Poverty, Occupational Choice and Social Networks: Essays in Development Economics

This thesis contains three independent chapters that are aimed towards contributing to our understanding of three questions in the literature on poverty, occupational choice, and social networks. The first chapter asks whether labour contracts in a rural economy play a significant role in ensuring workers against risks and if the outside options of workers determine the extent to which their labour contracts are interlinked with their insurance arrangements. As such, it provides evidence on a well-established idea in the study of rural labour markets—that of labour tying—by showing that it is an important channel through which the poor workers smooth their income and that an exogenous improvement in their outside options induces them to exit labour-tying and switch to alternative channels of informal insurance. The second chapter provides evidence on whether a transfer of capital and skills enable the poor to permanently exit poverty by entering into higher return occupations. It shows that such a transfer not only transforms the occupational choices of the targeted poor, but has significant general equilibrium effects on the local markets, and corresponding spillover effects on non-targeted households. The third chapter provides evidence on the question “do formal transfers crowd out informal transfers”, exploiting the randomized roll-out of a large scale asset transfer and training program to test for its effects on the informal transfer arrangements of the poor. It shows that the informal transfers to the poor are crowded out by the program, but this effect is highly heterogeneous depending on the location of the sender and the vulnerability of the targeted poor.

Author: Gulesci, Selim
Type: Report
Year: 2011