Falling Living Standards during the COVID-19 Crisis: Quantitative Evidence from Nine Developing Countries
(with many co-authors)
Paper available on request | Abstract Despite numerous journalistic accounts, systematic quantitative evidence on the evolution of economic conditions during the ongoing COVID-19 global pandemic remains scarce for most low and middle income countries, in part due to the limitations of official economic statistics in environments with large informal sectors and subsistence agriculture. We assemble large-scale evidence from over 30,000 respondents in 16 original household survey samples collected in nine countries in Africa (Burkina Faso, Ghana, Kenya, Rwanda, and Sierra Leone), Asia (Bangladesh, Nepal, and Philippines), and Latin America (Colombia). We document declines in employment and income across socioeconomic strata in all settings beginning in March 2020, with the share of households experiencing a drop in income ranging from 7 to 85\% (median share 67\%). Household coping strategies and government assistance were insufficient to sustain pre-crisis living standards in all cases, which resulted in widespread food insecurity and dire economic conditions even three months into the crisis. We discuss potentially promising public policy responses, both locally and globally, and speculate about the risk of persistent adverse effects, especially among children and other vulnerable groups.
Accepted at Science Advances
Migration and the Labor Market Impacts of COVID-19
(with many co-authors)
Paper | Abstract Using detailed microdata, we document how migration-dependent households are especially vulnerable during the COVID-19 pandemic. We create pre- and post-COVID panel datasets for three populations in Bangladesh and Nepal, leveraging experimental and observational variation in prior migration dependence. We report 25\% greater declines in earnings and fourfold greater prevalence of food insecurity among migrant households since March. Causes include lower migration rates, less remittance income per migrant, isolation in origin communities, and greater health risks. We compile a large set of secondary data to demonstrate the extent of vulnerability worldwide and conclude with recommendations for policy targeted at migrants.
Seasonal Poverty and the COVID-19 Pandemic
(with Arjun Kharel, A. Mushfiq Mobarak, and Corey Vernot)
Paper | Abstract Poor populations in low-income countries are likely to suffer the worst of the economic fallout from the COVID-19 crisis. 75\% of the world’s poor reside in rural agrarian areas where livelihoods fluctuate with the seasonal crop cycle. We investigate how seasonality mediates economic impacts of the crisis by constructing panel data to track rural Bangladeshi and Nepali households before and after the onset of the pandemic. We report how economic need may diverge from local infection risk in three key ways. First, current declines in employment and food security foreshadow even greater deprivation during the traditional agricultural lean season. Second, distress during harvest periods displaces agricultural and labor investment and will depress future earnings capacity. Third, nutritional and mental health deficits induced by the crisis can hinder economic decision-making and child development over the long term. Our findings inform how to target resources to facilitate economic recovery in rural areas.
Got (Clean) Milk? Transparency, Governance, and Incentives for Cleanliness in Indian Dairy Cooperatives
(with Manaswini Rao)
Paper | Abstract Much economic activity in developing countries takes place in production teams whose members are connected through a broader social network. We explore the effectiveness of team incentives among rural Indian dairy cooperatives. In a randomized evaluation, we find local cooperatives can solve internal collective action problems to respond to aggregate incentives for sanitation. However, in some cases, cooperative managers decline incentive payments when they cannot control information disclosure. Opting out of payment is prevalent among low social status managers, which we interpret in a model of elite capture with substitution between methods of rent extraction that have different efficiency implications.
Skimming off the Top: The Unintended Consequences of Technology Adoption in the Indian Dairy Industry
Updated version coming soon | Abstract In India, village dairy cooperatives collect milk from rural producers and sell it in bulk to the regional market. In the last decade the Karnataka Milk Federation, the largest organizer of cooperatives in the Indian state of Karnataka, has invested heavily in bulk milk chillers (BMCs) that drastically lower the time between production and refrigeration. These chillers, by lowering the perceived risk of penalty for spoilage, both raise the potential returns to high quality milk and increase the temptation to engage in unsavory practices such as milk dilution. Risk declines both because chillers better preserve milk and because monitoring at chilling stations is more lax. Therefore the new technology both raises the returns to quality and lowers the cost of cheating. I investigate the net effects of village access to a BMC on the production process through a difference-in-difference approach using village-level data from the district of Kolar. I find that production quantity increases with access to a chiller but average production quality decreases, as does the likelihood of being punished for low quality. The results are consistent with a model in which villagers increase their use of dishonest practices such as dilution after being connected to a BMC because they face less risk of being punished. The effect size is strongest in villages that had the highest quality ex ante, suggesting an equilibrium shift brought on by the change in punishment probability. In addition, I find the strongest evidence of adulteration in villages with fewer outside agricultural options.
Migration Frictions, Earnings Differentials, and Spatial Misallocation: Evidence from Thailand
Paper | Abstract This paper uses revealed-preference location decisions of workers in Thailand to quantify the disutility of labor migration, characterize the migration contribution to labor supply elasticity, and estimate the effect of migration frictions on spatial earnings differentials and labor misallocation. I estimate a spatial equilibrium model using commodity prices as instruments for local earnings to overcome endogeneity and selection, and to identify the NPV returns to potential migration. Estimation employs a novel strategy to accommodate measurement error and choice-based sampling. I find migration contributes 9.5 percentage points to local labor supply elasticity. The disutility from migration is 1.0–1.2 times annual earnings; alleviating this friction would induce a quarter of the population to relocate and would lower spatial earnings variation by 20\%. However, gains would be realized primarily in non-wage utility with a modest a 3\% increase in national product, suggesting migration frictions play a limited role in productive misallocation.
Lights at Night and Measures of Household Wellbeing
(with Xiaoman Luo)
Searching for Poverty Traps in Household Panel Data
(with Mo Alloush)
Asymmetric Information with a Noisy Signal