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O1 - Economic Development

Economic Development

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Anonymity or Distance? Experimental Evidence on the Obstacles That Young People Face in the Labour Market

Do search frictions constrain the labour market prospects of young workers? We conduct a randomised evaluation of two programmes designed to lower spatial and informational barriers to job search among 4,000 young Ethiopians. One group of subjects receives a transport subsidy. Another group participates in a workshop where their skills are certified and they receive training on how to make effective job applications. We find that both treatments significantly improve the quality of the jobs young workers obtain, and the effects are strongest for the most disadvantaged job-seekers.

Coping with Change: International Differences in the Returns to Skills

Expanded international data from the PIACC survey of adult skills allow us to analyze potential sources of the cross-country variation of comparably estimated labor-market returns to skills in a more diverse set of 32 countries. Returns to skills are systematically larger in countries that have grown faster in the recent past, consistent with models where skills are particularly important for adaption to dynamic economic change.

Banking the Unbanked? Evidence From Three Countries

We experimentally test the impact of expanding access to basic bank accounts in Uganda, Malawi, and Chile. Over two years, 17 percent, 10 percent, and 3 percent of treatment individuals made five or more deposits, respectively. Average monthly deposits for them were at the 79th, 91st, and 96th percentiles of baseline savings. Survey data show no clearly discernible intention–to–treat effects on savings or any downstream outcomes.

International Isolation and Regional Inequality: Evidence from Sanctions on North Korea

This paper examines how regional inequality evolves when a country becomes increasingly isolated from economic sanctions. I hypothesize three channels: regional favoritism by the ruling elites, reallocation of commerce that reflects the change in relative trade costs, and import substitution. Using nighttime lights from North Korea, I find that the capital city, trade hubs near China, and manufacturing cities become relatively brighter when sanctions increase. However, production shifts away from capital-intensive goods, deterring industrial development.

Social Networks, Reputation and Commitment: Evidence from a Savings Monitors Experiment

We study whether individuals save more when information about their savings is shared with another village member (a “monitor”). We focus on whether the monitor’s effectiveness depends on her network position. Central monitors may be better able to disseminate information, and more proximate monitors may pass information to individuals who interact with the saver frequently. In 30 villages, we randomly assign monitors. Average monitors increase savings by 35%.

Paving the Road to Development: Costly Migration and Labor Market Integration

How integrated are labor markets within a country? Labor mobility is key to the integration of local labor markets and therefore to understanding the efficacy of policies to reduce regional inequality. We present a comprehensive framework for understanding migration decisions, focusing on the costs of migrating. We construct and then estimate a spatial equilibrium model where mobility is determined not only by idiosyncratic tastes, but also by moving costs that are origin-destination dependent.

Temporary Migration and Endogenous Risk Sharing in Village India

When people can self-insure via migration, they may have less need for informal risk sharing. At the same time, informal insurance may reduce the need to migrate. To understand the joint determination of migration and risk sharing I study a dynamic model of risk sharing with limited commitment frictions and endogenous temporary migration. First, I characterize the model. I demonstrate theoretically how migration may decrease risk sharing. I decompose the welfare effect of migration into the change in income and the change in the endogenous structure of insurance.

Network Centrality and Informal Institutions: Evidence from a Lab Experiment in the Field

While social closeness mitigates contractual incompleteness, we examine how communities can enlist third parties to improve cooperation between socially distant pairs. Network-central members may be particularly effective at this role through two channels: information and enforcement. We conduct modified trust games (with and without third parties) in 40 Indian villages to measure the effectiveness of central third parties. Assigning a punisher at the 75th percentile of the centrality distribution (versus the 25th) increases efficiency by 21%.


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