Human Capital, Mobility, and the Unequal Effects of Climate Change
I examine the role of human capital in generating mobility across sectors or locations, a potential mechanism for adapting climate change. Using a historical schooling expansion in India, I provide reduced-form evidence on how human capital facilitates adaptation. Those with greater human capital are more likely to leave agriculture and migrate in response to a worsening climate. To understand these mechanisms in general equilibrium, I develop a spatial structural change model with climate change, occupational choice, migration, and investments into mobile human capital. Human capital concentrates in cities where demand for local services is higher. As less human capital remains in rural areas, the prospects for adaptation through structural change weaken. Over time, rural areas accumulate less human capital, making them less competitive in markets for human capital. I estimate the model to show the unequal effects of climate change on welfare across space and the income distribution. Welfare gains from avoiding climate change are highest in remote rural areas, precisely where policies for enhancing human capital have the largest effect.
The Economic Costs of Distorted Power Tariffs: Evidence from Power Purchase Agreements in Pakistan
We document the extent of generosity in existing power purchase agreements in Pakistan by assembling a database on all contracts and revisions to date. A simple model of procurement under asymmetric information and regulatory capture is developed to frame why the cost of power is so high in Pakistan. Using the model, we measure the size of the distortion caused by these market failures and estimate the static economic costs of these distortions on firms. Lastly, we consider the dynamic costs and inefficiencies resulting from this long-run agreements.
(with Faraz Hayat & Sugandha Srivastav)
Enhancing Enforcement through Religious Institutions: Experimental Evidence from Pakistan’s Power Sector
(with Robin Burgess, Michael Greenstone, Faraz Hayat & Usman Naeem)
The ability of governments to expand energy access runs aground when state capacity is limited. Weak enforcement creates a leaky bucket as electricity theft and unpaid bills go unchecked. As a result, energy access gets curtailed, especially for the poor. Together with the government of Pakistan, we are evaluating a novel intervention that seeks to shift social norms on the payment of electricity in areas beyond the reach of the state. Influential agents, notably local religious institutions (mosques), will deliver messages against electricity theft in treatment communities. A separate treatment arm provides financial incentives to pay for electricity. We use our experimental estimates to derive demand curves for electricity and theft using a simple theoretical model to quantify the fiscal value of the enforcement intervention. Our study takes place in Khyber Pakhtunkhwa, a rural, poor, and highly religious area of Pakistan where theft is widespread, making it an ideal setting to test if this is a cost-effective solution. Our proposal builds on a long-term engagement with the highest levels of the federal government in Pakistan.
Funding: IGC (£108k), J-PAL ($75k), Weiss Fund ($93k)
Deciphering the Miracle on the Han:
How South Korea Escaped Poverty and Transformed its Economy
(with Ignacio Banares Sanchez, Oriana Bandiera, Robin Burgess, Jay Euijung Lee, Jeongkyun Won & Hyunjoo Yang)
Britain’s industrial revolution in the late 18th century turned a page in the story of civilisation. Just like Britain, South Korea rose from poverty to become a leading industrialised economy today. Yet the ‘miracle on the Han River’, as South Korea’s growth experience is famously called, is not merely about how one country escaped poverty. The miracle is how it did so in such a dramatic, condensed timeline. This is the miracle that we wish to decipher. Are these changes a result of fate (fortunate fundamentals) or foresight (direct results of policies and other interventions)? We are creating an unprecedented historical database tracking all facets of South Korea’s structural transformation from the mid- to late-20th century. Utilising newly digitised historical micro data on output, firms, employment, migration, urbanisation, and infrastructure, we study the policies and channels through which the country achieved its remarkable transformation.
Funding: STEG (£19k), ESRC (£49k)
Electricity Supply and Firm Agglomeration in Ghana
(with Ignacio Banares Sanchez & Niclas Moneke)
Electricity is a crucial input for modern production, yet its quality across time and space varies substantially. In this project, we ask how the endogenous allocation of electricity affects firm productivity and agglomeration. We build a unique spatial dataset combining administrative data on electricity consumption, engineering records on electricity outages, and a detailed firm panel from a national census. With this data in hand, we use a machine learning algorithm to predict the spatial allocation of outages following exogenous supply shocks. Using this as an instrument, we obtain reduced-form causal estimates of how firms respond to outages. Lastly, leveraging a dynamic spatial general equilibrium model, we compare the current equilibrium observed in the data to counterfactuals where outages are (i) eliminated, or more realistically, (ii) optimally adjusted to maximise welfare, taking into account the spatial misallocation in firm entry and growth across the country.
Funding: IGC (£19k)
The Heterogeneous Impacts of Market Integration:
Evidence from Pakistan's Motorways
(with Faraz Hayat & Usman Naeem)
Across the world cranes and excavators are abuzz building out and upgrading transportation infrastructure. As markets within and across countries become more integrated, the ability for firms to trade flourishes. Such integration, however, creates winners and losers, with some firms reaping the rewards while others perish. This project studies the heterogeneous impacts of expanding transportation infrastructure and how these effects translate to changes in the spatial distribution of economic activity. Drawing on a vast administrative dataset of all formal firms in Pakistan, we examine the rollout of several large-scale motorways that were designed to connect the north and south of the country. Using quasi-exogenous variation in motorway access we examine the firm-level responses to the arrival of motorways (such as how networks, products offered, and prices shift).
Funding: STEG (£15k)
The General Equilibrium Effects of Electricity Access:
Evidence from Myanmar
(with Robin Burgess, Michael Greenstone, Niclas Moneke & Nicholas Ryan)
[Permanently on hold following military coup in February 2021]
There is a conviction that energy is transformative for economic growth. Yet, we have little evidence for how this transformation happens. We will evaluate a massive electrification drive in Myanmar which aims to bring access to 100%, up from 42% today, by 2030. Our focus is on both the aggregate and the micro levels, consisting of a nationwide evaluation that monitors economic outcomes as infrastructure expands across the country and an embedded experiment that varies electrification access by subsidising connections. This will allow us to analyse the aggregate, microeconomic, and spillover effects from a large-scale infrastructure intervention. We draw on an unprecedented geospatial administrative dataset covering every single pole, line, and transformer in the country and exploit a distance-based threshold that determines village eligibility for electrification in a given phase to arrive at estimates on the effect of expanding electricity access.
Funding: IGC (£167k)