Job Market Paper (JMP)

Abstract: A transition to cash crop production is widely considered to be a principal pathway for poverty reduction and economic development. However, cash crops are often perishable, and therefore suffer from a high risk of incurring post-harvest losses when modern storage is unavailable and market linkages are weak. Can cell phones help farmers overcome this risk of producing cash crops? The empirical analysis is motivated and framed by an extension of the agricultural household model that highlights the role of farmer-trader coordination. Using administrative village census data and primary household survey data I collected in rural Pakistan, this paper provides the first estimates of the impact of cell phone access on crop choice, farmer-trader coordination, and post-harvest losses. To deal with endogeneity of cell phone tower placement, I exploit a unique and arbitrary policy that restricts cell phone coverage in Pakistan from villages that lie within 10 kilometers of the Indian border. Regression discontinuity estimates of village level data indicate that cell phone access causes a 23-27 % increase in the probability of producing perishable crops. To uncover the distinct impacts of cell phone access on crop choice and farmer-trader coordination, I estimate the household level regressions by degree of perishability, where the perishability ranking is established based on the agronomic field experiments. For the extremely perishable crops, the area allocated increases by 23-27 %; the number of days between harvest and sale decrease by 5-7 days; and post-harvest losses fall by 21-35 %. In case of the highly perishable crops, the effects, although significant, have a lower magnitude. In contrast, for the least perishable crops, the area allocated decreases, but no effects are observed on farmer-trader coordination. Farmers' agricultural income and household consumption increase by 10-15% and 8-10 % respectively. The analysis is robust to numerous falsification tests and alternative specifications. While I find evidence that cell phone access improves price and weather information, as well as coordination with traders, I show that the latter channel, which this paper is the first to highlight, dominates in economic importance.

Map Showing Change in Cell Phone Coverage Around Restriction