Thursday, 30 March, 2023 | 14:00 | Macro Research Seminar

Raul Santaeulalia-Llopis (Universitat Autonoma de Barcelona) "Excess of Transfer Progressivity in the Village"

Prof. Raul Santaeulalia-Llopis

Universitat Autonoma de Barcelona, Spain

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Authors: Raul Santaeulalia-Llopis, Francesco Carli and Albert Rodriguez-Sala

Abstract: With primary data from a complete village in Malawi we find that the level of transfer progressivity is large. The solution to a village-calibrated OLG model with limited commitment and private information implies an optimal level of transfer progressivity that is one third that of the village data. Interistingly, the current transfer progressiviy turns out to be close to optimal in a "pre-fertilizer era". We rationalize our findings with social norms (a wedge on participation constraints) that are sluggish to economic change.