Essays in Development Economics
HIRFRFOT, KIBROM TAFERE
This dissertation consists of three self-contained papers, which are all related to the welfare consequences of risk and uncertainty. Chapter one studies the inter-generational effects of maternal early childhood shocks on the human capital outcomes of children. I exploit the 1983-1985 Ethiopian famine as an exogenous source of variation to study the effects of exposure to severe shocks in utero and/ or during the first three years after birth on the cognitive, non-cognitive and health capabilities of children of mothers who were exposed to shocks in early childhood. Using data that track children from early childhood through adolescence, I estimate the effects of mothers' early childhood shock over their children's life cycle. I find that the famine had a lasting inter-generational effect. Mothers' early childhood famine exposure reduces their children's height-for-age z-score, schooling, locus of control and self-esteem. These effects are persistent from age one through early adolescence. The main inter-generational transmission channel of the shock is children's maternal human capital endowment. Mothers who suffered the famine in early childhood are shorter and have less schooling. I also find a critical maternal shock duration threshold of three months. These findings point to ineffectiveness of remediation once the damage is done to mothers as young girls. The policy implication is that girls under the age of three with high risk of crossing the critical famine duration threshold should be targeted for health and nutritional interventions. In chapter two, coauthored with Christopher B. Barrett, Erin Lentz and Birhanu Ayana, we estimate the causal effects of index insurance coverage on the subjective well-being (SWB) of a poor population in rural southern Ethiopia. Insurance coverage may be welfare enhancing ex ante by reducing exposure to risk. Yet, if the insurance policy lapses without payout, but having paid a premium, the buyer will be financially worse off and may experience buyer's remorse ex post of the resolution of uncertainty. The ex ante and ex post well-being effects of insurance may therefore differ, especially in the absence of indemnity payments. We separately identify (1) the ex ante SWB effects of current insurance coverage that arise from reducing ex ante risk exposure to potential shocks, and (2) the ex post buyer's remorse effects of lapsed insurance policies that did not pay out. By exploiting the randomization of incentives to purchase a newly introduced index-based livestock insurance product and three rounds of household panel data, we establish that current coverage generates statistically significant gains in buyer's SWB. The ex ante gains more than offset the statistically significant buyer's remorse effect of having lost money on insurance that did not pay out. These results suggest that insurance can have significant impact on SWB and illustrate that failure to control for potential buyer's remorse effects can bias downwards estimates of the welfare gains from insurance coverage. Chapter three concerns with the determinants of crop diversification in Ugandan agriculture. I use three rounds of the Uganda National Panel Survey (UNPS) data, which collects detailed information on land holding and characteristics, crop production, agricultural inputs and farm management practices to examine the prime motives for observed crop diversification practices. The findings show that crop diversification is determined by a combination of yield and variance considerations, and that these considerations vary by crop type. Among the main crops in Uganda, inter-cropping of beans and sweet potatoes appears to be primarily driven by average yield considerations while variance (risk) appears to factor prominently in maize inter-cropping decisions. Maize and beans are best suited for inter-cropping, whereas sorghum and matoke yield better results when planted as mono crops. The maize-beans combination is the best crop mix. I also find that crop yields are lower and yield variance higher on larger plots, suggesting the inverse productivity-size phenomenon is present in Ugandan agriculture.
Economics; Agriculture economics
Just, David R.; Hoddinott, John F.
Applied Economics and Management
Ph. D., Applied Economics and Management
Doctor of Philosophy
Attribution 4.0 International
dissertation or thesis
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