This paper studies the causal impact of political connections on innovation. Using a unique hand-collected data set of sudden deaths of politically connected independent directors (i.e., retired government officials) in Chinese firms, we find that an unexpected loss of political connections increases a firm’s patent applications by 34% (14 patents). The innovation response is more pronounced in firms with stronger connections: when the connected directors held higher-level bureaucratic positions or when firms operate within their geographical jurisdictions. Upon losing political connections, firms face higher competitive pressure and divert resources from rent seeking into innovation investment. Our findings highlight the role of competition in the substitution between political connections and innovation, particularly in settings where formal institutions are weak.
Small-scale cross-border trade provides opportunities for economic gains in many developing countries. Yet cross-border traders—many of whom are women—face harassment and corruption, which can undermine these potential gains. We present evidence from a randomized controlled trial that provided access to information on procedures, tariffs, and rights to small-scale traders to facilitate border crossings, lower corruption, and reduce gender-based violence along the Democratic Republic of Congo (DRC)–Rwanda border. The training reduces bribe payment by 5 percentage points in the full sample and by 27.5 percentage points, on average, among compliers. The training also reduces the incidence of gender-based violence by 5.4 percentage points (30.5 percentage points among compliers). We assess competing explanations for the impacts using a game-theoretic model based on Hirschman’s exit, voice, and loyalty framework. The effects are achieved through early border crossings at unofficial hours (exit) instead of traders’ use of voice mechanisms or reduced rent seeking from border officials. These results highlight the need to improve governance and establish clear cross-border trade regulations, particularly on the DRC side of the border.
In many societies, parents are involved in selecting a spouse for their child, integrating this with decisions about premarital investment such as education. Do spousal preferences of parents and children conflict? We estimate parents’ spousal preferences based on survey choices between random profiles, elicited from parents or other relatives who actively search for a spouse on behalf of their adult child in Kunming, China. We simulate marriage outcomes based on preferences for age and education and compare them with patterns in the general population and with the preferences of a survey of students. The common concern that there may be aversion to highly educated or high-earning wives is somewhat corroborated in parents’ preferences but not in students’ preferences, nor in outcomes, where homogamy is common and wives who are more educated than husbands are as common as husbands who are more educated than wives. Parents prefer wives younger than their husbands, yet most couples are the same age, an outcome consistent with student preferences. Overall, divergences between parental and child preferences exist but are neither major nor very influential in explaining observed outcomes. Fears that highly educated women face diminished marriage prospects appear less serious than often claimed.
This paper uses exogenous variation in the probability of being surveyed at baseline to estimate the impact of being surveyed on subsistence farmers’ take-up of a new agricultural technology that improves food safety. I find large and statistically significant impacts of being surveyed and that an experimental treatment effect disappears for surveyed farmers. My results have strong implications for our understanding of the process of technology adoption, for the external validity of adoption results measured in surveyed populations, and for research ethics.
This study examines evidence from a randomized controlled trial of a novel financial services intervention designed to spur savings uptake in rural areas of the developing world. The sample includes more than 2,000 households from 325 villages in rural Malawi. Results show that an information treatment consisting of periodic village visits from a trained bank staff person significantly increased adoption and use of savings accounts. The findings also show important impact heterogeneities along dimensions such as education level, remoteness of village, and gender of household head, as well as positive spillover effects onto account uptake at other financial institutions. Further analysis reveals active account use among adopters. These findings confirm recent suggestions from survey evidence on an important role played by “soft” barriers to financial inclusion (e.g., low information and trust) and provide insights on how such barriers can be overcome.
The literature holds that having young children pushes women into self-employment to reconcile motherhood demands with their professional ambitions. However, knowledge gaps remain on how this effect differs by social context. Using nationally representative data from Nigeria, this paper demonstrates that motherhood has no statistically significant impact on women’s self-employment probabilities in a context where self-employment is predominantly informal and marriage creates extended family networks. Instead, after accounting for selection bias and the endogeneity of fertility and education decisions jointly, we find that lack of education drives up women’s self-employment probabilities in such a context. These findings are robust to alternative specifications.
This paper investigates the impact of a law protecting the employment rights of persons with disabilities in Cambodia. Similar to studies in high-income countries, we find that Cambodia’s national disability law did not improve the employment situation of persons with disabilities, and may have worsened it, 4 years after implementation. The reduction in employment and hours worked of disabled persons following the law’s introduction is concentrated among employees, females, young persons, those with less than a primary school education, and those in the industrial sector. We explore supply- and demand-side explanations for the disability law’s unintended effect. On balance, the most likely explanation for the reduced work activity of disabled workers is lower demand for their labor from employers facing workplace accommodation costs and in an environment where employment quotas for disabled workers appear to have been set at nonbinding levels.
We exploit the progression of the Peruvian conflict (1980–2000) over time and space to show that individuals’ responses to conflict violence are affected by the identity of the perpetrator. We find that a 1 standard deviation increase in exposure to all violence (from government and terrorists) reduces the perception of the importance of voting and the probability of voting by 1.4% and 1.8% (of each variable mean). However, distinguishing by the perpetrator’s identity unveils contrasting effects. A 1 standard deviation increase in exposure to government violence reduces the perception of voting importance by 4.8% and reduces participation in civil organizations by 12.8% as well as the perception that democracy works or matters by 4.8% and 3.3%. In contrast, exposure to terrorist violence strengthens social capital, although the size of the effects tends to be smaller. In addition, the period from the late teens to early twenties seems key to influencing later voting behavior, participation, and democratic beliefs. Results are robust to pretrends in the outcome variables, multiple hypothesis testing corrections, and selection into migration.
We investigate how means-tested public pensions interact with the informal sector, by exploiting a reform in the noncontributory old-age pension system in South Africa, where the eligibility age was lowered from 65 to 60 for men. By employing a difference-in-discontinuities (“diff-in-disc”) approach, we show that this reform triggered a large drop in elderly male employment. The response at the extensive margin comes from informal workers, who drop out of the labor force, while formal employment is mostly unaffected, despite the implicit incentive to draw benefits and simultaneously work informal jobs. This heterogeneity is not due to the lower earnings in informal jobs; at the same level of hourly earnings, informal workers drop out, while formal workers do not. Overall, we argue that this response is indicative of the “subsistence” nature of informal employment in South Africa, in particular, among the elderly.