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Un amigo nuestro del mundo de las altas finanzas siempre dice que los
pobres son como gestores de hedge funds o fondos de alto riesgo,
porque viven con cantidades enormes de riesgo. La única diferencia se
encuentra en sus niveles de renta. De hecho, nuestro amigo subestima
tremendamente el caso, pues ningún gestor de fondos de alto riesgo es
responsable del cien por cien de sus pérdidas, al contrario de lo que les
ocurre a casi todos los dueños de pequeños negocios y a los pequeños
agricultores. Además, para conseguir todo el capital para sus negocios,
los pobres a menudo tienen que recurrir a la «riqueza» acumulada por
sus familias o a préstamos de algún tipo, circunstancias a las que nunca
se enfrenta la mayoría de los gestores de fondos de alto riesgo.
Una gran proporción de personas pobres son pequeños
comerciantes o agricultores. En nuestra base de datos de dieciocho
países, un promedio del 50 por ciento de los pobres de zonas urbanas
tienen algún negocio no agrícola, mientras que la proporción de los
pobres de zonas rurales que dicen tener un negocio agrícola varía entre
el 25 y el 98 por ciento (la única excepción es Suráfrica, donde la
población negra fue excluida históricamente de la agricultura).
Adicionalmente, una fracción significativa de estos hogares también
lleva un negocio no agrícola. Además, la mayor parte de la tierra que
cultivan los pobres no es de regadío. Esto hace que los ingresos
agrícolas dependan mucho del tiempo, y una sequía, o incluso un
retraso de las lluvias, pueden causar la reducción de la cosecha en las
tierras de secano, con lo que podría esfumarse la mitad de los ingresos
del año.
Los dueños de negocios o de granjas no son los únicos cuyos
ingresos están expuestos al riesgo. Para los pobres, la otra forma de
empleo principal es el trabajo como jornaleros; entre los más pobres de
las zonas rurales, más de la mitad de quienes trabajan lo hacen a cambio
de un jornal diario. En las zonas urbanas la proporción se acerca al 40
por ciento. Cuando los jornaleros tienen suerte, encuentran trabajos
que duran varias semanas, o incluso varios meses, en obras de
construcción o en granjas; pero a menudo el empleo puede ser nada más
que para unos días o para un par de semanas. Nunca saben si tendrán
trabajo cuando acaben el empleo actual. Si la empresa tiene algún
problema, estos oficios son los primeros que desaparecen. Pak Solhin,
presentado en el capítulo segundo, no tardó en perder su puesto de
trabajo cuando el precio de los fertilizantes y del gasóleo subió y las
explotaciones agrícolas recortaron el número de trabajadores. Por eso,
los jornaleros tienden a trabajar menos días al año en comparación con
el resto de trabajadores y muchos de ellos apenas trabajan unos pocos
días al cabo de un año. Una encuesta hecha en Gujarat, en la India,
descubrió que los jornaleros trabajaban un promedio de 254 días al año
(mientras los asalariados trabajaban 354 y los autónomos 338) y que la
tercera parte que menos trabajaba lo hacía solamente 137 días[1].
Las grandes catástrofes atraen por sí solas la atención de los medios
de comunicación. Así ocurrió con la sequía de Bangladesh de 1974
(cuando los ingresos cayeron a la mitad en términos de paridad de
poder de compra y cuando, según algunas estimaciones, murieron hasta
un millón de personas)[2] y con las crisis alimentarias de África o la
sequía de 2005-2006 en Níger. Pero incluso en temporadas normales,
los ingresos agrícolas varían tremendamente de un año a otro. En
Bangladesh, en un año cualquiera considerado normal, los salarios
agrícolas podrían situarse un 18 por ciento por encima o por debajo de
sus niveles medios[3]. Cuanto más pobre es un país, mayor es la
inestabilidad. Por ejemplo, la variabilidad de los ingresos agrícolas en la
India multiplica por 21 la variabilidad de Estados Unidos[4], lo que no
debe sorprendernos, pues los agricultores estadounidenses están
asegurados, reciben subvenciones y se benefician de los programas
habituales de seguridad social; no necesitan despedir a sus trabajadores
o recortar los salarios cuando tienen una mala cosecha.
Como si los caprichos de los elementos no fueran suficientemente
malos, los precios agrícolas fluctúan enormemente. Entre 2005 y 2008
se produjo un incremento sin precedente del precio de los alimentos.
Durante la crisis financiera global se desplomaron, pero durante los
últimos dos años crecieron de nuevo, recuperando los niveles anteriores
a la crisis. En principio, los altos precios de los alimentos deberían
favorecer a los productores (los pobres de las zonas rurales) y
perjudicar a los consumidores (los pobres urbanos). Sin embargo, en el
verano de 2008, un año de récord en los precios tanto de alimentos
como de fertilizantes, todas las personas con las que hablamos en países
como la India e Indonesia pensaban que les estaba tocando la peor
parte: los agricultores pensaban que sus costes habían crecido más que
sus precios; los jornaleros se quejaban al no poder encontrar trabajo
porque los agricultores estaban ahorrando; al mismo tiempo, la gente
que vivía en las ciudades tenía dificultades para pagar la comida. El
problema no solo eran los precios, sino también la incertidumbre. Por
ejemplo, los agricultores, que pagaban precios elevados por los
fertilizantes, no tenían la seguridad de que el precio de sus productos
continuase siendo alto cuando llegara el tiempo de la cosecha.
Para las personas pobres, el riesgo no se limita a los ingresos o a la
comida; la salud, que se ha abordado en un capítulo anterior, es una
fuente fundamental de riesgo. También está la violencia política, la
delincuencia (como en el caso de la hija de Ibu Tina) y la corrupción.
LA COBERTURA
¿Qué pueden hacer las personas pobres para enfrentarse a estos riesgos?
Cuando se sufre una disminución de salarios o de ingresos, una
reacción natural es intentar trabajar más. Sin embargo, puede resultar
autodestructivo. Si todos los jornaleros quieren trabajar más cuando
vienen malos tiempos —por ejemplo, cuando hay una sequía o cuando
sube el precio de otros factores de producción—, compiten entre ellos,
lo que reduce los salarios. El problema se agudiza si no pueden
encontrar trabajo fuera del pueblo. El resultado es que el efecto sobre
los salarios de un mismo tipo de sequía es relativamente más negativo
en los pueblos de la India que se encuentran más aislados, donde es más
difícil para los trabajadores salir a buscar trabajo fuera. En esos lugares,
trabajar más no es necesariamente una forma efectiva de superar una
caída de los ingresos[9].
Cuando trabajar más no es una buena alternativa tras una caída de
ingresos, a menudo la mejor opción es intentar limitar el grado de
exposición al riesgo mediante la creación de una cartera diversificada,
como un gestor de fondos de alto riesgo. Es evidente que los pobres
ponen mucho ingenio en ello, con la única diferencia de que diversifican
actividades en vez de instrumentos financieros. Un hecho llamativo de
los pobres es el gran número de ocupaciones a las que se dedican los
miembros de una misma familia. En una encuesta realizada en
veintisiete pueblos de Bengala Occidental, incluso en los hogares que
decían cultivar un terreno, sus miembros dedicaban solamente el 40 por
ciento de su tiempo a la agricultura[10]. En esta encuesta, la familia tipo
tenía a tres de sus miembros trabajando en siete ocupaciones diferentes.
En términos generales, aunque la mayoría de las familias rurales están
vinculadas a la agricultura, es raro que esta sea su única ocupación.
Puede tratarse de una forma de reducción del riesgo —si una actividad
decae, otras pueden mantenerse—, aunque, como se verá más adelante,
también hay otras razones que explican esta diversificación.
Cultivar diversos terrenos en lugares diferentes del pueblo, en vez
de llevar una única tierra más grande, también permite diversificar algo
el riesgo. Cuando una plaga afecta a una parte del pueblo, es posible que
otras zonas puedan librarse de ella. Cuando falta la lluvia, es más
probable que puedan mantenerse las cosechas de las tierras más
próximas a aguas subterráneas. Resulta más sorprendente aún que zonas
distintas de un mismo pueblo puedan tener microclimas diferentes,
determinados por la pendiente, la altitud y la humedad.
La emigración temporal también puede interpretarse en este mismo
sentido. Es relativamente poco frecuente que una familia entera se
desplace a la ciudad. Lo habitual es que la mayoría se quede cuando
emigran algunos de sus miembros (que en la India y en México son
sobre todo los hombres y los adolescentes, mientras en China, Filipinas
o Tailandia son las hijas mayores). Así se consigue que el futuro de la
familia no dependa solamente del empleo de quien está en la ciudad, y
permite también mantener los contactos que la familia tiene en el
pueblo, lo que a menudo resulta útil, como se verá más adelante.
Otra forma de limitar el riesgo es actuar de forma muy
conservadora en la gestión de sus negocios o de sus tierras. Por
ejemplo, es posible que conozcan la existencia de una nueva variedad de
su cosecha principal, más productiva, pero que decidan no adoptarla.
Una ventaja de continuar con la tecnología tradicional es que a los
agricultores les basta con guardar semillas de la última cosecha para
plantar la siguiente, con lo que no necesitan comprar nuevas, que con
frecuencia significaría mucho dinero. Incluso en el caso de que las
nuevas semillas permitan recuperar con creces la inversión si las cosas
van bien, siempre hay una pequeña probabilidad de que la cosecha
fracase —por ejemplo, si no llegan las lluvias—, con lo que el agricultor
perdería la inversión adicional.
La familia también se utiliza para repartir el riesgo mediante
fórmulas originales. En la India, los hogares agrícolas usan el
matrimonio como forma de diversificar la cartera de riesgos de su
extensa familia. Cuando una mujer se traslada al pueblo de su familia
política, después de la boda, se crea un vínculo entre el hogar del que
procede y el hogar al que se incorpora y cada familia puede recurrir a la
otra en caso de apuro[11]. Los hogares agrícolas tienden a casar a sus
hijas en pueblos que estén lo suficientemente cerca como para que se
mantenga la relación, pero lo suficientemente lejos como para que haya
un patrón climatológico ligeramente diferente. De esta forma, si llueve
en un pueblo pero no en el otro, pueden ayudarse mutuamente. Otra
forma de comprar seguridad es tener muchos hijos. Como se ha visto
anteriormente, Pak Sudarno tuvo nueve hijos para asegurarse de que al
menos uno de ellos se encargaría de cuidarle.
Todas estas formas utilizadas por los pobres para afrontar el riesgo
suelen tener costes elevados. Esto se aprecia especialmente en la
agricultura. En la India, los agricultores pobres utilizan los recursos de
forma más conservadora pero menos eficiente cuando viven en zonas
donde la lluvia es más irregular[12]. Las tasas de beneficio de los
agricultores pobres crecen hasta un 35 por ciento cuando viven en
zonas donde el patrón anual de precipitaciones es muy predecible.
Además, este tipo de riesgo solo afecta a los pobres. Para los
agricultores más ricos no se observa relación alguna entre las tasas de
beneficio y la variabilidad de las precipitaciones, lo que probablemente
se debe a que pueden permitirse perder alguna cosecha y, por
consiguiente, están dispuestos a asumir riesgos.
Otra estrategia adoptada por los agricultores pobres es firmar
contratos de aparcería que establecen que el dueño de la tierra paga una
parte del coste de producción y se atribuye una parte de la cosecha.
Esto limita la exposición al riesgo del agricultor a costa de reducir sus
incentivos; puesto que el dueño se llevará, por ejemplo, la mitad de toda
la producción, el agricultor tiene un estímulo menor para trabajar
intensamente. Un estudio hecho en la India mostró que los agricultores
dedican hasta un 20 por ciento menos de esfuerzo personal a la tierra
explotada en régimen de aparcería que a la de tierras donde tienen
derecho a toda la cosecha[13]. Como consecuencia, estos terrenos se
explotan de forma menos intensiva y menos eficiente.
Tener ocupaciones múltiples, como les ocurre a muchas personas
pobres, también resulta ineficiente. Es difícil llegar a ser especialista en
alguna cosa sin especializarse en ella. Las mujeres que se ocupan de tres
negocios diferentes, al igual que los hombres que no pueden
comprometerse con un puesto fijo en la ciudad porque quieren volver al
pueblo cada cierto número de semanas, no aprovechan la oportunidad
de adquirir habilidades y experiencia en sus ocupaciones principales. Al
dejar pasar estas oportunidades también dejan pasar los beneficios de
especializarse en aquello que realmente se les da bien.
Por tanto, el riesgo que soportan los pobres no les pasa factura
solamente cuando llega un mal momento. El miedo a que pueda ocurrir
algo malo tiene como consecuencia el deterioro de la capacidad de las
personas pobres para desarrollar plenamente su potencial.
Ayudarse mutuamente
POBRES?
Puesto que el coste del riesgo es muy elevado y el seguro que se puede
conseguir a través de canales informales tiene muchas limitaciones, cabe
preguntarse por qué los pobres no acceden más a los seguros oficiales,
es decir, a los ofrecidos por las compañías aseguradoras. Cualquier tipo
de seguro formal es una rareza entre los pobres. Determinados
contratos de seguro que son productos estándar entre los agricultores
de países ricos, como los seguros de salud, los seguros contra el mal
tiempo o contra la muerte del ganado, prácticamente no existen en el
mundo en desarrollo.
Ahora que todo el mundo conoce los microcréditos, los seguros
para los pobres parecen un objetivo evidente, una oportunidad para los
capitalistas creativos llenos de buenas intenciones (un editorial de la
revista Forbes lo llamó «un mercado natural no penetrado»)[18]. Los
pobres se enfrentan a un riesgo enorme y deberían estar dispuestos a
pagar una prima razonable para asegurar sus vidas, su salud, su ganado o
su cosecha. Con miles de millones de pobres a la espera de contratar
seguros, incluso si se obtiene un beneficio minúsculo por cada póliza,
podría generarse ya un gran proyecto empresarial y, a la vez, les serviría
a estos de gran ayuda. Lo único que falta es alguien que organice este
mercado. Por eso, algunas organizaciones internacionales (como el
Banco Mundial) y grandes fundaciones (como la Fundación Gates) han
invertido cientos de millones de dólares para fomentar el desarrollo de
los seguros para los pobres.
Las dificultades obvias que conlleva ofrecer seguros son numerosas
y no afectan solo a los pobres. Se trata de problemas básicos que se
amplifican en los países pobres, donde es más difícil regular a las
aseguradoras y supervisar a los asegurados. Ya se ha mencionado el
«riesgo moral», que implica cambios de conducta en las personas
(como, por ejemplo, cultivar con menos cuidado, gastar más dinero en
sanidad y cosas así) cuando saben que no tendrán que hacerse cargo de
todas las consecuencias. Veamos los problemas que acompañan a la
oferta de seguros sanitarios. Ya se ha dicho que los pobres visitan
habitualmente a diversos especialistas en temas de salud. ¿Qué harán si
las visitas empiezan a ser gratuitas? Y los médicos, ¿no tendrán
tentaciones de pedir pruebas y recetar medicinas innecesarias,
especialmente si tienen también un laboratorio (como ocurre con
frecuencia en Estados Unidos y en la India) o si reciben comisión de la
farmacia? Parece que todo lleva a lo mismo, pues los pacientes quieren
ver acción, por lo que preferirán médicos proclives a recetar, mientras
que estos pueden ganar más dinero si recetan más. En suma, la oferta de
seguros sanitarios basados en reembolsar los gastos de asistencia
ambulatoria en países donde la asistencia médica, en el mejor de los
casos, está regulada deficientemente y donde cualquiera puede
establecer una consulta «médica», parece un primer paso hacia la
quiebra.
Otra cuestión es la «selección adversa». Si el seguro no es
obligatorio, las personas con posibilidades de tener algún problema en
el futuro pueden ser también más propensas a contratarlo; lo que sería
correcto, siempre y cuando la aseguradora también lo supiera, porque
entonces lo podría incluir en el cálculo de la prima. Pero si la
aseguradora no puede identificar a quienes compran el seguro porque
necesitan atención médica en ese momento, solo le queda la opción de
aumentar la prima de todo el mundo. No obstante, elevar el precio
empeora las cosas, pues desanima a quienes saben que probablemente
no necesitarán el seguro y, con ello, se agrava el problema original. Esta
es la misma razón por la que, en Estados Unidos, a quienes no pueden
tener un seguro sanitario a través de su empresa les resulta muy difícil
poder contratarlo a precios razonables. Y es también la causa de que los
programas de seguros sanitarios asequibles suelen ser también
obligatorios, pues si todos deben participar, la aseguradora no se queda
solo con las personas de riesgo alto.
Un tercer problema es el fraude descarado. ¿Qué impide a un
hospital presentarle a la aseguradora facturas falsas o cobrarle al
paciente una cantidad de dinero muy superior al coste del tratamiento?
Y si un ganadero ha contratado un seguro para su búfalo de agua, ¿qué
le impide decir que el búfalo ha muerto? Nachiket Mor y Bindu
Ananth, de la Fundación ICICI, son las dos personas más
comprometidas con el diseño de unos mejores servicios financieros para
los pobres dentro del sector de las finanzas de la India. Con un gran
sentido del humor, nos contaron su fracaso absoluto para ofrecer, hace
ya muchos años, seguros de ganado por primera vez. Después de que
todos los individuos asegurados en la primera fase afirmasen haber
perdido su ganado, decidieron establecer como exigencia para
demostrar la muerte del animal que el dueño mostrase la oreja de la vaca
muerta. El resultado fue que surgió un sólido mercado de orejas de
vaca, pues a cualquier vaca que moría —asegurada o no— le cortaban la
oreja y después la vendían a quienes tenían la suya asegurada para que
pudieran cobrar la póliza sin perder su vaca. En el verano de 2009
fuimos a una presentación de Nandan Nilekani, fundador y antiguo
consejero delegado del gigante indio del software, Infosys, a quien el
gobierno indio había encargado la creación de un sistema de
identificación personal que permitiese darle a cada ciudadano del país su
documento nacional de identidad. Nilekani explicó su plan, señalando
que diez huellas dactilares y una fotografía del iris de los ojos son
suficientes para identificar a alguien sin lugar a duda. Mor le escuchaba
concentrado y, cuando Nilekani hizo una pausa, dijo: «Es una pena que
las vacas no tengan dedos».
Algunos riesgos deberían ser más fáciles de asegurar que otros. Por
ejemplo, veamos el caso de la meteorología. Los agricultores deberían
valorar una política que les pagara una cantidad fija, basada en la prima
que contrataron, cuando la lluvia caída en la estación meteorológica más
cercana no alcanzara un determinado nivel crítico. Dado que nadie
controla el tiempo atmosférico y que no procede hacer ninguna
valoración sobre lo que debería hacerse (al contrario que en la atención
médica, donde alguien debe decidir qué pruebas o qué tratamientos se
necesitan), no existe margen para el riesgo moral ni para el fraude.
En el ámbito de la atención sanitaria, asegurar los problemas serios
de salud, como enfermedades graves o accidentes, parece mucho más
sencillo que la cobertura de la asistencia ambulatoria. Nadie quiere
someterse a una operación o a un tratamiento de quimioterapia sin
necesidad y los tratamientos son fácilmente verificables. Sigue habiendo
riesgo de tratamientos excesivos, pero la aseguradora puede limitar lo
que pagará por cada tratamiento. Sin embargo, persiste el gran problema
de la selección, pues la compañía no quiere tener como clientes
solamente a los enfermos.
El secreto para evitar la selección adversa está en comenzar con un
gran grupo de gente cuya relación sea ajena a cuestiones de salud —los
empleados de una gran empresa, los clientes de servicios de
microcréditos, los comunistas con carné, etcétera— y en tratar de
asegurarlos a todos.
Por esta razón, muchas instituciones de microfinanza (IMF)
pensaron en ofrecer seguros médicos. Tienen un conjunto amplio de
clientes o prestatarios a los que podrían ofrecer seguros. Dado que
estos clientes, que suelen tener tasas de morosidad muy bajas, podrían
dejar de pagar si sufrían problemas graves de salud, contratar seguros
médicos con ellos también serviría, de alguna forma, para asegurar a
estas instituciones de microfinanza. Además, el cobro de las primas
sería fácil, pues el personal que gestiona los préstamos ya se reúne con
los clientes semanalmente. De hecho, la prima se podría incorporar al
préstamo.
En 2007, SKS Microfinance, que entonces era la mayor institución de
microfinanza de la India, creó Swayam Shakti, un programa piloto de
seguros sanitarios que ofrecía coberturas por maternidad,
hospitalización y accidentes. Para evitar la selección adversa, el seguro
debía ser obligatorio para los grupos a quienes se les ofrecía. Con el
objeto de evitar el posible fraude, la cuantía de cada prestación estaba
limitada y se aleccionó seriamente a los clientes para que utilizaran los
hospitales de la red con la que SKS había alcanzado acuerdos a largo
plazo. Con el fin de hacer más atractivos a estos hospitales, los
asegurados que acudiesen a ellos no tendrían que pagar por adelantado
si se trataba de una enfermedad incluida en la póliza de seguro. SKS
pagaría directamente a los hospitales.
Cuando SKS introdujo el producto por primera vez, intentó hacerlo
obligatorio para todos sus clientes, pero protestaron y la empresa
decidió que solo fuera obligatorio en la primera renovación del crédito.
Como consecuencia, algunos clientes decidieron no renovarlo y SKS
empezó a perder clientes en las zonas donde estaban ofreciendo el
seguro. Unos meses después, las tasas de renovación de créditos de SKS
cayeron desde un 60 por ciento hasta cerca del 50 por ciento. La
consejera delegada de una institución de la competencia nos preguntó
sobre nuestro trabajo con SKS y, cuando le dijimos que estábamos
evaluando el impacto de la oferta de seguros médicos obligatorios a los
clientes de microcréditos, se rio y dijo: «Yo sé cuál es el efecto. En
todos los sitios donde SKS ha hecho este producto obligatorio, nuestros
clientes han aumentado. ¡La gente está dejando SKS para venir a nuestra
empresa!». Cerca de una cuarta parte de los clientes que querían
continuar pidiendo créditos a SKS, pero evitar el seguro médico,
encontraron una vía de escape legal: empezaron a pagar el crédito
anticipadamente, antes de que terminase el año de vigencia de la póliza.
De este modo, cuando renovaban su crédito, técnicamente estaban
cubiertos todavía por el seguro y, por tanto, no tenían que pagar la
nueva póliza. Ante esta resistencia, SKS decidió que el producto fuera
voluntario. Pero un seguro voluntario contratado solamente por
algunos clientes es susceptible de generar selección adversa y riesgo
moral. Las pólizas por cliente se dispararon y la empresa
ICICI Lombard, en cuya representación ofrecía el producto SKS,
concluyó que estaba perdiendo dinero y pidió a SKS que dejase de
asegurar a clientes nuevos. Otras organizaciones que intentaron poner
en marcha iniciativas similares han tropezado con obstáculos muy
parecidos en cuanto a la resistencia de los clientes a contratar
obligatoriamente el seguro.
Los seguros médicos vinculados a microcréditos no son los únicos
que han tenido problemas. Un grupo de investigadores entre los que
está Robert Townsend, compañero nuestro en el MIT, intentó medir los
efectos de un sistema muy sencillo de cobertura por riesgos
meteorológicos. Muy parecido al descrito anteriormente, el sistema
consiste en el pago de una cierta cantidad de dinero cuando la lluvia no
alcanza un mínimo determinado[19]. El producto se comercializó en dos
regiones de la India, Gujarat y Andhra Pradesh, secas y propensas a
sufrir sequías. En ambos casos se vendía a través de una organización de
microcréditos muy conocida y prestigiosa. La organización probó varias
formas de oferta y presentó el seguro a los agricultores. En general, la
contratación fue muy escasa, pues en el mejor de los casos solo lo
compró el 20 por ciento de los agricultores, y ese nivel solo se alcanzó
cuando alguien de esa IMF fue vendiendo puerta a puerta. Además,
incluso entre quienes contrataron el seguro, las cantidades vendidas
fueron muy pequeñas, pues la mayoría compraron pólizas que cubrían
solamente entre un 2 y un 3 por ciento de lo que serían sus pérdidas en
caso de falta de agua de lluvia.
Women empowerment and economic development are closely related: in one direction,
development alone can play a major role in driving down inequality between men
and women; in the other direction, empowering women may benefit development.
Does this imply that pushing just one of these two levers would set a virtuous circle
in motion? This paper reviews the literature on both sides of the empowerment–
development nexus, and argues that the interrelationships are probably too weak
to be self-sustaining, and that continuous policy commitment to equality for
its own sake may be needed to bring about equality between men and women.
( JEL I14, I24, I32, I38, J13, J16, O15)
1051
1052 Journal of Economic Literature, Vol. L (December 2012)
Table 1
Some Indicators of the Welfare of Men and Women
Sources:
(1) World Bank (2011).
(2) World Bank (2011).
(3) World Bank (2011).
(4) People’s Republic of China Population Census Office (1990).
(5) Indian Registrar General and Census Commissioner (1990).
(6) World Bank (2011).
(7) World Bank (2011).
years before, the rates were respectively as men do (Berniell and Sánchez-Páramo
22 percent and 30 percent. Meanwhile 2011). In political representation: women
primary school enrollment has become
constituted just 19.4 percent of the mem-
nearly universal for both boys and girls. In bers of lower and upper houses of parlia-
labor market opportunities: women are less ments in July 2011 (Inter-parliamentary
likely to work, they earn less than men for Union 2011). In legal rights: women in
similar work, and are more likely to be in many countries still lack independent rights
poverty even when they work. Women spend to own land, manage property, conduct
almost twice as much time on housework, business, or even travel without their hus-
almost five times as much time on child care, band’s consent. Twenty-one of the 63 coun-
and about half as much time on market work tries studied by Htun and Weldon (2011)
Duflo: Women Empowerment and Economic Development 1053
have unequal inheritance rights for men for women in parliament, be adopted.
and women. These measures are justified, according to
There is a bidirectional relationship the report, not only because they promote
between economic development and wom- equity, but also because they are necessary
en’s empowerment defined as improving to accelerate development. Interestingly,
the ability of women to access the constitu- the 2012 World Development Report
ents of development—in particular health, (World Bank 2011) adopts a much more
education, earning opportunities, rights, nuanced message. While it emphasizes the
and political participation. In one direction, “business case” for women empowerment,
development alone can play a major role in it mainly takes it as given that the equality
driving down inequality between men and between women and men is a desirable goal
women; in the other direction, continuing in itself, and policies should aim to achieve
discrimination against women can, as Sen that goal.
has forcefully argued, hinder development. This paper reviews the evidence on both
Empowerment can, in other words, acceler- sides of the empowerment–development
ate development. relationship. It first shows that poverty
Policymakers and social scientists have and lack of opportunity breed inequality
tended to focus on one or the other of between men and women, so that when
these two relationships. Those focus- economic development reduces poverty,
ing on the first have argued that gender the condition of women improves on two
equality improves when poverty declines. counts: first, when poverty is reduced, the
Policymakers should therefore focus on condition of everyone, including women,
creating the conditions for economic improves, and second, gender inequality
growth and prosperity, while seeking, of declines as poverty declines, so the condi-
course, to maintain a level playing field for tion of women improves more than that of
both genders, but without adopting specific men with development. Economic devel-
strategies targeted at improving the condi- opment, however, is not enough to bring
tion of women. about complete equality between men
In contrast, many emphasize the sec- and women. Policy action is still neces-
ond relationship, from empowerment to sary to achieve equality between genders.
development. The Secretary General of the Such policy action would be unambigu-
United Nations, Kofi Annan, for example, ously justified if empowerment of women
has argued that achieving gender equality also stimulates further development, start-
is a “prerequisite” to achieving the other ing a virtuous cycle. This essay argues
Millennium Development Goals (MDGs), that empowering women does indeed
including eliminating poverty, reducing change society’s choices in important ways,
infant mortality, achieving universal edu- although the usual depiction of women
cation, and eliminating the gender gap in as always making the best decisions for
education by 2015 (United Nations 2005). long-term development is somewhat exag-
In its report, “Engendering Development,” gerated. The conclusion here is a more bal-
the World Bank (2001) calls for policies anced, somewhat more pessimistic picture
to address gender imbalance in “rights, of the potential for women’s empowerment
resources, and voice,” and recommends and economic development to mutually
that institutional structures be overhauled reinforce each other than that offered by
to promote equality, and that specific mea- the more strident voices on either side of
sures, such as girls’ scholarships and quotas the debate.
1054 Journal of Economic Literature, Vol. L (December 2012)
2. Can Economic Development Cause placed in the position to make life or death
Women’s Empowerment? choices. Because these tragic choices are
often resolved at the expense of women’s
Gender inequality is often greater among well-being, increasing the resources avail-
the poor, both within and across countries. able to families, as economic development
For example, while the gender gap in pri- does, reduces the excess vulnerability of
mary and secondary gross enrollment has women.
rapidly gone down between 1991 and 2009 Even in the countries where the prefer-
worldwide, it is still wider in poor countries ence for boys is strongest, the evidence that
(7 percentage points for primary enrollment, girls systematically receive less care than
13 percentage points for secondary enroll- boys under normal circumstances is not as
ment) than in middle income countries (3 clear-cut as one might guess. It is, of course,
percentage points for primary enrollment, 2 very difficult to observe whether, for exam-
percentage points for secondary enrollment) ple, girls are given less to eat than boys, since
and rich countries (0 percentage points for households under observation are likely to
primary, 1 percentage point for secondary). change their behavior. Also, when asked to
And within countries, gaps between boys keep diaries of how much each member con-
and girls persist in poorer and more iso- sumes over a given period, households may
lated communities (World Bank 2011). The misreport the portions given to boys and
participation of women in the labor market girls. Finally, households may give the same
has grown by 15 percent in East Asia and amount to boys and girls, but girls’ needs may
Latin America between 1971 and 1995, a be different. Deaton (1989, 1997) proposed
rate faster than that for men, and the gender an ingenious way to use household consump-
gap in wages has narrowed as well. The life tion data to indirectly estimate whether girls
expectancy of women has increased by 20–25 are given less to eat than boys. He noted that,
years in developing countries over the past when a child is born, the household, in effect,
fifty years (World Bank 2011), while male life becomes poorer, since there is now one more
expectancy did not improve as much. person to feed—one who will remain unpro-
Is it the case that as countries develop, ductive for a long while. This means that the
women’s empowerment will follow naturally, adult members of the household need to cut
and there is therefore no need for specific down on their own consumption to make
policies targeted at improving the condition room for the new expenditures. Observing
of women? Is it sufficient to fight poverty the extent to which the household consump-
and to create the conditions for economic tion of “adult goods,” such as cigarettes, alco-
growth in poor countries? Recent research hol, or adult clothing drops when a child is
suggests that economic growth, by reduc- born, provides us with an indirect estimate
ing poverty and increasing opportunity, can of the “cost” of the child. If families expend
indeed have an important positive impact on fewer resources on girls, for example, if girls
gender equality. are given less to eat than boys, then the adults
will cut their consumption of adult goods by
2.1 Relaxing the Grip of Poverty through
a smaller amount when they have an extra
Economic Development
girl than when they have an extra boy. Yet,
The first way by which economic devel- both in Cote d’Ivoire, where Deaton first
opment reduces inequality is by relaxing conducted the research, and in Pakistan,
the constraints poor households face, thus where he repeated the analysis (Deaton
reducing the frequency at which they are 1997), there is no evidence that households
Duflo: Women Empowerment and Economic Development 1055
reduce consumption of adult goods less for increases when households face a crisis.
a girl than for a boy. The lack of evident dis- When the harvest is bad, due to droughts
crimination in everyday life is also apparent, or floods, and food is scarce, the murder of
for example, in immunization rates. The “witches” (almost always old women) is twice
vaccination differential between boys and as likely to occur as in normal years (Miguel
girls in India is small or nonexistent (accord- 2005). If crises throw poor households into
ing to the National Family Health surveys, circumstances in which they are more likely
girls have received 4.55 shots, and boys 4.79 to discriminate against vulnerable women,
shots). Rajasthan is one of the states in India then increasing the ability of poor house-
with the lowest female to male ratio and the holds to weather crises would disproportion-
lowest immunization rate among states in ately help women.
India. Yet, Banerjee et al. (2010) find no dif- These two examples suggest that just
ference in immunization rates between boys reducing the grip of poverty on these house-
and girls: on average, boys had received 1.19 holds or helping them to deal with crises
immunizations, and girls 1.18. could improve the welfare of women of all
This is not to say that girls are not treated ages. Ali et al. (2011) show that, in seven
differently than boys. The differential treat- countries around the world (including
ment is observed when either children or Afghanistan and India), there is no difference
parents face extreme circumstances. India in the ways that girls and boys are treated
has one of the largest discrepancies in gen- by health practitioners once they reach the
der-specific mortality rates. One reason for facility. If facilities were closer and easier to
this is that that girls are treated differently reach, parents would likely be bringing boys
when ill: for example, a study found that, and girls more often, and they would then
in the poor neighborhoods of New Delhi, be equally treated. Some also argue that,
girls are more than twice as likely to die of mechanically, improvements in water and
diarrhea (Khanna et al. 2003). This may not sanitation conditions, as well as the better
only cause excess mortality, but a progressive control of infection, may also be more ben-
deterioration in the nutritional status of girls eficial to girls than to boys, because boys are
compared to boys, even if girls eat as much more susceptible to congenital deformation,
as boys. If poor households are less likely and their disadvantage compared to girls, is
to spend money on a girl’s illness than on a lower for infectious diseases (Drevenstedt et
boy’s illness, then improved access to health al. 2008).
services, through either health insurance for As households become richer, they will
the entire family or free medical care for the also be less likely to face choices at the
poor, would disproportionately help girls, margin of subsistence. Indeed, in India,
even if parents do not change their behavior the study by Rose (1999) shows that house-
toward them. holds that can buffer their consumption in
Differential treatment of girls and boys a bad year—those, for example, with assets
also becomes acute when the household to sell—do not show the dramatic increase
itself is facing a crisis. In India, the excessive in relative mortality of girls during droughts.
mortality rate of girls, relative to boys, spikes This first suggests that providing house-
during droughts. When they cannot afford to holds with insurance against risk may reduce
feed everyone, families disproportionately both child mortality and the mortality gap
sacrifice the welfare of girls (Rose 1999). between boys and girls, and second, that
Research conducted in rural Tanzania shows households that are a little richer are less
explicitly how the vulnerability of women likely to be thrown into desperation by bad
1056 Journal of Economic Literature, Vol. L (December 2012)
rainfall. Reducing poverty, it seems, even estimate that every year of increase in life
without targeting women, will dispropor- expectancy leads to an increase in years of
tionately help women. Pension remittances education of girls (relative to boys) of 0.11 of
in South Africa offer suggestive evidence of a year. This creates two ways for economic
how a nontargeted transfer can improve the development to potentially improve the
plight of women. At the end of apartheid in relative welfare of women: by reducing the
the early 1990s, old-age pension programs, chance that they die at each childbirth, and
previously limited to whites, were expanded because economic development goes hand
to cover South Africans of all races. Since the in hand with a reduction in fertility.
introduction of the program, witch killings in In sub-Saharian Africa, a woman faces a
rural Northern Province have dropped dra- 1 in 31 chance of dying from complications
matically (Singer 2000). It is, of course, dif- due to pregnancy or childbirth, while in
ficult to definitively establish causality given the developed regions the risk is 1 in 4,300
the many other political and social changes (World Bank 2011). While maternal mortal-
that occurred in South Africa during the ity depends on a number of factors, it is less
same period. likely to occur if individuals are richer (and
Economic development reduces pov- are able to deliver in a high quality facility)
erty. It increases the ability—distinct from and if health systems function better. The
will—of households to withstand crises and diffusion of technological innovation matters
the ability of governments to insure their as well: Jayachandran, Lleras-Muney, and
poorest citizens against sickness and hunger. Smith (2010) find that the introduction of
Thus, by reducing the vulnerability of poor sulfa drugs in the United States led to a 24 to
households to risk, economic development, 36 percent reduction in maternal mortality
even without specifically targeting women, in the 1930s.
disproportionately improves their well-being Overall, fertility decreases with income
and education and age at first birth increases.
2.2 Economic Development, Fertility,
Age at first birth is a risk factor in maternal
and Maternal Mortality
mortality: very young mothers are more
Other than pre-birth and in early child- likely to die or have complications in child-
hood, women are most likely to be missing birth. Fertility has declined dramatically in
relative to men in childbearing years. This, most developing countries over the last two
of course, is not the result of active discrimi- decades, with few countries now having a
nation, but due to the fact that women carry total fertility rate of 6 or higher. That in itself
children and give birth, and that in itself is a has had a mechanical impact in reducing the
dangerous activity. Other than directly affect- number of missing women by decreasing the
ing the welfare of women (and not men) in a number of chances a woman has to die dur-
significant way, maternal mortality is poten- ing her childbearing years.
tially a source of lower parental investment in
2.3 Giving Women Hope by Expanding
childhood: if parents expect girls to be much
Their Opportunities
more likely to die as young women than boys,
they may be more inclined to invest in boys. The fact that women have fewer oppor-
Jayachandran and Lleras-Muney (2009) find tunities in the labor market may contribute
that the sudden reduction in maternal mor- to their unequal treatment in the house-
tality in Sri Lanka (brought about by effec- hold. Parents have lower aspirations for their
tive public policy) led to a convergence in daughters than for their sons, and female
the education level of boys and girls. They teenagers themselves have lower aspirations.
Duflo: Women Empowerment and Economic Development 1057
For example, in West Bengal, Beaman et al. It has been shown in several contexts that
(2011) find that, in places where no woman parents and children are sensitive to the
had ever been the local leader, 86 percent of perceived returns to education: those who
parents wanted their daughters to be either believe that education is more worthwhile
a housewife or whatever their in-laws would invest more in school (avoiding dropping out,
decide for her (the corresponding fraction being absent less often, or working harder
was below 1 percent for the boys). toward exams).1 Three recent studies, one in
If women do not work outside the home, China and two in India, show that increased
there may be a perception that they do opportunities for women in the labor market
not need to be as strong and healthy and do indeed translate into better outcomes for
that they do not need a formal education. women. The introduction of the Household
Interviews of parents in five states in north Production Responsibility System as part of
India conducted for the Public Report on post-Mao agricultural reforms in rural China
Basic Education (PROBE) in India (The allowed farming households to grow cash
PROBE Team 1999), found that as high as crops instead of staple cereals. This led to a
10 percent of them believed that it was not substantial boost in the production of tea in
important for girls to be educated—only up areas that were suitable for growing it. Given
to 1 percent believed the same for boys. Fifty- their smaller stature, particularly in terms
seven percent wanted their sons to study “as of their height and the size of their hands,
far as possible,” while only 28 percent wanted women have a comparative advantage over
the same for their daughters. Many parents men in the production of tea. In regions
believed that educating girls is not necessary, unsuitable for growing tea, the production of
since girls are only expected to marry and cash crops disproportionately produced by
take care of their households. In the Beaman men rather than women increased following
et al. (2011) study, 32 percent of the parents the reform. Qian (2008) shows that the num-
reported that they wanted their teenage boys ber of missing women, which is particularly
to graduate from secondary school or college, high in China, decreased in tea producing
and only 18 percent wished the same for their regions compared to other regions. For the
girls. same increase in total household income, an
If part of the motivation for educating chil- increase in female income of 7 U.S. dollars
dren is to enhance their employment oppor- per month (10 percent) translates into a 1
tunities, then improving the opportunities percentage point increase in the survival rate
available to women in the labor market would for girls. It is striking that this is true even
provide a strong catalyst for the treatment of in China, where it is generally believed that
women to change for the better. Economic cultural factors and the “one-child” policy
development leads to a change in the nature are very strong determinants of the prefer-
of work that is more conducive to women’s ence for boys.
work. This happened in the United States dur- The entry of India into the world econ-
ing 1930–50, where expansion of the demand omy provides another example of economic
for clerical workers increased the availability development leading to improved gender
of jobs that even respectable women could equality, even reversing the fortunes of
keep once married (Goldin 2006). More boys and girls as the traditional segregation
recently, this has happened not only in China of schooling options turned against boys.
and Mexico, with the rise in factory work suit-
able for women, but also in India with the rise 1 See Jensen (2010b), Nguyen (2008), and Attanasio
in service jobs due to outsourcing. and Kaufmann (2009).
1058 Journal of Economic Literature, Vol. L (December 2012)
Munshi and Rosenzweig (2006) study the opportunities can benefit girls more than
choice of language instruction in Mumbai boys. Jensen teamed up with Business Process
over several decades. In universities, instruc- Outsourcing centers (BPOs) centers to orga-
tion is in English, but in primary and sec- nize recruiting sessions in randomly selected
ondary schools, parents can choose either villages in rural areas where recruiters would
English or the local language, Marathi, as the typically not go in three states in Northern
medium of instruction for their child. When India. In some villages, only women were
India liberalized its economy in the 1990s, recruited, and in some villages, both men and
and its software and service industries grew, women were recruited. Not surprisingly, com-
the economic returns to education in English pared to other randomly chosen villages that
increased dramatically. The new sectors, did not see any such recruiting efforts, there
such as outsourced telemarketing, also pro- was an increase in the employment of young
vided labor market opportunities for women women in BPOs in these villages. Much more
who had traditionally been shut out of the remarkably, given that this was in the part of
labor market, leading to a rapid increase in India probably most notorious for discrimi-
English-based education for both boys and nation against women, three years after the
girls. Among the lower castes, the increase recruiting started, girls age five to eleven were
was much faster for girls than for boys: the about 5 percentage points more likely to be
proportion of lower-caste girls instructed in enrolled in school in the villages where there
English almost caught up to that of upper- was recruiting. They also weighed more, sug-
caste girls, but for the boys, the increase gesting that parents were taking better care
was not any faster compared to other castes. of them. The effects on boys was much more
Among the lower castes, girls are now more muted, even in villages where they were
likely to be educated in English than boys explicitly recruited. Jensen and Miller (2010)
are. The reason is that members of low- show that this low effect is the combination
caste households have traditionally relied on of a negative effect of boys whom parents
the caste network to find jobs, and choosing wanted (at baseline) to keep them on the farm
instruction in English for the child was con- and positive for those whom they wanted to
strued as an attempt to break out from the send away. Here again, the facts that girls are
foray of the caste. This spirit persists to some not expected to continue to be the ones to
extent, locking boys into education in Marathi preserve the family tradition actually turned
and then less lucrative jobs. This constraint out to be to their advantage.
does not apply to girls, who traditionally All these examples show that gender-
did not participate in the labor market. In blind policies that improve the economic
other words, girls have no tradition of rely- welfare of households can improve gender
ing on the caste (old-boy) network and are equality, and that diversifying the economy
free from the group expectations that bind and increasing women’s options in the labor
the boys. Girls can be educated in English market can cause households to adjust
and therefore be in a better position to take their behavior, moving them toward gender
advantage of marketplace opportunities as equality.
they arise. A quiet revolution is happening,
2.4 Freeing Up Women’s Time
even if households are not fully aware of the
consequences of their individual choices. A key source of inequality between
An experiment conducted by Jensen women and men stems from the way they are
(2010a) provides another clear demon- expected to spend their time. Berniell and
stration of how an increase in available Sánchez-Páramo (2011) conducted a study
Duflo: Women Empowerment and Economic Development 1059
of time use for the World Development and argues that this increase was due to
Report 2012, using data for 23 countries time freed for women in home production.
from the Multinational Use Study, and 12 Devoto et al. (2011) find no impact on time
countries that they added to make the data devoted to market activities when house-
set more representative of poor countries. holds became connected to piped water in
A clear, unsurprising pattern emerges: at all Morocco, but a significant increase in lei-
level of incomes, women do the majority of sure and reduction in stress levels and intra-
housework and care and, correspondingly, households conflicts.
spend less time in market work. The dif- Another source of gain of time with eco-
ference ranges from 30 percent more time nomic development is the reduction of fertil-
spent on housework by women than men ity, already mentioned, as well as the change
in Cambodia to six times more in Guinea, in the timing of this fertility. Young women
and from 70 percent more time for child who marry or have children typically drop
care in Sweden to ten times more in Iraq. out of school or college and are less likely to
These differences have an impact on wom- work (Field and Ambrus 2008, Miller 2010,
en’s ability to participate in market work, be Duflo, Dupas, and Kremer 2011). They tend
fully engaged in their career, etc. This is one to marry partners who are older than them.
reason why women in developing countries All of these lead to a reduction in women’s
are more likely to be involved in informal autonomy and capacities. In the United
work (such as running a small business) that States, Goldin and Katz (2002) show how
may not be the most productive use of their the availability of the pill to young, unmar-
time. For example, they may run a shop from ried women in the 1960s increased the age
their house in order to be able to mind the at marriage and the length of study of young
children at the same time, instead of taking women.
on productive employment. This reduces
2.5 Economic Development and
the chance that they have an autonomous
Women’s Rights
income, which, as we will see below, has
clear implications for their bargaining power Empirically, there is a strong correlation
within the household. between economic development and wom-
In this context, economic development en’s legal rights, in areas as diverse as prop-
can lead to the empowerment of women by erty rights, access to land, access to bank
freeing their time (which can then be used loans, violence against women, abortion
for market activities or for other things). policy, etc. Doepke and Tertilt (2009) show
Greenwood, Seshadri, and Yorukoglu a robust negative correlation of 0.4 or higher
(2005) argue that the diffusion of appli- across countries between the lack of rights
ances in the United States between 1930 and GDP per capita. Historically, the expan-
and 1950 was a key driver of the increase sion of economic rights to women in the
in the labor market participation of women United States and Europe preceded their
during that period and beyond. Dinkelman access to political rights (Doepke and Tertilt
(2010) exploits the logistical feasibility of 2009; Fernandez 2009). While it is of course
the roll out of electrification in South Africa impossible to infer causality from the data,
to study the impact of access to electricity two lines of argument suggest why economic
on female and male labor supply. She finds growth could lead men to willingly surren-
that electrification led to an increase of 9.5 der economic rights to their wives. Doepke
percentage points in female employment and Tertilt (2009) argue that, when the
(without any change in male employment) importance of human capital in the economy
1060 Journal of Economic Literature, Vol. L (December 2012)
increases (with technological progress), men growth in poor countries? In a word, will
start to be willing to surrender some rights economic development be enough?
to women to ensure that children get bet-
2.6 But Will Economic Development Be
ter educated (the argument requires that
Enough?
women care more about children’s human
capital and that bargaining power matter for There is evidence that growth will not
household decisions, which we will discuss be enough to overcome discrimination in
below). The trade-off is between their utility the home and in a number of domains. Sex
today and the utility of their offspring (chil- ratios remain skewed in favor of boys. In
dren, grandchildren, and future generations). China, despite rapid economic growth (and
Fernandez’s (2009) argument is slightly dif- the reforms described above), the sex ratio at
ferent, although related: she argues that as birth has worsened continuously since 1970,
fertility declines, fathers’ interest as hus- with an acceleration in the 1990s from about
bands (who would like to have all the rights), 53 percent of boys among all (reported)
start to conflict with their interest as fathers births to about 57 percent of boys among all
(who would like to protect their daugh- (reported) births. Within Asia, the sex ratio
ters against their future son-in-laws). With at birth in South Korea and Taiwan, both
economic growth and a decline in fertility, rich countries, is similar to that in China and
the balance starts tilting towards the latter India. The gap between girls and boys is clos-
interest, and women’s economic rights are ing for primary and secondary schooling, but
expanded. Doepke and Tertilt provide some for tertiary education, the ratio of females to
historical narrative that is consistent with males has not improved overall, even though
their theory, and Fernandez some sugges- participation has risen for both boys and
tive evidence from the granting of rights to girls. In the labor market, even in developed
women in the United States that states that countries, women who are equally qualified
had a faster reduction in fertility were more continue to earn less than men at all levels of
likely to expand women’s rights. Empirically, qualification. Legal rights, particularly prop-
there remains much more to be done, and erty rights, of women remain different from
this is a very interesting area of research. that of men in many countries, even as econo-
These two papers provide convincing theo- mies grow. Compared to economic opportu-
retical arguments, however, that economic nities, education, and legal rights, the gender
growth can lead to a progression in women’s gap in political participation has narrowed
rights. In fact, Doepke and Tertilt explicitly the least between 1995 and 2005. As of July
conclude that institutions such as the World 2011, only 26 countries in the world had met
Bank that are interested in women’s rights the target (set by the U.N. Economic and
would be well inspired to focus on programs Social Council in 1990) of having 30 percent
favorable to economic development (such as or more women in national legislative seats;
education policy), rather than push for direct the proportion of seats held by women in sin-
legislative changes for women’s rights. gle or lower houses of parliament was only
Is that how it works, then: as countries 19.4 percent globally, up from 15.9 in 2005,
develop, empowerment of women will follow 13.5 percent in 2000, and 9 percent in 1987
naturally? Is there a reason to design policies (Inter-parliamentary Union 2011).
specifically targeted toward improving the The persistent difference in sex ratios
condition of women? Or is it sufficient for at birth illustrates the fact that economic
improving women’s condition to fight poverty development, and the availability of new
and to create the conditions for economic technologies, can have perverse effects on
Duflo: Women Empowerment and Economic Development 1061
gender equality if it decreases the cost of commercially available in the United States,
discriminating against girls. High differ- there were reports of concerns that it could
ences in reported sex ratios at birth between be used for sex-selective abortion (Belluck
girls and boys are the result of unreported 2011). These concerns are almost surely
birth—infanticide—and increasingly, from justified: even without this test, there is evi-
sex-selective abortion. Sex-selective abor- dence of sex-selective abortion in some eth-
tion shows how the wider availability of new nic groups in the United States and Canada
technologies and the increased well-being today: in particular, since 1980, there is an
of households resulting from economic abnormal ratio of boys to girls among chil-
development have led to an increase in a dren at higher parity in Chinese, Korean,
particularly egregious form of discrimina- Asian American, and Indian-American fami-
tion. This is not limited to China: the 2001 lies (Abrevaya 2009; Almond and Edlund
census in India revealed a reversal of the 2008; Almond, Edlund, and Milligan 2009).
trend in the sex ratios, particularly in the Almond and Eldund report, for example,
most prosperous states in the north of India. that for third children, if there is no previ-
By the time of the 2011 census, they had ous boy, boys will outnumber girls by 50 per-
dropped to their lowest levels since inde- cent. Using linked records from California,
pendence. Economic calculus plays a role Abrevaya shows that Asian Indian mothers
here as well. Advertisements for clinics were significantly more likely to have a ter-
practicing sex-selection in Mumbai used to minated pregnancy and to give birth to a boy
read, “Better pay Rs 500 now than Rs 50,000 when they have previously only given birth
later” (Desai 1994). The Rs 50,000 refers to to girls. Eventually, in societies where there
the dowry that the parents would need to is a male preference, the pressure on the
pay when a girl is married. With the cost of marriage markets due to the rising sex ratio
sex identification and abortion becoming so (it is estimated that there are twenty million
low with new technologies, many more par- more boys under 20 than girls in China, and
ents may prefer to abort girls rather than 25 million more in India (Edlund and Lee
to raise and marry them. In Taiwan, Lin, 2009)) may provide some incentive for the
Qian, and Liu (2008) document that the sex ratio to revert. Edlund and Lee (2009)
sex ratio at birth (i.e., the fraction of boys provide evidence that the sex ratio is nor-
among live births) in Taiwan increased from malizing in Korea, after having exploded
0.515 in 1980 to 0.54 by 1990. All of the with the introduction of sonography.
increase is accounted for by increases in The disparity in earnings at all levels of
the sex ratio for higher parity. They argue qualification even in richer countries illus-
that the legalization of abortion in Taiwan trates the persisting bias against women.
in 1985/86 (when prenatal sex determina- This is not the place for a detailed review on
tion was already available) is responsible. gender discrimination in developed coun-
Even if increased opportunities for women tries: Goldin (2006) provides a masterful
reduce the dowry, there is little chance that summary of the long-run evaluation of the
they will bring it to such a low enough level place of women in society. Gaps in wages,
so as to make it worthwhile to let a girl live occupation, education, and labor force par-
in the face of such a low cost for abortion. ticipation have shrunk considerably in the
Sex selection does not appear to disappear United States from 1930 to 1990, in part due
even in the United States. When a blood test to some of the phenomena discussed earlier
that can determine the gender of the baby (a rise in the demand for clerical work, the
after seven weeks of pregnancy became resulting larger investment in education,
1062 Journal of Economic Literature, Vol. L (December 2012)
household appliances, the diffusion of the for being good at math, are given a diffi-
pill), but the convergence seemed to level cult math test in college, women do worse
off after 1990. Differences in participation than men. When they are given the same
and in wages do persist, particularly at the test after being told, “You may have heard
top, in part due to biases toward women, as that girls are less good than boys at math,
well as different cultural attitudes of what is but this is not true for this particular test,”
expected of women. however, female students do just as well as
Ample research by psychologists shows males (Spencer, Steele, and Quinn 1999).
that in developed countries, there is a wide- The explanation for this phenomenon is
spread “implicit” bias, shared by both men that girls have accepted and internalized
and women, associating men with career and the bias that they are not as good at math,
the sciences and women with family and lib- and they give up when the going gets tough.
eral arts For example, implicit associations When they are told that this “fact” does not
tests (e.g., Greenwald et al. 2002; see also apply to that particular test, they know to
www.implicit.org) ask participants to sort continue to try hard. As long as these biases
two series of names to the left or the right of persist, gender equality will be hindered
the screen. For example, female first names even if the technological conditions for
must be placed on the right, and male first an even playing field are met. Women are
name on the left. In the second series (alter- also negotiating less and less aggressively
nating with the first), words evoking career than men at hiring and during the promo-
must be placed on the left, and words evok- tion stage, and are less willing to compete
ing family must be placed on the right [or (Babcock and Laschever 2003; Gneezy,
the opposite]. Because it is easier for people Niederle, and Rustichini 2003).
to put things on the same side if they “go Likewise, while a number of factors con-
together,” the difference in the time spent tinue to hinder the parliamentary repre-
filling the stereotypical block (e.g., women sentation of women—the type of electoral
and family are on the same side) and the system present in a country, the role and
nonstereotypical block (women and career discipline of the political parties, the lack of
are on the same side) indicate an implicit previous political experience of women—
bias. Both women and men are more likely the widespread perception that women
to associate women with family and men are not competent leaders is probably the
with careers. Both women and men are more strongest barrier to greater participation
likely to associate women with liberal arts of women in policy making. It persists
and men with science. in developed countries as well: a series
This bias has persisted despite the wide- of experiments have shown that, holding
spread participation of women in these aca- performance constant, women leaders are
demic disciplines and the labor markets in evaluated more negatively than male lead-
these countries. These biases affect women’s ers. These studies typically either provide a
rewards for participating in the labor mar- written description of leadership situations,
ket or for getting a higher education both varying the sex of the leader, or use trained
directly and indirectly, by persuading girls actors to lead, allowing the experimenters
that they are not cut out for particular jobs, to control the degree of success the leader
or just not as good as men. Psychologists achieves (Swim et al. 1989). The surveys
have shown this effect, known as the “ste- find the bias is most pronounced when the
reotype threat,” to be very powerful. When leadership role is typically considered a
female and male students, recognized male role.
Duflo: Women Empowerment and Economic Development 1063
Similar evidence coming from India sug- about equality between women and men in
gests that citizens tend to give lower per- the foreseeable future, and policies will be
formance marks to female leaders than to required to accelerate this process.
male leaders, given the same information Yet, the gains from policies that target
about them, are also less likely to associate women come, to some extent, at the expense
women with leadership than men, and are of men. This much is evident in politics. Any
generally not feeling positive toward females position that a woman gets through a quota
in politics. Beaman et al. (2009) investigate is a position that a man does not get. The
attitudes in rural West Bengal using a vari- trade-offs are not always as explicit, but can
ety of methods. In one experiment, they be very stark indeed. For example, specific
ask respondents to listen to a short political measures to improve access of girls to school,
speech, read out either by a male actor or such as scholarships for girls or latrines in
a female actor. Among people who had not school, are an expensive way to get more
had the experience of a female leader, ran- girls into schools. Given that enrollment is
domly selected respondents who heard the already high, many scholarships go to girls
“male” speech are significantly more likely who would have gone to school anyway, mak-
to give it favorable marks than those who ing the cost per additional girl induced to go
heard the female speech. In another part of to school very high. This means that within
the study, they conduct “implicit association the very limited budget of most develop-
tests,” and show a strong association between ing countries, the transfers to girls come
women and the domestic sphere. Finally, at the direct expenses of boys. The money
respondents (particularly male) seemed spent on scholarships is not spent on other
quite comfortable acknowledging that they things that may help both boys and girls,
strongly preferred a male as leader rather such as hiring new teachers, or deworming
than a woman (this is in a country that has everyone. The trade-offs are real: compara-
a female head of the majority party and a tive cost effectiveness research (comparing
female president—since then, the state of across different experiments in a variety
West Bengal has also elected a female as the of contexts) suggest that the cost per extra
head of the state). It seems that there is a child enrolled of additional scholarships may
significant cultural barrier to recognizing be much larger than that of deworming, or
women as competent policy makers. informing parents of the returns to educa-
Evidence such as this provides support tion (Dhaliwal et al. 2011).
for the idea of “reservations” or quotas for Thus, policies that explicitly favor women
women in policy-making positions. Since need to be justified, not just in terms of being
perceptions are biased, in the absence of necessary to bring about gender equality,
affirmative action of some sort, it would be but in terms of gender equality itself being
very difficult for women to break into politics. desirable and worth the cost it implies. The
Indeed, in most of the seventeen countries second part of this essay explores the com-
where the target of 30 percent of women in mon justification that the trade-off between
parliament has been achieved, some kind of the interests of various people seen in the
affirmative action measure has been in place. short run is transitory; in the long run, there
If one wants to achieve balanced gender rep- is no trade-off between helping women more
resentation rapidly, it seems clear that affir- and helping everyone, because increasing
mative action will be needed. the share of resources going to women will
More generally, economic development increase the amount of resources so much
alone will probably not be enough to bring that everyone will be better off.
1064 Journal of Economic Literature, Vol. L (December 2012)
3. Can Women’s Empowerment Cause village council seats and village presidencies
Economic Development? be reserved for women.
There are two rationales for supporting Former World Bank President, James
active policies to promote women. The first is Wolfensohn, addressing the Fourth UN
that equity is valuable in and of itself: women Conference on Women, said:
are currently worse-off than men, and this Education for girls has a catalytic effect on
inequality between genders is repulsive in every dimension of development: lower child
its own right. For example, in the United and maternal mortality rates; increased edu-
cational attainment by daughters and sons;
Nation’s 2005 report on the Millennium higher productivity; and improved environ-
Development Goals (MDG), Kofi Annan, mental management. Together, these can
the Secretary General of the United Nations, mean faster economic growth and, equally
writes: “The full participation of women to important, wider distribution of the fruits of
all levels of decision-making is a basic human growth. . . . More education for girls will also
enable more and more women to attain lead-
right.” The second, a central argument in the ership positions at all levels of society: from
discourse of policymakers, is that women health clinics in the villages to parliaments in
play a fundamental role in development. The the capitals. This, in turn, will change the way
gender gap in education, political participa- societies will deal with problems and raise the
tion, and employment opportunities should quality of global decision-making.
therefore be reduced not only because it is Wolfensohn makes four claims. First of
equitable to do so, but also because it will all, that education of girls would change out-
have beneficial consequences on many comes for their children and the rest of us.
other society-wide outcomes. It should be We might call this a “reduced form” argu-
done, in other words, to increase efficiency. ment: broad “empowerment” of women
Accordingly, in the same report, Kofi Annan could change outcomes. Education could
argues that gender equality is in fact a “pre- have an effect, for example, through, for
requisite” to achieving the other MDGs. example, by improving their understanding
The stance that women empowerment is of how to raise children, use contraception,
desirable for efficiency shapes both the pol- and manage their homes. His second claim is
icy debate and the resultant economic poli- that empowerment of women in a narrower
cies the world over. Micro-credit schemes, sense (power or the ability to influence deci-
for example, have been directed almost sion making) would also change outcomes.
exclusively at women, because, it is argued, The third claim is that these changes would
women invest the money in goods and ser- be positive. The comment also raises a fourth
vices that improve the well-being of families, issue, assuming that increasing decision mak-
in goods that are conducive to development. ing of women would indeed lead to different
Similarly, most conditional cash transfer (and better) outcomes, that is what policy
benefit programs in developing countries, instruments are available to policymakers to
such as PROGRESA/Opportunidades in achieve these changes. Do they need to wait
Mexico, direct the transfer to women, not for it to come from improvement in their
men. Transfers conditioned on school enroll- human capital (the quote suggests it would
ment are often higher for girls or even be a consequence of their improved educa-
positive only for girls. Measures to enforce tion), or can policy interventions, such as
women’s access to political positions through changes in the law, change in electoral rules,
quotas have been instituted in 87 countries, changes in the rule governing programs,
including India, where a 1993 constitutional or other similar “top down” interventions
amendment required that one-third of rural change effective power?
Duflo: Women Empowerment and Economic Development 1065
The remainder of this section investigates husbands’ and wives’ education or earnings
these four issues. As will become apparent, might be obscured by a correlation between
the answers are often interlinked: it is often wives’ education or earnings and unobserved
a change in the rules governing local politics, characteristics of husbands for two reasons:
or particular programs, for example, which On the one hand, more educated or richer
allow us to identify shifts in power and their women may be able to marry men who care
resulting outcomes. Moreover, there is no more about their children. On the other
simple measure of “power” (unlike educa- hand, the observation that, after controlling
tion, for example), so that change in power for total resources, income in the hands of
is often proxied by changes in outcomes. women is associated with more desirable
Nevertheless, these four themes serve outcomes than income in the hands of men
as a useful organizing framework for the may reflect unobserved attributes of a man
literature. that directly influence child outcomes. For
example, if he is progressive enough to allow
3.1 Women Empowerment and Changes in
his wife to seek employment, then this same
Family Outcomes
progressive attitude may make him treat his
A substantial literature has studied these children better.
issues and found clear evidence of a correla- To get around these problems, researchers
tion between mothers’ education and earn- have exploited specific circumstances where
ings, and child welfare, particularly child the distribution of power, education, or earn-
health. Moreover, the correlation with moth- ings of women and men changed for reasons
ers’ education and earnings is almost always that had nothing to do with their individual
found to be stronger than the correspond- choices. These situations allow us to approxi-
ing correlation with fathers’ education and mate what would happen if women’s empow-
earnings. However, correlations are often erment policies were put in place and applied
misleading. In this instance, there are two to everyone, not only to very special families.
fundamental problems with the interpreta- A first dimension of empowerment (that
tion of the results. First, a woman’s educa- mentioned by Wolfensohn) is education.
tion, earnings, or political participation may Education can have a range of benefits within
be correlated with unobserved dimensions the households: if more educated women
of her ability, family, or community back- command higher outside wages, and it is eas-
ground. To the extent that these unobserved ier for them to get a job, then investing more
factors directly determine child health, the in educating women, rather than in men,
correlation does not indicate the causal may indeed have a more positive impact on
effect of raising a woman’s education, earn- child health than when the investments are
ings, or political participation. It is important spread evenly if women’s bargaining power
to recognize that the very fact that women in the household leads to better outcomes
are typically less likely to get an education, for children. In addition, if women are the
earn an income, and participate in political primary caregivers for young children, then
decisions is likely to make this bias stronger more education may help them provide bet-
for women than for men. Likewise, chil- ter care. Therefore, many believe that a spe-
dren might do better in countries or regions cial effort is needed to educate girls, and that
where women’s political participation is educating girls would have tremendous spill-
greater because these places are otherwise over effects. Unfortunately, the evidence for
more favorable environments. Second, the this is not as strong as is commonly believed.
comparison between the coefficients of Although an association between education
1066 Journal of Economic Literature, Vol. L (December 2012)
of mothers and the outcomes of their chil- the grounds that the money will be put to use
dren has been found over and over again, the germane to development implicitly recog-
evidence, in most cases, suffers from obvi- nize that women are not entirely powerless.
ous biases: educated girls come from richer If women were powerless, then the money
families and marry richer, more educated, would be immediately appropriated by their
more progressive husbands. As such, it is, in spouses, and we would see no impact of dis-
general, difficult to account for all of these tributing the money to women rather than to
factors, and few of the studies have tried to men. Conversely, if households were harmo-
do so. Breierova and Duflo (2004) use the nious entities where everyone had the same
massive expansion of school construction in preferences and desires, then the nominal
Indonesia in the 1970s to generate variation ownership of money would not matter within
in the differences in schooling between hus- the household. It would all go to a common
bands and wives based only on their region pool and channeled toward the best uses for
of birth and their dates of birth to get around the families.
this problem. When they correct for the In practice, there are good reasons to think
fact that more-educated women differ from that real families are somewhere between
less-educated ones, they still find that, con- these two extremes—neither ruled by a dic-
ditional on the household’s average educa- tator, nor without discord. Instead, all house-
tion level, households have fewer children hold members have different preferences,
when the wife is more educated. However, and different ideas about many things, from
they did not find a lower infant mortality. how many children to have to how best to
While there is no doubt that education has spend household income, and each idea
a positive effect on child mortality, it is not is given a different weight in the ultimate
clear that girls’ education is much more criti- decision depending on each member’s infor-
cal than boys’ education. Chou et al. (2010) mation set and bargaining power. In demo-
use the same empirical strategy to study the graphic and health surveys, for example,
impact of father and mother education on women typically report wanting fewer chil-
child health in Taiwan (which introduced dren than their husbands (Becker 1999).
compulsory junior secondary schooling in A consequence of this difference is that if
1968 and introduced it progressively in dif- women can hide their contraceptive choice
ferent regions). They find strong and positive from their husbands, final fertility may be
effects of both father and mother education lower. Ashraf, Field, and Lee (2010) provide
on child survival, and one effect is not sig- a clear demonstration of this phenomenon
nificantly greater than the next. While more in Zambia. In an experiment, they provided
needs to be learned about this, the automatic 836 married women in Lusaka, Zambia, with
presumption that female education is more a voucher guaranteeing free and immediate
important than male education for child access to a range of modern contraceptives
mortality and for other children outcomes through a private appointment with a family-
may need to be revised: it seems that both planning nurse. Some women received the
matter. voucher in private, while others received the
voucher in the presence of their husbands.
3.2 Women as Decisionmakers
This made a huge difference: compared
to cases where husbands were involved,
3.2.1 . . . within the Household
women who were seen alone were 23 per-
Micro-credit schemes or welfare agencies cent more likely to visit a family-planning
that restrict credit or transfers to women on nurse, 38 percent more likely to ask for a
Duflo: Women Empowerment and Economic Development 1067
more wealth, and therefore are different). Indeed, Duflo finds that girls who live with
Moreover, marriage decisions further com- a grandmother who receives the pension are
plicate the interpretation of these results, as heavier than those who live with a grand-
men who marry richer women may be more mother who is not quite old enough to receive
likely to have tastes similar to theirs. the pension. Moreover, when she looks at
Duflo (2003) takes the strategy of using height, Duflo finds that older girls, who were
unearned income a step further, and uses born before the pension was in effect, are
the rapid expansion of the Old Age Pension smaller when they live with a pension recipi-
Program in South Africa to address the ent (male or female) than when they live
remaining identification issues. At the end with a nonrecipient. However, among young
of apartheid, the government committed to girls, who have lived their lives since the pen-
achieving parity of benefits and eligibility sion system was put in place, those who live
requirements between whites and blacks. with a grandmother who receives the pen-
This was achieved mostly by increasing the sion are taller than those who live without
benefits received by blacks, which grew one. This suggests that pensions received
very rapidly between 1990 and 1993. In by women do translate into better nutri-
1993, 80 percent of black women above tion for girls. While the weight of the older
age 60 and 77 percent of black men above girls catches up immediately, deficit in early
age 65 received the pension. The maximum nutrition continues to be seen in height even
benefit of 370 rands per month—about 3 after good nutrition has resumed, and this is
U.S. dollars per day—was equal to one-half why the older girls remain smaller. We esti-
of the minimum wage, and about twice the mate that for girls, living with a grandmother
median per capita income in rural areas. who receives the pension is enough to bridge
Due to traditional living arrangements, half the gap between the size of children in
nearly one-third of black children under the United States and in South Africa. In
the age of 5 currently live with a pension contrast, no such effect is found when the
recipient. Children who live with a pension pension is received by a man and no corre-
recipient tend to come from relatively dis- sponding effects were found for boys (note
advantaged backgrounds, and so they tend that boys were as delayed as girls in terms of
to be smaller than other children their age. their stature before getting the pension, so
To estimate the effect of receiving a pension this difference does not appear to be due to
on the anthropometric status of children, the fact that only girls need to catch up).
Duflo exploits the fact that height reflects
3.2.2 . . . on the Farm: Women and
accumulated investments in child nutri-
Property Rights
tion. The larger the proportion of life dur-
ing which a child was well-nourished, the We observe many instances in which
taller she will be given her age. Expansion women retain property rights over a por-
of the program in the early 1990s increased tion of the assets they bring into the house-
the likelihood of receiving a pension among hold (we have already seen an example
qualified elderly people, and the ben- in Indonesia). In Africa, it is common for
efits became substantially larger. Thus, women and men to retain separate property
to the extent that the pension resulted in rights over productive assets, particularly
improved nutrition, children born after the land. For example, in Burkina Faso, women
expansion were more likely to have spent a retain ownership of their individual plots
larger fraction of their lives well-nourished within the marriage. Household members
if they lived with a pension recipient. work on each other’s plots, and inputs such
Duflo: Women Empowerment and Economic Development 1069
as fertilizer may be purchased collectively. less credit constrained, can afford fertilizer,
The production is also pooled together for which they use on their own plot, but not on
consumption by all household members. Of the woman’s plot. Given this imperfection in
course, as we saw above, household mem- negotiating within the household, a solution
bers may have different opinions about how to increase household productivity would
these pooled resources should be used, and be for the woman to “rent” her land to her
various factors, including how much land husband, who would then make the efficient
they own, will influence the final consump- production choice. One reason why this does
tion choices of the household. A well-func- not happen is because property rights are
tioning family, however, would first try to weak: if the husband works on the wife’s land
maximize the size of the pie before thinking for too long, he will eventually be recognized
about how to divide it. All inputs, including as “owning” it, and will stop compensating
labor, seeds, and fertilizer, should be allo- her. Anticipating this, women are not ready
cated to all plots so as to maximize the overall to surrender control to their husbands even
productivity of the landholding. Udry (1996) for compensation, and both members con-
shows that, in practice, this is far from being tinue to produce in their own corners. This is
the case. Many more inputs are being used an example where the fact that women have
on the men’s plots, so that, after controlling insecure property rights leads to sheer waste,
for the year, the characteristics of the plots, and literally makes families poorer.
and the type of crops produced, men’s plots Weak property rights for women also lead
are much more productive than women’s to an inefficiently low level of investment in
plots, mostly because much more fertilizer Ghana. Farmers in Ghana let their land lie
is applied to these plots. Because the effec- fallow for a few years to replenish its nutri-
tiveness of using fertilizer declines steeply ents. This is a form of investment in that
with how much is used, it would make much farmers forgo production for a few seasons
more sense to use a little on both men’s for higher post-fallow production. The risk,
and women’s plots. This, however, is not of course, is that someone seeing the fallow-
what households seem to be doing in most ing land may decide to start producing on it.
cases. Overall, household production might Where property rights are secure, this does
increase by 6 percent just by reallocating the not happen. Property rights on agricultural
same amount of fertilizer and labor. This is land in Ghana, however, are anything but
not negligible in an environment where peo- secure. In fact, a farmer only has, at best,
ple are so poor. usufructuary rights: the land belongs to both
So why would they not do this? One answer the village and the lineage, so that even if a
may be that households decide how to allo- piece of land is attributed to someone by the
cate resources as a function of how much food lineage, there is always the possibility that
everyone produced in a day, without taking the village will reallocate it to someone else.
into account the fact that a household mem- The more powerful someone is within either
ber may have helped out another to generate the village or the lineage, the more likely it is
this production. Each household member that they can fight opposing claims on their
prefers a bigger share of a smaller pie and, as land, and thus can choose to fallow without
a result, each works mostly on their own plot risk of being expropriated. Goldstein and
without regard to maximizing overall house- Udry (2005) show that indeed, farmers who
hold production, and they do not sufficiently have a position of power within either the vil-
help other household members with time lage or the lineage are more likely to fallow
or inputs. Men, being richer and therefore their land, and fallow it longer. As a result,
1070 Journal of Economic Literature, Vol. L (December 2012)
they have more productive land. Women roads and irrigation and less about drinking
are less likely to hold a position of power. water. In Rajasthan, over half the complaints
As a result, they fallow less often, and this made by women were about drinking water,
leads to a lower productivity for their land. while very few complained about education.
Again, the lower position of women directly Drinking water was also a big concern for
results in inefficient investment, and this is men in Rajasthan, but it was not as predomi-
not corrected by the transfer of property nant an issue as for women. In contrast, men
rights within the household, which might complained much more than women about
secure the claim of the household vis-à-vis roads and education. The pattern of com-
the lineage or the village, but at the expense plaints dovetails with gender responsibilities
of weakening women’s positions within their of men and women within the household and
own households. their employment opportunities. Women
are responsible for collecting drinking water
3.2.3 . . . and within the Community:
and, in West Bengal, they are the main ben-
Women as Policymakers
eficiaries of road works as they provide the
We have seen that women and men have bulk of labor on roads. In Rajasthan, both
different preferences, and that the house- men and women work on roads, but men
hold does not efficiently bargain to choose use the roads more as they travel more fre-
the actions that maximize the household’s quently in search of work.
utility, suggesting that women and men will This implies that giving women the right to
have different policy preferences. First, vote makes a difference. And indeed, Miller
women will prefer policies that better (2008) shows that the introduction of women
reflect their own priorities. Since they are suffrage in the United States was associated
particularly concerned about child health with a decline in infant mortality. In most
and nutrition, they should prefer policies countries however, women and men now
that will help them achieve these objectives. have the right to vote, although they do not
Second, women should be in favor of poli- get elected. Thus, the next step to increase
cies that will increase their bargaining power women’s political power is to directly affect
within the household, that is, policies that their representation through quotas or reser-
improve their situation in cases of divorce, vation policies.
and policies that increase their productivity To understand the effect of having
in everyday work or improve their chances women as policymakers, Chattopadhyay and
to access the labor market. In practice, we Duflo (2004) study the reservation policy for
do see that women and men have different women in India mentioned above. A consti-
preferences over policies. Chattopadhyay tutional amendment required states to both
and Duflo (2004) collect data on the types devolve power over expenditure for local
of complaints brought by both men and public goods to rural village councils, and to
women to the local village councils in two reserve a third of all council seats and coun-
districts in the states of West Bengal and cil presidencies for women. As a result, the
Rajasthan, India. Village councils admin- political representation and participation of
ister local public goods in rural India. The women has increased. A comparison of the
types of formal complaints differ by gender. type of public goods provided in reserved
For public works, women in West Bengal and unreserved village councils shows that
complained most about drinking water and the gender of the council president impacts
roads, and much less abut education and investments. Women invest more in infra-
irrigation. Men complained most about structure that is directly relevant to the
Duflo: Women Empowerment and Economic Development 1071
Although, interestingly, the response to the to affect decision making within households.
explicit question is not affected, people do Specifically, children are in better health if
vote more for women after the seats lose their mother brought more resources into
their reserved status. Beaman et al. (2011) the marriage. Field (2007) finds that when
examine another form of attitude: the aspi- squatters in Peru were given a property title
rations that parents have for their children, for their land, fertility declined, but only in
and that teenagers have for themselves. We areas where the prescription to put both the
have already noted the gaps between boys woman’s and man’s name on the title was
and girls. This gap is reduced by 0.15 stan- effectively enforced.
dard deviations (one-fifth) in villages where In many developing countries, women are
positions have been reserved for females for very poorly protected in the case of divorce,
ten years. Moreover, even in the absence of and stand to lose assets and the custody of
any additional investment in education infra- their children. Even when divorce laws exist,
structure, this led into an increase in edu- it is frowned upon in society, and remarry-
cational attainment for teenage girls, and a ing is difficult. Surprisingly, there is little
reduction in the gaps with boys. There are research on the effect of these institutions
thus real effects on future gender equality in developing countries. Work from the
of giving more power to women then they United States suggests that the institutions
would naturally be getting, over and above themselves matter for the outcomes within
their ability to directly influence outcomes. the family. Chiappori, Fortin, and Lacroix
To what extent can similar “top–down” (2002) show that the rights of each spouse
policies affect the balance of bargaining in case of divorce (which vary by state and
within the household? One avenue is the have evolved differently in different states
legal environment. A woman’s options out- over time) affect the labor supply decisions
side the marriage are also important for among married couples. Angrist (2002)
bargaining within the marriage. If a woman shows that the female children of American
has no options outside of the marriage, and immigrants have a higher marriage rate and
both she and her husband know that divorce lower labor supply (a sign of higher bargain-
is not possible or that in the case of divorce ing power, in the United States) when there
she would be without any means of support, were more males among the recent immi-
then the husband can impose decisions on grants of their age cohorts. The reason is that
the household—he can threaten his wife migrants tend to marry within their ethnic
with being left in a much worse position if group. Immigration-induced sex ratios that
she does not yield. This suggests that the are not balanced across sexes thus increase
institutional environment, such as the type of the likelihood of remarriage of the sex that is
divorce laws that exist, and the ease of remar- in short supply in case of a divorce, and thus
rying or of finding other ways of supporting increases their bargaining power within the
oneself in case of divorce would affect deci- household.
sion making within households, even when This suggests that policies seeking to
they do not end up divorcing. In Indonesia, increase women’s welfare in case of divorce or
each spouse retains ownership of the to increase women’s access to the labor mar-
resources he/she brought into the marriage. ket may impact outcomes within the house-
Thomas, Contreras, and Frankenberg (2002) hold, in particular child health. But would
show that, even controlling for the house- these effects extend to temporary transfer
hold resources today, the resources each programs that do not profoundly change
spouse brought into the marriage continue the nature of the relative status of men and
Duflo: Women Empowerment and Economic Development 1073
women? For example, do conditional cash than to men, seem to make a difference, even
transfers given to a mother for a period of a when they are both temporary and small.
few years have greater positive effects than if This was first demonstrated in a nice study by
they had been given to a father? The answer Lundberg, Pollak, and Wales (1997), which
is not obvious a priori. One might expect the takes advantage of a change in the alloca-
household to recognize that the transfers are tion of child benefits in the United Kingdom
temporary. In this case, the transfer should from a tax credit to a direct payment in the
have no real effect on the recipient’s bargain- name of the mother. This transfer “from the
ing power in the decision making, since the wallet to the purse” was associated with an
household knows that very soon it will revert increase in the consumption of women’s and
to the prior situation, and that the woman children’s clothing in households with chil-
would be punished if she tried to extract dren. Surprisingly, despite the fact that most
too much while her power lasted. In other of the recent CCT are targeted to women,
words, instead of trying to extract as much as there is very little evidence on whether this
possible at any point in time, the household is a factor in their effectiveness: since most of
members should insure each other, and tem- them are just targeted to women, it is essen-
porary transfers would not matter. tially impossible to distinguish the impact of
In practice, however, we observe that the gender of the recipient from that of the
household members do not seem able to pro- effect of the increased income, or the condi-
vide efficient insurance to each other. They tionality.3 An exception is a recent study by
may face the same constraints that informal Benhassine et al. (2011), which exploits the
insurance between households is subject to randomization of the gender of the recipi-
(moral hazard, hidden information, limited ent of a small conditional cash transfer in
commitment, etc.). In Côte d’Ivoire, women Morocco. They found that, despite the fact
and men grow different crops and are there- that the transfer was very small (it repre-
fore affected differentially by the same rain- sented only about 3 percent to 4 percent of
fall. Some years are good for men, and some beneficiary’s total consumption), households
years are good for women. One would expect reported spending it differently when the
that the consumption in the family would not woman was a recipient, and it had a some-
be affected by the temporary, rain-induced what larger effect on the education of young
fluctuations in the share of income contrib- children and girls when women received it.
uted by each partner. Yet Duflo and Udry It seems unlikely that the program directly
(2004) find that it is: in years when the affected their bargaining power, and indeed
production of women’s crops is higher, the the study does not find any evidence that
household spends a bigger share of its bud- other dimensions of women empowerment
get on food and also on private goods for have changed. However, they seem to have
women. In years when the production of been more likely to be in charge to spend
male’s crops is higher, the household spends that money, and they were more likely to
a bigger share of the budget on alcohol and spend it on education.
tobacco and male private goods. Robinson There are two important lessons from
(2011) has a similar finding from an experi- these findings. First, even if they do not
ment in Kenya, where husbands and wives bring about radical changes in women’s
were given small transfers over a period of a
few weeks. 3 Although some studies try to do this by using a func-
And indeed, the fact that conditional trans- tional form for the impact of income on consumption
fer programs are targeted to women, rather patterns.
1074 Journal of Economic Literature, Vol. L (December 2012)
status or in the way women are perceived in He compares school enrollment of adoles-
society, policies targeted toward women can cents (ages 13 to 17) in families where there
have immediate consequences. Even smaller is an elderly member who is eligible for the
changes that just give women control over a pension and in families where there is an
small stream of resources affect at least the ineligible elderly member. He finds that,
way that this money is spent. Increasing compared to those in families with ineligi-
women’s control over resources, even in ble elders, children are more likely to be in
the short run, will improve their say within school when they live with an eligible man
the household, which will not only increase than with an eligible woman. Here again, we
their welfare, but as research seems to have find evidence that the identity of the income
shown repeatedly, child nutrition and health holder matters. In this case, however, it is
as well. The second lesson is that families when men receive the pension that they
do not function very well, since they are not make the decision favorable to well-being
able to provide each other even basic neces- and development.
sities. This means that we cannot rely on In the case of women’s power, in the first
the family to correct imbalances in society cycle, women shift the allocation of public
in, for example, women’s property rights. If goods in a way that is unambiguously posi-
the family is functioning well, the fact that tive: while women invest more in drinking
women have weak property rights could be water, they invest less in schools in West
solved by transferring property from women Bengal, and less in roads in Rajasthan. This is
to men within the household, with the men not surprising since they operate within a set
able to compensate the women for this. If a budget, and whatever resources are used in
woman cannot rely on her husband to con- one area need to come from another (in the
tinue to compensate her over time, however, second cycle however, in West Bengal, they
she will be reluctant to do so, and will pre- seem to be doing more pretty much across
fer to retain ownership of the property, even the board, though still disproportionately on
if it is with weak ownership. In turn, this water). While this reform was clearly good
may have consequences for the efficiency for women (whose preferences were now
of households’ production, may slow down taken into account), it is less clear whether it
investment and growth, and may contribute is overall welfare improving or not: in order
to keeping households in poverty. to answer this question, one would need to
decide whether water was more important
3.4 Empowering Women: Is It Free Lunch
than schools or roads. There is no obvious
for Development Policy?
way to do this calculation: in West Bengal,
Women and men have different prefer- we tested all water wells, and found most
ences, and accordingly, use their rights over of them to be completely clean. The extra
the permanent transfer to express those investment in drinking water infrastruc-
preferences. However, the fact that women ture may thus have been primarily a matter
have different preferences does not mean of convenience for women. Beaman et al.
that those preferences are always benevo- (2009) collect detailed data on health out-
lent, that they always favor “good things,” comes in households in these villages. They
favorable to development. In the South find no impact of women’s leadership on
Africa case, giving money to women helps measure of infant health, but it does reduce
girls, but not boys. Edmonds (2006) uses the time teenage girls spend collecting water.
the same reform in South Africa to study the This is not to say that this convenience is not
impact of the pension program on education. important. Devoto et al. (2011) found a large
Duflo: Women Empowerment and Economic Development 1075
effect of the connection to the water system markets than men (from insecure property
on self-reported happiness. How one values rights, to constraints on their mobility or on
this convenience, versus educating children their time due to the obligation of child rear-
or better roads, is not something that econo- ing), access to inputs or cash alone may actu-
mists are well placed to evaluate. A coherent ally be more productive for women than for
argument could be made that if women had men. Karlan and Zinman (2011) find no evi-
not had power for a long time, and thus the dence that microcredit loans given to women
investment in drinking water had been lag- have larger effects than those given to men.
ging behind, it is probably efficient to invest Even more troubling are the results of De
more there. But this reminds us that there is Mel, McKenzie, and Woodruff (2009) that
no magic bullet, and that trade-offs remain directly test the proposition that the mar-
unavoidable. ginal returns to investing in female-owned
That said, we have seen along the way enterprises is larger than that of investing
several examples where giving women more in male-owned enterprises. They provided
power would have been efficiency enhanc- cash or in-kind grants to randomly selected
ing: this was the case in Udry’s study in businesses in Sri Lanka, and compared their
Burkina Faso, where lower investments on performance to that of a comparison group.
the women’s fields makes households inef- While they found a very large effect of the
ficient, or in Goldstein and Udry’s study in grants given to men (suggesting returns to
Ghana, where because of weak property capital of about 5 percent per month), the
rights, women were not investing. In the effect of the grant on profit was essentially
West Bengal study, though the static gains zero for women. Fafchamps et al. (2011) rep-
may depend on a policymaker’s objective licate the experiment in Ghana, with similar
function, there seems to be more unam- results: the in-kind grants had some effect
biguous dynamic gains, through the changes on the profit of female-owned businesses,
in attitudes toward female policymakers but only for those businesses that were quite
(allowing voters to choose among a larger profitable to start with. And for women, like
pool of candidates) and teenage girls (which in Sri Lanka, the cash grants had no effect on
leads to a change in the households’ willing- business profits whatsoever.
ness to invest in their human capital, with- There are a number of potential expla-
out reduction of the investments in boys). nations for these results: women work in
However, policymakers often are too quick different sectors, which may be more com-
to conclude that and allocation of resources petitive, and have less scope for expansion
toward women, rather than men, would and increases in profit; they may also be
always be efficiency enhancing. The exam- less committed to their businesses (or their
ple of capital for microenterprise is a useful husband may be less committed to letting
cautionary tale. them grow it . . . ) if this is mainly seen as
A strong claim by microcredit organi- a way to slightly increase household income
zations (who disproportionately lend to while keeping her busy. Finally, women
women, rather than to men) is that because may know less about how to run a busi-
women are more likely to be shut off from ness. The latter hypothesis has motivated
formal or informal sources of credit than a large effort worldwide to combine micro-
men, the returns to investing in their busi- finance services with business training,
nesses should be larger than the returns to particularly by the organization Freedom
investing in women. The problem is that if From Hunger. Addressing one constraint
women face other forms of unequal access to (credit) is not enough, the theory goes; the
1076 Journal of Economic Literature, Vol. L (December 2012)
gaps in education also need to be addressed. ing, which will have a direct impact on
Randomized impact evaluations tend to sug- development. Contrary to what is claimed
gest that the effects of such business train- by some of the more optimistic policymak-
ing are quite limited (Karlan and Valdivia ers, it is, however, not clear that a one-time
2011; Drexler, Fischer, and Schoar 2010). impulsion of women’s rights will spark a vir-
Field, Jayachandran, and Pande (2010) tuous circle, with women’s empowerment
shed interesting light on why that may be and development mutually reinforcing each
the case, and in particular on how an entre- other and women eventually being equal
preneurship opportunity (which could in partners in richer societies.
principle be training or finance) interacts On the one hand, economic development
with existing, slow moving social norms. In alone is insufficient to ensure significant
collaboration with SEWA, a microfinance progress in important dimensions of women’s
and support organization for self-employed empowerment, in particular, significant prog-
women, they conduct a randomized evalua- ress in decision-making ability in the face of
tion of a relatively standard business training pervasive stereotypes against women’s abil-
program in Ahmedabad, Gujarat. They find ity. On the other hand, women’s empower-
that the training had a positive impact on ment leads to improvement in some aspects
business income for Upper Caste women, of children’s welfare (health and nutrition, in
but not for Lower Caste women (the least particular), but at the expense of some oth-
restricted group in their sample) or Muslim ers (education).
women (the most restricted group). They This suggests that neither economic devel-
interpret these differences as stemming opment nor women’s empowerment is the
from a nonmonotonic effect of social norms magic bullet it is sometimes made out to be.
on the ability to acquire and apply business In order to bring about equity between men
knowledge. Upper Caste women might have and women, in my view a very desirable goal
had more to learn than Lower Caste women in and of itself, it will be necessary to continue
because they are less likely to be very active to take policy actions that favor women at the
participants in the market place before the expense of men, and it may be necessary to
training. But Muslim women, whose mobil- continue doing so for a very long time. While
ity was even more restricted, were not able this may result in some collateral benefits,
to put that knowledge to use. This study pro- those benefits may or may not be sufficient
vides a striking illustration of the trade-off to compensate for the cost of the distortions
faced by policy: the fact that women face associated with such redistribution. This
multiple constraints means that relaxing just measure of realism needs to temper the posi-
one may not improve outcomes. In this case, tions of policymakers on both sides of the
some policies that explicitly target women development/empowerment debate.
(for training or for financial resources) may
actually not be effective or cost effective.
References
out robust measures, the theories cannot be tested, the magnitudes of corruption
cannot be quantified, anticorruption policies cannot be assessed, and so forth.
studies are able to credibly describe the extent of the problem. As Bardhan
(1997: p. 1320) notes in his review of corruption, “our approach in this paper is
(and hence nonexistence of) good empirical data on the subject of corruption.”
The measurement challenges are driven by several problems. First, the very
fact that corruption is illegal makes people reluctant to talk about it for fear of
getting into trouble and, possibly, for shame. Second, the existing literature—
actional view of corruption. Measurement means finding out who bribed who
and by how much, which is inherently harder to quantify. Third, the traditional
Finally, measurement systems will evoke responses that make the measurement
system less reliable. If the government has a monitoring system in place, people
adjust to it and find ways around it. As a result, these measurement systems
studies gave the first real evidence about the channels through which corrup-
19 There are exceptions. For example, Tran (2008) gathers a comprehensive set of internal
bribery records from a firm in Asia to document the cost of bribe payments over time.
41
tion occurred and possible methods to eliminate it. Wade (1982) in particular
the distribution of water and contracts in a village in South India. The most
fascinating aspect of this study was the documentation of a fairly formal system
To obtain transfers to lucrative posts, the junior officers paid bribes based on
expectations about the amount of bribe money that can be collected from the
post. Thus, the value of the bribe payment in the transfer process was higher
for jobs that had greater potential for bribe extraction. In essence, the ability
to take bribes in a job induces bureaucrats to bribe others to get it. This highly
detailed study gives a glimpse into the pervasiveness of corruption in this area
and the mechanics of how it operates. It also illustrates how corruption is in-
terconnected throughout the entire organization and raises the possibility that
like all case studies, the study raises questions of generalizability. Is there as
much corruption in other contexts? Under what set of circumstances do these
as in the Hong Kong Police Force, Singapore Excise Department, and the Bureau
of Internal Revenue of the Philippines. In all these cases, the levers used are
replacing individual actors, and so forth. They also all seem to involve a person
at the top of each institution who was eager to implement these changes. On the
On the other hand, they raise the more fundamental question: if these levers
42
for eliminating corruption are within the choice sets of governments, why are
they not implemented? Although they spark hope that corruption can be fought,
these examples leave lingering questions about why conditions were ripe for these
interventions, but not for those elsewhere. Is what we observe due to particular
conditions would lead to similar steps being taken elsewhere? Should we expect
To address these inherent problems of case studies, the next attempts to measure
However, given the difficulty of inducing people to talk about corruption, these
bribes paid or the actual theft of resources. This perceptions based approach
has been carried out at quite a large scale, generating interesting cross-country
and cross-time datasets. The Economist Intelligence Unit created one of the
first such datasets.20 The data collection effort consisted of factor assessment
reports that were filled in by their network of correspondents and analysts. The
data are then aggregated into risk factors for about 70 countries. The report
included, for example, a question where the respondents rate “the degree to
payments” on a scale of one to ten, where a high value implies good institutions
43
of these indicators uses a different methodology with its own advantages and
disadvantages, which we do not discuss here due to space constraints.22 The real
advantage of such data is their breadth, which allows one to run large correlation
red tape.
countries tend to report more or less corruption, many have pointed out their
ruption indices actually mean and what a particular rank implies about the
International Corruption Perceptions Index for 2008, Brazil, Burkina Faso, Mo-
rocco, Saudi Arabia, and Thailand all have the same index value. However,
the value does not tell us what the form of corruption in these countries en-
tails, nor does it indicate whether the types of corruption observed in these
the theoretical framework developed above, bribe taking can actually promote
ideological reasons, to set the price cap below what it should be. Moreover,
deal with some other distortion (see Section 3). These countries may have very
be the same in Saudi Arabia and Burkina Faso, given their very different levels
of per capita wealth? Or, corruption may be a result of the government’s at-
44
in Case I (Section 3.3.1), absent a price cap, the bureaucrat might choose the
monopoly outcome and many slots may be wasted. A price cap might move the
outcome to more visible malfeasance by the bureaucrats (red tape and bribe
taking), but less misallocation and less inefficiency overall. Greater corruption
ruption in that country. Because they do not supply information about the
sources of corruption, these corruption indices actually tell us little about what
types of governance interventions would help deal with these problems, or even
these measures.
Second, perceptions may indicate little about the actual reality of situations
because they are influenced by the way we see everything else. For example,
perhaps when the economy is good, we perceive less corruption because we are
more satisfied with the government. Olken (2009), for example, compares the
perception of corruption in a roads project with actual missing expenditures. He
increase in the probability a villager believes that there is any corruption in the
project” (p.951). He also finds that the bias in perceptions is correlated with
of the population may not adequately reflect real corruption levels. This bias is
on random samples. For example, the measures from the Economist Intelligence
Unit are based on the perceptions of foreign analysts, who may have different
perceptions of corruption than the average citizen of the country. Finally, and
perhaps probably most importantly for our purposes, these data are most useful
45
for cross-country or cross-geography analysis. They are less useful for testing
Newer methods for measuring corruption have been developed to solve the small-
sample problem and move to more concrete measures of corruption. The first set
the ability to assemble data on self-reported bribes and service delivery quality.
bribes paid by firms in Uganda. To encourage truth telling in the survey, it was
tional Crime Victims Surveys and Peruvian Household surveys, both of which
contain information on bribes to public officials if the individual has been the
victim of a crime.24 Other studies collect prices paid for services that should be
free. For example, Banerjee et al. (2004) collects fees paid at government health
centers in India (that should mostly be free), while Atanassova et al. (2008)
collect data on prices paid and quantities received from the public distribution
system in India and compare them to the official prices for these commodities.
The main benefit of these methods is a move to measures that have actual mean-
ings. For example, using the measure in Banerjee et al. (2004), we can estimate
the bribe amounts paid at the health centers and use this information to under-
stand how the bribes affect the allocation of health services. We can also use
informal payments to public officials to deal with customs, taxes, licenses, regulations, and
services, etc. Can you estimate what a firm in your line of business and similar size and
characteristics typically pays each year?”
24 Mocan (2008) also use the ICVS to determine what characteristics were associated with
greater corruption.
46
biased by corruption levels. Moreover, most of the time, these measures are
the larger bribes that they may have paid. Indeed, in many of these cases the
reports are assumed to be reliable precisely because the agents do not know
how much they should have paid, and therefore, do not see themselves as pay-
ing bribes. It is also clear that people might be more willing to reveal bribes
that they paid in settings where the good they receive is abundant (so that they
The second method is the use of physical audits of governmental processes. For
and health worker absence, where they performed spot checks to determine
in India, and recorded all extra-legal payments made and the rules that were
broken in exchange for these extra-legal payments. Barron and Olken (2007)
along their regular routes in two Indonesian provinces. The surveyors observed
the illegal payments the truck drivers made to the traffic police, military officers,
One of the key challenges to the audit studies is whether the observed outcomes
actually reflect corruption rather than some less intentional form of bureaucratic
ineffectiveness, because often there is no smoking gun (bribe overtly paid, job
left entirely unattended, etc.). For example, Bertrand et al. (2007) find that
tain them. Could this be due to an “overloaded” bureaucrat who does not have
47
cannot distinguish between a good and bad driver? To understand this issue,
Bertrand et al. (2007) collect detailed quantitative and qualitative data on how
the bureaucrats behave during the licensing process. They document extreme
behaviors (e.g. simply never administering a driving test) which would be hard
teeism in rural India using audit methods. Does the fact that teachers often do
not come to school imply that they are consciously breaking the rules for private
gain? Or are lives of these teachers so difficult that they just cannot make it to
school often enough, despite trying as hard as they can? The research design
provides information that allows them answer these questions. Specifically, they
evaluate a program that monitors the teachers and provides incentives to the
teachers based on their attendance. They find that teachers are very responsive
that the teachers were previously ignoring the rules and were not incapable of
attending.
much money was released to the bureaucrat with how much the ultimate benefi-
ciaries of the funding report have received. For example, Reinikka and Svensson
tion grant in Uganda. They find that the average school received only about
(2004) compare Hong Kong’s reported exports to China at the product level
with China’s reported imports from Hong Kong to understand the extent of
48
from the bureaucrat documenting how the government resources were spent in
achieving a task and then compare them with an objective measure of how much
it should have cost to conduct the task. The difference between the two mea-
sures is, then, the estimate of how much was “stolen.” Olken (2007) uses this
have cost to build a road of that particular quality. To obtain the independent
measure, he sampled each road to determine the materials and labor used, and
then used local prices to cost these items. He finds that, on average, about 24
As with any other method, this one has both strengths and limitations. Its
innovation lies in the fact that it creatively allows the measurement of dissipated
government resources without asking the actors involved if they have paid or
remains possible (though unlikely) that road quality is mismeasured or that the
bureaucrats are not good at building roads. It is possible (though again unlikely)
that the missing resources indicate that the bureaucrats are trying to reallocate
funds to better uses. For example, in Reinikka and Svensson (2005), it is possible
(although again unlikely) that the resources that should have gone to the schools
capitation program were actually spent on services that the community deemed
more important, and did not end up in the pockets of government officials.
26 Other examples of cross-checking in the developing world include the Hsieh and Moretti
(2006) estimate of bribes in Iraq’s Food for Oil Program; Olken (2006) and Atanassova et al.
(2008) measure theft in food distribution programs using the same method; and Di Tella and
Schargrodsky (2003) use it to measure corruption in hospital procurements.
49
Would this result have necessarily been bad?
One way to get around these concerns is to look for correlations (motivated by
theory) between the extent of dissipation and some other variable. For exam-
ple, to show that the differences in reported shipments is corruption and not
just mismeasurement in the shipments, Fisman and Wei (2004: p.471) docu-
ment that the differences are “negatively correlated with tax rates on closely
related products, suggesting that evasion takes place partly through misclassifi-
In addition to these methods recently used in the literature, there are several
work is not yet published, such methods will surely contribute to the tools
available for studying corruption. For example, Banerjee and Pande (2009)
attempt to use second-hand data on which politicians have gotten rich since
they entered politics to identify those who have profited from corruption.28 They
find that this measure correlates strongly with other, more direct (perceptual),
measures of corruption (e.g. the answer to the question "do you think the
politician used his office for private gain?"). Cai et al. (2009) use predictions of
auction theory to argue that certain types of land auctions in China are used to
promote collusion between the auctioneer and the participants, for their mutual
benefit.
27 Duggan and Levitt (2002) provide an interesting example of cross-checking in sumo
wrestling. They basically show that a wrestler has a higher probability of winning than
expected when the match is key to his rank. To distinguish match throwing from effort, they
use theory as a guide: the effect goes away when there is greater media scrutiny, suggesting
that it is not effort. Moreover, the next time the same two wrestlers meet, the opponent is
more likely to win, suggesting that throwing future matches is a form of the bribe paid for
winning a key match. Similarly, Atanassova et al. (2008) cross-check receipt of a BPL card
(which in India identifies someone to be poor and allows them access to a set of redistributive
programs) against actual income levels. They correlate the error rate with features such as
caste of the recipient, their place in certain social networks etc., and argue that the correlations
are what a simple theory of corruption would predict.
28 Di Tella and Weinschelbaum (2007) provide a theoretical framework for thinking about
50
All these methods pick up the direct correlates of corruption, such as bribes and
absence from work, rather than its more indirect ramifications. In some cases,
such as teacher absenteeism, the direct consequence may be the most important.
However, the point of our framework is to argue that in many situations, the
bribe may just be the tip of the iceberg, with the more serious repercussions
showing up in terms of misallocation and red tape. The next section discusses
Most of the empirical research has been based on measuring the extent of bribery
or shirking and on how incentives affect these behaviors. Bertrand et al. (2007)
differs from much of the empirical research by focusing on the entire resource
allocation problem faced by the bureaucrat and therefore looking beyond bribe
taking as the measure of welfare. The basic strategy of the paper is to experi-
mentally vary the underlying types a bureaucrat faces and use the bureaucrat’s
license candidates. The first group was told to obtain a license as usual, the
second group was given a large incentive to obtain the license in the minimum
legal time allowed (30 days), and a third group was offered free driving lessons.
In our model the second group represents a situation where h and l have both
increased by the same amount. The third group represents a situation where
some of those who were low types will now become high types.
The driver’s license case corresponds to our Case IV (see Section 3.3.3). To
51
that we advocate in this paper.
6 Combating corruption
There is a large and growing empirical literature that studies the effect of ef-
forts to fight corruption. For example, Fisman and Miguel (2007) find that an
increase in punishments for parking violations in New York City reduced the
violations among the set of diplomats, who were most likely to violate the rules.
Using experimental techniques, Olken (2007) finds that theft in road projects
Schargrodsky (2003) find effects of both more stringent monitoring and higher
Several more recent papers on this topic have also tried to go a step further and
tives improves the final allocation of services. In the Di Tella and Schargrodsky
(2003) study, less bribe taking means better procurement prices, which is the
outcome of interest. Olken (2007) looks at the effect of auditing not only on
theft but also on the quality of the roads that were built. Duflo et al. (2008)
words, they are concerned that to complete the task as specified by the incen-
tives, the agent reduces his effort along other dimensions. Specifically, they ask
whether providing incentives for teachers to attend school will cause the teach-
ers to compensate by teaching less. To answer this question, they measure not
only teacher attendance as the final outcome but also the learning levels of the
children. They find that the multitasking problem is certainly not large enough
56
to outweigh the benefits of better incentives.
Corruption exists because there are not enough monitoring and incentives to
eliminate it. What then determines the extent of monitoring and incentives?
cal. What should we assume about the extent to which these rules are the
There are two possible approaches to answering these questions. One is what
might be called the political economy approach. This approach is taken in the
theory section here (Section 3). We assume some preferences for the government
and figure out how the rules and the nature and extent of corruption should vary
optimizing based on those preferences. We could then look for evidence for the
comparative static implications of that model and jointly test the model and
The alternative is to assume that the forces of political economy, although im-
rules can often arise as pure organizational innovations, without changes in the
Banerjee et al. (2001) implement a version of the first approach in the context
of the governance of localized sugar cooperatives. They assume that the coop-
these cooperatives —the different types of member farmers who grow the cane
57
that the cooperative turns into sugar —taking into account the desire of the
that map the pricing of cane and the productivity of the cooperative onto the
underlying mix of farmers in the cooperative. These implications are then tested
across a paper that combines this political economy approach with the more
too incomplete to be useful guides to what rules are actually chosen. The objec-
tive of a specific government at a specific point in time is some complex product
of its long-term goals and its short-term compulsions. Moreover, the way it
chooses rules must take into account the compulsions of all future governments.
It is also not clear how much governments understand about the consequences
of the various policy choices they make or about the policy options available
pen because political actors are trying to solve some "local" problem but the
solutions often have unanticipated and often global consequences, may be more
descriptively accurate. Certainly this approach fits better with the kinds of
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exogenous. That is, the assumption is that the need to solve problems is a
a particular point in time, is less so.30 The approach also makes it clear that
governments might choose bad rules (rules that go against its own objectives),
Several recent empirical exercises start from this point of view. For example,
Besley et al. (2005) find that, in South India, there exists a relationship between
and better allocations of Below Poverty Line cards, which provide privileged
centralized rules on health centers, community meetings are held to decide the
most important rules that health centers should follow, and the mechanisms for
the community to monitor the health centers. They find huge impacts: infant
mortality rates were cut by one-third. However, Banerjee et al. (2008) evaluate
corruption and the distortions associated with corruption.31 How does decen-
tralization change the kinds of rules that are optimal and the way in which they
are violated? How does the exact nature of decentralization factor into all this?
tion is a shift of control rights into the hands of those who have more local
information. The basic notion is that the community now has more information
and therefore can limit the extent of malfeasance by the bureaucrat. We do see
30 Banerjee (2002) discusses many of these methodological issues in greater detail.
31 Bardhan and Mookherjee (2006) provide a rare exception.
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some evidence that the easy availability of information matters. In the driver’s
license experiment, Bertrand et al. (2007) report that there are two obstacles
that bribes cannot get around: one is the requirement of showing some proof
of address and the other is the requirement of waiting at least 30 days after
making the initial application for a learner’s permit. Neither of these seem as
important as being able to drive, especially in India, where the driver’s license
are easy to observe, whereas the inability to drive properly is something that
requires another test to verify. Therefore, these are the rules that are enforced.
However, the answer to the question of what rules are violated in what way
must also depend on who exercises which type of control rights and what infor-
mation reaches whom, which all turns on the exact model of decentralization
7 Conclusion
the gaps in the literature. In Section 6, we discussed the need to more tightly
modeled corruption takes as given the idea that the assignment of the appli-
cants to the bureaucrats is random. This effectively places the applicants and
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