I’ve Been Waiting on the Railroad: The Effects of Congestion on Firm Production (Job Market Paper)
Abstract: Transportation networks worldwide suffer from heavy congestion. This paper provides the first estimates of congestion's effect on the production side of the economy, combining firm survey data with traffic data from Indian Railways. Geographic variation in congestion comes from a recent wave of passenger trains which were planned according to certain rigid rules, making it possible to identify the costs the additional traffic imposes on firms using the railways to ship goods. In estimating this “congestion externality”, the empirical strategy accounts for both direct and spillover effects of congestion. It also draws on a traffic model from operations research to disentangle a mean effect (congestion slows average shipping times) from a variance effect (congestion makes shipping times less predictable). In response especially to the unpredictability, firms simplify operations in several ways, leading to lower productivity and substantial revenue loss. While affected firms suffer, however, I draw on a general equilibrium model of competition to identify gains to their competitors. Policy implications of these results concern both the management of traffic on existing infrastructure, and the construction of new infrastructure.
Research in Progress
Manufacturing Underdevelopment: India’s Freight Equalization Scheme, and the Long-term Effects of Distortions on the Geography of Production (with Ernest Liu)
Abstract: India's Freight Equalization Scheme (FES) aimed to promote even industrial development by subsidizing long-distance transport of key inputs such as iron and steel. Many observers speculate that FES actually exacerbated inequality by allowing rich manufacturing centers on the coast to cheaply source raw materials from poor central regions. Using the lifting of FES in early 1990s as a natural experiment and exploiting the state-by-industry variation in exposure to FES, we find empirical support to the conjecture. Specifically, industries that depend heavily on these materials, directly or indirectly, tend to experience faster growth upon the lifting of FES in the poor central regions, which have more abundant supply of the raw materials.
Internal Migration in India: New Evidence from Rail Passenger Data (with Felix Forster and Clement Imbert)
Abstract: Received wisdom in the literature holds that internal migration in India is sub-optimally low. However, conventional measures of internal migration lack geographic granularity and temporal frequency. This paper presents new measures of permanent and seasonal migration based on passenger travel data from the Indian Ministry of Railways. We validate these measures using comparisons to established data from the National Sample Survey. Finally, we use gravity equations to estimate the elasticities of this short-term migration to economic shocks, and to back out the implied frictions.
Do Anti-Bribery Laws Affect International Trade and Investment?
Abstract: When governments pass laws to prevent their businesspeople from bribing foreign officials, how does this affect patterns of trade and foreign investment? A literature focusing on the OECD Anti-Bribery Convention claims that these laws direct international business toward less corrupt destination countries, with the effect of diverting business away from developing countries. I rebut this claim, using three empirical tests: (i) a baseline test building on previous work but accounting for the omitted role of OECD-level cooperation trends, (ii) an analysis of an initiative intensifying the Convention’s enforcement, and (iii) a test exploiting product-by-destination level variation in pre-Convention exposure to OECD exports. Together, these tests show that the redirection of trade and investment following the passage of the foreign bribery laws was due not to the laws themselves, but to an underlying trend of increased political cooperation among OECD countries, as indicated by patterns in UN voting affinity. This cooperation is what simultaneously led OECD countries to pass measures such as the Convention, and to do more business with other OECD countries, which happen to be less corrupt on average than non-OECD countries.
Changing Beliefs, Changing Bribes (with Abhijit Banerjee, Esther Duflo, Benjamin Olken, and Jeff Weaver)
Abstract: This project investigates the effect of changing legal penalties, and citizens' beliefs about these penalties, on corruption. We focus on a single, clear case: the law against riding a motorcycle without a helmet in India, a setting where many citizens pay bribes instead of a formal ticket and are unsure of the true legal fine. Preliminary data collection shows that police often lie to drivers about these fine amounts, in order to extract higher bribes. We design a randomized intervention using SMS messages to inform selected motorcyclists of the true legal fine. Ongoing analysis uses bargaining theory to study how drivers leverage this information to affect both the extensive margin of whether they pay bribes, and the intensive margin of amount paid. The bargaining outcomes potentially change when legal fine amounts change, a possibility we will study with an additional round of data collection after a pending law change.