We study how US immigration policy and the Internet boom affected not just the US, but also led to a tech boom in India. Students and workers in India acquired computer science skills to join the rapidly growing US IT industry. As the number of US visas was capped, many remained in India, enabling the growth of an Indian IT sector that eventually surpassed the US in IT exports. We leverage variation in immigration quotas and US demand across occupations to show that India experienced a ‘brain gain’ when the probability of migrating to the US was higher. Changes in the US H-1B cap induced changes in fields of study, and occupation choice in India. We then build and estimate a quantitative model incorporating trade, innovation, and dynamic occupation choice in both countries. We find that high-skill migration raised the average welfare of workers in each country, but had distributional consequences. The H-1B program induced Indians to switch to computer science occupations, and helped drive the shift in IT production from the US to India. We show that accounting for endogenous skill acquisition is key for quantifying the gains from migration.

This paper examines whether an important cultural institution in India – dowry – can enable migration by increasing the liquidity available to young men to share the gains of migration with their parents. We hypothesize that one cost of migration is the disruption of traditional elderly support structures, where sons live near their parents and care for them in their old age. Dowry can attenuate this cost by providing sons and parents with a moveable transfer that eases constraints on income sharing. To test this hypothesis, we collect two new datasets on property rights over dowry across family members. Net transfers of dowry to a man’s parents are common but far from universal. Consistent with using dowry for income sharing, transfers occur more when sons migrate, especially when they work in higher-earning occupations. Nationally representative data confirms that migration rates are higher in areas with stronger historical dowry traditions. Finally, exploiting a large-scale highway construction program, we show that men from areas with stronger dowry traditions have a greater migration response to reduced migration costs. Despite its well-documented adverse consequences, dowry may persist because it facilitates old-age support, promoting migration.

We characterize how firms structure supply chains under climate risk. Using new data on the universe of firm-to-firm transactions from an Indian state, we show that firms diversify sourcing locations, and that suppliers exposed to climate risk charge lower prices. Our event-study analysis shows firms with suppliers in flood-affected districts experience a temporary decline in inputs, followed by a return to original levels. We develop a general equilibrium spatial model of firm input sourcing under climate risk. Firms diversify identical inputs from suppliers across space, trading off the probability of a climate disruption against higher input costs. We quantify the model using data on 271 Indian regions, showing real wages vary across space and are correlated with geography and productivity. Wages are inversely correlated with sourcing risk, giving rise to a cost minimization-resilience tradeoff. Supply chain diversification unambiguously reduces real wage volatility, but ambiguously affects their levels, as diversification may come with higher input costs. While diversification helps mitigate climate risk, it exacerbates the distributional effects of climate change by reducing wages in regions prone to more frequent shocks.

We characterize what features make supply chains more resilient. Using new data. on the universe of firm-to-firm transactions from an Indian state, we identify firms with larger supplier risk following the Covid-19 lockdowns. Using an event-study design we find firms with suppliers in strict-lockdown districts experienced 4.5pp higher separation rates (a 15% increase relative to baseline). We study which characteristics increase supply-chain resilience. Firms that buy more complex products, with fewer available suppliers, are less likely to break links. We explore how firms change post-shock supplier composition. Firms with higher supplier risk form new links with larger and better-connected suppliers.

Neighborhoods are strong determinants of both economic opportunity and criminal activity. Does improving connectedness between segregated and unequal parts of a city predominantly import opportunity or export crime. We use a spatial general equilibrium framework to model individual decisions of where to work and whether to engage in criminal activity, with spillovers across the criminal and legitimate sectors. We match at the individual level various sources of administrative records from Medellin, Colombia, to construct a novel, granular dataset recording the origin and destination of both workers and criminals. We leverage the rollout of a cable car system to identify key parameters of the model, informing how changes in transportation costs causally affect the location and sector choices of workers and criminals. Our counterfactual exercises indicate that, when improving the connectedness of almost any neighborhood, overall criminal activity in the city is reduced, and total welfare is improved.

Emerging economies often feature low-quality institutions, generating micro-level trade frictions. In these settings, firms may rely on cultural-proximity-based informal institutions to overcome such frictions. We quantify the aggregate effects of cultural proximity in a production network. Using new microdata on firm-to-firm trade from India with information on prices, transactions, and caste and religious connections, we find that higher cultural proximity reduces prices and fosters trade at intensive and extensive margins. Our evidence suggests these results are driven by firms trying to overcome frictions imposed by low-quality institutions. Guided by these facts, we propose a quantitative firm-level production network model, where cultural proximity and institutional quality influence trade and matching costs. Our counterfactual exercises indicate that an economy composed of culturally closer firms features lower costs, lower prices, higher sales and higher welfare with respect to an economy with culturally distant firms.

In 1991, Brazil expanded its rural old-age pension to cover millions of previously uncovered women, conditional on work requirements. We use a difference-indifferences approach to show that this expansion drastically increased women’s employment by nine percentage points, or 26 percent. This increase in labor force participation occurred among women who were immediately age-eligible, and among younger cohorts that would be eligible in the future. These results illuminate the capacity of workers to respond to financial incentives for labor participation in old age, and the extent to which younger workers might be forward-looking as they respond to retirement incentives.

How does income from international migrant labor affect the long-run development of migrant-origin areas? We leverage the 1997 Asian Financial Crisis to identify exogenous and persistent changes in international migrant income across regions of the Philippines, derived from spatial variation in exposure to exchange rate shocks. The initial shock to migrant income is magnified in the long run, leading to substantial increases in income in the domestic economy in migrant-origin areas; increases in population education; better-educated migrants; and increased migration in high-skilled jobs. 77.3% of long-run income gains are actually from domestic (rather than international migrant) income. A simple model yields insights on mechanisms and magnitudes, in particular, that 23.2% of long-run income gains are due to increased educational investments in origin areas. Improved income prospects from international labor migration not only benefit migrants themselves, but also foster long-run economic development in migrant-origin areas.

We provide one of the first estimates of elasticities of substitution across suppliers within the same product. We estimate these elasticities by using new real-time administrative tax data on product-level prices and quantities with firm-to-firm transactions, and leveraging the geographic and temporal variation from the Covid-19 lockdowns in India. Suppliers are highly complementary even at this granular level, with an estimated elasticity of 0.55, thus amplifying negative shocks by transmitting them through the supply chain. We quantify this transmission and show that under our estimated elasticities, the overall fall in output is substantial and widespread. In policy counterfactuals, we quantify the importance of firm connectivity separately from firm size, and of targeting aid to connected firms. Protecting more connected firms mitigates output declines non-linearly with the size of the productivity shock.

We show that shared identity with elected leaders helps entrepreneurs form new and productive businesses. Following close Indian elections during 2006 −16, local firm entry by entrepreneurs belonging to the same cultural groups as winning candidates increases. Despite benefitting from preferential behavior, and in contrast to earlier work, such politically connected entrants are more productive than incumbent in-group firms. Simultaneously, business formation by out-group entrepreneurs does not decline. The high TFP of in-group entrants suggests barriers that previously precluded the entry of potentially high-performing firms. Administrative entry costs seem to be a key barrier that in-group politicians help ease.

This paper studies the role of customer and supplier acquisition in shaping firm dynamics and aggregate productivity. Using transaction-level data from a large Indian state, we document lifecycle patterns of customer and supplier networks. We find that younger firms have fewer customers and suppliers, lower sales and intermediate expenditures, and higher output prices and input costs. Motivated by these patterns, we develop a model of endogenous network formation where heterogenous firms undertake costly acquisition of customers and suppliers over the lifecycle. We study the normative properties of the model and find that the decentralized equilibrium is inefficient due to vertical and search externalities. Inefficient pricing and acquisition choices lead to quantitatively large aggregate productivity losses. We use the model to study how differences in acquisition technology map to productivity differences. We find that improvements in acquisition technology can generate sizable productivity gains, and that improvements in allocative efficiency are central for delivering these gains.

How does violence in origin areas affect the educational outcomes of refugees in their destinations? Using administrative panel data, we find that heightened violence in the hometowns of Syrian students leads to improvements in their school outcomes in Turkiye. Turkish language and Math scores of refugee students improve, with larger impacts on Turkish scores. There is no impact on naturalized Syrian students. We observe positive spillovers on Turkish students. These findings suggest ongoing violence in refugee-origin areas reduces the prospect of returning home, and induces students to better integrate into host countries by investing in education.

Most estimates of the economic impacts of transit networks compare regions along network routes to neighboring regions away from such routes. However, in the presence of spatial spillovers in economic activity such a method will underestimate the true effect of roads and railways. In this paper, I take into account spatial spillovers in estimating the overall impacts of transit networks in India. I use an empirical strategy relying on the historical placement of major cities: by connecting nodal cities with straight lines, I instrument for the endogenous placement of these networks. Using night-time luminosity data as a measure of economic activity, I estimate the parameters of a predictive model that incorporates these spillovers, which then performs well in an out-of-sample exercise. I find that being close to transit networks between cities led to greater economic activity in the 1990s and that such activity spread to neighboring regions, substantially increasing the overall impacts. Ignoring the spillovers produces income elasticities that are only 27% of the true overall effects of such routes. These geographic externalities led to a rapid rate of convergence in incomes across regions, highlighting how transit networks and spatial spillovers together, strongly determined the geographic spread and temporal changes in the economic development of the region.