Detecting Critical Junctures as They Unfold: Foundations, Measurement, and Applications from 120 Years of Reporting

Date:  July 2026
WP#: [670]
Authors: Abhijit Banerjee, Greg Fischer, Dean Karlan, Matt Lowe, and Benjamin N. Roth

Abstract: Explaining why some countries grow rich while others remain poor requires knowing how --- and when --- institutions change. A large body of research argues that institutional change often occurs at critical junctures: moments  when multiple institutional futures are possible, including a return to the status quo. Yet most empirical work examines critical junctures only in retrospect, risking the omission of pivotal moments when institutions were in flux but ultimately remained unchanged. We develop a new empirical approach to detect critical junctures as they unfold. Our key insight is to understand critical junctures as moments of uncertainty about institutions, which provides a text classifier with a theoretically motivated object to detect in contemporaneous discourse. In this chapter, we apply this idea to the study of historical critical junctures using newspaper text as a rich source of information regarding contemporary beliefs about institutional uncertainty. We translate this insight into a measurement strategy by training a large language model-based classifier, which we apply to the Times of London archive --- 11.95 million articles spanning 1800 to 2019 --- while focusing our main empirical analysis on 120 years of reporting from 1900 to 2019. This produces the first long-run, text-based measure of institutional uncertainty grounded in the concept of critical junctures. Compared to established indices of geopolitical and economic risk, our measure innovates on several fronts: (i) it captures high uncertainty even in periods without formal institutional change, consistent with ex-ante definitions of critical junctures; (ii) it provides earlier signals of major global convulsions, such as World War I; (iii) it evaluates candidate critical junctures using a common ex ante measure; and (iv) it opens new avenues for studying how critical junctures shape institutions and long-run development. Today, our Times-based index suggests that institutional uncertainty in the US and UK is as elevated as it was in the early 1940s --- a signal missed by other leading measures of risk.

Do Microenterprises Maximize Profits? A Nonrandomized Vegetable-Market Experiment in India

Date:  July 2026
WP#: [669]
Authors: Abhijit Banerjee, Greg Fischer, Dean Karlan, Matt Lowe, and Benjamin N. Roth

Abstract: We ran a nonrandomized, market-level experiment in Kolkata vegetable markets in which we subsidized vendors in some markets to sell additional produce. The vendors earned over 60% higher profits, excluding the value of the subsidy. Nevertheless, after the subsidy ended many vendors  stopped selling the additional produce. Vendors knew about the profitable opportunity and demonstrated that they were capable of exploiting it without assistance. We conclude that their behavior meaningfully diverges from profit maximization when considering take-home pay, likely due to a combination of high marginal costs of effort and feared sanctions from breaking anti-competitive norms.

Identity Uncertainty

Date:  July 2026
WP#: [668]
Authors: Anujit Chakraborty, Arkadev Ghosh, Matt Lowe, and Gareth Nellis

Abstract: Many group identities that influence economic behavior are imperfectly observed. Individuals and institutions often conceal identity markers to limit discrimination. Yet concealment also creates uncertainty about group membership, hampering coordination in social interaction. To study this tradeoff, we paired high- and low-caste men for collaborative data entry work in North India. We randomly assigned each mixed-caste pair to either be: (i) introduced by full names, making caste common knowledge; (ii) introduced by first names only, making caste disclosure a choice; or (iii) instructed not to disclose caste. The two concealment conditions substantially reduce the accuracy of beliefs about a partner’s caste and confidence in those beliefs. They also weaken workplace relations, lowering trust, willingness to interact, and perceived productivity—consistent with identity helping structure social coordination. Evidence on mechanisms shows that identity concealment inhibits authentic interaction, making workers less able to express their “true selves,” while certainty about a partner’s identity is associated with stronger workplace ties. Concealment leaves a sizable caste disparity in higher-status role assignment intact, suggesting minimal impacts on discrimination. We conclude that where group identities are socially entrenched, reducing their legibility may undermine intergroup relations.

The Effect of Reminders for Self-Set Goals on Productivity

Date:  June 2026
WP#: [667]
Authors: Martin Abel, Tomoko Harigaya, Michael Kremer & Jessica Zhu

Abstract: We examine how reminders for self-set goals influence productivity by analyzing

data from 10,187 volunteer agricultural extension workers in Rwanda. We elicited workers’ goals and experimentally varied their salience through text reminders. Due to unforeseen logistical delays, approximately half of the treatment group received reminders after completing their tasks. We find that goal reminders received during the regular working period increased a productivity index by 0.08 standard deviations, while reminders sent late had no effect. Further analysis of heterogeneity by goal ambition quartiles reveals an inverted U-shaped relationship: reminders are effective for goals in the second and third quartiles, but ineffective for low or excessively high goals. These results suggest that workers who set ambitious yet realistic goals are more likely to respond to reminders and increase productivity, consistent with prior evidence on externally set goals.

From People’s War to People’s Rule: Rebel Governance and the Foundations of Inclusive Democracy

Date:  May 2026
WP#: [666]
Authors: Bhishma Bhusal (Government of Nepal), Soledad Artiz Prillaman (Stanford University), Michael Callen (London School of Economics), Deepak Singhania (IIT Gandhinagar), Rohini Pande (Yale University), Apurva Subedi (Inclusion Economics Nepal)

Abstract: How does wartime rebel governance shape post-conflict institutions? We study this in Nepal, where the Maoist People's War (1996–2006) dismantled a 240-year caste-based monarchy and ended with Maoists entering democratic politics. During the conflict, Maoists established sub-national ``People’s Governments" that administered justice, collected taxes, and delivered local services. Using a spatial regression-discontinuity design, we show that exposure to People's Governments increased political knowledge and participation especially among historically marginalized indigenous groups (Janajatis). Exposure also reshaped party institutions and inter-party competition: candidate-selection committees in more exposed areas have 26 percent more Janajati members who, drawing on novel implicit-attitude data, exhibit less pro-upper caste bias. Non-Maoist parties' Janajati nomination rates nearly double in fully exposed areas, consistent with competition for newly mobilized voters. Nearly two decades on, local governments in exposed areas score 0.2–0.3 standard deviations higher on state capacity indices and receive 13% more in conditional federal grants. These findings show that when rebel groups enter competitive democratic politics, wartime governance institutions can — through citizen mobilization, party gatekeeping, and cross-party competition — enable a more inclusive and capable post-war state.

Science on the Move: How Experiential Pedagogy Shapes Human Capital

Date:  May 2026
WP#: [665]
Authors: Nitin Kumar Bharti, Samreen Malik, Abhiroop Mukhopadhyay, Nishith Prakash

Abstract: Despite near-universal school enrollment across many developing economies, the provision of quality education that cultivates lifelong learning and the capacity to apply knowledge in novel circumstances remains elusive. We conduct a cluster-randomized controlled trial in 132 public schools in Uttar Pradesh, India, to evaluate a guided, discovery-based science pedagogy at two intensity levels: a high-intensity Mobile Science Lab (MSL) and a lower-intensity Lab on Bike (LoB). MSL improves motivational beliefs and self-confidence by 0.15--0.18 standard deviations, reduces perceived barriers to education by 0.23 standard deviations, raises engagement by 0.17--0.22 standard deviations, and increases standardized test scores by 0.22--0.34 standard deviations across all subjects. LoB produces limited average effects, with gains concentrated among students completing all sessions. These findings demonstrate that pedagogical design and delivery intensity are critical determinants of multidimensional human capital formation, and that discovery-based pedagogy can shift motivational beliefs, engagement, and achievement in low-capacity public school systems.

It Takes a Village Election: Turnover and Performance in Local Bureaucracies

Date:  April 2026
WP#: [664]
Authors: Samuel Bazzi, Masyhur Hilmy, Benjamin Marx, Mahvish Shaukat, Andreas Stegmann

Abstract: In many countries, local governments struggle with inefficiency and inaction, often perpetuated by entrenched elites. This paper examines how leadership changes affect local bureaucratic performance. Combining personnel and citizen surveys with a regression discontinuity design in a large sample of Indonesian villages, we show that electoral turnover revitalizes local bureaucracies and improves the flow of information about citizen preferences. Bureaucrats serving new leaders interact more with citizens and are less connected to past or present village officials, resulting in a more responsive village government that better incorporates citizens' demands in policy-making. This improves local service provision, as measured in both administrative data and citizen surveys. Overall, our findings suggest that leadership turnover can mitigate elite capture and improve governance in local administrations. 

Hidden Discrimination in Frictional Labor Markets

Date:  April 2026
WP#: [663]
Authors: Elisa Macchi, Claude Raisaro

Abstract: This paper shows that frictions shape the set of worker attributes employers value. When those attributes carry identity connotations, changes in the friction environment affect hiring disparities. Through this channel, frictions can hide discrimination. We test for gender discrimination among 921 employers in male-dominated Ugandan manufacturing sectors. Employers perceive women as more trustworthy but worry about harassment risk, two attributes related to common monitoring and cooperation frictions. In an experiment where employers select from a pool of trainees for probationary hire, we randomly assign monitoring support targeting either worker misbehavior or workplace safety. Under business-as-usual conditions, men are selected at rates 10 percentage points higher than women, yet 42% of selected candidates are women, revealing substantial unmet demand. Audits to monitor new workers and prevent stealing widen the hiring gender gap by 62%, concentrated among employers with the strongest stated preferences for hiring women. Audits to prevent harassment, instead, close the gender gap. Monitoring frictions mask discrimination: the gender penalty is not driven by statistical discrimination on technical performance, we find no technical performance or trustworthiness differences by gender, and safety concerns can explain at most half of the uncovered penalty. The results provide proof of concept that when multiple distortions coexist, solving one friction can worsen allocative efficiency, consistent with second-best logic. Residual measures of bias depend on which worker attributes are measured and treated as productive, and can both understate and overstate discrimination.

Mitigating the Consequences of Job Loss in Lower-Income Countries: Evidence from Ethiopia

Date:  April 2026
WP#: [662]
Authors: Lukas Hensel, Girum Abebe, François Gerard, Stefano Caria

Abstract: Job loss is an understudied risk for formal workers in lower-income countries. In these settings, lump-sum severance pay is often the only source of job-loss insurance. We quasi-experimentally show that female factory workers in Ethiopia displaced by a tariff hike experience lasting declines in employment and consumption spending, and rising poverty. Experimentally, we find that additional lump-sum support induces early spending and reduces overall and manufacturing employment persistently. Disbursing an equivalent amount in tranches improves consumption smoothing and avoids adverse employment effects. Further, we document a high willingness to pay for additional insurance, alongside heterogeneous preferences over disbursement modality that shape responses to our interventions. These findings imply that increasing job-loss insurance raises welfare, although moving away from the lump-sum default can generate substantial additional gains.

The Well-Being Effects of Digital Mental Health Care

Date:  March 2026
WP#: [661]
Authors: Manuela Angelucci, Raissa Fabregas, and Antonia Vazquez

Abstract: AI-powered mental health apps have attracted growing interest as a low-cost way to expand care. Yet questions remain about their effectiveness, safety, and whether they may crowd out psychotherapy. We evaluate one such app in a randomized controlled trial among 1,964 Mexican women with mild to severe psychological distress. Over six months, app access improved mental health by 0.3 standard deviations with no evidence of harm, improved sleep quality, increased healthful behaviors, and reduced missed work, yielding considerably larger benefits than costs. Treated participants were also more likely to seek traditional psychotherapy, but this increase does not explain most of the mental health gains. App use was high in the first month but then declined, as is common in digital interventions. Despite this drop in use, treatment effects persisted. Participants continued to implement practices promoted by the app, suggesting that even short-term engagement can produce durable improvements through sustained behavioral change.

Geography and Economic Development

Date:  March 2026
WP#: [660]
Authors: Pascaline Dupas

Abstract: This chapter reviews the evidence on geography’s causal impact on economic development. The economics research on the causal impact of the disease burden, climate and soil conditions, and topographical constraints has moved beyond cross-country correlations to exploit natural experiments, historical shocks, and fine-grained spatial variation. The evidence shows that geographical factors have clear causal effects on development outcomes, both directly and indirectly, with sub-Saharan Africa at a particular disadvantage. Moreover, climate change will only exacerbate this disadvantage.

The Changing Landscape of International Development: An Introduction

Date:  March 2026
WP#: [659]
Authors: Pascaline Dupas, Pinelopi K. Goldberg and Rohini Pande

Abstract: Since the late 1980s, extreme poverty has declined sharply, life expectancy and schooling have increased, and electoral democracy has expanded. However poverty reduction has slowed in recent years, particularly following the COVID-19 pandemic, amid intensifying conflict, fragility, climate risks, democratic backsliding, and the erosion of global trends---including trade integration and geopolitical stability---that once supported growth. These dynamics raise three interrelated questions: what barriers impede further progress; where will future growth in lower-income countries come from; and how can growth be broadly shared. Taking stock of 15 chapters forthcoming in Volume 6 of the Handbook of Development Economics, we discuss how external conditions, state capacity and policy choices shape development; analyze the shifting growth drivers, including trade, technology and the rise of services; discuss persistent inequality and distributional tensions; and conjecture that investing in institutions and people pays off.

Intergenerational Spillovers of Environmental Attitudes and Behaviors

Date:  February 2026
WP#: [658]
Authors: Shubhro Bhattacharya, Sara M. Constantino, Nirajana Mishra, Nishith Prakash, Shwetlena Sabarwal, Dighbijoy Samaddar, Raisa Sherif

Abstract:This study evaluates how environmental education shapes household behavior through the intergenerational transmission of knowledge, beliefs and attitudes. We implement a novel activity-based environmental education program tailored to the local context in Patna, India, and designed to engage both children and adults. We test the direct effects of the intervention on participants and spillovers to non-participating family members in a randomized field experiment with 1,545 child–parent pairs. Households were assigned to one of three treatment arms---child-only, parent-only, or joint child–parent participation---or to a control group. We find that direct participation increases pro-environmental behaviors. Spillover effects are present but asymmetric. While both children and parents influence one another, only children shift their parents’ beliefs and attitudes toward climate change. After accounting for spillovers, joint participation does not produce stronger outcomes than participation by either group individually, suggesting that targeting children may be a more scalable and cost-effective approach to promoting sustainable household behavior.

Using Life Satisfaction Data to Measure Parents’ Child Gender Preferences

Date:  February 2026
WP#: [657]
Authors: Anna Barbeta-Margarit, Seema Jayachandran, and Suanna Oh

Abstract: Can questions about life satisfaction be used to measure parental preferences for daughters versus sons? Daughter preference has rarely been documented in the literature, even in matrilineal settings. One possible reason is that the commonly used measures of parental gender preference, such as fertility-stopping rules and sex ratio at birth, are ill-suited to high-fertility settings. We instead assess maternal preferences in Malawi by examining the life satisfaction of women who currently have one child, comparing those with a daughter to those with a son.  We find that in matrilineal (but not patrilineal) households, having a daughter increases mothers' life satisfaction, relative to having a son. 

Residential Segregation and Unequal Access to Local Public Services in India: Evidence from 1.5m Neighborhoods

Date:  February 2026
WP#: [656]
Authors: Sam Asher, Kritarth Jha, Paul Novosad, Anjali Adukia, Brandon Tan

Abstract: We study residential segregation and access to public services across 1.5 million urban and rural neighborhoods in India. Muslim and Scheduled Caste segregation in India is high by global standards, and only slightly lower than Black-White segregation in the U.S. Within cities, public facilities and infrastructure are systematically less available in Muslim and Scheduled Caste neighborhoods. Nearly all regressive allocation is across neighborhoods within cities at the most informal and least studied form of government. These inequalities are not visible in the aggregate data typically used for research and policy.

Firstborn Daughters and Family Structure in sub-Saharan Africa

Date:  February 2026
WP#: [655]
Authors: Garance Genicot and Maria Hernandez-de-Benito

Abstract: Does the absence of missing baby girls in sub-Saharan Africa imply a lack of son preference? This paper shows that it does not. Using birth histories from 34 Demographic and Health Surveys, we exploit the as-good-as-random assignment of a first child’s sex to study how having a daughter affects women’s family structure and fertility. Women with a firstborn daughter are more likely to divorce, enter polygynous unions, and tend to have more children. Among women whose first birth precedes formal union, a firstborn daughter increases long-run marriage rates but reduces the likelihood of marrying the child’s father. Despite these marital transitions, firstborn daughters lead to higher completed fertility and shorter birth intervals. These demographic responses translate into worse living standards for women, including living in poorer households, higher HIV risk and greater acceptance of intimate partner violence. To identify mechanisms, we leverage a geographic regression discontinuity design along ancestral ethnic borders separating matrilineal and patrilineal kinship systems. The effects of firstborn daughters are concentrated in patrilineal societies– where sons carry higher lineage and inheritance value–and are absent or reversed in matrilineal communities. Taken together, our results reveal that subtle but pervasive son preference powerfully shapes family formation and women’s life trajectories in sub-Saharan Africa, even in the absence of sex-selective abortion or distorted sex ratios at birth.

Hierarchy and Performance Pay: Experimental Evidence from the Public Sector

Date:  February 2026
WP#: [654]
Authors: Garance Genicot, Zahra Mansoor, Ghazala Mansuri

Abstract: Frontline workers in public bureaucracies perform multidimensional tasks and rely on supervisors who both monitor performance and supply essential managerial inputs. We study how incentive design should account for these interactions using a conceptual framework and a province-wide randomized experiment with the Punjab Agriculture Extension Department in Pakistan. Across 131 tehsils, we compare: (i) an Objective pay-for-performance scheme tied to digital activity metrics; (ii) a Subjective scheme in which supervisors allocate bonuses; and (iii) a Subjective Plus scheme that preserves discretion but introduces light-touch oversight of supervisors. All three schemes increase outreach, but through distinct channels. Objective incentives primarily raise intensive effort-- repeat visits to the same farmers--while Subjective Plus expands the extensive margin by inducing supervisors to schedule more farmer trainings and broaden geographic coverage. Contrary to standard multitasking concerns, meeting length--a proxy for engagement quality--increases across all arms. Oversight of supervisors also reduces favoritism in bonus allocation and improves merit-based evaluation, leading to greater access and yield gains among marginalized farmers. The results show that light-touch monitoring of middle management can substantially amplify the effectiveness and equity of performance pay in multi-layered bureaucracies.

Chat Over Coffee? Diffusion of Agronomic Practices and Market Spillovers in Rwanda

Date:  January 2026
WP#: [653]
Authors: Esther Duflo, Daniel Keniston, Tavneet Suri, and Celine Zipfel

Abstract: Agricultural extension programs often train a subset of farmers and rely on social networks for knowledge dissemination. We evaluate this approach through a two-stage experiment of an agronomy training program among Rwandan coffee farmers. The first stage randomized trainee concentration at the village level; the second randomly selected participants within villages. The program increased knowledge and self-reported adoption of the taught practices. It also reshaped farmers’ social networks by creating new social ties primarily among co-trainees. At first glance, the intervention appeared modestly effective, with treated farmers exhibiting higher yields than control applicants within the same village, although this difference is not statistically significant. However, knowledge did not diffuse, and control farmers with more treatment friends at baseline reduced audited adoption and input use. Villages with high trainee concentrations showed suggestive evidence of negative spillovers, consistent with reallocation of labor and other shared inputs toward treated farmers, as formalized in a simple model in which social ties shape access to inputs. Relative declines in the yields of control farmers in these villages account for treatment-control differences, raising concerns both about this dissemination strategy and estimates that fail to consider potential negative spillovers.

Women's Power in the Household

Date: January 2026
WP#: [652]
Authors: Seema Jayachandran and Alessandra Voena

Abstract: We examine women's household power in low- and middle-income countries, synthesizing theoretical frameworks and empirical evidence on its measurement, determinants, and consequences. We define women's household power as their influence over household choices, distinguishing it from broader empowerment concepts. We review economic models, including unitary, collective, and bargaining frameworks, and map these to empirical approaches. We then discuss measurement methods such as structural estimation of consumption allocation, survey measures, and laboratory experiments. On the determinants of women's power, we find that some approaches, such as transfers targeted to women, show mixed results, while others, such as increasing women's control over their earnings, show clearer positive impacts. On the effects of women's power, we pay special attention to children's human capital. Few studies provide strong evidence that mothers invest more in children than fathers do, but collectively the evidence suggests such an effect. We conclude by highlighting research and methodological gaps.

Social Learning among Urban Manufacturing Firms: Energy-Efficient Motors in Bangladesh

Date:  January 2026
WP#: [651]
Authors: Ritam Chaurey, Gaurav Nayyar, Siddharth Sharma, Eric Verhoogen

Abstract: Knowledge spillovers among firms are widely viewed as a key driver of agglomeration and growth but are difficult to estimate cleanly. We randomly allocated an energy-efficient motor --- a “servo'” motor --- among leather-goods firms in Dhaka, Bangladesh, and tracked adoption, information flows, beliefs about energy savings, and other variables. We use the difference between actual exposure and expected exposure (from simulated randomization draws) to identify the effect of exposure. We find a robust positive effect of exposure to treated neighbors within a small geographic area (500 meters in our baseline specification) on information flows and adoption. A marginal value of public funds (MVPF) calculation taking learning spillovers into account yields a significantly larger value than one considering only treated firms and suggests that adoption subsidies would be a cost-effective policy intervention.

Wedges: A Microeconomic Perspective on Misallocation

Date:  January 2026
WP#: [650]
Authors: Lauren Falcao Bergquist, Danial Lashkari, Eric Verhoogen

Abstract:This chapter takes stock of what has been learned from the recent micro-development literature about wedges --- mechanisms generating dispersion in marginal revenue products of factors across firms, which are commonly interpreted as indicators of misallocation. We present a general theoretical framework that allows us to consider several different types of wedges simultaneously. We argue that it is important to distinguish between between technological wedges, which are present even in the efficient allocation that would be chosen by the social planner, and distortionary wedges, which are present in market equilibrium but not the social planner's allocation. Not all wedges, as we have defined them, are distortionary. We also argue that interactions among wedges are pervasive. We review empirical findings about different types of wedges --- taxes, regulations, political connections, corruption, market power, contracting frictions, upgrading investments, and search --- focusing on studies that present direct evidence on particular wedges and how they generate dispersion in marginal returns to factors. Throughout, we pay special attention to how wedges vary with firm size and whether the evidence supports the “large firms are constrained'” view of development. We conclude with thoughts about promising directions for the misallocation literature.

Menstrual Stigma and Human Capital: Experimental Evidence from Madagascar

Date:  January 2026
WP#: [649]
Authors: Karen Macours, Julieta Vera Rueda, Duncan Webb

Abstract: Menstrual stigma affects adolescent girls worldwide, yet its impact on human capital development remains largely unexamined. We use a field experiment in 140 schools in Madagascar to evaluate interventions designed to reduce menstrual stigma and promote hygiene behaviors (N =2,250). Teacher-led sensitization on stigma and hygiene, menstrual products, and sanita tion infrastructure together substantially improve girls’ learning outcomes on standardized tests (+0.2 SD). These gains do not operate by improving school attendance or health, the channels typically invoked to justify menstrual hygiene programs. Instead, the improvements appear to arise from psychosocial mechanisms, including reduced menstrual stigma (measured using lab-in-the-field exercises, enumerator observations, and self-reports) and reduced stress (lower heart rate). We also test a novel approach for norm change by identifying “positive deviants” – girls within schools willing to openly challenge menstrual stigma. Selecting and training these positive deviants to serve as peer ambassadors for norm change produces significant additional improvements in self-reported stigma and hygiene behavior. The results demonstrate that addressing gender-specific psychosocial barriers can substantially improve girls’ education outcomes in highly deprived contexts, while highlighting both the promise and limitations of leveraging positive deviance for social norm change.

Learning to Work Towards Goals: A Sequential Evaluation of the Effect of a Goal- Setting Course on Academic and Soft Skills

Date:  Fall 2025
WP#: [648]
Authors: Anaya Dam, Guthrie Gray-Lobe, Michael Kremer, Joost de Laat and Karlijn Morsink

Abstract: This study sequentially evaluates a soft-skills course implemented in Ugandan and Kenyan primary schools that replaced academic review time with lessons on goal-setting and related skills as students prepared for high-stakes primary school-leaving exams. An exploratory evaluation in Uganda provided evidence of positive impacts on girls’ test scores. A confirmatory evaluation in Kenya found that the course led to improvements in self-reported soft skills, especially among girls, although no gains in test scores. The study illustrates the utility of sequential evaluation, with exploratory analysis to identify promising hypotheses, followed by out-of-sample testing, as a tool to uncover heterogeneous effects.

No Place Like Home? The Causal Effect of Forced Relocation from Central Addis Ababa

Date:  Fall 2025
WP#: 647
Authors: Gharad Bryan, Simon Franklin, Tigabu Getahun, Sarah Winton

Abstract: Do central slums provide essential economic and social benefits to the poor? We collected bespoke data for 5,000 households to study mass forced clearances in Addis Ababa. Evictees were offered alternative subsidized housing further from the center. Exploiting sharp clearance zone boundaries, regression-discontinuity estimates show negative impacts on social networks, but positive impacts on work, earnings, housing quality and environmental amenity. Relocating households close to their ex-ante neighbors eliminates social costs. Slums are not essential: relocation policies can be designed to fully compensate residents, and the sale value of cleared land more than covers the cost.

Beefing Up the Service Sector: Commodity Export Booms and Production Network Spillovers

Date:  Fall 2025
WP#: 646
Authors: Francesco Amodio, Giorgio Chiovelli, Serafín Frache

Abstract: We show that commodity export booms can propagate up the value chain, reshape production networks, and promote growth in the service sector. We study Uruguay’s beef export boom to China in the 2010s, combining customs, firm-to-firm transactions, employer-employee, and balance sheet data. Firms more linked to exporters experienced higher sales, especially in services, with associated gains in employment, wages, and sales per worker. Aggregate sales rose by 1.79%, with each export dollar generating 46 more cents in domestic sales, 10 cents in services. Over time, service firms reoriented their connections toward beef exporters, amplifying their gains from trade.

Left over or opting out? Squeeze, mismatch and surplus in Chinese marriage markets

Date:  Fall 2025
WP#: 645
Authors: Pauline Rossi, Yun Xiao

Abstract: Marriage is declining in China. Among singles, the probability of marrying in 2019 was half that of marrying in 1999. We estimate a Choo and Siow (2006b) model using census data to quantify the relative roles of changes in population structure and changes in marital surplus, i.e., the value of marriage. We find that the increase in the supply of educated people explains half of the decline, partly due to a mismatch between highly-educated women and less-educated men. The deterioration of female-to-male ratio, known as marriage squeeze, explains an additional 13% for men. The decrease in surplus accounts for the remainder.

Shaping Future Success: Evidence from an Early Childhood Human Capital Formation Intervention

Date:  Fall 2025
WP#: 644
Authors: Deepak Saraswat, Shwetlena Sabarwal, Lindsey Lacey, Natasha Jha, Nishith Prakash. Rachel Cohen

Abstract: Nearly 200 million children under five in low- and middle-income countries face developmental deficits, even as access to early childhood services expands. We present evidence from a large-scale randomized controlled trial (N=3,131 children in 201 schools) in Nepal’s government system testing three models of combining classroom quality with parental engagement. All teachers completed a 15-day training on pedagogy, national standards, and caregiver engagement, after which schools were randomly assigned to models varying whether caregiver sessions were led by teachers alone, by teachers supported with in-class helpers, or by external facilitators. The intervention increased children’s developmental outcomes by 0.10–0.20 standard deviations and improved caregiver engagement by similar magnitudes. Effects were most consistent when teachers received support that sustained classroom quality while engaging families, underscoring the critical role of workload management. Impacts were concentrated among disadvantaged households—those with lower baseline engagement, higher stress, and less education—highlighting the potential to reduce early childhood inequalities. Mechanism analysis shows the program shifted home and school inputs from substitutes to complements, creating mutually reinforcing pathways for child development. These findings demonstrate that modest, system-embedded reforms can generate scalable improvements in early childhood human capital formation.

Automation with Generative AI? Evidence from a Teacher Hiring Pipeline

Date:  Fall 2025
WP#: 643
Authors: Kobbina Awuah, Ursa Krenk, David Yanagizawa-Drott

Abstract: We experimentally embed generative AI (GPT-4) into a teacher-recruitment screening process, comparing three pipelines: (i) human-only, (ii) human with AI assistance, and (iii) fully automated screening. Automation increases downstream hiring success by 11 percentage points (a 73% improvement) over the human-only baseline. In contrast, AI assistance neither improves outcomes nor productivity, as users systematically disregard its recommendations, perceiving it as incapable of distinguishing between signals of teacher quality. Our results provide evidence in favor of fully automated deployment of generative AI for an economically important task, highlighting potential limitations of hybrid approaches involving humans-in-the-loop.

Irrigation Infrastructure and Satellite-Measured Land Cultivation Impacts: Evidence from the Senegal River Valley

Date:  Fall 2025
WP#: 642
Authors: Abdoulaye Cisse,  Alain de Janvry,  Joel Ferguson,  Marco Gonzalez-Navarro,  Samba Mbaye,  Elisabeth Sadoulet,  Mame Mor Anta Syll

Abstract: Expanding irrigation in sub-Saharan Africa is widely viewed as a promising strategy for closing yield gaps and enhancing resilience to climate change. Drawing on more than 3,000 satellite images over a 30-year period, we examine the impact of irrigation infrastructure development in the Senegal River Valley. We find that cultivation rates increase substantially following irrigation project completion. Cultivation rates are remarkably stable at around 25 percentage points above pre-irrigation levels for the first 20 years, and trend even higher from years 20 to 25. Moreover, we show that crops cultivated on irrigated land are significantly less sensitive to both positive and negative temperature shocks, underscoring the role of irrigation in climate adaptation. Despite these aggregate gains, we document considerable heterogeneity in project outcomes, with intermittent land use remaining widespread. To shed light on these patterns, we complement the satellite analysis with farmer survey data, which point to persistent water access constraints as a key barrier to continuous cultivation—constraints that cannot be resolved solely through individual farmer action.

Social Learning among Urban Manufacturing Firms: Energy-Efficient Motors in Bangladesh

Date:  Fall 2025
WP#: 641
Authors: Ritam Chaurey, Gaurav Nayyar, Siddharth Sharma, Eric Vehoogen

Abstract: Knowledge spillovers among firms are widely viewed as a key driver of agglomeration and growth, but are difficult to estimate cleanly. We randomly allocated an energy-efficient motor --- a “servo'” motor --- among leather-goods firms in Dhaka, Bangladesh, and tracked adoption, information flows, beliefs about energy savings, and other variables. We use the difference between actual exposure and expected exposure (from simulated randomization draws) to identify the effect of exposure. We find a robust positive effect of exposure to treated neighbors within a small geographic area (500 meters in our baseline specification) on information flows and adoption. A marginal value of public funds (MVPF) calculation taking learning spillovers into account yields a significantly larger value than one considering only treated firms and suggests that adoption subsidies would be a cost-effective policy intervention.

The Great Gatsby Curve: Upward Mobility, Persistence and Inequality

Date:  Fall 2025
WP#: 640
Authors: Laura Mayoral, Debraj Ray, Garance Genicot

Abstract: M.This paper revisits the Great Gatsby curve that connects inequality to mobility, using panel data spanning several countries and time periods. Existing literature observes that the intergenerational elasticity of earnings falls as inequality rises, implying that mobility (viewed as the negative of that elasticity) is negatively correlated with inequality. In sharp contrast, we show that measures of upward mobility, axiomatically aligned with progressivity in income growth rates, are robustly and positively associated with baseline inequality. While there is no contradiction here, our study highlights crucial differences between mobility measures based on (lower) persistence and those based on growth progressivity, and asks the reader to align their choice of measure with foundational criteria that they feel best describe "mobility". Our findings offer a re-interpretation of the Gatsby curve through the lens of shared prosperity, and have implications for the evolution of inequality within countries.

Improving Judicial Protection in Intimate Partner Violence Cases: The Role of Specialized Courts and Judges

Date:  Fall 2025
WP#: 639
Authors: Carolina Arteaga, Gustavo J. Bobonis, Paola Salardi, and Dario Toman

Abstract: We study the large-scale implementation of a system of specialized domestic violence courts (SDVCs), an innovation in access to justice programs for potential victims of intimate partner violence (IPV) and offenders. Using individual-level administrative data from the universe of civil domestic violence cases in Puerto Rico during the period 2014-2020, we leverage the staggered opening of SDVCs across judicial regions to examine the consequences for victims’ judicial protection and offender recidivism. Access to SDVCs leads to a considerable 8 percentage points increase in the probability that judges issue a protection order and a 1.7 percentage point (15 percent) decrease in victim and offender reappearance rates within one year of the start of the case. Effects are more pronounced for cases in which parties have children in common and in which access to SDVCs is more limited. Linking the case data to administrative and survey data on judges, we show that the priorities of judges assigned to SDVCs play a prominent role in explaining these outcomes.

Malfunctioning Democracies: Understanding Accountability Failures in Developing Countries

Date:  Fall 2025
WP#: 638
Authors: Claudio Ferraz

Abstract: This chapter examines why democracies in the developing world frequently underperform

in providing effective governance. We argue that these shortcomings stem from weaknesses in

accountability mechanisms, which leave governments vulnerable to corruption, clientelism, and

elite capture. Our framework distinguishes three accountability channels: vertical (citizens’ control

over politicians), horizontal (checks and balances across state institutions), and diagonal

(oversight by media and civil society). We synthesize the recent theoretical and empirical literature

to assess how each channel operates, the conditions under which it succeeds, and why it

often fails. A central finding is that accountability institutions rarely fail on their own; instead,

they are actively undermined by political actors seeking to preserve rents and entrench power.

This dynamic weakens electoral competition, erodes judicial independence, and curtails media

freedom, producing a mutually reinforcing cycle of weak accountability. Additionally, we argue

that sustainable reforms cannot be achieved by strengthening any single channel in isolation.

Since vertical, horizontal, and diagonal accountability are interdependent, effective reform requires

bolstering all three simultaneously. We conclude by discussing the implications of this

perspective for future research, including the role of new technologies, political polarization, and

candidate selection in reshaping accountability in developing democracies.

What Do Market-Access Subsidies Do? Experimental Evidence from Tunisia

Date:  Fall 2025
WP#: 637
Authors: Nadia Ali, Giacomo De Giorgi, Aminur Rahman, and Eric Vehoogen

Abstract: Many countries seek to promote exports by subsidizing market access, but evidence on such efforts has been mixed. We present the first randomized evaluation of a government financial-support program explicitly targeting exports, the Tasdir+ program in Tunisia. The program offered matching grants for fixed market-access costs but not variable costs. Tracking outcomes in administrative data, we find positive effects on exports on average. We find limited impacts on the number of destinations or exported products, which were stated policy targets. The finding that the fixed-cost subsidies expanded exports on the intensive margin but not the extensive margins of destinations or products stands in contrast to the predictions of several workhorse trade models.

Lab Experiments in Developing Country Contexts

Date:  Spring 2025
WP#: 636
Authors: Sara Lowes and Nathan Nunn

Abstract: Lab-in-the-field experiments, in which lab experiments are conducted in more naturalistic settings, are increasingly being implemented in developing country contexts. In this chapter, we outline the conceptual and logistical challenges typically associated with lab-in-the-field experiments in non-Western settings. We describe the importance of worldviews and how researcher preconceptions may inadvertently shape the types of research questions that are asked. We emphasize the importance of increasing diversity of subject pools and researchers. We also suggest a set of best practices when implementing lab-in-the-field experiments in developing countries.

The Social Consequences of Traditional Religion in Contemporary Africa

Date:  Spring 2025
WP#: 635
Authors: Etienne Le Rossignol, Nathan Nunn, and Sara Lowes

Abstract: In sub-Saharan Africa, despite the adoption of Christianity, traditional religious beliefs remain widely held. We examine the social consequences of holding traditional religious beliefs among urban and rural populations in central Africa. Using a variety of lab-in-the-field experiments that randomize partner characteristics, we test whether individuals who believe in traditional religion are treated or viewed differently by others. We find that participants act less prosocially towards partners known to hold traditional religious beliefs. We find that this behavior is supported by norms and by negative perceptions and stereotypes of traditional believers. The effects are economically important, ubiquitous, and are amplified by economic development. Individual-level data from across the African continent reveal patterns consistent with our experimental findings. Individuals who believe in witchcraft have lower incomes, and the effect is stronger in countries that are more developed. Our final analysis speaks to the origins of these effects. Within our experimental sample, the negative effects are stronger in rural villages with more historical missionary activity, and across the continent, the negative relationship between belief in witchcraft and income is stronger in regions with more colonial missionary presence. Both findings are consistent with descriptive accounts of Christianity leading to the stigmatization of African traditional religion.

The Complexity of Multidimensional Learning in Agriculture

Date:  Spring 2025
WP#: 634
Authors: Rachid Lajaaj and Karen Macours

Abstract: The adoption of new technologies often requires farmers to re-optimize production decisions over various inputs. Yet few studies examine how exposure to information signals on different inputs translate into dynamic learning and adoption decisions. We randomly invited farmers in Kenya to participate in agronomic research trials, giving them an opportunity to conduct side-byside comparisons of different combinations of inputs during three consecutive seasons. Drawing from detailed data collection during six seasons, we study farmers’ learning process. Farmers react to the exogenous signal by increasing experimentation and their farming know-how increases rapidly. High skill farmers experiment the most as a response to the treatment and learn faster, but also make new mistakes and endure a reduction in short term profit. We present a theoretical model with a multidimensionality of input and practice decisions where complementarities and substituabilities make searching for a better equilibrium costly, and then test the model’s implications.

The Colonial Legacy in India: How Persistent are the Effects of Historical Institutions?

Date:  Spring 2025
WP#: 633
Authors:  Lakshmi Iyer and Coleson Weir

Abstract: Using updated data, we analyze the long-run effects of two British colonial institutions established in India. Iyer (2010) showed that areas under direct colonial rule had fewer schools, health centers, and roads than areas under indirect colonial rule. Two decades later, we find that these differences have been eliminated, and that the gaps in poverty, health and education attainment are also smaller. Banerjee and Iyer (2005) found lower agricultural investments and productivity in areas with landlord-based colonial land tenure systems. Our updated data finds that only some of these differences have been eliminated, while others have remained constant and even widened. Consistent with this lack of convergence, we find that non-landlord areas continue to have higher education attainment and lower poverty rates six decades after the end of colonial rule. We conclude that the impact of colonial institutions can eventually fade away under the influence of targeted policies.

Testing Fractional Doses of COVID-19 Vaccines

Date:  Spring 2025
WP#: 632
Authors: Witold Więcek, Amrita Ahuja, Esha Chaudhuri, Michael Kremer, Alexandre Simoes Gomes, Christopher M. Snyder, Alex Tabarrok, and Brandon Joel Tan

Abstract: Due to the enormous economic, health, and social costs of the COVID-19 pandemic, there are high expected social returns to investing in parallel in multiple approaches to accelerating vaccination. We argue there are high expected social returns to investigating the scope for lowering the dosage of some COVID-19 vaccines. While existing evidence is not dispositive, available clinical data on the immunogenicity of lower doses combined with evidence of a high correlation between neutralizing antibody response and vaccine efficacy suggests that half- or even quarter-doses of some vaccines could generate high levels of protection, particularly against severe disease and death, while potentially expanding supply by 450 million to 1.55 billion doses per month, based on supply projections for 2021. An epidemiological model suggests that even if fractional doses are less effective than standard doses, vaccinating more people faster could substantially reduce total infections and deaths. The costs of further testing alternative doses are much lower than the expected public health and economic benefits. However, commercial incentives to generate evidence on fractional dosing are weak, suggesting that testing may not occur without public investment. Governments could support either experimental or observational evaluations of fractional dosing, for either primary or booster shots. Discussions with researchers and government officials in multiple countries where vaccines are scarce suggest strong interest in these approaches.

Reassessing India’s Poverty Decline over the Missing Decade: 2011-12 to 2022-23

Date: Spring 2025
WP#: 631
Authors: Maitreesh Ghatak and Rishabh Kumar

Abstract: This paper addresses the lack of official data on Indian poverty between 2011-12 and 2022-23, a period known as the "missing decade". It critiques two major attempts to estimate poverty during this time: one using national account growth rates and the other using a private survey. These methods are criticised for their assumptions and data limitations. The paper proposes a new method, imputing consumption from official labour force surveys using a wage-based model. The authors find that poverty reduction was not as dramatic as previously suggested, with about 20% of Indians living in poverty on the eve of the pandemic. The paper's analysis aligns with the fact that India's structural economic transformation was limited, with agriculture output stagnant and regional convergence lacking. The paper concludes that while poverty may have gone down, but its rate of decline has been slow in the decade after 2011-12. 

Meta-Analysis and Public Policy: Reconciling the Evidence on Deworming

Date: Spring 2025
WP#: 630
Authors: Kevin Croke, Joan Hamory Hicks, Eric Hsu, Michael Kremer, Ricardo Maertens, Edward Miguel, and Witold Więcek

Abstract: The WHO recommends mass drug administration (MDA) for intestinal worm infections in areas with >20% infection prevalence. Recent Cochrane meta-analyses endorse treatment of infected individuals but recommend against MDA. We conducted a theory-agnostic random-effects meta-analysis of the effect of multiple-dose MDA and a cost-effectiveness analysis. We estimate significant effects of MDA on child weight (0.15 kg, 95% CI: 0.07, 0.24; p <0.001), mid-upper arm circumference (0.20 cm, 95% CI: 0.03, 0.37; p=0.02), and height (0.09 cm, 95% CI: 0.01, 0.16; p=0.02) when prevalence is over 20%, but not on Hb (0.06 g/dl, 95% CI: -0.01, 0.14; p=0.1). These results suggest that MDA is a cost-effective intervention, particularly in the settings where it is recommended by the WHO. 

Can Digital Aid Deliver During Humanitarian Crises?

Date: Winter 2024
WP#: 629
Authors: Michael Callen, Miguel Fajardo-Steinhäuser, Michael G. Findley, and Tarek Ghani

Abstract: Can digital payments help reduce extreme hunger? Humanitarian needs are at their highest since 1945, aid budgets are falling behind, and hunger is concentrating in fragile states where repression and aid diversion present major obstacles. In such contexts, partnering directly with governments is often neither feasible nor desirable, making private digital payment platforms a potentially useful means of delivering assistance. We experimentally evaluated digital payments to extremely poor, female-headed households in Afghanistan, as part of a partnership between community, nonprofit, and private organizations. The payments led to substantial improvements in food security and mental well-being. Despite beneficiaries’ limited tech literacy, 99.75% used the payments, and stringent checks revealed no evidence of diversion. Before seeing our results, policymakers and experts are uncertain and skeptical about digital aid, consistent with the lack of prior evidence on digital payments for humanitarian response. Delivery costs are under 7 cents per dollar, which is 10 cents per dollar less than the World Food Programme’s global figure for cash-based transfers. These savings can help reduce hunger without additional resources, demonstrating how hybrid partnerships utilizing digital payment platforms can help address grand challenges in difficult contexts.

Outsourcing Policy and Worker Outcomes: Causal Evidence from a Mexican Ban

Date: Winter 2024
WP#: 628
Authors: Alejandro Estefan, Roberto Gerhard, Joseph P. Kaboski, Illenin O. Kondo, and Wei Qian

Abstract: A weakening of labor protection policies is often invoked as one cause of observed monopsony power and the decline in labor's share of income, but little evidence exists on the causal impact of labor policies on wage markdowns. Using confidential Mexican economic census data from 1994 to 2019, we document a rising trend over this period in on-site outsourcing. Then, leveraging data from a manufacturing panel survey from 2013 to 2023 and a natural experiment featuring a ban on domestic outsourcing in 2021, we show that the ban drastically reduced outsourcing, increased wages, and reduced measured markdowns without lowering output or employment. Consistent with the presence of monopsony power, we observe large markdowns for the largest firms, with the decline in markdowns in response to the ban concentrated among high-markdown firms. However, we also find that the reform reduced capital investment and increased the probability of market exit.

Long-run Impacts of Forced Labor Migration on Fertility Behaviors: Evidence from Colonial West Africa

Date: Winter 2024
WP#: 627
Authors: Pascaline Dupas, Camille Falezan, Marie Christelle Mabeu, and Pauline Rossi

Abstract: Is the persistently high fertility in West Africa today rooted in the decades of forced labor migration under colonial rule? We study the case of Burkina Faso, considered the largest labor reservoir in West Africa by the French colonial authorities. Hundreds of thousands of young men were forcibly recruited and sent to work in neighboring colonies for multiple years. The practice started in the late 1910s and lasted until the late 1940s, when forced labor was replaced with voluntary wage employment. We digitize historical maps, combine data from multiple surveys, and exploit the historical, temporary partition of colonial Burkina Faso (and, more specifically, the historical land of the Mossi ethnic group) into three zones with different needs for labor to implement a spatial regression discontinuity design analysis. We find that, on the side where Mossi villages were more exposed to forced labor historically, there is more temporary male migration to Cote d’Ivoire up to today, and lower realized and desired fertility today. We show evidence suggesting that the inherited pattern of low-skill circular migration for adult men reduced the reliance on subsistence farming and the accompanying need for child labor. We can rule out women’s empowerment or improvements in human and physical capital as pathways for the fertility decline. These findings contribute to the debate on the origins of family institutions and preferences, often mentioned to explain West Africa’s exceptional fertility trends, showing that fertility choices respond to changes in modes of production.

Digital Information Provision and Behavior Change- Lessons from Six Experiments in East Africa

Date: Winter 2024
WP#: 626
Authors: Raissa Fabregas, Michael Kremer, Matthew Lowes, Robert On, and Giulia Zane

Abstract: Mobile phone-based informational programs are popular worldwide, though there is little consensus on how effective they are at changing behavior. We present causal evidence on the effects of six mobile-based agricultural information programs implemented in Kenya and Rwanda. The programs shared similar objectives but were implemented by three different organizations and varied in content, design, and target population. With administrative outcome data for over 156,000 people across all experiments, we are sufficiently powered to detect small effects in real input purchase choices. Combining the results of all experiments through a meta-analysis, we find that the odds ratio for following the text-based recommendations is 1.20 (95% CI: 1.14, 1.26). We cannot reject similar effects across experiments and for different agricultural technologies. We do not find evidence of message fatigue or crowd-out of other inputs. The effects, however, seem to diminish over time. Providing more granular information, supplementing the texts with in-person calls, or varying the messages’ framing did not significantly increase impacts, but message repetition had a modest positive effect. While the overall effect sizes are small, the low cost of text messages can make these programs cost-effective.

Revisiting the Eswaran-Kotwal Model of Tenancy

Date: Winter 2024
WP#: 625
Authors: Dilip Mookherjee, Maitreesh Ghatak

Abstract: Persistence of sharecropping tenancy and increases in farm productivity following regulations protecting tenant rights have been observed in many developing countries. This paper examines if these can be explained by alternative models of sharecropping with two sided efforts/investments, namely, complete contract models either without wealth constraints (Eswaran-Kotwal (1985)), or with a wealth constrained tenant (Mookherjee (1997), Banerjee-Gertler-Ghatak (2002)); and incomplete contract holdup models without wealth constraints (Grossman-Hart (1986)). In the absence of wealth constraints the complete contract model always results in (incentive constrained) surplus-maximizing productivity, so there can be no scope for tenancy regulations to raise productivity. In the incomplete contract model, tenancy regulations would raise productivity only if the tenant’s investments are more important than the landlord’s investment. But in that case sharecropping tenancy would not persist in the absence of wealth constraints as the tenant would have purchased the land right ex ante from the landlord. The model with wealth constraints helps explain both the persistence of tenancy and productivity/surplus enhancing effects of tenancy regulations.

Public Service Delivery, Exclusion and Externalities: Theory and Experimental Evidence from India

Date: Fall 2023
WP#: 624
Authors: Alex Armand, Britta Augsburg, Antonella Bancalari, and Maitreesh Ghatak

Abstract: This study explores the interaction between the quality of public services, the implementation of user fees, and the resulting potential for exclusion, that can lead to negative externalities. Our theoretical framework takes account of the possible externalities that result from excluded users accessing alternative options in the context of sanitation, i.e., open defecation, and challenges the conventional wisdom that higher quality unequivocally leads to increased use. Instead, it highlights the ambiguity that results from a simultaneous increase in usage due to improved services (quality effect) and a decrease caused by the fees (price-elasticity effect). We then provide empirical evidence from a randomized controlled trial, where we incentivized the quality of water and sanitation services in the two largest cities of Uttar Pradesh, India. We show that higher service quality increases fee compliance but excludes some users, leading to unintended negative health externalities. Our detailed data provides evidence that results are driven by changes in caretaker behaviour. This finding highlights the need to be cautious regarding user fees, especially for public services involving significant externalities, and in settings where the users are very poor.

Zero-Sum Thinking, the Evolution of Effort-Suppressing Beliefs and Economic Development

Date: Fall 2023
WP#: 623
Authors: Augustin Bergeron, Jean-Paul Carvalho, Jonathan Weigel, Joseph Henrich, and Nathan Nunn

Abstract: We study the evolution of belief systems that suppress productive effort. These include concerns about the envy of others, beliefs in the importance of luck for success, disdain for competitive effort, and traditional beliefs in witchcraft. We show that such demotivating beliefs can evolve when interactions are zero-sum in nature, i.e., gains for one individual tend to come at the expense of others. Within a population, our model predicts a divergence between material and subjective payoffs, with material welfare being hump-shaped and subjective well-being being decreasing in demotivating beliefs. Across societies, our model predicts a positive relationship between zero-sum thinking and demotivating beliefs and a negative relationship between zero-sum thinking (or demotivating beliefs) and both material welfare and subjective well-being. We test the model’s predictions using data from two samples in the Democratic Republic of Congo and from the World Values Survey. In the DRC, we find a positive relationship between zero-sum thinking and the presence of demotivating beliefs, such as concerns about envy and beliefs in witchcraft. Globally, zero-sum thinking is associated with skepticism about the importance of hard work for success, lower income, less educational attainment, less financial security, and lower life satisfaction. Comparing individuals in the same zero-sum environment, we observe the divergence between material outcomes and subjective well-being predicted by our model.

Globalization and Inequality in Latin America

Date: Summer 2023
WP#: 622
Authors: Brian K. Kovak and Rafael Dix-Carneiro

Abstract: We survey the recent literature studying the effects of globalization on inequality in Latin America. Our focus is on research emerging from the late 2000s onward, with an emphasis on empirical work considering new mechanisms, studying new dimensions of inequality, and developing new methodologies to capture the many facets of globalization’s relationship to inequality. After summarizing both design-based and quantitative work in this area, we propose directions for future work. Our overarching recommendation is that researchers develop unifying frameworks to help synthesize the results of individual studies that focus on distinct aspects of globalization’s relationship to inequality.

On the Importance of African Traditional Religion for Economic Behavior

Date: Summer 2023
WP#: 621
Authors: Aimable Amani Lameke, Lewis Dunia Butinda, Max Posch, Nathan Nunn, and Raul Sanchez de la Sierra

Abstract: Within the field of economics, despite being widespread, African traditional religions tend to be perceived as unimportant and ignored when studying economic decision-making. This study tests whether this presumption is correct. Using daily data on business decisions and performance of beer sellers in the eastern Democratic Republic of the Congo, we study the importance of traditional religious beliefs for economic behavior and outcomes. Beer sellers perceive the risk of theft in their shops to be higher than it actually is, causing them to hold lower inventories, more frequent stock-outs, and reduced profits. We facilitate randomly-timed access to commonly-used, but typically prohibitively expensive rituals, which reduce the perceived risk of theft. We find that the rituals partially correct the beliefs about the risk of theft for sellers who report believing in the ritual’s efficacy. These sellers purchase more inventory, experience fewer stock-outs, and have larger sales, revenues, and profits. To distinguish the belief in the efficacy of the ritual from other incidental effects of participation, we analyze these outcomes for sellers who do not believe in the ritual. For these individuals, we find none of the observed effects. The findings provide evidence of the importance of African traditional religions, demonstrating that they can influence behavior and outcomes that are important for economic development.

Chat Over Coffee? Diffusion of Agronomic Practices and Market Spillovers in Rwanda

Date: Spring 2023
WP#: 620
Authors: Esther Duflo, Daniel Keniston, Tavneet Suri, and Celine Zipfel

Abstract: Agricultural extension programs often train a few farmers and count on diffusion through social networks for the innovation to spread. However, if markets are imperfectly integrated, this may also inflict negative externalities. In a two-step experiment of an agronomy training program among Rwandan coffee farmers, we first randomize the concentration of trainees at the village level and then randomly select within each village. Knowledge increased, and yields were 6.7% higher for trained farmers. We find no evidence of social diffusion; instead, control households experienced negative spillovers in high treatment concentration areas, likely because of competition for a scarce input, fertilizer.