21st Century India Center Seminar Series on the Indian Economy

Speaker: Tejaswi Velayudhan, UC Irvine

Discussant: Pablo Garriga, the World Bank

Paper Title: Value-added Taxes: Do People Pay If the Government Isn’t Watching?

Authors: Bhanu Gupta, Tejaswi Velayudhan, Prince Dhawan, Ankur Garg

Abstract: The Value-Added Tax (VAT) has become a powerful tool for raising tax revenue in contexts with low state capacity. Many countries rely on technology and automation to further strengthen self-enforcement and reduce the burden on tax officers. In this paper, we show that such increased reliance on self-enforcement can perversely reduce compliance. Strategic complementarity increases non-compliance among firms that remain connected to non-compliant suppliers. We experimentally increase perceived enforcement of tax filing among Goods and Services Tax (GST) taxpayers in New Delhi, India, which increases compliance by 10 percent on average. However, only taxpayers with above median levels of compliance in their supplier network respond to enforcement at all. Buyers in networks with more non-compliant suppliers are also less likely to shift away from these suppliers.

Speaker: Suanna Oh, Paris School of Economics

Paper Title: Worker Absences and Demand for Flexible Contracts

Authors: Sampreet Goraya, Suanna Oh, Yogita Shamdasani

Abstract: Worker absenteeism and high turnover remain common problems in developing labor markets, even while the unemployment rate is high (Allen 1981, Leigh 1983, Benavides et al. 2000). In India, the absence rate stands at 8% of worker-days among permanent manufacturing employees, and a majority of unskilled workers continue to be employed in informal casual labor. We hypothesize that worker demand for flexibility affects labor supply decisions, both in terms of absence and selection into informal work arrangements. We test for the existence of a demand for flexible work among unskilled casual laborers in Odisha, India, and investigate the underlying motivations. We use an incentive-compatible choice experiment, which elicits preferences over pairs of contracts which vary in levels of flexibility, attendance bonus, and distance to local network. This allows us to empirically document workers’ willingness to pay for flexibility in terms of forgone wage earnings, when they are proximate (or not) to the network. We combine this with attendance data from random implementation of contracts and collect detailed survey data on the causes of absences, social network and practices, as well as risk and time preferences. We plan to: 1) estimate the share of workers who have demand for flexibility that exceeds what is permitted in a typical formal contract; 2) distinguish the main reasons why workers demand flexibility, including the role of social duties; and 3) examine consequences for contract selection and earnings.

Speaker: Zhanhan Yu, University of Glasgow

Discussant: Danae Hernandez-Cortes, Arizona State University

Paper Title: Carbon Footprint of Place-Based Economic Policies

Author: Zhanhan Yu

Abstract: We assess the environmental impact of Special Economic Zones (SEZs), a place-based policy aimed at promoting economic development in India. Specifically, we examine the unintended effects of the policy on firms' energy consumption and carbon emissions. Using extensive firm-level data and a spatial RD-DiD design, we find that SEZs result in a significant 30% reduction in firms' carbon emissions, primarily driven by a shift from conventional energy to lower-carbon renewable alternatives. Heterogeneity analysis reveals that this substantial decline is largely driven by larger firms and those in regions with better access to cleaner energy.

Register for Nov. 20, 2024 Seminar

Speaker: Kartik Srivastava, Harvard University