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on Development |
| By: | Luis Bauluz (University of Bonn, WIL - World Inequality Lab); Yajna Govind (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, University of Bonn); Filip Novokmet (WIL - World Inequality Lab , University of Bonn) |
| Abstract: | Agricultural land is vital for three out of four of the poorest billion individuals in the world yet little is known about the distribution of agricultural land. Existing crosscountry estimates of land inequality, based on agriculture census data, measure the size distribution of agricultural holdings. These neither reflect land ownership inequality nor value inequality and often do not account for the landless population. In this paper, we tackle these issues and provide novel and consistent estimates of land inequality across countries, based on household surveys. We show that i) land-value inequality can di er signi cantly from land-area inequality, ii) di erences in the proportion of landless across countries vary substantially, a ecting markedly inequality estimates and, iii) regional patterns in inequality according to our benchmark metric (landvalue inequality including the landless) contradict existing estimates from agricultural censuses. Overall, South Asia and Latin America exhibit the highest inequality with top 10% landowners capturing up to 75% of agricultural land, followed by Africa and `Communist' Asia (China and Vietnam) at levels around 55-60%. . |
| Keywords: | inequality,capital gains,income shifting,top shares,Land Ownership,Inequality,Distribution |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-03022360&r=all |
| By: | Sebastian Axbard; Anja Benshaul-Tolonen; Jonas Poulsen |
| Abstract: | A large literature has highlighted the potential detrimental effects of natural resource wealth on social, economic and political outcomes. We study a previously largely unexplored relationship - the impact of natural resource wealth on criminal activity. Our empirical strategy exploits price fluctuations in 15 internationally traded minerals to study the impact of mineral wealth on local crime levels in South Africa - leveraging detailed crime data from 1,084 police precincts over 10 years. We find that increased mineral wealth leads to a reduction in criminal activity. An exploration of mechanisms suggest that the effect is due to changes in employment opportunities created by the mining industry, affecting the opportunity cost of engaging in criminal activity. Consistent with this we also document that results are driven by property crime and that mines are less likely to close down when prices are high. Our results suggest that downward shifts in international mineral prices can cause surges in crime. To investigate how resilience against such surges can be achieved, we exploit the roll-out of a government employment guarantee program and document that the program reduces the crime response to changes in international mineral prices. |
| Keywords: | Extractive Industries, Mining, Crime |
| JEL: | K42 D74 O13 |
| Date: | 2019–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:oxcrwp:220&r=all |
| By: | Roberto Bonfatti; Yuan Gu; Steven Poelhekke |
| Abstract: | Africa’s interior-to-coast roads are well suited to export natural resources, but not to support regional trade. Are they the optimal response to geography and comparative advantage, or the result of suboptimal political distortions? We investigate the political determinants of road paving in West Africa across the 1965-2012 period. Controlling for ge¬ography and the endogeneity of democratization, we show that autocracies tend to connect natural resource deposits to ports, while the networks expanded in a less interior-to-coast way in periods of democracy. This result suggests that Africa’s interior-to-coast roads are at least in part the result of suboptimal political distortions. |
| Keywords: | political economy, democracy, infrastructure, natural resources, development |
| JEL: | P16 P26 D72 H54 O18 Q32 |
| Date: | 2019–01–22 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:oxcrwp:215&r=all |
| By: | Parsons, Christopher (University of Western Australia); Reysenbach, Tyler (Productivity Commission); Wahba, Jackline (University of Southampton) |
| Abstract: | Immigrants' social networks exert considerable influence over their labor market opportunities and yet the pre-sorting of co-nationals by ability and across space, endures as a key challenge for empiricists attempting to establish causal network effects. To surmount this issue, we leverage the chaotic dispersal of Vietnamese refugees across the U.S. in 1975, which was demonstrably exogenous in both initial network size and quality, in tandem with an absence of pre-existing networks of co-nationals, to causally identify the effects of network size and network quality on refugees': occupational outcomes, skill intensity and skill upgrading. Our administrative data provide refugee's precise initial locations and pre-placement characteristics in Vietnam, which we uniquely employ as additional controls, as well as longitudinal information about their locations and occupations six years hence. We construct instruments from the initial quasi-random refugee allocations of network size and quality and leverage refugees' geo-locations to insulate our results from the Reflection Problem. Overall, network quality is a far more important determinant of refugees' labor market outcomes when compared to network size, one interpretation of which is that the type of referrals network members receive are more important than the overall number of referrals. Blue-collar networks: increase the probability of refugees' working in blue-collar jobs, draw additional workers into more manual and less complex intensive employment and serve to up-skill individuals along the manual skill dimension. Given the protracted circumstances under which the Viet Kieu entered the U.S., the composition of their networks played a pivotal role in their ultimate success. |
| Keywords: | networks, refugees, migration, labor markets |
| JEL: | F22 J61 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13952&r=all |
| By: | Ridwan D. Rusli; Wessel N. Vermeulen |
| Abstract: | We examine the economic consequences of resource extraction and the associ-ated revenue windfalls on subnational government revenues and spending patterns. Making use of Indonesia’s fiscal sharing rules and an offshore oil and gas produc-tion instrument, we find a positive impact of resource revenues on the center-local balancing funds including the general allocation fund, despite the latters’ fiscal re-balancing purposes. Fiscal windfalls from resource extraction increase public sector spending on capital and infrastructure projects as well as public goods and services, with positive spillover benefits on local tax revenues. At the same time spending on personnel and administration increases less and decrease as percentage of total expenditures. Interaction with district economic governance index data indicates enhanced infrastructure spending but also increases in the balancing funds. |
| Keywords: | Resource extraction; fiscal- and direct economic spillovers; decen¬tralization; subnational government budgets; South-East Asia; Indonesia |
| JEL: | H71 O13 Q32 |
| Date: | 2019–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:oxcrwp:222&r=all |
| By: | Frisancho, Veronica; Valdivia, Martin |
| Abstract: | This paper evaluates the impact of the introduction of savings groups on poverty, vulnerability, and financial inclusion outcomes in rural Peru. Using a cluster randomized control trial and relying on both survey and administrative records, we investigate the impact of savings groups over a two year period. We find that savings groups channel expensive investments such as housing improvements and reduce households’ vulnerability to idiosyncratic shocks, particularly among households in poorer districts. The treatment also induces changes in households’ labor allocation choices: access to savings groups increases female labor market participation and, in poorer areas, it fosters greater specialization in agricultural activities. Access to savings groups also leads to a four-percentage point increase in access to credit among women, mainly driven by access to the group’s loans. However, the introduction of savings groups has no impact on the likelihood to use formal financial services. On the contrary, it discourages access to loans from formal financial institutions and microfinance lenders among the unbanked. |
| Keywords: | Banca de desarrollo, Economía, Familia, Finanzas, Investigación socioeconómica, Pobreza, Sector financiero, |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:dbl:dblwop:1678&r=all |
| By: | Slavchevska, Vanya; Doss, Cheryl; Mane, Erdgin; Kaaria, Susan; Kar, Anuja; Villa, Victor |
| Abstract: | In Nepal, as in many developing countries, male outmigration from rural areas is significant and is rapidly transforming the sending communities. Using primary data collected from households in rural Nepali communities, this study analyzes the effects of male out-migration from rural agricultural areas on women’s and men’s work on and off the farm. Using an instrumental variable approach to correct for endogeneity related to outmigration, the study finds differential impacts on agricultural labor for the men and women who remain. Men reduce labor in non-farm work without significantly increasing their labor allocation to other activities. Women, on the other hand, increase their work on the farm taking on new responsibilities and moving from contributing family workers to primary farmers. Despite their growing roles as primary farmers, women in households with a migrant do not increase their work in higher value activities, and remain predominantly concentrated in producing staple grains. The analysis highlights the importance of recognizing the changing roles of rural women, especially with respect to the management of the family farm, but it also raises questions about the sustainability and resilience of rural livelihoods to shocks in remittance incomes. |
| Keywords: | NEPAL; SOUTH ASIA; ASIA; migration; rural areas; gender; labour; agriculture; women; men; households; remittances; rural outmigration; labour supply |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1981&r=all |
| By: | Ulrich J. Eberle (Future of Conflict Fellow at International Crisis Group and Princeton University); Dominic Rohner (University of Lausanne and CEPR); Mathias Thoenig (University of Lausanne and CEPR) |
| Abstract: | This paper investigates the impact of climate shocks on violence between herders and farmers by using geolocalized data on conflict events for all African countries over the 1997-2014 period. We find that a +1℃ increase in temperature leads to a +54% increase in conflict probability in mixed areas populated by both farmers and herders, compared to +17% increase in non-mixed areas. This result is robust to controlling for the interaction between temperature and ethnic polarization, alternative estimation techniques, disaggregation levels, and coding options of the climatic/conflict/ethnic variables. When quantifying at the continental level the impact on conflict of projected climate change in 2040, we find that, in absence of mixed population areas, global warming is predicted to increase total annual conflicts by about a quarter in whole Africa; when factoring in the magnifying effect of mixed settlements, total annual conflicts are predicted to rise by as much as a third. We also provide two pieces of evidence that resource competition is a major driver of farmer-herder violence. Firstly, conflicts are much more prevalent at the fringe between rangeland and farmland - a geographic buffer of mixed usage that is suitable for both cattle herding and farming but is particularly vulnerable to climate shocks. Secondly, information on groups' mobility reveals that temperature spikes in the ethnic homeland of a nomadic group tend to diffuse its fighting operations outside its homeland, with a magnified spatial spread in the case of conflicts over resources. Finally, we show that violence is substantially reduced in the presence of policies that empower local communities, foster participatory democracy, enforce property rights and regulate land dispute resolution. |
| Keywords: | Conflict, civil war, violence, climate change, weather, heat, temperature, nomadic, ethnicity, resource competition, farmer-herder conflict, Sahel |
| JEL: | D74 N47 O13 Q34 Z13 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:pri:esocpu:22&r=all |
| By: | Ahmed, Akhter; Hidrobo, Melissa; Hoddinott, John F.; Koch, Bastien; Roy, Shalini; Tauseef, Salauddin |
| Abstract: | Social protection programs are primarily focused on influencing household behavior in the short term, increasing consumption to reduce poverty and food insecurity, and promoting investments in human capital. A large body of evidence across numerous settings shows that cash and food transfer programs are highly effective in doing so. However, there is growing interest in understanding the extent to which such programs can help households stay out of poverty in the longer term, specifically after transfers end. We bring new evidence to this question, re-interviewing Bangladeshi households that participated in a well-implemented randomized social protection intervention four years after it ended. We find that combining transfers, either cash or food, with behavior change communication activities sustainably reduced poverty. Cash transfers alone had sustainable effects, but these were context-specific. The beneficial impacts of food transfers did not persist four years after the intervention finished. |
| Keywords: | BANGLADESH; SOUTH ASIA; ASIA; social protection; food security; poverty; cash transfers; intervention; households; sustainability; nutrition; poverty alleviation; food assistance; behavior change communication; food transfer; beneficiaries; poverty reduction |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1988&r=all |
| By: | Gupta, Manavi; Kishore, Avinash |
| Abstract: | India has recorded high levels of unemployment and low labor force participation rates in recent years even before the onset of the COVID-19 pandemic and the lockdown. How does an episode of unemployment or loss of income affect household consumption expenditure is an important question for designing effective safety nets. We use data on household-specific episodes of job loss and decline in income, from an earlier year (March-April 2019) to estimate the household response to employment shocks. We apply diff-in-diff and quantile regressions to a high-frequency panel data from a nationally representative survey of 1,75,000 households to estimate the impact of a job loss (and change in income) on household consumption expenditure—for urban and rural households, and households across different expenditure levels. We find that loss of employment of an earning member leads to a significant immediate decline in household consumption expenditure. The decline is much larger for urban households and households in the lowest and the highest deciles of monthly per capita. Durable expenses go down the most. Expenditure on health and education also goes down significantly and there is evidence of adjustments in discretionary expenses too, especially for urban households. For households with only one earning member, borrowing does not increase after the job loss, suggesting credit constraints. Government cash transfers help rural households, as the beneficiaries show a smaller reduction in consumption expenditure after the shock. Our findings highlight the high vulnerability of urban households to economic shocks and can inform the design and targeting of income support and other safety-net programs in India and other developing countries. |
| Keywords: | INDIA; SOUTH ASIA; ASIA; unemployment; household consumption; rural areas; urban areas; employment; shocks; cash transfers; credit; consumer participation; consumption smoothing; permanent income hypothesis; credit constraints; consumer spending |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1978&r=all |
| By: | Carneiro, Pedro (University College London); Kraftman, Lucy (Institute for Fiscal Studies, London); Mason, Giacomo (Competition and Markets Authority); Moore, Lucie (OPM); Rasul, Imran (University College London); Scott, Molly (OPM) |
| Abstract: | We evaluate an intervention targeting early life nutrition and well-being for households in extreme poverty in Northern Nigeria. The intervention leads to large and sustained improvements in children's anthropometric and health outcomes, including an 8% reduction in stunting four years post-intervention. These impacts are partly driven by information-related channels. However, the certain and substantial flow of cash transfers is also key. They induce positive labor supply responses among women, and enables them to undertake productive investments in livestock. These provide protein rich diets for children, and generate higher household earnings streams long after the cash transfers expire. |
| Keywords: | nutrition, cash transfers |
| JEL: | I15 O15 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13955&r=all |
| By: | Haushofer, Johannes (Department of Economics, Stockholm University and); Mudida, Robert (Strathmore Business School); Shapiro, Jeremy (Busara Center for Behavioral Economics) |
| Abstract: | We study the economic and psychological effects of a USD 1076 PPP unconditional cash transfer, a five-week psychotherapy program, and the combination of both interventions among 5,756 individuals in rural Kenya. One year after the interventions, cash transfer recipients had higher consumption, asset holdings, and revenue, as well as higher levels of psychological well-being than control households. In contrast, the psychotherapy program had no measurable effects on either psychological or economic outcomes, both for individuals with poor mental health at baseline and others. The effects of the combined treatment are similar to those of the cash transfer alone. |
| Keywords: | Unconditional cash transfers; Psychotherapy; Randomized experiment |
| JEL: | C93 D90 O12 |
| Date: | 2021–01–07 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1377&r=all |
| By: | Yasuharu Shimamura (Graduate School of International Cooperation Studies, Kobe University); Satoshi Shimizutani (JICA Ogata Sadako Research Institute for Peace and Development); Shimpei Taguchi (JICA Ogata Sadako Research Institute for Peace and Development, Research Program Division); Hiroyuki Yamada (Faculty of Economics, Keio University) |
| Abstract: | This paper examines the short term impact of improved access to supremely safe water at newly built boreholes on the health, schooling and time allocation of children in rural Zambia. We employ a difference-in-difference estimation using a dataset collected under a quasi-experimental setting. We observe positive and significant effects of improved access to safe water on the reduction of incidence of diarrhea for pre-school children but not for school age children. On the other hand, we do not find any positive effect on school attendance and even suggest that there is a negative effect on girls living surrounding new boreholes. To understand the mechanism behind this pattern, we examine any changes in the use of time by children with easier access to safe water. We find for girls a significant increase in time spent on water-related household chores including fetching water. Moreover, we observe a significant decrease in the incomegenerating activities of girls. These findings, together with the suggestive evidence of increased demand for supremely safe water available at boreholes with easier access, imply that the burden of water-related household chores appears to shift from mothers to daughters. |
| Keywords: | fetching water, borehole, waterborne diseases, Zambia, time use |
| JEL: | I38 J22 J16 |
| Date: | 2020–11–25 |
| URL: | http://d.repec.org/n?u=RePEc:keo:dpaper:2020-022&r=all |
| By: | Afridi, Farzana (Indian Statistical Institute); Debnath, Sisir (Indian Institute of Technology Delhi); Somanathan, E. (Indian Statistical Institute) |
| Abstract: | Air pollution is amongst the gravest public health concerns worldwide, and indoor sources are the largest contributors in many developing countries. In our study in central India, we randomly assign villages to a campaign by rural public health workers to either raise awareness about the adverse health effects of smoke from solid fuels and measures to mitigate them, or raise health awareness along with providing information on the universal cash-back LPG subsidy program or a control group in which neither information is provided. Using sales records of oil marketing companies, we find an over 6% increase in the purchase of LPG refills annually, almost 14% rise in monthly refill consumption and a 52% increase in self-reported induction stove usage in the combined treatment. There was no change in consumption of either LPG refills or usage of induction stoves in the health only treatment, but we observe behavioral changes - over 6 percentage points increase in the probability of the household having an outlet for smoke or a separate room for cooking. Our findings highlight the salience of financial constraints and the importance of the design of public subsidy schemes in inducing regular usage of clean fuels. |
| Keywords: | air pollution, solid fuels, LPG, induction, health, subsidy, awareness, India |
| JEL: | D10 D90 I15 Q53 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13967&r=all |
| By: | Prem, Mounu; Vargas, Juan F.; Namen, Olga |
| Abstract: | While the literature has documented negative effects of conflict on educational outcomes, there is little evidence on the effect of conflict termination. We show how the permanent ceasefire declared by FARC’s insurgency during peace negotiations with the Colombian government caused a differential improvement on several educational outcomes in the areas affected by FARC violence prior to the ceasefire. This effect is not explained by peacebuilding and post-war recovery investments, and they are only partially driven by wartime child soldiering. Instead, we find support for other mechanisms such as the post-ceasefire plummeting of victimization and new economic opportunities in treated areas. |
| Date: | 2020–12–30 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:kd4pb&r=all |
| By: | Christophe Muller (Aix-Marseille Univ, CNRS, AMSE, Marseille, France.); Nouréini Sayouti (CERDI, University of Auvergne) |
| Abstract: | Do households facing an interval of prices rather than a simple price alter the results of poverty analyses? To address this question, we exploit a unique dataset from Niger in which agropastoral households provide the minimum and maximum prices they paid for each consumed product in each season. We estimate poverty measures based on this price information using several absolute poverty line methodologies. Prices are used for valuing household consumption bundles, estimating household-specific price indices, valuing minimal calorie requirements, and extrapolating the link between food poverty and consumption.The results for Niger show statistically significant differences in the estimated chronic and dynamic poverties for these approaches, especially for international poverty comparisons and seasonal transient poverty monitoring. Specifically, using minimum and maximum prices generates gaps in the estimated poverty rates for Nigerien agropastoral households that exceed regional poverty disparities, which implies that regional targeting priorities in poverty alleviation policies would be reversed if these alternative prices are utilized.This result suggests that typically estimated poverty statistics, which assume that each household, or even cluster, faces a unique price for each product in a given period, may be less accurate for policy monitoring than generally believed. |
| Keywords: | poverty, prices, Niger, social policies |
| JEL: | I32 D12 Q12 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:aim:wpaimx:2102&r=all |
| By: | Carine Meyimdjui |
| Abstract: | Using a panel of 101 low- and middle-income countries with data covering the period 1980-2012, this paper applies various econometric approaches that deal with endogeneity issues to assess the impact of food price shocks on socio-political instability once fiscal policy and remittances have been accounted for. It focuses on import prices to reflect the vulnerability of importer countries / net-buyer households to food price shocks. The paper finds that import food price shocks strongly increase the likelihood of socio-political instability. This effect is greater in countries with lower levels of private credit and income per capita. On the other hand, while remittances seem to dampen the adverse effect of import food price shocks on socio-political instability in almost all countries, the mitigating role of fiscal policy is significant only in countries with low-levels of private credit. |
| Keywords: | Commodity price shocks;Remittances;Fiscal policy;Expenditure;Government consumption;import food price shocks,political instability,fiscal policy.,WP,food price shock,government crisis,consumption expenditure,expenditure growth,government reaction |
| Date: | 2020–11–13 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2020/248&r=all |
| By: | Ulrich Nguemdjo (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, LPED - Laboratoire Population-Environnement-Développement - IRD - Institut de Recherche pour le Développement - AMU - Aix Marseille Université); Bruno Ventelou (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This study analyses the relationship between a household member's migration and child mortality within the family left behind in rural areas. Exploring the richness of the Niakhar Health and Demographic Surveillance System panel, we use high-frequency migration data to investigate the effects of migration on child mortality at the household level over 16 years. Migrations, particularly short-term migrations, are positively associated with the survival probability of under-five children in the household. Also, we find that working age women's short-term migrations impact child mortality more than working age men's short-term migrations. This observation supports hypotheses in the economic literature on the predominant role of women in rural households in obtaining welfare improvements. Moreover, we detect crossover effects between households of the same compound –in line with the idea that African rural families share part of their migration-generated gains with an extended community of neighbors. Lastly, we investigate the effect of a mother's short-term migration on the survival of her under-5 children. The aggregate effect of a mother's migration on child survival is still positive, but much weaker. Specifically, mother migration during pregnancy seems to enhance the wellbeing of the child, considered immediately after birth. However, when the child is older (more than one year), the absence of the mother tends to decrease the probability of survival. |
| Keywords: | Niakhar,Senegal,short- and long-term migrations,child mortality |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-03078776&r=all |
| By: | Kapoor, Shreya; Deb Pal, Barun; Singhal, Aditi; Anantha, K. H. |
| Abstract: | Technology adoption has been advocated as an important way to improve agricultural productivity and welfare of farmers in the semi-arid regions across the globe. The Government of Karnataka implemented the Bhoosamrudhi program in four districts of the state (Bidar, Chikballapur, Dharwad, and Udupi) as a pilot project to increase the crop yield and income of smallholder farmers. This program was launched on the theme of technology adoption along with convergence among different departments of agriculture. Farmers have been classified into five categories based on their levels of technology intensification to assess the impact of different levels of technology intensification on their welfare. The research is built on a primary survey conducted in pilot districts of the state in 2018 over a sample of 1,465 farmer households. The results generated using econometric methods of propensity score matching (PSM) and inverse probability weighted with regression adjustment (IPWRA) highlight that the higher the intensification, the higher the net returns to the farmers. The results state that non-adopters would receive a benefit of an additional Rs.3200 per month if they adopt at least one level of technology intensification. Hence, this program turned out to be a successful model for smallholder farmers in semi-arid regions of India. Steps should be taken to maintain and expand the momentum of adoption to ensure food and livelihood security in the economy. |
| Keywords: | INDIA; SOUTH ASIA; ASIA; technology; intensification; farmers; welfare; impact assessment; econometric models; smallholders; crop intensification; technology intensification; technology adoption; Propensity score matching (PSM) |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:1982&r=all |
| By: | Martino Pelli; Jeanne Tschopp; Natalia Bezmaternykh; Kodjovi M. Eklou |
| Abstract: | This paper examines the response of firms to capital destruction, using a new measure of firm exposure to tropical storms as a negative exogenous shock on firms’ capital stock. Drawing on a panel of Indian manufacturing firms between 1995 and 2006, we establish that, depending on their strength, storms destroy up to 75.3% of the fixed assets of the median firm (in terms of its productivity and industry performance). We quantify the response of firm sales within and across industries and find effects akin to Schumpeterian creative destruction, where surviving firms build back better. Within an industry, the sales of less productive firms decrease disproportionately more, while across industries capital destruction leads to a shift in sales towards more performing industries. This build-back better effect is driven by firms active in multiple industries and, to a large extent, by shifts in the firm-level production mix within a firm’s active set of industries. Finally, while there is no evidence that firms adjust by investing in new industry lines, firms tend to abandon production in industries that exhibit lower comparative advantage. |
| Keywords: | Comparative advantage;Total factor productivity;Capital productivity;Natural disasters;Productivity;WP,ISIC firm,single-establishment firm,tropical storm |
| Date: | 2020–09–25 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2020/203&r=all |