Issues in Economic Development 2009/10
Department of Economics, University College London
Instructor: Dr. Samuel Berlinski; s.berlinski@ucl.ac.uk
Teaching Assistant: Mr. Brendon McConnell; brendon.mcconnell@ucl.ac.uk
Lecture times and venue: Fridays 11:00 -13:00, Drayton Jevons (B20)
Office Hours:
Berlinski: Wendsdays 10:15 -11:15 (Room 224, Drayton House)
McConnel: Tuesdays 12:00 – 13:00.
Course web page: http://www.homepages.ucl.ac.uk/~uctpsgb/teaching/c42/
Aims and Objectives
In this course, we will look at the issue of poverty and human resources development. We will
start by analysing the definition of poverty, look at different measures, and discuss policies aimed
at alleviating poverty. We will concentrate on the long run determinants of poverty and, therefore,
analyse the issues of fertility, education and health in some detail. We will propose
microeconomic models to explain how people make decisions about these variables and how
policy is likely to affect their choices. By the end of the course, students should be able to
critically assess policies designed towards helping the poor by taking into account how people
react to policy interventions and how to statistically assess the success of such policies.
Prerequisites
Intermediate Microeconomics and Introductory Econometrics are required.
Tutorials
There are four problem sets, one for each class, which typically include some exercises and/or
short written assignments (but not full essays). You are required to submit course work for at
least 3 classes. We will mark only one question in each problem set. You are allowed to work in
pairs and I advice to do so. If you work in pairs only submit one piece of work with both names.
Course work should be submitted to your class teacher via the Tutorial Class pigeon-holes before
12 noon on the Thursday before next class. Late submissions are not accepted. All course work
must be submitted with a cover sheet attached to the front. These are available from reception. In
sum:
Class
Week
1
2
3
4
3
5
7
9
Answers handed in
before 12 noon on
Thursday 21 January
Thursday 4 February
Thursday 25 February
Thursday 11 March
Evaluation
All the material covered in both the lectures and the reading list will be evaluated in a 2-hour
unseen written examination in Term 3. The structure of the exam will be similar than in the
previous year. Past exams can be found on line.
Reading list and course organization
Readings marked as JSTOR, Willey,MIT Press or Science Direct are available on line (you will
need your UCL userid and password to access trough ATHENS when outside the UCL domain).
1. Poverty and Development
We will discuss the definition of poverty and how it is measured. We will present a profile of
poverty in different continents and describe the characteristics of the poor.
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Banerjee, A. and E. Duflo, 2006, The Economic Lives of the Poor, Journal of
Economic Perspectives 21, pp. 141-167.
Datt, G., D. Jolliffe, and M. Sharma, 2001, A Profile of Poverty in Egypt, African
Development Review 13, pp. 202-237. [Willey]
Deaton, A., 2004, Measuring Poverty, Princeton Research Program in
Development Studies Working Paper 230.
Lipton, M. and M. Ravallion, 1995, Poverty and Policy, in J. Behrman and T. N.
Srinivasan (editors), Handbook of Development Economics. Volume 3B.
Amsterdam: Elsevier Science, North Holland, pp. 2553-2601.
Ray, D., 1998, Development Economics, New York: Princeton University Press,
Chapter 8.
Scheuren, F., 2004, What is a survey? [If you have no clue, this is a good place
to start].
The World Bank, 2000, World Development Report 2000/2001: Attacking Poverty,
New York: Oxford University Press, Part I. [The link is for all World Development
Reports (1992-onwards)].
2. Inequality, Growth and Poverty
We will discuss the interconnection between inequality, growth and poverty.
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Banerjee, A., 2000, The Two Poverties, MIT Department of Economics Working
Paper 01-16.
Banerjee, A. and E. Duflo, 2003, Inequality and Growth: What Can the Data Say?,
Journal of Economic Growth 8, pp. 267-299.
Banerjee, A. and Newman, A., 1994, Poverty, Incentives and Development,
American Economic Review Papers and Proceedings, pp. 211-215. [JSTOR]
Dollar, D. and A. Kraay, 2002, Growth is Good for the Poor, Journal of Economic
Growth 7, pp. 195-225.
Bourguignon, F., 2004, The Poverty-Growth-Inequality Triangle, mimeo World
Bank.
Lipton, M. and M. Ravallion, 1995, Poverty and Policy, in J. Behrman and T. N.
Srinivasan (editors), Handbook of Development Economics. Volume 3B.
Amsterdam: Elsevier Science, North Holland, pp. 2602-2614. [Science Direct]
Ray, D., 1998, Development Economics, New York: Princeton University Press,
Chapters 6 and 7.
3. Poverty Alleviation Policies and Targeting
We will discuss poverty alleviation policies and the targeting of these policies.
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.Besley, T. and R. Kanbur, 1993, The Principles of Targeting, in M. Lipton and J.
van der Gaag (editors), Including the Poor. Washington, D.C.: World Bank.
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Castro-Leal, F., J. Dayton, L. Demery, and K. Mehra, 1999, Public Social
Spending in Africa: Do the Poor Benefit?, The World Bank Research Observer,
pp. 49–72.
Lipton, M. and M. Ravallion, 1995, 1995, Poverty and Policy, in J. Behrman and
T. N. Srinivasan (editors), Handbook of Development Economics. Volume 3B.
Amsterdam: Elsevier Science, North Holland, pp. 2615-2638. [Science Direct]
Sen, A., 1995, The Political Economy of Targeting, in D. van de Walle and K.
Nead (editors), Public Spending and the Poor, Baltimore: The Johns Hopkins
University Press. [The link is for the whole book you only need pp. 11-24.]
4. Identifying Causal Effects and the Evaluation of Public Policy
When is the observed relation between variables a mere correlation and when does it entail a
causal effect? How do we measure the causal impact of a policy designed to help the poor?
In this section, we will briefly revise some of the available techniques to tackle the problem of
identification of causal effects: randomized experiments, ordinary least squares, matching
methods, differences-in-differences, and instrumental variables. This section is critical to
understand what follows in the course (e.g., it will help to interpret the observed relation
between labour productivity and nutrition and fertility and contraceptive policies).
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Angrist, J., and A.B. Krueger, 2001, Instrumental Variables and the Search for
Identification: From Supply and Demand to Natural Experiments, Journal of
Economic Perspectives 15, pp. 69-85. [JSTOR]
Burtless, G., 1995, The Case for Randomized Field Trials in Economic and
Policy Research, Journal of Economic Perspectives 9, pp. 63-84. [JSTOR]
Duflo, E., R. Glennerster, and M. Kremer, 2007, Using Randomization in
Development Economics Research: A Toolkit, In: T. Paul Schultz and John A.
Strauss, Editor(s), Handbook of Development Economics, Elsevier, Volume 4, pp.
Pp. 3895-3962.
Holland, P.W., 1986, Statistics and Causal Inference, Journal of the American
Statistical Association 81, pp. 945-970. [JSTOR]
Ravallion, M., 1999, The Mystery of Vanishing Benefits: Ms Speedy Analyst’s
Introduction to Evaluation, World Bank Policy Research Working Paper 2153.
5. Population Growth and Fertility
We will look at the relation between fertility, population growth, and economic development.
We will start by analysing the demographic transition. Then, we will take a detailed look at the
motivation of households to have children. We will analyse the scope for contraceptive
policies to induce a reduction in the total fertility rate in developing countries.
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Dasgupta, P., 1995, The Population Problem: Theory and Evidence, Journal of
Economic Literature 33, pp. 1879-1902. [JSTOR]
Pritchett, L., 1994, Desired Fertility and the Impact of Population Policies,
Population and Development Review 20, pp. 1-55. [JSTOR]
Phillips, J.E., R. Simmons, M.A. Koeining, and J. Chakraborty, 1988, Determinats
of Reproductive Change in a Traditional Society: Evidence from Matlab,
Bangladesh, Studies in Family Planning 19, pp. 313-334. [JSTOR]
Ray, D., 1998, Development Economics, New York: Princeton University Press,
Chapter 9.
Young, A., 2005, The Gift of the Dying: The Tragedy of AIDS and the Welfare of
Future African Generations, Quarterly Journal of Economics 120, pp. 243-266.
[MIT Press].
6. Education
Education is at the forefront of policy prescriptions when people think about how to improve
the well-being of poor people in the long-term. Therefore, we will ask here: How do
households decide on the education of their children? What is the effect of education on
productivity in developed economies? Which educational policies are more likely to improve
the cognitive skills of children and provide incentives not to drop-out from school?
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Duflo, E., 2001, Schooling and Labor Market Consequences of School
Construction in Indonesia: Evidence from an Unusual Policy Experiment,
American Economic Review 91, pp. 795-813. [JSTOR]
Glewwe, P., and M. Kremer, 2006, Schools, Teachers and Education Outcomes
in Developing Countries, In: E. Hanushek and F. Welch, Editor(s), Handbook of
the Economics of Education, Elsevier, 945-1017. [Science Direct].
Glewwe, P., 2002, Schools and Skills in Developing Countries: Education
Policies and Socioeconomic Outcomes, Journal of Economic Literature 40, pp.
436-482. [JSTOR]
Schultz, P., 2004, School Subsidies for the Poor: Evaluating the Mexican
PROGRESA Poverty Program, Journal of Development Economics 74, pp. 199250. [Science Direct].
Schultz, P., 1999, Health and Schooling Investments in Africa, Journal of
Economic Perspectives 13, pp. 67-88. [JSTOR]
UNESCO, 2003, Global Education Digest 2003: Comparing Education Statistics
Across the World, Montreal: UNESCO Institute for Statistics, pp. 7-20.
7. Health
We will start this section with a profile of disease incidence in developing economies. Then,
we will look at the household decision on how to invest in health and will discuss the causal
relationship between several health measures (including nutrition) and productivity. We will
finally discuss some of the policies used to improve people’s health in developing economies
and their chances of success.
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Bleakley, H., 2003, Disease and Development: Evidence from the American
South, Journal of the European Economic Association 1, pp. 376-386. [MIT
Press]
Miguel, E., and M. Kremer, 2007,The Illusion of Sustainability, Quarterly Journal
of Economics 122, pp. 1007-1065. [MIT Press]
Miguel, E., and M. Kremer, 2004, Worms: Identifying Impacts on Education and
Health in the Presence of Treatment Externalities, Econometrica 72, pp. 159-217.
[JSTOR]
Strauss, J. and D. Thomas, 1998, Health, Nutrition, and Economic Development,
Journal of Economic Literature 36, pp. 766-817. [JSTOR]
WHO, 1999, The World Health Report: Making a Difference, Part One.