The efficient operation and expansion of infrastructures in developing countries is crucial for growth and poverty reduction. However, recent reforms aimed at improving the performance of these sectors have had limited success. Evidence suggests that, in many instances, this was because the traditional regulatory theory relied on by policymakers was not suitable for the institutional context in developing countries. This article surveys more recent theoretical work focusing on problems with regulation in these countries. At the heart of the survey is the work of Jean-Jacques Laffont, who, in the last decade of his life, set about developing a theoretical framework for regulation in developing countries. We consider the implications of his work, which focused on the key institutional limitations faced in developing countries. We then discuss where experience suggests that there are important omissions from this modeling, bringing in extensions and alternative approaches pursued by other authors. We conclude by summarizing the key ways in which regulatory policy will be different when institutions are weak. Overall, we find that an understanding of the institutional context and its implications are crucial when designing a regulatory framework for developing countries.

We analyse income inequality in the UK from 1978 to 2009 in order to understand why income inequality rose very rapidly from 1978 to 1991 but then remained broadly unchanged. We find that inequality in earnings among employees has risen fairly steadily since 1978, but other factors that caused income inequality to rise before 1991 have since gone into reverse. Inequality in investment and pension income has fallen since 1991, as has inequality between those with and without employment. Furthermore, certain household types -notably the elderly and those with young children -which had relatively low incomes in the period to 1991 have seen their incomes converge with others.

This article develops a theoretical framework to analyze options for financing infrastructure in developing countries. We build a basic model that gives motivations for using a combination of public finance, private debt and private equity. The model is then extended in a number of ways to examine a variety of factors that are important for developing countries when considering financing choices. We focus in particular on key institutional weaknesses that are often important for infrastructure investment. Overall, we show that such weaknesses can be key in determining financing choices, but that they do not all push in the same direction. Financing schemes must therefore be adapted to consider the institutional limitations that are most pertinent in any given context. JEL classifications: G32, G38, H54, O16

More than Just Friends? School Peers and Adult Interracial Relationships * This paper investigates the impact of individuals' school peers on their adult romantic relationships. In particular, we consider the effect of quasi-random variation in the share of black students within an individual's cohort on the percentage of adults' cohabiting partners that are black. We find that more black peers leads to more relationships with blacks later in life. The results are similar whether relationships begun near or far from school, suggesting that the racial mix of schools has an important and persistent impact on racial attitudes.

The corpus of research on developing countries of the last five to ten years shows that the design of regulatory systems has to address many goals under very tight institutional capacity constraints. These goals range from standard economic concerns such as efficiency, equity, or fiscal sustainability when the networks rely heavily on subsidies to more political concerns including notably the need to ensure more accountability of the providers of the services. This article provides a brief overview of the ownership structure and organisation of regulation in developing countries. It identifies the four key institutional limitations that are found in developing countries: capacity, commitment, accountability, and fiscal efficiency. Furthermore, this article discusses their implications and the regulatory policy options available to address them. It shows some of the trade-offs and inconsistencies due to conflicts in the optimal strategy to deal with different problems. Finally, it summarises the relevant empirical results.