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An exploration of individual-level wage effects of foreign aid in developing countries

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  • Koch, Dirk-Jan
  • Schulpen, Lau

Abstract

The key research question that this article aims to respond to is: what are the individual-level effects of wages financed by development assistance? Our hypothesis is that these effects are substantial and overall positive, depending on the level of analysis. This article theorizes about unintended wage effects at the individual level, spillover effects, and those at the macro level, yet focuses its research on individual-level effects. The empirical part consists of two case studies. One takes a sample of grants from a donor agency, the Netherlands Ministry of Foreign Affairs, as a starting point, following these grants through the aid chain to determine local staffing costs. The other case study consists of a comparative wage analysis in a developing country, the Democratic Republic of Congo. As this field of research is rather fresh, instead of answering relevant questions with respect to wage effects, this study merely aims to identify questions that merit further research.

Suggested Citation

  • Koch, Dirk-Jan & Schulpen, Lau, 2018. "An exploration of individual-level wage effects of foreign aid in developing countries," Evaluation and Program Planning, Elsevier, vol. 68(C), pages 233-242.
    • Handle: RePEc:eee:epplan:v:68:y:2018:i:c:p:233-242
    DOI: 10.1016/j.evalprogplan.2017.09.002
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    References listed on IDEAS

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    1. Holger Görg & David Greenaway, 2016. "Much Ado about Nothing? Do Domestic Firms Really Benefit from Foreign Direct Investment?," World Scientific Book Chapters, in: MULTINATIONAL ENTERPRISES AND HOST COUNTRY DEVELOPMENT Volume 53: World Scientific Studies in International Economics, chapter 9, pages 163-189, World Scientific Publishing Co. Pte. Ltd..
    2. Martens,Bertin & Mummert,Uwe & Murrell,Peter & Seabright,Paul, 2008. "The Institutional Economics of Foreign Aid," Cambridge Books, Cambridge University Press, number 9780521055390.
    3. Feenstra, Robert C. & Hanson, Gordon H., 1997. "Foreign direct investment and relative wages: Evidence from Mexico's maquiladoras," Journal of International Economics, Elsevier, vol. 42(3-4), pages 371-393, May.
    4. Riddell, Roger C., 2008. "Does Foreign Aid Really Work?," OUP Catalogue, Oxford University Press, number 9780199544462, Decembrie.
    5. Swidler, Ann & Watkins, Susan Cotts, 2009. ""Teach a Man to Fish": The Sustainability Doctrine and Its Social Consequences," World Development, Elsevier, vol. 37(7), pages 1182-1196, July.
    6. Beata S. Javorcik, 2015. "Does FDI Bring Good Jobs to Host Countries?," The World Bank Research Observer, World Bank, vol. 30(1), pages 74-94.
    7. Banks, Nicola & Hulme, David & Edwards, Michael, 2015. "NGOs, States, and Donors Revisited: Still Too Close for Comfort?," World Development, Elsevier, vol. 66(C), pages 707-718.
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    Cited by:

    1. Qian, Nancy & Deserranno, Erika, 2020. "Aid Crowd-Out: The Effect of NGOs on Government-Provided Public Services," CEPR Discussion Papers 14755, C.E.P.R. Discussion Papers.
    2. Asongu, Simplice & Ezeaku, Hillary, 2020. "Aid Grants vs. Technical Cooperation Grants: Implications for Inclusive Growth in Sub-Saharan Africa, 1984-2018," MPRA Paper 107528, University Library of Munich, Germany.
    3. Dirk-Jan Koch & Jolynde Vis & Maria van der Harst & Elric Tendron & Joost de Laat, 2021. "Assessing International Development Cooperation: Becoming Intentional about Unintended Effects," Sustainability, MDPI, vol. 13(21), pages 1-26, October.
    4. Erika Deserranno & Aisha Nansamba & Nancy Qian, 2020. "The Unintended Consequences of NGO-Provided Aid on Government Services in Uganda," NBER Working Papers 26928, National Bureau of Economic Research, Inc.

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