Job Market Paper
Despite a large literature investigating the impacts of trade on firm productivity, there is almost no evidence on how small firms react to trade liberalization. In this paper, I show that India’s unilateral reduction in final goods tariffs increased the average productivity of its manufacturing firms by 15%. Using a unique dataset of firm-level surveys that are representative of the entire Indian manufacturing industry, I document that this result was driven by an increase in productivity among small, informal firms, which account for 80% of Indian manufacturing employment but have been excluded from previous studies. I also examine the effect of the fall in tariffs on the distributions of productivity and firm size, and find evidence consistent with the exit of the smallest, least productive firms from the informal sector.
Publications and Working Papers
"Distortionary Policies and the `Missing Middle' in Manufacturing Employment."
India's employment size distribution, like that of a number of other developing countries, exhibits a "missing middle," with employment concentrated among millions of tiny firms as well as a number of large firms, with little employment in mid-sized firms. A number of possible explanations for this phenomenon have been proposed, including stringent labor regulations and credit constraints, though there is virtually no quantitative evidence linking these factors with firm size. I employ a unique dataset that combines data on both formal and informal Indian firms with information on labor regulations and credit availability across Indian states to examine the impact of these policies on the missing middle.
"Do Residential Water Consumers React to Price Increases? Evidence from a Natural Experiment in Santa Cruz." Agricultural and Resource Economics Update 10(3), January/February 2007, pp. 9-11.
"Does Marginal Price Matter? A Regression Discontinuity Approach to Estimating Water Demand" (with Michael Hanemann). CUDARE Working Paper 1077, Revise and resubmit at the Journal of Environmental Economics and Management.
Although complex pricing schedules are increasingly common among water and electricity providers, it is difficult to determine whether consumers respond to complicatedmarginal prices because price changes are often confounded with simultaneous demand shocks or non-price policies. To overcome this challenge, we exploit a natural experiment - the introduction of a third price block in an increasing block pricing schedule for water - in Santa Cruz, California. Using a regression discontinuity design, we find that consumers do respond to changes in marginal price. Doubling marginal price led to a 12% decrease in water use (500 cubic feet per bill) among high-use households.
"Air Emissions from Dairy Farms in San Joaquin Valley: Current Status and Potential Mitigation Strategies" (with Peter Berck). Mimeo, 2006.
This paper provides an overview of recent regulations affecting air emissions from dairy farms in California, as well as a review of the literature on potential strategies to mitigate emissions. In 2003, California passed Senate Bill 700, which removed the agricultural exemption from the state health and safety code, and imposed several new requirements on air emissions from large confined animal facilities (CAF). Dairies emit numerous air pollutants, including ammonia, particulate matter, volatile organic compounds, and various greenhouse gases. Emissions mitigation can take place at various stages in the production cycle, including feed management, manure storage and disposal, and related cropping. However, empirical studies indicate that many strategies reduce emissions of one pollutant, while increasing emissions of another, or simply shift emissions from one part of the herd management cycle to another. Effective mitigation will require a prioritization of pollutants, as well as a life-cycle view of emissions control.