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 

Lore Vandewalle, 16 April 2020

In India, the trade-off the government is facing is not lives vs the economy when it comes to fighting Covid-19, but lives vs lives. The aim is not to lose more people to the containment measures than the virus would claim without them. Lore Vandewalle (IHEID) is a coauthor of CEPR Policy Insight 102, India's Lockdown

Debraj Ray, Lore Vandewalle, 15 March 2020

On 24 March 2020, the government of India ordered a nationwide lockdown of 1.3 billion people for 21 days as a preventive measure against COVID-19. Given what we know of the epidemic, it is difficult to quarrel with the prescription of social distancing and lockdown, when accompanied by state measures that provide adequate economic protection, but what happens in countries where the state is unable to provide the necessary back-up welfare measures? Debraj Ray (NYU) and Lore Vandewalle (IHEID) discuss the ideas presented in the CEPR Policy Insight they recently authored (together with Sreenivasan Subramanian). Download the paper here

Debraj Ray, Sreenivasan Subramanian, Lore Vandewalle, 08 April 2020

On 24 March, the government of India ordered a nationwide lockdown of 1.3 billion people for 21 days as a preventive measure against COVID-19. Given what we know of the epidemic, it is difficult to quarrel with the prescription of social distancing and lockdown, when accompanied by state measures that provide adequate economic protection. This column asks what happens when the state is unable to provide the necessary back-up welfare measures.

Natalie Bau, Adrien Matray, 16 March 2020

The misallocation of inputs, and in particular capital, may explain the large disparities in productivity across countries. This column exploits a policy in India in the early 2000s to quantify the effects of foreign capital liberalisation on misallocation and aggregate manufacturing productivity. As a result of the liberalisation policies, capital-constrained firms expanded their assets by 60%, spent more on labour (+24%), and increased their revenue by 18% relative to non-constrained firms. The effects of liberalisation were largest in areas with less developed local banking sectors.

Lucie Gadenne, Roland Rathelot, 03 February 2020

VAT may act to segment firm-to-firm trade in developing economies into VAT-paying and non-VAT-paying networks. This column presents evidence of this from India and argues that the higher the rate of VAT, the greater the effect. This segmentation decreases the output of non-VAT-paying firms, whose sourcing choices have been distorted by VAT, by between 7% and 10%.

Emily Breza, Supreet Kaur, Nandita Krishnaswamy, 12 October 2019

Enforcing collective action through social norms and social sanctions can be particularly relevant in poor countries, where local social networks are often key in risk sharing and information diffusion. This column uses two experimental exercises to test whether social norms shape aggregate labour supply in informal markets for casual daily agricultural labour in India. It finds that social norms help sustain wage floors, with workers taking jobs at wage cuts in private but rejecting them in public due to fear of sanctions.

Gabriel Chodorow-Reich, 20 August 2019

India's demonetisation in 2016 reduced the volume of currency in circulation by 75% overnight. This column uses new data sources to quantify impacts on economic activity and credit growth after the unprecedented natural experiment. These effects can teach us about the short-run economic disruption and long-run benefits of demonetisation. 

Chad Bown, 22 July 2019

Manisha Shah, 10 July 2019

A decade ago, India joined a range of countries that mandate free, compulsory education for school-aged children. Passed in August 2009, India’s Right to Education Act was potentially transformative legislation, yet detailed analysis of its impact on the country’s educational outcomes has been slow to emerge. This column uses three national datasets to consider whether the Act is associated with changes in student enrolment, test scores, student-teacher ratios, school infrastructure, and other indicators of educational health and standing.

Prottoy A. Akbar, Victor Couture, Gilles Duranton, Adam Storeygard, 29 June 2019

Urban transportation in developing countries is prioritised for massive investments, yet little is known about the determinants of urban mobility in these countries. This column applies a methodology for measuring the performance of overall motor vehicle transportation in a city to the 154 largest cities in India. It finds that there are substantial differences in mobility speeds across large Indian cities but that the variation is driven primarily by uncongested mobility, not by congestion delays. This implies that typical policy measures attempting to improve urban mobility are missing the mark altogether.

Martin Ravallion, 22 May 2019

Even when the central government is committed to a jobs guarantee, rationing of work opportunities can arise under decentralised implementation in poor places. This column examines India’s efforts to implement such a scheme and finds that there are two main drivers of this rationing: local administrative costs and local corruption. Partial administrative reforms by the centre can have perverse effects. Deeper policy reforms are needed to assure that stipulated rights for poor people are attained in practice.

Santosh Anagol, Vimal Balasubramaniam, Tarun Ramadorai, 17 January 2019

Although economic agents should discern signals from noise when drawing from experience, recent evidence suggests decision-making can be based on both noise and signal components. This column uses a natural experiment of IPO lotteries in India to show that randomised gains cause winning investors to increase applications to future IPOs and substantially increase portfolio trading volume in non-IPO stocks relative to lottery losers. Investors appear to draw inferences about their skill from noise. 

Diane Coyle, 08 August 2018

Josephine Duh, Dean Spears, 16 July 2018

Although average wealth in India has risen in recent years, calorie consumption has paradoxically fallen. Josephine Duh and Dean Spears explain that Indians are eating less despite being richer because disease rates are slowly declining, meaning that nutrition from food is extracted more efficiently.

Victoire Girard, 19 May 2018

Affirmative action policies are widely used to tackle the underrepresentation of certain groups. However, the efficiency of these policies is fiercely debated. This column uses novel data from India to explore how affirmative action quotas affect everyday discrimination. Local political council quotas for marginalised castes are found to reduce caste-based discrimination by around one fifth, but the effect disappears when the quotas are removed.

Guilhem Cassan, Lore Vandewalle, 09 December 2017

Many policies are designed along a particular identity dimension, such as gender or ethnicity. However, such efforts overlook the fact that individuals are associated with several identity dimensions at a time. Using Indian data, this column demonstrates how the intersection of different identity dimensions may lead to unanticipated effects. It shows that political quotas for women in local elections change policies not only in favour of women, but also in favour of low castes.



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