Econ

omic

s 17

2Is

sues

in A

frica

n E

cono

mic

Dev

elop

men

t

Pro

fess

or T

ed M

igue

lD

epar

tmen

t of E

cono

mic

sU

nive

rsity

of C

alifo

rnia

, Ber

kele

y

Econ

omic

s 17

2Is

sues

in A

frica

n E

cono

mic

Dev

elop

men

t

Lect

ure

15 �

Mar

ch 6

, 200

7

Eco

nom

ics

172:

Lec

ture

15

3

Eco

nom

ics

172:

Lec

ture

15

4

A m

odel

of w

ithin

-HH

reso

urce

allo

catio

n�

Imag

ine

ther

e ar

e N

hous

ehol

d m

embe

rs, i

=1, 2

, � N

�B

iolo

gica

lly a

ll pe

ople

nee

d to

con

sum

e at

leas

t C*to

su

rviv

e (th

ink

of a

min

imal

cal

oric

requ

irem

ent)

�In

goo

d ra

infa

ll ye

ars

hous

ehol

d in

com

e is

YH

I>N

C*!

ever

yone

has

eno

ugh

to e

at

�B

ut in

bad

rain

fall

year

s (d

roug

ht, f

lood

), ho

useh

old

inco

me

falls

bel

ow th

is li

ne Y

LO<

NC

*

!E

qual

div

isio

n of

inco

me

mea

ns e

very

one

star

ves

�U

nequ

al d

ivis

ion,

with

reso

urce

s di

rect

ed to

the

mos

t pr

oduc

tive

hous

ehol

d m

embe

rs (Y

ihig

h) is

a o

ptio

n

Eco

nom

ics

172:

Lec

ture

15

5

Mai

n pa

ttern

s in

the

data

from

Mea

tu�

Dat

a (s

ome

retro

spec

tive)

for 1

992-

2002

�Y

ears

with

ext

rem

e ra

infa

ll sh

ocks

(e.g

., dr

ough

ts,

flood

ing)

lead

to s

harp

dro

ps in

hou

seho

ld

cons

umpt

ion

and

ofte

n to

fam

ine.

Rec

all t

he m

ajor

di

fficu

lties

hou

seho

lds

have

with

sav

ing

in th

is d

istri

ct!

Eco

nom

ics

172:

Lec

ture

15

6

Mai

n pa

ttern

s in

the

data

from

Mea

tu�

Dat

a (s

ome

retro

spec

tive)

for 1

992-

2002

�Y

ears

with

ext

rem

e ra

infa

ll sh

ocks

(e.g

., dr

ough

ts,

flood

ing)

lead

to s

harp

dro

ps in

hou

seho

ld

cons

umpt

ion

and

ofte

n to

fam

ine.

Rec

all t

he m

ajor

di

fficu

lties

hou

seho

lds

have

with

sav

ing

in th

is d

istri

ct!

�Th

ere

are

larg

e in

crea

ses

in w

itch

mur

ders

and

atta

cks

in th

ese

year

s w

ith e

xtre

me

rain

fall

(Tab

le 4

), bu

t no

impa

ct o

n no

n-w

itch

mur

ders

(Tab

le 6

)

�V

illag

es w

ith m

ore

adhe

rent

s of

trad

ition

al re

ligio

ns

also

hav

e m

ore

witc

h m

urde

rs in

ext

rem

e ra

infa

ll ye

ars

Eco

nom

ics

172:

Lec

ture

15

7

Less

ons

from

witc

h ki

llings

in T

anza

nia

�In

com

e sh

ocks

lead

to v

iole

nce

agai

nst e

lder

ly w

omen

�w

itche

s� in

rura

l Tan

zani

a�

With

in-h

ouse

hold

reso

urce

con

flict

s m

ay li

e at

the

hear

t of t

his

viol

ence

�S

imila

r fin

ding

for m

edie

val E

urop

ean

witc

h ki

lling

s!

�Th

e la

ck o

f sav

ings

opt

ions

, cre

dit,

and

insu

ranc

e ar

e pr

obab

ly k

ey to

exp

lain

ing

the

huge

con

sum

ptio

n flu

ctua

tions

exp

erie

nced

by

hous

ehol

ds in

Mea

tu

Eco

nom

ics

172:

Lec

ture

15

8

Less

ons

from

witc

h ki

llings

in T

anza

nia

�W

hat a

re s

ome

poss

ible

sol

utio

ns?

Eco

nom

ics

172:

Lec

ture

15

9

Less

ons

from

witc

h ki

llings

in T

anza

nia

�W

hat a

re s

ome

poss

ible

sol

utio

ns?

�Fo

rmal

insu

ranc

e ag

ains

t wea

ther

sho

cks?

Eco

nom

ics

172:

Lec

ture

15

10

Less

ons

from

witc

h ki

llings

in T

anza

nia

�W

hat a

re s

ome

poss

ible

sol

utio

ns?

�Fo

rmal

insu

ranc

e ag

ains

t wea

ther

sho

cks?

�O

ld a

ge p

ensi

ons

for w

omen

?

Eco

nom

ics

172:

Lec

ture

15

11

Less

ons

from

witc

h ki

llings

in T

anza

nia

�W

hat a

re s

ome

poss

ible

sol

utio

ns?

�Fo

rmal

insu

ranc

e ag

ains

t wea

ther

sho

cks?

�O

ld a

ge p

ensi

ons

for w

omen

?�

Oth

ers?

Eco

nom

ics

172:

Lec

ture

15

12

Out

line:

New

topi

c: E

duca

tion

and

econ

omic

dev

elop

men

t(1

)M

odel

s of

hou

seho

ld e

duca

tiona

l inv

estm

ent

(2)

The

Girl

s S

chol

arsh

ip P

rogr

am (G

SP

) in

Ken

ya

Eco

nom

ics

172:

Lec

ture

15

13

Edu

catio

n an

d ec

onom

ic d

evel

opm

ent

�D

oes

educ

atio

n le

ad to

hig

her i

ncom

e? O

R d

oes

high

er in

com

e le

ad to

mor

e ed

ucat

iona

l inv

estm

ent?

Eco

nom

ics

172:

Lec

ture

15

14

Edu

catio

n an

d ec

onom

ic d

evel

opm

ent

�D

oes

educ

atio

n le

ad to

hig

her i

ncom

e? O

R d

oes

high

er in

com

e le

ad to

mor

e ed

ucat

iona

l inv

estm

ent?

�U

ncle

ar m

acro

econ

omic

evi

denc

e on

edu

catio

n an

d gr

owth

(e.g

., th

e ca

se o

f Ken

ya)

�W

hy d

o pe

ople

inve

st in

edu

catio

n?

Eco

nom

ics

172:

Lec

ture

15

15

Edu

catio

n be

nefit

s be

yond

wag

es

(1)

Wom

en�s

edu

catio

n an

d in

fant

mor

talit

y: e

ach

addi

tiona

l yea

r of s

choo

ling

is a

ssoc

iate

d w

ith a

5-1

0%

redu

ctio

n in

und

er-5

mor

talit

y

Eco

nom

ics

172:

Lec

ture

15

16

Edu

catio

n be

nefit

s be

yond

wag

es

(1)

Wom

en�s

edu

catio

n an

d in

fant

mor

talit

y: e

ach

addi

tiona

l yea

r of s

choo

ling

is a

ssoc

iate

d w

ith a

5-1

0%

redu

ctio

n in

und

er-5

mor

talit

y

(2)

Edu

catio

n m

ay s

peed

ado

ptio

n of

new

tech

nolo

gies

, e.

g., i

n ag

ricul

ture

, hea

lth

Eco

nom

ics

172:

Lec

ture

15

17

Edu

catio

n be

nefit

s be

yond

wag

es

(1)

Wom

en�s

edu

catio

n an

d in

fant

mor

talit

y: e

ach

addi

tiona

l yea

r of s

choo

ling

is a

ssoc

iate

d w

ith a

5-1

0%

redu

ctio

n in

und

er-5

mor

talit

y

(2)

Edu

catio

n m

ay s

peed

ado

ptio

n of

new

tech

nolo

gies

, e.

g., i

n ag

ricul

ture

, hea

lth

(3)

Edu

cate

d pe

ople

may

mak

e be

tter c

itize

ns in

a

dem

ocra

cy a

nd b

e m

ore

activ

e in

civ

il so

ciet

y

Eco

nom

ics

172:

Lec

ture

15

18

A m

odel

of e

duca

tiona

l inv

estm

ent

�In

puts

into

hou

seho

ld u

tility

incl

ude

curr

ent

cons

umpt

ion

in p

erio

d t=

1(C

1), a

nd th

e fu

ture

ear

ning

s of

the

two

child

ren

�on

e gi

rl (Y

g) a

nd o

ne b

oy (Y

b)�

Girl

, boy

am

ount

s (y

ears

) of s

choo

ling

are

Sg

and

Sb

Eco

nom

ics

172:

Lec

ture

15

19

A m

odel

of e

duca

tiona

l inv

estm

ent

�In

puts

into

hou

seho

ld u

tility

incl

ude

curr

ent

cons

umpt

ion

in p

erio

d t=

1(C

1), a

nd th

e fu

ture

ear

ning

s of

the

two

child

ren

�on

e gi

rl (Y

g) a

nd o

ne b

oy (Y

b)�

Girl

, boy

am

ount

s (y

ears

) of s

choo

ling

are

Sg

and

Sb

�K

ey a

ssum

ptio

n 1:

ther

e is

no

old-

age

savi

ng in

the

mod

el, o

ther

than

thro

ugh

inve

stm

ents

in c

hild

ren

--K

eep

in m

ind

the

case

of M

eatu

dist

rict,

Tanz

ania

, w

here

hou

seho

lds

had

very

lim

ited

savi

ngs

optio

ns

(eve

n sa

ving

gra

in w

as c

halle

ngin

g)

Eco

nom

ics

172:

Lec

ture

15

20

The

mod

el s

olut

ion

�C

hild

ren�

s to

tal t

ime

�bud

get�

T(i.

e., t

he to

tal y

ears

in

thei

r chi

ldho

od) a

re d

ivid

ed b

etw

een

stud

ying

(S) a

nd

wor

king

. The

wag

e fo

r chi

ld la

bor i

s W

> 0

.

Eco

nom

ics

172:

Lec

ture

15

21

The

mod

el s

olut

ion

�C

hild

ren�

s to

tal t

ime

�bud

get�

T(i.

e., t

he to

tal y

ears

in

thei

r chi

ldho

od) a

re d

ivid

ed b

etw

een

stud

ying

(S) a

nd

wor

king

. The

wag

e fo

r chi

ld la

bor i

s W

> 0

.

�Th

e ho

useh

old�

s pr

oble

m: C

hoos

e sc

hool

ing

for g

irls

and

boys

, res

pect

ivel

y, S

gan

d S

bto

max

imiz

e U

(C1,

Y)

Eco

nom

ics

172:

Lec

ture

15

22

The

mod

el s

olut

ion

�C

hild

ren�

s to

tal t

ime

�bud

get�

T(i.

e., t

he to

tal y

ears

in

thei

r chi

ldho

od) a

re d

ivid

ed b

etw

een

stud

ying

(S) a

nd

wor

king

. The

wag

e fo

r chi

ld la

bor i

s W

> 0

.

�Th

e ho

useh

old�

s pr

oble

m: C

hoos

e sc

hool

ing

for g

irls

and

boys

, res

pect

ivel

y, S

gan

d S

bto

max

imiz

e U

(C1,

Y)

�S

ubje

ct to

two

cond

ition

s:(1

) Hou

seho

lds

need

to c

onsu

me

in p

erio

d t=

1:C

1=

W*{

(T �

Sg)

+ (T

�S

b)}

Eco

nom

ics

172:

Lec

ture

15

23

The

mod

el s

olut

ion

�C

hild

ren�

s to

tal t

ime

�bud

get�

T(i.

e., t

he to

tal y

ears

in

thei

r chi

ldho

od) a

re d

ivid

ed b

etw

een

stud

ying

(S) a

nd

wor

king

. The

wag

e fo

r chi

ld la

bor i

s W

> 0

.

�Th

e ho

useh

old�

s pr

oble

m: C

hoos

e sc

hool

ing

for g

irls

and

boys

, res

pect

ivel

y, S

gan

d S

bto

max

imiz

e U

(C1,

Y)

�S

ubje

ct to

two

cond

ition

s:(1

) Hou

seho

lds

need

to c

onsu

me

in p

erio

d t=

1:C

1=

W*{

(T �

Sg)

+ (T

�S

b)}

(2) I

ncom

e in

old

age

is in

crea

sing

in c

hild

edu

catio

n:Y

= Y

g(S

g) +

Yb(

Sb)

Eco

nom

ics

172:

Lec

ture

15

24

The

mod

el s

olut

ion

�K

ey a

ssum

ptio

n 2:

the

mar

gina

l ret

urn

to s

choo

ling

is

assu

med

to b

e la

rger

for b

oys

than

for g

irls

at a

ll sc

hool

ing

leve

ls: Y

b′(S

) > Y

g′(S

)for

all

S--

In o

ther

wor

ds, e

ven

if th

ere

dim

inis

hing

retu

rns

to

year

s of

sch

oolin

g, e

ach

addi

tiona

l yea

r stil

l pro

vide

s a

larg

er re

turn

for b

oys

than

girl

s.

Eco

nom

ics

172:

Lec

ture

15

25

The

mod

el s

olut

ion

�K

ey a

ssum

ptio

n 2:

the

mar

gina

l ret

urn

to s

choo

ling

is

assu

med

to b

e la

rger

for b

oys

than

for g

irls

at a

ll sc

hool

ing

leve

ls: Y

b′(S

) > Y

g′(S

)for

all

S--

In o

ther

wor

ds, e

ven

if th

ere

dim

inis

hing

retu

rns

to

year

s of

sch

oolin

g, e

ach

addi

tiona

l yea

r stil

l pro

vide

s a

larg

er re

turn

for b

oys

than

girl

s.

�E

quat

ing

mar

gina

l ret

urns

to in

vest

men

t acr

oss

boys

an

d gi

rls le

ads

the

hous

ehol

d to

inve

st m

ore

in b

oys

unde

r thi

s as

sum

ptio

n

Eco

nom

ics

172:

Lec

ture

15

26

The

mod

el s

olut

ion

�K

ey a

ssum

ptio

n 2:

the

mar

gina

l ret

urn

to s

choo

ling

is

assu

med

to b

e la

rger

for b

oys

than

for g

irls

at a

ll sc

hool

ing

leve

ls: Y

b′(S

) > Y

g′(S

)for

all

S--

In o

ther

wor

ds, e

ven

if th

ere

dim

inis

hing

retu

rns

to

year

s of

sch

oolin

g, e

ach

addi

tiona

l yea

r stil

l pro

vide

s a

larg

er re

turn

for b

oys

than

girl

s.

�E

quat

ing

mar

gina

l ret

urns

to in

vest

men

t acr

oss

boys

an

d gi

rls le

ads

the

hous

ehol

d to

inve

st m

ore

in b

oys

unde

r thi

s as

sum

ptio

n�

How

real

istic

is th

ism

odel

?

Eco

nom

ics

172:

Lec

ture

15

27

Oth

er is

sues

in e

duca

tiona

l inv

estm

ent

(1)

Par

ents

eve

ryw

here

may

be

only

par

tially

altr

uist

ic

tow

ards

thei

r chi

ldre

n

Eco

nom

ics

172:

Lec

ture

15

28

Oth

er is

sues

in e

duca

tiona

l inv

estm

ent

(1)

Par

ents

eve

ryw

here

may

be

only

par

tially

altr

uist

ic

tow

ards

thei

r chi

ldre

n

(2)

Eve

n ch

ildre

n m

ay c

hoos

e to

inve

st le

ss in

sch

oolin

g ev

en fo

r the

mse

lves

, due

to h

igh

time

disc

ount

rate

s du

ring

thei

r you

th. I

mag

ine

a sc

hool

ing

inve

stm

ent

need

s to

be

mad

e fo

r a d

ista

nt fu

ture

retu

rn

Eco

nom

ics

172:

Lec

ture

15

29

Oth

er is

sues

in e

duca

tiona

l inv

estm

ent

(1)

Par

ents

eve

ryw

here

may

be

only

par

tially

altr

uist

ic

tow

ards

thei

r chi

ldre

n

(2)

Eve

n ch

ildre

n m

ay c

hoos

e to

inve

st le

ss in

sch

oolin

g ev

en fo

r the

mse

lves

, due

to h

igh

time

disc

ount

rate

s du

ring

thei

r you

th. I

mag

ine

a sc

hool

ing

inve

stm

ent

need

s to

be

mad

e fo

r a fu

ture

retu

rn, a

nd th

e fu

ture

is

high

ly d

isco

unte

d

!�T

oo li

ttle�

educ

atio

nal i

nves

tmen

t

Eco

nom

ics

172:

Lec

ture

15

30

The

Girl

s S

chol

arsh

ip P

rogr

am (G

SP

)

�G

SP

is a

rand

omiz

ed e

valu

atio

n of

a m

erit

awar

d fo

r G

rade

6 g

irls

in B

usia

and

Teso

dist

ricts

, Ken

ya

�64

Tre

atm

ent s

choo

ls, 6

3 co

mpa

rison

sch

ools

Eco

nom

ics

172:

Lec

ture

15

31

The

Girl

s S

chol

arsh

ip P

rogr

am (G

SP

)

�G

SP

is a

rand

omiz

ed e

valu

atio

n of

a m

erit

awar

d fo

r G

rade

6 g

irls

in B

usia

and

Teso

dist

ricts

, Ken

ya

�64

Tre

atm

ent s

choo

ls, 6

3 co

mpa

rison

sch

ools

�Th

e to

p 15

% o

f girl

s in

pro

gram

sch

ools

(by

dist

rict)

rece

ived

a $

38 p

rize

for s

choo

l fee

s an

d su

pplie

s ov

er

two

year

s, a

nd a

pub

lic a

war

ds c

erem

ony

Eco

nom

ics

172:

Lec

ture

15

32

Two

GS

P re

sear

ch q

uest

ions

(#1)

Wha

t im

pact

do

thes

e in

cent

ives

hav

e on

test

sco

res

and

othe

r mea

sure

s of

sch

ool p

erfo

rman

ce?

Eco

nom

ics

172:

Lec

ture

15

33

Two

GS

P re

sear

ch q

uest

ions

(#1)

Wha

t im

pact

do

thes

e in

cent

ives

hav

e on

test

sco

res

and

othe

r mea

sure

s of

sch

ool p

erfo

rman

ce?

(#2)

Wha

t im

pact

doe

s w

inni

ng th

e G

SP

aw

ard

have

on

late

r sch

oolin

g ch

oice

s an

d ou

tcom

es?

In p

artic

ular

do

es it

mak

e it

mor

e lik

ely

that

win

ners

sta

y in

sch

ool?

Eco

nom

ics

172:

Lec

ture

15

34

Two

GS

P re

sear

ch q

uest

ions

(#1)

Wha

t im

pact

do

thes

e in

cent

ives

hav

e on

test

sco

res

and

othe

r mea

sure

s of

sch

ool p

erfo

rman

ce?

(#2)

Wha

t im

pact

doe

s w

inni

ng th

e G

SP

aw

ard

have

on

late

r sch

oolin

g ch

oice

s an

d ou

tcom

es?

In p

artic

ular

do

es it

mak

e it

mor

e lik

ely

that

win

ners

sta

y in

sch

ool?

�Tw

o di

ffere

nt m

etho

dolo

gica

l app

roac

hes

to a

nsw

er

our t

wo

rese

arch

que

stio

ns:

(1) R

ando

miz

ed e

valu

atio

n m

etho

ds

(2) R

egre

ssio

n di

scon

tinui

ty m

etho

ds

Eco

nom

ics

172:

Lec

ture

15

35

The

Girl

s S

chol

arsh

ip P

rogr

am (G

SP

)

�Th

e ra

ndom

izat

ion

�wor

ked�

: tre

atm

ent a

nd

com

paris

on g

roup

sch

ools

are

sim

ilar a

t bas

elin

e (T

able

3, F

igur

e 5)

Eco

nom

ics

172:

Lec

ture

15

36

Eco

nom

ics

172:

Lec

ture

15

37

Eco

nom

ics

172:

Lec

ture

15

38

Eco

nom

ics

172:

Lec

ture

15

39

�Fo

r nex

t tim

e: C

ontin

ue re

adin

gs o

n ed

ucat

ion

Eco

nom

ics

172:

Lec

ture

15

40

Whi

tebo

ard

#1

Eco

nom

ics

172:

Lec

ture

15

41

Whi

tebo

ard

#2

Eco

nom

ics

172:

Lec

ture

15

42

Whi

tebo

ard

#3

Eco

nom

ics

172:

Lec

ture

15

43

Whi

tebo

ard

#4

Eco

nom

ics

172:

Lec

ture

15

44

Whi

tebo

ard

#5

Eco

nom

ics

172:

Lec

ture

15

45

Map

of A

frica

Eco

nom

ics

172:

Lec

ture

15

46

Map

of A

frica