Firms, Productivity and Development

Paper Session

Friday, Jan. 6, 2017 8:00 AM – 10:00 AM

Swissotel Chicago, Zurich E
Hosted By: American Economic Association
  • Chair: Christopher Woodruff, University of Warwick

Land Allocation, Income Shocks, and Productivity: Evidence From Kenyan Contract Farming

Lorenzo Casaburi
,
Stanford University
Michael Kremer
,
Harvard University

Abstract

Parcel fragmentation has substantially reduced average plot size in Sub-Saharan Africa and other developing regions over time. We use a proprietary plot-level panel database from a large sugarcane contract farming company to analyze land allocation choices in Western Kenya from 1987 to 2006. After documenting time-series patterns, we study the impact of temporary output shocks on parcel fragmentation choices. Positive output shocks increase the likelihood of parcel fragmentation in the next harvest cycle. This effect persists for at least five years after the shock. We present evidence on the role of inheritance rule and rental markets in shaping this response, and conclude by discussing the productivity implications of these effects.

Migrants, Information, and Working Conditions in Bangladeshi Garment Factories

Rachel Heath
,
University of Washington
Tyler McCormick
,
University of Washington

Abstract

A large portion of the labor force in many large factories in developing countries consists of internal migrants from rural areas, who may have little information about the industry upon beginning work. We examine whether workers' lack of information affects working conditions in the garment industry in Bangladesh. We use a retrospective panel of the wages and working conditions of 991 garment workers (matched to the factories they work in) collected in 2009. We find that internal migrants work in factories with worse conditions, but move towards factories with better conditions as they gain experience. These facts are consistent with a model in which migrants are poorly informed about working conditions upon beginning work but do learn as they gain experience in the industry.

Border Security, Trade and Firm Performance

Francesco Amodio
,
McGill University
Michele Di Maio
,
Parthenope University of Naples

Abstract

This paper studies the consequences of border security measures on economic activity. The banning of specific inputs limits firms' access to those inputs, lowering firm productivity and performance. For internal security reasons, the Government of Israel issued in 2008 a list of goods and materials which were banned from entering the Occupied Palestinian Territory (OPT) under any circumstance. We exploit the issuance of such list as a quasi-experiment, and identify its impact on firm operations and outcomes in the OPT. We use the US input-output matrix to derive a plausibly exogenous measure of intensity of each sector in banned inputs. We find those sectors which are more intensive in banned inputs to have systematically and differentially lower output and higher prices after 2008. These sectors also pay systematically lower wages, while we find no evidence of labor or capital reallocation. Evidence suggests a differential impact of the list across districts according to their baseline sectoral composition, showing that access to foreign inputs improves firm performance, but has an heterogeneous impact on local labor markets.

Guns and Roses: Flower Exports and Electoral Violence in Kenya

Ameet Morjaria
,
Northwestern University
Rocco Macchiavello
,
London School of Economics
Christopher Ksoll
,
Mathematica Policy Research

Abstract

This paper studies how firms react to electoral violence. Predictions derived from a
model of firms reaction to violence are tested using Kenya flower exporters during the
2008 post-election violence. The violence reduced exports primarily through workers
absence and had heterogenous effects: firms with direct contractual relationships in
export markets and members of the business association had higher incentives and
lower costs of reacting to the violence and suffered smaller production and workers
losses. Model calibrations suggest that the average firm operated at a loss during the
violence and absent workers suffered welfare losses at least three times larger than
weekly earnings. The results show how the impact of violence on trade is mediated by
different institutional arrangements associated with export.

The Hard Impacts of Soft Skills Training: Evaluating an Empowerment Program for Female Garment Workers in India

Achyuta Adhvaryu
,
University of Michigan
Namrata Kala
,
Harvard University
Anant Nyshadham
,
Boston College

Abstract

There is growing consensus that “soft” (non-cognitive) skills—such as the ability to allocate resources (e.g., time and money) effectively, interpersonal skills, and the ability to acquire and use information—can account as much for long-term economic wellbeing as cognitive ability and schooling. But how much of this relationship is causal? Using a controlled trial with multi-level treatment randomization, we study the direct and indirect spillover impacts of an in-depth soft skills training program aimed at empowering low-skilled female laborers in their personal lives and long-term career paths. We find that the purely philanthropically motivated year-long program had unexpected positive impacts on worker retention and attendance during the program roll-out and continued positive impacts after program completion on productivity and promotion rates. These positive externalities on labor supply and worker quality, though not the motivation for the training, more than pay for the cost of administering the program. Additional survey results show impacts on self-reported savings behavior (particularly for children’s education) and utilization of government and firm entitlement programs (e.g., pension, subsidized healthcare and schooling, and subsidized housing). Survey results also help to corroborate productivity and career advancement impacts, showing positive effects on self-assessment relative to peers and participation in skill development and production award or incentive programs on the job. We find sizable spillover effects on labor supply, productivity, and career advancement for untreated workers who frequently worked closely with treated workers. These spillovers emphasize the importance of the complex experimental design used to identify both direct and indirect impacts of treatment. We also find evidence of complementarities in treatment impacts on production with more treated co-workers on the line improving productivity controlling for one’s own treatment status. These spillovers and complementarities contribute further to the surprising profitability of the program.
JEL Classifications
  • O1 - Economic Development