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ObjectiveThis study examines the effects of household shocks on access to healthcare services in Kenya. Shocks are adverse events that lead to loss of household income and/or assets.Design and settingThe study used data from the Kenya Integrated Household Budget Survey 2015/2016, a nationally representative cross-sectional survey. A propensity score matching approach was applied for the analysis.ParticipantsThe study sample included 16 297 individuals from households that had experienced shocks (intervention) and those that had not experienced shocks (control) within the last 12 months preceding the survey.Outcome measuresThe outcome of interest was access to healthcare services based on an individual’s perceived need for health intervention.ResultsThe results indicate that shocks reduce access to healthcare services when household members are confronted with an illness. We observed that multiple shocks in a household exacerbate the risk of not accessing healthcare services. Asset shocks had a significant negative effect on access to healthcare services, whereas the effect of income shocks was not statistically significant. This is presumably due to the smoothing out of income shocks through the sale of assets or borrowing. However, considering the time when the shock occurred, we observed mixed results that varied according to the type of shock.ConclusionsThe findings suggest that shocks can limit the capacity of households to invest in healthcare services, emphasising their vulnerability to risks and inability to cope with the consequences. These results provoke a debate on the causal pathway of household economic shocks and health-seeking behaviour. The results suggest a need for social protection programmes to integrate mechanisms that enable households to build resilience to shocks. A more viable approach would be to expedite universal health insurance to cushion households from forgoing needed healthcare when confronted with unanticipated risks.

This paper reviews preliminary findings from the emerging microeconomic literature on observed changes in food insecurity associated with the COVID-19 pandemic. The review complements existing macroeconomic projections of food insecurity, based on expected changes in income and prices, by providing discussions of local-level, microeconomic differences in food insecurity in low- and middle-income countries.

The permanent income hypothesis states that agents perfectly smooth consumption given a large, anticipated shock to income. Testing these implications is difficult given the endogenous nature of income and payment timing. We leverage exogenous variation in military bonus size and timing matched with donations from a large workplace charitable drive where soldiers contribute via payroll deductions during a fixed open enrollment period. Our findings suggest that soldiers are 5 to 10 percent more likely to contribute if they receive their bonus during the open enrollment period. We show that soldiers smooth donations more with age and increased bonus experience.

The goal of this paper is to analyze the connections Hungarian income and wealth distribution on the one hand, and the macroeconomics impacts of the global financial crisis of 2007-2008 on the other hand. To do this, I build a heterogenous agent, dynamic, general equilibrium model, which I calibrate using Hungarian income distribution data before the crisis. The model is then used to study both the impact of the financial crisis on income and wealth inequality, and the role of income and wealth inequality in the macroeconomic developments after the crisis. Results indicate that (i) the long-run capital stock rises, and the interest rate falls, but the effect is quantitatively small; (ii) the long-run income and wealth distributions only change moderately; and (iii) the short-run consumption response of low-wealth household is very strong, and drives a sizable aggregate consumption drop as well.

I estimate the effect of lottery winnings on peers' debt accumulation using administrative data from Norway. I identify neighbors of lottery winners, and estimate an average debt response of 2.1 percent of the lottery prize among households that live up to ten houses from the winner. Analyzing heterogeneity, I find that neighborhood characteristics and shared characteristics with the winner matter for the debt response: there is a tendency for greater effects for those (1) residing closest to the winner, (2) residing in single-household dwellings, (3) with a longer tenure, and (4) with a household structure similar to that of the winner. Finally, estimates of the (imputed) expenditure response among neighbors indicate that they accumulate debt to finance increased spending, consistent with a "keeping-up-with-the Joneses" type explanation, where neighbors react to each others expenditure.

Globally, 21 percent of young women are married before their 18th birthday. Despite some progress in addressing child marriage, it remains a widespread practice, in particular in South Asia. While household predictors of child marriage have been studied extensively in the literature, the evidence base on macro-economic factors contributing to child marriage and models that predict where child marriage cases are most likely to occur remains limited. In this paper we aim to fill this gap and explore region-level indicators to predict the persistence of child marriage in four countries in South Asia, namely Bangladesh, India, Nepal and Pakistan. We apply machine learning techniques to child marriage data and develop a prediction model that relies largely on regional and local inputs such as droughts, floods, population growth and nightlight data to model the incidence of child marriages. We find that our gradient boosting model is able to identify a large proportion of the true child marriage cases and correctlyclassifies 78% of the true marriage cases, with a higher accuracy in Bangladesh (90% of the cases) and a lower accuracy in Nepal (71% of cases). In addition, all countries contain in their top 10 variables for classification nighttime light growth, a shock index of drought over the previous and the last two years and the regional level of education, suggesting that income shocks, the regional economic activity and regional education levels play a significant role inpredicting child marriage. Given the accuracy of the model to predict child marriage, our model is a valuable tool to support policy design in countries where household-level data remains limited.

We explore the effects of persistent income shocks on human capital using oil price fluctuations in a large sample of relevant African countries and employing micro data from multiple waves of the Demographic and Health Survey (DHS). Theoretically, such shocks enable human capital investment via the standard income effect; but also crowd it out because of substitutability between natural resource and human capital income sources - so the net outcome can go either way. Our model suggests that the relative strength of the two effects depends on the age at which the shock is experienced and the affected gender. Consistent with these insights, we find that income shocks in early life enhance educational attainment and other derived outcomes; but reduce them if experienced in adolescence, especially for females. These results survive multiple robustness checks, and their broader implications are discussed.

Globally, 21 percent of young women are married before their 18th birthday. Despite some progress in addressing child marriage, it remains a widespread practice, in particular in South Asia. While household predictors of child marriage have been studied extensively in the literature, the evidence base on macro-economic factors contributing to child marriage and models that predict where child marriage cases are most likely to occur remains limited. In this paper we aim to fill this gap and explore region-level indicators to predict the persistence of child marriage in four countries in South Asia, namely Bangladesh, India, Nepal and Pakistan. We apply machine learning techniques to child marriage data and develop a prediction model that relies largely on regional and local inputs such as droughts, floods, population growth and nightlight data to model the incidence of child marriages. We find that our gradient boosting model is able to identify a large proportion of the true child marriage cases and correctly classifies 78% of the true marriage cases, with a higher accuracy in Bangladesh (90% of the cases) and a lower accuracy in Nepal (71% of cases). In addition, all countries contain in their top 10 variables for classification nighttime light growth, a shock index of drought over the previous and the last two years and the regional level of education, suggesting that income shocks, the regional economic activity and regional education levels play a significant role in predicting child marriage. Given the accuracy of the model to predict child marriage, our model is a valuable tool to support policy design in countries where household-level data remains limited.

This dissertation concerns various types of economic shocks and the implications of such shocks on the decisions of households. There has been a long history in the theoretical economics literature of modeling agents as forward-looking and thus in making their life-cycle decisions they will have accounted for the paths they expect their income, wealth, or economic opportunities to take. Therefore, these chapters will focus on households' responses to unexpected changes in economic factors. The two types of economic shocks to be explored are income shocks, a shock that will affect only one spouse, and house price shocks, a shock that affects both spouses. Particular care is given to trying to identify exogenous and unexpected changes in income or wealth for the households. The asymmetric responses to financial gains versus losses are explored for each type of shock.Throughout the analyses are conducted using longitudinal data on individuals or households. These data allow for observations of the sample household through a long portion of its life cycle and through changes in their economic situation. In the first chapter, I explore the effects of unpredicted changes in permanent income of each spouse on the probability of divorce for the couple. I find that if the husband experiences a negative income shock, the probability of divorce increases. If the wife experiences a negative income shock, this effect on divorce is only true if she had a switch into unemployment. In Chapter 2, I continue the analysis of economic shocks on probability of divorce by looking at responses to local house price shocks. These local housing prices give us changes in wealth for the households that are exogenous to many of the other decisions an individual household makes. In response to a positive house price shock, the risk of divorce decreases for couples. Finally in the third chapter, I analyze the effect of housing prices on another household behavior: labor supply choices. Married female homeowners are less likely to be employed following a positive house price shock in their metropolitan area. Conversely, older married male homeowners are more likely to be employed when there are negative house price shocks in their area.

In this paper, we investigate the link between intra-household resource allocation and familial ties between household members. We show that, within the same geographic, economic and social environments, households where members have "stronger" familial ties (e.g. a nuclear family household) achieve near Pareto efficient allocation of productive resources and Pareto efficient allocation of consumption while households with "weaker" familial ties (e.g. an extended family household) do not. We propose a theoretical model of the household based on the idea that altruism between household members vary with familial ties which generates predictions consistent with the observed empirical patterns.

This dissertation examines how revenue shocks in Brazilian municipalities affect the mental health of their population. We exploit a plausible exogeneity regarding oil royalties distribution to establish a causal relationship between resource windfalls and the number of occurrences of mental illness. Using within municipality variation in oil revenues, we find that receiving more oil royalties reduces both hospitalizations due to cirrhosis and ambulatory procedures related to mental health. Our results are robust to a series of exercises. Our findings suggest that one possible explanation for this is that royalties have a positive impact on local economic outcomes which is consistent with findings from the literature. Esta dissertação examina como os choques de receita nos municípios brasileiros afetam a saúde mental de sua população. Exploramos uma possível exogeneidade em relação à distribuição de royalties de petróleo para estabelecer uma relação causal entre ganhos inesperados de recursos e o número de ocorrências de doenças mentais. Usando a variação municipal nas receitas do petróleo, descobrimos que o recebimento de mais royalties reduz as hospitalizações por cirrose e procedimentos ambulatoriais relacionados à saúde mental. Nossos resultados são robustos para uma série de exercícios. Nossas descobertas sugerem que uma possível explicação para isso é que os royalties têm um impacto positivo nos resultados econômicos locais, o que é consistente com as descobertas da literatura.

Este documento estudia la relación entre ingresos familiares y violencia doméstica en un país en desarrollo. Para ello, me enfoco en los municipios de Colombia con altos niveles de producción de café. Utilizando choques negativos en los precios del café como una fuente de variación exógena que afecta los ingresos de hogares cafeteros, encuentro que los municipios con producción intensiva de café experimentan un aumento en los casos de violencia doméstica contra la mujer como consecuencia de un choque negativo en sus ingresos. Para analizar los mecanismos de este choque, estimo diferentes efectos heterogéneos que describen bajo qué situaciones se intensifica el choque. Utilizando datos a nivel individual, encuentro que el efecto se mueve en la misma dirección para el caso de las mujeres rurales que viven en un municipio con producción intensiva de café. Además, encuentro que una mujer que tiene poder de decisión dentro del hogar tiene una menor probabilidad de ser víctima de violencia doméstica cuando su hogar se enfrenta a este tipo de choques. Este último resultado sugiere que el empoderamiento de la mujer es un factor relevante para reducir la violencia dirigida contra las mujeres. This paper studies the relationship between family income and domestic violence in a developing country. To do so, I focus on municipalities of Colombia with high levels of coffee production. Using negative shocks to coffee prices as an exogenous source of variation that impacts coffee-producing household income, I find that municipalities with more intensive coffee production experience an increase in domestic violence against women as a consequence of a negative income shock. In order to test the potential mechanisms, I estimate different heterogeneous effects that depict under which situations the shock intensifies. Using data at the individual level, I find analogous effects of a negative income shock for rural women who live in a municipality marked by intensive coffee production. Also, I find that a woman who has decision-making power within the household has a lower probability of being a victim of domestic violence when her household faced this type of shocks. This last result suggests that female empowerment is a mechanism to reduce violence targeted against women.

This dissertation examines how exogenous changes in income affect the most vulnerable populations in Ecuador: poor children and their mothers. It explores the effects of a negative income shock that is due to the 1998-2000 economic crisis and a positive income shock that is due to the introduction of a cash transfer program, the Bono de Desarrollo Humano. The outcomes examined are those related to early childhood development and to spousal domestic violence. Both improvements in child development and reductions in domestic violence are crucial for breaking the inter-generational transmission of poverty and for achieving the Millennium Development goals.The first chapter of this dissertation investigates the effects of Ecuador's 1998-2000 economic crisis on child health and cognitive development. This crisis was characterized by a drastic increase in prices and the eventual adoption of the dollar as its currency. While many reports show that household consumption decreased and poverty increased, there are no studies on the impact of the crisis on child development. I use data from three and five years after the crisis to investigate whether the Ecuadorian crisis had a negative and persistent impact on children's height and language development. In order to estimate the effect of the crisis on child outcomes I take advantage of the variation in children's exposure to the crisis that is due to birth month and province. Results suggest that one year of exposure to the crisis significantly decreased height-for-age z-scores by .1 SD and vocabulary test scores by 2.4 points. The effect of the crisis, however, was not uniform across households. Particularly, in rural areas children from farming households and those with more access to early childhood nutrition programs were significantly more protected from the crisis. Potential pathways through which the crisis impacted child outcomes are also explored.The second chapter, which is co-authored with Lia Fernald, takes advantage of the randomized roll-out of Ecuador's Bono de Desarrollo Humano (BDH) to examine the effects of an exogenous increase in income on the health and development outcomes of very young children. Families enrolled in the BDH received a monthly cash stipend ($15 USD) representing an approximate 6-10% increase in household income. Participants analyzed in this study are children 12-35 months old from treatment and comparison communities in rural and urban Ecuador. Main outcomes measured are language skills (the Fundación MacArthur Inventorio del Desarollo de Habilidades Comunicativas - Breve), height-for-age z-score, and hemoglobin concentration. Results indicate that in rural areas, being randomized to receive the BDH in very early childhood led to significantly better performance on the number of words a child was saying, and on the probability that the child was combining two or more words. There were no significant effects on language development for children in urban areas and there were no effects on height-for-age z-score or hemoglobin concentration in rural or urban areas. A limited number of potential pathways with respect to cognitive/language stimulation, health behaviors, and parenting quality are also explored. Findings indicate that compared to children in comparison areas, rural children in treatment areas were more likely to have received vitamin A or iron supplementation and have been bought a toy in the past six months. The third chapter, which is co-authored with Lia Fernald, also takes advantage of the randomized roll-out of the Bono de Desarrollo Humano to investigate how an exogenous increase in a mother's income impacts spousal domestic violence. We use existing household bargaining models to predict when a cash transfer will lead to an increase in domestic violence and when it will lead to a decrease. Consistent with predictions, results reveal that for more educated women who had more credible outside-of-marriage options, the BDH decreased psychological violence. However, for less educated women who did not have credible outside options, the effect of the cash transfer was ambiguous and depended on whether the husband or partner had more education than his wife or partner. In particular, for less educated women the cash transfer decreased psychological violence in households where the husband or partner had more education than his wife or partner, and it increased psychological violence in households where the opposite was true. Although the BDH led to significant changes in psychological violence, it did not lead to corresponding changes in physical violence.

In this paper, we explore the impact of current household repayment capacity on mortgage default using household-level panel data over the period 2004-2017 for Ireland. We measure repayment capacity as changes in the level of the current debtservice to income ratio to capture a direct channel for affordability shocks. We model the relationship between repayment capacity and default using a discrete time logit survival model of default flows. We test for a non-linear relationship to explore whether negative and positive shocks have asymmetric effects and whether shocks depend on household absorptive capacity. We also test the differing impacts of repayment shocks in crisis and non-crisis times and whether any differences are explained by negative equity or liquidity constraints. A number of endings emerge. We find that deteriorations in current debt service capacity have a positive and increasing effect on default which is dependent on the level of indebtedness or absorptive capacity. We find that the relationship between deteriorations in the repayment capacity and default are worsened in crisis times and we show that this is due to the presence of negative equity and liquidity constraints in these periods.

We explore the effects of persistent income shocks on human capital using oil price fluctuations in a large sample of relevant African countries and employing micro data from multiple waves of the Demographic and Health Survey (DHS). Theoretically, such shocks enable human capital investment via the standard income effect; but also crowd it out because of substitutability between natural resource and human capital income sources - so the net outcome can go either way. Our model also suggests that the relative strength of the two effects depends on the age at which the shock is experienced and the affected gender. Consistent with these insights, we find that income shocks in early life enhance educational attainment and other derived outcomes; but reduce them if experienced in adolescence, especially for females. These results survive multiple robustness checks, and their broader implications are discussed.

In early April 2020 we conducted a survey on a representative sample of more than 8,000 US households to study the effect of the coronavirus crisis on household income and retirement wealth, households' expectations about the recovery, and the impact of the shock on individuals' economic choices. Wealth shocks are large across the population, but more pronounced for middle-age households and those higher in the wealth and income distributions. This contrasts with income shocks, which are stronger for younger households and those in lower income and wealth quintiles. Expectations about household spending are affected by income shocks, but not by financial wealth shocks. Both wealth and income shocks are associated with upward adjustments in expectations about household debt, desired working hours, and retirement age. Finally, respondents expect the recovery of the stock market to occur more quickly than for previous stock market crashes and beliefs on the duration are strongly correlated with expectations about own wealth, debt, and labor market activity.

This paper disentangles the ethnic drivers of the effect of food-related income shocks on African conflict employing geo-localized information. We consider diversity and political ethnic variables and several conflict definitions. We find that differentiating between organized armed-force and non-organized conflict can be more informative than between factor and output conflict. We show evidence that conflict is driven by the opportunity cost and state capacity mechanisms. Furthermore, ethnic cleavages have a large role in the transmission process of income shocks on organized armed-force conflict; whereas their role in non-organized violence is more limited. The sensitivity to ethnic heterogeneity for producer-price and droughts shocks is much larger than for consumer-price changes. Financial support from the Spanish Ministry of Economy and Competitiveness (Projects PGC2018-093542-B-I00 and PID2019-111208GB-I00) is gratefully acknowledged.

O trabalho aplica um modelo de equilíbrio geralvsobre os dados brasileiros afim de ver a relação entre choques na renda do Brasil, spread da taxa de juros e a formação de preços de títulos de dívida externa entre 1995-2017. O modelo simulado entrega as mesmas regularidades do ciclo econômico do Brasil e de países emergentes: volatilidade de consumo maior do que o produto, taxa de juros contracíclica e balança comercial contra cíclica. A solução do modelo sugere que a rigidez nos termos dos contratos disponíveis para o Brasil vem diminuindo e permitindo diminuir os descontos e os juros pagos pelos títulos, tornando assim a economia brasileira capaz de suavizar choques idiossincráticos de diferentes magnitudes. Os dados empíricos dos títulos de dívida externa brasileiro emitidos entre 1995 e 2018 mostram uma redução nos nas taxas de juros negociadas e aumento no preço par dos títulos. The paper applies a general equilibrium model on the Brazilian data in order to see the relation between shocks in Brazilian income, interest rate spread and the formation of prices of external debt securities between 1995 and 2017. The simulated model delivers the same regularities of the economic cycle of Brazil and emerging countries: consumption volatility greater than output, countercyclical interest rate and trade balance against cyclical. The solution of the model suggests that the rigidity in terms of the contracts available to Brazil has been decreasing and allowing to reduce the discounts and interest paid by the bonds, thus making the Brazilian economy able to soften idiosyncratic shocks of different magnitudes. The empirical data of the Brazilian external debt securities issued between 1995 and 2018 show a reduction in the interest rates negotiated and an increase in the par value of the securities.

This paper investigates how different income shocks shape consumption dynamics over the business cycle. First, we break new ground by creating a unique, panel dataset of transitory and permanent income shocks, using subjective income expectations from the Dutch Household Survey. Second, we evaluate whether these observed income shocks help to explain contractions in aggregate consumption over the two most recent crises. We find that the income shocks experienced during the 2008-2009 Global Financial Crisis are of a different nature than the shocks experienced during the 2011-2012 Sovereign Debt Crisis, with the 2011-2012 shocks being perceived as more permanent. This helps explain why consumption falls less during the Global Financial Crisis, despite the fact that income declines more than during the Sovereign Debt Crisis.

This paper studies how aggregate economic conditions affect marriage markets in developing countries where marriage is regulated by traditional customary norms. We examine how local economic shocks influence the timing of marriage, and particularly child marriage, in Sub-Saharan Africa and in India, where substantial monetary or in-kind transfers occur with marriage: bride price across Sub-Saharan Africa and dowry in India. In a simple equilibrium model of the marriage market in which parents choose when their children marry, income shocks affect the age of marriage because marriage payments are a source of consumption smoothing, particularly for a woman's family. As predicted by our model, we show that droughts, which reduce annual crop yields by 10 to 15%, have opposite effects on the marriage behavior of a sample of 400,000 women in the two regions: in Sub-Saharan Africa, they increase the annual hazard into child marriage by 3%, while in India droughts reduce such a hazard by 4%. Changes in the age of marriage due to droughts are associated with changes in fertility, especially in Sub-Saharan Africa, and with declines in observed marriage payments. Our results indicate that the age of marriage responds to short-term changes in aggregate economic conditions and that traditional norms determine this response. This suggests that, in order to design successful policies to combat child marriage and improve investments in daughters' human capital, it is crucial to understand the economic role of traditional cultural norms.

V diplomskem seminarju predstavimo dejavnike potrošnje gospodinjstev v Italiji, Nemčiji in Veliki Britaniji. Opredelili smo gospodinjstvo, dohodek, potrošnjo in časovno uvrstili ter predstavili nekatere najbolj popularne potrošne funkcije. Razumevanje potrošnje smo nadgradili z izbranimi hipotezami vedenjske ekonomije, ki za razliko od standardnih potrošnih funkcij zavračajo predpostavko o racionalnem potrošniku. Za izbrane države, tj. Italijo, Nemčijo in Veliko Britanijo, predstavimo gibanje potrošnje in dohodka ter opredelimo rezultate izbranih empiričnih študij o dejavnikih potrošnje. Kot prvi dejavnik potrošnje analiziramo učinke premoženja na potrošnjo, osredotočimo se predvsem na učinke sprememb na potrošnjo iz naslova premoženja nepremičnin in finančnega premoženja. Kot drugi dejavnik potrošnje predstavimo odzive gospodinjstev na dohodkovne spremembe. Glede na predpostavke hipoteze permanentnega dohodka naj bi bili odzivi na dohodkovne spremembe homogeni, vendar na podlagi izbranih empiričnih raziskav ugotavljamo, da so odzivi gospodinjstev na dohodkovne spremembe heterogeni. In our diploma thesis we present factors of household consumption in Italy, Germany and Great Britain. We defined the term household, income, consumption and portrayed some of the most popular consumption functions from a historic viewpoint. We updated our understanding of consumption with several hypothesis reviews of behavioural economics. Behavioural economics serves as a counterpart of standard consumption functions with their refusal of a rational consumer. For Italy, Germany and Great Britain, we analyse and introduce household income and consumption from a statistical viewpoint. We also present several empirical studies on determinants of consumption for our selected countries. As the first determinant of consumption, we analyse the effects of wealth on consumption, where we focus primarily on effects arising from property and financial assets. As the second determinant of consumption, we present empirical studies on household responses to income changes in the selected European countries. According to the assumptions of permanent income hypothesis, responses to income changes should be homogenous, but according to our reviewed empirical research and evidence, we find that household responses to income changes are heterogeneous.

How do labor income shocks affect household investment in upper secondary and tertiary schooling? Using longitudinal data from 2005-15 for Argentina, Brazil, and Mexico, this paper explores the effect of a negative household income shock on the enrollment status of youth ages 15 to 25. The findings suggest that negative income shocks significantly increase the likelihood that students in upper secondary and tertiary school exit school in Argentina and Brazil, but not in Mexico. For the three countries, the analysis finds evidence that youth who drop out due to a household income shock have worse employment outcomes than similar youth who exit school without a household income shock. Differences in labor markets and safety net programs likely play an important role in the decision to exit school as well as the employment outcomes of those who exit across these three countries.

South Africa has one of the highest crime rates in the world, incurring high cost for society. The present paper examines the effect of weather shocks on various types of crime. Using a 12-year panel data set at monthly resolution on the police ward level, we demonstrate a short-term effect of warmer temperatures on violent crime and thereby offer support for the heat-aggression link as suggested by psychological research. Furthermore, we find evidence for a mid-term effect of weather on crime via agricultural income, which is in line with the economic theory of crime. Our findings have direct policy implications for the design of crime prevention strategies, in which weather forecasts could play an important role.

How do income shocks affect armed conflict? Theory suggests two opposite effects. If labour is used to appropriate resources violently, higher wages may lower conflict by reducing labour supplied to appropriation. This is the opportunity cost effect. Alternatively, a rise in contestable income may increase violence by raising gains from appropriation. This is the rapacity effect. Our article exploits exogenous price shocks in international commodity markets and a rich dataset on civil war in Colombia to assess how different income shocks affect conflict.We examine changes in the price of agricultural goods (which are labour intensive) as well as natural resources (which are not).We focus on Colombia's two largest exports, coffee and oil. We find that a sharp fall in coffee prices during the 1990s lowered wages and increased violence differentially in municipalities cultivating more coffee. This is consistent with the coffee shock inducing an opportunity cost effect. In contrast, a rise in oil prices increased both municipal revenue and violence differentially in the oil region. This is consistent with the oil shock inducing a rapacity effect.We also show that this pattern holds in six other agricultural and natural resource sectors, providing evidence that price shocks affect conflict in different directions depending on the type of the commodity. © The Author 2013. Published by Oxford University Press on behalf of The Review of Economic Studies Limited.

Drawing upon data from Ethiopia, we highlight the relationship between investments in child schooling and key factors related to household characteristics, supply and quality of schooling, and income shocks. The unique contribution of this study stems from our examination of the effect of adverse income shocks on gender-differentiated child schooling outcomes. While there are several empirical studies that test the degree to which households are able to smooth consumption in response to a covariate shock, only few studies probe the gender-differentiated impacts of those shocks within the household. We find a strong bias against investments in female education in rural Ethiopia. Controlling for key supply and demand side factors such as household income, parental education, distance to and quality of schools, girls who reside in rural areas are almost 12 percent less likely to be enrolled in primary school compared to boys. Furthermore, while an adverse weather-induced crop shock has no discernable impact on the schooling of boys, the same adverse shock has a deleterious impact on both the probability of enrollment and completion of schooling for girls. Besides the impact of adverse income shocks on child schooling, we find that investment in child schooling is significantly influenced by positive education externalities with the household and community, availability and distance to schools, and quality of school infrastructure.

The relationship between violence and chronic poverty has been studied mostly in the context of war or long-term episodes of conflict. In contrast to previous studies, this paper explores whether violence that does not include the shattering of infrastructure impacts the chance that poverty may remain chronic. A long-run perspective is gained by analyzing unique, recently gathered panel data at the municipality level in the Mexican context, covering the period from 1990 to 2010. Violence is measured as the number of non-drug-related homicides per 100,000 inhabitants. A municipality is classified as chronically poor if the percentage of people in food poverty remains above the national average during two consecutive periods. Econometric analysis is carried out through discrete choice models. Putting the results in context, consider of a chronically poor municipality in 2005 in which average household income is below the 25th percentile in 2000. If this municipality had a 10.47 non-drug-related homicide rate, the 75th percentile in 2000, its chance of remaining chronically poor into 2005 was almost double the corresponding chance of a municipality with the same mean household income but at the national median of violence in 2000 (zero non-drug-related homicides).

This paper examines the short-term impacts of a labor-intensive public works program on household welfare and economic prospects. Using a community-level randomized control trial approach, the paper finds that the public works program targeted at youth in Sierra Leone successfully provided temporary employment to youth characterized by low educational attainment. Cash income among program participants increased by nearly three times relative to the control counterparts, and treatment households experienced a 29 percent rise in monthly income. There is also evidence of significant re-optimization of household labor allocation and expenditure in response to program participation. First, there is an overall crowding-in of labor force participation by household members beyond program participation. Second, the extra income is spent partly to improve the quality of life and partly to secure future earnings. The treated households raised spending on food, medicines, and assets. They also expanded utilization of health services. Meanwhile, the consumption of temptation goods was greater, albeit by a small amount, and the rate of absenteeism among students was higher. To secure future earnings, the treated households set up new businesses: they were nearly four times more likely than the control households to set up new household enterprises. They also boosted their participation in informal savings groups and their investments in their homes and existing businesses. These results demonstrate that public works interventions have considerable potential as productive safety nets in post-conflict settings such as Sierra Leone. They can provide immediate income support, but also open avenues for investment in the productive capacity of poor households.

This paper studies how the sensitivity of consumption to income has changed over time as the degree of financial integration has risen. In standard theory, greater financial integration facilitates international borrowing and lending, helping to reduce the sensitivity of consumption growth to fluctuations in income. The paper examines the empirical validity of this prediction using an array of indicators of financial integration for a large sample of advanced and developing countries over the period 1960-2011. Two main results are reported. First, the sensitivity of consumption to income has declined over time as the degree of financial integration has risen. The decline has been more pronounced in advanced economies than in developing ones. Second, the regression analysis indicates that a higher degree of financial integration is associated with a lower sensitivity of consumption to income. This finding is robust to the use of a wide range of empirical specifications, country-specific characteristics, and other controls, such as interest rates and outcome-based measures of financial integration. The paper also discusses other potential sources of the temporal changes in the sensitivity of consumption to income.