The arrival of global retail chains in developing countries is causing a radical transformation in the way that households source their consumption. This paper draws on a new collection of Mexican microdata to estimate the effect of foreign supermarket entry on household welfare. The richness of the microdata allows us to estimate a general expression for the gains from retail FDI, and to decompose these gains into several distinct channels. We find that foreign retail entry causes large and significant welfare gains for the average household that are mainly driven by a reduction in the cost of living. About one quarter of this price index effect is due to pro-competitive effects on the prices charged by domestic stores, with the remaining three quarters due to the direct consumer gains from shopping at the new foreign stores. We find little evidence of significant changes in average municipality-level incomes or employment. We do, however, find evidence of store exit, adverse effects on domestic store profits and reductions in the incomes of traditional retail sector workers. Finally, we show that the gains from retail FDI are on average positive for all income groups but regressive, and quantify the opposing forces that underlie this finding.
Well-defined and secure property rights over land have long been recognized as essential for economic development (Demsetz 1967;North and Thomas 1973;De Soto 2000). There are, however, different ways in which these rights can be established. Contrary to the norm in developed countries where rights are established by land titles, in many developing countries they are established by contingent use of the land. In this case, security of access requires evidence of productive use by the occupant himself, with the implication that leaving the land idle or letting it to others creates a substantial risk of loss of rights. This can be inefficient for two reasons. First, it imposes conditions on the amount of labor used on the land by requiring that it be kept in production at an accepted standard of use, ignoring the return to labor in alternative activities. Second, the common prohibition to land transactions prevents land from being reallocated from less productive to more productive users. With a focus on increasing the efficiency of land use, land certification and titling programs that remove constraints on land use and allow land transactions have been widely sponsored by national governments and international development agencies (Heath 1990).
We investigate the relationship between the opening of a city's subway network and its air quality. We find that particulate concentrations drop by 4% in a 10km radius disk surrounding a city center following a subway system opening. The effect is larger near the city center and persists over the longest time horizon that we can measure with our data, about eight years. We estimate that a new subway system provides an external mortality benefit of about $594m per year. Although available subway capital cost estimates are crude, the estimated external mortality effects represent a significant fraction of construction costs.
This study argues that economic vulnerability causes citizens to participate in clientelism, a phenomenon with various pernicious consequences. We employ a randomized control trial that reduced household vulnerability through a development intervention: constructing residential water cisterns in drought-prone areas of Brazil. This intervention significantly decreased requests for private goods from politicians, especially among citizens likely to be in clientelist relationships. We also link program beneficiaries to electronic voting machines, and show the intervention decreased votes for incumbent mayors, who typically have more resources for clientelism. Findings are observed not only during the election campaign, but also a full year later.
We investigate the relationship between the extent of a city's subway network, its population and its spatial configuration. For the 632 largest cities in the world we construct panel data describing population, measures of centralization calculated from lights at night data, and the extent of each of the 138 subway systems in these cities. These data indicate that large cities are more likely to have subways but that subways have an economically insignificant effect on urban population growth. Our data also indicate that subways cause cities to decentralize, although the effect is smaller than previously documented effects of highways on decentralization. For a subset of subway cities we observe panel data describing subway and bus ridership. For those cities we find that a 10% increase in subway extent causes about a 6% increase in subway ridership and has no effect on bus ridership.
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