Essays in Development Economics

Abstract

This dissertation presents three essays in a variety of areas within development economics. In the first essay, Colonial Institutions and Public Education in India, I provide micro-evidence on the persistent adverse impacts of oppressive colonial institutions on present day education outcomes in India. Using rich primary survey data from nearly 1,000 villages, I find that villages that were endowed with landlord systems in the 1800s continue to have significantly worse primary school performance in present day. There are remarkable differences in school inputs as well, although these do not explain fully the variation in outcomes. In further analysis, I show that the lack of accountability and political representation at the local level is the main channel through with the landlord effect persists. Finally, I also show that the private sector steps in as an alternative to the poor quality of public education and offers significantly better inputs and produces much higher outputs in landlord areas.

The second essay, Aspirations and Financial Decisions: Experimental Evidence from the Philippines, is co-authored with Dean Yang and David McKenzie. In this paper, we present results from a randomized experiment among poor entrepreneurs testing the impact of exogenously inducing higher financial aspirations. In theory, raising aspirations could have positive effects by inducing higher effort, but could also reduce effort if unmet aspirations lead to frustration. We find that treatment resulted in more ambitious savings goals, but nearly all individuals fell far short of reaching these goals. Two years later, treated individuals had not saved more, and actually had lower borrowing and business investments. Treatment also reduced belief in the amount of control over one’s life. The results from the chapter suggest that setting aspirations too high can lead to frustration, leading individuals to reduce their economic investments.

In the third essay, Poverty and Well-Being of the Elderly in Latin America: The Role of Health, Pensions and Private Transfers, I leverage 44 existing household survey datasets from 17 countries in the Latin America and the Caribbean region to document patterns in poverty, well-being and living arrangements of the elderly in the region. I also examine elderly’s access to health care services and the burden of out-of-pocket health expenditures. In most countries included in the study, I find that health insurance plays a significant role in increasing utilization of health services and reduction of financial burden. Finally, I also examine the availability of pensions and private transfers, and their role in improving the well-being of the elderly.

My dissertation contributes to the empirical knowledge base in development economics in areas of economic history, education, health, household finance, demography, and poverty. The three essays aim to shed some light on key development issues facing countries in East Asia, South Asia and Latin America.