Publications

2008
Andrabi, Tahir, Jishnu Das, and Asim Ijaz Khwaja. 2008. “A Dime a Day: The Possibilities and Limits of Private Schooling in Pakistan.” Comparative Education Review 52 (3): 329-355. Publisher's Version comparative_education_review_vol_52_no_3_khwaja_2008_-_hks.pdf
2007
Pande, Rohini, Timothy Besley, and Vijayendra Rao. 2007. “Political Economy on Panchayats in South India.” Economic and Political Weekly. February 2007., 661-667. Publisher's VersionAbstract
Based on a study of some 500 villages in the four southern Indian states of Andhra Pradesh, Karnataka, Kerala and Tamil Nadu, this paper examines how the functioning of the panchayat system mandated by the 73rd amendment to the Constitution has had an impact on the economic
status of villages and the households within them. The study finds that gram panchayats, created by this massive experiment in democratic decentralisation, have had an effect on the delivery of public services, for example, in the targeting of beneficiaries of welfare programmes, but also that positive outcomes are linked to the political elites thrown up by the system.
Pande, Rohini. 2007. “Rural Credit.” In: The Oxford Companion to Economics in India. The Oxford Companion to Economics in India. Oxford University Press; 2007. Publisher's Version
Levy, Dan, and Jim Ohls. 2007. “Evaluation of Jamaica's PATH Programme: Final Report.,” MPR Reference No. 8966-090, March 2007. Publisher's VersionAbstract

This report summarizes the findings of an evaluation of a social safety net initiative, the Programme of Advancement Through Health and Education (PATH), which was undertaken by the Government of Jamaica, beginning in 2001. The main objectives of the initiative, which is operated by the Ministry of Labour and Social Security (MLSS), are to achieve better targeting of welfare benefits to the poor and to increase human capital by conditioning receipt of the benefits on participants meeting certain requirements for school attendance and health care visits.

levy_d_-_evaluation_of_jamaicas_path_dec_10_2010.pdf
Duflo, Esther, and Rohini Pande. 2007. “Dams.” Quarterly Journal of Economics 122 (2): 601-646. Publisher's VersionAbstract

This paper studies the productivity and distributional effects of large irrigation dams in India. Our instrumental variable estimates exploit the fact that river gradient affects a district's suitability for dams. In districts located downstream from a dam, agricultural production increases, and vulnerability to rainfall shocks declines. In contrast, agricultural production shows an insignificant increase in the district where the dam is located but its volatility increases. Rural poverty declines in downstream districts but increases in the district where the dam is built, suggesting that neither markets nor state institutions have alleviated the adverse distributional impacts of dam construction.

Bond, Phillipe, and Rohini Pande. 2007. “Coordinating Development: Can Income-based Incentive Schemes Eliminate Pareto Inferior Equilibria?.” Journal of Development Economics 83 (2): 368-391. Publisher's VersionAbstract

Individuals' inability to coordinate investment may significantly constrain economic development. In this paper we study a simple investment game characterized by multiple equilibria and ask whether an income-based incentive scheme can uniquely implement the high-investment outcome. A general property of this game is the presence of a crossover-investment point at which an individual's incomes from investment and non-investment are equal. We show that arbitrarily small errors in the government's knowledge of this crossover point can prevent unique implementation of the high-investment outcome. We conclude that informational requirements are likely to severely limit a government's ability to use income-based incentive schemes as a coordination device.

Djankov, Simeon, Rema Hanna, Marianne Bertrand, and Sendhil Mullainathan. 2007. “Obtaining a Driver's License in India: An Experimental Approach to Studying Corruption.” Quarterly Journal of Economics 122 (4): 1639-1676. Publisher's VersionAbstract

We study the allocation of driver's licenses in India by randomly assigning applicants to one of three groups: bonus (offered a bonus for obtaining a license quickly), lesson (offered free driving lessons), or comparison. Both the bonus and lesson groups are more likely to obtain licenses. However, bonus group members are more likely to make extralegal payments and to obtain licenses without knowing how to drive. All extralegal payments happen through private intermediaries (“agents”). An audit study of agents reveals that they can circumvent procedures such as the driving test. Overall, our results support the view that corruption does not merely reflect transfers from citizens to bureaucrats but distorts allocation.

Chandra, Amitabh, and Douglas Staiger. 2007. “Productivity Spillovers in Health Care: Evidence from the Treatment of Heart Attacks.” Journal of Political Economy 115 (1): 103-140. Publisher's VersionAbstract

A large literature in medicine documents variation across areas in the use of surgical treatments that is unrelated to outcomes. Observers of this phenomenon have invoked “flat of the curve medicine” to explain it and have advocated for reductions in spending in high‐use areas. In contrast, we develop a simple Roy model of patient treatment choice with productivity spillovers that can generate the empirical facts. Our model predicts that high‐use areas will have higher returns to surgery, better outcomes among patients most appropriate for surgery, and worse outcomes among patients least appropriate for surgery, while displaying no relationship between treatment intensity and overall outcomes. Using data on treatments for heart attacks, we find strong empirical support for these and other predictions of our model and reject alternative explanations such as “flat of the curve medicine” or supplier‐induced demand for geographic variation in medical care.

Pande, Rohini. 2007. “Understanding Political Corruption in Low Income Countries.” In: Handbook of Development Economics, T. Schultz and J. Strauss Eds. 2007., 4, 3155-3184. Publisher's VersionAbstract

Building on the large and growing empirical literature on the political behavior of individuals in low income countries this chapter seeks to understand corruption through the lens of political economy -- particularly in terms of the political and economic differences between rich and poor countries. Our focus is on the political behavior of individuals exposed to democratic political institutions. We review the existing literature on the determinants of individual political behavior to ask whether we can understand the choice of political actors to be corrupt and, importantly, of other individuals to permit it, as a rational response to the social or the economic environment they inhabit. We also discuss the implications of this view of corruption for anti-corruption policies.

cid_working_paper_no.145_2007_pande.pdf
2006
Khwaja, Asim, Ali Cheema, and Adnan Qadir. 2006. “Local Government Reforms in Pakistan: Context, Content and Causes.” Decentralization and Local Governance in Developing Countries: A Comparative Perspective. Eds. D. Mookherjee and P. Bardhan, Cambridge, MA: MIT Press, July 2006.Abstract

This paper examines the recent decentralization reforms in Pakistan under General Musharraf. We highlight major aspects of this reform and analyze its evolution in a historical context to better understand potential causes behind this current decentralization. Analyzing the evolution of local government reforms in Pakistan is interesting because each of the three major reform experiments has been instituted at the behest of a non-representative centre using a ‘top down’ approach. Each of these reform experiments is a complementary change to a wider constitutional reengineering strategy devised to further centralization of political power in the hands of the non-representative centre. We argue that the design of the local government reforms in these contexts becomes endogenous to the centralization objectives of the non-representative centre. It is hoped that analyzing the Pakistani experience will help shed light on the positive political economy question of why non-representative regimes have been willing proponents of decentralization to the local level.

khwaja_a_-_local_govt_reforms_in_pakistan_chapter_8_2006.pdf
Khwaja, Asim, Tahir Andrabi, Jishnu Das, and Tristan Zajonc. 2006. “Religious School Enrollment in Pakistan: A Look at the Data.” Comparative Education Review (August 2006) 50 (3): 446-477. Publisher's VersionAbstract

In recent years, policy makers have expressed growing concern about Pakistan’s religious schools, which are commonly known as madrasas.1 These concerns have been fueled considerably by reports and articles in the popular press contending that madrasa enrollment is high and increasing. The “rise” is generally attributed to either an increasing preference for religious schooling among families or a lack of other viable schooling options for the household.2 Yet while these theories have widespread currency, none of the reports and articles that we have reviewed have based their analysis on publicly available data sources or established statistical methodologies. Given the importance that is placed on the subject by policy makers in Pakistan and internationally, it is troubling that these theories remain unconfirmed.

khwaja_a_-_religious_school_enrollment_in_pakistan_madrassa_cer_dec05.pdf
Khwaja, Asim, Tahir Andrabi, and Maitreesh Ghatak. 2006. “Subcontractors for Tractors: Theory and Evidence on Flexible Specialization, Supplier Selection, and Contracting.” Journal of Developmental Economics April 2006. 79 (2): 273-302. Publisher's VersionAbstract

Buyer–Seller networks are pervasive in developing economies yet remain relatively understudied. Using primary data on contracts between the largest tractor assembler in Pakistan and its suppliers we find large variations in prices and quantities across suppliers of the same product. Surprisingly, “tied” suppliers – those that choose higher levels of specific investments – receive lower and more unstable orders and lower prices. These results are explained by developing a simple model of flexible specialization under demand uncertainty. A buyer faces multiple suppliers with heterogeneous types to supply customized parts. Specific investments raise surplus within the relationship but lower the seller's flexibility to cater to the outside market. Higher quality suppliers have a greater likelihood of selling outside and so this cost is greater for them. Therefore even if a buyer typically prefers high types, some low type suppliers might be kept as marginal suppliers because of their greater willingness to invest more in buyer-specific assets. Further empirical examination shows that the more tied suppliers are indeed of lower quality.

Levy, Dan, Johanne Boisjoly, Michael Kremer, and Jacque Eccles. 2006. “Empathy or Antipathy? The Impact of Diversity.” American Economic Review 96 (5): 1890-1905. Publisher's VersionAbstract

Mixing across racial and ethnic lines could spur understanding or inflame tensions between groups. We find that white students at a large state university randomly assigned African American roommates in their first year were more likely to endorse affirmative action and view a diverse student body as essential for a high-quality education. They were also more likely to say they have more personal contact with, and interact more comfortably with, members of minority groups. Although sample sizes are too small to provide definitive evidence, these results suggest students become more empathetic with the social groups to which their roommates belong.

levy_d_-_empathy_or_antipathy_dec_2006.pdf
Pande, Rohini. 2006. “Profits and Politics: Coordinating Technology Adoption in Agriculture.” Journal of Development Economics, December 2006 81 (2): 299-315.Abstract

This paper examines the political economy of coordination in a simple two-sector model in which individuals' choice of agricultural technology aspects industrialization. We demonstrate the existence of multiple equilibria; the economy is either characterized by the use of a traditional agricultural technology and a low level of industrialization or the use of a mechanized technology and a high level of industrialization. Relative to the traditional technology, the mechanized technology increases output but leaves some population groups worse off. We show that the distributional implications of choosing the mechanized technology restrict the possibility of Pareto-improving coordination by an elected policymaker, even when we allow for income redistribution.

profits_and_politics_coordinating_technology_adoption_in_agriculture_rohini_pande_2006.pdf
2005
Pande, Rohini, Tim Besle, and Vijayendra Rao. 2005. “Participatory Democracy in Action: Survey Evidence from South India.” Journal of European Economics Association Papers and Proceedings, May 2005 3 (2): 648-657.Abstract

We use household and village survey data from South India to examine who participates in village meetings called by elected local governments, and what effect these meetings have on beneficiary selection for welfare programs. Our main finding is that it is the more disadvantaged social groups who attend village meetings and that holding such meetings improves the targeting of resources towards the neediest groups.

pande_r_-_participatory_democracy.pdf
Pande, Rohini, Robin Burgess, and Grace Wong. 2005. “Banking for the Poor: Evidence from India.” Journal of European Economic Association 3 (2-3): 268-278.Abstract

State led credit and savings programs have been implemented in numerous low income countries, but their success in reaching the poor remains widely debated. We report on research which exploits the policy features of the Indian social banking program to provide evidence on this issue. State-led branch expansion into rural unbanked locations reduced poverty across Indian states. In addition, the enforcement of directed bank lending requirements was associated with increased bank borrowing among the poor, in particular low caste and tribal groups.

pande_r_-_banking_for_poor_jeea_2004.pdf
Pande, Rohini. 2005. “Can Rural Banks Reduce Poverty? Evidencefrom the Indian Social Banking Experiment.” American Economic Review, June 2005 95 (3): 780-795.Abstract
We exploit the introduction and removal of a nation-wide bank branch licensing rule which sought to increase and equalize bank branch presence across Indian states to estimate the effect of rural bank openings on poverty. Between 1977 and 1990, to qualify for a license to open a branch in a census location which already had one or more bank branches an Indian bank had to open four branches in locations with no bank branches.This policy caused banks to open relatively more rural branches in Indian states with lower initial Önancial development between 1977 and 1990. The reverse was true outside this period. We use these policy-induced trend reversals in the relationship between a state's initial financial development and rural branch expansion as instruments for rural branch expansion and find that rural branch expansion in India significantly reduced rural poverty.
pande_r_-_can_rural_banks_reduce_poverty_-_aer_2005.pdf
Pande, Rohini, and Christopher Udry. 2005. “Institutions and Development: A View from Below.” Proceedings of the 9th World Congress of the Econometric Society.Abstract

In this paper we argue the case for greater exploitation of synergies between research on specific institutions based on micro-data and the big questions posed by the institutions and growth literature. To date, the macroeconomic literature on institutions and growth has largely relied on cross-country regression evidence. This has provided compelling evidence for a causal link between a cluster of `good' institutions and more rapid long run growth. However, an inability to disentangle the effects of specific institutional channels on growth or to understand the impact of institutional change on growth will limit further progress using a cross-country empirical strategy. We suggest two research programs based on micro-data that have significant potential. The first uses policy-induced variation in specific institutions within countries to understand how these institutions influence economic activity. The second exploits the fact that the incentives provided by a given institutional context often vary with individuals' economic and political status. This can help us better understand how institutional change arises in response to changing economic and demographic pressures.

Pande, Rohini, Lena Edlund, and Laila Haider. 2005. “Unmarried Parenthood and RedistributivePolitics.” Journal of European Economic Association, March 2005 3 (1): 95-119.Abstract

Political survey data for nine West European countries show that women have become increasingly left-wing compared to men, and that this trend is positively correlated with the rise of non-marriage in these countries.This pattern is mirrored in German longitudinal data (GSOEP), where transitions out of marriage make women, but not men, significantly more left-leaning. Analysis of public spending data for high-income OECD countries (1980-1998) suggests that the political impact of non-marriage extends to the allocation of State resources with increases in non-marriage first reducing and then increasing State redistribution towards children.

pande_r-_unmarried_parenthood_redistrib._politics.pdf
2005. “Measuring Empowerment at the Community Level: An Economist’s Perspective.” Measuring Empowerment: Cross-Disciplinary Perspectives, 2005.Abstract

Experiences over the past few decades suggest a shortcoming of top-down approaches to development. Since the 1980s, the new watchwords have been “participatory” or “community-led” development and, more recently, “empowerment.” The World Bank’s Empowerment and Poverty Reduction: A Source book defines empowerment as “the expansion of assets and capabilities of poor people to participate in, negotiate with, influence, control, and hold accountable institutions that affect their lives”. Before empowerment can be integrated into development policy, however, it must be clearly conceptualized, and reliable measures must be developed. This is particularly important given that such measures of empowerment are likely to become project goals for development agencies.

khwaja_a_-_measuring_empowerment_bk_ch_2008.pdf

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