Aid, drugs, and informality : essays in empirical economics

University dissertation from Stockholm : Economic Research Institute, Stockholm School of Economics (EFI)

Abstract: The first three papers of this Ph.D. thesis experimentally study the preferences of individuals making cross-border charitable donations. In Is Foreign Aid Paternalistic? (with Anna Breman and Felix Masiye) subjects choose whether to make a monetary or a tied transfer (mosquito nets) to an anonymous household in Zambia. The mean donation of mosquito nets differs significantly from zero, and paternalistic donors constitute a higher share of the sample than do purely altruistic donors. The second paper, Corruption and the Case for Tied Aid (with Anna Breman), compares the willingness to give money to Zambia's national health budget (CBoH) with the willingness to donate mosquito nets to a health-care clinic in Lusaka. Donors clearly prefer tied aid to untied program aid. Exit questionnaires suggest the reason to be a fear of corruption and misallocation at the CBoH. In Altruism without Borders? (with Anna Breman), we study whether the willingness to give increase with the information given about the recipients. We find no significant effect of identification on donations.Women and Informality: Evidence from Senegal, the fourth paper (with Elena Bardasi), uses household survey data to study women’s work and gender wage gaps in the formal and informal sector in Dakar. Multinomial logit analysis reveals that women are 3-4 times less likely to work formally rather than informally. Wage regressions reveal that little schooling, for instance, explains a considerable part of the gender wage gap. In the informal sector, however, the wage gap between men and women remains at 28%.   The fifth paper, Does Innovation Pay? A Study of the Pharmaceutical Product Cycle, examines how a drug’s life cycle depends on its degree of therapeutic innovation. All New Chemical Entities introduced in Sweden between 1987 and 2000 are rated into one of three innovation classes: A (important gains); B (modest gains); and C (little gains). Over a 15-year life cycle, the average class A drug raises 15% higher revenues than B drugs and 114% higher revenues than C drugs. But yearly class A and C sales differences are rarely significant. When comparing innovative (A and B pooled) and imitative (C) drugs, 15-year life cycle revenues of innovative drugs exceed those of imitative drugs by 100%. This sales difference is significant in 19 out of 20 years after launch.