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.