Working Papers
CDEP-CGEG Working Papers are sponsored jointly by the Center for Development Economics and Policy (CDEP) and the Center on Global Economic Governance (CGEG), and are circulated to promote discussion and comment. They represent the views of their authors and not the official views of CDEP or CGEG.
Evan Plous Kresch
Abstract
This paper documents how weak institutions may undermine public goods service when multiple levels of government share responsibility of provision. I examine the Brazilian water and sanitation sector, which presents a natural experiment of shared provision between state and municipal companies. Using a differences-in-differences framework, I study a legal reform that clarified the relationship between municipal and state providers and eliminated any takeover threat by state companies. I find after the reform, municipal companies almost doubled their total system…
Hyuncheol Bryant Kim, Seonghoon Kim, and Thomas T. Kim
Abstract
Different work incentives may affect labor productivity differently. We implement a two-stage field experiment to measure effects of career and wage incentives on labor productivity through self-selection and causal effect channels. First, workers were hired with either career or wage incentives. After employment, a random half of workers with career incentives received wage incentives and a random half of workers with wage incentives received career incentives. We find that career incentives attract higher-performing workers…
Ama Baafra Abeberese and Ritam Chaurey
Abstract
Informal firms account for over half of output and employment in developing countries. To analyze the barriers to formalization, most of the literature has focused on entry costs in the form of registration fees, rather than on the ongoing costs and benefits of being a formal firm. This paper is the first to study the effect of a simultaneous change in ongoing formal sector costs and benefits on formalization. We analyze an Indian scheme that provided tax exemptions and capital subsidies to formal firms, thereby increasing the benefits…
Nancy Birdsall, Liliana Rojas-Suarez, and Anna Diofasi
Abstract
Despite increasing volatility in the global economy, the uptake of the IMF’s two precautionary credit lines, the Flexible Credit Line (FCL) and the Precautionary and Liquidity Line (PLL), has remained limited – currently to just four countries. The two new lending instruments were created in the wake of the global financial crisis of 2008 to enable IMF member states to respond quickly and effectively to temporary balance of payment needs resulting from external shocks. Both credit lines offer immediate access to considerable…
Belinda Archibong and Francis Annan
Abstract
This paper examines whether disease burdens, especially prevalent in the tropics, contribute significantly to widening gender gaps in educational attainments. We estimate the impact of sudden exposure to the 1986 meningitis epidemic in Niger on girls’ education relative to boys. Our results suggest that increases in meningitis cases during epidemic years significantly reduce years of education disproportionately for primary school-aged going girls in areas with higher meningitis exposure. There is no significant effect for boys in the same cohort…
Willem H. Buiter
Abstract
Necessary conditions for valid general equilibrium analysis include: (1) the number of equations equals the number of unknowns; (2) if (1) holds, the resulting solution(s) make sense. The fiscal theory of the price level fails on both counts, both away from and at the ELB. The underlying fallacy is the confusion of the intertemporal budget constraint of the State with a misspecified government bond pricing equilibrium equation. This means overdetermined systems unless (a) the price level is flexible, (b) the interest rate is the monetary policy instrument and (c)…
David Atkin, Azam Chaudhry, Shamyla Chaudry, Amit K. Khandelwal, Eric Verhoogen
Abstract
This paper studies technology adoption in a cluster of soccer-ball producers in Sialkot, Pakistan. We invented a new cutting technology that reduces waste of the primary raw material and gave the technology to a random subset of producers. Despite the arguably unambiguous net benefits of the technology for nearly all firms, after 15 months take-up remained puzzlingly low. We hypothesize that an important reason for the lack of adoption is a misalignment of incentives within firms: the…
Willem H. Buiter
Abstract
This paper investigates the implications for the nominal exchange rate of a Border Tax Adjustment (BTA) when there is BTA neutrality. A border tax adjustment is a change from an origin-based system of taxation, that taxes exports but exempts imports to a destination-based system that taxes imports but exempts exports. Both indirect taxes (e.g. a VAT) and direct taxes (e.g. a cash-flow corporate profit tax) can be subject to a BTA. In the US, a BTA for the corporate profit tax is under discussion.
There is BTA neutrality when the real equilibrium,…
David Atkin, Amit K. Khandelwal, Adam Osman
Abstract:
We conduct a randomized control trial that generates exogenous variation in the access to foreign markets for rug producers in Egypt. Combined with detailed survey data, we causally identify the impact of exporting on profits and productivity. Treatment firms report 15-25 percent higher profits and exhibit large improvements in quality alongside reductions in output per hour relative to control firms. These findings do not simply reflect firms being offered higher margins to manufacture high-quality products that take longer to produce…
Abstract
The purpose of this essay is to discuss the “human capital” approach to inference. Observed decisions by experts can be used to organize data on their decisions using simple machine learning techniques. The fact that the human capital of these experts is heterogeneous implies that errors in decision making are inevitable, which in turn allows us to identify the conditional average treatment effect for a wider class of situations than would be possible with randomized control trials. This point is illustrated with some data from medical decision making in the…
Daniel Aaronson, Rajeev Dehejia, Andrew Jordan, Cristian Pop-Eleches, Cyrus Samii, and Karl Schulze
Abstract
This paper documents the evolving impact of childbearing on the work activity of mothers between 1787 and 2014. It is based on a compiled data set of 429 censuses and surveys, representing 101 countries and 46.9 million mothers, using the International and U.S. IPUMS, the North Atlantic Population Project, and the Demographic and Health Surveys. Using twin births (Rosenzweig and Wolpin 1980) and same gendered children (Angrist and Evans 1998) as instrumental variables, we show…
Janet Currie and W. Bentley MacLeod
Abstract:
Expert performance is often evaluated assuming that good experts have good outcomes. We examine expertise in medicine and develop a model that allows for two dimensions of physician performance: Decision making and procedural skill. Better procedural skill increases the use of intensive procedures for everyone, while better decision making results in a reallocation of procedures from fewer low risk to high risk cases. We show that poor diagnosticians can be identified using administrative data and that improving decision making improve birth…