Working Papers

Suresh Naidu, James A. Robinson, and Lauren E. Young

Abstract

Existing theories of coups against democracy emphasize that elite incentives to mount a coup depend on the threat that democracy represents to them and what they stand to gain from dictatorship. But holding interests constant, some potential plotters, by the nature of their social networks, have much more influence over whether or not a coup succeeds. We develop a model of elite social networks and show that coup participation of an elite is increasing in their network centrality and results in rents during a dictatorship. We empirically…

Rabah Arezki, Patrick Bolton, Sanjay Peters, Frederic Samama, and Joseph Stiglitz

Abstract

This paper proposes an institutional solution that can help unlock the flow of low yielding longterm savings towards high-return infrastructure investments. The solution is to transform public-private partnerships in infrastructure and the classic model of multilateral development banks. Instead of thinking of public-private partnerships as bilateral contracts between a private concession operator and a government agency, we argue that they should be conceived as partnerships that also involve a development…

S Anukriti, Sonia Bhalotra, and Hiu Tam

Abstract

The introduction of prenatal sex-detection technologies in India has led to a phenomenal increase in abortion of female fetuses. We investigate their impact on son-biased fertility stopping behavior, parental investments in girls relative to boys, and the relative chances of girls surviving after birth. We find a moderation of son-biased fertility, erosion of gender gaps in breastfeeding and immunization, and complete convergence in the post-neonatal mortality rates of boys and girls. For every five aborted girls, we estimate that roughly one…

Joanna Tyrowicz, Lucas van der Velde, and Jan Svejnar

Abstract

From a theoretical perspective the link between the speed and scope of rapid labor reallocation and productivity growth or income inequality is ambiguous. Do reallocations with more flows tend to produce higher productivity growth? Does such a link appear at the expense of higher income inequality? We explore the rich evidence from earlier studies on worker flows in the period of massive and rapid labor reallocation, i.e. the economic transition from a centrally planned to a market-oriented economy in Central and Eastern…

Elliott Ash and W. Bentley MacLeod

Abstract

This paper provides evidence on the effect of electoral institutions on the performance of public officials. Using panel data on state supreme courts between 1947 and 1994, we measure the effects of changes in judicial electoral processes on judge work quality – as measured by citations by later judges. Judges selected by non-partisan elections write higher-quality opinions than judges selected by partisan elections. Judges selected by technocratic merit commissions write higher-quality opinions than either partisan elected judges or non-partisan-elected…

Evan Riehl

Abstract

Forgiving education systems create churning by allowing students to defer the completion of their schooling. This paper asks if time gaps in academic careers can lower educational attainment. I study an academic calendar shift in Colombia that created a one semester gap between high school and potential college entry. This brief gap reduced college enrollment rates relative to unaffected regions. Low SES students were more likely to forgo college, and individuals who did enroll after the gap chose higher paying majors.  Thus academic time gaps can affect both the…

Supreet Kaur, Michael Kremer and Sendhil Mullainathan

Abstract

Workers with self-control problems do not work as hard as they would like. This changes the logic of agency theory by partly aligning the interests of the firm and worker: both now value contracts that elicit more effort in the future. Three findings from a year-long field experiment with data entry workers suggest the quantitative importance of self-control at work. First, workers choose dominated contracts—which penalize low output but provide no greater reward for high output—36% of the time to motivate their future selves;…

Sutirtha Bagchi and Jan Svejnar

Abstract

A fundamental question in social sciences relates to the effect of wealth inequality on economic growth. Yet, in tackling the question, researchers have had to use income as a proxy for wealth. We derive a global measure of wealth inequality from Forbes magazine’s listing of billionaires and compare its effect on growth to the effects of income inequality and poverty. We find that wealth inequality reduces economic growth, but when we control for the fact that some billionaires acquired wealth through political connections, the effect of politically…

Polona Domadenik, Janez Prasniker, and Jan Svejnar

Abstract

In this paper we present and test a theory of how political corruption, found in many transition and emerging market economies, affects corporate governance and productive efficiency of firms. Our model predicts that underdeveloped democratic institutions that do not punish political corruption result in political connectedness of firms that in turn has a negative effect on performance. We test this prediction on an almost complete population of Slovenian joint stock companies with 100 or more employees. Using the supervisory board…

Jonas Hjort

Abstract

A body of literature suggests that ethnic heterogeneity limits economic growth. This paper provides microeconometric evidence on the direct effect of ethnic divisions on productivity. In team production at a plant in Kenya, an upstream worker supplies and distributes flowers to two downstream workers who assemble them into bunches. The plant uses an essentially random rotation process to assign workers to positions, leading to three types of teams: (a) ethnically homogeneous teams, and teams in which (b) one or (c) both downstream workers belong to a tribe in rivalry…

Yuriy Gorodnichenko, Jan Svejnar and Katherine Terrell

Abstract

We use rich firm-level data and national input-output tables from 17 countries over the 2002-2005 period to test new and existing hypotheses about the impact of foreign direct investment (FDI) on the efficiency of domestic firms in the host country (i.e., spillovers). We document that backward linkages have a consistently positive effect on productivity of domestic firms while horizontal and forward linkages show no consistent effect. We also examine how the strength of spillovers varies by sector, FDI source, business…

Todd Kumler, Eric Verhoogen and Judith Frias

Abstract

Non-compliance of firms with tax regulations is a major constraint on state capacity in developing countries. We focus on an arguably under-appreciated dimension of non-compliance: under-reporting of wages by formal firms to evade payroll taxes. We develop a simple partial-equilibrium model of endogenous compliance by heterogeneous firms to guide the empirical investigation. We then compare two independent sources of individual-level wage information from Mexico -- firms' wage reports to the Mexican social security agency and…