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Complements or Substitutes? State Presence and the Power of Traditional Leaders -- Guest post by Soeren J. Henn

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

When we study how institutions affect development, we often focus on the characteristics of national institutions, such as whether a country is democratic, protects property rights, or has inclusive institutions. Yet villages in many developing countries contain almost no trace of these national institutions. Instead, life in rural villages is typically shaped by local leaders. In Sub-Saharan Africa, traditional leaders (namely village chiefs) are an important local institution. They control resources – most notably land – collect informal taxes, influence voting, and implement local development projects. The local importance of traditional leaders also concerns the nation-state. As national institutions attempt to increase their presence in the countryside, traditional leaders could act as complements or substitutes to state presence. They could either cooperate or compete with the public good provision by the state and thus enhance or weaken it.
 
In my job market paper, I study how local leaders and the national state interact. Specifically, I estimate the effect of state presence on the power, legitimacy, and effectiveness of village chiefs. In other words, do village chiefs become more or less influential when the national state is absent (or present) and how does this affect their public good provision? A key institutional feature in this context is that African states have used different strategies of dealing with traditional leaders that primarily vary on one dimension: whether chiefs are formally integrated into the state apparatus. I investigate how this institutional choice shapes the relationship between state presence and chiefs.

Do Sociable or Higher-Achieving Peers Matter? Guest post by Román Andrés Zárate

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

While sociable peers increase your social skills, higher-achieving peers do not improve your academic performance. That is the main conclusion of my job market paper.
 
As the world bends closer towards automation, social skills take a lead role on individuals' well-being and labor market success. According to Deming (2017), between 1980 and 2012, jobs demanding high levels of social interaction grew by nearly 12 percentage points as a share of the U.S. labor force. Similarly, a recent column by the Washington Post highlights the importance of social skills for team productivity and employment opportunities. It describes the results of Google’s Project Aristotle, which concludes that the best teams at Google exhibit high levels of soft skills, and particularly social skills. These include emotional safety, equality, generosity, curiosity towards the ideas of your teammates, empathy, and emotional intelligence
 
While there is extensive research on policies that improve academic learning, little is known about how social skills form. My job market paper addresses this challenge. I present the results of a large-scale field experiment at boarding schools in Peru. The intervention was designed to estimate social and cognitive peer effects. While other studies have exploited random assignment to dormitories and classrooms, I use a novel experimental design to generate large variation in peer skills. Specifically, I assign students to two cross-randomized treatments in the allocation to beds in a dormitory: (1) less or more sociable peers, and (2) lower- or higher-achieving peers. This design surmounts many of the challenges with traditional approaches to the study of peer effects (Manski, 1993; Angrist, 2014; Caeyers and Fafchamps, 2016).

Out of Power? Political Capture of the Indian Electricity Sector -- Guest post by Meera Mahadevan

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

In 2012, 700 million people in India suddenly found themselves without power for over 10 hours. At the time of the incident, political parties blamed each other for mismanagement and failing infrastructure. Such incidents reflect the extensive dysfunction in the sector, with technical problems and billing leakages that are among the worst in the world, amounting to 20% of electricity generated. The poor quality of electricity supply imposes major costs on the Indian economy; electricity shortages, for example, reduce manufacturing plant revenues by 5-10%. Why do these problems persist despite exponentially growing power generation? My job market paper shows that political corruption is one of the root causes behind unreliable electricity supply.

What is the link between political corruption and poor electricity supply? In democracies, incumbent politicians may consolidate power by favoring their voters with better access or lower prices. In India’s electricity sector, where politicians do not have direct control over electricity pricing, they may resort to illicit means in order to do this. Lower prices may actually benefit targeted consumers.  But such patronage is costly: it hurts the revenues of electricity providers, inhibiting their ability to invest in infrastructure, and lowering electricity reliability for all consumers. While subsidies and increased access benefit consumers in targeted constituencies, the resulting underinvestment by providers may lead to unreliable supply.

Estimating the often-ambiguous welfare implications of corruption is, therefore, a challenge. Especially since detecting corruption is hard: corruption is frequently concealed, complicating the task of making causal inferences and identifying mechanisms of corruption. In this research, I develop novel methods to address these challenges, and find that political corruption in the electricity sector leads to large revenue losses for electricity providers, worsening their ability to reliably provide electricity.

Good Fathers & Lemon Sons: Why Political Dynasties Cause “Reversals of Fortune” -- Guest post by Siddharth George

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

Aquinos, Bhuttos, Trudeaus, Yudhoyonos, Gandhis, Lees, Fujimoris: political dynasties remain ubiquitous in democratic countries.  Though many societies democratised to end hereditary rule, nearly half of democratic countries have elected multiple heads of state from a single family.  Politics is significantly more dynastic than other occupations in democratic societies.  Individuals are, on average, five times more likely to enter an occupation their father was in.  But having a politician father raises one's odds of entering politics by 110 times, more than double the dynastic bias of other elite occupations like medicine and law.  Despite their prevalence and influence, we know little about the economic effects of political dynasties.

Effects of dynastic politics are theoretically ambiguous

Economic theory makes ambiguous predictions about how dynastic politics affects development.  On the one hand, bequest motives might lengthen politicians’ time horizons  and encourage them to make long-term investments. These founder effects could be good for economic development.  However, if some political capital is heritable (e.g., a prominent name or a powerful network), dynastic politics may render elections less effective at selecting good leaders and disciplining them in office.  These descendant effects are likely bad for development.  The overall impact of dynastic politics is ambiguous, because it is the net result of founder and descendant effects.

Land: Trap or Opportunity for the Rural Poor? Guest post by Juan Sebastián Galán

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Across the developing world, providing land through agrarian reform has been a popular strategy for expanding economic opportunities among the rural poor. Its use is commonly debated in several developing countries, including South Africa, China, India and many others in Latin America. A widely held view against providing land is that it traps recipient families in the countryside, forcing them to remain in the subsistence sector (Banerjee, 2000). This limits their chances to move up the social ladder.

Does It Matter Who Answers the Survey to Identify Families in Poverty? Guest post by Adan Silverio-Murillo

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Imagine that you receive a grant from the Bill & Melinda Gates Foundation to give money transfers to families living in poverty. Yet, the selected country does not have formal income records. As a consequence, you decide to collect income information through a household survey. On your way to collect the information, you find an economist who points out two problems: (1) income can be measured with a lot of noise; and (2) individuals may have incentives to sub-report income to participate in the program.
 

FinTech Adoption and its Spillovers. Guest post by Sean Higgins

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During my last trip to Mexico, I bought tamales from a street vendor and paid by card—something that would have been impossible not long ago. The vendor, who had a Bluetooth card reader connected to his cell phone, told me that his potential customers are not always carrying cash, and as a result, accepting card payments has increased his sales. This anecdote illustrates a broader trend: as the adoption of financial technologies (FinTech) increases on both the supply and demand sides of the market (see Figure 1), both consumers and small retail firms benefit.

The Perils of Being a Firstborn Child Amidst Forest Cover Loss in Indonesia: Guest post by Averi Chakrabarti

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

Our planet is currently experiencing substantial environmental degradation. The resulting depletion of resources and climate change patterns endanger the prospects for human life on earth in the long run, but there are often detrimental consequences that materialize sooner. While governments might have little incentive to reign in dangerous practices if the effects are not expected to emerge until the future, the recognition of concurrent costs might provide more urgency to the need to stem environmental harms. In my job market paper, I document an immediate human health impact of the rapid rates of deforestation in Indonesia, one that arises due to forest loss-induced spikes in malaria.
 

Why are relatively poor people not more supportive of redistribution? Guest Post by Christopher Hoy

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

Social commentators and researchers struggle to explain why, despite growing inequality in many countries around the world,  there is often relatively limited support among poorer people for policies where they are set to benefit (such as increases in cash transfers or in the minimum wage). Recent research drawing on surveys from the United States and Europe has identified a potential reason for why poorer people are not more supportive of redistribution: they don’t realise they are poor. These studies illustrate the majority of people tend to think they are positioned around the middle of the national income distribution regardless of whether they are actually rich or poor.

Five things we learnt from a loan and grain storage intervention in Tanzania. Guest post by Hira Channa

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Two of the main post-harvest concerns that many small holders in Sub Saharan Africa (SSA) face are:
  1. Maintaining the quantity and quality of staple grains throughout the year. 
  2. Managing the persistent price seasonality in grain commodity markets. In Mbeya, Tanzania, where our experiment was conducted, for the last two years maize prices in the lean season were 80% higher than prices at harvest.

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