Microeconomics of Development

Focused on the economic challenges facing developing countries, this course covers the evaluation of interventions aimed at solving them at the micro level. Topics include measuring development outcomes at macro and micro levels; analyzing and evaluating market failures, including their demand and supply-side causes; assessing the impact of interventions implemented by policymakers and researchers in developing countries; and synthesizing findings to design new policy interventions amenable to rigorous impact measurement.

The course draws on economic research employing data science across areas including health, education, discrimination, labor, psychology, corruption, and civil wars. Students also write a technical research proposal addressing an unsolved issue in one of these areas.

The course will be divided into 4 sections.

Section 1 will provide a review of the “bird’s eye view of development” followed by stylized facts of developing economies, and measurement of poverty, inequality and human development.

Section 2 will cover neo-classical economic growth models as well as the empirical literature on why and where development happens.

Section 3 will uncover the market failures facing the poor in the realm of human capital (particularly in health, education and labor).

Section 4 will deal with recent development work in the areas of behavioral economics, as well as economics of discrimination, corruption and civil conflict.

By the end of this course, each student will have had the opportunity to:

• Know about the stylized facts around development.
• Understand measurement of key development indicators and their limitations as well as neo-classical growth theories.
• Analyze and evaluate market failures through empirical papers that apply data science and economics to issues of human capital development (i.e., health, education and labor).
• Analyze and evaluate market failures through empirical papers that apply data science and economics to special issues of discrimination, psychology, corruption and civil conflict.
• Synthesize findings from the literature to create a research proposal for a dream experiment in development economics that solves an unsolved market failure.

• Banerjee, Abhijit V. and Esther Duflo, Poor Economics, 2013, Penguin Books. (The authors are winners of the Nobel Prize in Economics 2019).

• Additional required readings for each week will be uploaded on LMS. These will be academic (published or working) papers related to the topic being discussed in class that week and should be completed prior to class.