Poverty and Public Policy Exam #2

Gender-based quotas in India

- 1993, amendment to constitution of India required states to devolve more power over expenditures to local village councils (Gram Panchayats or GPs), i.e. decentralization, and to reserve 1/3 of all positions of chief (Pradhan) to women - Study asked people how they perceive female pradhans vs male pradhans, then showed a video of female leaders or male leaders giving a speech and again asked how they felt about the leader (effective, would you vote for them?) to see if there is a bias - Men don't perceive women as effective leaders - if female pradhan and in area where ever reserved, men have positive perception of female leaders at statistically significant levels - exposure to female leaders matters for how you perceive them as being effective -- voters can learn/change their attitude - In never-reserved villages, hypothetical leaders with identical performance are evaluated as less effective if they are female - Reservation doesn't make male villagers more sympathetic to idea of female leaders, it does make them more likely to associate women with leadership and improves their evaluation of female leader effectiveness - Women elected as leaders under reservation policy invest more in public goods more closely linked to women's concerns (drinking water and roads); invest less in public goods that are closely linked to men's concerns (education and roads) -- politician's identity can influence policy

India's "Green Revolution"

- 3 main strategies: 1) continued expansion of farming areas 2) double-cropping of existing farmland: 2 crop seasons per year, requires 2 monsoons: one natural and the other an artificial monsoon (dam collects and then later redistributes to crops, used standard irrigation methods) 3) promotion of genetically-enhanced seeds: new strains of high yield value (HYV) seeds, mainly wheat and rice but also corn - Negatives: agricultural output still often falls short of demand (India not totally and permanently self-sufficient in food); failed to extend concept of HYV seeds to all crops and all regions; accusation of "pro-rich peasant bias" in which green tech revolution was good for rich farmers but that poor farmers couldn't access it -- rich farmers had access to lines of credit/tech necessary to succeed and that there are now higher rates of unemployed landless farmers (tech replaced landless farmers ==> increased rural unemployment); problems with mechanization; worsened income distribution - Gov't goal was production and they did achieve that; maintained that growth is enough and they did grow

Rodrik "Diagnostics Before Prescription"

- Apparently cyclical nature of research in development: each new generation of work is self-conscious reaction to past thinking, and is superseded by a similar reaction to itself - applied economists and policy advisors mistake models and arguments that are valid only in specific circumstances for universal remedies; research loses relevance and effectiveness and research develops in its "vulgar" form the potential of doing actual damage by being applied in inappropriate circumstances - Growth diagnostics: idea that not all constraints bind equally and a sensible/practical strategy consists of identifying most serious constraints at work -- possible to reduce a long catalog of failures into shorter list of culprits; identify remedies for relaxing constraint that are appropriate to the context; successful countries are those that have implemented these two step sin ongoing manner - 3 half-truths: 1) successful countries are those that open themselves up to trade and rely on forces on comparative advantage (East Asia) 2) import-substitution and infant-industry promotion doesn't work 3) gov't intervention is futile bc rent seeking and incompetence; East Asian countries had actively shaped their comparative advantage through policies aimed at speeding up structural transition (subsidies, trade restrictions, financial market interventions, public ownership) -- simplistic view that Asian economies outperformed and outgrown the rest bc of less intervention in grade or greater neutrality is unsupportable - researchers and academics have to resist temptation to substitute pre-packaged solutions for nuance and skepticism - Washington Consensus: product of presumptive mindset, start with strong priors about nature of obstacles to development and appropriate fixes, bias towards universal recipes, "best practices" and rules of thumb - experimentalist approach starts with relative agnosticism on what works and what doesn't, explicitly diagnostic in its strategy to identify bottlenecks and constraints, emphasizes experimentation as strategy for discovery, monitoring and evaluation to learn which experiments work and which fail, looks for selective, relatively narrowly targeted reforms - ideally, diagnostics should guide choice of which random experiments are worth undertaking - development economists have too often fallen into trap of believing in "one right way", universal fix, a single best way of learning about what works and what doesn't - invest in learning how to navigate varying realities

Brazil's Fome Zero Project

- Brazills Fome Zero project (2003) has key objectives of eradicating hunger and fighting poverty; 4 prominent efforts: 1) the Bolsa Familia, 2) the National School Meal Program (PNAE) 3) National Program for Strengthening of Family Farming (PRONAF) 4) Food Acquisition Program (PAA) 1) Bosla Familia: social welfare program aimed at providing food security - Largest program within Fome Zero, benefits 12.3 million households - cash transfer program focused on poor families based on condition that children attend school and are regularly assisted by health care system - basic monthly transfer, supplemental benefits granted based on number of children that obtain vaccinations and regularly attend school - main cause of food insecurity is rising cost of food - doesn't provide sufficient assistance to allow individual to buy entire sum of goods and services they may need; families aren't completely food secure - success bc protects poor families from sudden increases in food price and increases availability of food 2) National School Feeding Program (PNAE): combats malnutrition and food insecurity by providing healthy meals at school that help children meet nutritional needs and supporting healthier eating habits through nutritional education - supports physical development, educational attainment, and lessens financial burden of providing food on families - responsible for feeding ~50 million students per day - malnutrition and food insecurity exist alongside diet-related diseases such as obesity, all of which disproportionately affect low-income communities - success facilitated by decentralized structure, qualified and trained gov't personnel, and strong regulation/oversight - decentralized assures minimum standard of quality, gives local gov't power to execute PNAE according to regional differences, simplifies distribution of foods to schools, increases food quality, more cost-effective - issue is child rejection of healthy food 3) National Program for Strengthening of Family Farming (PRONAF): decrease food insecurity by increasing rural development and stimulating agricultural production - expands availability of agricultural credit to rural, poor, and small farmers - credit enables farmers to invest in production process, industry innovation and technology - better developed regions have easier time getting credit from PRONAF 4) Food Acquisition Program (PAA) ensures food access to food insecurity groups through linking and strengthening of family farmers - promoted direct acquisition by gov't of agricultural products from family farmers - structured demand increased production; family farms are vulnerable to weak food markets and price volatility and struggle with commercialisation CONCLUSION: Fome Zero contributed to reduction of poverty and food security in Brazil over past 15 years - of food insecure, 60% live in northern and north eastern region -- rural, agricultural areas of Brazil

Bassuk and Rosenberg "Why Does Family Homelessness Occur?"

- Compared homeless and housed female-headed families -- in both groups the mothers were poor, currently single, had little work experience, and had been on welfare for long periods - Homeless mothers had more frequently been abused as children and battered as adults, and their support networks were fragmented and included proportionately more men; housed mothers had female relatives and extended family living nearby whom they saw often - Frequency of drug, alcohol, and serious psychiatric problems was greater among homeless mothers - The homeless were less likely to have grown up in families on welfare - Solutions to family homelessness require increase in supply of decent affordable housing, income maintenance, and assistance from social welfare agencies focused on rebuilding supportive relationships - Homeless women reported higher level of educational attainment - Fathers of homeless women were more available to them in childhood and were less likely to have problems such as alcoholism, physical illness, mental illness, and poverty - Mothers of homeless women had less commonly received AFDC - Smaller proportions of homeless mothers than housed mothers were receiving food stamps, WIC, or housing subsidies - History of having been abused as a child or adult and history of substance abuse or psychiatric difficulties is more prevalent among homeless mothers) - having grown up on welfare and having 3 adult supports were more prevalent among housed mothers - Goes against the "culture of poverty" argument, as the homeless were less likely to have grown up on welfare, and the housed mothers were the ones who were knowledgeable enough to maintain housing for themselves and their families and to obtain other benefits, such as food stamps

Banerjee "Why Fighting Poverty is Hard"

- Gov'ts typically use proxy means tests to measure poverty: family gets scored based on relatively small number of what are believed to be good proxies for family's standard of living; easy to measure, easy to manipulate - why not make sure of the fact that small communities can identify those among them that are really poor? villagers might have reason to slant their information, but can be mitigated if use a large enough group; might work better as a way to identify the ultra-poor - self-targeting: i.e. British poor-houses, only those who have no better alternatives would want that kind of work (digging ditches, carrying bricks); work on demand means you don't need anyone's sanction to seek work; advantage of flexibility (a lot of extreme poverty is temporary and/or unpredictable); disadvantages: what if no one in your family is fit enough to do manual labor, corruption; unless certain that assets build by using program labor were worth time/effort, how can we be sure that is made sense to go through all that to get better targeting? - Helping them help themselves by helping children of poor grow up with health and education that would enable them to be full participants in economy; provide healthcare for adults as way to insure them against things that are largely out of their control - not clear that a cash transfer program will do much for problem of malnutrition: increase in incomes of the poor did not lead to sharp increase in calorie or protein consumption; poor may be underinvesting in nutrition, either bc they don't know to value it or bc they don't want to be left our from consumer paradise middle-class India is becoming - healthcare for the poor is hard bc market solutions are not particularly attractive, tendency to underweight the cheap but valuable preventative aspects of medicine - instead of thinking of the poor as workers who need skills, thinks of them as potential entrepreneurs who need capital and property rights and the protection of the law (emphasis on microcredit); the poor don't have the skills, nor the knowledge of markets, nor the understanding of technology, to compete effectively in marketplace (get microcredit, limited by capital to most primitive tech and most crowded occupations); poor don't expect their businesses to transform their lives, if they did they would put more effort into growing these businesses

Role of Federal government in homelessness

- Housing policies: US dept of housing and urban development (HUD) cut 83% from 1978-1983; disinvestment in public housing and prioritization of home ownership; inadequate homeless assistance resources; inadequate gov't response to housing crises - Income related policies: slow to increase federal minimum wage, decline of union power, retreat of gov't funding for public education - Healthcare system: decrease in employer sponsored health insurance amid increase in health care costs and denial of insurance for those with preexisting conditions (pre-obamacare) - behavioral health and disabilities: health related problems directly lead to homelessness (inability to go to work, to school etc), community treatment increasingly scarce, qualifying for disability status is increasingly difficult (must be work related, periodically confirmed and tested) - mass incarceration, immigration

Banerjee and Duflo "Improving Healthcare Delivery in India"

- Indian public health system defunct in practice due to lack of interest of both providers and putative patients - gov't facilities are cheaper and staffed by trained/certified personnel, but most households prefer private providers (unregulated/unqualified) - public centers closed more than half the time, private available 24/7 - poor patients avoid the public health system despite fact that private doctors are less qualified, farther, and more expensive - demand for healthcare may be distorted bc people don't understand what is good for them - public health system is worse than it seems -- many providers almost never there, long waits, public drs spend less time with patients - private providers ask more questions and prescribe more medicines -- may not be warranted - adults more likely to go to dr for acute conditions that go away than for symptoms of chronic conditions that may be more serious - where public health facilities are available, people less likely to go to unqualified private drs - need to get rid of unqualified drs, regulate treatments, improve incentives - laws on who can prescribe what need to be tightened/enforced (get rid of unqualified drs and tendency to overmedicate) - standardized classification system for drs - general patient education - local control to deal with absence in public facilities - need incentives to increase demand

Causes of homelessness

- Individual level theories: alcohol, drug dependency, lack of education/skills, "culture of poverty", individual preferences - Policy/macroeconomic/structural theories: social/economic theories, weakened unions, globalization and free trade ==> loss of "blue collar" work, tax reforms, 1996 welfare reforms, rising housing costs - More than half of all homeless in US report suffering from a physical or psychiatric problem that makes it difficult to get indoors (severely mentally ill, chronic substance abuse, veterans, HIV/AIDS, victims of domestic violence)

Segregation in the US

- Late 1880s/Early 20th Century: less extreme black-white segregation at the turn of the century -- in northern cities, some African Americans shared neighborhoods with poor immigrants; African American isolation was lower in 1890 but it increased over the next two decades and took off in 1910-1930 - Post WWI: Immigration declines while African Americans begin "Great Migration" -- North, East, esp Midwest; Competition for urban spaces leads to violent conflict and mortgage discrimination - 1980s: Some decline in residential segregation but African Americans still most segregated group; lower segregation in south than in north, midwest, and northeast; south has more spatial integration but still social segregation - Challenges to segregation in 1960s-90s: Federal housing policy "Fair Housing Act" to end discrimination in housing markets, liberalization of white Americans' attitudes, gains in quality of housing construction, growth of African American middle class

Are poverty and inequality causes of segregation or consequences?

- Massey and Denton: segregation causes inequality/poverty discriminatory housing practices cause and maintain segregation african americans with higher SES are more likely to share a residential tract with african americans of lower SES than white americans - SES is the problem, and this leads to segregation - deindustrialization, suburbanization, "spatial mismatch" matter more

Overuse of incarceration

- Overuse of incarceration as a tool for addressing criminal behavior - demonstrated to be biased and discriminatory towards certain racial groups - expensive - overcrowding and conditions of confinement are argued to be unconstitutional - nature of prison and criminal justice system in US tends to aggravate the problem of crime both in short term and the long term

Soss "Lessons of Welfare"

- Policy design structure clients' program experiences in ways that teach alternative lessons about nature of gov't - welfare clients develop program specific beliefs about wisdom/efficacy of asserting themselves; beliefs about welfare agency and client involvement become basis for broader political orientations - Public assistance recipients are especially dormant group -- most widely accepted reason is that welfare recipients come from segments of the population with less abundant political resources and skills; 2nd -- welfare benefits discourage political involvement by cultivating personal traits of dependence (poor relief undermines motivation to work -- conservative critics); 3rd -- social provision can divert or temper political demand making (benefit provision produces demobilizing effects); 4th -- educative effects of participation and way in which institutional arrangements made leave imprints on citizens (welfare programs shape poor people's behaviors both inside and outside welfare agency) - As clients participate in welfare programs, they learn about how citizens and gov'ts relate, and these lessons have political consequences beyond domain of welfare agency - AFDC less politically active than SSDI recipients, disparity remains after accounting for other characteristics that distinguish the 2 groups - Relative to SSDI recipients, AFDC recipients are more likely to have a low level of education and low family income; more likely to be women, younger, and POC; to live in the South or (outside South) in central cities - All else equal, participation in AFDC has significant negative effect on likelihood that individual will vote; disparity remains even after controlling for key demographic differences - AFDC clients have caseworker relationships, regular case interviews, and an ongoing need to prove their means-tested eligibility; street-level bureaucrats in AFDC hold more power over clients and possess greater discretion - AFDC clients developed set of beliefs: 1) agency as pervasive threat to their life (force whose limits were unclear) 2) welfare relationships perceived as one way transactions in which agency had authority to issue directives and client status limited options to compliance or exit 3) emphasized personal discretion of individual workers 4) agency's capacities for actions as autonomous power over them, rather than as power to act on their behalf - SSDI doesn't include mandatory reviews, SSDI clients initiate most of their dealings with the agency instead of responding to directives; no caseworkers, so fend for themselves when need agency actions; expect to be effective if they persevere in advancing legitimate claims - In the eyes of welfare clients, gov't is a single system and welfare agency is a microcosm of gov't - Clients draw political lessons from their program experiences bc welfare agencies are usually the most accessible and consequential gov't institution in their life - 4 views of gov't: 1) democratic: gov't open and responsive to citizens who are politically equal, accountability 2) capitalist: gov't serves rich/corporations, pol process governed by money 3) complicated: gov't too large and has too many complicated systems and laws 4) autonomous: gov't officials do whatever they want - Autonomous view of gov't significantly more common among AFDC recipients - SSDI recipients more likely to mention gov't size and complexity; more likely to view gov't as open and democratic; more likely to believe their individual actions can affect gov't decisions and that collective movements can influence gov't actions - attitudes predict behaviors more accurately when developed through direct experiences, greater clarity and held with greater confidence - Internal efficacy: confidence in their political abilities - AFDC participation may lead individuals to develop higher evaluations of their own ability to deal with gov't

Western and Pettit "Incarceration and Social Inequality"

- Prisons have produced a new social group of social outcasts who are joined by shared experience of incarceration, crime, poverty, racial minority, and low education; have little access to social mobility available to the mainstream, and their social/economic disadvantage (crystallizing in penal confinement) is sustained over life course and transmitted from one generation to the next - Social inequality produced by mass incarceration sizable/enduring for 3 reasons: it is invisible (institutionalized populations commonly lie outside official accounts of economic well-being), it is cumulative (social/economic penalties that flow from incarceration are accrued by those who already have the weakest economic opportunities -- mass incarceration deepens disadvantage and forecloses mobility for the most marginal in society), and it is intergenerational (affects not just those who go to prison but their families and children as well) - Incarceration rates highest for those in their twenties and early thirties African Americans have always been incarcerated at higher rates than whites; racial disparities in incarceration have always been higher in the North than the South; African Americans are 7x more likely to be in prison or jail than whites - Class inequalities in incarceration are reflected in the very low educational level of those in prison and jail; labor market opportunities for men with no more than a high school education have deteriorated as prison population has grown; significant growth of incarceration rates among least educated reflects increasing class inequality in incarceration - Ubiquity of penal confinement in lives of young African American men with little schooling is historically novel, emerging only in the last decade - Inequality created by incarceration is often invisible to mainstream society because incarceration is concentrated and segregative; concentration of incarceration rates compounded by segregative function of penal system, which often relocates people to far-flung facilities distant from their communities and families; people are disconnected from basic institutions (households and labor market) that dominate common understanding/measurement of population - Serving time in prison or jail diminishes social and economic opportunities -- these diminished opportunities are found among those already most socioeconomically disadvantaged; serving time in prison associated with 40% reduction in earnings, reduced job tenure, reduced hourly wages, and higher unemployment; strong negative perceptions employers have of job seekers with criminal records; conditions of imprisonment may promote habits and behaviors that are poorly suited to routines of regular work, and time of prison means depleting work experience - High rates of parental incarceration likely add instability of family life; burdens of incarceration on women who are left to raise families partly reason why incarceration is strongly associated with divorce/separation; children of incarcerated parents (esp boys) are at greater risk of developmental delays and behavioral problems; formerly incarcerated men are 4x more likely to assault their domestic partners - Growth in american penal system over last 3 decades was concentrated in a small segment of the population, among young minority men with very low levels of education

Reardon "The Widening Income Achievement Gap"

- Reading achievement gap between those from high income families and those from low income families began widening with cohorts born in mid-1970s - the black-white achievement gap was considerably larger than income achievement gap among cohorts born in 1950s and 1960s, but now its considerably smaller - economic inequality now exceeds racial inequality in education outcomes - College-completion rate among children from high income families has grown sharply in past few decades; completion rate for low-income family students has barely moved - High-income students make up increasing share of enrollment at selective universities; even when compared with low-income students with similar test scores and academic records - Growing social-class gap in other important measures of adolescents' "soft skills" and behaviors related to civic engagement (extracurricular activities, sports, volunteering etc) - Income achievement gap is already large when children enter kindergarten and it doesn't change significantly during K-12 years -- suggests primary cause of the gap is not unequal school quality - income inequality has risen dramatically in last 30-40 years - Upward social mobility has become far more difficult and less certain, partly due to rising income inequality and partly because of declining economic growth - Economy increasingly bifurcated into low-skill, low-wage sector (service jobs etc) and high-skill, high-wage information sector (engineering and financial analysis etc); gone are manufacturing jobs that provided a middle-class wage without a college degree -- education success increasingly essential to economic success - Test scores increasingly central to idea of what schools are supposed to produce - Children in high-income families increasingly likely to be raised by 2 parents, both with college degrees; low income children more likely than ever to be raised by a single mother with a low level of education -- family income increasingly correlated to other family characteristics and resources that are important for children's development - States and school districts should devote greater share of resources and efforts to the earliest grades, including kindergarten and preschool; achievement gaps are self-perpetuating - More time in school (longer school days, longer school years, or after-school/summer programs) may help to narrow the academic achievement gap if added time used effectively - ensure all students have equal access to high-quality teachers, stimulating curriculum/instruction, and adequate school resources (computers/libraries)

Reardon, Fox, and Townsend "Neighborhood Income Composition"

- Residential segregation leads to racial and socioeconomic disparities in neighborhood conditions, which may lead to inequality in social and economic opportunities/outcomes - Sociological theory posits that neighborhood socioeconomic composition affects a number of educational, social, health, and political processes and outcomes (directly and indirectly through social norms, collective efficacy and social control, and exposure to violence -- all shaped in part by economic conditions) - Long-term exposure to neighborhood poverty has strong effects on cognitive and educational outcomes and teen pregnancy - Black and Hispanic households live, on average, where the poverty rate is significantly higher than that of non-hispanic whites - Predominantly black neighborhoods, regardless of socioeconomic composition, are spatially isolated in areas of severe disadvantage, racial disparities in neighborhoods persist even when comparing households of same income - Low-income households of all races live disproportionately in low-income neighborhoods, but patterns more pronounced for black and hispanic households; black and hispanic households live in more disadvantaged neighborhoods than white households with roughly similar levels of income - Segregation of the affluent is greater than the segregation of the poor - Racial composition of one's neighborhood depends much more on one's race than on one's income - Asian and white households typically live in neighborhoods with much higher median incomes than hispanic and black households (given they have the same income) - Black and hispanic households are in neighborhoods with median incomes substantially lower than white households (given household income) - Black and hispanics must have household incomes that are substantially higher than those of white or Asian households in order to live in neighborhoods with the same median income - Middle class households typically live in neighborhoods that are more similar to those of low-income households than to those of high-income households (high income households are more segregated) - Income distribution in one's neighborhood is a function of one's own income, but also of metro area where one lives (child growing up poor in DC and Minneapolis may have more access to high quality schools and other opportunities than equally poor or middle-class child in Atlanta or LA) - Among households with same annual income, there are sizable racial/ethnic differences in neighborhoods income composition; black middle-class households typically live in neighborhoods with median incomes similar to those of very poor white households; even high income black and hispanic households don't achieve neighborhood income parity with similar income white households - Black and Hispanic middle-class households tend to live in neighborhoods that contain much larger proportions of black and hispanic residents -- average black and hispanic households' incomes are substantially lower than white households' incomes, so racial segregation will tend to lead to disparities in neighborhood economic context - large racial disparities in exposure to poverty may have long-term consequences; black and hispanic children and families are doubly disadvantaged -- both economically and contextually -- relative to white and Asian families

Aid Success Stories

- South and East Asian green revolutions: 1950s and 1960s Rockefeller Foundation and other donors spurred development of high yield seed varieties and new techniques for modernized farming; USAID helped finance rapid uptake of these new technologies, including improved seeds, fertilizer, and irrigation - Smallpox eradication: 1967 WHO established Smallpox Eradication Unit and launched donor-supported worldwide campaign to eradicate the disease - Family planning: during 1960s US gov't and various organizations launched global effort to spread access to modern contraception, based on individual voluntary choices; uptake of contraceptive methods has been widespread, except some of sub-Saharan Africa) - Child survival: 1983 UNICEF launched campaign to promote child survival, based on combination known as GOBI: growth monitoring of children, oral rehydration therapy, breastfeeding for nutrition and immunity to infectious disease, and immunizations against childhood killers

"credence" good

- a good whose utility impact is difficult or impossible for the consumer to ascertain - in contrast to "experience" goods, the utility gain or loss of credence goods is difficult to measure - the seller of the good knows the utility impact of the good, creating a situation of asymmetric information (asymmetric information ==> moral hazard, adverse selection) - health care has characteristics of a credence good - complexity of healthcare makes exchange of info difficult, so both private and public health care are likely to be subject to major inefficiencies and quality problems

decentralization

- bc healthcare services are broad and varied, and bc spillover may be locally experienced, maybe a good way to organize healthcare provision is through decentralization - decentralization is the process of redistributing or dispersing power/responsibility from a central authority - tend to associate centralized state with failures, socialism/communism - administrative decentralization: at least one policy is implemented not by central gov't but by local gov't - political decentralization: decision making decentralization, appointment decentralization - constitution decentralization: lower, local tier of gov't has authority to make some decision on policy issue - fiscal decentralization: decisions on spending made at local level - pros: local gov't solves local problems, more in tune with needs of population, more accountability, local preferences could be different, certain goods/services more suited to local mgmt (garbage), could be less expensive, bureaucratic delay reduced - cons: political/social fragmentation, subject to laws of wherever you happen to be (large variation), some goods don't make sense with decentralization

healthcare in Indonesia

- decentralized healthcare - established links between local revenue collection and local expenditures on health care - more public expenditure on healthcare directly associated with higher levels of satisfaction - private spending in a district has reduced, inequality in health care access within a district has reduced - higher spending by districts led to lower public prices and a substitution away from private sectors

Key issues with healthcare from a policy perspective

- degree of "publicness" or the spillovers associated with each component of healthcare - the minimum efficient scale for provision (federal vs local) - potential for economies of scope, in either costs or benefits (i.e. more bang for your buck)

Foreign aid needed because

- domestic saving is low (no local money) - foreign exchange earnings are low (no foreign money) - technical skills, managerial skills, and technology are low but could be transferred (no human capital)

Cuba Dual-Currency System

- economic crisis in 1990s ==> increased reliance on US dollar for basic financial transactions, dollar became preferred means of payment for all non-state sponsored activities - cuban gov't legalized US dollar in 1993, and created convertible peso (CUC) which was given same value as the dollar; CUC assumed all functions dollar originally had - dual currency facilitated remittance payments by Cubans living abroad, expanded tourist industry, and spurred investment in Cuban businesses - Cuban peso (CUP) used to purchase most domestically produced goods (food, state salaries) and CUC is used to purchase imported goods or goods of a high quality (luxury items like alcohol) - tourist industry exclusively uses CUC, many Cubans don't have access to CUC - tips from tourists made in CUC to taxis, waiters, etc can be equivalent of month's salary in CUP; "low-skill workers involved in tourist industry often make more money than highly-skilled professionals like doctors, lawyers, and teachers, creating inverse pyramid of work incentives that disproportionately favors tourism industry - system designed for CUP to be used by Cubans almost exclusively, and tourists often don't even encounter CUP and use almost exclusively CUC - Work incentives across industries heavily impacted by gov't investments in tourism, creating income inequality and low wages for many non-tourism professions - As hopes to boost global investment in Cuban markets have led to tourist-focused economic policy, wages outside of tourism have been unable to keep up with prices of basic goods - vulnerability due to high exchange rates for CUP, created financial and social gaps between those that use CUP and those who have access to CUC - Cuban citizens (no access to CUC and have to use CUP) have reduced purchasing power when it comes to participating in nation's economy - even among women with high levels of social/technical capital, declining levels of financial capital, reinforced by insufficient wages in non-tourist sectors, have pushed many cuban women towards economic insecurity - many cubans of African descent less likely to be paid in CUC, attributed to racial discrimination in tourism hiring practices - focus on tourist towns has created regional economic disparities, increase in internal migration which leads to growing housing shortage and greater conditions of poverty - Eliminate CUC, promote greater feelings of nat'l identity and reduce dependency on foreign markets, greater social inclusion

"White Flight" Phenomenon

- extent to which segregation is the result of "flight" of white americans from central cities in 1960s-70s into the suburbs - some say racial makeup matters in explaining white flight -- increases in asian and hispanic populations do not account for it, only increases in african american population - white flight can be accounted for by deteriorating economy and social environment (low tax revenue, high crime rates, job relocations to suburban office parks) rather than race alone

Non-concessional financial flows

- has effectively the same terms (for interest rates, repayment schedule) as you would find in commercial banking system - public version: multilateral organizations such as World Bank, the IMF, the UN - private version: commercial banks

Financial purpose of foreign aid for developing countries

- humanitarian aid - development assistance: economic sectors, individual development projects - debt relief - technical assistance -- country that has financial crisis asks IMF for help, they send in people who are CPAs, accountants etc. to help them and teach them how to effectively handle books/budgeting; send in drs during a war (when human capital is lacking in a country)

Cammett "Partisan Activism and Access to Welfare in Lebanon"

- in Lebanon, sectarian political parties are key providers of social assistance and services - political activism and a demonstrated commitment to a party are associated with access to social assistance; higher levels of political activism facilitates access to higher levels or quantities of aid - For political organizations and ethnic/religious charities, service provision can be used to gain and reinforce political support or to maintain group boundaries - Parties may distribute benefits unevenly to lure in supporters, reward existing supporters, pursue both, or promote greater electoral turnout - political mobilization like protests, demonstrations, riots, militias signal party strength, ways to pressure for support besides voting; non-electoral forms of mobilization call for longer term comprehensive relationships of social protection between parties and more committed, core supporters - most loyal most likely to receive higher benefits; least risky, shorter-term demonstrated loyalty (voting) get limited rewards (food baskets, cash) that are delivered widely and easily - welfare in Lebanon involves minimal if any gov't intervention, non-state actors (political organizations and religious charities) profit from and sustain underdevelopment of public welfare - sectarian organizations assess political behavior in determining whether and to what degree individuals and their families should receive services - More politically active individuals (vote, attend party meetings, demonstrations, engage in visible/regular expressions of commitment to a party) more likely to receive services, even after accounting for differences in SES, gender, age, religious affiliation, piety, sectarian identity, and other potentially relevant factors

Policies to reduce homelessness

- increased access to affordable housing - universal access to health care - living wages - healthcare for the homeless and other gov't programs - permanent supportive housing programs

Concessional financial flows

- low(ish) interest rates, long(ish) repayment methods - loans, grants, "gifts" - public version is "official development assistance" (ODA) -- given by a country ("bilateral aid") or by an international organization ("multilateral aid") - private version: NGOs providing grants - bulk of concessional financial flows into a country is from of ODA (bilateral and multilateral soft loans and grants); donors are OECD, OPEC states, some East Asian countries - Multilateral organizations that provide ODA: UN and its agencies, funds focused on single-issues, International Development Association of World Bank, regional development banks, IMF (in context of debt relief)

Land Use and Extractive Industry in Guatemala

- majority of campesinos are squatters who have no official claim to land, but indigenous farmers are more likely to be squatter than their non- indigenous counterparts - lack of legitimacy in land use and property rights led peasants to move into forests, causing significant deforestation; arose from gov't policies that benefitted wealthy landowners at expense of poor farmers, land distribution disproportionately favored the wealthy - gov't didn't provide land for the poor, but also didn't prevent the actions of campesinos when they settled on abandoned land wherever they found it -- created "open-access" property rights - lack of gov't legitimacy in land tenure and property rights leads to underdevelopment and poor outcomes in health, earnings, and education; it's illegal for gov't to have relations with villages that lack legal standing, so it's often impossible for small settlements to build schools, clinics, or develop agricultural organization or community structure bc don't have assistance from gov't - increasing population and static land resources caused soaring inequality; land increasingly concentrated in hands of a few individuals - extractive industries: forestry and mining; indigenous receive little benefit while suffering repercussions of large-scale environmental turmoil - mining sector driven by Canadian private transnational mining companies like Goldcorp, face little regulation; risk environmental health with byproducts and waste leaking into soil and local water supply -- indigenous Guatemalans rely on more traditional subsistence means like fishing and agriculture - forestry ownership spread across gov't actors at nat'l and regional level, private entities, and indigenous communities; gov't and private corporations continue to develop on forestland, displacing indigenous Guatemalans evicted/displace; deforestation speeds rate of soil erosion, contaminating drinking water sources such as streams; unsustainable; affects emission of greenhouse gases by lessening mitigating force of forests on CO2 emissions; benefits private actors and Guatemalan central gov't disproportionately while yielding minimal benefit to surrounding indigenous population - national indigenous identity relatively weak and has made indigenous national political organization and response to abuse weak; linguistic diversity is major contributor to fragmentation of indigenous community

Causes of famines

- many famines have occurred when there was plenty of food per capita - war can disrupt/aggravate normal channels of food supply - roles of access and entitlements; one's entitlement to food can collapse even if there isn't a scarcity of food (if you can't get income, can't get food) - famine has never taken place in a functioning democracy; what matters is having a free press and competitive politics: opposition parties are an important way that problems in a country (like lack of food security) is brought to light; news media broadcasts early warning signs of starvation and criticize ruling parties when problems with food security are not solved; greater political competition associated with higher levels of public food distribution

Chen "Women in the Informal Sector"

- much of women's paid work is not included in official statistics - significant overlap between being a woman, working in the informal sector, and being poor (also overlap between being a women, working in informal sector, and contributing to growth) - women are over-represented in informal sector worldwide -- primary source of employment for women in developing countries - women more likely to be own account workers and subcontract workers, less likely to be owner operators or paid employees of informal enterprises (implications for relative earnings and poverty levels) - majority of women in informal sector are home-based workers or street vendors: home-based workers carry out remunerative work with their homes, include dependent subcontract workers, independent own account producers, and unpaid workers in family businesses; linked to global economy through global subcontracting (lead firms place orders/outsources to suppliers who put out work to sub-contractors who operate small production units or who put out production to homeworkers; street vendors represent a high proportion of employment in trade and significant share of trade GDP, women account for more than 50% of informal employment in trade - higher percentage of people in informal sector are poor, overlap greater for women than for men - men and women tend to be involved in different activities or types of employment even within same trades; men traders have larger scale operations and deal in non-food items (women do) - average incomes of both men and women are lower in informal economy; gender gap in wages higher in informal economy - female informal workforce contributes significantly to GDP, women are more likely to engage in multiple activities - homework predominant in clothing, textile industries, leather/footwear, carpet making, electronics - rate/pattern of country's growth (labor-intensity and sectoral composition), economic restructuring or crisis (privatization and public expenditure cuts), and global integration of economy can lead to persistence/growth of informal sector - women are less able to compete in labor, capital, and product markets bc relatively low levels of education/skills, less likely to own property or have market know-how - women's time/mobility constrained by social/cultural norms

Non-state actors and provision of public goods

- participation of non-state actors often central part of public goods provision in developing countries where states lack capacity of resources - non-state provision is often a stopgap measure with levels of provision lower than what they would be with effective state provision, but often better than nothing - non-state actors in public goods provision is double-edged sword: state saves financial and administrative resources, but non-state actors set up institutions to mobilize resources and supervise service delivery, may develop into political competitors (citizens question usefulness and legitimacy of that state) - In China, local officials believe coproduction of public goods with community groups, with community actors taking the lead, can build trust between officials and citizens that can spill over into increased citizen compliance with state demands

Jeffery Sachs' view on foreign aid

- parts of developing world, even those that are "well-governed" are stuck in poverty trap - more policy or gov't reform itself is not sufficient to overcome this poverty trap - what is needed is "big push" in public investments to produce large increase in productivity; foreign donors critical to this

State and local housing policies

- physical shortage of affordable rental housing in urban areas (urban gov'ts prefer expensive high rises) - various pro-landlord policies increasingly used to convert rental units into condos or higher-rent units - decline of rent controlled housing - increase in quality of construction and units makes most rentals too expensive

Why do donors give foreign aid?

- political and strategic goals: donors like to give to countries that are friendly to them -- ideologically friendly, could serve strategic service (military etc) - economic goals: "tied aid" where recipients have to spend a proportion of borrowed funds on purchase of goods from donor country; aid to countries where you already have economic ties; aid given within a region (aid to neighbors will help you bc proximity means you already have close ties) - humanitarian and moral reasons: short-term emergency assistance, long-term development assistance on debt relief and poverty alleviation

Women in politics

- political representation gap between men and women has narrowed the least between 1995 and 2000 - disparity doesn't reflect legal restrictions (women can vote, support candidates, run for office in nearly every country; in many countries, female voter turnout exceeds male turnout) - policy response has been gender quotas -- way to rapidly enhance women's ability to participate in policy making

Causes of food insecurity

- problem of matching food supply and demand at the same time - environmental misuse and abuse - demographic distributions - unequal resources - economic inequality - overpopulation - Colonization of developing world led to mass-scale hunger and malnutrition for millions - Int'l trade: Developing countries have seen prices of imported fuels and agricultural equipment rise much faster than prices they receive for their export of agricultural products on int'l market - Agricultural policy: developing countries need to be allowed to increase their agricultural productivity and they have to have access to 5 things simultaneously: land, capital, water, technology, and human capital; "Green revolutions" is package of modern agricultural technology that organizations like the UN and World Bank have delivered to developing countries

Recidivism

- recidivism rates often used by politicians to justify criminal justice policy and practices of punishment - high rates of recidivism not as a reason to impose greater punishment on criminals, but rather as a failure of the system to deal accurately and effectively with offenders and reduce crime - Individual behavior: criminals are beyond reform ==> punitive measures; rehabilitation fails; issue of mental health; something wrong with individuals that we can't fix, must punish to get them to see error of their ways ==> quickly get to policy solution of just locking them up - Societal factors: people who offend and who serve long prison sentences have a hard time re-acclimating to society after they've been released; don't have proper support systems, resort back to what they know; if sentencing too harsh, offenders dissociate from society and react criminally - Poverty Argument: people will use illegitimate means to support themselves financially if they can't legitimately; if pressured by low SES, will reengage after release from prison; recidivism because of failure to meet economic need, not because they don't know it's wrong or because rehabilitation failed - Not clear what reduces recidivism; "Green Prison" programs have been effective (teach prisoners specific skills like landscaping etc to get jobs); harsh prison conditions are not shown to have any effect on recidivism - main contributors to recidivism are difficulties in finding jobs, renting apartments, and getting an education

Danziger "Fighting Poverty Revisited"

- the 1964 Economic Report of the President discussed many strategies for reducing poverty, including: high levels of employment, accelerating economic growth, fighting discrimination, improving labor markets, expanding educational opportunities, improving health, assisting the aged/disabled - Johnson's 1964 speech emphasized structural factors as primary causes of poverty -- poor did not work enough bc of excessive unemployment, or if they did work, they earned too little due to insufficient skills - Johnson's economists predicted income poverty could be eliminated by 1980 bc they assumed benefits of economic growth would continue to be widely shared; macroeconomic policies kept economy going, then real wages would increase steadily for workers throughout wage distribution; employment and training programs would enhance skills, macroeconomic and antipoverty policies would sustain economic performance - Income poverty was not eliminated by 1980: some blame growth of antipoverty programs themselves, others argued eliminating income poverty was not as important a goal as changing personal behaviors of the poor; author argues income poverty goal was not bc the optimistic, yet reasonable, economic forecasts of early poverty researchers were invalidated by unexpected economic changes that began after the first oil price shock in 1973 -- economy failed to deliver the benefits of prosperity widely - era of steady economic growth and rising real wage rates that raised living standards for most workers in quarter century after WWII ended in the mid-1970s; most hard hit were workers with only a high school degree - past 3 decades, economic forces have increased financial hardships and prevented existing anti-poverty policies from further reducing poverty; changing relationship between growing economy and poverty (esp stagnation of male wages) refutes view that poverty remains high bc gov't provided too much aid - poverty increasing effects of a labor market that shifted from a quarter century of rapid economic growth (in which rising tide lifted all ships) to quarter century of slow growth and rising inequality - poverty-reducing effects of per capita growth diminished in early 1970s - antipoverty effect of GDP growth was smaller after 1973 than it had been in prior years - official poverty rate would have fallen to zero by 1984 if there had been no slowdown in rate of GDP growth after 1973 - official rate would have reached zero by 1987 even if GDP growth after 1973 had slowed as it did but if there had been no change in pre-1973 relationship between GDP and poverty - poverty remains high primarily bc relationship between economic growth and poverty changed unexpectedly after 1973 - Relationship between GDP and poverty changed after 1973 bc era of steadily rising real wages for workers across the distribution had ended; men's median earnings remained virtually constant for 3 decades, whereas before their earnings had grown at an annual rate of 1.6% - stagnation of median earnings for men since early 1970s represents failure of economy, not failure of antipoverty policies; labor supply as fallen, esp for less-educated men, over past 3 decades, partly bc of negative incentive effects of gov't transfer programs and partly bc of declining real-wages of less-educated workers - Factors that contributed to falling real wages of less-educated workers and increased earnings inequality: labor-saving tech changes, globalization of labor and product markets, immigration of less-educated workers, declining real value of minimum wage, declining unionization - despite increased work of wives and increased noncash transfers and tax credits for working poor, many less educated workers have not benefited from prosperity of last quarter century - early poverty researchers considered negative income tax (NIT) as most efficient antipoverty program - 1969 Nixon proposed the Family Assistance Plan, a NIT that would have extended cash assistance to 2 parent families, established a national minimum welfare benefit, reduced high marginal tax rate on earnings in the Aid to Families with Dependent Children (AFDC) Program and de-coupled cash assistance and social services -- such NITs sought to reduce poverty and provide work incentives by raising cash benefits for nonworking welfare recipients and by extending assistance to working poor who had been ineligible for cash welfare - NIT movement contributed to adoption of SSI and EITC - Under NIT, benefit is as a maximum for nonearners and then falls as earnings rise; EITC payments are 0 for nonworkers and reach maximum at about annual earnings of full-time minimum wage workers (payments rise with earnings for low earners until maximum benefit is reached) - NIT experiments followed by long period of research and experimentation on programs to raise work effort, instead of cash income, or nonworking poor; Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 transformed safety net for nonworking poor - PRWORA revealed minority of welfare recipients have multiple barriers to employment, making it difficult for them to work steadily even when national unemployment rate is low - evolution of welfare from cash-based to work-based could be furthered by experimentation with low-wage, transitional public-service jobs of last resort for those who are willing to work but can't find and keep regular jobs - Income poverty was not eliminated by 1980s bc economy has not generated increased earnings even for median full-time year-round male worker since 1970s -- economic growth has had limited impact on poverty bc rising earnings inequality has left many workers with lower real earnings - income poverty will not be reduced unless gov't does more to help low-income workers and those who are willing to work but cannot find jobs

Why does the government punish?

- to avoid conflict, maintain values, make people feel safer, protect society, rehabilitate the offender, prevent future criminal behavior - does government send people to prison as a punishment or does it send people to prison in order to receive punishment? as punishment, fewer human rights considerations; to receive punishment, longer sentences, less overcrowding

South Africa housing inequality

- unequal distribution of land/space central to Apartheid in South Africa; cities reconfigured to segregate racial and socioeconomic groups, pushing poor and non-White communities to outskirts ==> inequality in housing - housing inequality intertwined with disparate access to resources like water, electricity, sanitation, healthcare, education, economic opportunity - informal settlement: unplanned settlement where informal housing (structures not in compliance with building regulations) is constructed on land that occupants have no legal claim to (at least initially) and on which few, if any, services exist (may change over time) -- common is Temporary Relocation Areas (TRAs) where gov't places people for whom housing isn't available - backyard dwellings: informal shacks, erected by occupiers in yards of other properties; rose in prominence due to central gov't subsidies geared towards boosting housing ownership; potential as potent force to deliver affordable, quick, and somewhat decent rental housing while also empowering cash-poor landlords by providing them a steady income and opportunity to house needy relatives; undermine urban renewal due to overcrowding, perpetuating poor housing quality and appearance, and burdening capacity of provision for utilities like electricity and water - informal settlements and TRAs subject to police brutality and geographic isolation which decimates access to food and economic opportunity; people in informal settlements known to have more symptoms of depression - Reconstruction and Development Program (RDP): housing program with intention of reducing housing inequality; houses build by gov't and distributed to those with low household incomes; inability to provide housing for all people who qualify; cost restrictions have reinforced segregation (spending cap forces builders to construct in areas with low land prices ==> replicates and entrenches racial and socioeconomic segregation of Apartheid) - RDP houses widely traded and rented out, as it is hard for households to use RDP houses as financial assets and get lending against them, locations fail to meet their needs ==> they rent out RDP house and move to informal settlements or backyard dwellings in townships where they can be closer to jobs/livelihood opportunities (undermines strategies for reducing informal settlements and increasing access to formal housing structures and necessary utilities) - private sector financing system has capacity to fund wide majority of population, restore housing rights to middle-income black households and to design flexible, market-oriented policies; flawed in profit-seeking nature of financial sector and lack of innovation

Debate on "aid vs trade" - 3 main views

1) development should focus on expanding international trade and increasing developing countries' exports; aid should be eliminated given its many problems 2) trade and export orientation essential for economic growth/development, but it's not enough by itself; foreign aid has problems, but many (tied aid, conditional aid, lack of coordination, volatility) originate with donors 3) Aid is needed to help countries escape poverty cycle, to increase provision of basic services; aid helps countries reduce their debt burden and provides resources that can be used for poverty reduction and economic growth and development; focusing on trade is of little help bc developing countries have little to export -- countries/communities that are isolated (geographically) have little access to markets, urban centers, or ports so cannot realistically compete in int'l markets; investment in communications and transportation necessary to benefit from trade (aid can help provide this); aid can address bottlenecks to trade (having higher transport costs, lack of infrastructure, lack of access to credit, bad geography)

6 lessons from successful development assistance stories

1) interventions based on powerful, low-cost tech 2) interventions relatively easy to deliver, based on standardized protocols and local ownership 3) interventions applied at scale needed to solve underlying problem 4) interventions reliably funded 5) interventions are multilateral, drawing support from many gov'ts and int'l agencies 6) interventions have specific inputs, goals and strategies so success rates can be assessed

7 factors that limit effectiveness of foreign aid

1) usage of "tied aid": in context of bilateral aid, recipients must spend part of borrowed funds on goods from donor country 2) usage of "conditional aid": conditions are imposed on recipients which they must meet if funds are going to be used; policy conditionality, such as re-orienting economy towards "free market" approaches; projects typically decided by donors -- could be related to tied aid; imposed timetables could be very off from what is realistic in the country 3) financial flows can be volatile and unpredictable: makes it hard for recipient countries to implement policies that depend on aid funds 4) donors don't coordinate: leads to inefficiency in usage of aid 5) aid may not be "aid" in sense of not addressing those most in need 6) aid can be misused, appropriated by corrupt leaders, and increase local corruption 7) aid may substitute, rather than complement, role of domestic gov't: gov'ts lose incentive to increase tax revenues and increase efficiency of tax system, become dependent on aid; people start to prefer donors to the gov't, bad for building trust with the state

3 ways to deal with flat wages without declining standard of living

1) women go into paid work -- young mothers go to work in huge numbers, major reason because they had to prop up family incomes that were declining due to male wages declining 2) families (men and women) work longer hours: second/third jobs, overtime 3) borrowing -- going into debt, which seemed easy because housing prices were going up, used their homes as collateral/refinanced their homes

"Index of Dissimilarity"

Result is the percentage of one group that would have to move to get an equal distribution 0 = perfectly distributed (no segregation) 100 = no mixture of dissimilar groups (fully segregated)

Gender gap in education

addressing the gender gap in education is important bc rate of return on women's education is higher in the developing world, increasing education lowers fertility and increases economic productivity, there is a large multiplier effect on future generations if the mother is educated, and its important for ending the cycle of poverty and lack of schooling for women

Preferences of white americans model of segregation

argues segregation persists because white americans choose to live away from and exclude African Americans from their neighborhoods preferences of white americans and african americans have shifted away from integration

Social rate of return

costs and benefits to society of investment in education, includes the opportunity cost of having people not participating in the production of output and the full cost of the provision of education, rather than only the cost borne by the individual

Centralization

form of segregation and concentration in which one group is clustered near a geographic center

Concentration

form of segregation where similar groups are clustered together

Socioeconomic status differences model of segregation

higher incomes allow exodus from city centers argues race is not the cause as African Americans with requisite financial resources move to suburbs Evidence is mixed (Reardon, middle income blacks tend to live near low income whites)

Discrimination by individuals model of segregation

official discrimination has given way to unofficial discrimination links individual preferences to outcomes white americans have a "fixed tolerance" for living near minorities

Consequences of segregation

political/linguistic isolation poverty concentration (can make basic goods expensive) educational exclusion adaption of "oppositional culture" Segregation is worst for African Americans and Latinos (segregation + poverty) Limits access to jobs -- "spatial mismatch"

Ecological model of segregation

predicts segregation based on demographics and structural variables region, city size/age, number of new housing starts, level of suburbanziation

Discrimination by institutions model of segregation

real estate and lending practices african americans are denied housing loans more often and receive less favorable rates when granted a loan than similarly-situated white americans "redlining" benefits white americans

Residential segregation

residential/spatial distribution patterns tend to mirror social patterns/relationships residential and distribution patters have consequences for life chances (one's community has "contextual effects) Segregation -- pattern by which dissimilar groups are separated according to geographical areas (blocks, census tracts, neighborhoods, cities etc)

"Contact Measures"

vary according to group size chances of running into similarly-raced person "isolation index" -- the probability you will meet someone in your group "interaction index" -- probability that you will meet someone from another group