This thesis has two main objectives. First, it outlines a taxonomy of reflexive development practice, which aims at transcending the divide between modernism and postmodernism in the methodology of development economics. Second, the thesis examines the taxonomy in two countries at opposite ends of the development spectrum, Vanuatu and Singapore, attempting to show that the taxonomy provides insights for policymaking. The taxonomy is the principal contribution. It suggests an examination of external values and norms; an assessment of the importance of local context; a recognition that policies can worsen the problems that they try to solve; and the idea that theory and policy should be revised as circumstances change. The taxonomy is developed as a way of addressing the difficulties encountered by the modernist Washington Consensus on the one hand and postmodernism on the other. Some postmodernists have criticised modernists for trying to make universal statements based on findings specific to a particular time and context. A further criticism is that the modernist-type theorising exemplified by the Washington Consensus assumes too much certainty, putting excessive faith in the ‘expert’ outsider. Postmodernists, on the other hand, have often been criticised for being relativist or even being against theory itself. In extreme versions of postmodernism, the entire rejection of epistemological foundations allows no analysis or significant discussion. The taxonomy aims to steer away from the pitfalls of either tradition, emphasising in particular the unity of theory and practice and the need for analysis and policy advice to take account of both the objectivism of the outsider and the subjectivism of the insider. The thesis is divided into two parts. The first part discusses how the open systems approach of critical realism, John Maynard Keynes and the neo-Austrians aims to overcome the difficulties of modernism and postmodernism. It then examines some of the principal uses of the term reflexivity in the past century or so, suggesting that some of these uses are compatible with each other and with the idea of open systems. This section draws on the work of several economic methodologists and sociologists, including Karl Marx, Karl Mannheim, Pierre Bourdieu, Anthony Giddens and thinkers within the sociology of scientific knowledge. Next is a critical discussion of the Washington Consensus and its amended version, followed by the development of the taxonomy. Part two begins with a brief discussion of the nature of comparison within developing economies, before looking at the taxonomy in the context of Vanuatu and Singapore. Following the case-studies is an attempt to draw lessons from the experience of the two countries. Finally, the discussion is summarised and some conclusions established.

In this thesis I explore three topics in labour economics, using micro data from South Africa and Tanzania. South Africa suffers from extremely high income inequality, in part as a result of comprehensive Apartheid-era racial discrimination. The first topic explores possible explanations for the extremely large earnings differences across different types of employment for black South Africans, using the KwaZulu-Natal Income Dynamics Study data. I analyse the relative importance of individual ability and institutions, including public sector wage setting and trade unions, in determining earnings. My results suggest that human capital explains much of the earnings differentials within the private sector, including union premiums, but cannot explain the large premiums for public sector workers. Self-employment is very common in urban Tanzania but, unlike South Africa, survey data show that there are large overlaps in the distribution of earnings in private wage employment and self-employment. This suggests that self-employment represents a viable alternative to wage employment in small, low productivity firms for the majority of urban Tanzanians. In chapter three I build an equilibrium search model of the urban Tanzanian labour market to explain the choice of wage and self-employment and the variation in earnings across and within these sectors. In the final topic I explore the effect of education on earnings in Tanzania. Estimating the returns to education has stimulated much recent work in applied econometrics as researchers advance their understanding of the effect of individual heterogeneity on the possibility of estimating the returns to education. In my attempt to purge estimates of the return to education of the influence of individual heterogeneity, I use an education reform in Tanzania as a natural experiment that provides exogenous variation in education. When using Ordinary Least Squares (OLS) I find high and strongly convex, increasing returns to education. My best attempt at separating out the effect of individual heterogeneity suggests that returns are still high but that they may actually be concave.

Apart from the introduction (Chapter 1) and conclusion (Chapter 7), this thesis comprises five chapters organized into two parts: Part I studies promotion incentives in the public sector, and focuses on the case of teachers in rural China. All teachers in China compete with their colleagues for rank promotions. I aim to answer two questions: first, whether the promotion system for teachers in China elicits effort from teachers, and second, how the design features of the promotion system affect effort incentives. Part I includes four chapters. Chapter 2 introduces the topic and provides a background on promotions for teachers in China. It also discusses related work in this area, and introduces the data that will be used in Part I. Chapter 3 presents and tests a theoretical model of promotions as an incentive device. The model treats all teachers as identical in terms of their ability, and as such, focuses on average levels of teacher effort. It predicts that effort is exerted in response to potential promotions. In addition, the model also predicts that average effort incentives are higher in promotion contests in which the wage gap is higher, the promotion rate is closer to one half, the number of teachers competing for a promotion is higher (for promotion rates between 1/3 and 2/3), and the average age of teachers in the contest is lower, or the proportion of female teachers is lower. The model is used to derive an estimating equation by which to test predictions on average levels of teacher effort. An equation is estimated for the probability of promotion as a function of teacher effort, which is proxied by the teachers' annual performance evaluation scores. There is simultaneity present as effort increases the probability of promotion, but it is also the promise of promotion that motivates effort. As a result, effort is instrumented using wage changes, which are both informative (higher wage gaps are associated with higher effort) and valid (wages only affect promotions through effort). The second stage of the regression demonstrates that effort is indeed exerted by teachers in order to win promotions. The first stage confirms the predictions of the model with regards to wage gaps, the promotion rate, and the size and composition of the pool of competitors. Chapter 4 extends the model of Chapter 3 in two ways: teachers are now treated as heterogeneous in ability, and a multi-period model of teacher effort over time is also added. This chapter focuses on individual levels of teacher effort, and on how the parameters of the promotion system interact with teacher characteristics to affect teacher effort. The predictions include that teachers in the extremes of the skill distribution will have lower incentives, and as the contest size increases these teachers will have effort incentives that are lower still, that teachers who are five or more years from promotion eligibility will have zero effort, as will teachers in the highest rank, that teacher effort will increase in the five years leading up to promotion eligibility, and that teacher effort will decrease after a teacher is eligible for promotion but has been passed over several times. An effort equation is estimated that captures all of these components, and the predictions are largely affirmed by the data. Tests are conducted in order to alleviate concerns about selection, as well as measurement error in the performance evaluation scores. Chapter 5 concludes Part I. Part II of this thesis looks at teacher labour markets, social distance, and learning outcomes in Punjab, Pakistan. Chapter 6 explores the link between the distribution of teachers in the labour market, caste differences between teachers and students, and child learning outcomes. Using rich longitudinal data from Pakistan that allows me to convincingly identify the causal effects of caste on learning outcomes, I show how the distribution of teachers across public schools induces particular matches of high and low caste teachers and students, and that these matches are highly predictive of test score outcomes. Specifically, low caste male children perform significantly better when taught by high caste teachers than when they are taught by low caste teachers. Several possible channels are explored, including discrimination in the classroom, role model effects, teacher quality, patronage, peer effects, and returns to education. Although the channel cannot be proven, the data points to high caste teachers being able to raise the already high returns to education for low caste children because they are able to assist these children in getting educational benefits and employment later on using their patronage networks. Low caste children therefore work harder to impress high caste teachers, and this results in higher learning outcomes.

This thesis is a collection of three essays with contributions to the intergenerational and intra-generational mobility literature. The essay on full risk insurance and measurement error examines the likelihood that measurement error may reconcile observed departures from perfect rank immobility in insurable consumption with the mobility predictions of full risk insurance, by generating spurious rank-breaking transitions. The essay shows that under certain assumptions full risk insurance predicts perfect rank immobility and that there exists ranges of error covariance matrices for which the mobility predictions of full risk insurance plus measurement error can not be rejected in the Peruvian data. A novel approach to test these mobility predictions is presented. The essay on discrete time-states Markov chain models applied to welfare dynamics shows that models with higher order may fit data better than the popular first-order, stationary model, and that the order of the chain, in turn, affects the estimation of equilibrium distributions. A best-practice methodology to conduct homogeneity tests between two samples with different optimal order is proposed, and an index by Shorrocks, based on the trace of the transition matrix, is extended to discrete Markov chain models with higher order. The essay on cohort heterogeneity in intergenerational mobility of education shows how cohort heterogeneity affects the analysis of cross-group homogeneity and long-term prospects of a welfare variable, based on transition matrix analysis. The essay compares the transition matrices of Peruvian groups divided by gender and ethnicity and finds genuine reductions in heterogeneity of the mobility regimes between male and female and between indigenous and non-indigenous groups among the youngest cohorts. The essay proposes a methodology to conduct first-order stochastic dominance analysis with equilibrium distributions and shows that among the youngest cohorts past stochastic dominance of male over females and non-indigenous over indigenous disappear in the long term.

This dissertation contributes to the long-standing debate between those who argue that the enclosure of the commons was as a precondition to foster economic growth and those who defend common property regimes can be efficient and sustainable. Exploiting historical evidence from 19^th century and early 20^th century Spain, this research shows that the persistence of the commons in some Spanish regions was not detrimental to economic development, at least relative to the institutional arrangements they were replaced with. On the contrary, during the early stages of modern economic growth, the communal regime not only did not limit agricultural productivity growth, but indeed constituted a crucial part of the functioning of the rural economics in a number of ways. On the one hand, these collective resources complemented rural incomes and, subsequently, sustained households' consumption capacity. The reduction in life expectancy and heights in the provinces where privatisation was more intense, as well as the negative effect on literacy levels, strongly supports that the privatisation of the commons deteriorated the living standards of a relatively large part of the population. On the other hand, the communal regime also significantly contributed to financing the municipal budget. Deprived from this important source of revenue, local councils became unable to adequately fund local public goods and ended up increasing local taxes. Lastly, the social networks developed around the use and management of these collective resources facilitated the diffusion of information and the building of mutual knowledge and trust, thus constituting a vital ingredient of the social glue that hold these rural communities together. All things considered, the persistence of the commons in some regions provided peasants with cooperation mechanisms different from the market and made the transition to modern economic growth more socially sustainable.

Aside from the introduction and conclusion, this thesis comprises four core chapters: The first chapter investigates the presence of endogenous peer effects in the adoption of formal property rights. Using data from a unique land titling experiment held in an unplanned settlement in Dar es Salaam, Tanzania. I show a strong, positive impact of neighbour adoption on the household’s choice to purchase a land title. I also show that this relationship holds in a separate, identical experiment held a year later in a nearby community, as well as in administrative data for approximately 45,000 land parcels in the same city. I also discuss possible channels, including the possibility of complementarities in the reduction in expropriation risk. The second chapter examines the relationship between ethnic heterogeneity and the demand for formal land tenure. Using a unique census of two highly fractionalised settle- ments in Dar es Salaam, I show that households located near coethnics are significantly less likely to purchase a limited form of land tenure recently offered by the government. I attempt to address one of the chief concerns, endogenous sorting of households, by con- ditioning on a households choice of neighbors upon arrival in the neighborhood. These results suggest that close-knit ethnic groups may be less likely to accept state-provided goods if they can generate reasonable substitutes. The third chapter is a short chapter which presents results from a recent policy experi- ment in Tanzania where formal land titles were provided to informal settlers at randomised prices. Land owners were also randomly assigned conditional discounts, which could only be applied if a woman was designated as owner or co-owner of the land in question. Results show that conditionality has no adverse effects on demand for land titles, yet drastically increases the probability a woman is included. We discuss the implications of these results for the expected bargaining power impacts of the intervention. The final chapter investigates birth order effects on both anthropometric and edu- cation outcomes in a longitudinal survey of children from the Philippines. Birth order effects are present early in life for both outcomes, but attenuate as children approach adulthood. There is also evidence for nonlinear birth order effects, with both firstborn and lastborn children holding an advantage over middleborn children. These results are at odds with prevalent theories of birth order which predict lasting and monotonic differences in outcomes across children.

Accounting for output per worker differences across countries has been an ongoing topic of research in economics. This thesis expands upon standard approaches by allowing for technological heterogeneity and exploiting firm and worker level data to determine the microeconomic sources of variation in both productivity and earnings. An intercontinental comparison using production functions for the Ghanaian and South Korean manufacturing sectors in Chapter 2 finds, in contrast to the conclusions of much of the macroeconomic literature, that there is no difference in total factor productivity (TFP). The microeconomic sources of the difference in value added per worker lie within the technology of firms, which is defined as the way in which inputs are used. Two important dimensions of this difference are the larger role of material inputs and the much lower rate of return to schooling in Ghana. In Chapter 3 a more general specification investigates intra-African variation in production, which is much smaller than the intercontinental difference. The pattern of cross-country heterogeneity is that, as GDP per capita rises, the relative input of materials falls, those of capital and labour rise and the returns to education increase. Differences in TFP are limited. Possible sources of the low returns to schooling in Ghana are investigated in Chapter 4 using earnings and production functions. Conditional upon selection into occupations, the only group of workers for whom education appreciably increases earnings are those employed in skilled jobs with more than ten years of education. The evidence is consistent with a lack of technological sophistication being the source of these low returns. Investment in new production processes by firms will increase the return to education and raise incomes and output. Reducing the share of intermediate inputs in production is key to the transition from low to high productivity activities. Technology is the critical element that can explain the performance of manufacturing firms across countries.

This thesis consists of five stand-alone chapters empirically evaluating questions relating to the life cycle of natural resource extraction. We use three different data sets to shed light on the local impacts of natural resource booms and busts. In chapter 2 to 4 we use the household budget survey of Kazakhstan to explore the impacts of the oil boom on the local population. In the second chapter, we explore the distributional effects of the oil boom and show that average household income increased and income inequality decreased. In the third chapter we study how the increase in average income was perceived by the local population and find that households' satisfaction with income decreased. In the fourth chapter we study how the boom affected households' expenditure and show that the likelihood that households pay tuition fees for tertiary education increased. In chapter 5, we explore the long-term impacts of a negative labour demand shock following the coal mine closures in the UK. To do this we construct a new data set containing the location of all active coal mines since 1981 and link it to the UK census. We find that the dramatic lay off of miners since 1981 was associated with a persistent reduction in female labour force participation in the affected districts. In chapter 6, we study the determinants of drilling costs and their impact on the real price of oil using a new global data set on the number of exploration wells drilled and costs of drilling. To do this, we propose a structural model of the upstream sector in the oil and gas industry. The model allows us to decompose the variation in the reduced form errors of the estimated VAR into three structural shocks, and estimate the dynamic responses of the variables in the system to these shocks. We confirm that the upstream sector of the oil and gas industry is subject to increasing costs. But we do not find that the real oil price is permanently affected by shocks to costs of drilling.

This thesis presents three core chapters examining different aspects of the relationship between natural resources and economic development. While addressing different questions they share several features in common: a concern with causal inference; overcoming the challenges of endogeneity between resource abundance and other characteristics of developing countries; and the use of new and novel datasets with spatially identified units of analysis. The work contributes to a rich and growing empirical literature seeking to deepen our understanding of the underlying mechanisms affecting the fortunes of resource-abundant countries. In the introductory chapter I discuss the extensive literature on this topic and in particular focus on the new generation of well-identified within-country studies, seeking to understand the empirical relationship between resources and economic development. Countries typically welcome the news of a resource discovery with joy and indeed, resource discoveries hold great economic potential. But what determines whether a country is resource rich or not? Is it more than just a chance finding, or good geology? In Chapter 2, entitled Institutions and the Location of Oil Exploration I present an investigation into this question. I examine the relationship between governance and choices of where to drill for oil. This work utilises a new dataset on exploration wells and looks at the distribution of drilling close to national borders. This allows me to identify estimates for the effect of differences in governance between neighbours. Two times out of three, investors choose to drill on the side of borders that are better governed, all other things being equal. This suggests that resource-wealth itself may be contingent on factors beyond geology, and indeed may be endogenous to the process of development. In Chapter 3, entitled The Local Effects of Resource Extraction, I turn my attention to the local economic consequences of industrial mining in Indonesia. I present a simple three-sector general equilibrium model to generate predictions for the local labour market, akin to the Corden-Neary Dutch disease model of the macroeconomy. I test the predicted effects in response to an exogenous resource sector shock by looking at mine opening or mine expansion events across three hundred mines. I test the predictions of the model, first by estimating the economic footprint from industrial mining; found to be an average of fifteen kilometre radius. I then examine the response of reported labour market activity from households surveyed in nearby communities. Here I find no evidence for a shift of local labour into the mining sector. I do find however a notable movement of labour from the traded sectors (agriculture and manufacturing) to the non-traded service sector, with a strong effect for foreign-owned mines versus domestic ones. Chapter 4, entitled Disentangling the Effects of Resource Extraction: Local Government and Investment Multipliers, examines the oil and gas boom in Indonesia from 1999-2009. Here I deploy a variety of identification strategies to attempt to disentangle the regional effects of the boom, measured in terms of district GDP. I estimate effects arising from transfers of revenue to local government. Using an instrumental variable approach I isolate the fiscal channel from resource projects. I find a positive and significant effect of increased local government revenues on district GDP over the boom decade. I then examine the spillovers from resource projects, isolating them from fiscal transfers. For districts neighbouring resource rich districts I find evidence for a modest positive effect arising from project investments, rather than fiscal transfers. In Chapter 5 I present concluding thoughts and discuss a future research agenda. I also summarise the burgeoning landscape of resource data available for within country and spatially identified studies and offer some thoughts on how this might evolve.

This thesis employs two new approaches to explain some of the important debates in two key economic fields: labour market economics and macroeconomic studies related to current account imbalances. Chapter 1, Chapter 2 and Chapter 3 begin a new strand of research by introducing the normal inverse Gaussian (NIG) distribution to describe unobserved heterogeneity in the labour market. The NIG distribution can be represented as a normal variance-mean mixture with the inverse Gaussian (IG) distribution as the mixing distribution. A 0.01% subsample of the 1980 US Census, comprising all men between 18 and 65 who are in the labour force, as well as a comparable sample from Ghana, is used to show that the NIG distribution provides a better fit of the log earnings function than the normal distribution. The prediction of right skewness of the log earnings distribution arising from the log normal skill Roy selection model is rejected in favour of left skewness. The thesis then extends the model to describe the distribution of log earnings conditioned on education. The same two datasets (US males and Ghanaian males) are used for the empirical analysis. We find that, once the unobserved heterogeneity is accounted for, the return to education is almost flat for lower levels of education in Ghana, and then increases for education levels greater than ten years. One of the key differences between the two datasets is that skewness and unobserved heterogeneity is a function of education for Ghana but not for the US. The NIG framework is found to be a useful tool to model this heterogeneity. Chapter 4 uses a model that allows for a rich structure of age effects similar to those predicted by the life cycle theories to argue that the demographic shifts are partly responsible for the sustained rise in the US current account deficit and the rapid increase in China's current account surplus in the last decade. However, demographics do not have an impact on the long run equilibrium or level of current accounts. Rather, they are important determinants of the short run adjustment of current accounts to their equilibrium levels. In the next twenty years, the demographic shifts are likely to push towards further current account positive adjustments in China and current account negative adjustments in the US. Developing the infrastructure, financial markets, policy tools and regulatory settings to be able to cope with the excess capital flow remains an urgent task.