REPORTS:OCTOBER 2018
Abuelhaj, T., Gassmann, F., & O’Donoghue, C. (2018). Price opinion data in subsidized economies: Empirical evidence from Iraq (MERIT Working Papers No. 033). United Nations University – Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
Abstract
Distortions resulting from consumption subsidies or rationing systems often lead welfare analysts to use market price opinions, where household budget survey respondents are asked to provide their opinions of equivalent market prices of subsidized or rationed goods, to value consumption of the rationed goods. This is because prices paid by households for rationed goods do not represent the true marginal utility from consumption of these goods. This is the case in household budget surveys undertaken in Iraq, for example, where rationed food items received through the Public Distribution System are valued at market prices using price opinion data rather than at official prices facing households. Despite the fact that most Living Standards Measurement Surveys conducted in countries that maintain consumption subsidies collect market price opinions, little evidence exists to support the notion that respondent opinions on market prices adequately approximate shadow prices of subsidized or rationed commodities. This paper explores the adequacy of market price opinions of subsidized food commodities using data from Iraq. The evidence presented here suggests that price opinions of subsidized food commodities are influenced by the importance of the subsidy in the household economy – a reflection of household welfare levels and preferences. This leads to the conclusion that price opinion data for subsidized goods distorts the estimated transfer value of the PDS food subsidy and biases welfare analysis, particularly affecting the ability to monitor trends over time.
Muttaqien, A., Sologon, D., & O’Donoghue, C. (2018). Earnings polarization, ethnicity, and regional perspective in Indonesia (No. WIDER Working Paper 201 8/106). United Nations University.
Abstract
Recently, quantitative methods have been increasingly used in ethnicity research, which traditionally has relied mainly on qualitative methods. However, quantitative studies on ethnicity
in Indonesia are scarce, even though the country has more than 600 ethnic groups living across some 17 thousand islands and a history of ethnic conflicts in several regions. This study aims to address the earnings polarization in Indonesia, which is interwoven with social problems, ethnic conflicts, and social tensions. In particular, we examine the impact of ethnic diversity on earnings polarization in the Indonesian labour market using Re-centered Influence Function regression approach.
With considering additional covariates, the results show that regional characteristics are more important than ethnicity. Finally, ethnicity becomes not significant anymore by including the interaction effect between ethnicity and regional characteristics.
Ryser, L., Halseth, G., Markey, S., Gunton, C., & Argent, N. (2018). Path dependency or investing in place: Understanding the changing conditions for rural resource regions. The Extractive Industries and Society.
Abstract
Over the past few decades, senior governments in many OECD countries have rolled back regulatory strategies to incentivize jurisdictional environments for resource development. As senior governments promote resource development, however, they are also reducing financial support for communities experiencing the social and physical infrastructure pressures. This has prompted municipalities to pursue regional strategies to retain a portion of resource wealth. Drawing upon staples theory and evolutionary economic geography, we explore how municipal stakeholders in the Peace River region of British Columbia, Canada leveraged an underdeveloped provincial policy regime to recapture resource revenues through the Fair Share Agreement (FSA). Once the FSA was adopted, local governments needed to follow strict spending and investment guidelines. Based on their property tax regimes and limited jurisdiction, they focused on infrastructure repairs and expansion of basic services, but also with some investments in recreation centres and schools. Tensions emerge, however, about how these revenue regimes can either entrench path dependency or create opportunities for investing in place. Under this regime, no emergency or legacy fund investments are allowed. As local government stakeholders acquired resource revenues, they had no jurisdiction to support new development pathways, resulting in no significant changes from path dependency.