The 2009 World Development Report provides the following information for Colombia and Thailand. Explain carefully what each of the entries in the four columns of this table measures. Do these measures capture important dimensions of poverty?
Population below
National Poverty Line
(%)
Population below
$1.25 Day (PPP)
(%)
Poverty Gap at
$1.25 Day PPP
(%)
GNI per capita, PPP
(current
international $)
Colombia 40.2 9.7 4.7 8710
Thailand 8.1 <0.5 <0.5
2. Use the household utility maximization model to explain how the following policy interventions and economic changes can be expected to affect fertility rates and, ultimately, the rate of population growth.
(a) An increase in labour opportunities for women.
(b) An increase in average household's income.
(c) A law banning the use of child labor together with the provision of free primary education for all children.
3(a) What conclusion can be reached from the following data on income shares?
Percentage of Income Received by
Lowest 40% Highest 20%
Bangladesh 17.3 45.3
Indonesia 14.4 49.4
4) Suppose that, for example in Bangladesh, a minimum wage is instituted in the modernsector above the market clearing wage, while the rural traditional wage is market determined at a lower level than in the modern sector.
(a) Describe the impact of this policy on the rural labour force, urban unemployment,informal sector employment and the rural wage.
(b) Will the modern sector wage be equal to the traditional sector wage after markets equilibrate through migration? Explain.
(c) What effect might moving costs have on migration?
(d) What effect might the introduction of factories to rural areas have on the equilibrium you described in part (b)?