Microeconomics of Development (Binghamton University)

Semester: 

Fall

Offered: 

2019

This is an advanced undergraduate course covering core topics in the field of development economics. Development Economics studies the economics of human behavior of individuals in developing countries. The course takes a microeconomic perspective and covers state-of-the-art empirical methods for applied microeconomic analysis. The course addresses the microeconomic foundations of development problems and their implications for policy design in different contexts. Three main blocks comprise the course:

  1. The first block will concern identification strategies. “Identification strategies” or impact evaluation methods refer to methods, which a researcher uses with observational data (i.e., data not generated by a randomized trial) to approximate a real experiment. The ultimate researcher’s objective is to enable researchers to identify causal effects between two variables.
  2. The second block will concern human capital. Health and education are desirable in and of themselves, but they are also important determinants of productivity and of fertility levels (and of each other). What prevents poor households from becoming healthier and to acquiring more education? Why are girls often at a disadvantage within the household? What policies can improve health and education levels in developing countries?
  3. The third and final part will concern financial capital and frontier topics. Most people in developing countries are self-employed earning highly irregular income, either a daily profit in the informal sector when business is good or only realizing income once or twice a year in farming when the harvest is good. How do households deal with such irregular income? Can they borrow and save, and if not why not? How and how well do informal insurance networks work? Is microfinance the solution to all problems? We will also cover frontier topics, ranging from entrepreneurship, psychology and economics to political economy. Poor households often rely on the public sector for delivery of vital services, such as education and health services. But social service delivery in developing countries is often plagued by ineciencies and corruption. What innovations in the governance of social services can help improve their quality and effectiveness?

For each of topic covered in the course, we will pay special attention to the identifying causal effects that inform the design of public policies, and contrast the lessons learned from this approach to those obtained from observational studies.