Research

“Incentivizing Textbooks for Self-Study: Experimental Evidence from the Democratic Republic of the Congo.” (with Marieke Huysentruyt and Jean-Benoit Falisse). The Economic Journal, 134(664), 2024, 3262–3290.

Abstract: We designed and randomly evaluated the impact of a textbooks for self-study scheme in eastern DRC targeting student achievement in primary schools. Students in treatment schools were seven percentage points more likely to pass the national exam, and those who passed obtained higher scores. We also evidence higher scores on a French language test. The effects are primarily driven by student interest in textbooks, frequency of doing homework and motivation to go to school and continue education. Student achievement can thus be improved by intensified and diversified use of existing learning materials in poor and fragile settings.

“Foreign Aid and Female Empowerment.” (with Maria Perrotta Berlin and Evelina Bonnier). The Journal of Development Studies, 60(5), 2023, 662–684. 

Abstract: We estimate the community-level impact of foreign aid projects on women’s empowerment in the country with the most complete recent record of geo-coded aid project placement, Malawi. Our estimates can thus be interpreted as the average impact of aid from many different donors and diverse projects. We find that aid in general has a positive impact, in particular on an index of female agency and women’s sexual and fertility preferences. Gender-targeted aid has a further positive impact on women’s sexual and fertility preferences, and more tentatively on an index focusing on gender-based violence. However, the positive impact of gender-targeted aid disappears in patrilineal communities, and men’s attitudes towards female agency in the areas of sexuality and fertility are even negatively affected. This suggests that donors need to consider that the impact of aid on female empowerment can depend on the community context when they decide on aid project design and placement.

“The middle class and the modalities of political protest: Evidence from the Arab world.” (with Raj Desai and Tarik Yousef), Social Sciences Quarterly, (2023), 104, 684-701.

Abstract: Although the middle class has played an historic role in protest movements, we know little about why that protest takes nonviolent vs. violent forms. We develop a framework in which protest behaviors constitute signals of discontent, the costs of which increase in income. Our approach predicts that the upper-middle class will engage in nonviolent uprisings, the lower middle class will engage violently, while the poorest and richest will both abstain. Surveys from the Arab World supports these hypotheses, confirming that the middle class is overrepresented in protest movements, and that income subgroups within the middle class choose different modalities of protest.

“Trading Favors? UN Security Council Membership and Regional Favouritism in Aid Receiving Countries.” (with Raj Desai and Maria Perrotta Berlin), Review of International Organizations, (2023), 18, 237–258.

Abstract: We test the hypothesis that aid recipient governments are better able to utilize aid flows for political favoritism during periods in which they are of geo-strategic value to major donors. We examine the effect of a country’s (non-permanent) membership on the United Nations Security Council (UNSC) on the subnational distribution of World Bank aid. Specifically, we analyze whether World Bank projects are targeted to subnational regions in which the head of state was born, or to regions dominated by the same ethnic group as that of the head of state. We find that all regions within a recipient country, on average, receive a greater number of aid projects during UNSC membership years. Moreover, a leader’s co-ethnic regions (but not birth regions) receive significantly more World Bank projects and loan commitments during UNSC membership years compared to other years. This effect is driven chiefly by interest-bearing loans from the International Bank for Reconstruction and Development (IBRD). Most importantly, we find stronger subnational political bias in aid allocation for aid recipients whose UNSC votes are fully aligned with those of the United States, indicating that exchanges of aid for favors occur in multilateral settings.

“Can the poor organize? Public goods and self-help groups in rural India” (with Raj Desai), World Development, (2019), 121, 33-52.

Abstract: In many low- and middle-income countries, the quality of public goods available to the poor is inadequate. We report findings from a unique combination of a village-randomized controlled trial and a lab-in-the-field behavioral experiment involving the establishment of “self-help” groups in one of the poorest districts in India. The presence of these groups improved villagers' access to and quality of certain critical local public goods, in particular, water. Our evidence suggests that the underlying mechanisms responsible were better information provision through the groups, stronger engagement by members in village governance, and lower coordination costs. Public goods games played in a subset of control and treatment villages four years following the start of the intervention, additionally, indicate that cooperative norms are stronger in villages where self-help groups were present. We find little evidence that membership leads to a convergence of tastes among group members. These results suggest that, in contrast to traditional participatory development programs, self-help groups can build durable social capital that can improve government performance in poor communities. 

“From abnormal to normal—Two tales of growth from 25 years of transition” (with Torbjörn Becker), Economics of Transition, (2018), 26, 769-800.

Abstract: We look at the growth experience of 25 transition countries over the 25 years since the dissolution of the USSR. The initial collapse in income was much more severe in 12 former Soviet Union countries (FSU12) than in the 10 transition countries that joined the EU in 2004 and 2007 (EU10). In 2015, FSU12 income levels were further behind EU10 than they were at the start of transition, despite more rapid growth in the last 15 years. Compared to predictions from a parsimonious growth model, the region as a whole is ‘normal’ in terms of growth performance since the 2000s. However, the FSU12 over-perform and the EU10 under-perform relative to model predictions for the last 15 years. 

“The economics of transition literature” (with Charles Becker and Paul Wachtel), Economics of Transition, (2018), 26, 827-840.

Abstract: This article is based on a panel discussion on the contribution of the economics of transition literature to the broader understanding of economic and social development. All panel participants have been working in the field for decades and made important contributions to this literature. The transition experience was a social experiment on a scale not seen before, and many lessons were learned that travel beyond the specific region. Important contributions in areas such as political economy, contract theory, and the sequencing and complementarity of reforms were discussed. It was concluded that there is little reason at this point to consider economics of transition and development economics as separate subfields as they share the same intellectual objective, and complement each other in our understanding of the development process. 

“Days Of Rage and Silence: Explaining Political Action by Arab Youth”, (with Raj Desai and Tarik Yousef) in Young Generation Awakening, Oxford University Press, 2016.

Abstract: Two distinct patterns characterize the political history of Arab youth. On the one hand ample evidence exists of young Arabs withdrawing from political engagement for much of recent history. On the other hand youth played prominent roles in the Arab Spring uprisings that caused regimes to collapse. This chapter uses a signaling approach to explain this discrepancy. Youth, among other excluded groups, perceive peaceful political organization as a weak signal of discontent to governments. Therefore, youth apathy persists until the level of discontent is so high that they resort to violent political action. Using Gallup World Poll data for Arab countries for 2009–2011, the chapter shows that youth were less likely than older groups to engage in peaceful political activities and more likely to support political violence. The findings suggest that economic marginalization leads to political withdrawal and rising discontent and eventually breeds conflict. 

“The Economics of Authoritarianism in North Africa”, (with Raj Desai and Tarik Yousef) in The Oxford Handbook of Africa and Economics, Oxford University Press, 2015.

Abstract: This chapter examines the origin and evolution of the authoritarian bargain, or the provision of government welfare in exchange for political control, in North Africa. Following independence, North African states supported significant economic intervention and redistribution. Despite initial successes, these arrangements proved unsustainable and were to come under severe stress in subsequent decades. Fiscal austerity, along with reforms to governing social contracts, created a more durable system with its own internal logic, but also with internal contradictions. Recent upheaval in North Africa, the birthplace of the so-called Arab Spring protests, may be traced to resulting structural rigidities, coupled with the governments’ poor record in responding to a variety of crises. The recent economic history of North Africa, finally, shows how the policy mix that favors redistribution, equity, and security over growth has taken an increasing toll on precisely the social sectors it was intended to protect. 

“Aid Effectiveness in Times of Political Change: Lessons from the Post-Communist Transition” (with Emmanuel Frot and Maria Perrotta Berlin), World Development, 56 (2014), 127-138.

Abstract: We argue that the tilt toward donor interests over recipient needs in aid allocation and practices may be particularly strong in new partnerships. Using the natural experiment of Eastern transition we find that commercial and strategic concerns influenced both aid flows and entry in the first half of the 1990s, but much less so later on. We also find that fractionalization increased and that early aid to the region was particularly volatile, unpredictable and tied. Our results may explain why aid to Iraq and Afghanistan has had little development impact and serves as warning for Burma and Arab Spring regimes.

“Union Leaders as Experts: Wage Bargaining and Strikes with Union-Wide Ballot Requirements”, Scandinavian Journal of Economics, 114 (2012), 200–227.

Abstract: To avoid strikes and curb labour militancy, some governments have introduced legislation stating that union leadership as well as wage offers should be decided through union-wide ballots. This paper shows that members still have incentives to appoint militant union leaders, if these leaders have access to information critical for the members' voting decisions. Furthermore, conflicts may arise in equilibrium even though the contract zone is never empty and there is an option to resolve any incomplete information. Ballot requirements hence preclude neither militant union bosses nor inefficient contracts.

“The Costs of Political Influence: Firm-level Evidence from Developing Countries” (with Raj Desai), Quarterly Journal of Political Science, 6 (2011), 137-178.

Abstract: Arrangements by which politically connected firms receive economic favors are a common feature around the world, but little is known of the form or effects of influence in business-government relationships. We present a simple model in which influence requires firms to provide goods of political value in exchange for economic privileges. We argue that political influence improves the business environment for selected firms, but restricts their ability to fire workers. Under these conditions, if political influence primarily lowers fixed costs over variable costs, then favored firms will be less likely to invest and their productivity will suffer, even if they earn higher profits than non-influential firms. We rely on the World Bank's Enterprise Surveys of approximately 8,000 firms in 40 developing countries, and control for a number of biases present in the data. We find that influential firms benefit from lower administrative and regulatory barriers (including bribe taxes), greater pricing power, and easier access to credit. But these firms also provide politically valuable benefits to incumbents through bloated payrolls and greater tax payments. Finally, these firms are worse-performing than their non-influential counterparts. Our results highlight a potential channel by which cronyism leads to persistent underdevelopment. 

“The Logic of Authoritarian Bargains” (with Raj Desai and Tarik Yousef), Economics and Politics, 21 (2009), 93-125.

Abstract: Dictatorships do not survive by repression alone. Rather, dictatorial rule is often explained as an “authoritarian bargain” by which citizens relinquish political rights for economic security. The applicability of the authoritarian bargain to decision-making in non-democratic states, however, has not been thoroughly examined. We conceptualize this bargain as a simple game between a representative citizen and an autocrat who faces the threat of insurrection, and where economic transfers and political influence are simultaneously determined. Our model yields implications for empirical patterns that are expected to exist. Tests of a system of equations with panel data comprising 80 non-democratic states between 1975 and 1999 generally confirm the predictions of the authoritarian-bargain thesis, with some variation across different categories of dictatorship.

“Delegation versus Communication in the Organization of Government” (with Rod Ludema), Journal of Public Economics, 92 (2008), 213-235.

Abstract: When a government creates an agency to gather information relevant to policymaking, it faces two critical organizational questions: whether the agency should be given authority to decide on policy or merely supply advice, and what should the policy goals of the agency be. Existing literature on the first question is unable to address the second, because the question of authority becomes moot if the government can simply replicate its preferences within the agency. In contrast, this paper examines both questions within a model of policymaking under time inconsistency, a setting in which the government has a well-known incentive to create an agency with preferences that differ from its own. Thus, our framework permits a meaningful analysis of delegation versus communication with an endogenously chosen agent. The main result of the model is that governments prefer to delegate authority when the size of the time inconsistency problem is large relative to the uncertainty of the political consequences of the agent's policy choice, while they prefer to ask for advice if the opposite is true.

“Corruption and Economic and Political Reforms: A Structural Breaks Approach” (with Zaki Zahran), Economics and Politics, 20 (2008), 156-184.

Abstract: In this paper we look at the impact of broad policy reforms on the levels of corruption. We use a structural break approach to identify country-specific time periods in which significant shifts in corruption levels take place. We then correlate these times of change with a set of covariates with specific focus on the impact of democratization, and trade and equity market liberalization. We find robust support for the hypothesis that episodes of reduction in corruption levels tend to be correlated with democratization and equity market liberalization. 

“Foreign Aid: An Instrument for Fighting Communism?” (with Anne Boschini), Journal of Development Studies, 43 (2007), 622-648.

Abstract: In this paper, we test the argument that the sizeable reduction in aggregate aid levels in the 1990s was due to the end of the Cold War. We test two different models using a dynamic econometric specification on a panel of 17 donor countries, spanning the years 1970–97. We find aid to be positively related to military expenditures in the former Eastern Bloc during the Cold War, but not in the 1990s, suggesting that the reductions in aid disbursements are driven by the disappearance of an important motive for aid. We also study the effect on aid allocation, but here we do not find any robust effects of the end of the Cold War. 

“Political Constraints and Public Support for Market Reform” (with Raj Desai). IMF Staff Papers, 53 (2006), 92-114.

Abstract: As concerns of "reform fatigue" in lower- and middle-income countries have become more widespread, so has the search for ways of boosting support for market-oriented reforms. Although the effects of political institutions on reform results have been extensively analyzed, there has been relatively little investigation of their effects on public opinion. We argue that constitutional and extra-constitutional reforms that place limits on the discretionary authority of public officials and enable voters to monitor, reward, and sanction politicians can enhance the legitimacy of market reforms. We present a voting model with asymmetric information to illustrate that these formal-legal reforms provide a credible signal of reformers' commitments. Using panel data based on public opinion barometers from Eastern Europe and Latin America, we examine the effects of political authority on public support for markets. We find that constraints on the power of the executive branch boost support for markets but that this effect declines as the reform process matures. 

“Constitutionalism and Credibility in Reforming Economies” (with Raj Desai), Economics of Transition, 14 (2006), 479-504.

Abstract: There has been relatively little investigation of the effect of constitutional transformations on the economic transition in post-communist countries. We develop a simple signaling model in which constitutionalism—a commitment to limit political power and provide judicial defense of basic rights— reinforces the credibility of pro-market candidates’ electoral promises and boosts public support for economic reforms. These findings are tested using opinion poll data on public support for reform in Central and Eastern Europe, and in the former Soviet Union, in the 1990s. In a two stage procedure we show that public support for market reforms are higher in countries where incumbents have taken deliberate steps to increase political accountability and judicial independence. Public support also spurs actual economic reform.

“The Political Advantage of Soft Budget Constraints” (with Raj Desai), European Journal of Political Economy, 22 (2006), 370-387.

Abstract: Why do soft budget constraints persist in many post-socialist economies? We submit that the explanation may be to serve the political purpose of hiding the incumbent government's inability to promote job creation. We present a voting model with adverse selection in which politicians who are unable to implement productivity-enhancing reforms resort to firm subsides to decrease the rate of job destruction. We characterize the equilibrium size of subsidies and its composition into explicit and implicit subsidies. The equilibrium size and composition of subsides depend, among other things, on government rents, political transparency, political expectations, and firms' labour unit costs.

”Inflation and Inequality: Does Political Structure Matter?”, (with Raj Desai and Tarik Yousef), Economics Letters, 87 (2005), 41-46.

Abstract: Several studies have reported a positive correlation between inflation and inequality over the period 1965–1990. This correlation vanishes when the analysis is extended to the 1990s. This paper shows that the correlation still exists conditional on political structure. 

“Secessions and Political Extremism: Why Regional Referenda Do Not Solve the Problem”, Journal of the European Economic Association, 2 (2004), 805-32.

Abstract: This paper shows that an uninformed player can increase his bargaining power by committing to receive information from an expert more skeptical to cooperation. This general idea is applied to a model in which a regional political leader (the expert) influences voting in a referendum on independence by strategically disseminating information about the consequences of separation. I show that this motivates a moderate electorate to appoint a more extreme leader, to receive biased information that increases their bargaining power over the gains of staying unified. However, a trade-off between bargaining power and precision of information causes inefficient outcomes in equilibrium. 

“Incentives for Secession in the Presence of Mobile Ethnic Groups”, Journal of Public Economics, 87 (2003), 2105-2128.

Abstract: This paper presents a model on secessions and nationalism, with special emphasis on the role of imperfectly mobile ethnic minorities. Individuals trade off political benefits of homogeneity against economic costs from increasing returns to scale in production. The main findings are: (i) Mobility decreases the political motivation for independence, because increased competition for labour forces the ethnic majorities in the separating countries to accommodate their policy. (ii) The impact of mobility depends on whether separation is politically or economically motivated. (iii) Increased mobility leads to a less accommodated policy in case of no separation. 

“Democracy, Inequality and Inflation”, (with Raj Desai and Tarik Yousef) American Political Science Review, Vol. 97 (2003), 391-406.

Abstract: Do democracies suffer higher inflation than nondemocracies? We identify two competing hypotheses regarding the impact of democracy on inflation. In the “populist” approach, inflation is the result of public demands for transfers financed by the inflation tax, suggesting that electoral competition will increase inflation. In the “state-capture” approach, inflation is a result of pressure from elites who derive private benefits from money creation, suggesting that electoral competition may constrain inflation. We present a simple model that captures both ideas and argue that the impact of democracy is conditioned by the prevailing level of income inequality. This claim is tested with data from more than 100 countries between 1960 and 1999 using different dynamic panel estimation methods to control for unobserved effects and the potential endogeneity of some independent variables. We find robust evidence that democracy is associated with lower inflation in lower-inequality countries but with higher inflation in higher-inequality countries.