Job Market Paper
Credit and Demand for Green Energy: Evidence from Small Firms in Kenya. (with Yunyu Shu and Wycliffe Oluoch)
[ Abstract | Working Paper | PEDL | AEA Registry ]
Firms in sub-Saharan Africa face simultaneous credit and energy constraints. Off-grid solar bundled with credit financing has the potential to relax both constraints, yet adoption among firms remains low. Understanding how firms value different components of payment structures is crucial for designing green subsidies in credit contracts. This paper evaluates firm demand for solar sold on credit by eliciting discrete choices over contracts, and experimentally compares the impact of down payment subsidies versus flexible subsidies for down payment or repayment. We find that demand is primarily driven by sensitivity to upfront costs rather than future repayments. When offered the flexibility to allocate the subsidy to the down payment or the repayment, nearly all adopters choose to reduce the upfront cost. Despite the same de facto sub- sidy structure, this tailored subsidy scheme positively selects less liquidity-constrained adopters and leads to greater solar usage and more operational days.
Working Papers
Returns to Capital for Whom? Experimental Evidence from Small Firm Owners and Workers in Ghana. (with Morgan Hardy and Jamie McCasland). Revise and resubmit at American Economic Journal: Applied Economics.
[ Abstract | Working Paper | Development Impact Blog | NBER Development Economics ]
We document capital contributions from workers to their employers in a representative sample of small firms. We separately conduct a two-sided experiment in a sample of small employers, randomizing cash transfers to firm owners or a randomly selected worker. Transfers to either party increase firm profits in equal magnitude. Treated owners purchase additional business assets; treated workers purchase business assets that are used in their employing firm and experience wage increases. Our findings challenge the assumption of a separation of labor and capital in firms, with widespread implications for measurement and for understanding the nature of firms in our context.
Informed Climate Adaptation: Input and Output Subsidies for Shaded Cocoa. (with Yunyu Shu)
[ Abstract | Working Paper | Development Impact Blog | PEDL | IGC blog | AEA Registry ]
With growing climate risks, agro-environmental policies seek to protect the environment while reducing poverty by incentivizing climate adaptation. We study how information shapes adaptation under different subsidy schemes for cocoa farmers in Ghana, where forest tree planting for shade is encouraged as an adaptation strategy. Conducting a lab-in-the-field experiment, we compare the impacts of an information intervention under an input subsidy for planting forest trees and an output subsidy for producing cocoa beans from shaded farms. While farmers receiving the information in both subsidy groups plant more forest trees than their subsidy-only counterparts, the increase is higher under the output subsidy than the input subsidy even though the information leads both groups to similarly update their beliefs about the benefits of shade. We rationalize the differential effects of information with a model in which beliefs about rainfall uncertainty and shade benefits affect ex ante input decisions. Counterfactuals show that output subsidy has greater potential to drive adaptation than input when beliefs are reasonably correct. We validate the lab results by distributing tree seedlings, finding consistent treatment effects on the number of seedlings requested and obtained.
Works in Progress
Less is More; Worse is Better. (with Ming Li, Yunyu Shu and Jia Xiang)
[ Abstract | AEA Registry ]
Information campaigns are a major policy tool for promoting climate change adaptation. Such policies often face contestation because the benefits of adaptive actions are distributed unevenly across scales: local actors prioritize private resilience while policymakers emphasize collective, long-term social gains. We examine whether information framed around private versus social benefits shifts adaptation behaviors, and whether credibility-enhancing caveats alter uptake, in the context of cocoa farming in Ghana where agroforestry is a viable but under-adopted adaptation strategy. We find that, while information on private and social benefits are separately effective in driving adaptation, combining them does not necessarily increase the information impact. We also show that providing information on the downside risks of the adaptation strategy on top of its benefits increases information credibility and subsequently boosts adoption of the adaptation strategy.
Information, Insurance, and the Shadow Price of (No) Adaptation. (with Bo-Yeon Jang)
[ Abstract ]
This study disentangles the valuation of information shocks, insurance costs, and flood-resistant building regulations in housing prices of flood-prone properties following the National Flood Insurance Program (NFIP). Participation in the NFIP entails a bundle including estimates of flood risk (information shocks), insurance at subsidized cost against that risk (insurance costs), and protective community regulations on construction in flood-prone areas (building regulations). By leveraging updates of flood maps as well as a policy change eliminating the grandfathering of favorable insurance premia, we separate out the initial information shock of being classified into flood-prone areas from capitalization of insurance costs. Zooming into transactions in which insurance premia were grandfathered in, we further identify the effect of protective building regulations. Explicit estimates of these three underlying forces are crucial to understanding the impact of NFIP, which will only become more relevant as flood risk intensifies with climate change.
Beyond Informality: The Importance of Residential-Based Businesses. (with Morgan Hardy, Gisella Kagy and Monica Lambon-Quayefio) (draft coming soon)
[ Abstract ]
Existing enterprise literature emphasizes the formal-informal enterprise dichotomy, with traditional informal enterprise listing protocols targeting businesses operating in non-residential business structures. In a suburb outside Accra, Ghana, we implement an inclusive enterprise listing strategy that targets not only formal and informal non-residential structure businesses but also residential (household-based) businesses. We find that residential businesses are economically significant, comprising 47% of fixed structure businesses and 36% of output from such businesses within our study area in May 2022. We track businesses identified through our listing over a period of two years, showing meaningful persistence of these residential structure businesses; 76% are stiloperating and almost none switch structure type by the time of our final data collection. Residential structure businesses are also meaningfully distinct from non-residential structure businesses across multiple firm, owner, and household characteristics within, suggesting unique drivers and consequences of structure. Differences are often larger between residential and non-residential structure businesses than formal and informal businesses. Our study draws attention to a data gap in most existing commonly-avalable enterprise data sources and highlights the potential benefits of refined categorization in future research to deepen our understanding of both formal and informal enterprises in low-income countries.
Won't You Hire Your Neighboring Firm Owner? Experimental Evidence on the Benefits of Small Firm Consolidation. (with Morgan Hardy and Jamie McCasland) (experiment concluded)
Works Prior to Graduate School
Breakdown of Covered Interest Parity: Mystery or Myth?. (with Alfred Wong). 2018.
[ BIS Working Paper | VoxEU ]
Risk of Window Dressing: Quarter-end Spikes in the Japanese Yen Libor-OIS Spread. (with Alfred Wong and Mayu Kikuchi). 2019. Journal of Regulatory Economics.
[ Journal Manuscript ]
