peer-reviewed publications

(click title for paper,

to show abstract,

= open access)

Measuring Economic Growth with a Fully Identified Three-Signal Model

with Andrea Civelli and Ahmed Sadek Yousuf
The Review of Economics and Statistics, Accepted
NBER WP

We augment Henderson, Storeygard, and Weil (2012)’s two-signal model of true income growth with a third signal to overcome its underidentification problem. The additional moment conditions from the third signal help fully identify all model parameters without ad-hoc calibrations of the GDP’s signal-to-noise ratio. We characterize the necessary properties of the third signal. Using the model, we recover the optimal weight of the GDP in the composite economic growth estimates, which varies with the quality of the national statistics and the geographic level of analysis. The model improves on existing methodologies that use signals to measure true income.
The Marginal Disutility from Corruption in Social Programs: Evidence from Program Administrators and Beneficiaries

with Rema Hanna and Benjamin Olken
AER: Insights 6(1), March 2024
NBER WP AEA RCT REGISTRY

Concerns about fraud in welfare programs are used worldwide as an argument against such programs. If program administrators are particularly concerned about these issues compared to citizens, this could lead to a mismatch between policy and true social preferences. To investigate these issues, we conducted a survey experiment with over 28,000 social assistance program administrators, and over 19,000 program beneficiaries, spread across Indonesia. The experiment was designed to elicit the ‘marginal disutility of corruption,’ i.e., how respondents traded off between more generous social assistance and more losses due to corruption and fraud. Merely mentioning corruption in a hypothetical program reduced perceived program success equal to distributing more than 20 percent less aid overall. However, conditional on there being corruption, respondents were not very sensitive to the amount of corruption – in fact, overall respondents were willing to trade of $2 of additional corruption losses for an additional $1 of aid distributed to beneficiaries on the margin. We find that program administrators and program beneficiaries had remarkably similar assessments of the marginal disutility of corruption relative to more expansive assistance, showing little evidence of mismatch. The results suggest that anecdotes about corruption can, indeed, affect support for programs more than the actual amount lost.
Urban Sprawl and Social Capital: Evidence from Indonesian Cities

with Andrea Civelli, Alex Rothenberg, and Yao Wang
The Economic Journal, Volume 133, Issue 654, August 2023
NBER WP

We use detailed data from Indonesian cities to study how variation in density within urban areas affects social capital. For identification, we instrument density with soil characteristics, and control for community averages of observed characteristics. Under plausible assumptions, these controls address sorting on observables and unobservables. We find that lower density increases trust in neighbours and community participation. We also find that lower density is associated with reduced interethnic tolerance, but this relationship is explained by sorting. Heterogeneity analysis suggests that crime in dense areas undermines community trust and participation, intensifying the negative impact of density.
Life in the Slow Lane: Unintended Consequences of Public Transit in Jakarta

with Tadeja Gracner and Alex Rothenberg
Journal of Urban Economics 128, March 2022
FINAL DRAFT ONLINE APPENDIX
EXTERNAL LINKS: GLOBALDEV BLOG VOXDEV | MEDIA: JAKARTA POST

We study how TransJakarta, one of the world’s largest BRT systems, impacted commuting outcomes in Jakarta, Indonesia from 2002 to 2010. Using planned lines for identification, we find that BRT station proximity neither reduced vehicle ownership nor travel times, and it did not increase commuter flows. Instead, the BRT exacerbated congestion along service corridors. To evaluate welfare effects, we calibrate a quantitative spatial general equilibrium model with multiple congestible transport networks. Counterfactual simulations suggest that implementation improvements, including increasing the quality of expansion corridors, would significantly improve welfare with only modest costs.
previous title: "Improving Mobility in Developing Country Cities: Evaluating Bus Rapid Transit and Other Policies in Jakarta"
Dynamics and Stability of Social and Economic Networks: Experimental Evidence

with Juan Carrillo
Journal of Economic Behavior and Organization 188, August 2021
FINAL DRAFT

We use a laboratory experiment to test the dynamic formation of networks in a six-subject game where link formation requires mutual consent. First, the game tends to converge to the pairwise-Nash stable (PNS) network when it exists, and to not converge but remain in the closed cycle when no PNS network exists. When two Pareto-rankable PNS networks exist, subjects often coordinate on the high-payoff one. Second, the analysis of single decisions indicates the predominance of myopic rational choices, but it also highlights interesting systematic deviations, especially when actions are more easily reversible and when they involve smaller marginal losses. Third, behavior is heterogeneous across subjects, with varying degrees of sophistication.
substantive revision of The Strategic Formation of Networks: Experimental Evidence
Remittances, Child Labor, and Schooling: Evidence from Colombia

with Andres Cuadros-Menaca
Economic Development and Cultural Change 68(4), July 2020
FINAL DRAFT REPLICATION FILES

We estimate the causal impact of remittances on child labor and school participation in Colombia using data from its main metropolitan areas. We develop an instrumental variable (IV) strategy that leverages the unemployment shocks in the main destination countries of Colombian migrants arising from the 2008 financial crisis. Our IV combines these shocks with the historical migration rates from Colombian regions to these countries. We find that remittances reduce both labor participation and hours worked, but the impact on the latter is imprecisely estimated. We do not find an effect of remittances on schooling. Relative to their mean participation shares, these impacts are larger for younger children and girls. However, the negative impact for girls is associated with an even larger positive impact on their participation in household work. Finally, we study how remittances affect the overall household labor supply. We find that remittances reduce the labor supply of female adults, but their percent-change impact on adults is smaller than that on children.
Unity in Diversity? How Intergroup Contact Can Foster Nation Building

with Samuel Bazzi, Maisy Wong, and Alex Rothenberg
The American Economic Review 109(11), November 2019
FINAL DRAFT SLIDES NBER WP
EXTERNAL LINKS: VOXEU AEA HIGHLIGHT

We use a population resettlement program in Indonesia to identify long-run effects of intergroup contact on national integration. In the 1980s, the government relocated two million ethnically diverse migrants into hundreds of new communities. We find greater integration in fractionalized communities with many small groups, as measured by national language use at home, intermarriage, and children's name choices. However, in polarized communities with a few large groups, ethnic attachment increases and integration declines. Residential segregation dampens these effects. Social capital, public goods, and ethnic conflict follow similar patterns. Overall, our findings highlight the importance of localized contact in shaping identity.
previous title: "Unity in Diversity? Ethnicity, Migration, and Nation Building in Indonesia"
Skill Transferability, Migration, and Development: Evidence from Population Resettlement in
Indonesia

with Samuel Bazzi, Maisy Wong, and Alex Rothenberg
The American Economic Review 106(9), September 2016
FINAL DRAFT SLIDES ONLINE APPENDIX
EXTERNAL LINKS: IGC VOXDEV

We use a natural experiment in Indonesia to provide causal evidence on the role of location-specific human capital and skill transferability in shaping the spatial distribution of productivity. From 1979-1988, the Transmigration Program relocated two million migrants from rural Java and Bali to new rural settlements in the Outer Islands. Villages assigned migrants from regions with more similar agroclimatic endowments exhibit higher rice productivity and nighttime light intensity one to two decades later. We find some evidence of migrants' adaptation to agroclimatic change. Overall, our results suggest that regional productivity differences may overstate the potential gains from migration.
Rethinking Indonesia's Informal Sector

with Alex Rothenberg, Nicholas E. Burger, Charina Chazali, Rini Radikun, Indrasari Tjandraningsih, Cole Sutera, and Sarah Weilant
World Development 80, April 2016

This paper reviews competing theories about the causes of informality in developing countries and uses new data to determine the reasons for informality in Indonesia. We find that most of Indonesia's informal firms are very small, micro firms that pay low wages, are relatively unproductive, and serve local markets. Small-scale interviews reveal that firms are informal either because they have no desire to expand or borrow from banks, or because of tax evasion. Finally, we demonstrate that a major program to reduce registration costs had no effects on informality. Together, the evidence suggests that rational exit and the dual economy theories of informality best explain Indonesias informal sector.
Improving Education Quality through Community Participation: Results from a Randomized Field Experiment in Indonesia

with Menno Pradhan, Daniel Suryadarma, Amanda Beatty, Maisy Wong, Armida Alisjahbana, and Rima Artha
AEJ: Applied Economics 6(2), April 2014

Education ministries worldwide have promoted community engagement through school committees. This paper presents results from a large field experiment testing alternative approaches to strengthen school committees in public schools in Indonesia. Two novel treatments focus on institutional reforms. First, some schools were randomly assigned to implement elections of school committee members. Another treatment facilitated joint-planning meetings between the school committee and the village council (linkage). Two more common treatments, grants and training, provided resources to existing school committees. We find that institutional reforms, in particular linkage and elections combined with linkage, are most cost-effective at improving learning.

working papers

(click title for pdf, to show abstract)

Optimal Public Transportation Networks: Evidence from the World's Largest Bus Rapid Transit System in Jakarta

with Gabriel Kreindler, Tilman Graff, Rema Hanna and Benjamin Olken
| June 2023 | R&R, The American Economic Review | NBER WP VOXDEV
Designing public transport networks involves tradeoffs between coverage, service frequency, and direct service. We use the expansion of the bus system in Jakarta, Indonesia, to study these tradeoffs. We analyze how new direct connections, changes in bus travel time, and wait time reductions affect bus ridership and aggregate flows, and estimate a transit network demand model by matching the route launch events. Commuters in Jakarta are 2-4 times more sensitive to wait time than bus time, and inattentive to long routes. We develop a flexible framework to characterize optimal networks. A less concentrated network would increase ridership and commuter welfare.
Does Performance Pay Enhance Social Accountability? Evidence from Remote Schools in Indonesia

with Menno Pradhan, Jan Priebe, and Dewi Susanti
| December 2022 | NBER WP AEA RCT REGISTRY

Social accountability offers a viable alternative to top-down supervision of service delivery in remote areas when travel cost renders the latter ineffective. However, this bottom-up approach may not be effective when the community has weak authority relative to the service provider. This paper investigates whether giving communities authority over teacher performance pay improves the effectiveness of social accountability in Indonesia’s remote schools. We tested incentive contracts based on either camera-verified teacher presence or community ratings of teacher performance. Social accountability had the strongest and most persistent impact on student learning when combined with the former. The results indicate that when the principal (community) has weak authority vis-a-vis the agent (regular teachers), increasing that authority using an incomplete but verifiable contract works better than using a more comprehensive but subjective one.
previously: "Scores, Camera, Action: Social Accountability and Teacher Incentives in Remote Areas" | WB 2021 | RISE 2020
The Long-Term Effect of Improving Early-Life Learning Preparedness on Cognitive Abilities

with Saurabh Singhal
| February 2021

We estimate the long-term impact of an unanticipated shift in the beginning of the academic year from January to July in 1979 in Indonesia. Using a regression discontinuity design, we find that this policy led to between 0.21--0.28 standard deviation increase in cognitive abilities 30 years later. We find evidence that the policy increased long-term cognition by improving learning preparedness in early grades, mainly by increasing the absolute age-for-grade upon enrollment. We also find stronger impacts for individuals who had good health during childhood and did not experience early-life nutrition deficits. Our results provide novel evidence on the long-term impact of improving school readiness on cognition in a low-income country.
Uniter or Divider? Religion and Social Cooperation: Evidence from Indonesia

| November 2012 | ONLINE APPENDIX

This study investigates how religion influences particularized and generalized trust as well as inter-group discrimination and tolerance in contemporary Indonesia. I combine the individual-level data of the latest round of the Indonesian Family Life Survey with the national census microdata and other nationally representative datasets to examine two sources of variation through which religion may influence these attitudes: individual religiosity and the community's religious composition.

Religiosity is positively associated with particularized trust and in-group preference, and negatively with religious tolerance. The strengths of the associations between measures of in-group preference (including political preference) and individual religiosity are much stronger than those from gender, education, or per-capita expenditure; they are also strongest among Muslims, the dominant majority in Indonesia. These associations are robust to various identification strategies. Using selection on observables to benchmark the potential bias from selection on unobservables, I find that the selection on unobservables needs to be multiple times that on observables to explain away these results.

Meanwhile, consistent with previous empirical studies in economics and political science in the United States and other countries, I find in Indonesia that individuals are more cooperative and trusting of their community members in more religiously homogeneous communities. At the same time -- and in support of the optimal contact hypothesis of Allport (1954) -- individuals in more homogeneous communities exhibit more in-group trust and are less tolerant of members of the religious out-groups. I also find that the inclusion of segregation measures can substantially affect the size of the diversity coefficients. Conditional on diversity, the segregation coefficients are significant and their signs are opposite those of religious diversity for some of the outcomes.

permanent working papers

The Effect of Proximity to Parks on Childhood Obesity hide abstract

Integration and Trade Specialization in East Asia hide abstract

Properties of Fixed Effects Dynamic Panel Data Estimators for a Typical Growth Dataset hide abstract

Indonesia-China Economic Relations: An Indonesian Perspective hide abstract

work in progress

Teach Afghanistan: Gender Impact of Tutoring for University Entrance in Rural Afghanistan

with Ahmad Mobariz

Willingness to Pay for Signals of Rare Events

with Peter McGee and Alexander Ugarov

The Impact of High-Tech and High-Touch Interventions on Mathematics Aptitude

with Milda Irhanmi, Gumilang Sahadewo, and Daniel Suryadarma

Do Mover Schools Move Learning Forward? The Impact of an At-Scale Government Education Innovation

with Milda Irhanmi, Gumilang Sahadewo, and Daniel Suryadarma

other publications

reports

Reforming Policies for Small and Medium-Sized Enterprises in Indonesia

with Alex Rothenberg, Nicholas E. Burger, Charina Chazali, Rini Radikun, Indrasari Tjandraningsih, and Sarah Weilant
| 2015 | Jakarta: TNP2K

Village Capacity in Maintaining Infrastructure: Evidence from Rural Indonesia

| 2010 | Jakarta: World Bank

Indonesia Commerce Report

| 2007 | New York: Economist Intelligence Unit

GAM Reintegration Needs Assessment

with Patrick Barron, Samuel Clark, and Matthew Zurstrassen | 2006 | Jakarta: World Bank

The Environmental Impacts of the Electricity Sector Restructuring (in Indonesian)

with Agus Sari, Rizka Elyza, and Eriell Salim | 2003 | Jakarta: Pelangi

chapters

"Diversity, contact and nation building: Evidence from population resettlement in Indonesia"

in Dominic Rohner and Ekaterina Zhuravskaya (eds.), Nation Building: Big Lessons from Successes and Failures | 2023 | London: Center for Economic Policy Research

"Civil Service Reform in Boalemo District, Gorontalo Province"

in Stefan Nachuk and Susannah Leisher (eds.), Making Services Work for the Poor: Nine Case Studies from Indonesia | 2006 | Jakarta: World Bank

"Healthcare Insurance Reform in Jembrana, Bali"

with Laila Kuznezov | In Nachuk and Leisher (op. cit.)

"Creating Learning Communities for Children in the Polman District, West Sulawesi"

with Stefan Nachuk and Susannah Leisher | In Nachuk and Leisher (op. cit.)

"Economic Outlook: Indonesia"

in Southeast Asia Regional Outlook 2005-2006 | 2006 | Singapore: ISEAS

"Indonesia"

in Confronting Climate Change: Economic Priorities and Climate Protection in Developing Nations | 2000 | Washington DC: National Environment Trust