London School of Economics EOPP: Economic Organisation and Public Policy Programme LSE
EOPP: Economic Organisation and Public Policy Programme


EOPP Blog EOPP members are invited to contribute to the EOPP Blog hosted at

For further information, or if you would like to post to the Blog, please contact
Gisela Lafico, email:

We especially welcome any postings regarding development economics, political economy and public economics, and news about upcoming seminars, conferences or calls for papers related to these topics.

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Recent Postings:

Tue, 20 Mar 2012 13:23:00 +0000
SPECIAL EVENT NGO (Non-Profits, Governments, and Organizations) Workshop to be held May 25th and 26th
To be held
May 25th and 26th
Various Speakers
Location: Michio Morishima Room, R505 (5th Floor, LSE Research Laboratory, Lionel Robbins Building, London WC2A 2HD)

This is part of a series of workshops on this theme that Thierry Verdier (Paris School of Economics), Gani Aldashev (Namur), Emmanuelle Auriol (Toulouse School of Economics) and Maitreesh Ghatak (LSE), have been co-organizing for the last two years.

The importance of non-profits in developed countries in the social sectors is well-recognized. At the same time, non-governmental organizations (NGOs) play an ever-increasing and fundamental role in designing and carrying out development projects. Therefore, the formulation of effective policies towards the development NGO sector requires a good understanding about how NGOs function, how they perform their activities, what is the effect of the NGOs on development. Given such knowledge, the optimal regulatory framework of the NGO sector can be designed. Thus, both demand for comprehensive body of knowledge about the functioning and performance of the NGO sector is high, both from the policy-makers, the general public, and the NGOs themselves.

With this in mind, the Economic Organization and Public Policy programme at LSE is hosting the workshop NGO (Non-Profits, Governments, and Organizations) which is being funded by STICERD.

Fri, 14 Oct 2011 15:28:00 +0000
Banco de Portugal - Lisbon Meeting Best Paper Award for Oliver Vanden Eynde

Oliver Vanden Eynde, PhD student at EOPP has won the "Banco de Portugal - Lisbon Meeting Best Paper Award" for his paper titled "Targets of violence: Evidence from India's Naxalite Conflict".

This work was presented at the "Lisbon Meeting on Institutions and Political Economy". This is Oliver's second award, after

winning the "Economic History Society New Researchers' Prize" for his paper "Military Service and Human Capital

Accumulation: Evidence from Colonial Punjab" presented at the "2011 Economic History Society Annual Conference".

You can find more about Oliver's research on his personal website.
Fri, 14 Oct 2011 15:13:00 +0000
Recent Publication by Maitreesh Ghatak: The Land Acquisition Bill: A Critique and a Proposal
The paper is joint work with Parikshit Ghosh and was published in Economic and Political Weekly of India, October 8, 2011, Vol. XLVI, No 41, it is available here. A shorter version can be accessed here.

Abstract: The 2011 Land Acquisition and Rehabilitation and Resettlement Bill on land acquisition recently tabled in Parliament is well-intentioned but seriously flawed. Its principal defect is that it attaches an arbitrary mark-up to the historical market price to determine compensation amounts. This will guarantee neither
social justice nor the efficient use of resources. The Bill also places unnecessary and severe conditions on land acquisition, such as restrictions on the use of multicropped land and insistence on public purpose, all of which are going to stifle the pace of development without promoting the interests of farmers.

We present an alternative approach that will allow farmers to choose compensation in either land or cash, determine their own price instead of leaving it to the government’s discretion, and also reallocate the remaining farmland in the most efficient manner. Our proposed method involves a land auction covering not only the project site but also the surrounding agricultural land.
Tue, 11 Oct 2011 16:40:00 +0000
Recent Publication by Tim Besley, Maitreesh Ghatak and Konrad Burchardi: Incentives and the de Soto Effect
The paper is forthcoming in Quarterly Journal of Economics. The paper can be found here.

Abstract: This paper explores the consequences of improving property rights to facilitate the use of fixed assets as collateral, popularly attributed to the influential policy advocate Hernando de Soto. We use an equilibrium model of a credit market with moral hazard to characterize the theoretical effects, and also develop a quantitative analysis using data from Sri Lanka.
We show that the effects are likely to be non-linear and heterogeneous by wealth group. They also depend on the extent of competition between lenders. There can be significant increases in profts and reductions in interest rates when credit markets are competitive. However, since these are due to reductions in moral hazard, i.e. increased effort, the welfare gains tend to be modest when cost of effort is taken into account. Allowing for an extensive margin where borrowers gain access to the credit market, can make these effects larger depending on the underlying wealth distribution.
Thu, 17 Feb 2011 13:24:00 +0000
Recent Publication by Johannes Spinnewijn: Capital Income Taxes with Heterogeneous Discount Rates
The paper (joint with Peter Diamond) is forthcoming in AEJ: Economic Policy

Abstract: With heterogeneity in both skills and discount factors, the Atkinson-Stiglitz theorem that savings should not be taxed does not hold. In a model with heterogeneity of preferences at each earnings level, introducing a savings tax on high earners or a savings subsidy on low earners increases welfare, regardless of the correlation between ability and discount factor. Extending Saez (2002), a uniform savings tax increases welfare if that correlation is sufficiently high. Key for the results is that types who value future consumption less are more tempted by a lower paid job. Some optimal tax results and empirical evidence are presented.

The paper can be found here
Wed, 27 Oct 2010 14:39:00 +0000
Recent Publication by Tim Besley: The Logic of Political Violence
This paper (joint with Torsten Persson) is forthcoming in The Quarterly Journal of Economics

This paper offers a uni?ed approach for studying political violence whether it emerges as repression or civil war. We formulate a model where an incumbent or opposition can use violence to maintain or acquire power to study which political and economic factors drive one-sided or two-sided violence (repression or civil war). The model predicts a hierarchy of violence states from peace via repression to civil war, and suggests a natural empirical approach. Exploiting only within-country variation in the data, we show that violence is associated with shocks that can affect wages and aid. As in the theory, these effects are only present where political institutions are non-cohesive.

The paper can be found here
Thu, 14 Oct 2010 12:44:00 +0000
Recent Publications by Henrik Kleven
A paper by Henrik Kleven entitled 'Unwilling or Unable to Cheat? Evidence from a Tax Audit Experiment in Denmark' is forthcoming in Econometrica

This paper analyzes a tax enforcement ?eld experiment in Denmark. In the base year, a strati?ed and representative sample of over 40,000 individual income tax ?lers was selected for the experiment. Half of the tax ?lers were randomly selected to be thoroughly audited, while the rest were deliberately not audited. The following year, threat-of-audit letters were randomly assigned and sent to tax ?lers in both groups. We present three main empirical ?ndings. First, using baseline audit data, we ?nd that the tax evasion rate is close to zero for income sub ject to third-party reporting, but substantial for self-reported income. Since most income is sub ject to third-party reporting, the overall evasion rate is modest. Second, using quasi-experimental variation created by large kinks in the income tax schedule, we ?nd that marginal tax rates have a positive impact on tax evasion for self-reported income, but that this effect is small in comparison to legal avoidance and behavioral responses. Third, using the randomization of enforcement, we ?nd that prior audits and threat-of-audit letters have signi?cant effects on self-reported income, but no effect on third-party reported income. All these empirical results can be explained by extending the standard model of (rational) tax evasion to allow for the key distinction between self-reported and third-party reported income.

The paper can be found here

A paper by Henrik Kleven entitled 'Transfer Program Complexity and
the Take Up of Social Bene?ts' is forthcoming in the American Economic Journal: Economic Policy

This paper models complexity in social programs as a byproduct of efforts to screen between deserving and undeserving applicants. While a more rigorous screening technology may have desirable effects on targeting efficiency, the associated complexity introduces transaction costs into the application process and may induce incomplete take up. The paper integrates the study of take up with the study of classi?cation errors of type I and type II, and argues that incomplete take up can be seen as a form of type I error. We consider a government interested in ensuring a minimum income level for as many deserving individuals as possible, and characterize optimal programs when policy makers can choose the rigor of screening (and associated complexity) along with a bene?t level and an eligibility criterion. It is shown that optimal program parameters re?ect a trade-off at the margin between type I errors (including non-takeup) and type II errors. Optimal programs that are not universal always feature a high degree of complexity. Although it is generally possible to eliminate take up by the undeserving (type II errors), policies usually involve eligibility criteria that make them eligible and rely on complexity to restrict their participation. Even though the government is interested only in ensuring a minimum bene?t level, the optimal policy may feature bene?ts that are higher than this target minimum. This is because bene?ts generically screen better than either eligibility criteria or complexity.

The paper can be found here