Falling Living Standards during the COVID-19 Crisis: Quantitative Evidence from Nine Developing Countries
(with many co-authors)
Science Advances 7(6). Feb 2021.
Abstract Despite numerous journalistic accounts, systematic quantitative evidence on economic conditions during the ongoing COVID-19 pandemic remains scarce for most low- and middle-income countries, partly due to limitations of official economic statistics in environments with large informal sectors and subsistence agriculture. We assemble evidence from over 30,000 respondents in 16 original household surveys from nine countries in Africa (Burkina Faso, Ghana, Kenya, Rwanda, Sierra Leone), Asia (Bangladesh, Nepal, Philippines), and Latin America (Colombia). We document declines in employment and income in all settings beginning March 2020. The share of households experiencing an income drop ranges from 8 to 87% (median, 68%). Household coping strategies and government assistance were insufficient to sustain precrisis living standards, resulting in widespread food insecurity and dire economic conditions even 3 months into the crisis. We discuss promising policy responses and speculate about the risk of persistent adverse effects, especially among children and other vulnerable groups.
| Paper | Publication | Replication | Policy Brief | Coverage: One Two Three
Got (Clean) Milk? Organization, Incentives, and Collective Action in Indian Dairy Cooperatives
(with Manaswini Rao)
Abstract Small-scale producers commonly access broader markets through cooperatives or other production teams organized around local social networks. Social ties in such teams can informally sustain collective action in the presence of group-level outcomes, but introduce hierarchies based on member status. We explore the effect of group incentives on production among rural Indian dairy cooperatives. In a randomized evaluation of incentive payments for aggregate milk quality, we find village-level cooperatives can solve internal collective action problems to improve production. The magnitude is large, with a 1% increase in revenue raising the fraction of high-quality milk by up to 81%. However, a third of village elites decline incentive payments when they cannot control information disclosure about the payment. Opting out reflects frictions in coordination or surplus allocation within a social network, and suggests some transparency-based efforts to limit elite capture may undermine policy goals.
Migration and the Labor Market Impacts of COVID-19
(with many co-authors)
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.
Declining Mobility among Mexican-Born Workers in the US Labor Force
(with Julian Arteaga)
Abstract Geographic mobility is a key component of labor supply elasticity and can help smooth economic shocks over space. In this paper we investigate how the mobility response to local economic shocks has evolved among Mexican immigrants in the US from 2000 to 2020. Using Bartik shocks to instrument for local labor demand, we show that Mexican immigrants were more mobile than native-born Americans and other immigrant groups in the period from 2000 to 2010, with the gap peaking toward the end of the decade. This pattern subsequently reversed, and by 2020 native-born Americans were substantially more responsive to local market conditions than Mexican immigrants. This reversal cannot be fully explained by differences in the industry or demographic composition of the Mexican-born labor force, and the pattern holds for workers within the same industry and skill bin.
| Paper coming soon
Skimming off the Top: The Unintended Consequences of Technology Adoption in the Indian Dairy Industry
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.
| Updated version coming soon
Migration Frictions, Earnings Differentials, and Spatial Misallocation: Evidence from Thailand
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.
Seasonal Poverty and the COVID-19 Pandemic
(with Arjun Kharel, A. Mushfiq Mobarak, and Corey Vernot)
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.
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