Research
Journal Articles:
World Development, 2023.
There are growing concerns that automation technology may have far-reaching implications for development, by restructuring global value chains and substituting workers. This paper investigates how domestic and foreign automation impact a resource-rich emerging economy. The empirical analysis builds on a Ricardian model of trade and a shift-share approach. Differences in regional industrial compositions are used to translate domestic industry-level robot adoption to local labor markets in Brazil. Differential trade and inter-sectoral input–output linkages between a foreign industry and regions in Brazil are leveraged to construct a measure of exposure to foreign automation. Instrumental variables account for endogeneity in robot adoption. Larger exposure to foreign automation is found to decrease the share of manufacturing employment and increase the share of employment in the mining sector. These shifts are driven by changes in the demand for export goods from local labor markets. Domestic automation benefits higher skilled and female workers. The findings suggest that foreign automation may contribute to “premature deindustrialization” in emerging economies.
Greenhouse Farming and Employment: Evidence from Ecuador,
with Eva-Marie Meemken, Food Policy, 2023.
The transforming agri-food sector is an important contributor to employment generation in rural areas of lower-income countries. However, little attention has been paid to the question of how technology affects the quality and quantity of employment in the sector. In this paper, we provide the first empirical evidence of how the rise in greenhouse farming changes labor demand (i.e., the number of employees), using large-scale and nationally representative agricultural survey data from Ecuador between 2014 and 2021 and pseudo-panel as well as event-study estimation techniques. Contrary to fears that more technologically advanced production methods displace large shares of the workforce, we find that greenhouse farming is associated with higher labor demand. Specifically, greenhouse farms hire more female workers and workers on permanent contracts.
Working Papers:
Your Pain, My Gain? Does Civil Conflict induce a Diversion of International Trade?
with Tobias Korn
This paper investigates the trade diversion effects of national conflicts. We hypothesize that when civil war depresses one country's exports, the country's former trading partners increase imports from third countries as compensation. To investigate this hypothesis empirically, we create an indicator variable which translates the triadic relationship between a conflict country and an exporter-importer pair into a dyadic relationship estimable via standard gravity equations. We find robust evidence from both General Equilibrium estimations based on recent case studies as well as Partial Equilibrium estimates for the 1988--2015 period that civil wars divert international trade flows. We further provide evidence that these trade diversion effects persist after civil conflict is resolved, and that they are most prominent in the minerals sector. Our findings add to the discussion of the long-run economic costs of civil conflict.
Does Outgrowing equal Outsourcing? Contract Farming and Labor Demand
with Eva-Marie Meemken
Contract farming—a pre-harvest agreement between farmers and buyers such as processors, retailers, or large farms—has received substantial attention in the scientific literature and development policy debate. Yet the extant literature focuses almost exclusively on welfare implications for smallholder farmers participating in these schemes, paying little attention to the other side of the contract. We address this gap by estimating how contracting affects labor demand on large farms, employing an instrumental variable (IV) approach, and using unique census data from Tanzania. The instrument exploits historic variation in local cropping patterns during the time period when contract farming expanded rapidly in Tanzania. The empirical results show that contracting increases the demand for higher-skilled technical workers on large farms, while it makes it more likely to not hire any lower-skilled laborers. Further analyses suggest that the provision of extension services and different motives for engaging in contracting may be mechanisms behind the results. The findings are relevant for policy and generate several interesting questions that could be explored in follow-up research
Disability and risk preferences: Experimental and survey evidence from Vietnam
with Jan Priebe and Ute Rink
We investigate whether experiencing a disability incidence in the household affects economic risk preferences in Vietnam leveraging: (i) ten years of individual-level panel data; (ii) experimental data from incentivized risk games with randomly selected individuals; and (iii) established methods from psychology (priming) to induce a controlled recollection of disability events. We find that individuals who experience a disability event in their household behave in a more risk-averse manner than individuals without such an experience. The change in risk preferences is stable and does not rebound over time. Moreover, we show that shifts in economic risk preferences are related to an individual’s mental accounting across risk dimensions and a decrease in household wealth. We further provide evidence that changes in risk preferences are correlated with real-life risk behavior, highlighting the importance of our results.
Dealing with Agricultural Shocks: Income Source Diversification through Solar Panel Home Systems
with Friederike Lenel, Krisztina Kis-Katos and Christoph Weisser
This paper investigates whether small-scale solar panels can help farmers in rural areas of developing countries to mitigate income losses when they experience climatic shocks. We exploit a large dataset containing information about loan repayment as well as electricity usage from solar panels of individuals in Tanzania. Using machine-learning techniques we classify solar panel usage into private consumption and usage for business. We link customer locations to climatic stress events, making use of spatial and temporal variation in climatic shocks. We find that being exposed to climatic shocks reduces the ability of farmers to continue loan repayments. We then explore whether using solar panels for off-farm income generation can mitigate the income shocks.
Policy paper contributions:
Stemmler, H. 2022. The effects of COVID-19 on businesses: key versus non-key firms, ILO Working Paper 77 (Geneva, ILO): https://www.ilo.org/wcmsp5/groups/public/---dgreports/---inst/documents/publication/wcms_855012.pdf
World Bank. 2021. Socioeconomic Impacts of COVID-19 in Kenya on Firms : Rapid Response Phone Survey, Round 1. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/35172
Work in Progress:
Taking over the World? Automation and Market Power
with Richard Haarburger and Florian Unger
This paper studies how automation technology affects market power in the global economy. We develop a theoretical model in which firms' mark-ups are endogenous to the rate of technological adoption, but are also affected by technological adoption of other domestic and foreign firms. In an empirical analysis, we find that market-power, measured as the mark-up of price over marginal cost, is on average decreasing with a higher rate of automation. There is however substantial heterogeneity, with firms in the highest income quintile gaining market power. On the other hand, larger exposure to foreign automation increases average mark-ups, driven by exports in intermediate goods. These findings suggest adverse effects of automation on competition and market power.