Jeffrey Bloem, Khandker Wahedur Rahman, and Harshada Karnik are PhD students in Applied Economics at the University of Minnesota
In this series of posts we provide brief summaries of many papers presented at the 2018 Midwest International Economic Development Conference (MIEDC). Unfortunately, we were unable to attend every session. Apologies to the presenters we missed.
Agriculture
Money Matters: The Role of Yields and Profits in Agricultural Technology Adoption [Jeffrey Michler]
How can we explain widespread adoption of an agricultural technology that has little to no impact on crop yield? Investigating a technology for improved chickpea production in Ethiopia, the authors find that despite the limited yield impacts of the technology, the adoption rate of this technology is relatively high. What explains this seeming paradox? The authors argue that examining yields may be the wrong outcome variable and rather technology adoption may depend on profits. Indeed the authors find that the adoption of improved chickpea production reduces production costs and increases farm profits.
Risk Aversion, Crop Diversity and Food Security [Sunghun Lim]
Does the number of crops an agricultural household cultivated increase or decrease the food security of the household? On the one hand, crop diversity could increase food security through agro-ecological mechanisms. On the other hand, increased crop diversity may not be the most profitable method of farming. First, the author develops a theoretical model that adapts Sandmo’s (1971) model to characterize the interaction of risk aversion, crop diversity, and household food security. Second, using experimental data from Ethiopia, the author finds a negative effect of crop diversification on household food security.
Agriculture Support Services: Direct Effects, Complementarities and Time Dynamics [Kate Ambler]
What is the impact of cash and input transfers on agricultural production value? Using a randomized control trial in Malawi, the authors find a large effect from the combination (both cash and inputs) of transfers on agricultural productivity over a two-year period. These impacts seem to be driven by an increase in resources allocated to inputs. In the first year more pesticides are used and in the second year more labor is allocated to farm work. Finally, the authors find evidence that intensive agricultural extension services increase productivity in the second year only. This last finding highlights important time dynamics in the design of programs aiming to boost agricultural productivity.
Agricultural Labor Markets and Fertilizer Demand: Intensification is Not a Single Factor Problem for Non-separable Households [Sarah Kopper]
Fertilizer is widely considered to be under-used in many sub-Saharan African contexts. Do constraints caused by market imperfections limit rural households’ ability to purchase fertilizer and boost agricultural production? The author answers this question by testing the effects of labor endowment on farm labor and conditional fertilizer demand. If markets are complete, then labor endowment should have no effect on conditional fertilizer demand. A statistically significant relationship suggests that labor market imperfections affect conditional fertilizer demand and may help explain low fertilizer use in sub-Saharan Africa. Own-price elasticities indicate that policies that focus only on reducing the price of fertilizer are unlikely to be effective in improving agricultural production.
Subsidies for Agricultural Technology Adoption: Evidence from Randomized Experiments in Uganda [Jacob Ricker-Gilbert]
Does subsidizing new agricultural technology speed up the rate of early adoption? Relatedly, does subsidization crowd-in or crowd-out commercial purchases of the technology? The authors answer these questions by implementing a randomized control trial in Uganda that subsidized improved grain storage bags. The study shows that subsidized households are more likely to purchase the technology at commercial prices compared to non-subsidized households. This suggests that under certain circumstances a one-time subsidy can be useful in encouraging technology adoption, and that this subsidization does not crowd-out non-subsidized purchases of the technology.
Finance
In-Kind Transfers as Insurance [Sandip Sukhtankar]
Although cash transfers are an increasingly popular means to transfer income to poor households, in-kind transfers still persists in many contexts. The authors investigate whether cash or in-kind transfers perform better at insuring poor households against price shocks. Using the data from India the authors show that, in price volatile markets, cash transfers may not protect recipients from price risk. On the other hand, in-kind transfers are associated with higher calorie consumption and welfare. These results indicate that unlike cash transfers, in-kind transfers better protect recipients from price fluctuations.
Pay Me Later: A Simple Employer-based Saving Scheme [Jason Kerwin]
A consistent market failure in many contexts across the developing world is the lack of decent savings mechanisms. This generates complications when households want to purchase high-priced assets or other durable goods. The authors implement an RCT in Malawi that investigates whether piece rate workers benefit from deferring daily payments in exchange for a single lump-sum payment. The authors find that take-up for this saving scheme is high and participants, on average, save 14% of their earnings through this mechanism. This increase in savings increases households’ ability to accumulate assets. Four months after the payout, participating households experienced an increase of 0.13 standard deviations in asset ownership.
