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Oriana Bandiera, Michael Carlos Best, Adnan Qadir Khan, and Andrea Prat
Abstract
We design a field experiment to study how the allocation of authority between frontline procurement officers and their monitors affects performance both directly and through the response to incentives. In collaboration with the government of Punjab, Pakistan, we shift authority from monitors to procurement officers and introduce financial incentives to a sample of 600 procurement officers in 26 districts. We find that autonomy alone reduces prices by 9% without reducing quality and that the effect is stronger when the monitor tends to delay approvals for purchases until the end of the fiscal year. In contrast, the effect of performance pay is muted, except when agents face a monitor who does not delay approvals. The results illustrate that organizational design and anti-corruption policies must balance agency issues at different levels of the hierarchy.
Oriana Bandiera, Michael Carlos Best, Adnan Qadir Khan, and Andrea Prat
Abstract
We design a field experiment to study how the allocation of authority between frontline procurement officers and their monitors affects performance both directly and through the response to incentives. In collaboration with the government of Punjab, Pakistan, we shift authority from monitors to procurement officers and introduce financial incentives to a sample of 600 procurement officers in 26 districts. We find that autonomy alone reduces prices by 9% without reducing quality and that the effect is stronger when the monitor tends to delay approvals for purchases until the end of the fiscal year. In contrast, the effect of performance pay is muted, except when agents face a monitor who does not delay approvals. The results illustrate that organizational design and anti-corruption policies must balance agency issues at different levels of the hierarchy.
Alex Eble and Feng Hu
Abstract:
We study the transmission of beliefs about gender differences in math ability from adults to children and how this affects girls’ academic performance relative to boys. We exploit randomly assigned variation in the proportion of a child’s middle school classmates whose parents believe boys are innately better than girls at learning math. An increase in exposure to peers whose parents report this belief increases a child’s likelihood of believing it, with similar effects for boys and girls and greater effects from peers of the same gender. This exposure also affects children’s perceived difficulty of math, aspirations, and math performance, generating gains for boys and losses for girls.
Anja Benshaul-Tolonen, Garazi Zulaika, Elizabeth Nyothach, Clifford Oduor, Linda Mason, David Obar, Kelly T. Alexander, Kayla F. Laserson, and Penelope A. Phillips-Howard
Alex Eble, Chris Frost, Alpha Camara, Babourcarr Bouy, Momodou Bah, Maitri Sivaraman, Jenny Hsieh, Chitra Jayanty, Tony Brady, Piotr Gawron, Peter Boone, Diana Elbourne
Abstract
Despite large schooling and learning gains in many developing countries, children in highly deprived areas are often unlikely to achieve even basic literacy and numeracy. We study how much of this problem can be resolved using a multi-pronged intervention combining several distinct interventions known to be effective in isolation. We conducted a cluster-randomized trial in The Gambia evaluating a literacy and numeracy intervention designed for primary-aged children in remote parts of poor countries. The intervention combines para teachers delivering after-school supplementary classes, scripted lesson plans, and frequent monitoring focusing on improving teacher practice (coaching). A similar intervention previously demonstrated large learning gains in a cluster-randomized trial in rural India. After three academic years, Gambian children receiving the intervention scored 46 percentage points (3.2 SD) better on a combined literacy and numeracy test than control children. This intervention holds great promise to address low learning levels in other poor, remote settings.
On 31 October, the Center on Global Economic Governance hosted Daniel Cohen, head of the economics department of the Ecole normale supérieure and a professor and founding member of the Paris School of Economics.
Supreet Kaur
Abstract
This paper tests for downward nominal wage rigidity in markets for casual daily agricultural labor in a developing country context. I examine wage and employment responses to rainfall shocks—which shift labor demand—in 500 Indian districts from 1956-2008. First, there is asymmetric wage adjustment: nominal wages rise in response to positive shocks but do not fall during droughts. Second, after transitory positive shocks have dissipated, nominal wages do not return to previous levels—they remain high in future years. Third, inflation moderates these effects: when inflation is higher, real wages are more likely to fall during droughts and after transitory positive shocks. Fourth, wage distortions generate employment distortions: employment is lower in the year after a transitory positive shock than if the positive shock had not occurred; landless laborers experience a 6% employment reduction. Fifth, consistent with misallocation of labor across farms, households with smaller landholdings increase labor supply to their own farms when they are rationed out of the external labor market. These findings indicate that wage rigidity lowers employment levels and increases employment volatility—in a setting with few institutional constraints. Data from a new survey I conducted in two Indian states suggests that agricultural workers and employers: view nominal wage cuts as unfair; are considerably less likely to regard real wage cuts as unfair if they are achieved through inflation rather than nominal cuts; and believe that nominal wage cuts cause effort reductions.
Published as "Nominal Wage Rigidity in Village Labor Markets" American Economic Review, Vol 109 No 10, October 2019
Alex Eble and Feng Hu
Abstract
Information affects beliefs, which in turn determine investment decisions. Because human capital exhibits dynamic complementarity, early sources of information play a crucial role in its formation. We study how information from stereotypes and role models influences children’s beliefs, aspirations, investment, and academic performance. A model of investment under uncertainty predicts that role models should have the greatest effect for children facing stereotypes who are also on the margin of giving up on themselves. We exploit random assignment of students to classes in a nationally representative dataset of Chinese middle schools to test the model’s main predictions and address potential alternative explanations.
Michael Carlos Best, Jonas Hjort, and David Szakonyi
Abstract
How much of the variation in state effectiveness is due to the individuals and organizations responsible for implementing policy? We investigate this question and its implications for policy design in the context of public procurement, using a text-based product classification method to measure bureaucratic output. We show that effective procurers lower bid preparation/submission costs, and that 60% of within-product purchase-price variation across 16 million purchases in Russia in 2011-2015 is due to the bureaucrats and organizations administering procurement processes. This has dramatic policy consequences. To illustrate these, we study a ubiquitous procurement policy: bid preferences for favored firms (here domestic manufacturers). The policy decreases overall entry and increases prices when procurers are effective, but has the opposite impact with ineffective procurers, as predicted by a simple endogenous-entry model of procurement. Our results imply that the state’s often overlooked bureaucratic tier is critical for effectiveness and the make-up of optimal policies.
In several countries across the globe, including the US, socialism is increasingly forming a part of the political rhetoric.
Abstract
Though previous works have discussed the benefits of precolonial centralization for development in Africa, the findings and the mechanisms provided do not explain the heterogeneity in development outcomes of formerly centralized states. Using new survey data from Nigeria, I find a significant negative effect of precolonial centralization on access to certain public services for centralized regions whose leaders failed to cooperate with the autocratic military regime, and whose jurisdictions were subsequently punished by underinvestment in these public services, with lasting impacts till today. The results are robust to extensive controls and instrumenting forn precolonial centralization with an ecological diversity index.
Published in the journal World Development, September 2019: "Explaining Divergence in the Long-Term Effects of Precolonial Centralization on Access to Public Infrastructure Services in Nigeria"
Laura Boudreau, Rachel Heath, and Tyler H. McCormick
Abstract
Many workers in large factories in developing countries are internal migrants from rural areas. We examine the relationship between workers’ migration status and the working conditions they face in a household survey of garment workers in Bangladesh. We document that migrants are in firms with higher wages but worse working conditions, but as their careers progress, they have higher mobility than locals as they move towards firms with better conditions. These facts are consistent with a model in which migrants are poorly informed about working conditions upon beginning work but learn more as they gain experience in the industry.
Sonia Bhalotra, Rudi Rocha, and Rodrigo R. Soares
Abstract
We investigate universalization of access to health in Brazil. We find large reductions in maternal, foetal, neonatal and post-neonatal mortality, a reduction in fertility and, possibly on account of selection, no change in the quality of births. Using rich administrative data, we investigate changes in organization, access and outcomes, thereby illuminating the driving mechanisms. We find sharp increases in coverage of primary health facilities with GPs and outreach workers and, in line with this, increases in outpatient procedures, prenatal care visits, health-education activities and home visits by medical professionals. Consistent with an attempt to rationalize use of hospital resources, we find a decline in specialists and hospital beds per capita. Despite this, we see increases in hospital births, C-sections, and maternal hospitalization for complications, with no change in rates of infant hospitalization.
Jan Hanousek, Anastasiya Shamshur, Jan Svejnar, and Jiri Tresl
Abstract
Using a panel data set of 148,286 firm-year observations related to 41,497 privately owned firms in thirteen European countries between 2001 to 2013, we provide the first large-scale study of the effect of uncertainty about corruption (need to make unofficial payments to public officials) on corporate investments. With a dataset of manager interviews and a dataset of firms’ financial and accounting statements, we find that higher corruption uncertainty is associated with lower corporate investments in medium-size and large domestically-owned firms, but not in foreign-owned firms or very small domestic firms. The level of corruption has no effect on investment when corruption uncertainty is included in estimation, a finding that contradicts earlier corruption studies that did not include corruption uncertainty. Our results hold in fixed effects, instrumental variable, and matching analyses. They are robust to model specifications and suggest that policy should aim at reducing corruption uncertainty (e.g., by having all permits issued by one office).
Jonas Hjort, Diana Moreira, Gautam Rao, and Juan Francisco Santini
Abstract
This paper investigates if research findings change political leaders’ beliefs and cause policy change. Collaborating with the National Confederation of Municipalities in Brazil, we work with 2,150 municipalities and the mayors who control their policies. We use experiments to measure mayors’ demand for research information and their response to learning research findings. In one experiment, we find that mayors and other municipal officials are willing to pay to learn the results of impact evaluations, and update their beliefs when informed of the findings. They value larger-sample studies more, while not distinguishing on average between studies conducted in rich and poor countries. In a second experiment, we find that informing mayors about research on a simple and effective policy (reminder letters for taxpayers) increases the probability that their municipality implements the policy by 10 percentage points. In sum, we provide direct evidence that providing research information to political leaders can lead to policy change. Information frictions may thus help explain failures to adopt effective policies.