Research

Job Market Paper

Paying to Be Paid Early: Debt Bondage in India’s Brick Kilns Paper

Abstract

Bonded workers voluntarily trade their future labour for credit from their employer. The price of this credit is rarely made explicit, and has never been measured empirically. This paper quantifies it for India’s 15 million brick kiln workers, and asks whether workers knowingly pay it. Partnering with employers, I advertise real vacancies with randomised terms to 1,494 Odisha households. Workers favour jobs offering lower pay but larger advances by 10 percentage points, implicitly borrowing at over 19.5% per month. This partly reflects credit market failures: applications concentrate amongst credit constrained workers and spike after negative income shocks. However, workers underestimate what advances cost, and three quarters wrongly believe high advance jobs pay more. Telling workers the true pay gap does not change beliefs. Among those who most need cash, it even raises demand for high advance jobs. Regulating against these contracts would therefore protect some workers from costly mistakes, but deny others a lifeline.

Working Papers

Blossoming Towns (submitted) With Niclas Moneke and Céline Zipfel. Paper

Abstract

Towns and cities create jobs and income. Can the arrival of new jobs also create a town? We study large agro-industrial labour demand shocks in rural sub-Saharan Africa: flower farms in Kenya. Rising production costs in Europe generate a boom in Kenyan cut-flower export production, providing stable wage jobs for mostly low-skilled women. We exploit the specific requirements of cut-flower production to track the arrival and growth of greenhouses over the last two decades. We find large increases in wage employment and home-to-market transformation within agriculture, especially for women. Urbanisation unfolds: population growth and in-migration are flanked by an emerging private rental market for housing. Housing quality and infrastructure access improve, wealth accumulates. Educational investments increase while fertility decreases. Suggestive evidence highlights that the resulting towns initiate occupational change, motivate forward-looking investment and even survive flower farm closures – indicating towns that can sustain themselves as centres of economic activity.

Work in Progress

Jobs to End Poverty: Evidence from Bangladesh With Oriana Bandiera, Robin Burgess, Stefano Caria, Munshi Sulaiman and Jack Thiemel.

Abstract

Do the poor have high returns from trainable human capital? Can they afford to pay for it? And are they differentially targeted by the organizations that offer training? We provide unique evidence on these questions by combining a household census (N=42,895) in urban Bangladesh, a randomized controlled trial of an on-the-job training intervention, unique data on the targeting of the implementing partner, and a structural model. We find that take-up of the training at full price is minimal, and there are no effects on labor market outcomes. The poor, however, increase employment and consumption under a 70% discount. We also document that, for the same program, the implementing NGO would have selected richer beneficiaries who are more likely to enroll in training. Our structural model rationalizes these findings by estimating that the poor have higher-than-average returns to training, but they also experience higher participation costs, and are hence targeted less frequently by an implementer that wants to maximise take-up. We confirm the central finding that the poor have higher-than-average returns to training in a re-analysis of previous training experiments, using machine learning predictions of outcomes and treatment effects.

Publications

Distributional and Climate Implications of Policy Responses to the Energy Crisis: Lessons from the UK With Thiemo Fetzer and Ludovica Gazzè. Economic Policy, 2024, 39(120): 711–756. Paper Financial Times

Abstract

Which households are most affected by energy price shocks? How do interventions in energy markets affect these patterns? To investigate these questions, this paper introduces a measurement framework that leverages granular property-level data representing more than 50% of the English and Welsh housing stock. This framework will form the basis for current and future studies on the heterogeneous effects of the energy crisis more broadly. We find that the energy price shock has a more pronounced effect on relatively more affluent areas where energy use is higher at baseline. We document that commonly used untargeted interventions in energy markets significantly weaken market price signals for able-to-pay households. Alternative, more targeted policies are cheaper, easily implementable, and could better align energy-saving incentives.

Book Chapters

Technology and Development With Robin Burgess and Céline Zipfel. In Madon, T., Gadgil, A. J., Anderson, R., Casaburi, L., Lee, K., Rezaee, A. (eds), Introduction to Development Engineering. Springer, Cham, 2023. Chapter