Lecture 2- Water for Life Galiani, Gertler (2005) Flashcards
Who wrote “Water for Life, The impact of the Privitization of Water Services on Child Mortality” and when?
Galiani and Gertler in 2005
What is the goal of the paper?
To study if there is a causal link on water privatization reducing child mortality
What is the main empirical strategy used?
Difference in Difference- the before and after of the treatment group is compared to the before and after of the control. From this, the effect of water privatization is gleaned.
What is the main regression used?
Yit= adI it+BXit+Lander t +uni+eut
What does adIit mean in the regression?
It is a dummy variable showing whether water was privatized in municipality I at time t.
a shows the difference-in-difference estimate of the effect of privatization .
What does u mean in the regression?
It controls for individual fixed effects, things that vary across the municipalities that could affect water privatization levels e.g. if its viewed as effective, but don’t vary over time.
What does u mean in the regression?
Controls for individual (municipality) fixed effects
Where was the data derived from and when?
The Argentine Ministry of death is where child deaths from 1990-99 were found.
How was it made sure that the deaths were linked to water ?
The deaths were dissagregated into 20 pathologies and it was checked that the reduction in deaths came from infectious and parasitic causes and not chronic dieseases e.g. cancer
What is the main assumption of the empirical strategy used?
That the trends of the control and treatment group were the same before privatization
When did privatization largely take place?
1991-99 Galliani used difference in difference to record effect
What was the main result?
The privatization of water systems led to a statistically significant decrease in deaths.
And not from diseases unrelated to water (infectious and parasitic)
What are the issues with water ptivatization?
May lead to less than optimal provision as there are health externalities of water privatization
May lead to price increases which hurts the poor or may only be done in high income areas (Estache,2001)
May be most efficient for firms to exclude poor from water provision so privatization causes health of poor to deteriorate.
