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Summary

Learning in the Household
Author(s):
John J. Conlon, Harvard University
Malavika Mani, Columbia University
Gautam Rao, Harvard University and NBER
Matthew W. Ridley, Massachusetts Institute of Technology
Frank Schilbach, Massachusetts Institute of Technology and NBER
Abstract:

Conlon, Mani, Rao, Ridley, and Schilbach study social learning between spouses using an experiment in Chennai, India. The researchers vary whether individuals discover information themselves or must instead learn what their spouse discovered via a discussion. Women treat their 'own' and their husband's information the same. In sharp contrast, men's beliefs respond less than half as much to information that was discovered by their wife. This is not due to a lack of communication: husbands put less weight on their wife's signals even when perfectly informed of them. In a second experiment, when paired with mixed and same-gender strangers, both men and women heavily discount their teammate's information relative to their own. Conlon, Mani, Rao, Ridley, and Schilbach conclude that people have a tendency to underweight others' information relative to their own. The marital context creates a countervailing force for women, resulting in a gender difference in learning (only) in the household.

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This paper was distributed as Working Paper 28844, where an updated version may be available.

Improving Public Sector Service Delivery: The Importance of Management
Author(s):
Sabrin A. Beg, University of Delaware
Anne E. Fitzpatrick, University of Massachusetts-Boston
Adrienne Lucas, University of Delaware and NBER
Abstract:

Deficient public sector management in developing countries can constrain service delivery due to the complementarity between manager and worker effort. Through a 210 school randomized controlled trial we compare T1) training teachers and managers in differentiated instruction (teaching at students' learning levels) and providing managers a classroom practices checklist; T2) T1 plus training on managerial best practices focused on "People Management"; and a control group. Both interventions equally increased standard measures of school management focused on instructional practices and student test scores 0.11SD, 30 percent of a learning-year. T2 differentially improved standard measures of People Management but not productivity. The simple, objective checklist increased the impact of teacher training relative to other similar trainings. One year later, the interventions had persistent effects on management quality without additional training.

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"Good Politicians'': Experimental Evidence on Motivations for Political Candidacy and Government Performance
Author(s):
Saad Gulzar, Stanford University
Muhammad Yasir Khan, University of Pittsburgh
Abstract:

How can Gulzar and Khan motivate ‘good’ politicians – those that will carry out policy that is responsive to citizens’ preferences – to enter politics? In a field experiment in Pakistan, they vary how political office is portrayed to ordinary citizens. Gulzar and Khan find that emphasizing pro-social motives for holding political office instead of personal returns – such as the ability to help others versus enhancing one’s own respect and status – raises the likelihood that individuals run for office and that voters elect them. It also better aligns subsequent policies with citizens’ preferences. The candidacy decisions are explained by social influence, and not information salience – the researchers find that social versus personal messaging matters only when randomly delivered in a public setting but not in private. Results also show that changes in political supply, not citizen preferences or behavior, explain policy alignment. Taken together, the results demonstrate that non-financial motivations for political entry shape how politicians perform in office.

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Crowding in Private Quality: The Equilibrium Effects of Public Spending in Education
Author(s):
Tahir Andrabi, Pomona College
Natalie Bau, University of California, Los Angeles and NBER
Jishnu Das, Georgetown University and NBER
Naureen Karachiwalla, International Food Policy Research Institute
Asim Ijaz Khwaja, Harvard University and NBER
Abstract:

Andrabi, Bau, Das, Karachiwalla, and Khwaja study the effects of a policy that distributed large cash grants through school councils to public schools in rural Pakistan. Using a village-level randomized control trial, the researchers identify the medium-term equilibrium effects of this policy in a marketplace where the private sector is large and there is substantial school choice. Learning increases in both the public and private sectors. Private school improvements appear to be driven by competitive pressures. Private schools located closer to public schools and in villages with higher quality public schools experience larger improvements. Failing to measure learning improvements in the private sector greatly reduces cost-effectiveness. Their findings suggest that, through public sector investment, the government can leverage choice and market structure to improve students' outcomes across sectors.

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Converging to Convergence
Author(s):
Michael Kremer, University of Chicago and NBER
Jack Willis, Columbia University and NBER
Yang You, The University of Hong Kong
Abstract:

Empirical tests in the 1990s found little evidence of poor countries catching up with rich unconditional convergence - since the 1960s, and divergence over longer periods. This stylized fact spurred several developments in growth theory, including AK models, poverty trap models, and the concept of convergence conditional on determinants of steady-state income. Kremer, Willis, and You revisit these findings, using the subsequent 25 years as an out-of-sample test, and document a trend towards unconditional convergence since 1990 and convergence since 2000, driven by both faster catch-up growth and slower growth of the frontier. During the same period, many of the correlates of growth - human capital, policies, institutions, and culture - also converged substantially and moved in the direction associated with higher income. Were these changes related? Using the omitted variable bias formula, the researchers decompose the gap between unconditional and conditional convergence as the product of two cross-sectional slopes. First, correlate-income slopes, which remained largely stable since 1990. Second, growth-correlate slopes controlling for income - the coefficients of growth regressions - which remained stable for fundamentals of the Solow model (investment rate, population growth, and human capital) but which flattened substantially for other correlates, leading unconditional convergence to converge towards conditional convergence.

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This paper was distributed as Working Paper 29484, where an updated version may be available.

Loan Officers Impede Graduation from Microfinance: Strategic Disclosure in a Large Microfinance Institution
Author(s):
Natalia Rigol, Harvard University and NBER
Benjamin N. Roth, Harvard University
Abstract:

One of the most important puzzles in microfinance is the low rate of borrower graduation to larger, more flexible loans. Utilizing observational and experimental data from a large Chilean microfinance institution, Rigol and Roth demonstrate that loan officers impede borrower graduation due to common features of their compensation contracts. Their partner lender offers both microloans and larger, more flexible graduation loans, and relies on loan officer endorsements to determine borrower graduation. Loan officers are rewarded for the size of their portfolio and repayment, and so are implicitly penalized when good borrowers graduate. In a novel experiment designed to isolate strategic disclosure, Rigol and Roth modify compensation to reduce this implicit penalty and document that loan officers withheld endorsements of their most qualified borrowers prior to the shift. Graduated borrowers endorsed after the shift are 34% more profitable for their partner lender than those endorsed beforehand. A back-of-the-envelope calculation suggests that strategic behavior of loan officers accounts for $4.8-29.2 billion in lost social value from forgone borrower graduations in microfinance worldwide. Rigol and Roth's experimental design may prove useful for other experiments within firms.

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This paper was distributed as Working Paper 29427, where an updated version may be available.

Citizen Participation and Government Accountability: National-Scale Experimental Evidence from Pollution Appeals in China
Author(s):
Mark Buntaine, University of California, Santa Barbara
Michael Greenstone, University of Chicago and NBER
Guojun He, University of Hong Kong
Mengdi Liu, University of International Business and Economics
Shaoda Wang, University of Chicago
Bing Zhang, Nanjing University
Abstract:

This paper reports a national-scale field experiment about how citizen participation affects the enforcement of pollution standards in China. Using data publicized by the country’s Continuous Emissions Monitoring System (CEMS), Buntaine, Greenstone, He, Liu, Wang, and Zhang identify in real-time firms that violate national emission standards and randomly intervene by making different appeals against those violations. Privately informing or appealing to local governments about violations has limited impact, while publicly appealing to local governments on social media significantly increases firms’ achievement of environmental standards. Firms that are subject to public appeals about violations are 40% less likely to violate emission standards on average and reduce their average air and water emission concentrations by 12% and 5% respectively. These effects are substantially larger when the appeals on social media are randomly promoted to a larger audience, suggesting that the public visibility of appeals creates incentives for local governments to enforce emissions standards. Exploiting additional features of their experimental design, Buntaine, Greenstone, He, Liu, Wang, and Zhang also demonstrate that appeals that are common knowledge to firms and local governments provide governments leverage to ensure firms comply with regulations. A back-of-the-envelope calculation suggests that encouraging citizen participation could lead to significant improvements in China’s aggregate environmental quality.

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AI-tocracy: the Symbiosis of Autocrats and Innovators
Author(s):
Martin Beraja, Massachusetts Institute of Technology and NBER
Andrew Kao, Harvard University
David Y. Yang, Harvard University and NBER
Noam Yuchtman, London School of Economics
Abstract:

Can frontier innovation be promoted and sustained under autocracy? Beraja, Kao, Yang, and Yuchtman argue that a symbiotic relationship between frontier innovation and entrenched autocracy can exist. Symbiosis arises when (i) innovative output increases autocrats’ probability of maintaining power, and (ii) autocrats’ spending on innovative output to maintain power generates further innovation. Beraja, Kao, Yang, and Yuchtman evaluate these two conditions of symbiosis in China’s facial recognition AI sector. The researchers gather comprehensive data on firms and government procurement contracts in this sector, as well as on social unrest across China during the last decade. Beraja, Kao, Yang, and Yuchtman show that, first, autocrats benefit from AI: local unrest leads to greater government procurement of facial recognition AI, and increased AI procurement suppresses subsequent unrest. Second, the AI sector benefits from autocrats’ suppression of unrest: the contracted AI firms innovate more both for the government and commercial markets. Taken together, these results establish the conditions for sustained AI innovation under the Chinese regime: AI innovation entrenches the regime, and the regime’s investment in AI for political control stimulates further frontier innovation.

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The Effects of Climate Change on Labor and Capital Reallocation
Author(s):
Jacopo Ponticelli, Northwestern University and NBER
Abstract:

Albert, Bustos, and Ponticelli study the effects of climate change on labor and capital reallocation across regions, sectors and firms. The researchers use newly digitized administrative reports on extreme weather events occurred in Brazil during the last two decades and a meteorological measure of excess dryness relative to historical averages to estimate the effects of droughts in the local economy of affected areas, on the magnitude of the labor and capital flows they generate and on factor allocation in destination regions. Albert, Bustos, and Ponticelli document two main results. In the short run, local economies insure themselves against negative weather shocks via financial integration with other regions. However, in the long run, affected regions experience capital outflows driven by a reduction in loans, consistent with a permanent decrease in investment opportunities. Second, they find that abnormal dryness affects the structure of both the local economy and the economy of areas connected via migrant networks. Directly affected areas experience a sharp reduction in population and employment, concentrated in agriculture and services. While local manufacturing absorbs some of the displaced workers, these regions experience large out-migration flows. Regions receiving climate migrants expand employment in agriculture and services, but not in manufacturing. Using social security data, Albert, Bustos, and Ponticelli provide evidence that labor market frictions direct migrants to firms connected to migrant social networks, which are mostly outside the manufacturing sector. This has implications for the composition of economic activity and the firm size distribution in destination regions.

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This paper was distributed as Working Paper 28995, where an updated version may be available.

Cutting Out the Middleman: The Structure of Chains of Intermediation
Author(s):
Matthew Grant, Dartmouth College
Meredith Startz, Dartmouth College and NBER
Abstract:

Distribution of goods often involves chains of multiple intermediaries engaged in sequential buying and reselling. Why do such chains arise, and how will changes in their structure due to changes in policy or trade costs affect consumers? Grant and Startz show that internal economies of scale in trade costs lead to chains with multiple intermediaries, and that this suggests developing countries markets are more likely to be served via long chains. Contrary to common wisdom, cutting middlemen out can, but does not necessarily, benefit consumers, even when intermediaries hold market power. Instead, there is a fundamental tradeoff between costs and entry that means even pure reductions in trade costs can have perverse effects. The proposed mechanism is simple, but can account for empirical patterns in wholesale firm size, prices and markups that Grant and Startz document using original survey data on imported consumer goods in Nigeria. The researchers estimate a structural version of the model for distribution of Chinese-made apparel in Nigeria, and describe endogenous restructuring of chains and the resulting impacts on consumer welfare in response to counterfactual changes in regulation, e-commerce technologies, and transport infrastructure. Grant and Startz find that cutting out middlemen has heterogenous impacts across locations, but often harms more remote consumers.

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In-kind Transfers as Insurance
Author(s):
Lucie Gadenne, Warwick University
Samuel Norris, University of British Columbia
Monica Singhal, University of California, Davis and NBER
Sandip Sukhtankar, University of Virginia
Abstract:

Recent debates about the optimal form of social protection programs have highlighted the potential for cash as the preferred form of transfer to low income households. However, in-kind transfers remain prevalent throughout the world. Gadenne, Norris, Singhal, and Sukhtankar argue that beneficiaries themselves may prefer in-kind transfers because these transfers can provide insurance against price risk. Households in developing countries often face substantial price variation as a result of poorly integrated markets. The researchers develop a model demonstrating that in-kind transfers are welfare improving relative to cash if the covariance between the marginal utility of income and price is positive. Using calorie shortfalls as a proxy for marginal utility, Gadenne, Norris, Singhal, and Sukhtankar find that in-kind transfers improve welfare relative to cash for Indian households, an effect driven entirely by poor households. The researchers further show that expansions in the generosity of the Public Distribution System (PDS)--India's in-kind food transfer program--result not only in increased caloric intake but also reduced sensitivity of calories to prices.

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This paper was distributed as Working Paper 28507, where an updated version may be available.

Inappropriate Technology: Evidence from Global Agriculture
Author(s):
Jacob Moscona, Harvard University
Karthik Sastry, Massachusetts Institute of Technology
Abstract:

An influential explanation for the persistence of global productivity differences is that frontier technologies are adapted to the conditions of the high-income, research-intensive countries that develop them and significantly less productive if used elsewhere. This paper studies how the environmental specificity of agricultural biotechnology affects its global diffusion and productivity consequences using differences in the presence of unique crop pests and pathogens (CPPs) as an shifter of the potential appropriateness of crop-specific biotechnology developed in one country and applied in another. Moscona and Sastry find that inappropriateness predicted by CPP mismatch reduces cross-country transfer of novel plant varieties and that the predicted inappropriateness of frontier technology reduces crop-specific output. Their estimates imply that this ecological mismatch reduces global agricultural productivity by 40-50% and increases productivity disparities by 10-15%. Moscona and Sastry use their framework to investigate why the Green Revolution had heterogeneous effects across environments, why adoption of frontier technology remains low in Africa, and how emergence of new R&D markets and ecological changes from global warming might affect global productivity.

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Participants

Christian Ahlin, Michigan State University
Tahir Andrabi, Pomona College
Belinda Archibong, Columbia University
Christina L. Brown, University of Chicago
Mark Buntaine, University of California, Santa Barbara
Rossella Calvi, Rice University
Kevin Donovan, Yale University
Rob Garlick, Duke University
Matthew Grant, Dartmouth College
Selim Gulesci, Trinity College Dublin
Morgan L. Hardy, New York University Abu Dhabi
Allan Hsiao, University of Chicago
Terence R. Johnson, University of Virginia
Etienne Le Rossignol, CES
Jung Hyuk Lee, University of Southern California
Melissa C. LoPalo, Montana State University
Matt Lowe, University of British Columbia
Madeline McKelway, Dartmouth College
Sultan Mehmood
Priya Mukherjee, University of Wisconsin-Madison
Oyebola Okunogbe, World Bank Research Group
Matthew Pecenco, Brown University
Matthias Schuendeln, Goethe-Universität Frankfurt am Main
Margaret Triyana, Wake Forest University
Andrew F. Zeitlin, Georgetown University
Bing Zhang, Nanjing University

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