O - Economic Development, Innovation, Technological Change, and Growth
Economic Development, Innovation, Technological Change, and Growth
We study whether individuals save more when information about their savings is shared with another village member (a “monitor”). We focus on whether the monitor’s effectiveness depends on her network position. Central monitors may be better able to disseminate information, and more proximate monitors may pass information to individuals who interact with the saver frequently. In 30 villages, we randomly assign monitors. Average monitors increase savings by 35 percent.
How integrated are labor markets within a country? Labor mobility is key to the integration of local labor markets and therefore to understanding the efficacy of policies to reduce regional inequality. We present a comprehensive framework for understanding migration decisions, focusing on the costs of migrating. We construct and then estimate a spatial equilibrium model where mobility is determined not only by idiosyncratic tastes, but also by moving costs that are origin-destination dependent.
When people can self-insure via migration, they may have less need for informal risk sharing. At the same time, informal insurance may reduce the need to migrate. To understand the joint determination of migration and risk sharing I study a dynamic model of risk sharing with limited commitment frictions and endogenous temporary migration. First, I characterize the model. I demonstrate theoretically how migration may decrease risk sharing. I decompose the welfare effect of migration into the change in income and the change in the endogenous structure of insurance.
This paper evaluates the effect on household savings of India’s recent financial inclusion drive, a drive that generated an unprecedented increase in access to financial institutions by using mobile technologies to deliver services practically at the doorstep of rural households.
We study how opening to trade affects economic growth in a model where heterogeneous firms can choose to adopt a new technology already in use by other firms. We characterize the growth rate using summary statistics of the profit distribution—the ratio of profits between the average and marginal adopting firm. Opening to trade increases the spread in profits through increased export opportunities and foreign competition, induces more rapid technology adoption, and generates faster growth.
While social closeness mitigates contractual incompleteness, we examine how communities can enlist third parties to improve cooperation between socially distant pairs. Network-central members may be particularly effective at this role through two channels: information and enforcement. We conduct modified trust games (with and without third parties) in 40 Indian villages to measure the effectiveness of central third parties. Assigning a punisher at the 75th percentile of the centrality distribution (versus the 25th) increases efficiency by 21%.
Financial markets expose individuals to the risks and returns of the broader economy. Can they also lead to a reevaluation of the costs and benefits of conflict and peace initiatives? Can this happen even in the context of persistent ethnic conflict, and even affect voting decisions? Prior to the 2015 Israeli elections, we randomly assigned financial assets to likely voters and gave them incentives to actively trade for up to seven weeks. The assets included stocks of Israeli and Palestinian companies. We also randomly assigned their initial amounts and divestment dates.
There is evidence that laborís share of income has been declining in many countries since the 1980s. While theoretical explanations for declining labor shares use models with representative firms, this paper proposes a model in which firms can be heterogeneous in terms of capital-intensity, market power, ownership, and productivity.
The recent literature on idea flows studies technology diffusion in isolation, in environments without the generation of new ideas. Without new ideas, growth cannot continue forever if there is a finite technology frontier. In an economy in which firms choose to innovate, adopt technology, or keep producing with their existing technology, we study how innovation and diffusion interact to endogenously determine the productivity distribution with a finite but expanding frontier.
The welfare impact of expanding access to bank accounts depends on whether accounts crowd out pre-existing financial relationships, or whether private gains from accounts are shared within social networks. To study the effect of accounts on financial linkages, we provided free bank accounts to a random subset of 885 households. Within households, we randomized which spouse was offered an account and find no evidence of negative spillovers to spouses.