Abstract: Agricultural price support policies are a popular way to alleviate the risk inherent in volatile prices, but, at the same time, may distort input allocation responses to agricultural productivity shocks across multiple sectors. This could reduce productivity in the agricultural sector in developing countries. I empirically test for misallocation in the Indian agricultural setting, with national price supports for rice and wheat. I first motivate the setting using a two-sector, two-factor general equilibrium model and derive comparative statics. I then use annual variation in the level of the national price supports for rice and wheat relative to market prices, together with exogenous changes in district-level agricultural productivity through weather shocks, in a differences-in-differences framework. I derive causal effects of the price supports on production patterns, labor allocation, wages, and output across sectors. I find that rice area cultivated, rice area as a share of total area planted, rice yields, and rice production all increase, suggesting an increase in input intensity (inputs per unit area) dedicated to both staple crops. Wheat shows a similar increase in input intensity. The key input response is a reallocation of contract labor from the non-agricultural sector during peak cultivation periods, which results in an increase in wages in equilibrium in the non-agricultural sector (especially in response to price supports for the labor-intensive crop, rice, of 23%). The reallocation of labor reduces agricultural productivity by 82% of a standard deviation, and simultaneously reduces gross output in non-agricultural firms by 8.5%. I also find that rice- and wheat-producing households do not smooth consumption more effectively in response to productivity shocks in the presence of price supports.
"Scabs: The Social Suppression of Labor Supply" (with Emily Breza and Supreet Kaur)
Abstract: Social norms can serve as a powerful force for conformity, producing collective behaviors among decentralized individuals. We test for this force in the labor market: whether norms prevent workers from supplying labor at wage cuts, generating cartel-like behavior in the absence of explicit collusion. We partner with 183 existing employers, who offer jobs to 502 workers in informal spot labor markets in India. Unemployed workers are privately willing to accept jobs below the prevailing wage, but rarely do so when this choice is observable to other workers. In contrast, social observability does not affect labor supply at the prevailing wage. Workers give up 38% of average weekly earnings in order to avoid being seen as breaking the social norm. In addition, they are willing to pay to punish anonymous laborers who have accepted wage cuts---indicating that collective labor supply behavior is reinforced through the threat of social sanctions. Finally, consistent with the idea that social conformity could have aggregate implications, measures of social cohesion correlate with downward wage rigidity and business cycle volatility across India.
“End Heuristics in Retrospective Voting: Evidence From a Conditional Cash Transfer Experiment” (with Sebastian Galiani, Nadya Hajj, Patrick J. McEwan, and Pablo Ibarrarán), Revise & Resubmit
Additional coverage: “Electoral Reciprocity in Programmatic Redistribution: Experimental Evidence”, VoxEU Post, 10/22/2016
Abstract: A Honduran field experiment allocated cash transfers that varied in their amount and timing. Voters were not indifferent to timing. Two groups of villages received similar cumulative payments per registered voter, but one received larger “catch-up” payments closer to election day. The latter treatment had larger effects on voter turnout and incumbent party vote share in the 2013 presidential elections. The results are consistent with lab experiments showing that individuals err in their retrospective evaluations of payment sequences. In Honduras, voters apparently used the amount of the final payment as an end heuristic for the sum of all payments received.
SELECTED RESEARCH IN PROGRESS
“Does Wage Compression Exacerbate Earnings Inequality?” (with Emily Breza and Supreet Kaur), In the field.
“Economic Opportunity and Motivation for Crime: Theft From Oil Pipelines in Nigeria"
“Demand for Flexibility in Labor Arrangements: Evidence from Rural India” (with Suanna Oh and Yogita Shamdasani)