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Structural Estimation and Policy Evaluation in Developing Countries

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  • Petra E. Todd
  • Kenneth I. Wolpin

    () (Department of Economics, University of Pennsylvania, Philadelphia, Pennsylvania 19104)

Abstract

This review discusses the use of discrete choice dynamic programming (DCDP) methods for evaluating policies of particular relevance to developing countries, such as policies to reduce child labor and increase school attendance, improve school quality, affect immigration flows, expand old-age pension benefits, or foster small-business investment through microfinance. We describe the DCDP framework and how it relates to static models, illustrate its application with an example related to conditional cash transfer programs, consider numerous empirical applications from the literature of how the DCDP methodology has been used to address substantively important policy issues, and discuss methods for model validation.

Suggested Citation

  • Petra E. Todd & Kenneth I. Wolpin, 2010. "Structural Estimation and Policy Evaluation in Developing Countries," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 21-50, September.
  • Handle: RePEc:anr:reveco:v:2:y:2010:p:21-50
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    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev.economics.102308.124345
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    References listed on IDEAS

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    Cited by:

    1. Reis, Hugo, 2015. "Girls' Schooling Choices and Home Production: Evidence from Pakistan," IZA Discussion Papers 9562, Institute for the Study of Labor (IZA).
    2. Yu Zheng & Juan Pantano, 2012. "Using Subjective Expectations Data to Allow for Unobserved Heterogeneity in Hotz-Miller Estimation Strategies," 2012 Meeting Papers 940, Society for Economic Dynamics.

    More about this item

    Keywords

    development economics; dynamic discrete choice models; schooling; migration;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I20 - Health, Education, and Welfare - - Education - - - General
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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