SEEKING RENT IN THE INFORMAL SECTOR

Rent seeking within the vast informal segment of the developing world is a relatively under‐explored topic in the interface of labor market policies and public economics. Moreover, how rent seeking and corruption within the informal segment gets affected by economic reforms targeted for the formal sector is rarely discussed in the literature. This paper fills the gap. We identify conditions under which economic reform in the formal segment will increase the rate of corruption or rent seeking in the informal sector and raise the pay‐off for those involved in rent‐seeking activities. When the formal sector contracts due to reforms, rent seeking in the informal sector may increase and lower the level of welfare unconditionally. Economic reforms may increase corruption instead of reducing it, unlike standard conjectures.     

On General and Specific Transfers for Child Support in Divorce

In a post-divorce equilibrium under joint legal custody of a child the paper compares the effect of two different transfer schemes, a general purpose transfer scheme and a specific purpose transfer scheme, from non-custodial parent to the custodial parent of the child on his/her welfare. Surprisingly, it finds that the marginal effects are neutral. The result contributes to the policy framework by suggesting that the lawyers/courts can choose the two alternatives equivalently in settling the child custody cases in a post-divorce situation. The paper also characterizes such transfer schemes and proves that the schemes can never restore the child’s welfare at the ‘happy marriage’ equilibrium level.

     

Understanding Resilience in Climate Change and Conflict Affected Regions of Nepal

In the face of global climate change, strengthening community resilience becomes increasingly important, especially in conflict affected countries with fragile governance. Nepal is such a country, recovering from a decade of civil war while facing several climate and environmental risks, including floods, droughts and landslides. We aim to contribute to the understanding of resilience building by drawing on case studies from Banke, Dang and Rolpa districts in Nepal. To compare the resilience of the districts we conduct field research. None of the analysed approaches to strengthen the resilience are without unintended consequences. The provision of rice in Rolpa increases food security but also creates local preferences for rice that cannot be met sustainably. In Dang and Banke aid resources themselves have become a source of conflict. We conclude that a more holistic understanding of local realities is needed to minimise unintended effects and strengthen resilience under challenging governance and (post)conflict conditions.     

Harassment, corruption and tax policy: reply

Saha [Eur. J. Polit. Econ. (2003)] has raised some points about our paper [Eur. J. Polit. Econ. 16 (2000) 75]. We herewith reply to these points.     

Bank-specific determinants of nonperforming assets of Indian banks

The paper examines the role of bank-specific variables in explaining the dynamics of non-performing assets (NPAs) of Indian banks in a panel data framework over the post liberalisation period, 1995–2011. The results have been derived after controlling for macroeconomic factors like real GDP, inflation, exchange rate etc. Applying several variants of Generalized Method of Moments (GMM) technique in dynamic models, we find that that there is significant time persistence of NPAs in Indian banking system. We also find that larger banks are more prone to default than smaller banks. We find support for the ‘bad management hypothesis’ as we observe that an increase in profit level of the banks reduces NPAs in the next period. Lagged capital adequacy ratio as an important prudential indicator also significantly reduces current NPAs of banks. The paper also draws some important policy implications about NPA management.     

School dropout and overeducation in developing economies: Feasibility of a budgetary solution†

High rates of school dropout and overeducation are typical problems faced by developing economies. This paper addresses these issues in a unique theoretical model that accounts for complementarity between household and infrastructural investment in education production function on the one hand, and school and higher education on the other hand. The results derived in this paper show that a reallocation of the education budget in favor of school education can solve both problems at the same time if certain conditions are satisfied. Otherwise, reallocation aggravates the problems. This paper questions the efficacy of the widely practiced budget reallocation policy in favor of school education, and in turn, shows that reallocation cannot eliminate school dropouts.     

“Love for variety,” outside option and extensive margin of demand

The paper models a uniform-price Bertrand-price-competition in a differentiated product oligopoly market, where the buyers' preference shows “love for variety.” The buyers differ from each other in their valuation of the differentiated product with a common outside option available to all. The model endogenously determines both the extensive and intensive margin of demand and the equilibrium number of varieties in the differentiated product market. It shows that in such a framework complementarity exists at the extensive margin of demand even in the presence of demand substitutability between the varieties. The results apply to the competition between brick and mortar shops and malls.