Development Microeconomics

Goals of the Course

The effective design and analysis of development policies require a deep understanding of the behavior of economic agents such as consumers, producers, and the government. The Development Microeconomics course is strategically crafted to equip students with advanced knowledge in microeconomics, coupled with practical skills essential for scrutinizing economic problems and market dynamics. Firstly, the course emphasizes understanding the microeconomic foundations underlying various development issues, utilizing this comprehension to engage in discussions about policy choices and outcomes. Relying on empirical microeconomic studies, the course further investigates economic behavior amidst different market failures and assesses the impacts of policy interventions. Topics covered encompass a wide array, including inequality, education, health, poverty, and failures in land, labor, credit, and insurance markets.

Objectives of the Course

This course enables students to develop an understanding of the economic environment in which firms operate and trains them to employ various microeconomic theories to analyze markets and household decisions.

Upon completion of this course:

• Students will possess the ability to use logical economic reasoning and quantitativemethods to analyze development policies and design interventions to address real-worldissues.
• Students will have the proficiency to use the programming language R to explore data andsolve problems. They will complete a final project in which they analyze a dataset from adeveloping economy using the techniques covered in the course.

Teaching tips and student responsibilities

IN THE CLASSROOM students are encouraged to engage actively, ask questions, and pace themselves to keep up with the faster course tempo. Preparing for lectures beforehand allows for a more meaningful classroom experience.

OUTSIDE THE CLASSROOM students must manage their time wisely, dedicating two or more hours to independent study for every class hour. Completing assigned homework diligently, focusing on the problem-solving process, and challenging oneself with additional problems contribute to a deeper understanding of the subject.

READING MATERIALS students are advised to undertake pre-reading before lectures, laying a foundation for quicker comprehension during class. Post-lecture reviews, involving a careful revisit of lecture materials, slides, and notes, help solidify understanding.

Course outline

1. Introduction
2. Prices and welfare
3. Measuring price changes
4. The distributional impact of price changes
5. Pro-poor growth and microsimulation
6. Firm and efficiency
7. Production and accumulation
8. Firm heterogeneity
9. Education
10. Health
11. Credit constraints
12. Risk, insurance, and saving
13. Land markets
14. Inequality, poverty traps, and development
15. Impact evaluation of development policies via microdata

Textbook/Reference Book

1．Textbook

No specific textbook will be used in this course.
Lecture materials will be provided in each session.

2．General readings

• Banerjee, Abhijit and Esther Duflo (2011), Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty, Public Affairs.
• Bardhan, Pranab and Christopher Udry (1999), Development Microeconomics, Oxford University Press.
• Deaton, Angus (1997), The Analysis of Household Surveys. The Johns Hopkins University Press. 1997, chapters 1 and 2
• Ray, Debraj (1998), Development Economics, Princeton University Press, Princeton

Course Evaluation Method and Criteria

Midterm exam (30%); Final exam (40%); Weekly online quizzes (30%)

Lecture materials

1. Introduction

This lecture is provided under Creative Commons Attribution-Non Commercial-ShareAlike 4.0 International.

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