This week we featured research on entrepreneurs, mental health, inflation and more!
This week on Ideas in Development, we were joined by Kecia Rust to discuss the full housing chain in Africa – from land and finance to construction and rental markets – and what it would take for African cities to absorb nearly a billion new residents over the next quarter century.
And on VoxDevTalks, Monica Lambon-Quayefio discussed research into digital credit for smallholder cocoa farmers in Ghana. Drawing on a randomised controlled trial conducted in partnership with the social enterprise Farmerline, the conversation explores why farmers struggle to access formal credit, how a digitised lending model sought to address this, and what the results reveal about the limits and promise of agricultural fintech.
Central banks can lose credibility quickly when policy decisions are seen as politically driven. Evidence from Brazil shows that even a single ungrounded policy shift can unanchor inflation expectations and deteriorate inflation dynamics. Marco Bonomo, Carlos Carvalho, Stefano Eusepi, Marina Perrupato, Daniel Abib, João Ayres, and Silvia Matos discuss.
Loren Brandt, Ruochen Dai, Gueorgui Kambourov, Kjetil Storesletten, and Xiaobo Zhang examine serial entrepreneurship in China, using data covering the universe of Chinese firms from 1995 to 2015. They document that serial entrepreneurs are a quantitatively important part of the economy, representing about one-third of all firms and hold nearly half of all registered capital. Their performance, however, reveals a more complicated picture than previous research has suggested.
Relatively little is known about the channels through which poor mental health reduces labour participation and income – or whether it is driven by low job take-up, poor performance on the job, or higher quit rates. To better understand how mental health conditions relate to these important outcomes, Leandro Carvalho, Damien de Walque, Crick Lund, Heather Schofield, Vincent Somville, and Jingyao Wei examine the relationship between mental health and labour market outcomes in Ghana. They find that poor mental health is strongly associated with a reduced willingness to take up this attractive work opportunity. However, this strong association between depression and anxiety and the willingness to work is only present for work offered outside of the home.
Yuzuru Kumon addresses why pre-industrial Japan was so poor up to 1880. Despite being a highly sophisticated society and among the first non-Western countries to industrialise, it ranked among the poorest countries in the world by measures of unskilled male wages. He shows that the unusually equal distribution of landownership paradoxically led it to become one of the poorest economies in history. These findings can also explain why much of East Asia had become poor and already diverged from Western Europe by 1800.
In low-income settings, poverty and mental health are often locked in a vicious cycle. Armed conflict can intensify this cycle: violence and displacement amplify trauma. In Ethiopia, Melissa Hidrobo, Harold Alderman, Negussie Deyessa, Daniel O. Gilligan, Parthu Kalva, Jessica Leight, Michael Mulford, and Heleene Tambet investigate whether combining psychological support with economic assistance can break this cycle, and how the effectiveness of these interventions shifts in a context of conflict.
In Mexico, Pamela Bombarda and Maria Bas test the relationship between input-trade liberalisation and the reallocation of workers from informal to formal firms. Workers in industries that experienced the largest input-tariff reductions were significantly more likely to transition to formal employment. This effect is particularly pronounced for high-skilled workers. These findings confirm that the complementarity between foreign inputs and skilled labour is a key channel driving the reallocation of workers from informal to formal jobs.
And yesterday we reposted the first article from In Development, in which Paul Niehaus tells the story of co-founding, and growing, GiveDirectly, and the role that evidence played.
Elsewhere in development:
- On AI, Paul Goldsmith-Pinkham on writing and thinking with AI, Rob Wiblin on how scary is Claude Mythos, and Alex Imas on AI, the economics of structural change and the post-commodity future of work.
- Two cool jobs: Our World in Data is hiring a writer, and Coefficient Giving is hiring a Managing Director, Philanthropic Advisory.
- Dean Yang is the first President of the new International Development Economics Association.
- Vishnu Venugopalan on Designing Industrial Policy for Development.
- On The CGD Podcast: What Does the Iran War Mean for Low- and Middle-Income Countries? With Liliana Rojas-Suarez and Catherine Pattillo
- And Pranab Bardhan's conversation on East Asian History with Chinese economic historian, Debin Ma.