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job market series 2014

The Mission: Human Capital and the Persistence of Fortune: Guest Post by Felipe Valencia

This is the sixteenth in our series of posts by students on the job market this year.

The importance of history in economic development is well-established (Nunn 2009; Spolaore and Wacziarg 2013), but less is known about the specific channels of transmission which drive this persistence in outcomes. Dell (2010) stresses the negative effect of the mita (mining labor system) in Latin America, and Nunn and Wantchekon (2011) document the adverse impact of African slavery through decreased trust. But might other colonial arrangements lead to positive outcomes in the long run?

I address this question in my Job Market Paper by analyzing the long-term economic consequences of European missionary activity in South America. I focus on missions founded by the Jesuit Order in the Guarani lands, in modern-day Argentina, Brazil and Paraguay. This case is unique in that Jesuits were expelled from the Americas in 1767 and never returned to the Guarani area, thus precluding any direct continuation effect. While religious conversion was the official aim of the missions, they also increased human capital formation by schooling children and training adults in various crafts. My research question is whether such a one-off historical human capital intervention can have long-lasting effects.

"Coordinate or Perish": Can Cell Phones Help Farmers Grow Perishable Crops? Guest post by Saher Asad

This is the fifteenth post in our series by students on the job market this year

The main theme of my job market paper can be summed in a comment that a farmer made during my primary data collection field trips.
"Before I had a cell phone I harvested my crop and then had to wait for a trader to buy my crops; now I talk to the trader and harvest my crops when he will buy it."
-Farmer in rural Pakistan
 

People think it’s easy to contract HIV. That’s a good thing, right? Maybe not. Guest post by Jason Kerwin

This is the fourteenth in our series of posts by students on the job market this year.

People are afraid of HIV. Moreover, people around the world are convinced that the virus is easier to get than it actually is. The median person thinks that if you have unprotected sex with an HIV-positive person a single time, you will get HIV for sure. The truth is that it’s not nearly that easy to get HIV – the medical literature estimates that the transmission rate is actually about 0.1% per sex act, or 10% per year.

Who Benefits From School Competition? Guest Post by Natalie Bau.

This is the thirteenth in our series of posts by students on the job market this year.

A standard result in industrial organization is that competition increases consumer welfare by incentivizing firms to lower prices and increase quality. Yet, education may be very different since: (1) a child’s learning depends on the match between the child and the school and (2) not all children are equally responsive to their learning in a school when they make enrollment decisions.  Once these conditions are explicitly modelled, under plausible assumptions, an increase in competition can lead schools to increase their focus on wealthy, high ability children at the expense of poorer children. In my job market paper, I formalize this intuition and then combine a structural model of school choice with quasi-experimental results to show that increasing competition in a schooling market increases inequality in test-score gains by 0.1 standard deviations.

Customer Information Is Not a Prescription for Counterfeit Drugs: Guest post by Anne Fitzpatrick

This is the twelfth in our series of posts by students on the job market this year

Recent work has suggested that as many as one-third of antimalarial drugs in sub-Saharan Africa are of low-quality, a catch-all term ranging from effective counterfeit medicines to dangerous “fakes” (Nayyar et al., 2012). The persistence of low drug quality may be attributable to asymmetric information (Akerlof, 1970). Patients do not know their need for treatment, or the drug quality at the time of the purchase. In order to maximize profits, providers may then substitute cheaper, lower quality drugs. Bjorkman et al., (2012) find that fake drugs are particularly common in areas with low levels of customer knowledge about malaria transmission, where customers are potentially easier to deceive. However, the only intervention shown to reduce counterfeit drugs is the introduction of a high-quality competitor (Bjorkman et al., 2012; Bennett and Yin, 2014). Might increased customer information about purchases cause suppliers to improve their drug quality?
 
I address this question in my job market paper. I implement a randomized audit study in Uganda to measure how suppliers adjust price and quality if customers knew what disease the patient had (i.e., “diagnosis”) or knew the particular drug to buy. I contrast the response of drug quality with service quality, which is also low in developing countries (Das and Hammer, 2014). I find that price falls when customers present more information. Counter-intuitively, I find that both service and drug quality fall when the customer presents more information.

Fixing financial markets when other key markets are broken, too: Guest post by Alex Cohen

This is the eleventh in our series of posts by students on the job market this year
Researchers, policymakers and aid organizations have devoted lots of attention to improving access to credit and, increasingly, insurance for small firms and farms in developing countries. Yet some recent papers find puzzlingly weak effects of insurance and credit on growth and profits (Cole et al. 2014, Banerjee et al. forthcoming).
 One potential explanation may be that in developing countries, it’s not just financial markets that have imperfections, but that other key markets, such as markets for labor and land, have problems, too. In particular, high costs of supervising or finding trustworthy employees may make it expensive to add labor (Eswaran and Kotwal 1986, Fafchamps 2003, Foster and Rosenzweig 2011). For farms specifically, missing land markets may further constrain expansion (Goldstein and Udry 2008, Adamopoulos and Restuccia 2014).

Does higher pay attract better applicants? Evidence from a Ugandan NGO: Guest post by Erika Deserranno

This is the tenth in our series of posts by students on the job market this year

Personnel recruitment is a key challenge for all organizations and we know that financial incentives play an important role in determining who applies for a job (Dal Bó et al. 2013, Ashraf et al. 2014). The theoretical literature indicates that when candidates have imperfect information about a job, financial incentives can convey a signal about broader job attributes (Benabou and Tirole 2003). Paying a person a lot of money to perform a task might signal that the task is hard or unpleasant, or that it has other specific features. If these features are important to workers, then the signal conveyed by financial incentives affects selection.

In my job market paper, I study this “signal” channel of financial incentives in the context of a recruitment campaign for a newly created Community Health Promoter (CHP) position. During the recruitment process of CHPs in rural villages of Uganda, I collaborate with the NGO BRAC to create experimental variation in expected earnings for the position. I use this to estimate the effect of financial incentives on: (1) the candidates’ perception of the job, (2) the size and composition of the applicant pool, and (3) the performance of the organization.

Ending Stigma: Lessons from the AIDS Epidemic -- Guest post by Laura Derksen

This is number 9 in our series of posts by students on the job market this year.

As HIV continues to spread in sub-Saharan Africa, so does stigma. Many go to great lengths to hide their HIV status, get tested at clinics far from home to avoid being seen, and put off medical care until it's much too late. This has devastating effects. While life-saving medication is now provided for free in most parts of Southern Africa, there are still over one million AIDS deaths every year. Reluctance to seek treatment also has a negative externality. Antiretroviral drugs slow the spread of HIV dramatically, but a “treatment for prevention” strategy won’t work if people don’t seek treatment.

What causes stigma? What can we do about it?

Invisible sample selection: Why you should care about those who leave when you are interested in those left behind: Guest post by Andreas Steinmayr

This is the eighth in our series of posts by students on the job market this year.
A key problem in the literature on the economics of migration is how emigration of an individual affects the welfare of households left behind (see Antman (2013) for a literature overview). The literature has worried a lot about the possibility that households that select into migration are different from those that don’t. A whole range of different IV approaches, along with a few migration lottery experiments have tried to address this form of selection.  However, the literature has worried less about (and been less successful dealing with) a second form of selection, namely that some households do not leave any member behind. I call this invisible sample selection since these all-move households are not observed at all in the standard household surveys in origin countries used in most studies (and also not in many other datasets). But failing to account for this problem leads to biased estimates, as explained below and shown in this graphical illustration.

The Hidden Local Costs of Deforestation in the Tropics. Guest post by Teevrat Garg

This is the seventh post in our series of blogs by graduate students on the job market this year.

The debate over deforestation has traditionally weighed the tradeoffs between local economic benefits and the broader ecological footprint measured in carbon emissions (Alix-Garcia et al., 2013; Foster & Rosenzweig, 2003). Consequently, this framing has led to the creation of several multi-billion dollar programs under the umbrella of the United Nations known as REDD+ or Reduced Emissions from Deforestation and Degradation. The idea is simple: in exchange for forgoing the economic benefits of logging and forest land clearing, countries that preserve forests (particularly poorer countries) receive payments from richer countries that benefit from the reduced carbon emissions associated with deforestation.

The underlying principle is that effects of deforestation related emissions are global in nature.

To the contrary, my research finds that the effects of deforestation are substantially larger at the local level due to health externalities (particularly from increased malarial incidence).  I find that local health costs of deforestation in Indonesia are an order of magnitude higher than the global carbon externalities. Thus local institutions, as opposed to external governments, may have the strongest incentives for forest preservation. Furthermore, given the productivity, morbidity, mortality and fertility costs associated with malaria (Lucas 2013, Lucas 2010), there may be a double dividend from environmental conservation currently being ignored in policy formulation.

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