Understanding the microeconomic fundamentals of development problems lies at the heart of an effective development policy design. The goal of this course is to both understand the microeconomics of incentives and institutions underlying key development issues and the tools researchers and policy-makers use to study these issues and to design related policy interventions. It focuses on both theoretical interpretation and empirical estimation of microeconomic models of individual, household, farm, market and non-market institutions that relate to a range of issues attracting both research and policy attention in the field. For each development issue, we will discuss some theoretical and empirical backgrounds of the institutional settings and incentives, and will discuss some concrete policy interventions taken from recent empirical studies around the world. The course is designed for students with at least advanced undergraduate-level training in microeconomics and econometrics and an interest in advanced study and policy-oriented research in microeconomics of development.

On completion of the course, students will: 

1. Be familiar with some of the key micro-level development issues, their related institutions and incentives
2. Understand the microeconomic foundations and estimation techniques used to study these issues
3. Be able to apply these theoretical and empirical techniques to constructively design and analyse related policy interventions for the current or other development issues.

In-class presentation (10%) [all outcomes], Constructive policy briefs (20%) [outcome 3], Research assignment (30%) [outcome 2], Final examination (40%) [outcomes 1 & 2].

Two 1.5 hour lectures per week.

Students are expected to have completed an advanced undergraduate-level microeconomics course equivalent to ECON3101 or IDEC8016 and an econometric course at the level equivalent to IDEC8017.

Assumed Knowledge: Advanced undergraduate-level microeconomics and econometrics

Recommended course: IDEC8022 Economic Development

The primary textbook for this course is

Development Economics. D. Ray. Princeton University Press (1998)

This book, however, will not provide full reference of the material covered in this course. The course material will also draw on the following three books supplemented by journal articles, book chapters, and technical papers on the relevant issues.

Poor Economics: Radical Rethinking of the Way to Fight Global Poverty. A. Banerjee and E. Duflo. PublicAffairs (2011)

Portfolios of the Poor: How the World's Poor Live on $2 a Day. D. Collins, J. Morduch, S. Rutherford, and O. Ruthven. Princeton University Press (2009).

Understanding Poverty. A. Banerjee, R. Benabou and D. Mookherjee, editors. Oxford University Press (2006).

Course outline

Week 1:   Measures and empirics of economic development

Week 2:   Research methods in development microeconomics

Week 3:   Poverty traps, vulnerability and welfare dynamics

Week 4:   Labour productivity and market

Week 5:   Education

Week 6:   Health and nutrition

Week 7:   Intra-household resource allocation

Week 8:   Land and property right

Week 9:   Risks, saving and insurance

Week 10: Credit

Week 11: Agricultural productivity and technological diffusion

Week 12: Interlinked Agrarian contracts

Week 13: Environmental Externalities