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Spatial Decentralization and Program Evaluation: Theory and an Example from Indonesia

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  • Pitt, Mark M.

    ()
    (Brown University)

  • Menon, Nidhiya

    ()
    (Brandeis University)

Abstract

This paper proposes a novel instrumental variable method for program evaluation that only requires a single cross-section of data on the spatial intensity of programs and outcomes. The instruments are derived from a simple theoretical model of government decision-making in which governments are responsive to the attributes of places and their populations, rather than to the attributes of individuals, in making allocation decisions across space, and have a social welfare function that is spatially weakly separable, that is, that the budgeting process is multi-stage with respect to administrative districts and sub-districts. The spatial instrumental variables model is then estimated and tested by GMM with a single cross-section of Indonesian census data. The results offer support to the identification strategy proposed.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5208.

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Length: 31 pages
Date of creation: Sep 2010
Date of revision:
Handle: RePEc:iza:izadps:dp5208

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Keywords: spatial decentralization; program evaluation; instrumental variables; Indonesia;

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References

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  1. Conley, Timothy G & Ligon, Ethan, 2002. " Economic Distance and Cross-Country Spillovers," Journal of Economic Growth, Springer, Springer, vol. 7(2), pages 157-87, June.
  2. Frank Kleibergen & Mark E Schaffer, 2007. "RANKTEST: Stata module to test the rank of a matrix using the Kleibergen-Paap rk statistic," Statistical Software Components S456865, Boston College Department of Economics, revised 24 Aug 2014.
  3. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2007. "Enhanced routines for instrumental variables/GMM estimation and testing," Boston College Working Papers in Economics, Boston College Department of Economics 667, Boston College Department of Economics, revised 05 Sep 2007.
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Cited by:
  1. Portner, Claus C & Beegle, Kathleen & Christiaensen, Luc, 2011. "Family planning and fertility : estimating program effects using cross-sectional data," Policy Research Working Paper Series 5812, The World Bank.

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