We propose a method for identifying exposure to changes in trade policy based on asset prices that has several advantages over standard measures: it encompasses all avenues of exposure, it is natively firm-level, it yields estimates for both goods and service producers, and it can be used to study reductions in difficult-to-quantify non-tariff-barriers in a way that controls naturally for broader macroeconomic shocks. Applying our method to two well-studied US trade liberalizations provides new insight into service-sector responses and reveals dramatically different outcomes among small versus large firms, even within narrow industries.
This paper studies school choice and information frictions in Haiti. Through a randomized control trial, we assess the impact of disclosing school-level test score information on learning outcomes, prices, and market shares. We find evidence that in markets where information was disclosed, students attending private schools increased test scores. The results also suggest private schools with higher baseline test scores increased their market share as well as their fees when the disclosure policy is implemented. While prices and test scores were not significantly correlated in the baseline survey, they exhibited a significant and positive correlation in treatment markets after information disclosure. These results underscore the potential of information provision to enhance market efficiency and improve children’s welfare in context such as Haiti.
Social connections are fundamental to human well-being. We examine the social networks of mothers of young children in rural Odisha, India. Gendered norms around marriage, mobility, and work likely shape this group’s opportunities to form and maintain ties. We track 2,170 mothers’ networks over 4 years and find a high degree of isolation. Wealthier women and women from more-advantaged castes and tribes have smaller networks than their less-advantaged peers, primarily because they know fewer women within their own socioeconomic group. There exists strong but symmetric homophily by socioeconomic group. Socioeconomic differences are associated with toilet ownership and labor force participation.
Access to microcredit has been shown to generate only modest average benefits for recipient households. We study whether other financial market frictions – in particular, lack of access to a safe place to save – might limit credit’s benefits. Working with Kenyan farmers, we cross-randomize access to a simple savings product with a harvest-time loan. Among loan offer recipients, the additional offer of a savings lockbox increased farm investment by 11% and household consumption by 7%. Results suggest that financial market frictions can interact in important ways and that multifaceted financial access programs might unlock dynamic household gains.
Access to smartphones and mobile internet is increasingly necessary to participate in the modern economy. Yet women significantly lag men in digital access, especially in lower-income settings with gender gaps that span other dimensions - and where digital gaps threaten to deepen existing analog inequities. We study the short- and long-term effects of a large-scale state-sponsored program in India that aimed to close digital gender gaps by transferring free smartphones to women while constructing 4G towers to bring rural areas online. The program was well implemented, reversing gender gaps in smartphone ownership in the short run. However, many women lost ownership and gender gaps in use quickly worsened as men made use of the new phones. Nearly 5 years after the program began, we find limited evidence of persistent effects across a range of outcomes, including phone ownership and use, gender norms, access to information, and local economic activity, although we do find some evidence of sectoral reallocation in the labor market. Despite widespread increase in smartphone adoption across households, digital gender gaps persist and were not affected by the program. Our findings suggest that in gender-unequal, resource-constrained settings, addressing affordability alone may not close digital gender gaps.
Poor entrepreneurs must frequently choose between business investment and children's education. To examine this trade-off, we exploit experimental variation in short-run microenterprise growth among a sample of Indian households and track schooling and business out-comes over eleven years. Treated households, who experience higher initial microenterprise growth, are on average one-third more likely to send children to college. However, educational investment and schooling gains are concentrated among literate-parent households, whose enterprises eventually stagnate. In contrast, illiterate-parent households experience long-run business gains but declines in children's education. Our findings suggest that microenterprise growth has the potential to reduce relative intergenerational educational mobility.
Modern financial institutions are coordination mechanisms that have evolved to help solve specific sorts of collective action challenges. The idea of biodiversity and conservation finance is to nudge the further evolution of these institutions to help solve the collective action problems associated with nature conservation. For decades economists studying the environment have used tools and ideas from financial management to provide insights into natural resource management and conservation. However, the field has primarily adapted the use of financial tools rather than investigating mechanisms for financing, except for the sizable literature on direct payments (i.e., payments for ecosystem services). Increasingly, the policy world and investing world recognize that more resources are needed to maintain the biosphere. Blending prior environmental economics research with new research and practice on financing nature conservation may be able to help direct financial innovation to help solve, yet unsolved, collective action problems in order to conserve nature and ensure sustainable development.
Successful implementation of the Kunming-Montreal Global Biodiversity Framework requires identifying a process for measuring and valuing changes in biodiversity that build on the recognition that economics and valuation must play a key role in “halting and reversing” biodiversity loss. Here, we discuss considerations for a practical path to valuing changes in biodiversity. Framing changes in the value of biodiversity as a summary of changes in certain natural assets enables leveraging existing approaches and international standards associated with environmental-economic accounting. We discuss why an approach that builds from individual species, evolutionary groups, or functional groups into a practical, hierarchical statistical classification system is better than the development of any one biodiversity index. We merge techniques from ecology and other natural sciences, national and environmental-economic accounting, and economics, which are all on the cusp of making measurement of the change in the value of biodiversity possible. The focus should be on scaling and integrating these approaches. The path forward appears to begin with imperfect but useful measures, grounded in robust concepts, while establishing ambition to further scale-up measurements—just like the past evolution of many other official statistical series.
A monopolist platform uses data to match heterogeneous consumers with multiproduct sellers. The consumers can purchase the products on the platform or search off the platform. The platform sells targeted ads to sellers that recommend their products to consumers and reveals information to consumers about their match values. The revenue- optimal mechanism is a managed advertising campaign that matches products and preferences efficiently. In equilibrium, sellers offer higher qualities at lower unit prices on than off platform. The platform exploits its information advantage to increase its bargaining power vis-à-vis the sellers. Finally, privacy-respecting data-governance rules can lead to welfare gains for consumers.
The extent to which women participate in the labor market and have access to formal employment differs greatly across Indian states. In this paper we build on the methodology developed by Hsieh, Hurst, Jones, and Klenow (2019) to estimate the productivity consequences of such differences. Using rich microdata on occupational sorting and earnings, our theory allows to separately identify labor demand distortions (e.g., discrimination in hiring for formal jobs) from labor supply distortions (e.g., frictions that discourage women’s labor force participation). We find that both demand distortions and supply distortions are negatively related to state-level economic development. Equalizing distortions across Indian states could raise state-level productivity by up to 15%.
This paper presents a model of consumption behavior that explains the presence of “wealthy hand-to-mouth” consumers using a mechanism that differs from those analyzed previously. We show that a two-asset model with temptation preferences generates a demand for commitment and thus illiquidity, leading to hand-to-mouth behavior even when liquid assets deliver higher returns than illiquid assets. This preference for illiquidity has important implications for consumption behavior and for fiscal stimulus policies. Our model matches the recent empirical evidence that Marginal Propensity to Consume remain high even for large income shocks, suggesting a larger response to targeted fiscal stimulus than previously believed.
Wealth accumulation is critical for advancing women's and men's economic opportunities, and yet is understudied in developing countries. Leveraging new, nationally-representative, cross-country comparable surveys where men and women self-reported on their personal asset ownership, we show that individual-level wealth inequality is significantly higher vis-à-vis comparators based on per capita household consumption expenditure, and per capita household wealth. Intra-household wealth inequality explains about 12–30 percent of overall wealth inequality, depending on the country context. The analysis further demonstrates how survey design choices, in particular respondent selection, matter for individual wealth inequality estimates.
Two years prior to elections, two-thirds of Delhi municipal councillors learned they had been randomly chosen for a preelection newspaper report card. Treated councillors in high-slum areas increased pro-poor spending, relative both to control counterparts and treated counterparts from low-slum areas. Treated incumbents ineligible to rerun in home wards because of randomly assigned gender quotas were substantially likelier to run elsewhere only if their report card showed a strong pro-poor spending record. Parties also benefited electorally from councillors' high pro-poor spending. In contrast, in a cross-cut experiment, councillors did not react to actionable information that was not publicly disclosed.
Globally, preschool enrollment has surged, but its quality is often poor. We evaluate strategies to improve quality of public preschools in Colombia. The first, designed by the government and rolled out nationwide, provided extra funding, mainly earmarked for hiring teaching assistants. The second also offered low-cost training for existing teachers. The first intervention had no effect on child development, while the second improved children’s cognitive development, especially for more disadvantaged children. This pattern can be explained by the interventions affecting teachers' behavior differently. The first led teachers to reduce their classroom time, including learning activities, while additional training offset the adverse effect on learning activities and improved teaching quality.
Most empirical work in economics has considered only a narrow set of measures as meaningful and useful to characterize individual behavior, a restriction justified by the difficulties in collecting a wider set. However, this approach often forces the use of strong assumptions to estimate the parameters that inform individual behavior and identify causal links. In this paper, we argue that a more flexible and broader approach to measurement could be extremely useful and allow the estimation of richer and more realistic models that rest on weaker identifying assumptions. We argue that the design of measurement tools should interact with, and depend on, the models economists use. Measurement is not a substitute for rigorous theory, it is an important complement to it, and should be developed in parallel to it. We illustrate these arguments with a model of parental behavior estimated on pilot data that combines conventional measures with novel ones.
On the basis of a randomized controlled trial, we evaluate a scholarship program in Mexico, Programa de Becas Educación Media Superior (PROBEMS), aimed at improving graduation rates and test scores among upper secondary school students from poor backgrounds. We find that, on average, the program has no effect on either graduation rates or math and Spanish test scores. We point to two possible reasons for this failure: (i) the program was badly targeted, with many of the recipients being from less disadvantaged families than intended; and (ii) the prior academic achievement of those eligible was often insufficient for successful completion of the academic requirements of upper secondary school. This points to accumulated achievement deficits that could be addressed by interventions targeting learning at an earlier stage.