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.
This is the thirteenth in our series of posts by students on the job market this year.
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.
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).
- 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.”
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.
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?
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.
- Economics that really matters – a new blog from Cornell – includes an interesting post by Julia Berazneva on validating household survey data with audio recordings: as well as validating the interviews took place “the audio recorders provided so many unanticipated benefits!... First of all, we used them as a training tool… he audio files were also useful for identifying and revising incorrect data – missing, illogical, inconsistent or outlier values, etc…. Moreover, the costs are low. Our 9-month long project spent an additional $236 in total for three digital voice recorders, several sets of rechargeable batteries and a battery charger.” Also a series of posts on a new buzzword I’ve been hearing lately: resilence.
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.