“Priced Out: Aggregate Income Shocks and School Pricing in the Chilean Voucher Market” (Job Market Paper)
Abstract: Private school market shares are rising steadily in many developing countries, but we have a limited understanding of how private schools set prices, how parents respond, and how this affects enrollment and performance in equilibrium. To shed light on demand behavior and supply response, I present a model of school pricing that incorporates an unusual feature of schooling -- a potential preference by parents for small classes, and hence low school enrollment -- that interacts with schools having market power. I show that, for a relatively broad range of parameter values, these two features can lead to the surprising result that an increase in aggregate household income, and hence an increase in willingness to pay for private schooling, can actually cause equilibrium private school enrollment to decrease. To investigate how private school enrollment responds to rising household income in practice, I exploit aggregate community-level income shocks in Chile, which has had a nationwide school voucher system since 1981. These shocks are caused by different responses to the price of copper in different municipalities. I show that private school prices rise by 0.9% in response to a shock that causes a 1% rise in income while private school enrollment falls by 2.0%. I find that falling private school enrollment is primarily caused by the middle-income students at the top schools. Those middle-income students induced to downgrade by rising prices do not experience the test score gains from the income shock experienced by students in the rest of the income distribution. I structurally estimate an extended version of my model and find that both market power and parental preferences for reduced class size are contributing to the observed declines in enrollment.
“Fenced Out: Why Rising Migration Costs Matter”
Abstract: Spending on border enforcement has risen by 240% in the United States in the last decade and the construction of a fence on the U.S.-Mexico border has become a focal point in the debate over the costs and benefits of increased border security. However, whether and by how much the fence actually reduces migration from Mexico to the United States remains an open question. This paper estimates the impact of the fence on migration flows between Mexico and the United States and investigates the mechanisms driving observed impacts. To conduct this analysis, I exploit variation in the timing of U.S. government tactical infrastructure investment in fence construction in the period after the passage of the 2006 Secure Fence Act. Using Mexican household survey data and data I collected on border fence construction, I find that construction in a given municipality reduces migration by 39% from that municipality and by 26% from adjacent municipalities. I also find evidence that fence construction reduces migration rates for residents of non-border states with historically low access to smugglers by 38%. Based on these estimates, I calculate that the implied cost of the fence per migrant deterred is $4,800 USD. My findings suggest that fence construction deters migration because the migration costs faced by prospective migrants are sensitive to the particular set of available crossing locations. I derive a simple migration selection model to test this hypothesis and find that a left-censoring of the migration cost distribution, consistent with the disproportionate elimination of low-cost crossing options, best rationalizes evidence on changing migration patterns.
“Do Group Dynamics Influence Social Capital and Female Empowerment? Experimental Evidence from Microfinance” (with Erica Field, Rohini Pande, Natalia Rigol, and Shayak Sarkar). Submitted.
Abstract: Group meetings are an intrinsic part of the classic microfinance model that have the potential to increase social capital. Using experimental variation in group meeting frequency, we show that meeting more frequently builds social capital among female microfinance clients in India. However, group composition and individual characteristics are important determinants of social capital gained – clients who are new entrants benefit more from frequent meetings when matched with group members who are also new. To examine potential gains in female empowerment, we provided clients additional resources to assign as gifts during the festival season. Traditional measures of empowerment – consulting husband before allocating gifts and gift-giving to husbandside – are unchanged. However, among experienced client groups we observe an increased concentration of gift allocation towards own nuclear family (and away from extended family). This is consistent with greater social capital being linked to changes in network structure and empowerment.
“The Economic Returns to Social Interaction: Experimental Evidence from Microfinance” (with Erica Field and Rohini Pande), forthcoming, The Review of Economic Studies.
Abstract: Microfinance clients were randomly assigned to repayment groups that met either weekly or monthly during their first loan cycle, and then graduated to identical meeting frequency for their second loan. Long-run survey data and a follow-up public goods experiment reveal that clients initially assigned to weekly groups interact more often and exhibit a higher willingness to pool risk with group members from their first loan cycle nearly two years after the experiment. They were also three times less likely to default on their second loan. Evidence from an additional treatment arm shows that, holding meeting frequency fixed, the pattern is insensitive to repayment frequency during the first loan cycle. Taken together, these findings constitute the first experimental evidence on the economic returns to social interaction, and provide an alternative explanation for the success of the group lending model in reducing default risk.
Research in Progress
“Estimating Supply and Demand Responses to an Information Intervention in the Chilean Education Sector” (with David Autor, Marianne Bertrand, Esther Duflo, and Francisco Gallego).
Abstract: Vocational secondary school graduates in Chile face high unemployment rates and low wages. Thus, these schools do not always seem to be providing their students with the skills necessary for them to succeed in the labor market. An important factor that may be constraining the supply of high-quality vocational education is parents’ limited access to information on the job market outcomes of schools’ graduates that could be used to inform secondary school decisions. To evaluate the importance of limited information in this setting, we provide parents of eighth grade students at randomly selected primary schools with information on the earnings and employment rates of graduates from local secondary schools (obtained from confidential IRS data). In addition, we randomize the market-level intensity of treatment (i.e. the fraction of primary schools in which parents receive report cards) and randomize whether secondary schools are sent the report cards in advance and told that eighth grade students will also receive them. We are interested in potential responses from the school (e.g. different vocational track offerings). Our results will thus shed light on demand for quality, information deficit and market response to parental information in the context of a competitive education sector.
“Job Loss and Crime in Mexico” (with Melissa Dell and Kensuke Teshima).
Abstract: This project exploits variation in the competition that Mexican manufacturers face due to Chinese export growth in order to predict local rates of job loss. We intend to estimate the extent to which manufacturing job loss in recent years has contributed to increases in violence and organized crime in Mexico. We are particularly interested in examining heterogeneous effects based on the match between the types of workers who are displaced in a particular region and the characteristics of preexisting criminal networks operating there.