120_lecture3_fall09

120_lecture3_fall09 - ECO 120, Lecture 3 Jon Robinson UC...

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Unformatted text preview: ECO 120, Lecture 3 Jon Robinson UC Santa Cruz October 1, 2009 Jon Robinson (UCSC) ECO 120, Lecture 3 October 1, 2009 1 / 47 Administration there is no scheduled MSI time sign up for times https://eop-apps.ucsc.edu/OTSS/tutorsignup/ problem set 1 posted online today due 1 week from today. decided not to have Stata on this problem set (will start on problem set 2) Jon Robinson (UCSC) ECO 120, Lecture 3 October 1, 2009 2 / 47 Readings today: Ray, pp. 272-279, 489-504 (health poverty traps) some empirical examples of health and income (not from syllabus) Thomas, Duncan et al. (2006), &Causal E/ect of Health on Labor Market Outcomes: Experimental Evidence,mimeo, UCLA Jon Robinson (UCSC) ECO 120, Lecture 3 October 1, 2009 3 47 Health, Nutrition, and Income starting the health, nutrition, and income part of the syllabus today: poverty traps late today or probably next week: testing for poverty traps Jon Robinson (UCSC) ECO 120, Lecture 3 October 1, 2009 4 / 47 health & nutrition Chronic malnutrition prevalent: UNICEF: 40-60% of children in developing countries iron decient diarrhea kills 2 million children annually (Kremer and Zwane, 2007) we could nd many other stats todays lecture: is it possible that these health problems "trap" people into poverty? Jon Robinson (UCSC) ECO 120, Lecture 3 October 1, 2009 5 / 47 Poverty Traps What is a poverty trap? A situation in which initial conditions play a crucial role in determining where an individual or country ends up Examples health - > income malnourished people cannot work - > cannot make money - > remain poor - > cannot a/ord food - > remain malnourished and cannot work credit - > small business development assume for the moment that small business are pro&table poor people cannot get access to credit - > they cannot start small businesses - > they are stuck in low-wage occupations such as farming- > they remain poor and cannot get access to credit other examples? education? institutions? many more Jon Robinson (UCSC) ECO 120, Lecture 3 October 1, 2009 6 47 Dasgupta-Ray model (from textbook) will look only at 1 of these: income - > nutrition Can the lexus generate a poverty trap? Will work through these issues formally will rely on graphical analysis for the most part essentially we are going to see how an income-nutrition connection might a/ect labor supply Jon Robinson (UCSC) ECO 120, Lecture 3 October 1, 2009 7 47 Standard Labor supply Jon Robinson (UCSC) ECO 120, Lecture 3 October 1, 2009 8 / 47 normal, upward-sloping labor supply curve (to be induced to work more, people will need more compensation) who works and who doesn&t work in this kind of model? is there involuntary unemployment? Jon Robinson (UCSC) ECO 120, Lecture 3 October 1, 2009 9 / 47 Dasgupta-Ray Based on relationship between work capacity & caloric intake Resting metabolism Maintain body temp., keep breathing, keep heart going, etc.: 1700 kcal per day Energy for work comes on top of this Jon Robinson (UCSC) ECO 120, Lecture 3 October 1, 2009 10 / 47 Dasgupta-Ray...
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120_lecture3_fall09 - ECO 120, Lecture 3 Jon Robinson UC...

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