Social Incentives, Delivery Agents and the Effectiveness of Development Interventions

joint with Oriana Bandiera (LSE), Robin Burgess (LSE), Erika Deserranno (Northwestern),

Ricardo Morel (IPA) and Munshi Sulaiman (BRAC)

December 2021

Abstract There has been a dramatic rise in the use of the local delivery model for development interventions, where local agents are hired as intermediaries to target benefits to potential beneficiaries. We study this model in the context of a standard agricultural extension intervention in Uganda using a novel two-stage experimental design. In the first stage, we randomize the delivery of the intervention across communities. In the second, in each community we identify two potential delivery agents and then randomly select one of them. This stage yields exogenous variation in social ties to the actual delivery agent as well as to their counterfactual. We use this to identify how social incentives shape the behavior of delivery agents through them having social ties to farmers in communities from which they are recruited and serve. We document a trade-off between coverage and targeting: delivery agents treat more farmers when they have a greater number of social ties, but they are significantly more likely to target their non-poor ties -- counter to the pro-poor intent of the intervention. We explore reasons why delivery agents target their non-poor ties, and conclude by discussing the implications of our findings for the design of the local delivery model.

Microfinance and Diversification

joint with Oriana Bandiera (LSE), Robin Burgess (LSE), Erika Deserranno (Northwestern),

Ricardo Morel (IPA),  Munshi Sulaiman (BRAC) and Jack P.Thiemel (LSE)

October 2021

Abstract The bulk of the world's extreme poor live in rural areas and work in subsistence agriculture. Diversification out of this activity is often seen as the sine qua non of economic development. We evaluate whether the randomized roll-out of a mainstay development intervention - microfinance - into poor, agricultural and largely unbanked populations in rural Uganda exerts any influence on diversification into non-agricultural labor market activities. The new microfinance product differs from existing sources of formal and informal credit in that it allows households to borrow larger amounts but has inflexible repayment dates and the use of funds is monitored. We find that the arrival of microfinance enables women to diversify out of agricultural production and into non-agricultural labor market activities such as small-scale trading. This low-level structural change, however, is not transformative in that it does not lead - at least after two years - to significant uplifts in earnings, consumption, savings, investment and overall wealth.

Do Cash Transfers Promoting Early Childhood Development Have Unintended Consequences on Fertility?

joint with Pedro Carneiro (UCL), Lucy Kraftman (IFS) and Molly Scott (OPM)

September 2021

Abstract There has been a stark rise in direct cash transfer programs to the poor, and in policy interest in interventions targeting outcomes in early childhood. We draw these trends together to study whether interventions offering cash transfers to pregnant mothers to promote early childhood development, unintentionally induce those not pregnant to bring forward birth timing in order to become eligible for the receipt of such transfers. We do so in the context of rural Northern Nigeria, where the majority of households reside in extreme poverty, are credit constrained and food insecure, and frequently experience aggregate shocks. Contraceptives are unavailable and men largely drive fertility choices, yet the costs of bringing forward birth timing mostly operate through worse maternal and child health. We present evidence from a randomized control trial evaluating an intervention offering high-valued and long-lasting unconditional cash transfers to pregnant mothers. We examine how this impacted fertility dynamics among 1700 households in which women were not pregnant at baseline, tracked over four years from the intervention initiation. We document precise null impacts on the timing of births, total births and composition of households becoming pregnant over our study period. The reason is a combination of three factors: (i) women retain full control over the use of additional resources they bring into their household; (ii) women have available productive investment opportunities in their own businesses; (iii) they choose to transfer few resources to husbands. Hence ultimately men have weak private incentives to alter birth timing. Based on this constellation of factors, we use DHS surveys to classify low-income countries into those that are more or less likely to see fertility consequences when cash transfers for early childhood development are targeted to pregnant mothers.

The Search for Good Jobs: Evidence from a Six-year Field Experiment in Uganda
joint with Oriana Bandiera (LSE), Vittorio Bassi (USC), Robin Burgess (LSE),
Munshi Sulaiman (BRAC) and Anna Vitali (UCL)

August 2021

Abstract We present evidence from a six-year field experiment with young job seekers in urban labor markets in Uganda. We study how standard labor market interventions impact their search behavior, long run labor market outcomes, and how these long run outcomes are mediated through search behavior. The interventions we consider are the offer of vocational training, vocational training combined with job assistance, and job assistance only. Training is offered in sectors with high wage firms. Job assistance comprises a light touch offer to match workers for job interviews with such high wage firms. At baseline, youth are unskilled yet overly optimistic about their job prospects. Relative to controls, those offered vocational training become even more optimistic, search more intensively and direct their search towards higher quality firms. However, for youth additionally offered job assistance, expectations and search effort are revised downwards as call back rates from firms the workers are matched to, are far lower than their prior expectation. These differential search strategies impact long run outcomes: vocational trainees without job assistance have higher employment rates, longer employment spells, and end up in higher quality jobs and firms than workers additionally offered job assistance. Our analysis highlights how the potential for labor market entrants to be exuberant or discouraged both matter for long run outcomes through job search behavior. We discuss implications for the design and targeting of labor market interventions meant to help young people find good jobs.

Identifying Network Ties from Panel Data: Theory and an Application to Tax Competition
joint with Aureo de Paula (UCL) and Pedro CL Souza (Warwick)

August 2020

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.

Revisions requested, Review of Economic Studies.