Working Papers
Abstract: Agricultural markets often fail to allocate resources efficiently across farm households in developing countries. However, policymakers require knowledge of which markets fail and how the distortions they generate are correlated. Using data from rural Thailand, I characterize how distortions in land, labor, credit, and insurance markets each contribute to misallocation. I use moments in household consumption and production data to separately identify these distortions and develop a novel method using them to structurally estimate the production function. I find that the efficient allocation would increase aggregate productivity by 31% relative to the status quo, while only 16% (9%) gains could be achieved by eliminating financial (input) distortions in isolation. Positive interaction effects from addressing multiple distortions simultaneously account for the remaining 6% TFP gains. Meanwhile, other common methods would produce larger estimates of misallocation and suggest that a financial market intervention would decrease aggregate productivity. Accounting for multiple correlated distortions is therefore crucial for measuring misallocation and designing policies to address it.
Abstract: Consumption in rural areas of low-income countries is often highly variable across seasons. What drives this seasonality, and can the welfare of households across the “lean season” be improved via the provision of credit? We measure prices and consumption for farm-households across seasons in Gombe, Nigeria, and at the same time elicit information about farmers’ intertemporal marginal rates of substitution by offering them one-month bonds with different rates of return. Against this background, we also implement a randomized post-harvest loan (PHL) program, which provides credit—up to a generous ceiling—at a subsidized interest rate. Farmers randomly offered the loan almost universally borrow the maximum amount and, on average, store more grain. However, this is a risky investment, and in the year of our experiment it did not pay off, as maize prices did not increase following the harvest. Given this, it is unsurprising that we find no significant effects of the loan on consumption, investment or welfare—using the PHL to make a leveraged bet on maize prices going up was a bad investment ex post. Was it a bad investment ex ante? This depends on whether lean seasons are due to poorly functioning financial markets in Gombe, or because markets in Gombe are poorly integrated with the broader market. We adapt tools from the asset pricing literature to our data to test the null hypothesis of well-functioning local financial markets in Gombe. We fail to reject this null, suggesting that promoting spatial integration may improve lean-season welfare more than the local provision of credit would.
The Impacts of Large-Scale Land Transactions: Evidence from Ethiopia (with Dagim Belay, Workineh Asmare Kassie, Melkamu Workie Tassie, and Solomon Zena Walelign).
Large-scale land transactions (LSLTs) have expanded rapidly across developing countries over the past decades, especially in Ethiopia. While LSLTs are often promoted as instruments for rural transformation, promising employment creation, technology transfer, and improved market integration, they also raise concerns about displacement, reduced access to natural resources, and weakened customary tenure. We combine two analyses to study the medium-run effects of LSLTs in Ethiopia. First, we leverage the plausibly exogenous timing of LSLT entry to estimate the effects on local economic and environmental outcomes. Second, we conduct an original survey of households in Gambela region—an LSLT hotbed—including detailed questions on households’ interactions with LSLTs to shed light on mechanisms. Here we exploit the fact that potential investors relied on observable factors such as soil characteristics, road access, and proximity to conflict zones to identify causal effects using double-debiased machine learning. For a subsample of Gambela, we also observe whether the LSLT simply received a concession or actually engaged in cultivation, which allows us to distinguish the effects of an active investment from those of cordoning off a large tract of land. At the national level, we find modest effects on crop productivity along with accelerated deforestation, albeit with no effect on overall tree cover and significant reductions in burned area. In Gambela, we find similar effects on crop burning but also that LSLTs reduced agricultural productivity and tree cover. We estimate a 1.2 percentage point increase in the probability of engaging in wage employment for every 1,000 ha of LSLT within 5–10 km—driven solely by active LSLTs—but no effects on other labor market outcomes, agricultural production or consumption. The areas surrounding cultivated parcels also experience reduced deforestation, while there are no economic effects surrounding uncultivated parcels. These results are consistent with limited labor market and other direct linkages between LSLTs and households and suggest that both the main promises and pitfalls of LSLTs may be overstated in such contexts.
Selected Work in Progress
Improving Precision in Stratified Experiments: Design-Based Inference Meets ANCOVA. Writing stage
Measuring Demand for Options as Price Insurance (with Daniel Agness and Dan Maggio) [AEA RCT Registry #0019208]. Analysis stage
Uncertainty and Incentives for Quality Upgrading: Evidence from Ugandan Cassava (with Mathew Kato and Jérémy do Nascimento Miguel) [AEA RCT Registry #0016441]. Data Collection Stage
Cash Transfers, Market Integration and Seasonality in General Equilibrium (with Ethan Ligon). Data collection stage.
Publications
Zilberman, David, Thomas Reardon, Jed Silver, Liang Lu, and Amir Heiman. 2022. From the laboratory to the consumer: Innovation, supply chain, and adoption with applications to natural resources. Proceedings of the National Academy of Sciences 119 (23)
Diao, Xinshen, Eduardo Magalhaes, and Jed Silver. 2019. Cities and rural transformation: A spatial analysis of rural livelihoods in Ghana. World Development 121:141–157.