This is an intermediate-to-advanced microeconomic theory course with a development focus. Special attention is paid to the role of informational asymmetries and subsistence constraints, to the need for family or village-level informal arrangements in the absence of complete markets, and to the causes of high fertility, infant mortality and child labour.
Bardhan, P. and C. Udry (2001), Development Microeconomics, Oxford University Press
Cigno, A. and F. C. Rosati (2006), The Economics of Child Labour, Oxford University Press
Varian, H. R.(2014), Intermediate Microeconomics, 9th ed., W. W. Norton & Co.
Journal articles listed in detailed course description below.
Learning Objectives
Competence in microeconomic analysis. Ability to address analyitcally some of main problems characterising less developed economies.
Prerequisites
Given the substantial analytical content, the course presupposes a good grounding in elementary-to-intermediate microeconomics and familiarity with the standard mathematical tools of economic theory (analytical geometry, infinitesimal calculus, optimization with equality and inequality constraints).
Teaching Methods
Lectures with student-instructor interaction. Regular attendance is strongly recommended.
Type of Assessment
Written examination with open questions.
Course program
1. Revision of general equilibrium and welfare economics
Readings:
Varian (2014), Ch. 32 and 33
2. Intertemporal choice, uncertainty, insurance and asymmetric information, informal insurance
Readings:
Varian (2014), Ch. 10, 12 and 38
Fitzsimons, E. (2007), “The effects of risk on education in Indonesia”, Economic Development and Cultural Change, vol. 56, pp. 1-25
3. Credit markets with moral hazard and adverse selection, microcredit
Readings:
Bardhan and Udry (2001), Ch. 7, 8 and 11 (Sec. III)
Morduch, J. (1999), “The microfinance promise”, Journal of Economic Literature, vol. 37, pp. 1569-1614
4. Asset and land markets, farmer-trader contract, share-cropping, principal-agent contract
Readings:
Varian (2014), Ch. 11
Bardhan and Udry (2001), Ch. 6 (Sec. I and II) and 9 (Sec. I and III)
Hirschleifer, J. and J. G. Riley (1979), “The analytics of uncertainty and information: An expository survey”, Journal of Economic Literature, vol. 17, pp. 1375-1421
5. Labour markets, efficiency wages, long-term employment contracts, bonded labour
Readings:
Bardhan and Udry (2001), Ch. 4 and 9 (Sec. II)
Genicot, G. (2002), “Bonded labor and serfdom: a paradox of voluntary choice”, Journal of Development Economics, vol. 67, pp. 101–127
6. Migration
Readings:
Bardhan and Udry (2001), Ch. 5
Dustmann, C., T. Frattini and A. Glitz (2008), “The labour market impact of immigration”, Oxford Review of Economic Policy, vol. 24, pp. 478-495
7. Education, child labour and intergenerational transfers
Readings:
Cigno and Rosati (2006), Introduction and Ch. 2, 5, 8, 9
Cigno, A. (2011), Lectures on Fertility, Savings, Intergenerational Transfers and Gender, Secs. 1, 2 and 3, Thuenen Series of Applied Economic Theory N. 119, University of Rostock, Institute of Economics
Bales, K. (2000), Disposable People: New Slavery in the Global Economy, University of California Press
8. Conditional cash transfers
Readings:
Chiapa, C. and L. Juarez (2016), “The schooling repayment hypothesis for private transfers: Evidence from the PROGRESA/Oportunidades experiment”, Review of Economics of the Household, vol. 14, pp. 811–828
Cigno, A. (2012), “How to deal with covert child labor, and give children an effective education, in a poor developing country”, World Bank Economic Review, vol. 26, pp. 61-67
Lincove, J.A. and A. Parker (2015), “The influence of conditional cash transfers on eligible children and their siblings”, Education Economics, vol. 24, pp. 352-373
9. Fertility and infant mortality
Readings:
Cigno and Rosati (2006), Ch. 3 (Sec. 3.1), 5 and 9
Cigno, A. (1998), “Fertility decisions when infant survival is endogenous”, Journal of Population Economics, vol. 11, pp. 21-28
Manuelli, R. E. and A. Seshadri (2009), "Explaining international fertility differences", Quarterly Journal of Economics, vol. 124, pp. 771-807
10. Game theory and family rules
Readings:
Varian (2014), Ch. 19
Cigno and Rosati (2006), Ch. 1 (Sec. 1.3)
Cigno, A. (2011), Lectures on Fertility, Savings, Intergenerational Transfers and Gender, Secs. 3 and 4, Thuenen Series of Applied Economic Theory N. 119, University of Rostock, Institute of Economics
11. International trade and the skill premium
Readings:
Cigno and Rosati (2006), Ch. 4
Cigno, A., G. Giovannetti and L. Sabani (2018), “The role of trade and offshoring in the determination of relative wages and child labour”, Journal of International Trade and Economic Development, vol. 27, pp. 267-292
Goldberg, P. and N. Pavcnik. 2007. “Distributional effects of globalization in developing countries”, Journal of Economic Literature, vol. 45, pp. 39–82