top of page

Research

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 to 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 Lopsided Contracts:
Evidence from Power Purchase Agreements in Pakistan

Virtually all electricity produced and sold in developing countries is through bilaterally negotiated long-term contracts between independent power producers (IPPs) and state-owned utilities. These power purchase agreements (PPAs) set the cost of electricity in a country, an important factor of production. Yet information on the terms behind PPAs is rarely disclosed, making them potentially ripe for rent extraction. In a first-of-its-kind effort, we compile a novel dataset on the universe PPAs signed in Pakistan since private participation began in 1994. Four features characterise PPAs in Pakistan: (i) they were negotiated and signed bilaterally, without competitive procurement; (ii) a long contract tenor, typically 25-40 years; (iii) a “cost-plus” nature, which guarantees real returns on equity, often exceeding 20%, with full cost pass through; and (iv) a “take-or-pay” clause, meaning payments flow to generators irrespective of how much electricity they produce. These “capacity payments” exceed Pakistan's combined annual budget for health, education, and social protection. Digging deeper, we use confidential financial disclosures on actual revenues and costs for a subset of IPPs to show that firms artificially inflate their true fuel costs in PPAs to generate excess profits. As a result, some producers earn annual real returns on equity above 80%, far beyond what is contracted. On average, actual profits are 83% higher than what is contracted. In ongoing work, we are collecting information on the ownership of IPPs to establish whether politically connected firms are able to engage in rent extraction by inflating costs. To conclude, we use a general equilibrium model to size the economic costs of these lopsided contracts by comparing against counterfactual electricity prices in the absence of rent extraction and in the presence of competitive procurement.

(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)
bottom of page