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Structural Estimation and Policy Evaluation in Developing Countries

  • Petra E. Todd
  • Kenneth I. Wolpin

    ()

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

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.

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Article provided by Annual Reviews in its journal Annual Review of Economics.

Volume (Year): 2 (2010)
Issue (Month): 1 (09)
Pages: 21-50

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Handle: RePEc:anr:reveco:v:2:y:2010:p:21-50
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