Research

RESEARCH
I study how economies adjust when institutional capacity is limited. My research develops the concept of adaptive misallocation: when rebuilding capacity is weak, decentralised substitution alters the path of economic adjustment and can generate persistent efficiency losses. Using experimental variation and large-scale administrative data, I study how firms and institutions respond when these constraints shape economic response.

Publications and Working Papers:

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

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Abstract: I study how compliance responds dynamically to temporary, highly visible policy interventions. I develop a coordination framework in which visibility raises contemporaneous compliance by activating marginal adopters, while postintervention persistence depends on belief updating within local social networks. As visibility fades, compliance attenuates at a rate governed by social cohesion. I test the framework using a randomised field experiment in dense urban neighbourhoods. Compliance rises sharply during the intervention but decays afterward, with significantly slower decay in more cohesive communities. Welfare counterfactuals show that short, salient interventions can generate substantial gains when targeted to cohesive networks.

2.  Maha Rehman, "Adaptive Frontlines and the Elasticity of Public Service Utilisation"

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Abstract: Public service delivery in low-capacity environments often operates through frontline institutions subject to binding organisational constraints. This paper studies the elasticity of public service utilisation with respect to frontline capacity, and how this elasticity depends on whether capacity expansions introduce an adaptive frontline rather than a static increase in staffing. I analyse a randomised assignment of newly trained health mobilisers to administrative units during a large-scale vaccination campaign in Lahore, Pakistan. The intervention expands frontline capacity by introducing a mobile, locally embedded layer that augments existing facilities. Assignment increases the aggregate pool of frontline capacity and alters implementation conditions at the facility level. However, realised deployment across facilities is incomplete and selectively implemented, reflecting endogenous patterns of frontline allocation. I show that utilisation increases sharply in settings where adaptive frontline capacity is realised, implying positive elasticity of service utilisation with respect to realised, adaptively allocated frontline capacity. Instrumental-variables estimates indicate economically large increases in uptake among facilities whose deployment status is induced by assignment. The results demonstrate that capacity expansions are most effective when they introduce adaptive frontlines rather than when they operate as static additions to existing delivery systems.

3.   Maha Rehman, "Recovery without Efficiency"

4. 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.

WORK IN PROGRESS

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