Asian Development Review

Four in five poor people in the Asia and Pacific region live in rural areas. Crop cycles in agrarian areas create periods of seasonal deprivation, or preharvest “lean seasons,” when work is scarce and skipped meals become frequent. In this paper, we document this phenomenon of seasonal poverty and discuss existing formal mechanisms for coping with it. We then focus on seasonal migration from rural to urban areas as a potential coping strategy and review the evidence on the effects of encouraging seasonal migration through transport subsidies. Over the past 10 years, we have conducted a series of randomized control trials in Bangladesh and Indonesia that provided rural agricultural workers with small migration subsidies to pay for the cost of round-trip travel to nearby areas in search of work. This paper summarizes the lessons learned from this multicountry, multiyear series of seasonal migration trials, the implications of these results for spatial misallocation, urbanization, and growth, and the replicability and relevance of this and other policies encouraging domestic migration more broadly for other areas in the Asia and Pacific region.

Using a recently constructed dataset that draws on the China Employer–Employee Survey, this paper provides new evidence on the earnings gap between rural migrant and urban manufacturing workers in the People's Republic of China. When we only control for province fixed effects, we find that rural migrant workers are paid 22.3% less per month and 32.2% less per hour than urban workers. We find that the gap in hourly earnings is larger than the gap in monthly earnings because rural migrant workers tend to work an average of 5.6% more hours per month than urban workers. Using these data, we also find that 87.4% of the monthly earnings gap and 73.9% of the hourly earnings gap can be attributed to differences in the individual characteristics and human capital levels of rural migrant and urban workers. Furthermore, we find that this unexplained earnings gap varies among different groups of workers. The earnings gap is much larger (i) for workers in state-owned enterprises than in nonstate-owned enterprises, (ii) for college-educated workers than workers with lower levels of educational attainment, and (iii) in Guangdong province than in Hubei province.

This paper uses loan-level data from Thailand's National Credit Bureau to study household debt over the life cycle of borrowers. We decompose two aggregate and commonly used measures of debt—debt per capita and delinquency rate—into components that unveil the extensive and intensive margins of household indebtedness. We find a striking inverted-U life-cycle pattern of indebtedness as predicted by economic theories. However, peaks are reached at different ages for different loan products and different lenders. We also find that debt has expanded over time for all age groups. Younger cohorts seem to originate debt earlier in their lives than older generations. Meanwhile, older borrowers remain indebted well past their retirement age. Finally, we find a downward pattern of delinquency over the life cycle. Our findings have important policy implications on financial access and distress of households as well as on economic development and financial stability of the economy.

This paper explores financial spillovers between emerging Asia and advanced economies using principal component analysis to extract common shocks in Asia. We first investigate stock market spillovers across the regions and find that spillovers from emerging Asia became significant after the global financial crisis. However, our industry-level analysis shows that the increased spillovers can be attributed to the first principal component (PC) in the manufacturing sector rather than to the first PC in the financial sector. This implies that the rise of the Asian manufacturing sector in the global market played a key role in enhancing the stock market spillovers. We next examine bilateral spillovers in short-term and long-term rates. In the tapering period, we find significant spillovers in long-term rates from the first PC in emerging Asia to Europe and the United States. However, these spillovers were much smaller than the stock market spillovers in magnitude.

By classifying international green and non-green trade for the period 1980–2015, this study investigates trends in green trade, exports, and imports as shares of total trade, exports, and imports, respectively. The general findings are that these green shares increased during the review period, albeit with the green shares for member countries of the Organisation for Economic Co-operation and Development showing different trends than those of nonmember countries. Further, three countries at different stages of economic development—the People's Republic of China, the Republic of Korea, and the United States—each exhibit different trends in green trade over time. In particular, the green trade, export, and import shares of the People's Republic of China decreased over time, which is in contrast to the increases observed for the Republic of Korea and the United States during the review period. The findings suggest that efforts to persuade developing countries to accept international agreements to reduce greenhouse gas emissions should also consider the transboundary transmission of these emissions and their health effects.

Do firms pay more taxes after formalization? The answer to this question is nontrivial. Tax noncompliance can be a persistent behavior among formerly informal firms. Analyzing the relationship between formalization and tax payments can also be challenging if nonswitching and switching firms have different characteristics. I use a panel dataset built from five small and medium-sized enterprise surveys conducted in Viet Nam from 2005 to 2013. By comparing nonswitching informal firms to switchers, I show that switchers are more likely to pay taxes and to pay a higher amount, thereby confirming heterogeneity. By comparing switchers before and after formalization, I find that formalization increases tax payment likelihood by 20% and the tax amount paid by 93%. A control function approach indicates that my results are robust to potential endogeneity of formalization. Therefore, this paper provides supportive evidence for a key public policy rationale to promote formalization: increased tax revenues.

This paper assesses the environmental and economic efficiency of thermal plants operating on fossil fuels in Pakistan using methods based on data envelopment analysis. Using the material balance principle, we find that cost- and carbon-efficient points can only be obtained simultaneously by switching to gas. However, under an assumption of variable returns to scale, these points can still be obtained without this conversion through the application of best practices. Furthermore, about 26% of costs and about 34% of carbon emissions can be reduced without a switch to gas, but instead by using technically efficient inputs; this approach can also lead to a significant reduction in electricity prices and considerable environmental benefits. Power plants operating on residual fuel oil are significantly more technically efficient than plants operating on gas. Nonetheless, both types of plants have an equal share in forming the metafrontier as exhibited by the meta-technology ratio. There is a definite need to make plants more efficient by using the best possible combination of inputs and overhauling. Bootstrap results also suggest that further improvement in efficiency is possible.

Households in developing countries predominantly rely on solid fuel for cooking, which is injurious to both the environment and human health. The provision of clean energy for cooking, therefore, is essential for safeguarding the environment and human health, primarily of women and children in developing countries. Using the 2014–2015 Pakistan Social and Living Standards Measurement Survey and robust econometric methods, this study analyzes different types of energy used for cooking among urban households in Pakistan. The study shows that although urban households in Pakistan mostly use gas for cooking, the use of solid fuels, particularly among poor and relatively less educated households, is pervasive. The econometric findings confirm that households with a higher level of education and wealthy families mainly use clean energy, such as gas, and are less likely to use dirty solid fuels, such as cake dung and crop residue for cooking. Considering the expansion of middle-class households and anticipating their demand for clean fuel for cooking, this study suggests ensuring an adequate supply of clean sources of energy to meet future demand as well as augmenting the affordability and awareness among households who are still dependent on solid fuels.