Jean-Marie Baland

Is Child Labor Inefficient

We build a model of child labor and study its implications for welfare. We assume that there is a trade‐off between child labor and the accumulation of human capital. Even if parents are altruistic and child labor is socially inefficient, it may arise in equilibrium because parents fail to fully internalize its negative effects. This occurs when bequests are zero or when capital markets are imperfect. We also study the effects of a simple ban on child labor and derive conditions under which it may be Pareto improving in general equilibrium. We show that the implications of child labor for fertility are ambiguous.

The Economics of Roscas and Intra-Household Resource Allocation

This paper investigates individual motives to participate in rotating savings and credit associations (roscas). Detailed evidence from roscas in a Kenyan slum (Nairobi) suggests that most roscas are predominantly composed of women, particularly those living in a couple and earning an independent income. We propose an explanation of this based on conflictual interactions within the household. Participation in a rosea is a strategy a wife employs to protect her savings against claims by her husband for immediate consumption. The empirical implications of the model are then tested using the data collected in Kenya.

The Ambiguous Impact of Inequality on Local Resource Management

Abstract The impact of inequality on the ability of human groups to undertake successful collective action is investigated with special reference to overexploitation of common property resources. In voluntary provision problems, on the one hand, inequality has an ambiguous impact on the feasibility of the efficient outcome even though better endowed agents contribute more to collective action. In regulated settings, on the other hand, inequality tends to reduce the acceptability of available regulatory schemes and, therefore, to make collective action more difficult.

Rent-seeking and resource booms

Abstract This paper develops a model of rent-seeking in which the opportunity cost of rent-seeking is foregone entrepreneurship. It provides conditions under which resource booms tend to lead to an increase in rent-seeking activity and those in which they induce entrepreneurship. We identify an important difference between the two activities which leads resource booms to bias gains in favour of rent-seeking over entrepreneurship. But we also show that this bias depends on the nature of the initial equilibrium.

Pretending to Be Poor: Borrowing to Escape Forced Solidarity in Cameroon

From field observations of credit cooperatives in Cameroon, we find that 19% of the loans taken are fully collateralized by savings held in the same institutions. This behavior is costly to the borrower, as it represents a net interest payment of about 24% per year. While traditional explanations may partly explain this behavior, interviews with members of the cooperatives suggest the following new rationale: members resort to borrowing to signal to friends and relatives that they are poor and do not have savings available. By doing so, they can avoid requests for financial help. We develop a signaling model to analyze the conditions under which this behavior is an equilibrium outcome.

The Environmental Impact of Poverty: Evidence from Firewood Collection in Rural Nepal

We investigate determinants of household firewood collection in rural Nepal, using 1995–96 and 2002–3 World Bank Living Standards Measurement Survey (LSMS) data. We incorporate village fixed effects, endogenous censoring, measurement error in living standards and heterogeneous effects of different household assets. We find no evidence in favor of the poverty‐environment hypothesis. The evidence for the environmental Kuznets curve depends on the precise measure of living standards and time period studied. Firewood collections fall with a transition to modern occupations and rise with increasing population and household division. The local interhousehold collection externality is negligible, indicating that policy interventions are justified only by ecological considerations or nonlocal spillovers.

The Distributive Impact of Land Markets in Uganda

This article presents first‐hand evidence about land distribution and the impact of land markets in central Uganda. This area is characterized by unequal distribution of land inheritance, rural‐rural migration, and active land markets. We show that land markets, and particularly land purchases, tend to reduce the initial inequality in the initial (inherited) distribution of land. Land purchases by landless farmers in their native village represent an important part of this adjustment.

Economics of common property management regimes

The purpose of this chapter is to identify the reasons for collective action failures and successes in natural resource management, and to understand, in the light of economic theory, the mode of operation of the factors involved whenever possible. In the first section, we clarify the notion of a common property management regime and provide cautionary remarks about estimation methodologies commonly used. In Section 2, we focus on the general case where common property regulation is feasible yet only if governance costs are kept to a reasonable level. Emphasis is placed on such factors as the size of the user group, income or wealth inequality, and availability of exit opportunities. Special attention is paid to the aspect of inequality since this has remained a rather confused issue in much of the empirical literature. Economic theory can contribute significantly to improving our understanding of the manner in which it bears upon collective action. In Section 3, we discuss cognitive problems as an important impediment to the design and implementation of efficient common property management systems. We also present evidence of the deleterious effects resulting from the absence or inappropriateness of state interventions, particularly where they are motivated by private interests. In Section 4, the importance, under a co-management approach, of appropriate incentive systems at both the village and state levels is underlined and illustrated.

Coordination problems in local-level resource management

Starting from the observation of important returns-to-scale effects in conservation of common property resources, we identify some of the factors that impinge upon the chances of success of a decentralized, group-based, management of local natural resources. Particular attention is paid to the influence of asset inequality among resource users. In particular, it is shown that, by redistributing incentives among landowners, land reform has an ambiguous impact on the latters willingness to undertake conservation investments.

Daily wages and piece rates in agrarian economies

The paper presents an analysis of the coexistence of daily-wage and piece-rate contracts in agrarian economies. We show that, when individual effort is taken into account, daily-wage labourers typically form a convex set in the space of working ability. The most able and the least able labourers work on piece rates, as they can thus choose their own level of effort. We also prove that, on a monopsonistic labour market, the use of both contracts in equilibrium results from the profitability of market segmentation. Imperfect substitutability between workers under different contracts and the downwards rigidity of daily wages can also explain the coexistence of the two types of contracts in more general settings, e.g. perfect competition