Tackling Youth Unemployment: Evidence from a Labor Market Experiment in Uganda

joint with Livia Alfonsi (BRAC), Oriana Bandiera (LSE), Vittorio Bassi (USC), Robin Burgess (LSE), Munshi Sulaiman (BRAC and StC) and Anna Vitali (UCL)

January 2020

Abstract We design a labor market experiment to compare demand- and supply-side policies to tackle youth unemployment, a key issue in low-income countries. The experiment tracks 1700 workers and 1500 firms over four years to compare the effect of offering workers either vocational training (VT) or firm-provided training (FT) for six months in a common setting where youth unemployment is above 60%. Relative to control workers we find that averaged over three post-intervention years, FT and VT workers: (i) enjoy large and similar upticks in sector-specific skills, (ii) significantly improve their employment rates, and, (iii) experience marked improvements in an index of labor market outcomes. These averages, however, mask differences in dynamics: FT gains materialize quickly but fade over time, while VT gains emerge slowly but are long-lasting, leading VT worker employment and earning profiles to rise above those of FT workers. Estimating a job ladder model of worker search reveals the key reason for this: VT workers receive significantly higher rates of job offers when unemployed thus hastening their movement back into work. This likely stems from the fact that the skills of VT workers are certified and therefore can be demonstrated to potential employers. Tackling youth unemployment by skilling youth using vocational training pre-labor market entry, therefore appears to be more effective than incentivizing firms through wage subsidies to hire and train young labor market entrants.

Revised and resubmitted (second round), Econometrica.


The Impacts of a Multifaceted Pre-natal Intervention on Human Capital Accumulation in Early Life

joint with Pedro Carneiro (UCL), Lucy Kraftman (IFS), Giacomo Mason (CMA), Lucie Moore (OPM) and Molly Scott (OPM)

November 2019

Abstract We present results from a large-scale and long-term randomized control trial to evaluate an intervention targeting early life nutrition and well-being for households residing in extreme poverty in Northern Nigeria. The multifaceted intervention provides: (i) information to mothers and fathers on practices related to pregnancy and infant feeding; (ii) high-valued unconditional cash transfers to mothers, each month from pregnancy until the child turns two. We document two- and four-year impacts among 3600 pregnant women and their children. The intervention leads to large and sustained improvements in anthropometric and health outcomes for children, including an 8% reduction in stunting by endline. These impacts are partly driven by information-related channels (such as improved knowledge, practices and health behaviors of mothers towards new borns). However, the value and certain flow of cash transfers is also key: these induce labor supply responses among women, and allow them to undertake investments in livestock. These are both a source of protein rich diets for children, and generate higher earnings streams for households long after the cash transfers expire. The results show the sustainability and cost-effectiveness of scalable multifaceted pre-natal interventions in even the most challenging and food insecure economic environments.

Parental Responses to Information About School Quality: Evidence from Linked Survey and Administrative Data

joint with Ellen Greaves (Bristol), Iftikhar Hussain (Sussex) and Birgitta Rabe (Essex).

November 2019

Abstract Multiple inputs determine children's cognitive achievement. We study the interaction between family and school inputs by identifying the causal impact of information about school quality on parental time investment into children. Our setting is England, where credible information on school quality is provided by a nationwide school inspection regime. Schools are inspected at short notice, with school ratings using hard and soft information. As such soft information is not necessarily known to parents ex ante, inspection ratings provide news to parents that plausibly shifts inputs into their children. We study this using household panel data linked to administrative records on school performance and inspection ratings. We observe some households being interviewed pre school inspection (control), and others being interviewed post inspection (treatment). Treatment assignment is determined by a household's survey date relative to the school inspection date, and shown to be as good as random. We find that parents receiving good news over school quality significantly decrease time investment into their children (relative to parents that will later receive such good news). Hence on average, beliefs over school quality and parental inputs are substitutes. Our data and design allow us to provide insights on the distributional and test score impacts of the nationwide inspections regime, through multiple margins of endogenous response of parents and children. Our findings highlight the importance of accounting for interlinked private responses by families to policy inputs into education.

Identifying Network Ties from Panel Data: Theory and an Application to Tax Competition

joint with Aureo de Paula (UCL) and Pedro CL Souza (PUC-Rio)

October 2019

Abstract Social interactions determine many economic behaviors, but information on social ties does not exist in most publicly available and widely used datasets. We present results on the identification of social networks from observational panel data that contains no information on social ties between agents. In the context of a canonical social interactions model, we provide sufficient conditions under which the social interactions matrix, endogenous and exogenous social effect parameters are all globally identified. While this result is relevant across different estimation strategies, we then describe how high-dimensional estimation techniques can be used to estimate the interactions model based on the Adaptive Elastic Net GMM method. We employ the method to study tax competition across US states. We find the identified social interactions matrix implies tax competition differs markedly from the common assumption of competition between geographically neighboring states, providing further insights for the long-standing debate on the relative roles of factor mobility and yardstick competition in driving tax setting behavior across states. Most broadly, our identification and application show the analysis of social interactions can be extended to economic realms where no network data exists.

Contagious Animosity in the Field: Evidence from the Federal Criminal Justice System

joint with Brendon McConnell (Southampton)

June 2019

Abstract A vast literature uses ingroup biases to explain animus towards others. The notion can be extended to multi-identity societies, where social preferences are defined over one ingroup and multiple outgroups. We use a novel research design to recover the structure of social preferences across outgroups in a high stakes setting. We investigate whether increased animosity towards Muslims post 9-11 had spillover effects on Black and Hispanic individuals in the federal criminal justice system. Using linked administrative data tracking defendants from arrest through to sentencing, our core finding is that as 9-11 increased animosity towards Muslims, sentence and pre-sentence outcomes for Hispanic defendants significantly worsened. Outcomes for Black defendants were unchanged. We underpin a causal interpretation of our findings by providing evidence in favor of the identifying assumptions underlying the research design. The findings are consistent with judges and prosecutors displaying social preferences characterized by contagious animosity from Muslims to Hispanics. To understand why increased animosity towards Muslims post 9-11 could spillover onto Hispanics, we draw on work in sociology to detail how Islamophobia and immigration have become intertwined in American consciousness since the mid 1990s, but were forcefully framed together in the aftermath of 9-11. We narrow the interpretation of the results as being driven by social preference structures using decomposition analysis, and correlating sentencing differentials to judge characteristics, including their race/ethnicity. Our findings provide among the first field evidence of contagious animosity, that social preferences across outgroups are interlinked and malleable.

Revisions requested (second round), Journal of Labor Economics.

The Anatomy of a Public Health Crisis: Household and Health Sector Responses to the Zika Epidemic in Brazil

joint with Ildo Lautharte Junior (UCL)

March 2019

Abstract The global frequency and complexity of viral outbreaks is increasing. In 2015, Brazil experienced an epidemic caused by the Zika virus. This represents the first known association between a flavivirus and congenital disease, thus marking a `new chapter in the history of medicine' [Brito 2015]. We use administrative records to document household and health personnel responses to the epidemic over two phases: (i) between May and October 2015, when it was known that Zika was in Brazil, but its symptoms were thought to be dengue-like and without consequence for those in utero; (ii) following an official alert on November 11th recognizing the link between Zika and congenital disease. On household behavior, we find a 7% reduction in pregnancies post-alert, a response triggered immediately after the alert, and driven by higher SES women. On responses during pregnancy, there is an increased use of ultrasounds (9%) and abortions (5%), especially late term abortions. These impacts are driven by mothers that conceived post-alert. There is a lack of response during pregnancy among mothers that conceived just pre-alert, despite their unborn children also being at risk. As a result, those conceived pre-alert are significantly more likely to be born with low birth weight, and the rise in microcephaly is concentrated in this cohort. On responses of health personnel, we document an increased administration of dengue tests to pregnant women post-alert (that lacking a formal test for Zika was the best approach to diagnosis), and no change in counseling on contraception for women seeking to become pregnant. Our results provide a rich picture of household and health personnel responses to an evolving epidemic. They suggest disseminating information about Zika is less effective among those already pregnant and at risk, but for those yet to conceive, the primary welfare cost of the epidemic is disease avoidance, as they move away from unconstrained fertility paths, or abort pregnancies.

The Economic Lives of Young Women in the Time of Ebola: Lessons from an Empowerment Program

joint with Oriana Bandiera (LSE), Niklas Buehren (World Bank), Markus Goldstein (World Bank) and Andrea Smurra (UCL)

December 2018

Abstract We evaluate an intervention to raise young women's economic empowerment in Sierra Leone, where women frequently experience sexual violence and face multiple economic disadvantages. The intervention provides them with a protective space (a club) where they can find support, receive information on health/reproductive issues and vocational training. Unexpectedly, the post-baseline period coincided with the 2014 Ebola outbreak. Our analysis leverages quasi-random across-village variation in the severity of Ebola-related disruption, and random assignment of villages to the intervention to document the impact of the Ebola outbreak on the economic lives of 4,700 women tracked over the crisis, and any ameliorating role played by the intervention. In highly disrupted control villages, the crisis leads younger girls to spend significantly more time with men, out-of-wedlock pregnancies rise, and as a result, they experience a persistent 16pp drop in school enrolment post-crisis. These adverse effects are almost entirely reversed in treated villages because the intervention enables young girls to allocate time away from men, preventing out-of-wedlock pregnancies and enabling them to re-enrol in school post-crisis. In treated villages, the unavailability of young women leads some older girls to use transactional sex as a coping strategy. The intervention causes them to increase contraceptive use so this does not translate into higher fertility. Our analysis pinpoints the mechanisms through which the severity of the aggregate shock impacts the economic lives of young women, and shows how interventions in times of crisis can interlink outcomes across younger and older cohorts.

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