Four Empirical Essays in Development Economics

This thesis is made up of four essays in empirical development economics. The first essay takes a new look, from a macro perspective, at the issue of remittances effectiveness. Using a panel dataset for 41 Sub-Saharan Africa countries over the period 1981-2010 and controlling for endogeneity under instrumental variable estimation, I find that remittances reduce poverty, but the size of the poverty reduction depends on how poverty is being measured. Additionally, remittances have income-equalizing effects. The second essay investigates the effect of gross fixed capital formation on poverty and explores whether the gross fixed capital formation and poverty relationship can be strengthened by institutions in Sub-Saharan Africa. It is found that gross fixed capital formation reduces poverty and institutions reinforce the gross fixed capital formation and poverty link. The third essay uses a nationally representative pseudo-panel dataset of Ghana for 1991/1992, 1998/1999 and 2005/2006 to investigate whether there is a positive relationship between rainfall-driven agricultural income and household per capita expenditure. It is found that a fall in rainfall-driven agricultural income leads to a decrease in per capita expenditure. The results show that female-headed and rural households are more vulnerable to adverse rainfall-driven agricultural income changes. The expenditure disaggregation indicates that female-headed households significantly reduce per capita non-food expenditure in times of rainfall-induced agricultural income decrease whilst the response of male-headed households focuses more on reducing per capita food and remittance expenditures. In the fourth essay, we use a repeated cross-section dataset of Ghana for 1991/1992, 1998/1999, 2005/2006 and 2012/2013 to investigate the effect of agricultural income on remittances. We find that households in Ghana may use remittances to protect themselves from negative agricultural income changes.