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June 21, 2017

Measuring Rents from Public Employment: Regression Discontinuity Evidence from Kenya - Working Paper 457

Public employees in many developing economies earn much higher wages than similar private-sector workers. These wage premia may reflect an efficient return to effort or unobserved skills, or an inefficient rent causing labor misallocation. To distinguish these explanations, we exploit the Kenyan government’s algorithm for hiring eighteen-thousand new teachers in 2010 in a regression discontinuity design. Fuzzy regression discontinuity estimates yield a civil-service wage premium of over 100 percent (not attributable to observed or unobserved skills), but no effect on motivation, suggesting rent-sharing as the most plausible explanation for the wage premium.

Nicholas Barton , Tessa Bold and Justin Sandefur
December 20, 2016

The Impact of Anti-Money Laundering Regulation on Payment Flows: Evidence from SWIFT Data - Working Paper 445

Regulatory pressure on international banks to fight money laundering (ML) and terrorist financing (TF) increased substantially in the past decade. We find countries that have been added to a high-risk greylist face up to a 10% decline in the number of cross border payments received from other jurisdictions, but no change in the number sent. We also find that a greylisted country is more likely to see a decline in payments from other countries with weak AML/CFT institutions. We find limited evidence that these effects manifest in cross border trade or other flows. Given that countries that are placed on these lists tend to be poorer on average, these impacts are likely to be more strongly felt in developing countries.

Results Through Transparency: Does Publicity Lead to Better Procurement?
September 19, 2016

Results Through Transparency: Does Publicity Lead to Better Procurement? - Working Paper 437

Governments buy about $9 trillion worth of goods and services a year, and their procurement policies are increasingly subject to international standards and institutional regulation. Using a database of World Bank financed contracts, we explore the impact of a relatively minor procurement rule governing advertising on competition using regression discontinuity design and matching methods. Our findings suggest the potential for more significant and strongly enforced transparency initiatives to have a sizeable effect on procurement outcomes.

Biometric Elections
August 17, 2016

Biometric Elections in Poor Countries: Wasteful or a Worthwhile Investment? - Working Paper 435

Elections have emerged as a leading area for the application of biometric technology in developing countries, despite its high costs and uncertainty over its effectiveness. This paper finds that a reduction in the probability of post-election violence by only a few percentage points could offset the cost of the technology. However, this is possible only in particular situations.

August 31, 2015

Taxes: Price of Civilization or Tribute to Leviathan? - Working Paper 412

There are two dominant narratives about taxation.  In one, taxes are the “price we pay for a civilized society” (Oliver Wendell Holmes Jr.).  In this view taxes are not a necessary evil (as in the pairing of “death and taxes” as inevitable) but a positive good: more taxes buy more “civilization.” The other view is that taxes are “tribute to Leviathan”—a pure involuntary extraction from those engaged in economic production to those who control coercive power producing no reciprocal benefit.  In this view taxes are a bane of the civilized.   We consider the question of taxes as price versus tribute for contemporary India.

Lant Pritchett and Yamini Aiyar
The Meaning of Failed Replications: A Review and Proposal - Working Paper 399
April 9, 2015

The Meaning of Failed Replications: A Review and Proposal - Working Paper 399

The welcome rise of replication tests in economics has not been accompanied by a single, clear definition of ‘replication’. A discrepant replication, in current usage of the term, can signal anything from an unremarkable disagreement over methods to scientific incompetence or misconduct. This paper proposes an unambiguous definition of replication, one that reflects currently common but unstandardized use. It contrasts this definition with decades of unsuccessful attempts to standardize terminology, and argues that many prominent results described as replication tests should not be described as such. Adopting this definition can improve incentives for researchers, encouraging more and better replication tests.

May 13, 2014

On the Distributed Costs of Drug-Related Homicides - Working Paper 364

Reliable estimates of the effects of violence on economic outcomes are scarce. We exploit the manyfold increase in homicides in 2008-2011 in Mexico resulting from its war on organized drug traffickers to estimate the effect of drug-related homicides on house prices. 

Nicolas Ajzenman , Sebastian Galiani and Enrique Seira
October 2, 2013

Can Results-Based Payments Reduce Corruption? - Working Paper 345

A common objection to results-based programs is that they are somehow more vulnerable to corruption. This paper explains why results-based approaches to foreign aid may be less vulnerable to corruption than traditional approaches which track inputs and activities. The paper highlights corruption costs associated with failing to generate benefits and outlines the conditions under which one approach or another might be preferable. It concludes that results-based programs may be less vulnerable to corruption costs associated with failure because they limit the capacity of dishonest agents to divert funds unless those agents first improve efficiency and outputs.