Development Economics

Fall 2004

MIT 14.771; Harvard Economics 2390B
Tuesday, Thursday 10:30 - 12:00

Please note:
Lectures from 9/21 to 11/9 will be held at MIT in Building E52, Room 175
Lectures from 11/16 to 12/9 will be held at Harvard, Room M15


Esther Duflo: E52-251g, MIT, 258-7013, eduflo@mit.edu

Abhijit Banerjee: 253-8855, banerjee@mit.edu

Michael Kremer: 207 Littauer, Harvard, 495-9145, mkremer@fas.harvard.edu

Teaching Assistants: Kalina Manova, manova@fas.harvard.edu; Patricia Cortes, pcortes@MIT.EDU

This class contributes to the fulfillment of requirements for the development field for Economics Ph.D. students at both Harvard and MIT. People other than Economics Ph.D. students should consult with the instructors before enrolling.

The first 14 classes will be taught by Esther Duflo and Abhijit Banerjee at MIT in E52-175. The remaining 7 classes will be taught by Michael Kremer at Harvard in Littauer M15. There will be no class on November 11 (Veterans' Day) and November 25 (Thanksgiving).

Requirements: Problem sets will generally be handed out every other Thursday and will be due one week later. The final exam will count for 70% of the grade, and the problem sets will account for the remaining 30%. The final exam will most probably be on December 14), at the regular class time. Otherwise it till be during the regular class time on December 9th. Class participation will also be considered in borderline cases.

Most readings are available on the web (single-starred items), check the course page at MIT, http://web.mit.edu/14.771/www/ for links or at Harvard http://www.courses.fas.harvard.edu/~ec2390b Required readings that are not available on the web will be handed out and put on reserve at Dewey library and at Littauer Center Library.

Everyone is encouraged to attend the Development Seminar, which meets on Tuesdays from 2:45-4:00 p.m. at Harvard in Harvard Hall Room 104. The first meeting of the Development Seminar is on September 21st . When there is an out-of-town speaker, we normally take the speaker out to dinner, and we will try to save a couple of spots for graduate students each time. If you are interested in coming to dinner with a particular speaker, inform Lauren LaRosa (seminar coordinator) at larosa@fas.harvard.edu (the best way to reach her) or call at 617- 496-1488.

There will occasionally be additional Development Seminars held at MIT, Room E51-151, 2:30-4pm. Check Harvard's seminar webpage for dates/speakers.

Everyone is also welcome to attend the Development Lunch at their respective institution. The MIT Development Lunch meets on Mondays from 12:00 until 1:00pm at MIT in Building E51, Room 095. The Harvard Development Lunch meets on Wednesdays from 12:50pm until 2:00pm at the Kennedy School at One Eliot St in the Perkins Room on the fourth floor. The first meeting of the Harvard Development Lunch will be held on September 22nd.

General readings

BOOKS:

Ray, Debraj. Development Economics. Princeton University Press, 1998. (recommended, at the MIT COOP)

Deaton, Angus. The Analysis of Household Surveys. John Hopkins, 1997. (recommended, at the MIT COOP)

Bardhan, Pranab and Christopher Udry. Development Microeconomics. Oxford: Oxford University Press, 1999.

Articles:

Holland, Paul, (1986) "Statistics and Causal Inference", Journal of the American Statistical Association, Vol. 81 (396), 945-960.

Freedman, David (1991) "Statistical Models and Shoe Leather," Sociological Methodology, Vol. 21, 291-313.

* Meyer, Bruce D. (1995), "Natural and quasi-experiments in economics," Journal of Business and Economic Statistics, 13 (2), pp. 151-161. link to 1994's NBER working paper

* Angrist, Joshua and Alan Krueger (2001), "Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments," Journal of Economic Perspectives, Vol. 15 (4), pp. 69-87.

Josh Angrist and Alan Krueger, "Empirical Strategies in Labor Economics", ch. 23 in Ashenfelter and Card, Handbook of Labor Economics, vol. 3. (Recommended Reading)

*Freeman, David (1991) "Statistical models and Shoe Leather," Sociological Methodology, 21: 291-313

Duflo, Esther (2003) "Scaling up and Evaluation," forthcoming in Annual Bank Conference in Development Economics Conference Proceedings. World Bank, 2003

Banerjee and Duflo's Lectures

1. Introduction (1 lecture)

** Boyce, J. and B. Hartmann, "A Quiet Violence: View from a Bangladesh Village," chapters 1, 12 and 13.

2. Credit (2 lectures Banerjee and 1 Lecture Duflo)

** Aleem, Irfan, "Imperfect Information, Screening and the Costs of Informal lending: A Study of a Rural Credit Market in Pakistan", World Bank Economic Review, 3, 329-349, 1990

* Banerjee, Abhijit (2004) "Contracting Constraints, Credit Markets, and Economic Development," in M. Dewatripoint, L. Hansen and S. Turnovsky, eds. Advances in Economics and Econometrics: Theory and Applications, Eight World Congress of the Econometric Society, Volume III. Cambridge University Press, pp. 1-46. click here for pre-published version

* Banerjee, Abhijit and Esther Duflo (2004), "Do Firms Want to Borrow More? Testing Credit Constraints Using a Directed Lending Program," mimeo, MIT

* Banerjee, Abhijit and Kaivan Munshi (2004), "How Efficiently is Capital Allocated? Evidence from the Knitted Garment Industry in Tirupur," Review of Economic Studies, Vol. 71(1), 19-42.

* Morduch, Jonathan (1999), "The Microfinance Promise," Journal of Economic Literature, Vol. 37 (4), pp. 1569-1614.

* Pitt, Mark and Shahidur Khandker (1998), "The Impact of Group-based Credit Programs on Poor Households in Bangladesh: Does the Gender of Participants Matter?" Journal of Political Economy, Vol. 106 (5), pp. 958-996.

* Burgess, Robin And Rohini Pande(2003), "Do Rural Banks Matter? Evidence from the Indian Social Banking Experiment," mimeo, Yale.

* Karlan, Dean (2002), "Social Capital and Group Banking," mimeo, Princeton.

3. Land (3 lectures)

* Shaban, Radwan (1987) "Testing between Competing Models of Sharecropping," Journal of Political Economy, Vol. 95 (5), pp. 893-920.

* Banerjee, Abhijit, Paul Gertler and Maitresh Ghatak (2002), "Empowerment and Efficiency: Tenancy Reform in West Bengal," Journal of Political Economy, Vol. 110 (2), pp 239-280.

*Banerjee, Abhijit (2000) "Prospects and Strategies for Land Reforms," in B. Pleskovic and J. Stiglitz (eds), Annual World Bank Conference on Development Economics 1999. Washington, DC: World Bank, pp. 253-284. Link to ABCDE Conference paper version.

*Field, Erica (2003), "Entitled to Work: Urban Property Rights and Labor Supply in Peru," Mimeo, Harvard, July.

Field, Erica (2004), "Do Property Titles Increase Credit Access Among the Urban Poor? Evidence from a Nationwide Titling Program," Mimeo, Harvard, January.

*Goldstein, Marcus and Chris Udry (2004), "Gender, Power and Agricultural Investment in Ghana", mimeo, Yale Universty.

 

4. Reputation (1 lecture)

* Tirole, Jean (1996), "A Theory of Collective Reputations (With Applications to the Persistence of Corruption and to Firm Quality)," Review of Economic Studies, Vol. 63 (1), pp.1-22.

* Banerjee, Abhijit and Esther Duflo (2000), "Reputation Effects and the Limits of Contracting: A study of the Indian Software Industry," Quarterly Journal of Economics, Vol. 115 (3), pp. 989-1017, 2000.

5. Gender and Family (2 lectures)

Banerjee, Abhijit (2004), "Educational Policy and the Economics of the family", Journal of Development Economics, Vol. 74 (1), pp. 3-32.

Qian, Nancy (2004) "Missing Women and the Price of Tea in China: The Effect of Income on Sex Ratios," mimeo, MIT.

* Browning, Martin and Pierre-Andre Chiappori (1998), "Efficient Intra-household Allocations: A General Characterization and Empirical Tests," Econometrica, Vol. 66 (6), pp. 1241-1278.

* Duflo, Esther (2003), "Grandmothers and Granddaughters: Old Age Pension and Intra-household Allocation in South Africa," World Bank Economic Review, Vol. 17 (1), pp. 1-25.

Udry, Christopher (1996), "Gender, Agricultural Production, and the Theory of the Household," Journal of Political Economy, Vol. 104 (5), pp. 1010-1045.

* Duflo, Esther and Christopher Udry (2001), "Intrahousehold Resource Allocation in Côte d'Ivoire: Social Norms, Separate Accounts and Consumption Choices," NBER WP #10498, also BREAD WP016.

6. Nutrition and Health (2 lectures)

* Duflo, Esther, Abhijit Banerjee and Angus Deaton (2004) "Wealth, health, and health services in rural Rajasthan," forthcoming in the American Economic Review Papers and Proceedings, 2004

* Dasgupta, Partha and Debraj Ray (1986), "Inequality as a Determinant of Malnutrition and Unemployment: Theory," The Economic Journal, Vol. 96 (384), pp. 1011-1034.

Srinivasan, T. N. (1994), "Destitution: A Discourse," Journal of Economic Literature, Vol. 32 (4), pp. 1842-55.

* Subramanian, Shankar and Angus Deaton (1996), "The Demand for Food and Calories," Journal of Political Economy, Vol. 104 (1), pp 133-62.

** Strauss, John and Duncan Thomas (1995), "Human Resources: Empirical Modeling of Household and Family Decisions." In Behrman, Jere and T.N. Srinivasan, eds., Handbook of Development Economics, Volume 3. Amsterdam: North Holland, pp. 1885-2023. (Note: this is a reference article; you will want to read it if you are interested in development; for this lecture you need to read the section on the relationship between income and nutrition).

Miguel, Edward and Michael Kremer (2004) "Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities", Econometrica, 72 (1), 159-217

7. Education (2 lectures)

* Duflo, Esther and Michael Kremer (2003) "Use of Randomization in the Evaluation of Development Effectiveness," mimeo, MIT-Harvard. Forthcoming in, Proceedings of the Conference on Evaluating Development Effectiveness, July 15-16, 2003, World Bank Operations Evaluation Department (OED) Washington, D.C.

* Banerjee, Abhijit, Shawn Cole Esther Duflo and Leigh Linden (2003) "Remedying Education: Evidence from Two Randomized Experiments in India," mimeo, MIT

* Duflo, Esther (2001), "Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment" American Economic Review, Vol. 91 (4), pp 795-813.

* Angrist, Joshua and Victor Lavy (1999), "Using Maimonides' Rule to Estimate the Effect of Class Size on Scholastic Achievement," Quarterly Journal of Economics, Vol 114 (2), pp. 533-575.

 

Kremer Section

8. Technology

Klenow, P. and A. Rodriguez-Clare, "The Neoclassical Revival in Growth Economics: Has it Gone too Far?," NBER Macroeconomics Annual, pp. 73-114, 1997.

* Banerjee, A, "A Simple Model of Herd Behavior," Quarterly Journal of Economics, 107 (3), pp. 797-817.

* Ellison, G. and D. Fudenberg, "Rules of Thumb for Social Learning," Journal of Political Economy, 101 (4), pp. 612-643, 1993.

* Foster A.D. and M.R. Rosenzweig, "Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture," Journal of Political Economy, 103 (6), pp. 1176-1209, 1995.

* Kremer, M., "The O-Ring Theory of Economic Development" Quarterly Journal of Economics, 108 (3), pp. 551-575, 1993.

* Basu, Susanto and David N. Weil, "Appropriate Technology and Growth," Quarterly Journal of Economics, 113 (4), pp. 1025-54. November 1998.

*Kremer, M., "Creating Markets for New Vaccines: Part I: Rationale," Innovation Policy and the Economy, MIT Press, Volume 1, 2001.

* Kremer, M., "Creating Markets for New Vaccines: Part II: Design Issues," Innovation Policy and the Economy, MIT Press, Volume 1, 2001.

9. Population

Malthus, T.R., Chapters 1 & 2, "Essay on the Principle of Population 1798," The Works of Thomas Robert Malthus, Pickering & Chatto Publishers Limited, London, 1986.

* Kremer, M., "Population Growth and Technological Change: 1,000,000 B.C. to 1990," Quarterly Journal of Economics, 108 (3), pp. 681-716. August 1993. (Reprinted in Economic Growth: Theory and Evidence, edited by Gene Grossman, Elgar. Reference Collection, International Library of Critical Writings in Economics, no. 68, 1996; and in Population Economics, edited by Julian Simon, forthcoming.)

* Galor, O., and David N. Weil, "The Gender Gap, Fertility, and Growth," American Economic Review, 86 (3), pp. 374-387, 1996.