Intermediate-to-advanced microeconomic theory course with a development focus. Special attention is paid to the role of informational asymmetries and subsistence constraints, and to the causes and consequences of 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.
Learning Objectives
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, and to the causes and consequences of child labour.
Prerequisites
Given the substantial analytical content, the course presupposes a good grounding in conventional microeconomics and familiarity with the standard mathematical techniques of economic theory (constrained optimization, analytical geometry).
Further information
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, Ch. 32 and 33
2. Intertemporal choice, uncertainty, insurance and asymmetric information, informal insurance
Readings:
Varian, 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, 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, Ch. 11
Bardhan and Udry, 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, 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, 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. Intergenerational transfers, the family as a substitute for the credit market and the welfare state, family rules
Readings:
Cigno and Rosati, Ch. 1 (Sec. 1.2 and 1.3)
Cigno, A. (2011), Lectures on Fertility, Savings, Intergenerational Transfers and Gender, Sec. 2 (Subsec. 2.1) and 3, Thuenen Series of Applied Economic Theory N. 119, University of Rostock, Institute of Economics
8. Education and child labour
Readings:
Cigno and Rosati, Introduction and Ch. 2, 5
Bales, K. (2000), Disposable People: New Slavery in the Global Economy, University of California Press
9. 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
10. Fertility and infant mortality
Readings:
Cigno and Rosati, 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
11. International trade
Readings:
Cigno and Rosati, 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