Research

We use high-frequency data on fine particulate matter air pollution (PM 2.5) at the locality level to study the effects of high pollution on daily labor supply decisions in the metropolitan area of Mexico City. We document a negative, non-linear relationship between PM 2.5 and same-day labor supply, with strong effects on days with extremely high pollution levels. On these days, the average worker experiences a reduction of around 7.5% of working hours. Workers partially compensate for lost hours by increasing their labor supply on days that follow high-pollution days. We find that low-income workers reduce their labor supply significantly less than high-income workers. Unequal responses to high pollution along other dimensions (job quality, flexibility, gender) matter, but less than income. We provide suggestive evidence that reductions in labor supply due to high pollution are consistent with avoidance behavior.

The reduction of carbon emissions will require a rapid phasing out of coal and the displacement of millions of coal miners. How much could this energy transition cost mining workers? We use the dramatic collapse of the UK coal industry to estimate the long-term impact on displaced miners. We find evidence of substantial losses: wages fall by 40% and earnings fall by 80% to 90% one year after job loss. The losses are persistent and remain significantly depressed fifteen years later, amounting to present discounted value earnings losses of between four and six times the miners pre-displacement earnings.

Sanitation is at the heart of public health policies in most of the developing world, where around 85% of the population still lack access to safe sanitation. We study the effectiveness of a widely adopted participatory community-level information intervention aimed at improving sanitation. Results from a randomized controlled trial, implemented at scale in rural Nigeria, reveal stark heterogeneity in impacts: the intervention has immediate, strong and lasting effects on sanitation practices in less wealthy communities, realized through increased sanitation investments. In contrast, we find no evidence of impacts among wealthier communities. This suggests that a targeted implementation of CLTS may increase its effectiveness in improving sanitation. Our findings can be replicated in other contexts, using microdata from evaluations of similar interventions.

This paper shows that using yields may not be informative of the relationshipbetween farm size and  productivity in the context of small-scale farming. This occurs because, in addition to productivity, yields pick up size-dependent market distortions and decreasing returns to scale. As a result, a positive relationship between farm productivity and land size may turn negative when using yields. We illustrate the empirical relevance of this issue with microdata from Uganda and show similar findings for Peru, Tanzania, and Bangladesh. In addition, we show that the dispersion in both measures of productivity across farms of similar size is so large that it renders farm size an ineffective indicator for policy targeting. Our findings stress the need to revisit the empirical evidence on the farm size-productivity relationship and its policy implications.

Least developed economies are characterized by poorly functioning labour markets: only a small fraction of workers are in paid employment, where productivity and wages are low. We incorporate a standard search framework into a two-sector model of development to assess the importance of different obstacles to job creation and productivity. The model provides new insights into the characterization of poorly developed labour markets that are observed in the data, such as high wage dispersion. We estimate the model using microdata for six countries in sub-Saharan Africa and highlight the empirical relevance of labour-market frictions, entry costs and skills.

This paper provides new evidence on the recent performance of piped water consumption subsidies in terms of pro-poor targeting for 10 low- and middle-income countries around the world. Our results suggest that in these countries, existing tariff structures fall well short of recovering the costs of service provision, and that, moreover, the resulting subsidies largely fail to achieve the goal of improving the accessibility and affordability of piped water among the poor. Instead, the majority of subsidies in all 10 countries are captured by the richest households. On average, across the 10 low- and middle-income countries examined, 56% of subsidies end up in the pockets of the richest 20%, but only 6% of subsidies find their way to the poorest 20%. This is predominantly due to the most vulnerable segments of the population facing challenges in access and connection to piped water services. Shortcomings in the design of the subsidy, conditional on poor households being connected, exist but are less important.

This paper examines how subsistence farmers respond to extreme heat. Using microdata from Peruvian households, we find that high temperatures reduce agricultural productivity, increase area planted, and change crop mix. These findings are consistent with farmers using input adjustments as a short-term mechanism to attenuate the effect of extreme heat on output. This response seems to complement other coping strategies, such as selling livestock, but exacerbates the drop in yields, a standard measure of agricultural productivity. Using our estimates, we show that accounting for land adjustments is important to quantify damages associated with climate change.

This paper examines the effect of resource shocks on non-primary employment by gender. Using a new dataset from the closure of coal mines in UK, we show that the effects are different for men and women: when a mine closes, employment in manufacturing and services increases for men, but decreases for women. Population size and wages are also negatively affected. The effects are sizeable and persist more than 20 years after mine closures. These results are consistent with men and women being imperfect substitutes in the labour market, and highlight the importance of considering gender issues when assessing the economic impact of natural resources.

We examine how modern, polluting industries can affect agricultural productivity. The focus is on large-scale gold mining in Ghana, which is capital-intensive, releases environmental pollutants and is located near agricultural areas. Guided by a consumer–producer household framework, we estimate an agricultural production function and find that farmers located near mines experienced a relative reduction in total factor productivity of almost 40% between 1997 and 2005. We examine alternative mechanisms and find that pollution is the most plausible explanation for our results. This article highlights an important externality through which industries can affect living conditions in rural areas.

We propose a model where the size of the public sector and aggregate output are interrelated through the occupational choice of agents who differ in their skill level and degree of public-mindedness. When the public sector attracts bureaucrats with low degree of public service motivation, they will use their position to rent seek by employing an excessive number of unskilled workers. This leads to an equilibrium with relatively high unskilled wages, which lowers profits and deters entrepreneurship. Conversely, an equilibrium with a lean public sector and greater private economic activity arises when public service motivated agents populate the state bureaucracy. These agents exert high effort and employ a limited number of unskilled workers. Our model also shows that a bloated public sector with high wages may be supported by the unskilled agents.

This paper examines the local economic impact of Yanacocha, a large gold mine in Northern Peru. Using annual household data from 1997 to 2006, we find evidence of a positive effect of the mine's demand for local inputs on real income. The effects are only present in the supply market and surrounding areas, and reach unskilled workers in non-mining sectors. Consistent with a general equilibrium framework, we also find an increase in the local price of nontradable goods. Taken together, our results underline the potential of backward linkages from extractive industries to create positive spillovers in less developed economies. 

Many firms in developing countries adopt captive power generators to deal with expensive and unreliable supply of electricity. I present a model that combines upstream regulation with downstream heterogeneous firms in a monopolistic competition framework, where firms can pay a fixed cost to adopt this marginal cost-reducing device. The presence of captive power affects the market equilibrium by increasing the level of idiosyncratic productivity a firm needs to survive in the market and by re-allocating sales and profits towards the more productive, adopting firms. Additionally, the rate of adoption is shown to increase with the price of electricity, industries' electricity–intensity and with higher barriers to firm entry. The mechanisms I propose are present for a cross-section of Indian firms.

I investigate the effect of electricity provision on industrialization using a panel of Indian states for 1965–1984. To address the endogeneity of investment in electrification, I use the introduction of a new agricultural technology intensive in irrigation (the Green Revolution) as a natural experiment. As electric pumpsets are used to provide farmers with cheap irrigation water, I use the uneven availability of groundwater at the start of the Green Revolution to predict divergence in the expansion of the electricity network and, ultimately, to quantify the effect of electrification on industrial outcomes. I present a series of tests to show that the electrification channel remains the most important one among alternative explanations that could link groundwater availability to industrialization directly or indirectly. Results show that an increase in one standard deviation in the measure of electrification is associated with an increase of around 14% in manufacturing output for a state at the mean of the distribution.

We assess the extent and cost of misallocation in agriculture in less-developed countries comparing the analysis at the plot and farm levels. Using detailed data from Uganda, we show that the plot-level analysis leads to extremely large estimates of reallocation gains, even after adjusting for measurement error and unobserved heterogeneity. These results reflect two empirical limitations of the plot as unit of analysis: excess measurement error and near constant returns to scale production estimates. We find limited evidence of substantial measurement error at the farm level. 

Gollin and Udry (2021) estimate the contribution of mismeasurement to productivity dispersion among production units and conclude that previous studies have overestimated the potential efficiency gains from factor reallocation. We show that this conclusion is incorrect based on their own empirical evidence, which instead corroborates the importance of misallocation emphasized in the macro-development literature. We also point out important limitations in the implementation of the plot-level analysis that overstates the importance of mismeasurement in understanding productivity differences.

We study the effects of extreme temperature shocks on political participation using data from Indian elections between 2009 and 2017. Taking advantage of localized, highfrequency data on land surface temperatures, we find that areas with greater cumulative exposure to extreme temperatures experience an increase in voter turnout and a change in the composition of the pool of candidates who stand for election. As a consequence, electoral outcomes are affected. We provide evidence that our results are driven by the negative effect of climate change on agricultural productivity. First, we show that the results are strongest in areas with a larger rural population. Second, we show that there is a non-monotonic relationship between temperatures and turnout which closely mirrors the relationship between temperatures and agricultural productivity. We also find that, following temperature shocks, winning candidates are more likely to have an agricultural background. Finally, we show that politicians with an agricultural background invest more in irrigation, which mitigates the effects of high temperatures, on both agricultural production and on turnout. Our paper provides new evidence about the ways in which political agents in developing countries (including both voters and candidates) may respond to climate change via political channels.