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Adverse Shocks and Human Development

  • Author(s): Majid, Muhammad Farhan
  • Advisor(s): Deolalikar, Anil B
  • Arnott, Richard J
  • et al.

Every year Muslims worldwide fast during the Islamic month of Ramadan. In 2010 alone, more than 1.2 billion Muslims globally, and 155 million Muslims in Indonesia, were potentially exposed to their mother's fasting. My first paper uses longitudinal data (the Indonesian Family Life Survey) to study the persistent effects of in utero exposure to Ramadan over the life cycle. The exposed children have lower birth weights, they study fewer hours during elementary school, do more child labor, score 7.8 percent lower on cognitive tests and 5.9 percent lower on math test scores. As adults, the exposed children work 4.5 percent fewer hours and are more likely to be self-employed.

In my second chapter, which is joint work with Jorge Aguero, we look at the role which conflict plays in perpetuating inequalities. The identification of the effect of wars on human capital tends to focus on the population of school age children at the time of the conflict. Our paper introduces a methodology to estimate the effect of war on the stock of human capital by examining the changes in the presence of educated people after the Rwanda genocide. We find that the genocide reduced the stock of human capital in Rwanda severely. The before-and-after results show that highly educated individuals (i.e., those with primary education or more) are ``missing'' at a rate that is 19.4\% higher than the less educated. Moreover, Rwanda's average years of schooling is lower by 0.37 years. When comparisons with Uganda are made, these estimates more than double suggesting that, if anything, the previous finding were biased downwards. Interestingly, when the cross-sectional variation within Rwanda variation in intensity of genocide is exploited there is no evidence of statistically significant differences. This suggests that the losses in the stock of human capital due to the Rwandan genocide were aggregate in nature.

In my third chapter, I review the most recent literature from developing countries on parental investment response to child endowment shocks. I find that parents tend to reinforce fetal shocks. Moreover, there seems to be a gender bias in parental investments. However, there is much heterogeneity over the life cycle, with little work done on prenatal investments and none on investment response for adult children. The most attention being drawn on those between 5-15, with a particular interest in schooling time and expenditure. These changes in turn can have significant impacts on the children as they grow up due to externalities, uncertainties and changes in parental investment behavior.

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