Does a woman’s take-up of government benefits vary with her perception of how they will be shared within the household? Using randomized assignment to alternative information treatments, we examine this question in the context of Saudi women’s willingness to apply for unemployment assistance (Hafiz). We compare the take-up among women who receive no program information to three groups: those who receive information on program eligibility conditions (Eligibility group) and those who receive additional information that their registration status is broadly confidential (Privacy group) or that they fully control registering and accessing benefits (Agency group). Three months later, the treatments, on average, doubled Hafiz applications, with the treatment impacts largest for the Agency group. Women from poorer households and married women are most responsive to the Agency and Privacy interventions respectively. These findings are consistent with collective household bargaining models where family members’ spending preferences differ; we predict larger treatment impacts when there is more competition for resources.
Low- and middle-income nations host 76 percent of the world's refugees. This study uses original data to explore within-country spatial variability in refugee-hosting responsibilities. We find that hosting responsibilities for the displaced Rohingya people in Bangladesh are allocated in similarly unequal fashion when analyzed at the national, regional, and microregional levels. Refugee camps are placed in socioeconomically disadvantaged communities relative to both Bangladesh as a whole and surrounding areas. Our findings underscore the importance of considering host communities in the coordination of humanitarian responses to refugee crises to prevent economic hardship and political backlash.
We quantify the effects of the political development cycle – the fluctuations between the left (Maoist) and the right (pragmatist) development policies – on growth and structural transformation of China in 1953-1978. The left policies prioritized structural transformation towards non-agricultural production and consumption at the cost of agricultural development. The right policies prioritized agricultural consumption through slower structural transformation. The imperfect implementation of these policies led to large welfare costs of the political development cycle in a distorted economy undergoing a structural change.
Less than 30% of people in Africa received a dose of the COVID-19 vaccine even 18 months after vaccine development. Here, motivated by the observation that residents of remote, rural areas of Sierra Leone faced severe access difficulties, we conducted an intervention with last-mile delivery of doses and health professionals to the most inaccessible areas, along with community mobilization. A cluster randomized controlled trial in 150 communities showed that this intervention with mobile vaccination teams increased the immunization rate by about 26 percentage points within 48–72 h. Moreover, auxiliary populations visited our community vaccination points, which more than doubled the number of inoculations administered. The additional people vaccinated per intervention site translated to an implementation cost of US $33 per person vaccinated. Transportation to reach remote villages accounted for a large share of total intervention costs. Therefore, bundling multiple maternal and child health interventions in the same visit would further reduce costs per person treated. Current research on vaccine delivery maintains a large focus on individual behavioural issues such as hesitancy. Our study demonstrates that prioritizing mobile services to overcome access difficulties faced by remote populations in developing countries can generate increased returns in terms of uptake of health services.
We document that sales of individual products decline steadily throughout most of the product life cycle. Products quickly become obsolete as they face competition from newer products sold by competing firms and the same firm. We build a dynamic model that highlights an innovation-obsolescence cycle, where firms need to introduce new products to grow; otherwise, their portfolios become obsolete as rivals introduce their own new products. By introducing new products, however, firms accelerate the decline of their own existing products, further depressing their sales. This mechanism has sizable implications for quantifying economic growth and the impact of innovation policies.
We document strong skill matching in Turkish firms’ production networks. Additionally, in the data, export demand shocks from rich countries increase firms’ skill intensity and their trade with skill-intensive domestic partners. We explain these patterns using a quantitative model with heterogeneous firms, quality choices, and endogenous networks. A counterfactual economy-wide export demand shock of 5% leads both exporters and nonexporters to upgrade quality, raising the average wage by 1.2%. This effect is nine times the effect in a scenario without interconnected quality choices. We use the model to study the conditions for the success of export promotion policies.
A currency’s essential feature is to be a medium of exchange. This study explores the potential of cryptocurrencies to be used in daily transactions in El Salvador, the first country to make bitcoin legal tender. The government’s “big push” introduced “Chivo Wallet,” a digital wallet sharing features with Central Bank Digital Currencies (CBDCs), with perks to use it for trading bitcoins and US dollars. Through a nationally representative, face-to-face survey of 1800 households and blockchain data encompassing all Chivo Wallet transactions, we document a pattern of low and decreasing usage of digital payments and bitcoin. Privacy and security concerns are key adoption barriers, which speaks to a policy debate on crypto and CBDCs with anonymity at its core. Additionally, we estimate Chivo Wallet’s adoption cost and complementarities among adopters.
Climate policies vary widely across countries, with some countries imposing stringent emissions policies and others doing very little. When climate policies vary across countries, energy-intensive industries have an incentive to relocate to places with few or no emissions restrictions, an effect known as leakage. Relocated industries would continue to pollute but would be operating in a less desirable location. We consider solutions to the leakage problem in a simple setting where one region of the world imposes a climate policy and the rest of the world is passive. We solve the model analytically and also calibrate and simulate the model. Our model and analysis imply: (1) optimal climate policies tax both the supply of fossil fuels and the demand for fossil fuels; (2) on the demand side, absent administrative costs, optimal policies would tax both the use of fossil fuels in domestic production and the domestic consumption of goods created with fossil fuels, but with the tax rate on production lower due to leakage; (3) taxing only production (on the demand side), however, would be substantially simpler and almost as effective as taxing both production and consumption, because it would avoid the need for border adjustments on imports of goods; and (4) the effectiveness of the latter strategy depends on a low foreign elasticity of energy supply, which means that forming a taxing coalition to ensure a low foreign elasticity of energy supply can act as a substitute for border adjustments on goods.
Conditional cash transfer (CCT) programs aim to reduce poverty or advance social goals by encouraging desirable behavior that recipients under-invest in. An unintended consequence of conditionality may be the distortion of recipients’ behavior in ways that lower welfare. We first illustrate a range of potential distortions arising from CCT programs around the world. We then show that in the simple case where a CCT causes low return participants to select into a behavior, and social returns and private perceived returns are aligned, transfer size plays an important role: the larger the transfer, the stronger the distortion becomes, implying that (i) there is an optimal transfer size for such CCTs, and (ii) unconditional cash transfers (UCTs) may be better than CCTs when the transfer amount is large. We provide empirical evidence consistent with these claims by studying a cash transfer program conditional on seasonal labor migration in rural Indonesia. In line with theory, we show that when the transfer size exceeds the amount required for travel expenses, distortionary effects dominate and migration earnings decrease.
What is the pathway to development in a world marked by rising economic nationalism and less international integration? This paper answers this question within a framework that emphasizes the role of demand-side constraints on national development, which is identified with sustained poverty reduction. In this framework, development is linked to the adoption of an increasing returns to scale technology by imperfectly competitive firms that need to pay the fixed setup cost of switching to that technology. Sustained poverty reduction is measured as a continuous decline in the share of the population living below $1.90/day purchasing power parity in 2011 U.S. dollars over a five-year period. This outcome is affected in a statistically significant and economically meaningful way by domestic market size, which is measured as a function of the income distribution, and international market size, which is measured as a function of legally-binding provisions to international trade agreements, including the General Agreement on Tariffs and Trade, the World Trade Organization, and 279 preferential trade agreements. Counterfactual estimates suggest that, in the absence of international integration, the average resident of a low- or lower-middle-income country does not live in a market large enough to experience sustained poverty reduction. Domestic redistribution targeted towards generating a larger middle class can partially compensate for the lack of an international market.
Growth is closely related to structural transformation, the reallocation of economic activity among sectors. A well-functioning labor market plays an important role in this process by enabling workers to find employment in the growing, more productive sectors. We review the literature on labor market frictions that limit worker flows, slow structural transformation, and trap workers in poverty. The three main areas of focus are the extent of sectoral wage gaps, labor market dynamics, and evidence on specific frictions. Evidence in each area points to the presence of frictions that hinder worker reallocation. The literature also suggests policies that may help remediate frictions and improve worker mobility. We conclude by noting several open questions that provide promising avenues for future work.
In panel data on Chinese establishments spanning the 2001 WTO accession, import competition is associated with increases in revenue productivity. We propose a model that interprets this (and additional evidence) as firms choosing to differentiate their products to escape import competition. In the model, the profit from endogenous differentiating is decreasing in trade costs and is an inverted U-shaped function of productivity. We estimate the model and study a counterfactual trade liberalization. In response to import competition, firms differentiate their products and increase their markups, thereby increasing revenue productivity as in the data. Since product differentiation is underprovided by the market, the endogenous differentiation increases welfare relative to a model without firms’ option to differentiate. So, the model rationalizes the positive relationship between import competition and revenue productivity in the data, and it puts forth a new source of gain from trade.
Economic disruptions generally create winners and losers. The compensation problem consists of designing a reform of the existing income tax system that offsets the welfare losses of the latter by redistributing the gains of the former. We derive a formula for the compensating tax reform and its impact on the government budget when only distortionary tax instruments are available and wages are determined endogenously in general equilibrium. We apply this result to the compensation of robotization in the United States.
Time use data facilitate understanding of labor supply, especially for women who often undertake unpaid care and home production. Although assisted diary-based time use surveys are suitable for low-literacy populations, they are costly and rarely used. We create a low-cost, scalable alternative that captures contextually-determined broad time categories; here, allocations across market work, household labor, and leisure. Using fewer categories and larger time intervals takes 33% less time than traditional modules. Field experiments show the module measures average time across the broader categories as well as the traditional approach, particularly for our target female population. The module can also capture multitasking for a specific category of interest. Its shortcomings are short duration activity capture and the need for careful category selection. The module’s brevity and low cost make it a viable method to use in household and labor force surveys, facilitating tracking of work and leisure patterns as economies develop.
We study equilibria in static entry games with single-dimensional private information. Our framework embeds many models commonly used in applied work, allowing for firm heterogeneity and selective entry. We introduce the notion of strength, which summarizes a firm's ability to endure competition. In environments of applied interest, an equilibrium in which entry strategies are ordered according to the firms' strengths always exists. We call this equilibrium herculean. We derive simple and testable sufficient conditions guaranteeing equilibrium uniqueness and, consequently, a unique counterfactual prediction.