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Weekly links December 19: Savings, basic incomes, skill gaps & M&Ms, and more…

David McKenzie's picture
  • On the FAI blog Tim Ogden discusses what we mean by savings when we talk about it as an outcome.
  • A snapshot of the job market this year from 538 – what the next generation of economists is working on? Development is pretty popular, corporate finance and international economics not so much.
  • Testing basic incomes: the Guardian reports on an experiment in India, where Unicef funded an unconditional basic income scheme. A “modified randomized control trial” (whatever that is) assigned everyone in 8 treatment villages to receive a monthly income for 18 months, with 12 control villages: “the basic incomes resulted in more economic activity and work. Conventional labour statistics would have picked that up inadequately. There was a big increase in secondary economic activities, as well as a shift from casual wage labour to own-account farming and small-scale business” Haven’t come across an academic paper with the results or more details.

Resilience and recovery ten years after the 2004 Indian Ocean tsunami: A summary of results from the STAR project

Authored by Elizabeth Frankenberg, Duncan Thomas, and Jed Friedman

Ten years after the devastating 2004 Indian Ocean tsunami, Aceh provides an example of remarkable resilience and recovery that reflects the combination of individual ingenuity, family and community engagement and the impact of domestic and international aid. The tsunami devastated thousands of communities in countries bordering the Indian Ocean. Destruction was greatest in the Indonesian provinces of Aceh and North Sumatra, where an estimated 170,000 people perished and the built and natural environment was damaged along hundreds of kilometers of coastline. In response, the Indonesian government, donors, NGOs and individuals contributed roughly $7 billion in aid and the government established a high-level bureau based in Aceh to organize recovery work. 

To shed light on how individuals, communities, and families were affected by and responded to the disaster in the short and medium term, we established the Study of the Tsunami Aftermath and Recovery (STAR). Beginning in 2005, STAR has followed over 30,000 people who were first enumerated in 2004 (pre-tsunami) in 487 communities (community location depicted in the figure below), as part of a population-representative household survey conducted by Statistics Indonesia. Interviews were conducted annually for 5 years after the tsunami; the ten-year follow-up is currently in the field. We ascertained survival status for 98% of the original pre-tsunami respondents and have interviewed 96% of survivors. The study is designed to provide information on the short-term costs and longer-term recovery for people in very badly damaged communities and in comparison communities where the disaster had little direct impact.

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.

Weekly links December 12: risk and entrepreneurship, changing opinions, IE in times of crisis, and more…

David McKenzie's picture
  • A new 3ie paper on methods for doing impact evaluations of humanitarian assistance (h/t Chris Blattman): “Since 2005, more than US$90 billion has been spent on humanitarian assistance….Yet, very few impact evaluations are being conducted.”
  • With job market season upon us, Chris Blattman offers his advice for negotiating an academic job offer.
  • A new paper in Science this week shows how contact with minorities can change opinions: “LaCour and Green demonstrate that simply a 20-minute conversation with a gay canvasser produced a large and sustained shift in attitudes toward same-sex marriage for Los Angeles County residents. Surveys showed persistent change up to 9 months after the initial conversation. Indeed, the magnitude of the shift for the person who answered the door was as large as the difference between attitudes in Georgia and Massachusetts.”

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).

Weekly links December 5: how to do research, corruption at borders, work for me, and more…

David McKenzie's picture
  • From the Chronicle of Higher Education - How sociologists made themselves irrelevant -  “sociologists have become distant spectators rather than shapers of policy. In the effort to keep ourselves academically pure, we’ve also become largely irrelevant in molding the most important social enterprises of our era”. Also it ends with two smell tests that are relevant to development economists too “If you end up with findings that have policy implications that you would never dream of advocating for yourself or your loved ones, be wary of them.”