Three essays on policy evaluation in developing countries
OA Version
Citation
Abstract
This dissertation is a collection of three independent essays on the theory and application of methods of policy analysis in development economics. The first chapter tackles the methodological problem of external validity: the extent to which a study's findings apply to settings outside of the study's original context. There has recently been much debate within development economics over the practical usefulness of randomized policy evaluations outside of the places and times they were originally implemented. The chapter offers a practical solution to the problem of assessing generalizability: I derive bounds on the average causal effect in a context of interest using data from a previous experimental study.
The second chapter, coauthored with Amrit Amirapu, investigates the costs that labor regulations impose on Indian firms. Regulatory burden has been viewed as the cause of many economic problems in India, including misallocation of resources across firms and slow growth. Many Indian regulations do not apply to firms with fewer than 10 workers. We use a downward discontinuity in the size distribution of firms at the 10-worker threshold to quantify regulatory costs imposed on firms. We find that these costs are substantial on average but vary widely across states, with firms in more corrupt states facing higher implied costs.
The third chapter, also coauthored with Amrit Amirapu, investigates changes in the production of certain goods in India in response to the elimination of the Small Scale Industry Reservation policy. This policy mandated that only firms maintaining less than a particular level of capital stock (about $1 million) were eligible to produce specific goods. The policy was gradually phased out over the period from 1997 to 2008. Different goods were de-reserved in different years, facilitating the comparison of markets for recently de reserved goods relative to never-reserved and still-reserved goods. We investigate the effects of de-reservation on small incumbent firms owing to competition from large formal entrants.