Development Economics

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Development Economics

• Population
• Health Nutrition

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World population
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Source Demographic Yearbook, 2004, United Nations
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Demographic transition

• Mortality decrease
• Infant mortality first, then adult mortality
• 3 main factors, not independent from each other
• Health technologies (infrastructures, drugs,
  global public goods)
• Mothers education (quality of nutrition and
  child care)
• Income increase (nutrition).
• Fertility transition
• Progressive adjustment to the number of children
  actually wanted
• Quantity-quality trade-off drawn by the increased
  survival of children
• Further decrease in the number of birth due to
• Lowering uncertainty on life expectancy of
  children
• Change in the economic and social condition of
  women
• Strong variations of the dependency ratio over 30
  to 50 years
• Problem labour market absorption capacity.

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Fertility choices

• Demand for children (Becker - 1960)
• Expected benefits
• Missing markets
• Old age support
• Insurance
• Child labor
• Costs
• Child rearing (direct and indirect costs)
• Uncertainty
• Child survival
• Child earnings in adulthood
• Child attention to its parents in adulthood.
• Increases the number of desired children
• Can be reduced through changes in mortality rates
  through information

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Income improvements and fertility choices
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Is fertility too high?

• Information
• relative to current mortality rate
• Uncertainty
• overshooting
• Externalities
• Within societies
• Within families
• Social Norms
• Television.

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Population issues

• Negative impact
• Malthusians models
• Other models with capital dilution (Solow,
  Ramsey)
• Impact of black plague and influenza / Impact of
  AIDS ?
• Examples of organized lowering of fertility
  (China, Tunisia)
• Positive impact
• Models with technical progress depending from the
  population (Boserup, Simon)
• New consensus non significant impact ? health
  issues

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Health and Nutrition

• Descriptive elements
• Measures
• Relation between health/nutrition and income
• Difficulties to identify causal relations
• Impact of income on health/nutrition
• Impact of health on income
• Theory of efficiency wage
• Empirical results

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Nutrition and income
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Famines

• Not always due to insufficient availability of
  food resources at the country level
• Sen Problem of access to available resources
  trade entitlement failure.
• Articulation between initial endowments and
  economic and social environment.
• Ex of Bengal in 1943. Relative price of rice
  shoots up. Terms of trade labour/rice decrease
  from 100 in 1939/40 to 32 in 1942/43 households
  who suffered most fishermen and agricultural
  wage workers. (6,4 of sharecroppers and small
  farmers died while 40,3 of agricultural wage
  worker did).

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Health and income Strong correlation between
income and nutrition, that diminishes with the
countrys standard of living
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During the war, the increase in the stature of
Vietnamese men was brought to a halt.
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The health/wage correlation is not entirely due
to difference in education.
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Measuring health

• Health is multidimensional
• Several measures
• Each dimension can have a different impact on
  productivity and/or labour supply.
• Measures of health
• Measures de nutrition

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Measures of health

• General Health Status Self-evaluation of health
  status on a scale from 1 to 5.
• Doesnt capture the multiplicity of health
  dimensions
• How to interpret the answer  good health?
• What is the norm? Comparability issue.
• Individuals with low access to the health system
  over-estimate their health status (they assume
  they are ok as long as they dont have any
  contrary information)
• Measurement error systematically correlated with
  income under-estimation of the impact of health
  on wage.

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Measures of health (2)

• Symptoms
• Diarrhoea, fever, respiratory difficulties
• Same measurement error problem than GHS
• Days where normal activity could not be carried
  out.
• Individuals for whom the opportunity cost of time
  is the highest loose less days.
• Norm is adapted to physical condition.
• Capacity to undertake certain efforts
• For the younger individuals, there is very little
  variance.

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Nutritional measures.

• Calories availability
• Food expenditures (including self-consumption)
  are converted into calories.
• Suppose no losses
• Does not take into account meals taken outside
  the home or offered to visitors.
• Calories intake
• Weighing before and after meals.
• 24 hours recall
• The difference between availability and intake is
  positively correlated to income.

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Nutritional measures.(2)

• Anthropometric Measures
• Size long term indicator, determined by
  nutrition in infancy.
• Body Mass Index (weight in kg / (size in m)²)
  indicator of current nutritional status. Higher
  mortality risk for BMIlt18 or gt30.
• Arm circumference
• Measurement errors are not systematically
  correlated to individual characteristics.
• Can be used as control when using calories
  consumption data (needs are correlated to BMI).

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Relation income/nutrition

• A priori, it exists both ways
• Income ? nutrition/health through food
  consumption and demand for health care.
• Nutrition/health ? income through its impact on
  productive capacity.
• Serious identification problems.

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Theoretical framework

• Production function for health
• HH(N,L A,B,D,?,eh)
• where N health inputs and Llabour supply
• A individual characteristics, B family
  characteristics, D health environment.
• ? unobservable, e measurement error.
• Wage function
• ww(H A,S,B,I,?,ew)
• S education, I community variables
  (infrastructures)

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Identification Problems

• If ? and ? have common components, the estimated
  effect of health on wage will be over-estimated.
• Simultaneity
• cpo
• ? If N increases w, via H, hence the implicit
  price of N decreases and its consumption
  increases.

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• Reduced form for nutrition demand
• Nj Nj (pn , pc , A,S,B,V,D,I, ? ,? ,?)
• ? also appears in the wage function (hence the
  simultaneity issue.
• Possible instrumental variables conditionally to
  H and I, pn and D could be valid instruments for
  health in wage functions. Often distance to
  health infrastructures, quality, food price
• Problem in case of endogeneous placement.

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Impact of health on labour supply

• Same difficulties
• In reduced form, impossible to say whether impact
  of health on labour supply is due to productivity
  (income effect and/or price effect) or to the
  direct effect of preferences.
• Identifying the structural model requires to find
  the appropriate instruments.
• Pitt, Rosenzweig Hassan 1990 estimate a
  structural model.
• Foster Rosenzweig 1994 Healthiest individuals
  choose piece-rate remuneration or
   self-employed  jobs. Daily wage workers put in
  less effort.

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Impact of income on nutrition

• Elasticity of calories demand with respect to
  income
• If high, there exist substitution possibilities
  with other consumption if calorie cost increases.
  
• From the nutritional point of view it is not
  necessarily desirable.
• Very varied results from 0,86 in Sierra Leone
  (Strauss 1984), to 0,01 in Indonesia
  (PittRosenzweig 1985)

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Impact of nutrition on productive capacity
efficiency wage theory

• Leibenstein (1957) at low levels of nutrition,
  the production capacity is weak. When nutrition
  improves, productive capacity increases, first at
  increasing rate and then at decreasing rate.
• (Stiglitz, Dasgupta, Ray)

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There exists a minimum wage ( efficiency wage )
under which productivity jumps discontinuously to
very low levels.
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Other consequences

• In equilibrium, involuntary unemployment affect
  individuals in poor health.
• Non-wage inequalities are transmitted to the
  labour market.
• Long term labour contracts should be observed
  because of future returns to current nutrition.
• Intra-family disparities
• No empirical results to confirm convincingly the
  existence of the poverty trap suggested by
  theory.
• Pitt, Rosenzweig Hassan 1990 intra-family
  inequality, but taxation of the better endowed.
• Rural wages in India gtgtgt nutritional minimum
  (Swamy, 1997)
• Daily labour contracts.

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Impact of nutrition on productive capacity

• But, despite empirical difficulties, results
  point to a rather positive effect
• Strauss 1986, Sierra Leone, elasticity of
  agricultural production to calories intake0,33,
  i.e. a worker who consumes 1500 calories a day is
  0,6 times less productive than the one who
  consumes 2400.
• Sahn Alderman, 1988, Sri Lanka, elasticity of
  male wage to calorie consumption0,2.

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Impact of health on income

• Stronger for the poor, not very big
• Brazil (ThomasStrauss) not be illiterate
  30cm
• In general it disappears with instrumentation.
• Thomas Strauss, Brazil
• Size has the strongest effect
• BMI increases male wage, mainly for the less
  educated
• Calories intake increases wage at very low level
  of consumption
• Protein intake has higher returns for highest
  consumption levels.
• Schultz Tansel, impact of illness
• Côte dIvoire men having lost 1 day of work
  during the month have a wage lower by 18 no
  effect in Ghana no effect for women.

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Controlled experiments

• Cure against schistosomiases (sugar cane
  plantations)
• Tanzania increase the income of infected workers
  but not enough to catch up with non-infected
  workers.
• Cameroon no effect, but no difference ex-ante
  either.
• Iron supplementation (rubber - Indonesia)
• Anaemic workers (20 less productive than others)
  , catch up with others after 60 days of treatment
  (about 300 obs.,).
• Caloric supplementation
• Small positive imapct of hourly productivity
  (Kenya, 47 obs. )

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Other impact of health

• Impact on education
• Glewwe Jacoby, Ghana impact of undernutrition
  on age of entry at school
• Miguel Kremer, Kenya, Deworming increases
  attendance but does not improve the results at
  cognitive tests.