Does Group Inclusion Hurt Financial Inclusion? Evidence from Ultra-poor Members of Ugandan Savings Groups
(2017). With Andrea Canidio, Journal of Development Economics, 128, 24-48. [Web appendix]
Millions of ultra-poor households in sub-Saharan Africa rely exclusively on savings groups to meet their financial needs. However, the ability of savings groups to fully meet these needs remains unclear. We randomize at the village level the proportion of ultra-poor members of newly-formed savings groups. We find that scarcity of loanable funds is more severe in poorer groups and affects disproportionately their poorest members. A trade-offemerges between the inclusion of ultra-poor households into a savings group and its ability to provide credit to these same ultra-poor households.
Understanding how capital flows within rural communities in sub-Saharan Africa can provide important insights on the nature of poverty and the effectiveness of financial intermediation. We use unique individual level savings and borrowing data to study the flow of funds within a sample of 104 Ugandan savings groups. We show that poor households borrow from wealthier households, which implies that the marginal benefit of money is decreasing in wealth. Other individual characteristics do not predict the flow of funds within the group. We also fail to detect evidence that members are using savings groups to smooth out occupation-specific income shocks.
Legalize, Tax and Deter: Optimal Enforcement Policies for Corruptible Officials (2016). With Alberto Motta, Journal of Development Economics, 118, p. 207-215. [Web appendix] [Gated Version]
There is a heated debate on the merits of legalizing certain illegal, harmful and corrupting activities (such as trade in illicit drugs), but little theoretical insights on the consequences for optimal enforcement policies and corruption. We propose a model where the government hires law enforcers to report those who engage in a harmful activity. Offenders are allowed to respond by offering bribes to the law enforcers in exchange for their silence. When standard anti-corruption policies are costly to implement, we show that an alternative tax-and-legalize policy can yield significant benefits, especially in countries with weak institutions and for activities that are not too harmful. However, a tax-and-legalize scheme eliminates the distortions stemming from the threat of corruption by increasing the equilibrium number of harmful activities,which might explain why it is not as widespread a policy as the theory suggests.
The Disease Environment, Schooling, and Development Outcomes: Evidence from Ethiopia (2015). Journal of Development Studies, 51 (12), p. 1563-1584. (lead article) [Web appendix] [Gated Version]
The disease environment could help explain underdevelopment in Africa. This article shows that local malaria risk is associated with worse local development outcomes. Combining an Ethiopian household survey with satellite-derived topographical information, the article shows that malaria incidence is correlated with village elevation, slope and their interaction; that is, malaria is sensitive to elevation in flatlands, where the habitat is suitable for mosquito breeding, but not in steeper lands. Using topography as a predictor of the disease environment, education levels are found to be negatively correlated with malaria. I find suggestive evidence that
some other outcomes are related to malaria risk. Finally, the performance of topography predictors is assessed against other climate-based predictors of malaria.
The Trade Consequences of Maritime Insecurity: Evidence from Somali Piracy
(2015). With Anca Cristea and Logan Lee, Review of International Economics, 23 (3), p. 525-557. [Gated Version]
In the past decade (2000–2010), pirates from Somalia have carried out thousands of attacks on cargo ships sailing through the Gulf of Aden and the Indian Ocean, causing what others have identified as significant damage to maritime trade. In this paper, we use variations in the spread and intensity of Somali piracy to estimate its effect on the volume of international trade. By comparing trade volume changes along shipping routes located in pirate waters to those that are not, we estimate that Somali piracy reduced bulk commodities trade passing through the Gulf of Aden by 4.1% per year from 2000 to 2010.We find smaller reductions in total trade, consistent with the fact that not all goods are shipped by sea or are targets of pirate attacks. While our estimates suggest that the trade costs of piracy are much lower than what has been suggested in the existing literature, we find that they remain significant and unevenly distributed, with five countries and the EU shouldering 70% of the total costs.
This paper shows that the threat of collusion between a productive agent and the auditor in charge of monitoring production can influence a number of organizational dimensions of the firm, including outsourcing decisions and the allocation of production costs. We find that the optimal organizational response to internal collusion lets the agent choose between working outside the firm with no monitoring, or working within the firm with monitoring. In equilibrium, there are no rents due to collusion and the efficient worker works outside the firm. The results are robust to a number of extensions.
Transitory Shocks and Birth Weights: Evidence from a Blackout in Zanzibar
(2014). Journal of Development Economics, 108, p. 154-168. [Gated Version]
Do transitory economic shocks affect neonatal outcomes? I show that an unexpected, month-long blackout in Tanzania caused a sharp but temporary drop in work hours and earnings for workers in electricity-dependent jobs. Using records from a maternity ward, I document a reduction in birth weights for children exposed in utero to the blackout, and an increase in the probability of low birth weight. The reduction is correlated with measures of maternal exposure to the blackout. The blackout also increased fertility for teenage and first-time mothers, but selection into pregnancy cannot fully explain the drop in weights.
Power Outages, Power Externalities, and Baby Booms
(2014). Demography, 51 (4), p. 1477-1500
Determining whether power outages have significant fertility effects is an important policy question in developing countries, where blackouts are common and modern forms of family planning are scarce. Using birth records from Zanzibar, this study shows that a month-long blackout in 2008 caused a significant increase in the number of births 8 to 10 months later. The increase was similar across villages that had electricity, regardless of the level of electrification; villages with no electricity connections saw no changes in birth numbers. The large fertility increase in communities with very low levels of electricity suggests that the outage affected the fertility of households not connected to the grid through some spillover effect. Whether the baby boom is likely to translate to a permanent increase in the population remains unclear, but this article highlights an important hidden consequence of power instability in developing countries. It also suggests that electricity imposes significant externality effects on rural populations that have little exposure to it.
The Economics of Savings Groups
With Andrea Canidio and Rebekah Selby, Updated April 2016 (Update coming soon)
Fertility Responses to Schooling Costs: Evidence from Uganda's Universal Primary Education Policy
With Edward Bbaale, April 2018
Work in Progress
Slowing Down Digital Credit, with Michael Kuhn and Silvia Prina
Milking it for all it’s Worth: Digital Credit in the Dairy Sector, with Silvia Prina and Jessica Goldberg
Borrowing Constraints in Savings Groups, with Jessica Goldberg
Prohibition, Legalization, and the Cost of Corruption in the War against Drugs, with Alberto Motta
How does Mobile Money Affect Adopters’ Social Networks?, with Cynthia Kinnan and Silvia Prina
Politically Motivated Development, with Shankha Chakraborty
Committed to (some) insurance, with Murat Yilmaz
Long term evolution of savings groups: evidence from three countries (with Dean Karlan and Christopher Udry)