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Missing Women: Age and Disease

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Relative to developed countries and some parts of the developing world, most notably sub- Saharan Africa, there are far less women than men in India and China. It has been argued that as many as a hundred million women could be missing. The possibility of gender bias at birth and the mistreatment of young girls are widely regarded as key explanations. We provide a decomposition of these missing women by age and cause of death. While we do not dispute the existence of severe gender bias at young ages, our computations yield some striking new findings . . . 

Does the Globalization of Anti-corruption Law Help Developing Countries?

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What role do foreign countries play in combating political corruption in developing countries? This chapter begins by describing the recently developed transnational anti-corruption regime, which encompasses legal instruments ranging from the dedicated multilateral agreements sponsored by the OECD and the United Nations, to the anti-corruption policies of the international financial institutions, to components of the international anti-money laundering regime, international norms governing government procurement, and private law norms concerning enforcement of corruptly procured contracts. It also surveys the evidence concerning a variety of claims about the potential advantages and disadvantages of having foreign institutions play a role in preventing, sanctioning, or providing redress for corruption on the part of local public officials . . . 
Kevin E. Davis

Warming Increases Risk of Civil War in Africa

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Armed conflict within nations has had disastrous humanitarian consequences throughout much of the world. Here we undertake the first comprehensive examination of the potential impact of global climate change on armed conflict in sub-Saharan Africa. We find strong historical linkages between civil war and temperature in Africa, with warmer years leading to significant increases in the likelihood of war. When combined with climate model projections of future temperature trends, this historical response to temperature suggests a roughly 54% increase in armed conflict incidence by 2030, or an additional 393,000 battle deaths if future wars are as deadly as recent wars. Our results suggest an urgent need to reform African governments’ and foreign aid donors’ policies to deal with rising temperatures.
Shanker atyanath, Marshall Burke, Edward Miguel, John Dykema, and David Lobell

Selling Out on the UN Security Council

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Election to the United Nations Security Council (UNSC) provides nations with an opportunity to trade policy support in exchange for aid and other forms of financial assistance. Nations elected to one of the ten temporary two year seats on the United Nations Security Council experience substantially lower economic growth during their time on the council than comparable nations not on the UNSC. Over the two year period of UNSC membership and the following two years, during which a nation is ineligible for reelection, UNSC nations experience a 3.5% contraction in their economy relative to nations not elected to the UNSC. Further, on average nations in the UNSC become less democratic and experience an increase in the level of restrictions on press freedom. The effects of UNSC membership on political and economic development are particularly strong in non-democratic states.
Alastair Smith, NYU and Bruce Bueno de Mesquita, NYU

A Model of Ethnic Conflict

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This paper studies costly conflict in a world of complete information, in which society can commit to divisible transfers among all potentially warring groups. The difficulty in preventing conflict arises from the possibility that there may be several conflictual divisions of society, each based on a different marker, such as class, geography, religion, or ethnicity. It is shown that this diversity of societal markers is particularly conducive to social instability when potential conflict is over private, divisible resources. In contrast, when conflict is over public goods, such diversity promotes social stability . . .
Joan Esteban, Instituto de Analisis Economico and Debraj Ray, NYU

Inequality and Markets: Some Implications of Occupational Diversity

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This paper characterizes long run income distribution in a competitive economy with borrowing constraints. Parents decide both on financial bequests and investments in their children's education. The occupational structure is "rich": there is a continuum of occupations with varying entry costs that are imperfect substitutes in the production process. Occupational returns are endogenously determined by market conditions. If the span of occupational investments is wide enough, the wealth distribution is non- degenerate and long-run inequality arises. In this case, the average return to education must rise with the level of educational investment - the return to human capital is endogenously nonconcave. This finding, which contrasts with the usual presumption that the private return to human capital is decreasing, constitutes the central empirically testable proposition of this paper.
Dilip Mookherjee, Boston University and Debraj Ray, NYU

The Distribution of Wealth and Fiscal Policy in Economies with Finitely Lived Agents

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We study the dynamics of the distribution of wealth in an overlapping generation economy with finitely lived agents and inter-generational transmission of wealth. Financial markets are incomplete, exposing agents to both labor and capital income risk. We show that the stationary wealth distribution is a Pareto distribution in the right tail and that it is capital income risk, rather than labor income, that drives the properties of the right tail of the wealth distribution. We also study analytically the dependence of the distribution of wealth, of wealth inequality in particular, on various fiscal policy instruments . . . 
Jes Benhabib, Alberto Bisin and Shenghao Zhu

Empirics of Strategic Interdependence: The Case of the Racial Tipping Point

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The Schelling model of a “tipping point” in racial segregation, in which whites flee a neighborhood once a threshold of nonwhites is reached, is a canonical model of strategic interdependence. The idea of “tipping” explaining segregation is widely accepted in the academic literature and popular media. I use census tract data for metropolitan areas of the US from 1970 to 2000 to test the predictions of the Schelling model and find that this particular model of strategic interaction largely fails the tests. There is more “white flight” out of neighborhoods with a high initial share of whites than out of more racially mixed neighborhoods.
William Easterly, NYU

Democratic Transitions and Implicit Power: An Econometric Approach

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Recent works of political economy have emphasized the importance of distinguishing between transfers of explicit and implicit power over economic decision making in democratic transition. Scholars have so far provided interesting anecdotal evidence supporting their claims of potential divergence between transfers of explicit and implicit power. This raises the question of whether it is possible to econometrically identify when a transfer of explicit power has not also been accompanied by a transfer of implicit power. This paper offers a straightforward and easily replicable approach to addressing this question using the tools of financial econometrics. We apply this approach here to a major country where considerable uncertainty remains over the military's implicit role in economic decision making long after an explicit transfer of power to elected leaders, namely Turkey. Our findings indicate a significant gap between the explicit and implicit aspects of Turkey's democratic transition, adding support to scholars' claims about the importance of distinguishing between these aspects of transitions.
Gokce Goktepe and Shanker Satyanath

Cultural Context: The Productivity of Capitalism

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Does capitalism perform better when embedded in certain cultures? Given the wide range of economic success and failure, we address potential causes for the effectiveness or ineffectiveness of institutional constraints. This paper argues that culture matters for the success of capitalist institutions, specifically economic freedom. We claim that different cultures may raise or lower the productivity of economic institutions by either constraining or supporting these rules. We analyze this relationship empirically by examining how the interaction between economic freedom and culture affects economic growth. Our results suggest that culture does, indeed, enhance the effectiveness of capitalism and its subsequent impact on growth . . . 
Claudia Williamson and Rachel Mathers

Women's Rights and Development

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Why has the expansion of women's economic and political rights coincided with economic development? This paper investigates this question, focusing on a key economic right for women: property rights. The basic hypothesis is that the process of development (i.e., capital accumulation and declining fertility) exacerbated the tension in men's conflicting interests as husbands versus fathers, ultimately resolving them in favor of the latter. As husbands, men stood to gain from their privileged position in a patriarchal world whereas, as fathers, they were hurt by a system that afforded few rights to their daughters. The model predicts that declining fertility would hasten reform of women's property rights whereas legal systems that were initially more favorable to women would delay them. The theoretical relationship between capital and the relative attractiveness of reform is non-monotonic but growth inevitably leads to reform. I explore the empirical validity of the theoretical predictions by using cross-state variation in the US in the timing of married women obtaining property and earning rights between 1850 and 1920.
Raquel Fernandez, NYU

Pivotal Patronage

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In contrast to traditional approaches to patronage politics, in which politician directly buy electoral support from individuals, we examine how patronage based parties can elicit wide spread electoral support by offering to allocate benefits to the precinct giving it the most support. Provided that the party can observe precinct level voting, this mechanism, which eliminates the need to observe individual votes or to reward a large number of individual voters, incentivizes voters to support a party even when the party enacts policies which are against their interests. When a party allocates rewards contingent upon precinct-level voting results, voters can be pivotal both in terms of affecting who wins the election and in influencing which precinct gets the benefits. The latter (prize pivotalness) dominates the former (outcome pivotalness), particular when a patronage party is anticipated to win. Competition between the precincts for prize pivotalness encourages rational voting even when the odds of outcome pivotalness approach 0.
Alastair Smith, NYU and Bruce Bueno de Mesquita, NYU

Remarks on the Initiation of Costly Conflict

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This paper studies costly conflict in a world of complete information, in which society can commit to divisible transfers among all potentially warring groups. The difficulty in preventing conflict arises from the possibility that there may be several conflictual divisions of society, each based on a different marker, such as class, geography, religion, or ethnicity. It is shown that this diversity of societal markers is particularly conducive to social instability when potential conflict is over private, divisible resources. In contrast, when conflict is over public goods, such diversity promotes social stability.
Debraj Ray, NYU

SigNet: Low Cost Auditable Transactions using SIM cards and Mobile Phones

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The absence of reliable network connectivity in the developing world has resulted in the use of paper receipts remaining the de facto standard for tracking transactions of various types. This includes both cash transactions (microfinance-related disbursements and repayments, purchases, money transfers) and noncash goods (food commodities to/from godowns or warehouses). Such receipts are susceptible to loss, damage and alteration . . .
Michael Paik and Lakshminarayanan Subramanian

Getting Climate-Related Conditionality Right

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Conditionality has gotten a bad name in development finance. But it may be rehabilitated by the emerging climate change regime. Mitigating climate change by reducing emissions of greenhouse gases (GHGs) from developing countries will require substantial amounts of capital. Some of that capital will come from individuals or organizations who insist that their funds be used in ways that tend to promote mitigation. In other words, they will insist on conditionality. This raises a number of policy concerns, including several that are reminiscent of debates about conditionality in other contexts . . . 
Kevin Davis, NYU and Sarah Dadush, NYU

Securing Private Property: Formal versus Informal Institutions

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Property rights is one of the most fundamental and highly robust institutions supporting economic performance. However, the channels through which property rights are achieved are not adequately identified. This paper is a first step towards unbundling the black box of property rights into a formal and informal component. We empirically determine the significance of both informal and formal rules in securing property rights. We find that when both components are included in the analysis, the impact of formal constraints are greatly diminished, while informal constraints are highly significant in explaining the security of property. These results are robust to a variety of model specifications, multiple instrumental variable and a range of control variables.
Claudia Williamson, NYU and Carrie Kerekes, Florida Gulf Coast University

Civil War Exposure and Violence

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In recent years scholars have begun to focus on the consequences of individuals' exposure to civil war, including its severe health and psychological consequences. Our innovation is to move beyond the survey methodology that is widespread in this literature to analyze the actually behavior of individuals with varying degrees of exposure to civil war in a common institutional setting. We exploit the presence of thousands of international soccer (football) players with different exposures to civil conflict in the European professional leagues, and find a strong relationship between the extent of civil conflict in a player's home country and his propensity to behave violently on the soccer field, as measured by yellow and red cards. This link is robust to region fixed effects . . . 
Edward Miguel, University of California Berkeley; Sebastian Saiegh, University of California San Diego; and Shanker Satyanath, NYU

Can Informed Public Deliberation Overcome Clientelism? Experimental Evidence From Benin

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This paper provides experimental evidence on the effect of "informed" town hall meetings on electoral support for programmatic, non-clientelist platforms. The experiment takes place in Benin and involves real candidates running in the fi…rst round of the 2006 presidential elections. The treatment is a campaign strategy based exclusively on town hall meetings during which policy proposals made by candidates are "speci…c" and informed by empirical research. The control is the "standard" strategy based on campaign rallies followed by targeted or clientelist electoral promises . . . 
Leonard Wantchekon

Political Survival and Endogenous Institutional Change

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Incumbent political leaders risk deposition by challengers within the existing political rules and by revolutionary threats. Building on Bueno de Mesquita, Smith, Siverson, and Morrow’s selectorate theory, the model here examines the policy responses of office-seeking leaders to revolutionary threats. Whether leaders suppress public goods such as freedom of assembly and freedom of information to hinder the organizational ability of potential revolutionaries or appease potential revolutionaries by increasing the provision of public goods depends, in part, on the sources of government revenues. Empirical tests show that governments with access to revenue sources that require few labor inputs by the citizens, such as natural resource rents or foreign aid, reduce the provision of public goods and increase the odds of increased authoritarianism in the face of revolutionary pressures. In contrast without these sources of unearned revenues, governments respond to revolutionary pressures by increasing the provision of public goods and democratizing.
Bruce Bueno de Mesquita, NYU and Alastair Smith, NYU

Economic Freedom, Culture and Growth

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How does economic freedom and culture impact economic growth? This paper argues that culture and economic institutions, specifically economic freedom, both play a role in economic development independently, but the strength of their impact can only be better understood when both are included in the growth regression. We find that, when both are included in the growth regression, the impact of culture is greatly diminished, while economic freedom continues to have a significant impact on economic growth. Our results suggest that economic freedom is more important than culture for growth outcomes, though the mechanisms through which culture affects growth warrant further investigation. We posit that culture may be more important for initial growth, diminishing in significance once the institutions of economic freedom have been established.
Claudia Williamson, NYU and Rachel Mathers, West Virginia University

The Phelps-Koopmans Theorem and Potential Optimality

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Can discounted optimal paths spend an “infinite amount of time above” the golden rule?
This paper seeks to answer that question. I show in Proposition 1 that if an optimal path converges, its limit must lie weakly below the minimal golden rule, the lowest capital stock that globally maximizes net consumption. This result is independent of any curvature assumptions, either on the production function or on the utility function. Thus far, then, the intuition of the convex model carries over: convergent programs that are potentially optimal with respect to some utility function cannot stay above and bounded away from the golden rule . . . 
Debraj Ray, NYU

Leader Survival, Revolutions and the Nature of Government Finance

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Leaders face multiple threats to their political survival. In additional to surviving the threats to tenure from within the existing political systems, which is modeled using Bueno de Mesquita et al’s (2003) selectorate theory, leaders risk being deposed through revolutions and coups. To ameliorate the threat of revolution, leaders can either increase public goods provisions to buy off potential revolutionaries or contract the provision of those public goods, such as freedom of assembly, transparency and free press, which enable revolutionaries to coordinate. Which response a leader chooses depends upon existing institutions and the structure of government finances . . . 
Alastair Smith, NYU and Bruce Bueno de Mesquita, NYU

Randomized Evaluation of Institutions: Theory with Applications to Voting and Deliberation Experiments

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We study causal inference in randomized experiments where the treatment is a decision making process or an institution such as voting, deliberation or decentralized governance. We provide a statistical framework for the estimation of the intrinsic effect of the institution. The proposed framework builds on a standard set-up for estimating causal effects in randomized experiments with noncompliance . . . 
Yves Atchade and Leonard Wantchekon

Exploring the Failure of Foreign Aid: The Role of Incentives and Information

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The stated purpose of foreign aid is to promote economic and human development. Recently, the ability of foreign aid to achieve its goals is called into question. Widespread conceptual and empirical literature suggests that foreign aid is ineffective. This paper explores the failure of foreign aid relying on the role of both incentives and information. The success of aid depends on incentives faced by all parties in donor and recipient countries. In addition, both donors and recipients must obtain the necessary information to actually target and achieve desired goals. This analysis provides a double-edged sword to explain why foreign aid fails to achieve development goals.
Claudia R. Williamson

Empirics of Strategic Interdependence: the Case of the Racial Tipping Point

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The Schelling model of a “tipping point” in racial segregation, in which whites flee a neighborhood once a threshold of nonwhites is reached, is a canonical model of strategic interdependence. The idea of “tipping” explaining segregation is widely accepted in the academic literature and popular media. I use census tract data for metropolitan areas of the US from 1970 to 2000 to test the predictions of the Schelling model and find that this particular model of strategic interaction largely fails the tests. There is more “white flight” out of neighborhoods with a high initial share of whites than out of more racially mixed neighborhoods.
William Easterly

A Remark on Color-Blind Affirmative Action

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Elite colleges and universities in the United States have recently faced a number of legal challenges that restrict their use of explicitly race-contingent admissions policies. Since these institutions continue to seek broad representation from different social groups (and to view campus diversity as an essential ingredient in the provision of a first-rate education), they have strong incentives to adjust their admissions criteria in order to attain diversity goals through less direct means. There is considerable evidence that this process is well underway, and a literature dealing with the efficiency implications of color-blind affirmative action policies has emerged . . . 

Tanzania's Economic and Political Performance: A District-Level Test of Selectorate Theory

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Hypotheses derived from the selectorate theory of political survival are tested against Tanzanian district-level data. We assess the extent to which resource allocations within Tanzania depend on the size of the district-level presidential winning coalition and the presidential support coalition. Using indicators that precisely measure coalition size given Tanzania’s electoral rules, we find that smaller winning coalition districts emphasize private goods allocations such as maize vouchers and road construction. Larger coalition districts emphasize public goods provision such as better health care access, residential electrification, greater income equality, and a lower infant mortality rate. These findings hold with controls for poverty, productivity, and population. Support coalition size – that is, total vote share for the winning party – generally has an insignificant effect on public and private goods allocations. Likewise, the control variables generally have little effect . . . 
Alastair Smith, NYU and Bruce Bueno de Mesquita, NYU

Underground Insurgency and Democratic Revolution

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We propose a model of the transition from an autocratic regime to either a liberal democracy or a new autocratic regime (e.g. a communist government). An underground organization votes on whether or not to hold a mass protest. If a protest is held, the organization members decide whether to put effort into the uprising. Higher effort makes regime change more likely, but it is individually risky. This creates the possibility, in principle, of high and low effort equilibria. But we show, using weak dominance arguments, that only the high effort equilibrium is “credible.” Thus, internal party democracy is shown to enhance the efficiency of political transitions . . .