Trade Policy and Access to Intermediate Inputs: Quantifying the Welfare Costs of a Fertilizer Shortage [submitted] (with Devaki Ghose and Ana Fernandes)
Trade policy and geopolitical events play a critical role in shaping fertilizer access as over 80% of countries are net importers of fertilizer. This paper leverages a natural experiment to quantify the economy-wide costs and distributional impacts of restricted fertilizer access in a developing country where agriculture is central to livelihoods, highlighting the role of trade policy in shaping such access. Using high-frequency firm-level trade data, ground production records, newly constructed satellite-based crop yield estimates, and event study designs, we document that Sri Lanka’s sudden 2021 ban on chemical fertilizer imports sharply reduced agricultural output and exports. A spatial general equilibrium model incorporating context-relevant features of developing countries—fertilizer subsidies, land inequality, and non-homothetic preferences—estimates an average 7.33% decline in real income, with disproportionate losses for farmers, tea estate workers, and fertilizer-intensive regions. Our model closely matches the partial equilibrium elasticities of yields to fertilizer estimated in the experimental literature, but its corresponding general equilibrium elasticities are substantially smaller—reflecting the mitigating effect of endogenous adjustments in crop prices and wages. The nationwide nature of the ban thus allows us to estimate the macroeconomic cost of fertilizer shortages in a way that would not be possible using localized randomized control trials. The model reveals an interaction between trade policy and domestic agricultural policy: by radically decreasing fertilizer use, the import ban effectively scales down a large fertilizer subsidy program, reducing income transfers from non-farm to farm sectors and dampening welfare losses for mobile workers.
De-concentrating Integration? Spatial Concentration, Trade Access, Local Fundamentals, and Structural Change [R&R, Journal of Urban Economics]
Why are populations more spatially concentrated in some countries than in others? And why does spatial concentration change over time? I investigate the relationship between international trade integration and the evolution of spatial concentration while controlling for the influences of local fundamentals (i.e. productivity and amenities) and structural change. To do that, I create a two-sector quantitative spatial model with non-homothetic preferences and multiple subnational regions that vary in terms of access to trade networks, local fundamentals, and the agricultural share of consumption. In the model, international integration increases the population of initially less populated regions because these regions are relatively more dependent on foreign imports. I estimate the model in two steps: first, I use model-implied trade gravity equations to estimate the global structure of trade costs; second, I estimate unobserved local fundamentals by matching the model to 2005 data on wages, population, and employment for 1611 regions across 192 countries. Counterfactual exercises indicate that integration tends to reduce spatial concentration. Furthermore, a model-driven accounting exercise shows that changes in trade access can explain 15% of the variation of the observed 1990-2005 change in spatial concentration in a sample of 44 countries.
Refugees, Space, and Structural Transformation (with Stelios Michalopoulos, Elie Murard, Elias Papaioannou, and Seyhun Orcan Sakalli)
Labor Coercion, Agglomeration Economies, and Long-Run Regression Discontinuity Designs (with Stelios Michalopoulos, Elie Murard, Elias Papaioannou, and Seyhun Orcan Sakalli)
Non-Tariff Measures in a Quantitative General Equilibrium Trade Model
Gravity Implications of the Functional Form of Trade Costs for Realistic Distance Distributions
Paddy Rice Area and Yield Mapping in Sri Lanka Using Remote Sensing (with Mutlu Ozdogan, Sherrie Wang, Devaki Ghose, Ana Fernandes, and Gonzalo Varela)
Safety of Navigation and International Trade (with Vitoria Rabello de Castro and Marcos Ribeiro Frazao)
Combining Pre-School Teacher Training with Parenting Education: A Cluster-Randomized Controlled Trial (with Berk Özler, Lia C.H. Fernald, Patricia Kariger, Christin McConnell, Michelle Neuman), Journal of Development Economics, 2018, 133(C), 448-467.
We used a randomized, controlled study to evaluate a government program in Malawi, which aimed to support child development by improving quality in community-based, informal preschools through teacher training, financial incentives, and group-based parenting support. Children in the integrated intervention arm (teacher training and parenting) had significantly higher scores in assessments of language and socio-emotional development than children in preschools receiving teacher training alone at the 18-month follow-up. There were significant improvements in classroom organization and teacher behavior at the preschools in the teacher-training only arm, but these did not translate into improved child outcomes at 18 months. We found no effects of any intervention on child assessments at the 36-month follow-up. Our findings suggest that, in resource-poor settings with informal preschools, programs that integrate parenting support with preschools may be more (cost-) effective for improving child outcomes than programs focusing simply on improving classroom quality.
Selection on Ability and the Early-Career Growth in the Gender Wage Gap (with Gustavo Gonzaga and Rodrigo R. Soares), IZA Discussion Paper No. 10791, May 2017.