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Open Access Publications from the University of California

The CEGA Working Paper Series showcases ongoing and completed research by CEGA staff, affiliates, visiting fellows, and CEGA-supported project publications authors. CEGA Working Papers employ rigorous evaluation techniques to measure the impact of large-scale social and economic development programs, among other research designs, and are intended to encourage discussion and feedback from the global development community.

Cover page of The Workforce of Clientelism: The Case of Local Officials in the Party Machine

The Workforce of Clientelism: The Case of Local Officials in the Party Machine

(2021)

Local politicians can function as crucial intermediaries between voters and party bosses in a clientelistic network. We study their role by matching data on 300 million welfare payments in the Indian state of West Bengal to village-level election returns. Local politicians systematically misallocate resources based on party loyalty and successfully deliver votes to their national co-partisans. Politicians are compensated for successful mobilization through a performance bonus immediately after the national election. The (promise of) increased compensation from government funds induces opposition candidates to switch to the ruling party in strategically important local councils, bringing them under its control.

Cover page of The Economics of the Public Option: Evidence from Local Pharmaceutical Markets

The Economics of the Public Option: Evidence from Local Pharmaceutical Markets

(2021)

We study the economic and political effects of competition by state-owned firms, leveraging the decentralized entry of public pharmacies to local markets in Chile around local elections. Public pharmacies sell drugs at a third of private pharmacy prices, because of a stronger upstream bargaining position and downstream market power in the private sector, but are also of lower quality. Exploiting a field experiment and quasi-experimental variation, we show that public pharmacies affected consumer shopping behavior, inducing market segmentation and price increases in the private sector. This segmentation created winners and losers, as consumers who switched to public pharmacies benefited, whereas consumers who stayed with private pharmacies were harmed. The countrywide entry of public pharmacies would reduce yearly consumer drug expenditure by 1.6 percent, which outweighs the costs of the policy by 52 percent. Mayors that introduced public pharmacies received more votes in the subsequent election, particularly by the target population of the policy.

Cover page of Digital Collateral

Digital Collateral

(2021)

A new form of secured lending utlitizing "digital collateral" has recently emerged,most prominently in low and middle income countries. Digital collateral relies on "lockout" technology, which allows the lender to temporarily disable the ow valueof the collateral to the borrower without physically repossessing it. We explore thisnew form of credit both in a model and in a field experiment using school-fee loansdigitally secured with a solar home system. We find that securing a loan with digitalcollateral drastically reduces default rates (by 19 pp) and increases the lender's rateof return (by 38 pp). Employing a variant of the Karlan and Zinman (2009) methodology, we decompose the total effect and find that roughly one-third is attributable to (ex-ante) adverse selection and two-thirds is attributable to (interim or ex-post) moral hazard. Access to a school-fee loan significantly increases school enrollment and school-related expenditures without detrimental effects to households' balance sheet.

Cover page of Making Entrepreneurs: Returns to Training Youth in Hard Versus Soft Business Skills

Making Entrepreneurs: Returns to Training Youth in Hard Versus Soft Business Skills

(2021)

We study the medium-term impacts of the Skills for Effective Entrepreneurship Development (SEED) program, an innovative in-residence 3-week mini-MBA program for high school students modeled after western business school curricula and adapted to the Ugandan context. The program featured two separate treatments: the hard-skills MBA features a mix of approximately 75% hard skills and 25% soft skills; the soft skills curriculum has the reverse mix. Using data on 4400 youth from a nationally representative sample in a 3-arm field experiment in Uganda, the 3.5 year follow-up demonstrated that training was effective in improving both hard and soft skills, but only soft skills were directly linked to improvements in self-efficacy, persuasion, and negotiation. The skill upgrade was rewarded in substantially higher earnings; 32.1% and 29.8% increases in earnings for those who attended hard- and soft-training, respectively, most of which, was generated through self-employment. Furthermore, youth in both groups were more likely to start enterprises and more successful in ensuring their businesses' survival. The program led to significantly larger profits (24.2% and 27.2% for hard- and soft- treatment arms respectively) and larger business capital investments (38.4% and 32.6% for SEED hard and SEED soft, respectively). Both SEED curricula were very cost-effective; two months worth of the extra earnings caused by the training alone would exceed the cost of the program. These benefits abstract from the job- and business-creation benefits of the program, which were substantial: relative to the control group, SEED entrepreneurs created 985 additional jobs and 550 new businesses.

Cover page of Armed Conflicts and Forced Displacements: Incentives and Consequences on Consumption and Social Preferences

Armed Conflicts and Forced Displacements: Incentives and Consequences on Consumption and Social Preferences

(2021)

Several countries currently have ongoing armed conflicts or are in post-conflict. Relatedly, the number of refugees has almost doubled in the last decade from continued armed conflicts with an increasing influx to countries like Uganda. This thesis examines armed conflicts and forced displacements with four specific objectives: (1) attempts to explore the incentives and disincentives of armed conflicts in the Great Lake Regions, (2) to assess the consequences of armed conflict on consumption and consumption pathways in post-conflict (3) to examine prosocial attitudes between hosts and refugees and to identify any discrimination (4) to evaluate the role of social preferences in informal contractual land arrangements between refugees and hosts. Informal contractual land arrangements offer an alternative sustainable and innovative way by which refugees can acquire land to be self-reliant. The thesis uses case study reviews, panel data methods, and lab in the field experiments. It focuses on the post-conflict Northern region of Uganda and Adjumani district that has a massive influx of refugees.We find that armed conflicts in the Great Lake Regions are driven by several factors stemming from grievances from ethnic and religious differences and orchestrated by autocratic political systems. With three measures of household conflict exposure, this thesis finds that food consumption was significantly less by a range of between 21 to 30 percent for affected households three years after the cessation of hostilities compared to the level at the time of the conflict. As the threat of insecurity reduces, affected families rely less on consumption from market purchases and transfers and more on their own food production. Further, this thesis finds no evidence of refugees making discriminatory social differentiation of "us refugees" and "them host" in their interactions with hosts, particularly in areas remote from urban areas. They are more trustworthy towards hosts than to fellow refugees in remote areas. We find that refugees located more than 10km from district headquarters reciprocate the trust and are more generous to hosts than to fellow refugees by 8 and 15 percentage points, respectively, in the behavioral experiments. Hosts trust fellow hosts more than refugees, by a 10 percentage point difference. However, hosts located 10km or more from the center trust refugees more than they trust fellow hosts (22 percentage point difference). In remote areas, we think that high transaction costs of travel confines refugees and hosts to a smaller radius, allowing for meaningful interactions between them. Lastly, the results show that trust plays a significant role in determining the hosts' willingness to engage in informal land arrangements with refugees. At least 4 in 10 of both refugees and hosts are willing to enter into such an agreement. The host's trust is associated with a 20 percent increased willingness to participate in informal land transactions.The study concludes with the following policy implications. First, governments in the Great Lake regions can avoid the reoccurrence of armed conflict by paying attention and addressing factors that have motivated past conflicts like grievances from high inequality and lack of political rights. Second, food assistance programs should be targeted at households directly affected by armed conflict, emphasizing fostering own food production after an armed conflict. Third, to minimize discrimination by hosts and boost refugee integration, the study suggests creating opportunities for meaningful refugee and host interactions such as community groups, sports activities, and religious worship. Finally, refugees' self-reliance can be enhanced by taking measures to build trust and leverage on existing behavioral attributes of hosts to promote informal land arrangements amidst costly Government land provision to refugees.

Cover page of Using Satellite Imagery and Deep Learning to Evaluate the Impactof Anti-Poverty Programs

Using Satellite Imagery and Deep Learning to Evaluate the Impactof Anti-Poverty Programs

(2021)

The rigorous evaluation of anti-poverty programs is key to the fight against global poverty. Traditional evaluation approaches rely heavily on repeated in-person field surveys to measure changes in economic well-being and thus program effects. However, this is known to be costly, time-consuming, and often logistically challenging. Here we provide the first evidence that we can conduct such program evaluations based solely on high-resolution satellite imagery and deep learning methods. Our application estimates changes in household welfare in the context of a recent anti poverty program in rural Kenya. The approach we use is based on a large literature documenting a reliable relationship between housing quality and household wealth. We infer changes in household wealth based on satellite-derived changes in housing quality and obtain consistent results with the traditional field-survey based approach. Our approach can be used to obtain inexpensive and timely insights on program effectiveness in international developmentprograms.

Cover page of Combating Political Corruption with Policy Bundles

Combating Political Corruption with Policy Bundles

(2021)

In this paper, we develop a dynamic model of politicians who can engage in corruption. The model offers important insights into what determines corruption and how to design policy to combat it. We estimate the model using data from Brazil to measure voters' willingness to pay for various commonly-proposed anti-corruption policies, such as increasing audit probabilities, increasing politicians' wages, and extending term limits. We document that while voters have a high willingness to pay for audit policies, due to their effectiveness in reducing corruption, policymakers should instead adopt a multi-pronged approach. By bundling certain policies, we can achieve similar welfare gains at fractions of the costs.

Cover page of The Health Costs of Political Identity: Evidence from the U.S. during the COVID-19 Pandemic

The Health Costs of Political Identity: Evidence from the U.S. during the COVID-19 Pandemic

(2021)

Recent evidence suggests political polarization in the United States has magnified the role of political identity in shaping behavioral responses to the COVID-19 pandemic. We merge U.S. county-level data on mask-wearing, cell-phone mobility, county characteristics, and variables reflecting conservative political identity with data on COVID-19 cases and deaths from the first year of the COVID-19 pandemic in the United States. State-level fixed-effect estimations controlling for county characteristics indicate every 10 percentage point increase in the county popular vote for President Trump in the 2020 election to be associated with a 4.3 percentage point decline in public mask-wearing, a 0.19 decline in a COVID-19 safety index, and an increase in 811 COVID-19 cases and 17 COVID-19 deaths per 100,000 county residents. Once we control for the county-level Trump vote, measures of traditional American conservatism, including gun ownership, lower state tax rates, and the availability of abortion, display little systematic explanatory power over COVID-safety behaviors, cases, and deaths.

Cover page of Too Fast, Too Furious? Digital Credit Delivery Speed and Repayment Rates

Too Fast, Too Furious? Digital Credit Delivery Speed and Repayment Rates

(2021)

Digital loans are a source of fast short-term credit for millions of people. While digital credit broadens market access and reduces frictions, default rates are high. We study the role of the speed of delivery of digital loans on repayment. Our study uses unique administrative data from a digital lender in Mexico and a regression-discontinuity design. We show that reducing loan speed by doubling the delivery time from ten to twenty hours decreases the likelihood of default by 21%. Our finding hints at waiting periods as a potential consumer protection measure for digital credit.

Cover page of Monitoring in Target Contracts: Theory and Experiment in Kenyan Public Transit

Monitoring in Target Contracts: Theory and Experiment in Kenyan Public Transit

(2021)

Technologies that allow firms to monitor employees are becoming widespread. Westudy how these technologies affect informal contracts and firm productivity. Specifically, we introduce monitoring devices into commuter minibuses in Nairobi, Kenya, that track real-time vehicle driving behavior and daily productivity. We randomize which minibus owners have access to these monitoring data using a novel mobile app that we designed for the industry. We find that treated vehicle owners modify the terms of the contract to induce higher effort and lower risk-taking, which results in lower firm costs. To interpret these findings, we develop a relational contracting model that demonstrates how monitoring can improve the efficiency of the owner-driver contract. Structural estimation of the contract model via simulated method of moments suggests moderate welfare increases stemming from lower firm costs, although drivers are only partially compensated for the loss of their information rent.