Working Papers
Farm Household Misallocation. Job Market Paper
Abstract: Agricultural markets often fail to allocate resources efficiently across farm households in developing countries. However, policymakers require knowledge of which markets fail and how the distortions they generate are correlated. Using data from rural Thailand, I characterize how distortions in land, labor, credit, and insurance markets each contribute to misallocation. I use moments in household consumption and production data to separately identify these distortions and develop a novel method using them to structurally estimate the production function. I find that the efficient allocation would increase aggregate productivity by 31% relative to the status quo, while only 16% (9%) gains could be achieved by eliminating financial (input) distortions in isolation. Positive interaction effects from addressing multiple distortions simultaneously account for the remaining 6% TFP gains. Meanwhile, other common methods would produce larger estimates of misallocation and suggest that a financial market intervention would decrease aggregate productivity. Accounting for multiple correlated distortions is therefore crucial for measuring misallocation and designing policies to address it.
Credit and Welfare Across the Lean Season (with Ethan Ligon) [AEA RCT Registry #0008022]
Abstract: Consumption in rural areas of low-income countries is often highly variable across seasons. What drives this seasonality, and can the welfare of households across the “lean season” be improved via the provision of credit? We measure prices and consumption for farm-households across seasons in Gombe, Nigeria, and at the same time elicit information about farmers’ intertemporal marginal rates of substitution by offering them one-month bonds with different rates of return. Against this background, we also implement a randomized post-harvest loan (PHL) program, which provides credit—up to a generous ceiling—at a subsidized interest rate. Farmers randomly offered the loan almost universally borrow the maximum amount and, on average, store more grain. However, this is a risky investment, and in the year of our experiment it did not pay off, as maize prices did not increase following the harvest. Given this, it is unsurprising that we find no significant effects of the loan on consumption, investment or welfare—using the PHL to make a leveraged bet on maize prices going up was a bad investment ex post. Was it a bad investment ex ante? This depends on whether lean seasons are due to poorly functioning financial markets in Gombe, or because markets in Gombe are poorly integrated with the broader market. We adapt tools from the asset pricing literature to our data to test the null hypothesis of well-functioning local financial markets in Gombe. We fail to reject this null, suggesting that promoting spatial integration may improve lean-season welfare more than the local provision of credit would.
Selected Work in Progress
Measuring Farm-Household Nonseparability (with Ethan Ligon). Analysis stage
The Impacts of Large-Scale Land Transactions: Evidence from Ethiopia (w/ Yeshwas Admasu, Workineh Asmare Kassie, and Solomon Zena Walelign). Data collection stage
Technology Adoption and the Commercialization of Staple Crops: Evidence from Ugandan Cassava Processing (w/ Anthony Ijala, Mathew Kato, and Jérémy do Nascimento Miguel). Data Collection Stage
Publications
Zilberman, David, Thomas Reardon, Jed Silver, Liang Lu, and Amir Heiman. 2022. From the laboratory to the consumer: Innovation, supply chain, and adoption with applications to natural resources. Proceedings of the National Academy of Sciences 119 (23)
Diao, Xinshen, Eduardo Magalhaes, and Jed Silver. 2019. Cities and rural transformation: A spatial analysis of rural livelihoods in Ghana. World Development 121:141–157.