This dissertation examines how information frictions play a role in fostering poverty, limiting firm growth and perpetuating weak institutions in low income settings. In contexts where markets and formal institutions are weak or not functioning optimally, informal economic systems play an important role. Networks and relationships are central to the existence of informal systems; therefore, exploring existing information constraints, understanding information diffusion and alleviating information frictions has the potential to significantly improve the livelihoods of these populations.

My dissertation looks at how formal and informal systems co-exist and more specifically whether reducing information frictions can improve welfare, taking both formal and informal channels into account. I study the interactions between formal and informal institutions and focus on information frictions in a variety of contexts, specifically in (1) trade and value chains in Kenya and Uganda (Chapter 1), (2) agriculture markets and technology adoption in India (Chapter 2) and (3) voting behaviors and government failures in low income populations of the USA (Chapter 3).

In Chapter 1, I focus on informal trade. In low- and middle-income countries, a large share of trade is conducted by small-scale informal traders – mostly women – and is missing from official trade statistics. Using the natural experiment of a border closing, a randomized con- trolled trial, and panel data collection, I study the role of information frictions in traders’ choices of markets and border crossings at the Kenyan-Ugandan border and the consequences for livelihoods and prices in agriculture markets. First, I show that traders’ choice of markets and routes is sticky. Second, some of this stickiness is driven by limited information about profitable arbitrage opportunities and true (tariff) costs of crossing the border. Third, I build a model incorporating these frictions, which I test using an RCT. I find that giving information on tariff costs and local prices to traders (via a cellphone platform) increases switching across markets and routes, leading to large increases in traders’ profits and signif- icant formalization of trade. Consistent with the model, information provision has general equilibrium effects – specifically, a reduction in consumer prices in agricultural markets. Taken together, the results point to the centrality of information frictions in informal trade and highlight the promise of new information technology to ameliorate them.

In Chapter 2, I look at the role of information frictions in limiting adoption of new agri- cultural technologies in developing countries. Efforts to improve learning involve spreading information from government agents to farmers. We show that when compared to this government approach, informing private input suppliers in India about a new seed variety increases farmer-level adoption by over 50 percent. Suppliers become more proactive in in- forming potential customers and carrying the new variety. They induce increased adoption by those with higher returns from the technology. Being motivated by expanded sales offers the most likely motive for these results.

In Chapter 3, I explore how information affects voting behavior. We study changes in voting, new voter registration, and candidate choice in response to a criminal government failure which exposed one in twelve households in Flint, MI to lead in their tap water. We compare changes in outcomes for voters who received home lead test results just before versus just after an election. We find that the Flint water crisis, widely understood as the result of institutional racism, caused stark racial divergence in political participation between Black and White voters. Black voters increased turnout, accelerated registration, and rejected the incumbent, while White voters did not change their voting behavior.

The enforcement of public policies is a critical aspect of governance that is significantly shaped by political and institutional forces. This dissertation studies the public policy enforcement in China, which features both strong state capacity and weak rule of law. Therefore, the relationship between the central and local government is particularly important in understanding public policy enforcement in this setting. Inspired by theoretical insights and the frontier literature in political economy and development economics, I employ reduced-form empirical methods to evaluate key features in China’s public policy enforcement. The three chapters of my dissertation discuss three different modes of public policy enforcements in China, each featuring varying roles of the central and local governments. The findings in this dissertation shed light on the complex dynamics of policy enforcement in China’s unique political and institutional context and have important implications for policymakers seeking to improve the effectiveness of governance.

Although the chapters are ordered to highlight the most important work from my doctoral study as Chapter 1, I would like to introduce the contents of each chapter in reverse order, beginning with Chapter 3 and ending with Chapter 1. The introduction starts with a discussion of the simplest mode of public policy enforcement, in which the central government dictates and vertically implements the policy, in Chapter 3. Moving to Chapter 2, the discussion explores the issue of incentives for local government officials, adding complexity to the enforcement model. Finally, in Chapter 1, the conflict between overlapping government hierarchies is analyzed. Overall, this dissertation presents a comprehensive examination of the challenges involved in public policy enforcement, with a focus on the role of government officials at different levels of the hierarchy.

Chapter 3 of this dissertation, which was co-authored with Chang Liu and Li-An Zhou and published in the Journal of Comparative Economics in 2020, evaluates the Universal Salt Iodization (USI) policy implemented in China in 1994. As the largest nutrition intervention policy in human history, the USI policy aimed to eliminate iodine deficiency diseases that could cause severe consequences on the cognitive abilities of future generations. Due to the central government's monopoly on salt production, distribution, and retail, the policy was effectively enforced vertically. To evaluate the policy's impact on children's later-life educational outcomes, we employed a difference-in-differences strategy to compare the educational outcomes of cohorts born before and after USI across counties with different iodine deficiency disorder levels based on population census data combined with county-level information. Our results demonstrate that the USI policy increased primary school enrollment by 0.6 percentage points and was more beneficial for girls and children born in rural areas. These findings further highlight the efficacy of public policies when enforced vertically by the central government.

Chapter 2 is coauthored with Qianmiao Chen, Chang Liu, and Peng Wang, and published in the European Journal of Political in 2022. This chapter examines a more prevalent model of policy enforcement in China, where the central government sets general policy targets, and local governments have considerable discretion in their implementation. We use Chinese governments’ crisis response to the COVID-19 pandemic as an example of such a model and investigate the role of local government leader’ career incentives in determining city-wide lockdown measures. At the onset of the pandemic, most local leaders hesitated to impose lockdowns as their promotions depended on achieving strong numbers for economic growth in their regions, which could be suppressed by such measures. However, when the nation’s top leader warned that local leaders who failed to control the disease would be removed from office, many rapidly implemented resolute measures. Nonetheless, our analysis reveals that local leaders with stronger promotion incentives were still more likely to downplay the virus by avoiding or minimizing lockdowns. The findings underscore how local politicians may be incentivized to act slowly during crises, undermining the central government's objectives in critical public policies.

Chapter 1 examines a complex scenario in which policy enforcement is limited by the conflict between overlapping government hierarchies, constraining the local governments’ ability in effective policy enforcement, even if they have strong incentives. To illustrate this point, I document a real-world example that Chinese central and provincial state-owned enterprises (SOEs) were exempted from local environmental regulations due to an institutional barrier. This exemption pushed local regulators to impose more stringent regulations on private firms. Using rich firm-level panel data and exploiting the decentralization of Chinese central and provincial SOEs, I investigate the direct and spillover effects of removing this regulatory constraint. The results show that polluting SOEs invest more in pollution abatement inputs that do not contribute directly to production, pollutes less, and have lower productivity when decentralized to the prefectural level. Furthermore, private firms in the same prefecture pollute more while increasing output and TFP, especially those with more binding financial constraints. At the aggregate level, decentralizing polluting SOEs in a prefecture reduces total emissions without significantly affecting total industrial output or aggregate productivity. When hypothetically reallocating 10% of emissions from central and provincial SOEs to private firms, I calculate total industrial output gains of 0.74–3.31%. This chapter highlights the significance of institutional interactions, particularly between central and local governments' policy targets, in shaping policy outcomes.

There is a large body of economic literature that documents the existence of son preference and its negative impact on girls’ accumulation of human capital. Some studies have found that gender preference is exacerbated when fertility declines. Many studies have also looked at the impact of availability of family planning on fertility. My work contributes to this literature by linking these together and measuring the impact of fertility control policies on gender preference at birth. Also, it presents the first quantitative study of gender preference at birth in Iran.

In the first essay, I provide a short history of fertility policies and population transition in Iran. In the second essay, I look at the government provided family planning program and its impact on the fertility decline in rural Iran. I estimate the association between a woman’s age of exposure to a clinic and her total number of children. I find that exposure to a health clinic at her most fertile ages (20-35) is associated with a 20% reduction in total number of children born to a woman, a significant drop (equivalent to one child).

In the third essay, I examine the extent of gender preference at birth in Iran and its impact on fertility decisions, using gender composition of first two children as a random experiment. I find that parents with a first born daughter will, on average, have more children; daughters are followed more quickly with another birth; and among all gender compositions, mothers with two daughters are most likely to continue child bearing.

I exploit the quasi-experimental expansion of rural health clinics providing family planning services in rural Iran. Using a difference in difference method, (with village fixed effects), I estimate the impact of access to family planning on gender biased fertility decisions. Availability of family planning is associated with a 12-17% reduction in probability of subsequent birth for mothers with two children. However, there is no difference in this probability based on gender composition of children. I find that access to family planning does not exacerbate son preference expressed through fertility in rural Iran.

This dissertation contains three related articles on peer effects and the economics of crime. The first article, “Distortion of Justice: How the Inability to Pay Bail Affects Case Outcomes” shows how pretrial detention increases the likelihood that defendants will plead guilty and will plead to less favorable terms. The second article, titled “Breaking Bad: Mechanisms of Social Influence and the Path to Criminality in Juvenile Jails” shows that peer effects in juvenile correctional facilities affects future crime, and discusses potential mechanisms. The third article, titled “Tests of Random Assignment to Peers in the Face of Mechanical Negative Correlation: An Evaluation of Four Techniques” presents a novel test of random assignment to peer groups and evaluates it alongside three others using simulations.

This dissertation is composed of three chapters and studies issues related to crime, unemployment and health. The first chapter looks at the effect of funding for public safety on drug related violence. The second chapter, which is joint work with Santiago Guerrero, examines the effect of unemployment on crime during the latest great recession. The third chapter examines the effect that the introduction of ultra-low sulfur diesel has had on infant mortality.

The first paper develops a simple framework to describe the effect of increases in fighting capacity on violence and uses a large program in Mexico to empirically estimate the effect of funding for public safety on violence, specifically drug related violence. Starting in 2008, Mexico implemented a large program designed for the strengthening of the municipal police, the assignment of which was based on an index. The main areas of allowed expenditures for these funds were: the purchase of fighting equipment, technology infrastructure and training of the police force. Instrumenting funding with the arbitrary initial eligibility cutoff, I find that the funds led to large increases in drug related violence. Evidence is consistent with the funds allowing the police to fight criminal organizations which weakened organizations and in turn led to turf wars. The effect is not higher for PAN municipalities, the party whose main platform during the study period was to fight organized crime. Also, there does not seem to be an increase in violence in politically stable municipalities as a result of the program, but there is a decrease in areas with low land productivity. Consistent with theory, I also find suggestive evidence of an inverted U-shaped relationship between baseline funding for public safety and the effect of the program.

The second paper estimates the effect of unemployment on crime in Mexico. This study uses the variation in unemployment across metropolitan areas in Mexico induced by the latest great recession. Areas that were highly dependent on the US economy experienced the largest increases in unemployment, thus we instrument unemployment with the initial manufacturing and tourism labor share interacted with US GDP and find that increases in unemployment have led to decreases in crime in Mexico. The results are consistent with the decrease in potential targets due to the increases in unemployment outweighing the positive effect coming from the decrease in the opportunity cost of engaging in criminal activities as unemployment increases.

The third paper estimates the effect of the introduction of ultra-low sulfur diesel on infant health in Mexico. In 2006 the Mexican government began the rollout of ultra-low sulfur diesel in metropolitan areas, starting with border municipalities. Using a difference in differences approach, I find that, despite its potential to improve health outcomes, there is no evidence that sulfur regulation had a substantial effect on infant mortality outcomes.

Can personalized mentorship by experienced workers improve young job seekers’ labor market trajectories? To answer this question, in the first chapter of this dissertation I study “Meet Your Future”, a mentorship program we designed and randomized which assisted a subset of 1,112 vocational students during their school-to- work transitions in urban Uganda, where youth unemployment is high. The program improved participants’ labor market outcomes. Relative to the control, mentored students were 27% more likely to work three months after graduation; after one year, they earned 18% more. Call transcripts from mentorship sessions and survey data reveal that mentorship primarily improved outcomes through information about entry level jobs and labor market dynamics, and not through job referrals, information about specific vacancies, or through building search capital. Consistent with this finding, mentored students revise downward their overly optimistic beliefs about starting wages and revise upward beliefs about the returns to experience. As a result, they lower their reservation wages and turn down fewer job offers. The results emphasizes the role of distorted beliefs among job seekers in prolonging youth unemployment and proposes a cost effective and scalable policy with an estimated internal rate of return of 300%. In the second chapter of this dissertation, I move to investigate whether hiring processes themselves can disadvantage women and consequently explain part of the gender wage gap and the occupational segregation documented in many labor markets across the world. Specifically, I look at referrals, a significant factor in hiring decisions and one of the primary ways to land a job. With my coauthor, we conduct a correspondence experiment to examine how referrals by firm employees may perpetuate occupational gender segregation among Uganda’s skilled workers. We start by presenting pairs of gender-differing profiles of potential candidates to workers in a wide range of industries, and ask who they would refer to their firm for an internship we subsidize. We randomize the gender of the high-experience profile to elicit discriminatory preferences while mitigating endogeneity in network formation. To validate the findings in this anonymous setting we subsequently offer participants the possibility to use their networks as referral choice sets, the lifelike setting. We further randomize the disclosure of the referral source’s name to the employer. We document three facts. First, discrimination in referrals exists against both genders and is correlated with subjects’ gender and the gender dominance of their sector; however, discrimination against the non-stereotypical gender is more prevalent in male-dominated sectors. Second, the intrinsic preferences of employees are a significant driver of their discrimination in referrals, which, in general, do not simply reflect passthrough from employers’ preferences. Thirdly, when the referral is private, subjects in male dominated sectors are more likely to refer women, indicating that beliefs regarding employer preferences are a significant driver of pro-male bias in these sectors. In the last chapter I investigate gender disparities in the effect of COVID-19 on the labor market outcomes of skilled Ugandan workers. Leveraging a high-frequency panel dataset, my coauthors and I find that the lockdowns imposed in Uganda reduced employment by 69% for women and by 45% for men, generating a previously nonexistent gender gap of 20 p.p. Eighteen months after the onset of the pandemic, the gap persisted: while men quickly recovered their pre-pandemic career trajectories, 10% of the previously employed women remained jobless and another 35% remained occasionally employed. Additionally, the lockdowns shifted female workers from wage-employment to self-employment, relocated them into agriculture and other unskilled sectors misaligned with their skill sets, and widened the gender pay gap. Pre-pandemic sorting of women into economic sectors subject to the strongest restrictions and childcare responsibilities induced by schools’ prolonged closure only explain up to 65% of the employment gap.

Among the greatest accomplishments of the Second Industrial Revolution was to engender economic mobility–individuals’ abilities to improve their economic status over the course of their lives–par excellence in human history. This dissertation uses novel datasets and modern econometric methods to evaluate the potential, pathways, and possibilities offered by mobility. Because mobility is a phenomenon that unfolds over decades if not generations, the first two chapters leverage the tools of economic history. In Chapter 1, I use a natural experiment to study the long-run returns to promotions in the U.S. submarine service during the Second World War. In Chapter 2, I evaluate the welfare and political economic effects of the expansion of the Imperial German transport network. Yet the Second Industrial Revolution remains incomplete; in particular, mechanization is largely absent from Sub- Saharan African agriculture. Then, in Chapter 3, I conduct an inquiry into the adoption of maize shellers in Uganda.My first chapter studies the long-term consequences of an early career promotion. To answer this question with causal estimates, I study a natural experiment: the United States submarine force during the first half of the Second World War. When allocating promotions, the US Navy’s Bureau of Personnel endorsed enlisted men recommended by captains who had sunk enemy ships. Defects in the Mark 14 torpedo, however, meant that submarines were substantially less likely to sink ships, irrespective of crew quality, if the strength of the geomagnetic field in their patrol zone was too different than the historical field strength near Newport, Rhode Island. To identify exogenous variation in promotions, I construct a vector of instruments using quasi-random variation derived from submarine patrol locations. Leveraging a novel dataset linking enlisted men’s naval data to their later life outcomes, I find that conditional on surviving the war, promoted sailors lived 2.4 years longer than their non-promoted counterparts. Furthermore, exogenously promoted sailors lived in wealthier ZIP codes at the time of their deaths. These effects are pronounced for sailors who received submarine-success triggered promotions to the rate of chief petty officer, suggesting the importance of developing and exercising managerial ability for later life well-being. My second chapter, coauthored with Jacob Weber, evaluates the influence of Imperial Germany’s (1871 - 1918) infrastructure expansion on welfare and voter participation. Because rail and waterway construction in this period was largely motivated by military concerns, it constitutes a quasi-exogenous shock to trade exposure. Using a novel panel dataset synthesizing constituency-level data on voting, population, wages, and inter-constituency trade costs to discipline a canonical spatial equilibrium model, we find that infrastructure improvements raised welfare by 3-5%, mitigated migration from rural areas, and increased voter participation in national elections by about 0.25%. In my third chapter, coauthored with Livia Alfonsi, we investigate Ugandan smallholder farmers’ participation in rental markets for postharvest machinery; specifically, we study the adoption of the maize sheller. Traditional, human-powered methods of shelling maize are burdensome and lead to excess breakage of maize kernels. Using shellers saves time, reduces drudgery, and increases marketable quantities of maize. We provide case studies for two villages in the Eastern Region, where access to these machines and their requisite maintenance networks is relatively greater. We censused these villages to characterize the demand side of their rental markets; in particular, we estimated willingness to pay (WTP) among villagers through a Becker–DeGroot–Marschak-type (BDM) exercise. In providing policy recommendations to enable accelerated mechanization of postharvest processing machinery, we complement our case study evidence with a census of maize sheller rentiers from all four Ugandan regions. Together, the three chapters of my dissertation use rigorous research designs informed by economic theory to contribute toward the ongoing policy debate over enabling economic mobility in the 21st century.

Low and middle-income countries are urbanizing rapidly, and nowhere is urbanizing faster than Sub-Saharan Africa. The rush of urbanization presents multiple challenges to policymakers, including how to accommodate rural-to-urban migrants in growing cities while simultaneously improving productivity and promoting food security for those who remain in the agricultural sector. This dissertation speaks to each of these areas. In Chapter 1, I study the intergenerational impacts of public housing expansion in Addis Ababa, Ethiopia – one of Africa’s fastest growing cities. In Chapters 2 and 3, I study technology adoption and agricultural infrastructure expansion in Kenya. Combining the two helps us to make sense of the simultaneous and potentially competing challenges faced by governments in low-income countries during a period of rapid structural transformation. Using tools drawn from the literatures on labor and urban economics, and combining large-scale survey activities with administrative and spatial data, the dissertation employs natural experiments, randomized controlled trials, and structural models to identify causal effects and answer policy-relevant questions.

In Chapter 1, “Housing and Human Capital: Condominiums in Ethiopia”, co-authored with Tigabu Getahun, we evaluate a major government response to the pressures of urbanization: the largest expansion of public housing on the African continent. The policy subsidizes homeownership, allowing households to move from low-quality housing or to use their unit as an income generating asset. We make use of the lottery mechanism that has been used to allocate these units to more than 200,000 households in Addis Ababa, Ethiopia, over the past 15 years. To do so, we combine extensive surveys from 2,987 households, surveys with children of affected households, and administrative data collected in collaboration with policy partners to study how this policy has impacted the human capital accumulation of children.

We find large and positive effects of a housing policy in a low-income setting. Specifically, we show that children in lottery winning households experience 4.5-11% increase in school attendance, a 10.5% increase in secondary school completion rates, and a 16% increase in post-secondary school matriculation. Our surveys allow us to observe additional measures of human capital that are typically unavailable to researchers using only administrative data. Namely, we show evidence of improved cognition and socio-emotional development for children in lottery winning households, as well as increases in aspirations. We make use of spatial and temporal variation to disentangle mechanisms and reach a novel conclusion: policy impacts are driven by children in households that own and occupy the unit that they win. This rules out the possibility that treatment acts through a wealth effect alone and suggests that neighborhoods of residence may play an important role. We then adapt a structural model of selection from new work in the policy evaluation literature to characterize patterns of selection and estimate margin-specific treatment effects. To our knowledge, our work represents the first use of these methods in the evaluation of a policy in a low-income setting.

My second chapter, “New Technology and Network Change”, uses dyadic regressions, a social network panel, and a randomized controlled trial to show how networks respond to the introduction of a new technology. Technology recipients become more central within village networks, driven both by differential maintenance of existing links and through the creation of new ones. I apply these results to a peer effects model with directed networks and show that failing to consider network change overestimates treatment effects and that failing to account for new connections due to the intervention underestimates the importance of peer effects.

In my third chapter, coauthored with Travis Baseler, Sylvain Chassang, Pascaline Dupas, and Erik Snowberg, “Valuing the Time of the Self-Employed”, we consider a critical but understudied component of policy evaluations – people’s value of their own time. Accurately estimating the value that the self-employed assign to their own time is essential for estimating the profitability and welfare impacts of interventions. The majority of the literature assumes this value to be zero, which may explain low adoption of seemingly profitable technologies that require increases in worker time. The market wage is likely to be a poor reference in low-income settings, where labor market frictions inhibit individuals from easily converting their time into a wage. To make progress on this question, we use choice data from farming households in Kenya and a structural model to identify behavioral wedges in choices. Accounting for these wedges, we estimate that valuing the time of the self-employed at 60% of the market wage is a reasonable rule of thumb.

Together, the three chapters of my dissertation highlight the two-sided policy challenge presented by urbanization and structural transformation in East Africa. Applying econometric methods and experimentation, we focus on communities, both rural and urban, to shed light on how they function and adapt, and how they shape human welfare.

Electricity is widely considered to be critical for economic growth, but recent literature provides mixed evidence on the welfare implications of rural electrification in developing countries. Understanding the welfare impacts of electrification requires detailed knowledge about the determinants of consumer demand for electricity in rural, low-income settings. My dissertation uses a combination of field experiments and natural experiments to contribute to current knowledge of consumer demand for electricity and explore the associated implications for consumer welfare. I employ a unique product to address current limitations in the literature: pay as you go (PAYGo) solar. PAYGo solar is explicitly designed to lower barriers to electrification for rural, low-income households. It does so my requiring down payments which are small relative to the cost of purchasing a solar home system outright or being connected to the grid, and by allowing for flexibility in ongoing payments to use the system. In each chapter of my dissertation, I partner with a PAYGo solar company operating throughout sub-Saharan African to study a distinct aspect of consumer demand for solar electricity. The first chapter of my dissertation studies consumer responses to randomly offered bulk discounts and monthly rewards for electricity purchases in Rwanda and Kenya. Both types of incentives potentially alter the average and marginal price that consumers pay for solar electricity. I find that most consumers do not respond to either type of incentive. While this could suggest that demand for electricity is inelastic on the intensive margin, I provide suggestive evidence that uncertainty over the future marginal utility of solar as well as liquidity constraints may also play important roles in explaining consumer non-responsiveness to price. In the second chapter of my dissertation, I use a second field experiment with solar customers in Rwanda to formally explore the role of liquidity constraints and transaction costs in shaping demand for solar electricity. The key observation underlying this chapter is that PAYGo solar contracts render electricity access a strictly perishable good, or a good that cannot be stored. I show that transaction costs for perishable goods create welfare loss. The loss comes from the trade-off between transaction costs and the waste that occurs when perishable goods expire, a trade-off that is compounded by liquidity constraints. I explore the trade-off between waste and transaction costs through a field experiment where I randomly offer 2,000 current solar customers a line of credit for solar access time. The line of credit both alleviates liquidity constraints and lowers transaction costs. Consumers who previously bought in bulk respond by eliminating wasteful consumption, reducing demand by up to 6.4%. Those who are the most likely to be liquidity constrained increase demand by 88%. My results illustrate that transaction costs for perishable goods distort willingness to pay in opposite directions for different subsets of consumers. I estimate consumer surplus from electricity under the less distorted conditions of my experiment. My estimates indicate a stronger cost-benefit proposition for universal electrification than others in the literature, but indicate that marginal households' willingness to pay still falls below current cost-covering levels. In the final chapter, I turn to the aspect of demand for electricity that I could not address with either of the field experiments in the first two chapters: the initial decision to adopt electricity. I specifically ask how much electrification choices depend on the expected price of electricity on the intensive margin. I use the phased rollout of a subsidy for PAYGo solar electricity in Togo to measure impacts on electrification. The subsidy reduces the intensive margin price of electricity by 18--42%, with the largest discounts going to consumers choosing the smallest systems. The subsidy increases the adoption of small systems by 85%--135% under different specifications, implying relatively high elasticities of 2.02--3.25. Increases in adoption of medium and large systems range from 23% to 63%, implying elasticities between 1.33 and 3.54. I compare welfare estimates from the subsidy in Togo to my work on the intensive margin of PAYGo in Rwanda in chapter two. Discrepancies between the two studies point to limitations of revealed preference measures for durable goods: both intensive and extensive margin demand may be shaped by a variety of non-price factors that fail to accurately measure welfare. I conclude by offering directions for future research on the economics of rural electrification.