Job market paper

Endogenous markups, input misallocation and geographical supplier access

Abstract: Inefficient allocation of inputs across firms has gained a prominent role in explaining development outcomes. Yet, inferring the costs of misallocation is challenging. Ignored firm heterogeneity from technology and demand biases the inferred costs from misallocation upwards or downwards. This paper develops and estimates a structural model that disentangles fundamental heterogeneity on the demand side from input misallocation distortions. Counterfactual analysis is performed by comparing equilibria in an oligopolistic setting with differentiated products. This enables comparative statics for a rich set of outcomes at any level of aggregation, as well as estimating their uncertainty. Instead of the usual TFP “accounting" approach that relies on aggregate production functions, exact consumer and producer welfare measures are used and aggregate inputs allowed to adjust. Using plant quantity and price data from the Indian iron and steel industry, I find no losses in aggregate labour or aggregate material productivity from misallocation. Welfare losses, however, are large, equivalent to 31% of sales and higher for consumers than producers, driven by higher prices. Perhaps surprisingly, welfare losses due to misallocation in material input markets are larger than those from misallocation of labour. Geographical access to the relevant input suppliers through the transportation network is found to be a significant driver of material misallocation. A one standard deviation increase in access to suppliers reduces the material distortion by a third of its standard deviation. This suggests differences in supplier access can be mitigated by infrastructure investments with allocative gains beyond reducing direct shipping costs.

Working papers

International and sectoral variation in industrial energy prices 1995-2015 (forthcoming, Energy Economics)

with Misato Sato, Damien Dussaux, and Stefania Lovo

Abstract: Energy price rises for industry are a major political concern. Access to cheap energy is often considered a key factor for the competitiveness of industry. To enable international comparisons, and to foster further empirical research on the impacts of energy price or tax differentials on a wide range of outcomes, such as international trade and investment patterns, we construct sector level energy prices for 12 industrial sectors in 48 countries for the period 1995 to 2015. Our prices are constructed as weighted averages of fuel-specific prices by fuel consumption. We provide guidelines for the use of our energy price data, which is made available for download, as well as a set of stylized facts, on major trends and variations, and illustrative applications.

[old 2015 version here: Grantham Research Institute on Climate Change and the Environment Working Paper No. 187]

Can subjective resilience indicators predict future food security? Evidence from three communities in rural Kyrgyzstan (under review)

with Abbie Clare, Lira Sagynbekova, Chris Béné, Akylbek Rahmanberdi

Abstract: Recent attempts to develop a standardised tool to quantify levels of household resilience to climate extremes typically generate very large household surveys, which take a number of hours to complete. Moreover, significant questions exist around which resilience capacities to measure, how to measure them, and how to weight them for their relative importance in facilitating or hindering resilience in any given context. Subjective approaches to resilience measurement may offer an attractive alternative, because they ask respondents for a rating of their overall perceived resilience, thereby placing more emphasis on what resilience means to local people and leaving the choice of which capacities, in what combination and quantities, up to them. This paper is the first to quantitatively compare the power of subjective and objective resilience measures to predict future wellbeing (in this case, represented by household food security) in the face of socio-environmental shocks and stressors. Using a household panel data set collected in three contrasting rural Kyrgyzstan villages, our study finds that subjective resilience indicators are strong independent predictors of future food security. The subjective indicators capture variance that is not picked up by standard objective indicators and significantly increase the accuracy of models that predict future levels of household food security. Moreover, there is tentative evidence that the subjective resilience indicators developed in this study may be comparable across contexts. These results provide the first quantitatively sound evidence that subjective indicators may have a significant role to play in increasing the accuracy and efficiency of assessing, monitoring and evaluating the resilience of households to climate extremes.

Work in progress

Competition and Conflict: Evidence from a Community Driven Development Program in Indonesia (working paper soon)

with Teevrat Garg, Stefania Lovo and Caterina Gennaioli

Environmental regulation and trade in used vehicle: Evidence from EU exports (working paper soon)

with Stefania Lovo

Book chapters and policy reports

Bezabih, M., Lovo, S., Singer, G., & McLaren, C. (2016). Climate-resilient development in agrarian economies. In Fankhauser, S., & McDermott, T. K. (Eds.). The Economics of Climate-Resilient Development. Edward Elgar Publishing.

Lovo, S., Bezabih, M. and Singer, G. (2015). Green agricultural policies and poverty reduction. Policy brief. Grantham Research Institute on Climate Change and the Environment.

[available here, coverage.]

Braun, S. and Singer, G. (2012). Greasing the Wheels of the Labor Market? Immigration and Worker Mobility. Kiel Policy Brief, 52. Kiel Institute for the World Economy

[available here]