Mark M. Pitt

The Impact of Group-Based Credit Programs on Poor Households in Bangladesh: Does the Gender of Participants Matter?

This paper estimates the impact of participation, by gender, in the Grameen Bank and two other group‐based micro credit programs in Bangladesh on labor supply, schooling, household expenditure, and assets. The empirical method uses a quasi‐experimental survey design to correct for the bias from unobserved individual and village‐level heterogencity. We find that program credit has a larger effect on the behavior of poor households in Bangladesh when women are the program participants. For Example, annual household consumption expenditure increases 18 taka for every 100 additional taka borrowed by women from these credit programs, compared with 11 taka for men.

THE MEASUREMENT AND SOURCES OF TECHNICAL INEFFICIENCY IN THE INDONESIAN WEAVING INDUSTRY

Production function models are estimated with a time series of cross-section data on Indonesian weaving establishments. The sources of technical inefficiency are investigated. Three firm attributes are identified as being potentially related to firm efhciency. Tbey are firm ownership, age and size. The importance of these attributes as sources of inefficiency in the Indonesian weaving industry is investigated and the implications of the find,ings discussed.

Empowering Women with Micro Finance: Evidence from Bangladesh

This article examines the effects of men’s and women’s participation in micro credit programs on various indicators of women’s empowerment using data from a special survey carried out in rural Bangladesh. These credit programs are well suited to studying how gender‐specific resources alter intrahousehold allocations because they induce differential participation by gender through the requirement that only one adult member per household can participate in any micro credit program. Empowerment is formalized as an unobserved latent variable reflecting common components of qualitative responses to a large set of questions pertaining to women’s autonomy and decision‐making power. The empirical methods are attentive to various sources of endogeneity, and the results are consistent with the view that women’s participation in micro credit programs helps to increase women’s empowerment. The effects of male credit on women’s empowerment were generally negative.

Food Preferences and Nutrition in Rural Bangladesh

T HE dietary choice of households near subsistence levels of nutrient intake is one of obvious policy importance. In many countries, such as Bangladesh, national goals are set in terms of nutritional intake and there is heavy intervention in the markets for foods. However, little is known about the manner in which food preferences vary with food expenditure and nutrient intake. The design of efficient programs to aid nutritionally deficient households in attaining minimal levels of nutrient intake requires information on all ownand cross-price elasticities for both target and non-target groups. The net effect of a food price subsidy on the consumption of food nutrients cannot be predicted without knowledge of the complete elasticity matrix. Results presented below demonstrate that substitution effects can be so strong that the subsidization of certain foods quite often reduces nutrient consumption. In this study, demand equations for nine foods which allow for extremely flexible consumer price response are estimated from the individual budgets of 5,750 rural Bangladeshi households. Estimation at the household level is preferred because it more readily permits the incorporation of household composition variables into the demand analysis, such as household size, occupation and employment status, that are typically lost in aggregation. There is also a greater range and variation in expenditure levels than found in grouped data. This is of particular importance in the study of nutritional well-being as it is the poorest households which are of special interest. Moreover, the household sample provides sufficient degrees of freedom to estimate a simple varying parameter model which requires the estimation of 270 parameters. Previous econometric analysis of income-class specific dietary choice has been limited and not altogether satisfactory. Pinstrup-Anderson, de Londono and Hoover (1976) estimated complete sets of price elasticities for different income strata using Frischs scheme in order to study the impact of changes in relative prices on nutrient consumption. Their results are suspect because of the assumption of want independence necessary for this methodology to be valid. Alderman and Timmer (1980), who were also concerned with studying the relationship between food price policy and nutrient intake by income classes, econometrically estimated separate price coefficients for each income group by including slope dummy variables in their demand equations for rice and cassava in Indonesia. The inclusion of these dummy variables revealed surprisingly large differences in compensated price response across income groups. Although their results support the notion that poorer households respond differently to prices than the rich, the limitations of their data constrained them to consider only two foods and to specify changes in price response which are discontinuous with respect to income. I The formulation and estimation of the food demand equations is discussed in section II below. Section III presents the results of the estimation and discusses the nutritional implications of movements in relative food prices and other exogenous variables. Section IV summarizes our findings.

The effects of improved nutrition, sanitation, and water quality on child health in high-mortality populations☆

Abstract A framework is set out for estimating the effects of interventions on child health that considers changes in the allocation of family resources, who among children survive (survival selectivity), and changes in the health of surviving children net of family resources. Estimates based on structural-equations semi-parametric models applied to data describing households from rural areas of two low-income countries indicate that conventional reduced-form estimates understate the effectiveness of improving sanitation facilities. This is due to the reduced allocation of household resources to children in households with better facilities but not to mortality selection, which is negligible.

Smuggling and price disparity

Abstract This paper proposes a model of smuggling consistent with the coexistence of smuggling, legal trade and price disparity, defined as a domestic price which exceeds (is less than) the return from legal export (import). These phenomena have been found to characterize Indonesian smuggling. A framework is presented in which legal trade is used to cloak smuggling activity with the implication that the greater the volume of legal trade, the less the costs of smuggling. This model is then used to explain the observation noted above and to show that smuggling may be welfare increasing vis-a-vis the non-smuggling situation, and that even if the suppression of smuggling is costless, tax revenue maximization may require a positive level of smuggling. In addition, the model is applied to coffee and rubber exports from Indonesia.

Microeconometric models of rationing, imperfect markets, and non-negativity constraints

This paper provides a theoretically consistent approach to estimating demand relationships in which kink points occur either in the interior or on the vertices of the budget set. There are important classes of problems in developing countries which demonstrate such kinked budget sets including binding non-negativity constraints. This paper also extends these methods to the estimation of production structures. As an application a translog cost function for three energy inputs is estimated from cross-sections of individual Indonesian firms.

Does Micro-Credit Empower Women? Evidence from Bangladesh

This paper examines the effects of mens and womens participation in group-based micro-credit programs on a large set of qualitative responses to questions that characterize womens autonomy and gender relations within the household. The data come from a special survey carried out in rural Bangladesh in 1998-99. The results are consistent with the view that womens participation in micro-credit programs helps to increase womens empowerment. Credit program participation leads to women taking a greater role in household decisionmaking, having greater access to financial and economic resources, having greater social networks, having greater bargaining power compared with their husbands, and having greater freedom of mobility. Female credit also tended to increase spousal communication in general about family planning and parenting concerns. The effects of male credit on womens empowerment were, at best, neutral, and at worse, decidedly negative. Male credit had a negative effect on several arenas of womens empowerment, including physical mobility, access to savings and economic resources, and power to manage some household transactions.

Equity, externalities and energy subsidies The case of kerosine in Indonesia☆

Abstract This paper examines two arguments used to justify the subsidy provided kerosine, the primary commercial fuel of Indonesian households. One argument holds that the subsidy reduces deforestation externalities resulting from wood gathering. Econometric analysis of a large cross-section of households finds that firewood/kerosene substitution is very limited in Java, where the deforestation problem is most severe, so that kerosene subsidy is not an effective means of alleviating the problem. The second argument holds that social equity requires the subsidization of ‘basic needs’ such as kerosene. It is found that the kerosene subsidy disproportionately benefits urban and wealthier households.

Risk, Schooling and the Choice of Seed Technology in Developing Countries: A Meta-Profit Function Approach

The determinants of rice seed variety choice are studied in a framework in which cultivators variety-specific profit, risk preferences, uncertainty, and schooling affect variety choice. The econometric model takes the form of a simultaneous equation switching regimes model with random profit functions (the metaprofit functions). Adoption of high-yielding varieties in Indonesia is found to be positively associated with profitability, likelihood of flooding, quality of irrigation conditional on relative profit, and availability of credit, and negatively associated with likelihood of drought and land wealth. Schooling significantly affects variety-specific profit and input demand, but not variety choice. Copyright 1991 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.