Final

Final. = &nb= sp; = &nb= sp; = &nb= sp; Spring 2005

Name:______________________= _ &= nbsp; &nbs= p; Economics of Development

Each question is worth the total number of points in parentheses; sub-questions are allocated an equal share of the total points= per question. Final is worth 30 p= oints.

1) Popul= ation issues. (4 points)

a) Fill = in the following table, and use the resul= ts to illustrate the concept of the hidden momentum of population growth. Fr stands for the total fertility = rate of the associated age cohort during their reproductive years. Assume future youth cohorts will h= ave a total fertility rate of 2. To= tal population is for males and females; assume 50% of the population is female. This is the same as the example presented in class.

<= o:p>	G= en 1	G= en 2	G= en 3	G= en 4
y= outh fr=3D2
r= eproductive fr=3D2
post reprod. Fr=3D2=	20
<= o:p>	<= o:p>	<= o:p>	<= o:p>	<= o:p>
T= otal population	120

<= o:p>	G= en 1	G= en 2	G= en 3	G= en 4
y= outh fr=3D2
r= eproductive fr=3D3
post reprod. fr=3D4	10
<= o:p>	<= o:p>	<= o:p>	<= o:p>	<= o:p>
T= otal population	120

b) Illus= trate on a graph and briefly explain the different phases of the demographic transit= ion.

2) Inequ= ality (3 points)

a) Draw = a Lorenz curve of income distribution, and illustrate how you can derive a Gini coefficient from the Lorenz curve graph.

b) Draw a Kuznets curve (the original one, not the environmental one) and briefly exp= lain what it means.

3) True = or False (6 points)

Statement	Circle whether the statement is true or false
The inverse farm size productivity relationship impl= ies that small family farms should be consolidated into larger farms to reali= ze economies of scale.	True &nbs= p; False
The demand for children model indicates that increas= ed job opportunities for women can lead to lower population growth rates.	True &nbs= p; False
Research suggests that it is relatively common for informal sector enterprises to start small and transition into the formal sector as they grow larger.	True &nbs= p; False
Hirschman argued forward and backward linkages justi= fied explicit support for agricultural development rather than industrial development.<= span style=3D'mso-spacerun:yes'>	True &nbs= p; False
The Harris-Todaro migration model explains why migra= tion to cities may continue in spite of existing urban unemployment.	True &nbs= p; False
In Latin America = the private internal rate of return to primary education is positive but the social internal rate of return to primary education is negative.	True &nbs= p; False
The height for age measure is used as an indicator o= f past undernutrition.	True &nbs= p; False
“Green” net national product (NNP*) meas= ures GNP after subtracting off depreciation of environmental capital assets and depreciation of manufactured capital assets.	True &nbs= p; False
Evidence on the relationship between income per capi= ta and urban air quality (particulate matter) is consistent with he “Environmental Kuznets Curve” model.	True &nbs= p; False
The majority of the population in developing countri= es lives in urban areas.	True &nbs= p; False
Food production per capita worldwide has been decrea= sing over the past 30 years.	True &nbs= p; False
World population is projected to arrive at a level o= f 29 billion in 2050, after which it will stabilize around this level.	True &nbs= p; False

4) Poverty measures. (3 points)

Person number	Income per day
1	$0.05
2	$0.95
3	$0.99
4	$1.01
5	$2.00
6	$2.20
7	$3.80
8	$4.00
9	$9.00
10	$22.00

TOTAL INCOME &nbs= p; &= nbsp; &nbs= p; &= nbsp; $46.00

a) What = is the headcount and the headcount index of poverty if= the poverty line is defined as $1 per person per day?

b) What = is the total poverty gap and the normalized average po= verty gap?

c) What = share of total income is held by the highest quintile and what share is held by the lowest quintile?

5) Health (3 points)

a) Four = types of malnutrition were discussed in class. Identify three of them.

b) What = is a disability adjusted life year?

6) Educa= tion (2 points)

a) In cl= ass, we discussed reasons for addressing gender inequality in education. List four reasons we could use to justify policies that reduce gender inequality in education.

b) Expla= in the argument that observed patterns of public spending on education in developi= ng countries can lead to increased income inequality from the level observed i= n the current generation to the level observed in the next generation.

7) Income diversification. (1 point)

Statement	Circle whether the statement is true or false
Estimates of the value of non-farm income in rural a= reas tend to find non-farm income accounts for less than 15% of total income.	True &nbs= p; False
Risk coping describes strategies adopted after an ad= verse shock is realized in an attempt to maintain food security.	True &nbs= p; False
Employment in the farm cash labor market in a rural = area is not considered a form of income diversification.	True &nbs= p; False

8) Trage= dy of the commons. (2 points). Herder A and Herder B can choose t= o put 1,2, or 3 animals on the commons. Payoffs are as described in each c= ell of the matrix, with payoff to herder A on the left hand side, payoff to herder= B on the right hand side.

	&nbs= p; &= nbsp; &nbs= p; Herder B
Herder A		1	2	3
1	3 &nbs= p; 3	2 &nbs= p; 7	1 &nbs= p; 8
2	7 &nbs= p; 2	6½ &nbs= p; 6 ½	5 &nbs= p; 7
3	8 &nbs= p; 1	7 &nbs= p; 5	6 &nbs= p; 6

a) What = is the Nash equilibrium outcome of this game if each herder plays best response to= the other?

b) Can a= policy that limits the quantity of animals each herder places on the commons Paret= o improve on the Nash equilibrium outcome? Explain.

c) Descr= ibe two policy responses to the tragedy of the commons that are commonly recommended (not the ones I presented when discussing my work, but the ones suggested by the standard model).

9) Pover= ty traps. (4 points)

a) Krishna presents this poverty transition matrix (wh= ich we discussed in class). What par= t of this matrix represents households that fell into poverty, and what general patterns emerged in the study to explain what caused these households to fa= ll into poverty?

	Poor 25 Years Ago	Not Poor 25 years ago
Poor Currently	17.8%	7.9%
Not Poor Currently	11.1%	63.2%

b) Contr= ast asset poverty to income poverty.

c) Contr= ast chronic and transitory poverty.

d) Contrast structural and stochastic poverty.

10) Agri= culture (2 points).

a) Expla= in how land tenure reform in a sharecropping system can lead to increased incentiv= es to invest in soil conservation measures.

b) Expla= in the link between land tenure reform and access to formal credit.

Extra Credit: <= /span>(1 point, no partial credit)

The demand for children model is presented in the book= as:

Define fully each component and identify the hypothesi= zed sign of the derivative of the demand function with respect to each variable= .