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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.

Suggested Citation

  • Pitt, Mark M. & Menon, Nidhiya, 2010. "Spatial Decentralization and Program Evaluation: Theory and an Example from Indonesia," IZA Discussion Papers 5208, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp5208
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    References listed on IDEAS

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    1. Esther Duflo, 2001. "Schooling and Labor Market Consequences of School Construction in Indonesia: Evidence from an Unusual Policy Experiment," American Economic Review, American Economic Association, vol. 91(4), pages 795-813, September.
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    3. Conley, Timothy G & Ligon, Ethan, 2002. "Economic Distance and Cross-Country Spillovers," Journal of Economic Growth, Springer, vol. 7(2), pages 157-187, June.
    4. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2007. "Enhanced routines for instrumental variables/GMM estimation and testing," CERT Discussion Papers 0706, Centre for Economic Reform and Transformation, Heriot Watt University.
    5. Frank Kleibergen & Mark E Schaffer & Frank Windmeijer, 2007. "RANKTEST: Stata module to test the rank of a matrix," Statistical Software Components S456865, Boston College Department of Economics, revised 29 Sep 2020.
    6. Rosenzweig, Mark R & Wolpin, Kenneth I, 1986. "Evaluating the Effects of Optimally Distributed Public Programs: ChildHealth and Family Planning Interventions," American Economic Review, American Economic Association, vol. 76(3), pages 470-482, June.
    7. Edward Miguel & Michael Kremer, 2004. "Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities," Econometrica, Econometric Society, vol. 72(1), pages 159-217, January.
    8. Pitt, Mark M & Rosenzweig, Mark R & Gibbons, Donna M, 1993. "The Determinants and Consequences of the Placement of Government Programs in Indonesia," The World Bank Economic Review, World Bank, vol. 7(3), pages 319-348, September.
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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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    More about this item

    Keywords

    instrumental variables; program evaluation; spatial decentralization; Indonesia;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General

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