Labor Markets in Developing Countries
Paper Session
Saturday, Jan. 3, 2026 10:15 AM - 12:15 PM (EST)
- Chair: Seema Jayachandran, Princeton University
The Impact of AI on Developing Country Labor Markets
Abstract
Generative AI tools are widely being adopted in developing countries—-in India, for example, 92% of knowledge workers, or workers working at a desk, report utilizing AI tools in their job every day (2024 Work Trend Index Annual Report). Leveraging cross-occupation variation in exposure to AI, and combining data from the universe of LinkedIn profiles, job postings, and all workers on a large online freelancing platform, this study will examine how generative AI is reshaping employment, wages, career progression, productivity, and the distribution of gains and losses across workers in India and other markets.The Economic Consequences of Knowledge Hoarding
Abstract
Social learning is an important source of knowledge diffusion in low-income countries. However, the highly localized character of many labor markets could inhibit social learning by generating incentives for individuals to hoard knowledge. This paper studies the impact of knowledge hoarding on the diffusion of profitable skills and technologies in rural Burundi and measures its aggregate and distributional consequences for the village economy. In a field experiment covering 223 villages (labor markets), we encourage workers skilled in high-return agricultural technologies to share their knowledge with unskilled individuals. We randomize at the local labor market level whether the unskilled worker is a competitor (i.e., someone from the same labor market) and whether the training is about a technology with rivalrous rents (row planting, which commands a wage premium in the labor market). We first establish that knowledge hoarding indeed reduces social learning. When incumbents are matched with an individual from the same labor market, knowledge transmission occurs only 3% of the time, but this figure reaches 43% if the unskilled worker is not a competitor. In contrast, transmission of a technology with nonrivalrous rents (composting) is high regardless of the unskilled worker's identity. Next, we show that knowledge hoarding creates winners and losers: By hoarding knowledge, incumbents earn 6% more, and the skilled equilibrium wage is 3% higher. In contrast, unskilled workers' earnings and farm output are 7% and 20% lower, respectively. Overall, knowledge hoarding reduces technology adoption by over 20%, suggesting substantial yield losses. Finally, our results suggest that fear of social sanction is a mechanism that sustains knowledge hoarding among the incumbents, highlighting how social ties can foster social learning but also inhibit it when knowledge diffusion threatens incumbents' rents.Exposure and Spatial Choice: Evidence from Nairobi
Abstract
Economic analysis of access to opportunities (jobs, education, healthcare, goods, etc.) often focuses on the role of prices, quality, and access costs. Building on research from psychology, marketing and neuroscience, we study the additional role of prior exposure with an option for shaping choices, in the context of urban mobility for work. In a sample of 800 casual workers in Nairobi, the median person commutes 7.8 km but has never been to half the neighborhoods within 75 minutes from where they live. To quantify pure preferences for familiar locations, defined as locations visited at least once in the past, we offer short-term employment and experimentally induce familiarity by training participants in either familiar or unfamiliar locations. Participants are willing to travel 3.5 km further or take a pay cut worth 22% of the median daily wage to avoid working in a location never visited before. This differential is fully offset after one visit to such an unfamiliar neighborhood. Individuals are also initially less likely to consider working in an unfamiliar neighborhood without prompting and a single visit closes half of this gap. Participants partially anticipate these effects. These effects persist for a different paid opportunity 2-4 months after the intervention, and participants report visiting training neighborhoods outside our study. Our results are consistent with unfamiliarity making people view neighborhoods more negatively, and we find little evidence that navigation costs or exploration risk can explain these results. Our results suggest that past exposure frictions are an important component of urban mobility costs in cities like Nairobi.JEL Classifications
- O1 - Economic Development
- J4 - Particular Labor Markets