Seminar 2. week 7
1: Assume that the wage premium in the “Big Push” model, as given by Murphy et al., depends on the degree of modernization n, implying that v=v(n) where v’>0. Present the model and its conclusions under this assumption.
2: What are the causes and consequences of corruption?
3: Does corruption corrupt?
4: Is corruption  oil or sand in the economic machinery?

Seminar 3. week 9
1: Many poverty trap arguments depend on increasing returns to scale properties. Does this imply that increasing returns are bad for development?
2: (Relating to Kremer’s O-ring and Mehlum’s note) Consider the modified O-ring production function y=k^(\alpha)*q1*q2*q3^n*n*B, where q1 is a measure of the reliability of the electricity supply, and q2 is a measure of the security against stealing (in a broad sense) and q3 is the (familiar) quality of workers.
a) What is the effect on production and wage from an increase in the reliability of power supply?
b) How does the return to an increase in the quality of workers depend on the security situation?

Seminar 4. week 13.
1.: In the Harris Todaro model. What is the value of total production?
2.: In the Harris Todaro model. What happens (to migration, production, sectoral output etc) if the price of manufactured goods go up?
3.: In the Harris Todaro model. What is the value of total production if labour demand by agriculture is given by average productivity?
4.: In the Harris Todaro model. What happens (to migration, production, sectoral output etc) if agricultural labor demand changes from being given by average productivity to being given by marginal productivity?
5: In the Harris Todaro model. How is the model affected if there is a total income in the informal sector proportional to the size of the formal modern sector (e.g given as 10% of the total wage income in modern sector) that is shared equally between the informal sector workers?
6: In the Harris Todaro model. How is the model affected if life in the informal sector is more appealing the larger it gets (due to network effects etc.)? What if the effects is the other way, life in the informal sector is less appealing the larger it gets (due to crime, pollution etc.)

Seminar 5 week 17.
1. Explain the concepts of Moral hazard and adverse selection. Explain the mechanism in Stiglitz and Weiss (1981) as presented in Bardhan and Udry. (You may look at the original text from 81 also). How is it relevant for poor countries.
2. Discus the relationship between efficiency and distribution in sharecropping agriculture.

Seminar 6 week 19
1. Explain Rodriks model.
2. With background in http://siteresources.worldbank.org/NEWS/Resources/weatheringstorm.pdf discuss through which mechanisms the financial crisis might depress private investments.

TERMPAPER

What are the possible effects of a trade reform on the structure of production and the degree of poverty in a dual economy? (Think of trade reform as a reform that opens the world markets so that the price of agriculture goods increases relative to that of manufactures). Under what circumstances, if any, does a trade reform unambiguously improve the living conditions for the entire population? Discuss in the end possible effects on an urban informal sector.
(To be handed in at the lecture April 28)