Essays in Development Economics

This dissertation consists of three essays. In the first chapter, I investigate the effect of long-term income shocks that affect only one side of the marriage market in India. The asymmetric shock is due to two factors - (1) a jobs-based affirmative action program that affects the occupations and wages of a group of castes that were historically against, with a strict upper age limit on eligibility and, (2) a social norm that determines which member works outside the household. The program results in a differential positive income shock for young men in the treated group. The income shock is found to affect the marriage market in several ways. First, there is no effect on the marriage rate of treated men. However, conditional on marriage, treated men pair up with spouses that have higher educational attainment, are taller, and have a higher BMI. They are also more likely to marry outside their own community. Second, treated women are overall less likely to marry, and their choice of spouse is unaffected conditional on marriage. Finally, controlling for observables, treated husbands are found to have greater decision making power within the households that are formed. There is no significant effect for treated wives. A structural model of the marriage market based on Choo and Siow (2006) is used to investigate the aggregate marital welfare effects of the policy. The estimates find that up to 80% of the benefit of the affirmative action policy accrues to men within the treated group. These findings suggest that (1) a larger share of the welfare gains from affirmative action policies accrue to the household member that actually receives them, and (2) that the marriage market is one mechanism through which the distribution operates, in addition to the intra-household bargaining process that is standard in the literature. In the second chapter (joint with Ashna Arora, Rakesh Banerjee and Siddharth Hari), we study the political economy of public service delivery. Local governments in developing countries play a crucial role in the provision of local public goods and the functioning of social welfare programs. This chapter investigates the relationship between the size of elected local government councils and public service delivery. We use a natural experiment from India, where the number of politicians at the village level is an increasing, discontinuous function of village population. We set up a regression discontinuity design to study the impact of a larger elected council on the targeting of welfare schemes as well as the allocation of private benefits by politicians to themselves. We find that larger councils improve access to a large scale workfare program, especially for traditionally disadvantaged communities. We also find that increasing the number of council members increases appropriation of private benefits by the council head but not by ordinary members. These results have implications for policy design. In the third chapter (joint with Ritam Chaurey), we investigate the relative effects of manager supervision on different types of labor. Across a large cross section of firms, we find that managers spend more time in supervisory roles when a larger share of contract labor is employed. This finding is then established causally using a differencein- differences approach, exploiting variations in labor regulations across Indian states and rainfall-driven demand shocks. Using the causal approach, we find that (i) there is no significant change in total management input in response to short run demand shocks, suggesting that the institutional factors of the market for managers has larger search/firing costs than that for industrial workers. However, (ii) managers are observed to spend more time in supervisory roles when relatively more contract labor is employed in response to demand shocks. Contrary to the literature, we also find that (iii) there is no productivity change when there is an influx of contract labor. These findings suggest that there are complementarities between manager supervision and contract labor input, even relative to other types of labor, and that the manner of deployment of management capital within a firm is endogenous, conditional on the total amount.These findings could account for one of the features that is widely observed in empirical studies - firms in regions with strong employee protections have lower steady state productivities.