RATES OF RETURN TO EDUCATION IN BOTSWANA: RESULTS FROM THE 2002/2003 HOUSEHOLD INCOME AND EXPENDITURE SURVEY DATA SET

Using the most recent Household Income and Expenditure Survey data (2002/2003), this paper presents current rates of return to education for Botswana. The results show that the rates of return have in general declined by one percentage point on average between the periods as shown in Table 2 . If we, however, look at the averages for the different school cycles, the fall in the average rates is quite significant at about six percentage points between the periods. The biggest fall is for secondary education, especially upper secondary education, which fell by 28 percentage points between the periods. The rates of return to tertiary education, however, rose by more than 50 percentage points. Ignoring upper secondary, the pattern of rates of return has remained similar to the results of the study based on the 1993/1994 data. Rates are higher for tertiary education and lower for secondary than for primary education. This results are still consistent with rates of return generally rising with level of education. At policy level, the results continue to support sharing of costs between Government and beneficiaries or their parents especially at tertiary education level. Second, the results indicate the need for the country to continue to vigorously pursue job creation and reorient the education system from emphasis on white collar jobs.

Table 2. Mincerian earnings function: overall Ψ
Dependent variable (ln monthly earnings)

EMPLOYMENT,CAPITAL, AND PRODUCTIVITY DYNAMICS: EVIDENCE FROM THE MANUFACTURING SECTOR IN URUGUAY

Using a sample of Uruguayan manufacturing establishments we analyze employment, capital, and productivity dynamics over a period of currency appreciation; changes in trade policy; and changes in the institutional setting of wage negotiations. As the relative capital–labor price ratio fell, capital intensity increased. At the same time, there was an increase in labor and total factor productivity. Creation and destruction rates were relatively high and pervasive over time, sectors, establishment size, and establishment age, with exits explaining a sizeable part of destruction rates. Most of the excess reallocation was due to movements “within” rather than “between” sectors. Thus, high reallocation rates were linked to establishment‐level heterogeneity rather than aggregate shocks.     

RAISING EDUCATIONAL ATTAINMENT OF THE POOR: POLICIES AND ISSUES

Despite every policymaker's recognition, enrollment rates of the low‐income countries remain low. A simple framework of understanding educational outcomes is presented using a unitary model with an altruistic parent and a child. The traditional interventions, so‐called supply‐side policies, and recent innovation of relaxing constraints faced by households, the conditional transfer programs or so‐called demand‐side policies, are reviewed. In addition, recent trends on estimation technique are discussed. It has been argued that randomization is clearly the best for inference, however, one may still want to choose the optimal combination of randomized experiments and observational data, as the former requires more resources and time. This is particularly true for economics than other hard sciences, partly because of our inability to fine‐tune the control, and partly because of our lack of solid microfoundation than other sciences when an experiment shows unexpected results.     

REMITTANCES AND AGGREGATE LABOR SUPPLY: EVIDENCE FROM SIXTY‐SIX DEVELOPING NATIONS

Do remittances reduce labor supply in recipient economies? This paper addresses this question with aggregate level data for a panel of sixty‐six developing countries from the Middle East and Africa, Asia and the Pacific, and Latin America and the Caribbean over the period 1985 to 2005. The results exhibit a positive and significant relationship between remittances and aggregate labor supply. The effect is clearly driven by men in each of the three regions. Three potential explanations are put forward to explain these empirical findings: (1) non‐migrating household members are likely to increase their labor supply in order to defray migration‐related expenses; (2) neighboring households increase their labor supply to help family members migrate after they become more aware of the benefits of remittances; and (3) remittances overcome credit constraints, thus generating employment.     

LINKING POVERTY AND INCOME SHOCKS TO RISKY SEXUAL BEHAVIOUR: EVIDENCE FROM A PANEL STUDY OF YOUNG ADULTS IN CAPE TOWN

Is there a link between household income and income stress, and risky sexual behaviour of young people? Anecdotal and qualitative evidence suggests this may be the case, but there is little quantitative research measuring this relationship. We use two waves of new data from the Cape Area Panel Study to investigate this link for 2,993 African and coloured youths aged 14 to 22 in 2002. In the process, we discuss one type of research design that could allow for a causal interpretation of the effect of income poverty on HIV risk. This design plausibly separates out the effect of income stress from the effect of living in a poor household by comparing behaviours across households with and without negative economic shocks, conditional on baseline income. Our results indicate that females in poorer households are more likely to be sexually active in 2002 and more likely to sexually debut by 2005. In addition, girls in households experiencing negative economic shocks are more likely to reduce condom use between 2002 and 2005. However, they are less likely to have multiple partners in 2002 or have transitioned to multiple partners by 2005. Males who experienced a negative shock are more likely to have multiple partners. Despite the tight research design for assessing shocks, the findings on the impacts of shocks do not generate clear recommendations for policy. There appears to be no systematic difference in condom use at last sex by household income levels or income shocks.     

Influence of a Wife's Working Status on Her Husband's Accumulation of Human Capital

Japanese household‐level data consisting of husband's earnings, wife's working status and their schooling levels are used to test three hypotheses, with particular consideration given to the time‐consuming process of human capital accumulation within marriages. The empirical results supports the following hypotheses: (i) a non‐working wife's schooling has a greater positive effect on her husband's earnings than a working wife's schooling; and (ii) the effect of a non‐working wife's schooling increases with the length of marriage, whereas the effect of a working wife's schooling does not change over the course of marriage.     

EFFECTS OF IMPROVING INFRASTRUCTURE QUALITY ON BUSINESS COSTS: EVIDENCE FROM FIRM‐LEVEL DATA IN EASTERN EUROPE AND CENTRAL ASIA

Public infrastructure is one of the important determinants of economic growth. Not only access to but also quality of infrastructure affects firm productivity as well as people's livelihood. Frequent interruptions of the infrastructure‐service supply impose extra backup costs on enterprises, hinder their timely business activities, and result in large losses of sales opportunities. This paper focuses on the impacts of improving the quality of public utilities (electricity, water supply, and telecommunications), using firm‐level data from 26 transition economies in Eastern Europe and Central Asia. The results suggest that firm costs would significantly increase when electricity outages occur frequently and the outage duration becomes longer. Similarly, when more time is required to restore suspended water supply, firms' competitiveness would be weakened. Not surprisingly, the impacts tend to vary depending on industry. The construction, manufacturing, and hotel and restaurant sectors are found particularly vulnerable.     

THE ROLE OF PRIVATE CAPITAL INFLOWS AND THE EXCHANGE MARKET PRESSURE ON REAL EXCHANGE RATE APPRECIATION: THE CASE OF TURKEY

The aim of this paper is to investigate the role of different private capital inflows and the exchange market pressure (EMP) on the real effective exchange rate (REER) appreciation of the currency in Turkey. To that end, the paper first investigates the long‐run equilibrium relationship and then employs Granger causality analysis. Results of the bounds test for cointegration within the autoregressive distributed lag (ARDL) modelling approach of Pesaran et al. (2001 ) reveal level relationship between the diverse private capital inflows, EMP and REER. Granger causality analysis suggests that there is a unidirectional causality running from all the concerned private capital inflows and EMP to REER. The ARDL model shows first that the impact of bank liabilities and portfolio investment liabilities are almost equal, high and positive. Second, foreign direct investment and workers' remittances have a negative but statistically insignificant effect. Third, EMP mitigates REER appreciation of the currency in Turkey. The empirical results suggest that speculative portfolio investment liabilities but particularly bank liabilities with short maturities should be better managed; more flexibility should be introduced to the floating exchange rate regime to avoid loss of competitiveness related with capital inflows; whereas foreign direct investments and remittances should be encouraged.     

INTRODUCTION TO A STUDY OF INTRAHOUSEHOLD RESOURCE ALLOCATION AND GENDER DISCRIMINATION IN RURAL ANDHRA PRADESH,INDIA

In this special issue, we use unique household data which was collected exclusively for our study in Andhra Pradesh, India, with the help of an NGO. We estimate and test the intrahousehold resource allocation rules, incidence of child labor, and the effects of credit constraints on time allocation among household members. Three empirical papers of this issue indicate the overall support for the collective model against the unitary model of households, clarified the role of household structure, and show the nature of mother‐child labor substitution under a binding credit constraint. In addition, a survey paper discussing the recent trends on educational attainment and the empirical strategies in identifyng the policy effects are included.