Working Papers

Shocks and Technology Adoption: Evidence from Electronic Payment Systems (with Nicolas Crouzet and Filippo Mezzanotti) [pdf] (November 2022) [Accepted, Journal of Political Economy]

Coverage: [Kellogg Insights] [Ark Invest] [CNBC] [TPRI] [QRIUS]
Abstract: Theories of coordination failures in technology adoption have been influential in economics, but empirical evidence on their importance is limited. This paper studies the role of this friction in the adoption of digital payments systems, using data from the largest provider of electronic wallets in India during the 2016 Demonetization. Our empirical strategy exploits variation in the intensity with which Indian districts were exposed to the cash contraction induced by the Demonetization. Consistent with a dynamic technology adoption model with complementarities, we show that the rate of adoption of the technology increased persistently in response to the large but temporary cash contraction. Estimates of the model indicate that the 6-month adoption response would have been 45% lower absent adoption complementarities. This suggests that large but temporary policy interventions can resolve coordination failures in technology adoption, though we highlight an important limitation of this logic: temporary interventions can also exacerbate initial differences in adoption across regions or markets.

Demand for Quality, Variable Markups and Misallocation: Evidence from India [pdf] (September 2022)

Abstract: Markups vary systematically across firms and generate misallocation, yet empirical evidence on sources driving markup variation is limited. I study how demand-side factors affect markups. Using detailed firm-product-level data from India, I document that both marginal costs and markups are increasing in firm-size. Changes in markups across the firm-size distribution in response to exogenous demand shocks to poor households lend support to the demand-based markup channel: producing better quality and selling to wealthier, less demand elastic households leads larger firms to incur higher costs and charge higher markups. Accounting for the demand-based channel reduces estimated misallocation losses by 30 percent.

Language Barriers, Technology Adoption and Productivity: Evidence from Agriculture in India (with Jacopo Ponticelli and Andrea Tesei) [pdf] (September 2022)

Coverage: [World Bank Development Blog] [Ideas for India] [Kellogg Insights] [ThePrint]
Abstract: We study the effect of language barriers on the ability of farmers to access information about agricultural technologies in rural areas of India. We use call-level data from a government-sponsored call center for agricultural advice offered in different languages across Indian states. Exploiting differences in the language spoken by farmers and call center advisors, we document that language barriers can significantly limit adoption of modern agricultural technologies --- such as high-yielding varieties seeds --- and impact long-run agricultural productivity.

Credit Enforcement, Price of Quality and Inequality