Behavioral Dynamics in Transitions from College to the Workforce, with Catalina Franco

Journal of Economic Behavior and Organization, Volume 188, August 2021, Pages 567-590.

This paper examines how decision-making may change when individuals face a permanent change in financial resources after a major life transition. We experimentally elicit preference and cognitive measures from Colombian students on the job market, as well as from a comparison group of college peers in lower years, over eight months. This period encompasses the job search process while in college and ends after they graduate and begin their full-time jobs. Using a difference-in-differences setup, we find that job-market students perceive greater financial liquidity and take on more responsibilities. We do not find any evidence of an increase in the take up of credit or that they move out of their parents’ homes, features commonly associated with this transition. Regarding preferences, we find suggestive evidence that they become less present-biased and more prosocial along this transition to the workforce. We do not find significant changes in risk and ambiguity preferences or cognitive performance. These findings help us document the changes experienced during a universal transition, one that is achieved through own effort rather than cash-transfers or government policies.

Working Papers

Politicians may target public goods to benefit their constituents, at the expense of others. I study this phenomenon in the context of Indian electricity and estimate the distributive consequences. Using new administrative billing data, I show that billed electricity consumption is lower for constituencies of the winning party, while actual consumption, measured by nighttime lights, is higher, using close-election regression discontinuities. I document the covert way in which politicians subsidize constituents via manipulating bills. These actions have a substantial deadweight loss of over $0.5 billion, hurting utilities' ability to provide reliable electricity, which has significant negative consequences for development.

We study whether climate-induced water scarcity enhances the scope for clientelism in India. Farmers without access to groundwater during dry seasons cope using a large public-aid program controlled by local politicians. We leverage a multidimensional regression discontinuity for exogenous variation in whether local politicians are aligned with the state's ruling party. We find that the state government channels disproportionate funds to co-partisan jurisdictions in water-stressed areas and consequently gains votes in subsequent elections. However, we find no partisan differences in aid allocation for non-water-stressed areas, suggesting a selective targeting of public funds to garner votes in the highest-return regions.

Many parts of the developing world lack electrification, and firms or households connected to the electrical grid often experience intermittent supply. Solar mini-grids and rooftop systems are offered as a substitute to the grid, or a stop-gap until grid access and quality improve. Yet, adoption of these solar technologies remains low, as asymmetric information between sales agents and potential buyers -- and resulting low levels of trust -- is a barrier to adoption. In collaboration with a company selling solar products, we test whether alleviating information asymmetries increases adoption of rooftop solar products through a randomized experiment implemented in three Indian states. Half of the company's sales agents were randomly assigned to receive a tablet consisting of a guided algorithmic application designed to ensure potential customers received accurate information on the solar products, and to help sales agents in recommending the solar product appropriate for the subject's needs. The treatment led to an increase in rates of adoption and intent to adopt by 14%. Potential customers approached by treated sales agents report greater knowledge of the solar products, as well as a better impression of sales agents' product knowledge and professionalism. These results illustrate how tackling information constraints may be a more cost-effective means of increasing adoption than other methods such as large subsidies.

The Indian Electricity Sector is composed primarily of state-owned electricity utilities that make massive losses, often costing the central government billions of dollars a year to bailout. These losses are driven by the prevailing low prices of electricity, non-payment of bills or theft, and non-metering of electricity use. This creates a vicious cycle where electricity is treated as an entitlement, with low utility revenues, unreliable supply, and low willingness-to-pay for electricity. Using a large reform in the sector that was implemented differentially across different states, I find that some states were able to improve the reliability of their electricity supply. In response, firms scaled up their consumption of grid-electricity, showing a willingness to pay higher average prices for reduced blackouts. Firms also re-optimize their production decisions: increasing purchased electricity, worker hours and worker productivity. These results demonstrate that when supply improves, it is possible to break out of the bad equilibrium in India, marked by low prices and low investment.

Works in Progress

Women Leaders and Environmental Outcomes (with Maulik Jagnani)

Smart Meters and Electricity Services: Evidence from India, Nepal, Tajikistan, and Uzbekistan (with Robyn Meeks, Manisha Pradhananga, and Takashi Yamano)

Other Work

Raising Global Energy Ambitions: The 1000 KWh Modern Energy Minimum, The Energy for Growth Hub (2021), with Todd Moss, Morgan Bazilian, Moussa Blimpo, Lauren Culver, Jacob Kincer, Vijay Modi, Rose Mutiso, Varun Sivaram, Jay Taneja, Mark Thurber, Johannes Urpelainen, Michael Webber, Bob Muhwezi

Seeing is Believing: Poverty in the Palestinian Territories, World Bank (2014), with Tara Vishwanath, Brian Blankespoor, Faythe Calandra, Nandini Krishnan and Nobuo Yoshida

Poverty Mapping in the Kyrgyz Republic: Methodology and Key Findings, Working Paper 76690, World Bank (2013), with Nobuo Yoshida and Larisa Praslova

Understanding Seasonal Extreme Poverty in the Northwestern Region of Bangladesh, Vol. 2: The Extent of Seasonal Deprivation and Informal/Formal Coping Mechanisms, World Bank (2012), with Shinya Takamatsu and Nobuo Yoshida