Research

RESEARCH OVERVIEW

My research studies equilibrium adjustment under binding capacity constraints. When enforcement and rebuilding capacity are limited, decentralised responses generate what I term adaptive misallocation: private substitution away from unreliable non-market inputs that distort reallocation paths and produce persistent aggregate efficiency losses.

Publications and Working Papers:

1.    Maha Rehman, “The Architecture of Economic Adjustment after Shocks”

2.   Maha Rehman, “Industrial Reorganisation and Adaptive Misallocation after Disasters”

      Economics of Disasters and Climate Change (2025): 1-47. 

  Link | Twitter Thread | VoxDev Blog

Abstract: Large natural disasters impose severe disruptions on firms, particularly in environments with limited public insurance and uncertain post-disaster support. This paper documents how firms reorganise production following the 2005 Pakistan earthquake and asks whether adaptation under such environments builds resilience or instead generates inefficiencies. Using a difference-in-differences design on a nationally representative panel of manufacturing firms, I document a non-monotonic pattern of vulnerability across the production structure. Firms with intermediate capital–labour ratios experience the largest and most persistent declines in sales, while both labour-intensive and highly capital-intensive firms display greater resilience. Firms respond through intensive short-run adaptation: extending operating hours, reallocating labour toward skilled workers, increasing reliance on privately provided backup infrastructure, and diversifying markets. These responses stabilise output but do not innovate, indicating a reorganisation of production toward survival rather than long-run efficiency. To interpret these patterns, the paper develops a model of adaptive misallocation in which firms facing limited external insurance over-invest in self-protective inputs. These privately optimal responses divert resources away from productivity-enhancing investment and generate persistent distortions in firm behaviour. The results show that disasters reshape production not only through capital destruction, but through expectation-driven misallocation in environments with limited insurance and support.

3.   Maha Rehman, "Mapping Efficiency Gradients in Electricity Distribution Systems"

4.  Maha Rehman, "Equilibrium Compliance under Transitory Visibility"

 AEA RCT Registry | Twitter Thread

Project Brief

I develop a general threshold model of adoption in dense, information-rich urban centres, where individual compliance depends on private incentives and socially mediated influences. I test the framework in a large-scale randomised controlled trial demonstrating that lowering adoption costs and reinforcing salience at central network nodes shifts equilibrium compliance. The analysis identifies generalisable mechanisms through which adoption thresholds evolve in high-density environments.

5.  Maha Rehman, "Adaptive Allocation at the Frontline"

      AEA RCT Registry  | Twitter Thread

Project Brief

This paper studies the returns to endogenous allocation in constrained production systems.

SELECTED WORK IN PROGRESS

1.     Maha Rehman, "Non-Market Inputs and Private Substitution under State Retrenchment"
   
   
   All papers listed are solo-authored unless otherwise noted.