Andrew W. Horowitz

Are International Remittances Altruism or Insurance? Evidence from Guyana Using Multiple-Migrant Households

Abstract While international remittances provide significant disposable income for many households in less-developed countries, there is no consensus on migrants’ remittance motivation. Two principal competing explanations for remittances are altruism and risk sharing. This paper employs previously unanalyzed data to bring new evidence to the debate. We develop a simple theoretical model that yields distinct testable predictions for each motivation. Among the model’s testable predictions is differential remittance behavior by migrants from households with multiple versus single migrants under altruism and risk sharing. Our estimation finds significant differences in remittance behavior of multiple and single migrants and these differences support the altruistic incentive to remit.

Returns to General, Technical and Vocational Education in Developing Countries:recent evidence from Suriname

We employ a new data set from Suriname to estimate private and social returns to technical, vocational and two tracks of general education (mathematics and language). Return estimates are based on gender-specific wage equations, corrected for sample selection bias and adjusted for unemployment. We find that, for both genders, returns to either general track exceed returns to technical or vocational education. Female returns to the language track exceed those to the mathematics track from the social and private perspective, while for males, both social and private returns in the mathematics track exceed those in the language track.

Prostitutes, Pimps, and Brothels: Intermediaries, Information, and Market Structure in Prostitution Markets

Prostitution is a multi-billion dollar, globally distributed, low-concentration service industry that is receiving increasing attention in the economics literature. This article focuses on a widespread, but little studied, feature of this environment—the role of intermediaries (pimps or brothel owners) on market outcomes. Prostitution laws and markets are perhaps unique in that transactions between principals (prostitutes and johns) are egal in many countries, while intermediary activity (pimping) is illegal. After surveying the varying cross-country legality of agents we develop a simple theoretical model to analyze how the presence or absence of intermediaries shifts the distribution of market surplus. We show that eliminating pimps and brothels may shift surplus in non-obvious ways, depending on the precise function they perform and on whether equilibrium is pooling or separating across “high quality” and “low quality” market segments. The implications of alternative policy regimes (intermediaries legal or illegal) are considered.

Household‐Level Education Borrowing Constraints: Evidence Using the College Attendance of the Sisters of Vietnam Draft Avoiders

Most studies of U.S. education borrowing constraints are based on an individual male household member and find that they have little effect on educational attainment. We argue that the correct unit of analysis is the attainment of all sibling intrahousehold resource rivals. We use the male college attendance return shock associated with Vietnam War conscription risk as a quasi‐natural experiment. In credit‐constrained households, scarce education resources should shift toward at‐risk males and manifest in lower attainment by resource rival sisters. We find significantly lower attendance among rival sisters. Our findings cast doubt on assertions that borrowing constraints do not affect attainment.

Does Child Labor Reduce Youth Crime

This paper explores the nexus between youth-employment, youth-crime, and socialization in the context of the child labor debate in economics. The analysis draws upon both economics and sociology and suggests that neglect of the socializing benefits of youth (and perhaps child) employment in the economics literature is a potentially important lacuna. The sociology literature contains evidence that youth-labor reduces criminal propensity. If this effect extends to the youth who are the subject of the economics child-labor literature, potentially large private and external benefits of some-types of child-labor have been ignored. After presenting evidence of the linkage between youth-socialization, youth-employment, and youth-crime we consider possible implications for child-labor policies.

Ranking Rates of Return to Education: Legitimacy and an Explicit Diagnostic

Abstract Rankings of internal rates of return to education have significantly influenced education expenditures within developing countries and lending priorities of multilateral institutions. It is widely suspected, however, that estimated education returns are subject to systematic bias. The direction and magnitude of this bias are hotly contested. This paper demonstrates that in the presence of systematic bias, idiosyncratic properties of the internal-rate-of-return mapping may cause a ranking reversal. An explicit analytical test of return-ranking legitimacy is developed and applied to select African and Asian countries.

Durability and strategic trade are there rents to be captured

Abstract This paper analyzes strategic trade policy when home and foreign duopolists produce a durable good that is either sold or leased in a third country. Durability is important for two reasons: it characterizes most of the products discussed in the strategic trade literature, and it also calls for explicit dynamic modeling. For duopolists who sell their product in a third-country market, this paper finds the optimal policy to be a tax on domestic output. For duopolists who lease the good in a third-country market, though, the optimal policy is a subsidy.

Hierarchical Human Capital and Economic Growth: Theory and Evidence

We embed an N-level human-capital hierarchy in a growth model and demonstrate that the hierarchical structure generates an optimal investment program with phases of stock depletion and expansion in the stocks of the various levels of humancapital. We then take the implications of the model to data from a diverse sample of countries and find patterns of stock expansion and contraction consistent with the theoretical model. We also illustrate how allowing for hierarchical human-capital formation might contribute to the empirical growth literature.

Labour supply and wages among nuclear and extended households: The Surinamese experiment

This article explores labour market behaviour of members of extended and nuclear households in Suriname. Previous analyses have found that co‐operative childcare opportunities within the extended household increase female labour force participation. Such coordination implies correlated participation decisions, which invalidates standard assumptions made in estimating participation with probits and wages with regressions. We employ a GMM estimation, which allows correlation among household members. We find that extended and nuclear household members are not significantly different in participation propensities, but do differ significantly in wages. We argue that greater home production opportunities in extended households dilute labour market effort and hours, reducing earnings.

A Signal of Altruistic Motivation for Foreign Aid: A Theoretical Model and Empirical Test

We develop a theoretical model showing that countercyclical transfers from a wealthy donor to a poorer recipient generate a signal of altruistic donor motivation. Using OECD foreign aid (ODA) data we find the signal present in approximately one-sixth of a large set of donor-recipient pairs. We then undertake two out-of-model exercises to validate the signal: a logit regression of signal determinants and the growth effects of ODA from signal-positive pairs compared to non-signal bearers. The logit indicates our signal meaningfully distinguishes donor-recipient pairs by characteristics typically associated with altruism. The growth exercise shows ODA from signal bearers displays stronger reverse causation and more positive long-run effects. These results contribute to understanding, and control for, endogeneity in the distribution of ODA.