analyze a randomized trial of an innovative anti-poverty program in South India, part of a series of pilot programs that provide “ultra-poor” households with inputs to create new, sustainable livelihoods (often tending livestock). In contrast with results from other pilots, we find no lasting net impact on income or asset accumulation in South India. We explore concerns with program implementation, data errors, and the existence of compelling employment alternatives. The baseline consumption data contain systematic errors, and income and consumption contain large outliers. Steps to address the problems leave the central findings largely intact: Wages for unskilled labor rose sharply in the area while the study was implemented, blunting the net impact of the intervention and highlighting one way that treatment effects depend on factors external to the intervention itself, such as broader employment opportunities.

Does Preservation Accelerate Neighborhood Change? Examining the Impact of Historic Preservation in New York City

Does Preservation Accelerate Neighborhood Change? Examining the Impact of Historic Preservation in New York City

Brian J. McCabe and Ingrid Gould Ellen
04/05/2016

Problem, research strategy, and findings: A number of studies have examined the property value impacts of historic preservation, but few have considered how preservation shapes neighborhood composition. In this study, we ask whether the designation of historic districts contributes to changes in the racial composition and socioeconomic status of New York City neighborhoods. Bringing together data on historic districts with a panel of census tracts, we study how neighborhoods change after the designation of a historic district. We find little evidence of changes in the racial composition of a neighborhood, but report a significant increase in socioeconomic status following historic designation.
Takeaway for practice: Our research offers empirical evidence on changes in the racial composition and socioeconomic status of neighborhoods following the designation of a historic district. It suggests that historic preservation can contribute to economic revitalization in urban neighborhoods, but that these changes risk making neighborhoods less accessible to lower-income residents. Planners should consider ways that the city government can work to preserve the highly valued amenities of historic neighborhoods while mitigating the potential for residential displacement.

Banks and Microbanks

Banks and Microbanks
Journal of Financial Services Research (2014) 46:1–53. DOI 10.1007/s10693-013-0177-z

Robert Cull, Asli Demirgüç-Kunt, and Jonathan Morduch
08/01/2014

We combine two datasets to examine whether the presence of banks affects the profitability and outreach of microfinance institutions.We find evidence that competition matters. Greater bank penetration in the overall economy is associated with microbanks pushing toward poorer markets, as reflected in smaller average loans sizes and greater outreach to women. The evidence is particularly strong for microbanks relying on commercial-funding and using traditional bilateral lending contracts (rather than group lending methods favored by microfinance NGOs). We consider plausible alternative explanations for the correlations, including relationships that run through the nature of the regulatory environment and the structure of the banking environment, but we fail to find strong support for these alternative hypotheses.

The Impact of Microcredit on the Poor in Bangladesh: Revisiting the Evidence

The Impact of Microcredit on the Poor in Bangladesh: Revisiting the Evidence
Journal of Development Studies 50 (4), April 2014: 583-604.

David Roodman and Jonathan Morduch
04/01/2014

We replicate and reanalyse the most influential study of microcredit impacts (Pitt and Khandker, 1998). That study was celebrated for showing that microcredit reduces poverty, a much hoped-for possibility (though one not confirmed by recent randomized controlled trials). We show that the original results on poverty reduction disappear after dropping outliers, or when using a robust linear estimator. Using a new program for estimation of mixed process maximum likelihood models, we show how assumptions critical for the original analysis, such as error normality, are contradicted by the data. We conclude that questions about impact cannot be answered in these data.

Democratization and Universal Health Coverage: A comparison of the experiences of Ghana, Kenya, and Senegal

Democratization and Universal Health Coverage: A comparison of the experiences of Ghana, Kenya, and Senegal
Global Health Governance, 6(2): 1-27.

Grépin, Karen and Kim Yi Dionne
09/23/2013

This article identifies conditions under which newly established democracies adopt Universal Health Coverage. Drawing on the literature examining democracy and health, we argue that more democratic regimes – where citizens have positive opinions on democracy and where competitive, free and fair elections put pressure on incumbents – will choose health policies targeting a broader proportion of the population. We compare Ghana to Kenya and Senegal, two other countries which have also undergone democratization, but where there have been important differences in the extent to which these democratic changes have been perceived by regular citizens and have translated into electoral competition. We find that Ghana has adopted the most ambitious health reform strategy by designing and implementing the National Health Insurance Scheme (NHIS). We also find that Ghana experienced greater improvements in skilled attendance at birth, childhood immunizations, and improvements in the proportion of children with diarrhea treated by oral rehydration therapy than the other countries since this policy was adopted. These changes also appear to be associated with important changes in health outcomes: both infant and under-five mortality rates declined rapidly since the introduction of the NHIS in Ghana. These improvements in health and health service delivery have also been observed by citizens with a greater proportion of Ghanaians reporting satisfaction with government handling of health service delivery relative to either Kenya or Senegal. We argue that the democratization process can promote the adoption of particular health policies and that this is an important mechanism through which democracy can improve health.

Parallel paths to enforcement: Private compliance, public regulation, and labor standards in the Brazilian sugar sector

Parallel paths to enforcement: Private compliance, public regulation, and labor standards in the Brazilian sugar sector
Politics & Society

Coslovsky, Salo and Richard Locke
09/16/2013

In recent years, global corporations and national governments have been enacting a growing number of codes of conduct and public regulations to combat dangerous and degrading work conditions in global supply chains. At the receiving end of this activity, local producers must contend with multiple regulatory regimes, but it is unclear how these regimes interact and what results, if any, they produce. This paper examines this dynamic in the sugar sector in Brazil. It finds that although private and public agents rarely communicate, let alone coordinate with one another they nevertheless reinforce each other’s actions. Public regulators use their legal powers to outlaw extreme forms of outsourcing. Private auditors use the trust they command as company insiders to instigate a process of workplace transformation that facilitates compliance. Together, their parallel actions block the low road and guide targeted firms to a higher road in which improved labor standards are not only possible but even desirable.

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