Federico Rossi, 12 May 2022

How does the productivity of different types of workers vary across countries? This column uses micro data from countries at different levels of development to document that highly educated workers are relatively more productive in rich countries. Exploiting variation in the skill premia of foreign-educated migrants, the author concludes that this is mostly due to the technological environment in rich countries being more complementary to high-skill labour.   

Fiona Burlig, Akshaya Jha, Louis Preonas, 08 April 2022

Electricity blackouts continue to impose major costs on firms and households around the developing world.  There are many causes for these blackouts, including limited electricity generating capacity and failing distribution infrastructure. This column provides an additional explanation for India’s blackouts: utilities choose to purchase less electricity from the wholesale sector when procurement costs are high, leading to less electricity reaching end-users. India could reduce blackouts by making its existing fleet of power plants available to generate more often, which would require addressing ongoing inefficiencies in Indian electricity supply.

Pavel Chakraborty, Devashish Mitra, Asha Sundaram, 07 December 2021

The global market size of outsourcing doubled between 2000 and 2019. While most studies look at foreign outsourcing, this column uses new data on Indian firms to analyse the effects of increased competition from Chinese imports on the domestic outsourcing of manufacturing jobs. It finds that greater import competition is associated with a significant increase in domestic outsourcing. Additionally, it shows that this effect is only present in Indian states with pro-worker labour regulations. Thus, it highlights the important role of domestic institutions in how firms adapt to globalisation. 

Marianne Bertrand, Chang-Tai Hsieh, Nick Tsivanidis, 20 October 2021

Changes in contract labour regulation were introduced in India in the late 1940s. The hope was that controlling whether firms could downsize would reduce mass job losses as large British companies left the country post-independence. This column explores the effect of the Industrial Disputes Act on firms of different sizes. The authors find that smaller firms did not see much change, but larger firms did employ fewer contract workers as a result. However, this effect was driven by firms exploiting a loophole, rather than the law itself.

Peter Robertson, 09 October 2021

US military spending is said to be greater than the next 11 countries combined. However, the conventional use of market exchange rates to compare across countries dramatically overstates US spending relative to other countries. This column introduces a military purchasing power parity exchange rate for 59 countries based on the relative unit cost ratio across counties. This ‘military PPP’ shows that the US military budget in 2019 was smaller than that of the next three largest military spenders – China, India, and Russia – combined.

Sourav Bhattacharya, Pavel Chakraborty, Chirantan Chatterjee, 20 September 2021

It has long been recognised that innovation and technology adoption contribute significantly to rising income inequality. This column uses a change in the patent regime in India as a quasi-natural experiment to estimate the impact on wage inequality between managerial and non-managerial workers in a firm. The authors find that stronger intellectual property protection has a sharper impact on the demand for managerial skill for technologically advanced firms, highlighting both within and between firm inequality.

Alex Armand, Britta Augsburg, Antonella Bancalari, 09 August 2021

Community toilets in slums are often degraded, dirty, and poorly maintained, but upgrading facilities is difficult because of low willingness to pay among potential users and free riding. This column looks at community toilets in Uttar Pradesh, India, and asks whether externally incentivising maintenance can sustainably improve the quality of public infrastructure. Providing cash incentives to the caretaker and a one-time facility upgrade improved the quality of facilities and reduced free riding, but pushed more residents to practise open defecation, with poor public health outcomes. Fully subsidising basic services is important but measures are needed to prevent overcrowding and degradation.

Fiona Burlig, Anant Sudarshan, Garrison Schlauch, 27 June 2021

At the outset of the Covid-19 pandemic, the developing world took many of the same policy steps as developed nations to contain the spread, including lockdowns. This column uses evidence from India, where the government implemented one of the most stringent lockdowns, to show that domestic travel bans may actually have increased Covid-19 cases in developing countries with large urban-rural migrant populations. While a travel ban is in place, the spread of the disease in migrants’ rural home districts is indeed temporarily stopped. But when travel is finally permitted, migrants return home possibly carrying many more infections than if they had been allowed to leave early.

Prachi Mishra, Nagpurnanand Prabhala, Raghuram Rajan, 02 June 2021

India only introduced credit scoring technology in 2007. This column studies its adoption by the two main types of banks in the country: new private banks and state-owned public sector banks. While both types of banks check nearly all scores for new borrowers, public sector banks are very slow to adopt scoring for their prior relationship borrowers even though scores are reliable predictors of delinquency. Government ownership does not explain this slow adoption, as older privatebanks also exhibit similar adoption patterns. The findings suggest that practices from the past, when adapted to different regulatory and economic environments, are slow to change and can hold back better practices today.

Gaurav Chiplunkar, Pinelopi Goldberg, 19 April 2021

Promoting gender equality in firm ownership is not only beneficial for women, but for the entire economy. This column describes a framework for quantifying the macroeconomic implications of gender-based distortions that affect female entrepreneurship. Applying the model to India suggests that eliminating the barriers to entry, operation, and expansion for female-owned firms could produce significant productivity and welfare gains.

Noam Angrist, Simeon Djankov, Pinelopi Goldberg, Harry Patrinos, 09 April 2021

Human capital is a critical component of economic development. But the links between growth and human capital – when measured by years of schooling – are weak. This column introduces a better measurement, using a database that directly measures learning and represents 98% of the global population. The authors find that the link between economic development and human capital is strong when measured in this way. They also show that global progress in learning has been limited over the past two decades, even as enrolment in primary and secondary education has increased.

Sriram Balasubramanian, Rishabh Kumar, Prakash Loungani, 12 March 2021

India has seen a four-fold increase in average incomes since 1990, which has lowered the share of the population living in absolute poverty from 45% to 20% and improved the lot of 130 million people. But while most segments of society have shared in this remarkable performance, inequality in incomes within India remains large. This column argues that increased attention to mitigating urban–rural and inter-state income and opportunity differentials – leveraging the digital technology in which the country excels – would be a prudent investment to help sustain growth.

Alison Andrew, Orazio Attanasio, Britta Augsburg, Jere Behrman, Monimalika Day, Pamela Jervis, Costas Meghir, Angus Phimister, 17 February 2021

Despite the importance of female networks, many women worldwide face substantial barriers to creating and maintaining social connections. This column examines new mothers’ social networks in rural Odisha, an eastern state in India, and finds that young mothers tend to be extremely isolated, with potentially important consequences for mental and physical wellbeing, access to services, and maternal empowerment. The networks that exist display strong negative socioeconomic status gradients, with dominant-caste and wealthier women being much more isolated than their lower-status peers.

Kenneth Lee, 04 November 2020

On March 24, 2020, India's Prime Minister announced the world's largest COVID-19 lockdown, bringing to a near-halt the economic and social lives of more than one billion Indian residents. Ken Lee talks to Tim Phillips about his work on the economic impacts and behavioural changes induced by this unprecedented policy using two unique data sources: Facebook mobility data and a representative sample of previously surveyed low income Delhi households.

Read the underlying CEPR Covid Economics paper: Job loss and behavioral change: The unprecedented effects of the India lockdown in Delhi  by Kenneth Lee, Harshil Sahai, Patrick Baylis and Michael Greenstone

Barry Eichengreen, Poonam Gupta, Rishabh Choudhary, 12 October 2020

Inflation targeting in India is a work in progress, but the interim assessment presented in this column suggests that significant progress has already been achieved to date.  This progress is evident in the reduced volatility of a range of inflation-related outcomes (the volatility of inflation, of inflation expectations, and of exchange rates and equity markets) and in the stronger anchoring of inflation expectations, which appears to have enhanced the ability of the Reserve Bank of India to respond to the exceptional shock of the COVID-19 pandemic. The Bank would appear to be one of a substantial number of inflation-targeting central banks that were able to respond more forcefully than their non- inflation-targeting counterparts.

Viral Acharya, 28 August 2020

In a new book based on his time as deputy governor of India's central bank, Viral Acharya warns that India's bloated public sector is strangling growth. The economy urgently needs institutional reform, he tells Tim Phillips - and now is the perfect time to do it.

Viral's book is called Quest for Restoring Financial Stability in India, and is published by Sage India.

Chirantan Chatterjee, Eric Hanushek, Shreekanth Mahendiran, 23 July 2020

Expanding access to schools has been an important goal of development policy. This column studies the 2009 Right to Education Act in India intended to mandate compulsory and free access to schools for all children aged 6 to 14. It finds that the act led to an increase in the number of private tuition centres which partly crowded out the goal of more equal access to education as only children from wealthier households can afford private tuition.

 

Ulrich J. Eberle, Vernon Henderson, Dominic Rohner, Kurt Schmidheiny, 09 July 2020

Urbanisation is a major driver of economic development. Agglomeration forces that make cities productive and dispersion forces that limit their growth have been extensively studied, but the effect of ethnolinguistic diversity has been largely overlooked. This column shows that more diverse regions tend to experience more social tensions and conflict, less urbanisation, less urban concentration, and hence potentially less economic growth. This effect is however more confined to intermediate political regimes like fragile democracies, whereas a mature degree of democracy helps to defuse the negative impact of diversity on urbanisation.

Swati Dhingra, 02 May 2020

The Covid-19 lockdown implemented in India is estimated to have tripled the urban unemployment rate. Most low-income urban workers will fall through the cracks of the provisions being put in place to support workers, and almost none of them has access to benefits. This column argues that the self-targeting features of a universal job guarantee make it an appealing policy option to protect informal workers in urban India both now and in the longer term.

Debraj Ray, 16 April 2020

Governments have a tendency to prefer minimising visible dangers. A tight lockdown reduces visible deaths from Covid-19, but brings with it diffuse, and relatively invisible deaths (for example suicide, domestic violence). Debraj Ray (NYU) is coauthor of CEPR's Policy Insight 102: India's Lockdown 

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