Rishabh Sinha

Publications

Talent allocation, gender disparities and post-reform economic growth in Central America, Economica (2025)

From 1995 to 2015, Costa Rica, El Salvador and Panama underwent significant labour market transformations, particularly in the occupational distribution and participation of women. This paper examines these shifts through an occupational choice model, focusing on three key frictions affecting efficient talent allocation: labour market discrimination, barriers to human capital accumulation, and restrictive social norms. The findings reveal that improved talent allocation drove economic growth in Costa Rica and Panama, primarily due to reductions in barriers to human capital accumulation. In contrast, labour market discrimination intensified, supporting the retaliatory hypothesis and creating headwinds for growth. The aggregate effects in El Salvador are relatively mild and noisy, making it difficult to pin down the impact qualitatively. Nonetheless, prevailing social norms around market work have precipitated sharply in El Salvador for both genders, creating a significant impediment to growth.

[Paper] [Pre-print]

Central America's deindustrialization, Structural Change and Economic Dynamics (2023)

This paper analyses industrial trends in six Central American economies by assembling and harmonizing sectoral data from multiple sources. The results show that the industrial employment share has declined by an average of 2.5 percentage points over the past two decades. Contrary to a trade-driven deindustrialization hypothesis, which suggests that cheaper imports have replaced domestic production of industrial goods, the findings indicate that this decline is primarily driven by an increase in barriers that restrict the efficient flow of labor across sectors. The paper argues that policy interventions that target these barriers could potentially lead to significant industrial expansion. However, the economic impact of such policies may be marginal, with aggregate output projected to increase by 3.2 percent or less upon eliminating these barriers. Moreover, this approach also carries risks, as it may introduce new distortions that could further hinder economic efficiency. Perhaps a more prudent growth strategy will be to concentrate on boosting productivity, which though challenging, directly affects the output.

[Paper] [Pre-print] [Replication files]

Conflict and the nature of precautionary wealth (with L Aghabarari and A Rostom), Oxford Economic Papers (2022)

This paper examines the accumulation of precautionary wealth in Afghanistan using detailed data from a large household survey. A percent increase in income variance is associated with a 0.22% and 0.84% increase in broad and narrow wealth, respectively. This precautionary response is most pronounced at the extremes of wealth distribution. Wealthy households rely exclusively on livestock, while less affluent use jewelry for self-insurance. Conflict amplifies the precautionary motive, with households in high-conflict provinces reporting higher wealth at the same level of uncertainty. An increase in conflict intensity is also associated with an expansion of livestock weight in the asset portfolio.

[Paper] [Summary] [Replication files]

Crop yield convergence across districts in India's poorest state, Journal of Productivity Analysis (2022)

Bihar, India’s poorest state, witnessed impressive yield growth in its three principal crops during the last decade or so. This paper examines whether a reduction in regional yield disparities accompanied these state-level productivity gains. The convergence test allows the district-specific element of productivity to vary with time, thus permitting divergence in interim phases. District rice yields converged towards a common growth path. The results for wheat and maize are not as conclusive. However, there is strong evidence of divergence for each crop in recent years. This divergence, nonetheless, happens in the presence of club convergence. The club classification transcends agro-climatic boundaries, indicating a role for policy to aid growth in the lagging districts. The shifts in credit allocation over the years do not appear to be driving the yield divergence, highlighting the limitations of a macro credit-driven policy.

[Paper] [Short slides]

Sectoral productivity gaps and aggregate productivity, B.E. Journal of Macroeconomics (2021)

The paper examines the aggregate impact of misallocation measured using gaps in labor productivity across sectors. A simple model of resource allocation is used to quantify the effect in which the gaps arise due to distortions in the form of asymmetrical taxes on hiring labor across sectors. From a development accounting approach, the gains from eliminating distortions are meager and are not consequential in accounting for cross-country variation in incomes. Nevertheless, the gains for some countries rival the growth that they have accumulated over several years. Of the 87 countries in the sample, the changes in distortions over time exert a net negative impact in 45 countries instead of providing tailwinds to growth. Changes in distortions account for just under 5.6% of the total growth when aiding growth. In turn, the output drag represents 3.4% of the actual growth on average for the sub-sample in which distortions yield a net negative effect. The move towards allocative efficiency bears a positive association with the quality of institutions.

[Paper] [Pre-print]

Investment decisions and exposure to crime and corruption (with S Farazi and A Rostom), Economics Bulletin (2020)

Using firm-level data from Afghanistan, we find that undertaking investment raises the likelihood of experiencing episodes of crime and corruption. Our analysis suggests that firms more prone to criminal attacks are aware of the risks and accordingly make costly security arrangements to mitigate the impact. The likelihood of security spending is higher for formal firms and those having access to finance. The two policy instruments increase the availability of resources, some of which is spent to fight crime.

[Paper]

Input substitutability and cross-country variation in sectoral linkages, Economics Letters (2019)

Using cross-country data, I find the elasticity of substitution across sectoral inputs to be less than one for the broad sectors of the economy. Differences in relative prices account for a non-trivial share of the cross-country variation in sectoral linkages.

[Paper]

Book

Going viral: COVID-19 and the accelerated transformation of jobs in Latin America and the Caribbean (with G Beylis, R Jaef, M Morris, and A Sebastian), The World Bank (2020)

The economic impact of COVID-19 is unprecedented in size and scope. It has quickly evolved from a health emergency into an employment crisis. It also has far-reaching implications for workers beyond the immediate employment effects, as it most likely has accelerated the transformation process of jobs that had already started in the region and the world. This book focuses on three important pre-pandemic trends observed in the region—namely, premature deindustrialization, servicification of the economy, and task automation—that were significantly changing the labor market landscape in the region and that have been accelerated by the crisis. While there is still uncertainty about the economic impacts of Covid-19, policymakers need to start planning for a rapidly evolving future that will come sooner than expected. A strong focus on productivity, technology development and adoption, and training in relevant skills will be key to adapting and taking advantage of the new opportunities in the post-pandemic world. Importantly, the accelerated transformation of jobs calls for a rethinking of labor regulations and social protection policies geared towards wage earners employed in the formal sector of the economy. The three trends identified in Going Viral, the effects of the pandemic itself, and the growing reliance on electronic platforms raise doubts that wage employment will increase substantially in the coming years. At the same time, earnings and transactions processed through electronic platforms are more visible to the authorities, bringing an opportunity to increase tax revenue and social security contributions. The flexible regulation of the emerging forms of work in a way that encourages employment, supports formalization, and expands the coverage of social protection to larger segments of the population will be of utmost importance for policymakers preparing for a new and changed world.

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