Lahore School of Economics

4-5 September 2019

The Lahore School of Economics in partnership with International Growth Centre hosted its Second International Conference on Applied Development Economics, at its Burki Campus on 4-5th September 2019. Similar to the first edition of the conference last year which was a great success, the two-day event this year, was once again devoted to bringing together policy makers, renowned researchers, academics and practitioners from within Pakistan and abroad to discuss relevant themes for developing countries such as, poverty, social protection, gender, public finance, firms and political economy. The thought-provoking research presented at the conference was hoped to disseminate and invite interesting feedback, stimulate further research in this domain and be instrumental in improving research capabilities of young researchers within the country.

The conference started off with welcome remarks by Dr. Shahid Amjad Chaudhry (Rector, Lahore School of Economics). He extended a warm welcome to a distinguished and impressive galaxy of academics, researchers and other honorable guests. He highlighted that it is a sensitive time for Pakistan with the brunt being borne by the poor and vulnerable segments of society especially with regards to food poverty. He emphasized the dire need for researchers to collaborate globally, so as to understand and address the complexities of the developing world. He highlighted on how this conference sets the stage for further deliberation on core developmental issues. The plenary address was delivered by Dr. Ghazala Mansuri (Lead Economist, World Bank) who took on a more policy-oriented approach towards issues in her insightful research focusing on water, sanitation and child health. She pondered over that it is puzzling that even though poverty has been on a declining trend in Pakistan, improvement in sanitation and access to safe drinking water - focal areas of MDGs - have been limited. She stressed on how stunting and wastage in children caused due to poor sanitation facilities, has an adverse impact on their motor skills and immunity, regardless of the household’s income level. She highlighted that these effects were more strongly felt in Sindh, and more so in rural than urban areas, due to inefficient human fecal waste management relative to Punjab, KP and Baluchistan. She also noted that only urban areas have access to piped water whereas hand and mechanized pumps are more commonly found in rural areas, with sporadic testing for water quality and contamination. This contamination, she explained, arises from effluent seeping into water ways and ground water used for drinking and irrigation of agricultural production which is highly detrimental to health. She concluded her address by proposing that there is a need to strengthen regulatory guidelines and enforcement mechanisms in this sphere as well as provision safe water and sanitation by the public sector.

The first session of the conference focused on poverty and the role of social protection in economic development. The chairperson for the session was Dr Shahid. The session was initiated by Jonathan deQuidt (Assistant Professor, Stockholm University) with his paper (written jointly with Dr. Gharad Bryan, Tom Wilkening and Dr. Nitin Yadav) evaluating whether market design can contribute towards increasing efficiency in reallocation problems and hence in reducing poverty. The discussant for the paper was Sanval Nasim (Assistant professor, Lahore University of Management Sciences). The study used a lab-in-the field experiment where farmers in Uganda traded land in a hypothetical environment. The key finding of the study shows that while comparing performance in a more complex package auction to a simpler continuous double auction, the added complexity increased efficiency, reducing the gap to the first best by around 26%. – a valuable insight in developing a discerning policy for the role of market design in poverty reduction. The second paper was presented by Jacopo Bonan (Research Fellow, Politecnico di Milano) on Agricultural transformation and farmers' expectations (coauthored with Harounan Kazianga and Mariapia Mendola, Universita` di Milano–Bicocca, Centro Studi L.d’Agliano and IZA), with Zunia Saif (Assistant Professor and Research Fellow, Lahore School of Economics) as the discussant. Using a control experiment to examine factors driving small-holder subsistence farmers to adopt new cash crops/technology i.e. oilseeds, the paper concluded that the farmers who under-estimate the price of oilseeds at baseline have a higher propensity to adopt the new crop since expectations regarding profitability are effectively overstated. Therefore, the study identifies farmers’ expectations as a key driver behind agricultural technology adoption, which has an enormous role in economic development. The last paper in the session was co-authored by Rabia Arif (Assistant Professor, Lahore School of Economics) and Dr. Theresa Chaudhry (Professor of Economics, Fellow of the Centre for Research in Economics and Business, Lahore School of Economics) while Dr. Simon Quinn (Associate Professor, University of Oxford) was the discussant. It explored the heterogeneous spillover effects of emigration on labor market activity and investment decisions in Punjab. The results demonstrate promising prospects for migrant sending households – a favorable shift in labor market activity from lower to higher status employment and entrepreneurship coupled with investments in property, bank deposits, etc. Overall, migration is found to be a force for women’s empowerment, rural development and positive social change for the younger and lesser educated.

The second session of the conference was on gender with a special emphasis laid on policy initiatives that can be taken to encourage greater female labor force participation. The session was chaired by Ghazala Mansuri. Dr. Hamna Ahmed (Assistant Professor and Research Fellow, Lahore School of Economics) presented the first paper of the session (jointly written with Mahreen Mahmud, Dr. Farah Said and Zunia Saif) and the discussant for the paper was Jonathan deQuidt (Stockholm University). The research was an assessment of whether motivating female students via role models is effective in encouraging their entry into the labor force. The study attempts to explore if due to the intervention the female students apply for a job, report a subjective improvement in aspirations, self-belief and sense of control, as well as, an improvement in measures of effort exerted in order to secure employment. The preliminary results of the first follow-up survey are quite desirable from policy standpoint as the treatment group exhibited greater locus of control and job search efforts relative to the control group. The second paper of the session, coauthored by Dr. Kate Vyborny and Erica Field (Research Associate, Duke University), explored how higher restrictions on women’s physical mobility limits their labor market opportunities and the pool of female employees that firms can attract and retain. The discussant of the paper was Ayesha Ali (Assistant Professor, Lahore University of Management Sciences). The preliminary results of the study suggest that female job seekers are more likely to apply for a job when it is more accessible by the commuting service, and even though women respond to both mix-gender and women-only transport services but the application rate for the latter is higher. The session on the whole was useful in unravelling a policy for overcoming women’s labor market constraints.

Papers presented in the third session continued to discuss various gender related issues. The first paper in the session was by Mahreen Mahmud (postdoctoral Research Fellow, University of Oxford), Dr. Kate Orkin (Senior Research Fellow, University of Oxford) and Emma Riley (Junior Research Fellow, University of Oxford), with Morgan Hardy (Assistant Professor, New York University, Abu Dhabi) as the discussant. Their study aimed to evaluate the impact of i) increasing household resources and ii) a psychological intervention on a woman’s bargaining power judged by her economic position and incidences of intimate partner violence. The study ascertains if one or both interventions is/are needed to improve their bargaining power without any violence as backlash. The second paper of the session written jointly by Morgan Hardy (New York University, Abu Dhabi) and Gisella Kagy (Assistant Professor, Vassar College) puts forth experimental evidence on demand constraints in the gender profit gap amongst micro-entrepreneurs. The research studied Ghanian garment manufacturers and found a gender gap in the market-size-to-firm ratio and disproportionate self-reports of “not enough customers” from female owners. It noted that there is more crowding in female-dominated industries since they are more responsive with production levels to random demand shocks.

The last session of day continued the comprehensive discussion on various dimensions on gender. The first paper of the session was by Dr. Farah Said (Assistant Professor and Research Fellow, Lahore School of Economics) Uzma Afzal (University of Nottingham), Giovanna d’Adda (Assistant Professor, University of Milan), Marcel Fafchamps (Economist and Senior Fellow, Stanford University), with Saher Asad (Assistant Professor, Lahore University of Management Sciences) as the discussant. The research via a triple experimental investigation analyzed intra-household consumption allocation and demand for agency. The paper presented some interesting findings that subjects are no better at guessing their spouse’s preferences than those of a stranger and many disregard their knowledge and beliefs about others’ preferences when assigning them a consumption bundle. The paper finds significant evidence of demand for agency in all three experiments. The second paper of the session which concluded the first day of the conference was by Zubaria Andlib and Dr. Aliya Khan (Quaid- i-Azam University), while Dr. Kate Vyborny (Duke University) was the discussant for the paper. The study shed light on the high share of females as contributing family workers in total women employment in Pakistan. Empirical analysis showed that young girls, women from larger households and married women are more likely to be contributing family workers. The study proposed investment in different skill development programs of these workers in order to enhance their employment prospects, and hence raise female labor force participation on the whole.

The second day of the Conference opened with a plenary address by Dr. Adnan Khan (Professor, London School of Economics and Political Science) on the unintended effects of corruption control in the context of public procurement in Punjab, Pakistan. The authors run a field experiment with public procurement officers by randomly providing them with greater autonomy, incentives, or both. They find that autonomy reduces prices up to 9 percent, while they find no effect of providing incentives. When procurement officers are provided both autonomy and incentives, the observed effects are similar to the autonomy treatment arm. He concluded his talk with the following main insight: if supervisors are more corrupt then giving autonomy to procurement officers would increase efficiency but giving incentives in this case will not be effective in reducing capture. His work illustrates that allocation of authority depends on relative misalignment of implementing versus monitoring agents.

The plenary address was followed by a session on political economy, governance, and institutional capacity, chaired by Adnan Khan. The first speaker in the session Dr. Waqar Wadho (Assistant Professor and Senior Research Fellow, Lahore School of Economics) shared results from ongoing work on measuring and limiting corruption in the Pakistani bureaucracy. His work estimates the rate of overall corruption and misuse of public funds in the bureaucracy and tests the effectiveness of four anticorruption policy interventions. He concluded his talk by saying that social sanctions, wage incentives and community monitoring could reduce corruption. The second paper by Verena Wiedemann (Dphil candidate, University of Oxford) aimed at studying the impact of political violence and protest induced supply chain disruptions on consumer prices in Ethiopia and Pakistan. The last paper in the session by Dr. Saher Asad (Assistant Professor, Lahore University of Management and Sciences) investigated the impact of school interventions in Khyber Pakhtunkhwa that reformed either the teacher evaluation system or the school evaluation system by measuring relevant metrics and tying them in a transparent way to promotions for teachers and head teachers respectively. The authors find that both treatments had null effects on student attendance and learning outcomes due to deviation of inspectors from the given protocol.

Dr. Azam Chaudhry (Dean and Professor, Lahore School of Economics) chaired the next session on firms and entrepreneurship. Dr. Simon Quinn (Associate Professor of Economics and Deputy Director, Centre for the Study of African Economies, University of Oxford) presented results from a novel field experiment with young professionals in Ethiopia who were exposed to firm management in practice. This entailed placing young professionals for one month in established firms to shadow middle managers. Using random assignment into program participation, the authors find positive average effects on wage employment, but no average effect on the likelihood of self-employment. The next paper in this session by Dr. Muhammad Meki (Junior Research Fellow, University of Oxford) explored an underlying mechanism by which fixed-repayment debt contracts may lead to sub-optimal business investment. For this purpose, the author investigated the potential for `microequity contracts', which involved performance-contingent repayments, to stimulate more profitable investment choices by micro entrepreneurs. The main insights which emerge from his work is that microequity contracts were successful in stimulating more profitable investments, and the effects of take-up of such contracts was particularly strong for the most risk- and loss-averse individuals.

The session after lunch, chaired by Dr. Waqar Wadho (Assistant Professor and Senior Research Fellow, Lahore School of Economics) continued to focus on the theme of firms and entrepreneurship. Dr. John Morrow (Senior Lecturer, Kings College London) opened the session with a talk on comparative advantage of firms. In the context of the Indian manufacturing sector, the author shows that firms co-produce in industries that share intermediate inputs suggesting input capabilities drive multi-product production patterns. More specifically, complementarities driven by input capabilities make a firm on average 5% (and up to 15%) more likely to produce in an industry. Entry barriers in input markets constrained the comparative advantage of firms and were equivalent to a 10.5 percentage point tariff on inputs. The second paper by Dr. Ali Choudhary (Research Director, State Bank of Pakistan; Research Associate, Centre for Economic Performance, London School of Economics) explored trends in management practices among a sample of 4500 manufacturing firms in Pakistan. His work showed that firms which have more skilled employees, who are larger, older and/or more export oriented have more structured management practices while those in areas that experienced increases in terrorist activity over the study period had the biggest deterioration in management practices. In addition, the authors found that efficient management is associated with superior firm performance as measured by productivity, profitability and jobs growth. The last paper of the session by Naveed Iftikhar (Public Policy Advisor) explored the drivers of entrepreneurship in Pakistan. The analysis indicated that higher levels of tertiary education, an increase in the share of professional employment in labor force and greater net migration towards cities are associated with higher rates of firm creation.

Dr. Mahreen Mahmud (Postdoctoral Research Fellow, University of Oxford) chaired the final session of the day which explored norms and behavior. Dr. Sanval Nasim (Assistant professor, Lahore University of Management Sciences) presented the first paper of the session on the effect of providing day-ahead air pollution forecasts and training in forecasting techniques on a series of outcomes including pollution forecast error, travel times willingness to pay for protective face masks and changes in time use. The last paper of the session by Dr. Ayesha Ali (Assistant Professor, Lahore University of Management and Sciences) explored potential mechanisms for countering misinformation in a randomized controlled setting. The authors evaluated the effectiveness of educating users about common features of misinformation and providing feedback to users about their past behavior in engaging with misinformation on their ability to identify fake news and find that social media users believe less in fake news when they are exposed to the interventions under study.

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