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November 2017

Taxing Clients? How Clientelism Hurts Citizen Tax Morale in Benin: Guest post by Sanata Sy-Sahande

This is the seventh in this year’s job market series.
Developing countries regularly underperform in their capacity to collect taxes, with tax revenue to GDP ratios that are 20 to 30 percent less than those of high-income countries (Besley and Persson, 2014). This tax capacity gap represents lost revenue that could have provided much-needed public goods and services while reducing reliance on foreign aid. This issue is especially relevant in Africa, where “shadow economies” comprise up to 75% of national GDP (Schneider and Enste 2000), indicating that large swaths of these countries’ populations manage to evade taxation. What accounts for this failure to convince citizens to pay taxes?
Structural roadblocks to tax collections in developing countries include poor service quality, dysfunctional bureaucracies, and outdated equipment. In contrast, my job market paper provides a political explanation centered on clientelism, or politicians' exchange of targeted goods for votes from loyal supporters.

Should people be paid to apply for jobs? Guest post by Stefano Caria

This is the sixth in this year’s job market series 
Labor misallocation is believed to be a key driver of differences in income across countries (Hsieh and Klenow 2010). However, the causes of this misallocation are not always well understood and there is little evidence on what interventions can improve the allocation of workers in the economy. These issues are particularly important in Sub-Saharan Africa, where worker mobility from low to high productivity sectors is often limited (McMillan, Rodrick and Verduzco-Gallo 2014).
My job market paper provides new experimental evidence from Ethiopia showing that subsidizing job applications can reduce inefficiencies in the allocation of workers’ talent.

Ticket to Ride? Building Efficient and Equitable Cities with Bus Rapid Transit: Guest post by Nick Tsivanidis

This is the fifth in this year’s job market series.
By 2050, 2.5 billion people will move into cities with the vast majority doing so in the developing world (United Nations 2014). This has the potential to lift millions out of poverty by increasing the productivity of firms and workers who benefit from agglomeration. However, rapid and unplanned growth can lead to sprawling, inefficient cities with hours wasted stuck in traffic. Governments will spend vast sums on mass transit systems to reduce commute times (McKinsey 2016), but measuring their benefits is challenging. While individuals save time on any particular commute, their decisions of where to live and work will change as new alternatives become attractive and land and labor markets adjust. The lack of detailed intra-city data in less developed countries coinciding with the construction of large transit systems makes evaluating their causal impact even more daunting.
In my job market paper, I ask the question: how large are the economic gains to improving public transit within cities and how are they distributed between low- and high-skilled workers? I construct detailed data across 2,800 census tracts from before and after the opening of the world’s largest Bus Rapid Transit (BRT) system–TransMilenio–in Bogotá, Colombia. I develop a new reduced form methodology derived from general equilibrium theory to empirically assess TransMilenio’s impact on city structure and use this framework to quantify its aggregate and distributional effects.

Jobs for Votes: RDD Evidence on Patronage in Brazilian Public Sector Hiring: Guest post by Edoardo Teso

This is the fourth in this year’s series of job market posts.
As the quality of a country's public sector workforce is an essential factor in its effectiveness in providing services, governments should try to hire qualified individuals in the public sector (Finan et al. 2017). However, there may be an important obstacle to the quality of this recruitment process, especially in developing countries: politicians could engage in patronage - the use of public sector jobs to reward their political supporters.

Virtually all modern bureaucracies are characterized by a civil service system, where the introduction of meritocratic hiring criteria was meant to shield public sector jobs from patronage practices. However, politicians typically retain some discretion in the selection of public workers, for instance through the use of temporary contracts (Grindle 2012). As a consequence, patronage could still play an important role in public sector hiring.  Despite the potentially significant impact of this phenomenon on the quality of the public workforce, no study has systematically documented its presence in a modern bureaucracy, limiting our understanding of its consequences for the public sector.

In my job market paper "Patronage in the Allocation of Public Sector Jobs" (joint work with Emanuele Colonnelli and Mounu Prem), I study patronage in the context of Brazilian local governments during the 1997-2014 period.

Information-driven voter disagreement over more authoritarianism: Experimental evidence from Turkey: Guest post by Ceren Baysan

This is the third in this year’s series of posts by PhD students on the job market.

Globally, civil liberties and political rights have been declining for eleven consecutive years (Freedom House, 2017). The erosion of these measures runs counter to a priori expectations that circumstances would improve: the number of democracies had doubled within the past five decades and information is increasingly available to voters due to a growing and diverse set of media sources. The presence of more accessible information has been linked to improved political accountability, a fundamental factor of development (Drèze and Sen, 1989; Besley and Burgess, 2002). On the other hand, increased access to information is also believed to polarize voters, offering a possible explanation for the backsliding of democratic norms (Downs, 1957; Gentzkow and Shapiro, 2011). In my job market paper, I show that experimentally varied exposure to the same information in a partisan campaign polarized vote choice on weakening the system of checks and balances in Turkey.

Attention or information? Why telling Nina’s parents she missed school makes her a better student -- Guest post by Nina Cunha

This is the second in this year’s series of posts by PhD students on the job market. Reminder that submissions close tomorrow at noon.

When I was in school, I used to skip some classes; my parents probably never learned about it (at least until this blog post). Now imagine there was a system in place to tell my parents how often I skipped classes in the previous weeks. When Nina’s parents get a message pointing out that she missed school yesterday, while they learn at no cost that her behavior was not in line with their expectations, they may also realize that attendance is an important dimension of their daughter’s behavior to which they should attend moving forward. Therefore, informing parents about their child’s attendance, for instance, might also draw their attention to the importance of attending class, increasing their awareness about monitoring benefits. This is particularly relevant in face of the evidence on how poverty captures attention (Mani et al., 2013), and on how, given limited attention, individuals may fail to learn from dimensions they do not notice (Hanna et al., 2014). Therefore, while informing parents lowers monitoring costs – alleviating moral hazard and inducing better school outcomes, in line with parent’s objectives –, communication may also increase the salience of monitoring benefits. My job market paper investigates the mechanisms behind the effects of communication with parents.

No participation without taxation? Evidence from randomized tax collection in the D.R. Congo: Guest post by Jonathan Weigel

This is the first in this year’s series of posts by PhD students on the job market. Reminder that submissions close this Wednesday at noon.
Good political institutions are thought to be essential for sustained economic development (Acemoglu et al., 2016). But where do inclusive, accountable institutions come from? One prominent explanation centers on taxation (Schumpeter, 1918; Besley and Persson, 2009, 2013). Historically, when states began systematically taxing their populations to pay for wars, citizens protested fiercely, demanding public goods and political rights: “no taxation without representation.” This process triggered the co-evolution of tax compliance, citizen participation in politics, and accountable governance. Today, policymakers often promote taxation in developing countries to jumpstart this same virtuous cycle. “Bringing small businesses into the tax net,” writes the IMF, “can help secure their participation in the political process and improve government accountability” (IMF, 2011).

IE analytics: introducing ietoolkit

Luiza Andrade's picture
Scientific advances are the result of a long, cumulative process of building knowledge and methodologies -- or, as the cliché goes, “standing on the shoulders of giants”. One often overlooked, but crucial part of this climb is a long tradition of standardization of everything from mathematical notation and scientific terminology, to format for academic articles and references.

How big data helped us estimate the impact of an intervention with 0.8% take-up

Claudia Ruiz's picture

When asked if he would like to have dinner at a highly-regarded restaurant, Yogi Berra famously replied “Nobody goes there anymore. It’s too crowded”. This contradictory situation of very low take-up combined with large overall use is common with some financial products – for example, the response rate to direct mail credit card solicitations had fallen to 0.6 percent by 2012, yet lots of people have credit cards.

It is also a situation we recently found ourselves in when working on a financial education experiment in Mexico with the bank BBVA Bancomer. They worked with over 100,000 of their credit card clients, inviting the treatment group to attend their financial education program Adelante con tu futuro (Go ahead with your future). Over 1.2 million participants have taken this program between 2008 and 2016, yet only 0.8 percent of the clients in the treatment group attended the workshop. A second experiment which tested personalized financial coaching also had low take-up, with 6.8 percent of the treatment group actually receiving coaching.

In a new working paper (joint with Gabriel Lara Ibarra), we discuss how the richness of financial data on clients allows us to combine experimental and non-experimental methods to still estimate the impact of this program for those clients who do take up the program.

Weekly links November 10: how to properly pre-register, trade and inequality, surprising findings and more…

David McKenzie's picture
  • Data Colada on how to properly pre-register a study: “it may be helpful to imagine a skeptical reader of your paper. Let’s call him Leif. Imagine that Leif is worried that p-hacking might creep into the analyses of even the best-intentioned researchers. The job of your preregistration is to set Leif’s mind at ease. This means identifying all of the ways you could have p-hacked – choosing a different sample size, or a different exclusion rule, or a different dependent variable, or a different set of controls/covariates, or a different set of conditions to compare, or a different data transformation – and including all of the information that lets Leif know that these decisions were set in stone in advance”…but on the other hand “it should contain only the information that is essential for the task at hand… We have seen many preregistrations that are just too long… you don’t need to say in the preregistration everything that you will say in the paper. A hard-to-read preregistration makes preregistration less effective…” – comes with a nice example table of what bad specifications and good specifications look like.

Where is the development economics research happening? The geographical distribution of NEUDC research

David Evans's picture

Yesterday I posted a round-up of the research presented at NEUDC, a major conference on development economics. Although most economic research aspires to uncover principles relevant across multiple contexts, empirical research happens at a place and time. I mapped out the distribution of research presented at NEUDC, fully recognizing that this makes no claim to be representative of the profession as a whole.

Below, I charted the number of studies per country (for all countries that had at least two studies). If a study used data from multiple countries (up to four), I counted each of them. If a study used a data set that spans 30 countries, I didn’t use it.

What’s the latest in development economics research? A round-up of 140+ papers from NEUDC 2017

David Evans's picture

Did you miss this year’s Northeast Universities Development Consortium conference, or NEUDC? I did, unfortunately!

NEUDC is a large development economics conference, with more than 160 papers on the program, so it’s a nice way to get a sense of new research in the field.
Thankfully, since NEUDC posts submitted papers, I was able to mostly catch up. I went through 147 of the papers and summarized them below, by topic. If a paper you loved or presented isn’t in the rundown, feel free to add a brief summary in the comments. (Why 147 instead of 160? I skipped a few macro papers and the papers that weren’t posted.)

These links should take you to your topic of interest: Agriculture, cash transfers and asset transfers, credit and insurance, crime, conflict, violence, and war, culture, norms, and corruption, education, elections and political economy, firms, governance, bureaucracy, and social capital, health (including WASH), jobs (including public works), marriage, methodology, migration, mobile phones and mobile money, poverty, inequality, and shocks, psychology, taxes, and traffic.

The Economics and Law of Sexual Harassment in the Workplace

Berk Ozler's picture

This week, I leave you with this short 2003 paper in the Journal of Economic Perspectives by Kaushik Basu. It both follows somewhat from my last post, is related to the day's news, and relevant for thinking about principles for intervention in labor markets for a host of issues that our colleagues deal with in developing and developed economies...Here is the abstract - but you can read the paper in 30 minutes...

Weekly links November 3: posters against stunting, but are RCTs bad for kids? Publishing lab experiments and replications, and more…

David McKenzie's picture

How hard are they working?

Markus Goldstein's picture
I was at a conference a couple of years ago and a senior colleague, one who I deeply respect, summarized the conversation as: “our labor data are crap.”   I think he meant that we have a general problem when looking at labor productivity (for agriculture in this case) both in terms of the heroic recall of days and tasks we are asking survey respondents for, but also we aren’t doing a good job of measuring effort.