Decentralizing education resources: school grants in Senegal

September 9, 2015

By: Pedro Carneiro (Institute for Fiscal Studies and cemmap and UCL) ; Oswald Koussihouèdé (Institute for Fiscal Studies) ; Nathalie Lahire (Institute for Fiscal Studies) ; Costas Meghir (Institute for Fiscal Studies and Yale University) ; Corina Mommaerts (Institute for Fiscal Studies)

The impact of school resources on the quality of education in developing countries may depend crucially on whether resources are targeted efficiently. In this paper we use a randomized experiment to analyze the impact of a school grants program in Senegal, which decentralized a portion of the country’s education budget. We find large positive effects on test scores at younger grades that persist at least two years. We show that these effects are concentrated among schools that focused funds on human resources improvements rather than school materials, suggesting that teachers and principals may be a central determinant of school quality.

Keywords: Quality of education; Decentralization; School resources; Child Development; Clustered Randomized Control Trials

JEL: H52 I22 I25 O15



(Mis-)Predicted Subjective Well-Being Following Life Events

September 9, 2015

By: Odermatt, Reto (University of Basel) ; Stutzer, Alois (University of Basel)

The correct prediction of how alternative states of the world affect our lives is a cornerstone of economics. We study how accurate people are in predicting their future well-being when facing major life events. Based on individual panel data, we compare people’s forecast of their life satisfaction in five years’ time to their actual realisations later on. This is done after the individuals experience widowhood, marriage, unemployment or disability. We find systematic prediction errors that are at least partly driven by unforeseen adaptation.

Keywords: adaptation, life satisfaction, life events, projection-bias, subjective well-being, utility prediction, unemployment

JEL: D03 D12 D60 I31


Introducing a Statutory Minimum Wage in Middle and Low Income Countries

September 9, 2015

By: David Margolis (CES – Centre d’économie de la Sorbonne – UP1 – Université Panthéon-Sorbonne – CNRS, EEP-PSE – Ecole d’Économie de Paris – Paris School of Economics, IZA – Institute for the Study of Labor, IZA – Forschungsinstitut zur Zukunft der Arbeit (Institute for the Study of Labor) – Bonn Universität – University of Bonn)

The motivation for introducing statutory minimum wages in many developing countries is often threefold: poverty-reduction, social justice and growth. How well the policy succeeds in attaining these goals will depend on the national context and the numerous choices made when designing the policy. Institutional capacity in developing countries tends to be limited, so institutional arrangements must be adapted. Nevertheless, a statutory minimum wage appears to have the potential to help low- and middle-income countries advance toward the aforementioned development objectives, even in the face of weak enforcement capacity and pervasive informality.