The dissertation consists of an introductory chapter and four self-contained chapters.
Chapter 2, Keep It Real: Measuring Real Inequality Using Survey Data from Developing
Countries, is concerned with the measurement of real inequality in developing
countries. In particular, I investigate how two separate effects can drive wedges between
inequality estimates based on nominal consumption aggregates and estimates
based on real consumption aggregates. The first effect is caused by differences in the
composition of consumption over the income distribution coupled with differential
inflation of different consumption items. The second effect is caused by increasing
quantity discounting as one moves up through the consumption distribution. I further
argue that poverty estimation based on GDP data of national accounts and inequality
estimates of consumption surveys should employ real, rather than nominal, inequality
estimates. I estimate the magnitude of these effects using 15 nationally representative
surveys from six countries (Ethiopia, Madagascar, Malawi, Mozambique, Pakistan and
Tanzania) covering the period 1999–2011. In some of the studied countries, real inequality
is higher than nominal inequality. This increases the level and reduces the decline of
poverty over time, but the magnitude of the correction is country- and year-specific.
Chapter 3, Social Ties and the Efficiency of Factor Transfers, which is co-authored
with Benedikte Bjerge and Marcel Fafchamps, introduces a test of whether social ties
help or hinder efficiency-enhancing factor transfers. In particular, we test the impact of
family connections, ethnic groups and geographical proximity. Our findings indicate
that neighbors conduct more efficiency-enhancing transfers but that households that
are members of the same ethnic group or kinship network conduct fewer efficiencyenhancing
transfers. However, we find the latter effects to be driven by the presence of
a few large landowners. When the presence of these large landowners is explicitly addressed,
the finding is reversed and there are more efficiency-enhancing land transfers
between kin-related households and between neighbors. Allocative efficiency in land
is not achieved at the village level. This suggests that social ties do not reduce transfer
barriers sufficiently to permit an efficient reallocation of land within villages.