Working Papers
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Trading Off Human Capital versus Productive Asset Investment:
Perceptions of Risk and Return
PAP: AEARCTR-0017654
Abstract
This paper studies a fundamental trade-off faced by low-income households in developing countries: whether to invest in productive assets to improve productivity and build resilience, or to invest in human capital to enable entry into the skilled labor market. We study quantitatively how perceptions of risk and returns associated with climate change and structural transformation affect investment decisions. We conduct two field experiments with over 2,000 pastoralist parents in rural Kenya and Ethiopia: a hypothetical choice experiment to estimate parental preferences and subjective beliefs over their children's future education, occupation, and livestock production, and an information intervention that exogenously shifts beliefs about these returns to examine how households adjust actual investment decisions. Together, these analyses allow us to test and quantify how risks associated with productive assets shape human capital investment.
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Long-run Effects of Temporary Catastrophic Drought Insurance Coverage
World Bank Blog
Abstract
We study the long-run effects of temporary catastrophic drought insurance coverage on pastoralist households in Kenya and Ethiopia. Instrumenting for insurance purchase with randomized premium discounts, we estimate the impacts on households re-surveyed a decade after the start of the experiment. Effects depend on baseline herd size. Among households with smaller herds, insurance reduced holdings of small, liquid livestock like goats -- typically held as a precautionary reserve -- freeing resources for crop production and driving a sharp long-run rise in children's education due to reduced demand for child herding labor. Among households with larger herds, insurance instead facilitated a significant increase in holdings of higher-return large-animals, like cattle, with no comparable effect on schooling. Both patterns strengthened over the following decade, well after insurance itself became unavailable to sample households. These results are consistent with poverty-trap dynamics under which households on opposite sides of an unstable herd-size threshold respond to reduced risk exposure in opposite, self-reinforcing ways. Even a temporary intervention that reduces uninsured risk exposure can generate self-sustaining gains in human capital and productive capacity long after the intervention itself has ended.
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Productive Assets, Child Labor, and Schooling:
Evidence from Pastoralist Communities
Kanematsu Award; Nishijima Award; George F. Warren Award
Abstract
Productive assets are central to poor households' income generation and to many social protection programs, yet they may also raise the opportunity cost of schooling. I study this trade-off among pastoralist households in Kenya and Ethiopia, combining household panel data with satellite measures of rangeland conditions. I exploit temporal and spatial variation in drought exposure across locations, years, and children's ages using household and community fixed-effects. Early-life drought exposure is associated with significantly more completed years of education at later ages. Evidence on livestock holdings and short-run responses in children's time use supports an asset-based explanation. Droughts are associated with substantial, statistically significant reductions in livestock holdings that remain evident at the first three annual lags. Livestock work declines at both shorter and longer lags, with some evidence of increased schooling. Together, these patterns are consistent with persistent herd losses reducing current and future demand for child labor. These findings highlight the importance of accounting for complementarity between productive assets and children's labor when designing social protection policies that build or protect these assets.
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Site Selection Causes Bias in Policy-Oriented Social Science Research
Abstract
Social science research often relies on field data drawn from non-randomly selected study sites. To examine potential bias in site selection, we combine a systematic review of survey-based rural development studies in the Peruvian Amazon with a regionally representative community census and household survey. Studied communities have systematically higher development status, household welfare, and inequality than unstudied communities. The patterns are consistent with purposive site selection related to research costs and targeting, underscoring the importance of study-site selection bias in policy-relevant research.
Publications
- Restricting Mothers' International Migration and Human Capital Investment.
- Index-Based Livestock Insurance to Support Pastoralists against Droughts.
- Can Insurance Payouts Prevent a Poverty Trap? Evidence from Randomised Experiments in Northern Kenya.
- Understanding Pastoralists' Dynamic Insurance Uptake Decisions: Evidence from Four-Year Panel Data in Ethiopia.
Work in Progress
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Droughts, Cattle Raiding, and Child Marriage:
Evidence from Pastoralist Communities
Abstract
We study how drought and cattle raiding interact to affect child marriage in pastoralist communities in Kenya and Ethiopia, where marriage payments are prevalent. We will leverage more than 20 years of drought histories across more than 400 communities to examine how climate and conflict risks may shape girls' marriage timing, schooling, and economic opportunities.
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Banning Hazardous Child Labor:
Substitution into Safer Work and Schooling
Abstract
We study how Cambodia's ban on 38 hazardous activities for workers under age 18 affected children's work and schooling. Combining population census and establishment data, we compare cohorts covered by the ban across communities with different exposure to hazardous establishments. Preliminary estimates indicate a 1.8 percentage-point decline in hazardous employment and a 2.9 percentage-point increase in school attendance four years after implementation. We also find evidence that employment shifted from manufacturing and services toward agriculture, highlighting how children may move between sectors when hazardous work is restricted.
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Reducing Conflict Incentives through Insurance and Paid Apprenticeships
Abstract
We study whether combining drought insurance with paid apprenticeships can expand livelihood opportunities for young men and reduce incentives for cattle raiding in pastoralist communities in Kenya and Ethiopia.