Recent publications & working papers

Recent publications

“Agglomeration, Misallocation, and (the Lack of) Competition”. American Economic Journal: Macroeconomics, 13 (October 2021): 483-519

Authors: Joe Kaboski, Wyatt Brook, Yao Amber Li

Abstract: Industrial agglomeration policies may limit competition. We develop, validate, and apply a novel approach for measuring competition based on the comovement of markups and market shares among firms in the same location and industry. Then we develop a model of how this reduction in competition affects aggregate income. We apply our approach to the well- known special economic zones (SEZs) of China. We estimate that firms in SEZs exhibit cooperative pricing almost three times as intensively as firms outside SEZs. Nevertheless, we model the aggregate consequences of SEZs and find positive effects because markups become higher, but also more equal.

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“Anemia, diet, and cognitive development: Impact of health information on diet quality and child nutrition in rural India”. Journal of Economic Behavior & Organization, 190, 495-523.

Authors: Santosh Kumar, Marion Krämer, Sebastian Vollmer

Abstract: Lack of information about health risks may limit the adoption of improved nutrition and other new healthy behaviors. This paper studies the effect of a nutrition-information intervention on household dietary behavior, hemoglobin levels, and cognitive outcomes of children in rural India. Using experimental data and a regression discontinuity design that exploits the exogenous cutoff of hemoglobin level for anemia, we find statistically insignificant treatment effects on dietary improvements, child health, and cognitive outcomes of children. Our findings suggest that light-touch nutrition information alone, even when parents are informed about the health risk of their children, may not induce the adoption of healthy behaviors. Our findings also imply that factors other than information might constrain households in making nutritional investments for their children.

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“Big Fish in Thin Markets: Competing with the Middlemen to Increase Market Access in the Amazon”. Journal of Development Economics, 155 (March 2022): 102757

Authors: Joe Kaboski, Viva Bartkus, Wyatt Brooks, Carolyn Pelnik

Abstract: Middlemen are ubiquitous in supply chains. In developing countries they help bring products from remote communities to end markets but may exert strong market power. We study a cooperative intervention which organizes together poor fishing communities in the Amazon — one of the poorest and most remote regions of the world — to purchase large boats in order to partially bypass middlemen and deliver their fish directly to market. We find that the intervention increases income by 27%, largely through an increase in price received, and also increases consumption. Moreover, the intervention is highly cost effective with the projected stream of income gains easily covering the cost of the investment. Finally, we formalize a model in which the market power of middlemen itself can create a poverty trap, which can be eliminated with cooperative investment.

Partner: Fundacao Amazonas Sustentavel

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“Crime, inequality and subsidized housing: Evidence from South Africa”. World Development, Vol. 168 (August 2023)

Authors: Patrizio Piraino, Roxana Elena Manea, Martina Viarengo

Abstract: We study the relationship between housing inequality and crime in South Africa. We create a novel panel dataset combining information on crime at the police station level with census data. Our analysis shows that housing inequality explains a significant share of the variation in both property and violent crimes, net of spillover effects, time and district fixed effects. An increase of roughly one standard deviation in housing inequality explains 10–12 percent of total crime increases. Additionally, we analyze a prominent housing program for low-income South Africans to show that policies that decrease inequality in housing conditions may also reduce crime. We suggest that these policies can help mitigate the societal and individual strains that are often correlated with criminal engagement.

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“Exploitation of Labor? Classical Monopsony Power and Labor’s Share”. Journal of Development Economics 150 (May 2021): 102627

Authors: Joe Kaboski, Wyatt Brooks, Yao Amber Li, Wei Qian

Abstract: How important is the exercise of classical monopsony power against labor for the level of wages and labor’s share? We examine this in the context of China and India – two large, rapidly-growing developing economies. Using theory, we develop a novel method to quantify how wages are affected by the exertion of market power in labor markets. The theory guides the measure- ment of labor “markdowns,” i.e., the gap between wage and the value of the marginal product of labor, and the method examines how they comove with local labor market share. Applying this method, we find that market power substantially lowers labor’s share of income: by up to 11 percentage points in China and 13 percentage points in India. This impact has fallen over time in both countries, however.

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“Financial frictions, financial market development, and macroeconomic development”. Oxford Development Studies, forthcoming

Authors: Joe Kaboski

Abstract: This paper reviews the state of knowledge on the impact of financial frictions and financial underdevelopment on firms. The focus is on their aggregate and distributional consequences for the macroeconomies of developing countries. It then reviews available data and data needs for future progress and proposes an agenda of important but unanswered questions for informing our understanding of growth and policy. Various questions involve ways to promote financial development itself, guide second-best policies in the face of financial frictions that enable macrodevelopment, and develop an inclusive financial system that benefits all.

“From Micro to Macro Development”. Journal of Economic Literature, 61 (June 2023), 1–33

Authors: Joe Kaboski, Francisco J. Buera, Robert M. Townsend

Abstract: Macroeconomic development remains an important policy goal because of its ability to lift entire populations out of poverty. In our review of the literature, we emphasize that the best way to achieve this objective is to embrace a synthesis of methods and ideas, with the science of experiments as a unifying feature. Randomized controlled trials need representative data and structural modeling, and macro models need to be designed and disciplined to the realities and data of developing-country economies. Macroeconomic models have key lessons for gathering and analyzing micro evidence and for moving to an evaluation of macro policy. Resource constraints, heterogeneity, general equilibrium effects, obstacles to trade, dynamics, and returns to scale can all play key roles. A synthesis for macro development is well under way.

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“Improving Child Health and Cognition: Evidence from a School-Based Nutrition Intervention in India”. The Review of Economics and Statistics 2021; 103 (5): 818–834

Authors: Santosh Kumar, Marion Krämer, Sebastian Vollmer

Abstract: We present experimental evidence on the impact of the use of double-fortified salt in school meals on anemia, cognition, and the learning outcomes of primary school children in rural Bihar, one of the poorest regions of India. We find that a year-long intervention had statistically significant positive impacts on hemoglobin levels and reduced anemia by 20%; however, these health gains did not translate into significant impacts on cognitive performance, test scores, and school attendance. Treatment effects on anemia and test scores were larger for children with higher school attendance. The findings indicate that school-based health interventions are a cost-effective and scalable approach for reducing anemia among school children in resource-constrained countries.

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“Infrastructure Investment and Labor Monopsony Power”. IMF Economic Review, 69 (August 2021): 470-504

Authors: Joe Kaboski, Wyatt J. Brooks, Illenin Kondo, Yao Amber Li, Wei Qian

Abstract: In this paper we study whether or not transportation infrastructure disrupts local monopsony power in labor markets using an expansion of the national highway system in India. Using panel data on manufacturing firms, we find that monopsony power in labor markets is reduced among firms near newly constructed highways relative to firms that remain far from highways. We estimate that the highways reduce labor markdowns significantly. We use changes in the composition of inputs to identify these effects separately from the reduction of output markups that occurs simultaneously. The impacts of highway construction are therefore pro-competitive in both output and input markets, and act to increase the share of income that labor receives by 1.8–2.3 percentage points.

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“Intergenerational persistence of health: Evidence from India”. Economics Letters, Volume 224, March 2023

Authors: Santosh Kumar, Bernard Nahlen

Abstract: Using nationally representative data, we estimate intergenerational mobility in health in India. Results from the instrumental variable method show that children of anemic mothers are more likely to be anemic, with an intergenerational health correlation of 0.26. Results are robust to the inclusion of confounding factors including the mother’s height. We find that the correlation between mothers’ anemic status and children’s anemic status differs by wealth quintile, indicating that economic status may play a role in the persistence of poor health across generations in developing countries.

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“Leader Identity and Coordination” The Review of Economics and Statistics (2023) 105 (1): 175–189.

Authors: Lakshmi Iyer, Sonia Bhalotra, Irma Clots-Figueras, Joseph Vecci

Abstract: This paper examines policy effectiveness as a function of leader identity. We experimentally vary leader religious identity in a coordination game implemented in India and focus on citizen reactions to leader identity, controlling for leader actions. We find that minority leaders improve coordination, and majority leaders do not. Alternative treatment arms reveal that affirmative action for minorities reverses this result, while intergroup contact improves the effectiveness of leaders of both identities. We also find that minority leaders are less effective in towns with a history of intergroup conflict. Our results demonstrate that leader and policy effectiveness depend on citizen reactions, conditioned by social identity and past conflict.

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“Medium-run impacts of iron-fortified school lunch on anemia, cognition, and learning outcomes in India”. Oxford Bulletin of Economics and Statistics

Authors: Santosh Kumar, Liza von Grafenstein, Abhijeet Kumar, Sebastian Vollmer

Abstract: Using a phase-in research design, we provide experimental evidence on the impacts of early versus late initiation of iron fortification in school lunch programs on children's health and cognitive outcomes in India. We find higher hemoglobin levels and a lower likelihood of anemia in the early treatment group that experienced four years of treatment, compared to the late treatment group that was exposed to one and a half years of treatment. Despite significant health gains, we do not find evidence for treatment effects on cognitive and educational outcomes. Heterogeneity analyses show evidence of gendered effects—the anemia reduction is lower among females relative to males.

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“Mobile’izing Agricultural Advice: Technology Adoption, Diffusion and Sustainability”. The Economic Journal , Volume 131, Issue 633, January 2021, p. 192–219

Authors: A. Nilesh Fernando, Shawn Cole

Abstract: Mobile phones promise to bring the ICT revolution to previously unconnected populations. A two-year study evaluates an innovative voice-based ICT advisory service for smallholder cotton farmers in India, demonstrating significant demand for, and trust in, new information. Farmers substantially alter their sources of information and consistently adopt inputs for cotton farming recommended by the service. Willingness to pay is, on average, less than the per-farmer cost of operating the service for our study, but likely exceeds the cost at scale. We do not find systematic evidence of gains in yields or profitability, suggesting the need for further research.

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“Religion and Abortion: The Role of Politician Identity” Journal of Development Economics, 153: 102746, 2021

Authors: Lakshmi Iyer, Sonia Bhalotra and Irma Clots-FIgueras

Abstract: Debates around abortion typically invoke religion and politics but there is no causal evidence of the impact of politician religion on abortion. Leveraging quasi-random variation in politician religion generated by close elections in India and controlling for the party affiliation of politicians, we find lower rates of sex-selective abortion in districts won by Muslim state legislators, consistent with a higher reported aversion to abortion among Muslims compared to Hindus. The competing hypothesis that this reflects weaker son preference among Muslims is undermined by stated preference data and by demonstrating that fertility and girl-biased infant mortality increase in Muslim-won districts.

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“Seeking the Treated: The Impact of Mobile Extension on Peer Information Exchange in India”. Journal of Development Economics, Volume 153, November, 2021

Authors: A. Nilesh Fernando

Abstract: Do Information and Communications Technologies (ICTs) ‘disrupt’ in-person peer interactions that generate and spread local knowledge? To investigate, I randomize access to a mobile phone-based agricultural extension service and find that while it reduces reliance on peer agricultural advice, it does not crowd-out peer interactions. Instead, treated farmers are more likely to recommend inputs to their peers, who, in turn, prioritize interacting with them. Consequently, exposure to the treatment, directly or via peers, increases willingness-to-pay for the service. Overall, evidence on complementarities between treated respondents suggest ICT-based services may encourage peer interactions and technology diffusion at scale.

Partner: Development Support Center

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“Shackled to the Soil: Inherited Land, Cultural Norms, and Labor Mobility”. The Journal of Human Resources, Volume 57, Issue 2, Spring 2022

Authors: A. Nilesh Fernando

Abstract: The inheritance of wealth promotes occupational choice, but may restrict it where its use is constrained by limited markets and cultural norms. This paper investigates the effects of inheriting agricultural land in rural India and finds that while larger inheritances, on average, increase future household consumption, first-born sons do not experience these gains. For first-borns, inheriting land reduces urban migration and entry into non-agricultural work. In contrast, inheriting land does not influence occupational choice or migration for latter-born sons. I attribute these differences, in part, to a cultural norm of parental support incumbent on first-borns and its interaction with inherited land. Patrilineal Hindu inheritance customs, whereby sons inherit an equal amount of their parents’ land, motivate sibling sex composition as an instrument for land. In support of instrument exogeneity, I find no reduced form effects for individuals with landless parents.

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“Skill-Biased Structural Change”. Review of Economic Studies, 89 (March 2022): 592–625

Authors: Joe Kaboski, Francisco J. Buera, Richard Rogerson, and Juan I. Vizcaino

Abstract: Using a broad panel of advanced economies we document that increases in GDP per capita are associated with a systematic shift in the composition of value added to sectors that are intensive in high-skill labor, a process we label as skill-biased structural change. It follows that further development in these economies leads to an increase in the relative demand for skilled labor. We develop a quantitative two-sector model of this process as a laboratory to assess the sources of the rise of the skill premium in the US and a set of ten other advanced economies, over the period 1977 to 2005. For the US, we find that the sector-specific skill neutral component of technical change accounts for 18-24% of the overall increase of the skill premium due to technical change, and that the mechanism through which this component of technical change affects the skill premium is via skill biased structural change.

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“Sweeping It under the Rug: Household Chores and Misreporting of Child Labor”. Economics Bulletin, 2020, Vol. 40 No. 2, pp.901-905

Authors: Eva Dziadula, Danice Guzmán

Abstract: We collect data on child labor in almost 3,000 Nepali households, and our analysis shows that estimates of child labor prevalence vary from 11.6% to 29% with the definition of child labor used. The variation comes from the number of hours worked and from which tasks are considered child labor. Furthermore, we use two different surveys during data collection. In the first, an adult (proxy) reports on the daily activities of each child in the household, and in the second, the children (direct) respond themselves. Proxy and direct responses are less likely to match when the definition includes time spent on household chores, which is typically underestimated for girls. We find that proxy reporting of whether the child worked in the past week is 5.5 percentage points lower than the direct reporting. Within households, misreporting is significantly more likely for girls than for boys. Across households, however, misreporting is associated with child's age, not gender. Furthermore, among girls misreporting is associated with the number of younger children at home. Our analysis helps explain why varying measures of child labor used in the literature yield different results.

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“The Long-Run Effects of Labor Migration on Human Capital Formation in Communities of Origin”. American Economic Journal: Applied Economics 2016, 8(4): 1–35

Authors: Taryn Dinkelman, Martine Mariotti

Abstract: We provide new evidence of one channel through which circular labor migration has long-run effects on origin communities: by raising completed human capital of the next generation. We estimate the net effects of migration from Malawi to South African mines using newly digitized census and administrative data on access to mine jobs, a difference-in-differences strategy, and two opposite-signed and plausibly exogenous shocks to the option to migrate. Twenty years after these shocks, human capital is 4.8-6.9 percent higher among cohorts who were eligible for schooling in communities with the easiest access to migrant jobs.

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“The Value of a Green Card in the U.S. Marriage Market: A Tale of Chain Migration?”. China Economic Review 2023, Vol. 82

Authors: Eva Dziadula, Cynthia Bansak, and Madeline Zavodny

Abstract: This study examines the impact of having a clear path to lawful permanent resident status, or a “green card,” on marital status and spousal characteristics among Chinese immigrants in the United States. A series of U.S. policy changes in the early 1990s made almost all mainland Chinese immigrants already present in the country eligible for a green card. We examine the effect of those policy changes on Chinese immigrants' marriage market outcomes relative to other East Asian immigrants. Using 1990 and 2000 U.S. Census data, we find that the share of Chinese immigrants who are married increased after they became automatically eligible for a green card. In particular, highly educated Chinese immigrants became relatively more likely to be married with a spouse living with them and relatively less likely to be married with a spouse living elsewhere. This pattern suggests that some Chinese spouses immigrated after their husband or wife received legal status, or spousal chain migration occurred. We also find that highly educated Chinese immigrants benefited in the marriage market in terms of spousal education and earnings, but less-educated Chinese immigrants did not. Meanwhile, less-educated Chinese-born women became relatively more likely to marry a U.S. native.

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“Time Use and Gender in Africa in Times of Structural Transformation”. Journal of Economic Perspectives 36(1):57-80

Authors: Taryn Dinkelman, L. Rachel Ngai

Abstract: Many African countries are still in the early stages of structural transformation. Typically, as economies move through the structural transformation, activities once conducted within the household are outsourced to the market. This has particular implications for women's time use. In this paper, we document that current patterns of female time use in home production in several African countries closely resemble historical time use patterns in the United States. We highlight two stylized facts about women's time use in Africa. First, in North Africa, women spend very few hours in market work and female labor force participation overall is extremely low. Second, although extensive margin participation of women is high in sub-Saharan Africa, women tend to work in the market for only a few hours each week, with the rest of their work hours spent in home production. These two facts suggest two different types of constraints that could slow down the reallocation of female time from home to market as economies grow: social norms related to women's market work, and a lack of infrastructure (e.g., household infrastructure and childcare facilities) to facilitate marketizing home production. We discuss recent empirical evidence related to each set of constraints and highlight new avenues for research.

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“Understanding Adverse Outcomes in Gulf Migration: Evidence from Administrative Data from Sri Lanka”. International Migration Review , Volume 56, Issue 1, 2022

Authors: A. Nilesh Fernando, Alison Lodermeier

Abstract: For many in South Asia, international migration to the Gulf countries provides access to lucrative employment opportunities without domestic comparison. Yet higher wages in Gulf countries are often coupled with poor working conditions, employer malpractice, and abuse. We utilize a unique administrative dataset on Sri Lankan migrant workers and complaints made by them to Sri Lankan Consulates to analyze the prevalence of workplace abuse and employer malpractice along this complex supply chain. Our analysis reveals that Sri Lankan migrants are systematically exposed to fraud and abuse that can, in part, be attributed to factors specific to the local recruitment agency who placed them. Understanding why recruitment agencies systematically differ in the quality of their placements may inform regulatory policy aimed at reducing the risks faced by migrants in destination countries.

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“Upping the Ante: The Equilibrium Effects of Unconditional Grants to Private Schools”. American Economic Review, 110 (10): 3315-49

Authors: Niharika Singh, Tahir Andrabi, Jishnu Das, Asim I. Khwaja, and Selcuk Ozyurt

Abstract: We assess whether financing can help private schools, which now account for one-third of primary school enrollment in low- and middle-income countries. Our experiment allocated unconditional cash grants to either one (L) or all (H) private schools in a village. In both arms, enrollment and revenues increased,leading to above market returns. However, test scores increased only in H schools, accompanied by higher fees, and a greater focus on teachers. We provide a model demonstrating that market forces can provide endogenous incentives to increase quality and increased financial saturation can be used to leverage competition, generating socially desirable outcomes.

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“Why Are Fewer Married Women Joining the Work Force in Rural India? A Decomposition Analysis over Two Decades”. Journal of Population Economics 31:783–818

Authors: Taryn Dinkelman, Farzana Afridi, Kanika Mahajan

Abstract: In contrast with global trends, India has witnessed a secular decline in women’s employment rates over the past few decades. We investigate this decline in rural areas, where the majority of Indian women reside. Using parametric and semi-parametric decomposition techniques, we show that changes in individual and household attributes fully account for the fall in women’s labor force participation in 1987–1999 and account for more than half of the decline in 1999–2011. Our findings underscore increasing education levels among rural married women and the men in their households as the most prominent attributes contributing to this decline. We provide suggestive evidence that changes in more educated women’s relative returns to home production compared with market production may have adversely affected female labor force participation in rural India.

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Working Papers

“Digital Training for Micro-Entrepreneurs: Experimental Evidence from Guatemala”

Authors: Alejandro Estafan

Abstract: Previous literature shows minor impacts of in-person business training in developing countries, but few papers study digital training’s effectiveness. We partner with a multinational corporation and conduct a field experiment involving the franchise stores of a retail chain in Guatemala, owned mainly by women, to measure the impact of a digital training program combining a mobile app with reproducible video capsules and virtual one-on-one consulting meetings. We find significant impacts on business practices and profitability. Consulting meetings are crucial in inducing engagement with the app’s reproducible content. We highlight program flexibility, internet access, and initial profitability as key effectiveness determinants.

Partner: Inter-American Development Bank

“Dispersion in Financing Costs and Development”

Authors: Joe Kaboski, Tiago Cavalcanti, Bruno Martin, and Cezar Santos

Abstract: Most aggregate theories of financial frictions model credit available at a single cost of financing but rationed. However, using a comprehensive firm-level credit registry, we document both high levels and high dispersion in credit spreads to Brazilian firms. We develop a quantitative dynamic general equilibrium model in which dispersion in spreads arise from intermediation costs and market power. Calibrating to the Brazilian data, we show that, for equivalent levels of external financing, dispersion has more profound impacts on aggregate development than single-price credit rationing and yields firm dynamics that are more consistent with observed patterns.

“Distance, Forest Conservation, and Ecological Changes along the Amazon River”

Authors: Viva Bartkus, Kelly Rubey

Abstract: This paper examines the effects of travel distance, participation in forest conservation programs, and changes in forest ecology on various indicators of well-being including income, economic activities, education, happiness, and health perceptions. We study how these measures vary across 117 communities, representing 2,165 households and 10,123 people who live along the Amazon river. Our current results suggest that longer travel distance and less engagement with FAS programs like Bolsa Floresta (BF) are associated with lower incomes. Our dataset will also allow us to track how ecological events—like major flooding/precipitation, illegal logging, and forest fires—affect these communities along the given indicators.

“Do Working Children in Nepal Miss More School? Depends Who You Ask”

Authors: Eva Dziadula, Danice Guzmán

Abstract: This paper examines the relationship between school attendance and work among Nepalese children. Relative to non-working children, engagement in market work is associated with 1.5 additional missed school days per week; moreover, girls’ engagement in domestic work is associated with 0.4 more days, when using self-reported data. Using responses from household representatives, however, shows a much weaker correlation. To understand this inconsistency, we deploy a randomized survey experiment to investigate adults’ perception of schooling benefits, where high benefits may indicate closer attention to children’s time use. We find adults report very few benefits of education on average.

“Export Manufacturing, Female Labor Force Participation, and Demographic Change: Evidence from Mexico”

Authors: Alejandro Estafan

Abstract: This paper investigates the impacts of export manufacturing on local labor markets and vital demographic outcomes in Mexico. Analysis of data from a large-scale export manufacturing program indicates that exogenous expansions in U.S. demand for Mexican imports increase employment rates in the formal manufacturing sector of Mexico. This result is driven by unemployment reductions among unskilled workers, and by women drawn into activity in the workforce, rather than by a crowding-out effect affecting existing jobs in other sectors. Export manufacturing disrupts marriage markets through these labor market impacts, reducing marriage rates and increasing divorce rates. Moreover, export manufacturing improves female access to social security and reduces female, infant, and fetal mortality. These results highlight the role of export manufacturing programs in transforming developing countries’ economic and demographic outcomes.

“Hiring Frictions and the Promise of Online Job Portals: Evidence from India” . American Economic Review-Insights, Conditionally Accepted

Authors: A. Nilesh Fernando, Niharika Singh, Gabriel Tourek

Abstract: Firms accustomed to hiring through networks may face sparse applicant pools, limiting the quantity or quality of hires. Online job portals expand their pool of potential employees, but such firms may be reluctant to trust workers outside their networks. We sample over 1,500 firms posting vacancies on an online job portal in India and randomly: (i) increase the size of their applicant pool, doubling the number of applicants; (ii) provide background verification services for their applicants; or (iii) both. Firms assigned to the combined treatment increase hiring from the portal relative to control and the individual treatments, which contributes to greater hiring overall. The hires from the portal are good matches as measured by employee retention after six months. We show how combining the treatments can generate a complementarity when firms value both ability and trustworthiness, but place greater relative weight on the latter. Our results suggest the effectiveness of online job portals can be enhanced through the provision of screening tools that induce greater employer trust in job seekers.

“How Important are Indivisibilities for Development? Experimental Evidence from Uganda?”

Authors: Joe Kaboski, Molly Lipscomb, Virgiliu Midrigan, and Carolyn Pelnik

Abstract: Theoretically, indivisible investments together with financial frictions can lower development, generate poverty traps, and lead agents to become risk-loving. Using experimental cash grants involving a choice between a safer, low payoff and a riskier, large payoff lottery, we find that 27 percent choose the riskier, larger lottery. Small grant winners invest in livestock and business inventory, while large grant winners invest in land, which exhibits high capital gains. Our quantitative model shows that the aggregate effects of financial deepening are sizable if the indivisible investment can be accumulated (e.g., capital) but not if it is in fixed supply (e.g., land).

“Labor Migration, Capital Accumulation, and the Structure of Rural Labor Markets”

Authors: Taryn Dinkelman, Grace Kumchulesi, Martine Mariotti

Abstract: Between 1967 and 1974, a bilateral labor treaty boosted circular labor migration from Malawi to South Africa by 200%, triggering the return of over 53 million USD in migrant earnings to origin communities. A deadly migrant worker plane crash in 1974 ended the flow of money and all migrants were repatriated. We investigate how local labor markets responded to the temporary increase in the local supply of capital generated by this natural experiment. In districts receiving more migrant capital as a result of the plane crash, we find that workers -– particularly women – moved out of farming and into more capital-intensive non-farm service sectors in thirty years following the end of migration. We show that investments in non-farm physical capital and in human capital contribute to these sectoral labor shifts. Our results demonstrate that large, temporary increases in the local supply of capital can trigger persistent changes in rural labor markets over the long run.

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“Leaping or Creeping up the Energy Ladder: Electricity Diffusion in a Rural African Setting”

Authors: Taryn Dinkelman, Mark Collinson, Wayne Twine, Martin Wittenberg

Abstract: Improving access to modern energy is often touted as a way to reduce poverty insub-Saharan Africa. Yet, there is considerable uncertainty around how quickly new ac-cess to modern energy might translate into impacts on the environment, on householdlivelihoods, and on small businesses. This paper uses a unique longitudinal datasetof rural South African households to study adoption dynamics of electrical appliancesin the wake of a national electrification program that ensured free and near-universalaccess to electricity. Estimating duration models of time-to-adoption with semi-annualhousehold-level data spanning 15 years, we show that it takes around 4 years afterelectricity arrives for at least half of all households to adopt electric stoves and fridges,a parameter we define as the median time-to-adoption. A full transition to cookingwith electricity encounters the longest delay of 8 years. We show these estimates arelikely lower bounds on adoption times. Both the level of current income, and the predictabilityof future income, matter for speeding up adoption. Our results point to a slow process of diffusion of electrical appliances in rural Africa, even under favorable conditions for adoption.

“No Taxation Without Representation?: Evidence from Colonial India”

Authors: Lakshmi Iyer, Latika Chaudhary, James Fenske

Abstract: We create a new database of municipal finances in colonial India. The data span four decades and include more than 500 cities in modern-day India, Pakistan and Bangladesh. We will use these data to answer several questions: (1) Do elected officials make different fiscal decisions than appointed ones? (2) How did local property wealth evolve over time and across space? (3) How did inter-city trade evolve over time and across space? (4) How did the global depressions of the 1890s and the 1930s affect economic activity, internal trade and city finances in India.

“Regulation by Reputation? Intermediaries, Labor Abuses, and International Migration”

Authors: A. Nilesh Fernando, Niharika Singh

Abstract: Migrant workers and prospective employers rely on intermediaries to facilitate complex, lucrative, and often risky labor market matches. However, if information frictions obscure their reputation, intermediaries may have little reason to invest in the quality of their placements. Using data on over 1.5 million Sri Lankan migrants to the Gulf region, we test whether an intermediary rating program designed to ease information frictions can improve placement quality. The regulator first announced the rating criteria and then publicly revealed a rating. Agencies eligible for the program—especially previously under-performing agencies—invest in the rating criteria and are less likely to exit the market. Migrants placed by these agencies receive higher salaries, are matched with less abusive employers, and receive better non-wage amenities even prior to the ratings being revealed. Once revealed, higher ratings increase foreign demand, but elicit limited mi- grant response. Collectively, our results suggest the program induced intermediaries to improve placement quality by screening employment opportunities abroad.

“Religion and Demography: The Influence of Papal Visits on Fertility”

Authors: Lakshmi Iyer, Paloma Lopez de mesa Moyano, Vivek Moorthy

Abstract: Globally, total fertility rate (TFR) has decreased from 4.7 children per woman in 1950 to 2.4 children per woman in 2019. In this project, we study how religious leaders may affect fertility decisions. Specifically, we combine data on papal visits with fertility data from the Demographic and Health Surveys (DHS) to investigate how the Pope’s presence and speeches influence household fertility decisions in 13 Latin American countries.

“The Distribution of Crisis Credit: Effects on Firm and Aggregate Indebtedness”

Authors: Joe Kaboski, Federico Huneeus, Mauricio Larrain, Sergio JL Schmukler, and Mario Vera

Abstract: We study the distribution of credit during crisis times and its impact on leverage and risk at the firm and macroeconomic levels. We analyze a large-scale COVID-19 public credit guarantee program in Chile, using novel transaction-level credit data matched with tax data. We nd that demand drives the increase in leverage, especially for riskier firms, but several factors keep aggregate risk small. Aggregate risk increases substantially when credit limits are relaxed, but reallocating the existing program credit toward riskier firms or raising the expected default increases risk much less. A quantitative model of firms and endogenous default con rms our empirics.

“The Domestic Effects of an International Migration Ban: Evidence from Sri Lanka”

Authors: A. Nilesh Fernando, Alison Lodermeier, Paul Shaloka

Abstract: International migration offers women access to lucrative job opportunities that can prove transformative for their families and enhance their relative position in a household. However, critics argue that female migrants are frequently subject to abuse abroad, and the young children migrant mothers leave behind may suffer worse outcomes in the absence of their care. This has led many governments to restrict these opportunities. We study a policy implemented by the Sri Lankan government in 2013 that restricted women’s migration opportunities both because of their own age (Age Ban) and because of their children’s age (Child Ban). We find that the policy drastically reduced migrant outflows suggesting strong compliance with the ban. Mothers subject to this ban reduce their fertility, an effect driven by behavioral responses to the ban rather than compositional changes to the workforce. Preliminary results suggest the ban negatively affected children’s educational outcomes for mothers affected by the ban. 

“The Price of Fairness: Experimental Evidence on the Limits to Demand for Redistribution”

Authors: Patrizio Piraino, Joanna Ryan

Abstract: How far are people willing to go to reduce inequality and enact what they perceive as a fair distribution of income? We address this question in South Africa, one of the most unequal countries in the world, where questions of fairness and redistribution are part of everyday considerations. We carry out an experiment where a third-party stakeholder is paired with two “workers” and makes a series of redistributive decisions over their earnings. These redistributive decisions carry varying personal costs to the stakeholder, and the inequality in worker payout is also varied. Additionally, we randomly vary the source of inequality: luck or merit. We show that stakeholders’ willingness to redistribute increases with initial pay inequality and decreases with personal cost to redistribute. The source of inequality also makes a difference, with higher redistribution in the luck treatment. The source matters less at higher levels of inequality, suggesting a degree of aversion to extreme disparities, even when payouts are seen as rightfully earned. On the other hand, the effect of stakeholders’ personal cost does not interact with the source of inequality, indicating a robust self-interest motivation. The interplay of these effects can result in significantly different levels of post-redistribution inequality. We suggest that substantial redistribution might be acceptable to most as a tool for reducing high inequality - such as that observed in South Africa - especially when income allocation is deemed unfair. However, self-interest may be a significant limiting factor.

“The Stable Transformation Path”

Authors: Joe Kaboski,Francisco J. Buera, Marti Mestieri, and Daniel O’Connor

Abstract: Dynamic models of structural transformation are often non-stationary, precluding balanced growth path (BGP) analysis. We develop a generalization of the BGP concept that we call a Stable Transformation Path (STraP). The STraP characterizes the medium-term dynamics of the economy in a turnpike sense; it is the non-stationary path toward which the economy (quickly) converges from an arbitrary initial capital stock. Calibrated simulations demonstrate that these medium-term dynamics have important quantitative implications for structural transformation, investment, and growth, including slow convergence. Medium-term dynamics alone account for the observed 40% secular decline in average growth rates across stages of development.