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

Authors: Sayahnika Basu, Yao Wang, 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.

Speaker: Kartik Srivastava, Harvard University

Discussant: Carolina Lopez, The World Bank, DECRG

Paper Title: Long-run Effects of a School System Targeted Towards Historically Disadvantaged Communities

Authors: Naveen Kumar and Kartik Srivastava 

Abstract: We use admissions lotteries to estimate the long-run effects of a residential middle school system targeted toward historically disadvantaged communities in India. We designed a socio-economic survey to collect data on a range of outcomes for lottery applicants from the 2010-11 cohort, detailing their educational, labor market and networks outcomes 12 years after their entry into the lottery. Using the lottery as an instrument for enrollment in treatment schools, we find that those who attend treated schools have more years of schooling, better senior secondary school grades, a higher likelihood of attending college, and higher labor force participation. Importantly, we find effects on the size and composition of social networks: treated students have smaller and more caste-homogenous social networks. Differential exposure to peers from their own social groups during formative years of schooling is likely to frame their attitudes and beliefs, and affect their exposure to labor market opportunities. We are currently working on expanding this data collection to study mechanisms behind these effects, to build a deeper understanding of the role of networks in this context, and to study whether treated students can leverage their higher educational attainment into better labor market outcomes through support that mitigates network-based disadvantages.

Speaker: Ashish Sedai, University of Texas at Arlington

Discussant: Livia Alfonsi, Harvard Business School

Paper Title: Reshaping Gender Norms and Building Trust: Evidence from a Community-Based Couple Counseling RCT

Authors: Debayan Pakrashi, Dil Rahut, Ashish K. Sedai, Aashima Sinha, and Tetsushi Sonobe‖

Abstract: Using a randomized control trial, we examine the effects of an innovative and gender-sensitive couple counseling intervention on labor allocation, intra-household bargaining, and social norms in Kanpur, India. We evaluate two interventions: (1) private couple counseling and (2) community-based couple counseling emphasizing public accountability and cooperative decision-making. Both interventions significantly improved labor outcomes and intra-household decision-making, with particularly large and empowering effects for women. The novel community and couple-based intervention produced stronger impacts on women’s time use, self-employment, and decision-making power. Behavioral shifts in trust and cooperation further suggest that these interventions can meaningfully reshape intra-household dynamics, reduce gender inequality, and foster broader economic development.

Speaker: Raisa Sherif, Max Planck Institute for Tax Law and Public Finance

Discussant: Apurav Bhatia

Paper Title: Intergenerational transmission of pro-environmental attitudes and behaviours.

Authors: Shubhro Bhattacharya, Sara Constantino, Nirajana Mishra, Nishith Prakash, Shwetlena Sabarwal and Dighbijoy Samaddar

Abstract: This study examines how environmental education influences household behavior through intra-family transmission of environmental attitudes and actions. Using a randomized field experiment with 1,545 child-parent pairs in Bihar, India, we analyze both direct effects on participants and spillover effects on non-participating family members. Our experimental design creates four distinct groups: a control group, child-only treatment, parent-only treatment, and joint child-parent treatment. This allows us to systematically evaluate the effectiveness of targeting different household members with environmental education. Our findings reveal nuanced patterns of influence within families. We observe spillover effects on non-participating family members, but these effects vary by both the type of behavior measured and the direction of influence. While both parents and children can influence each other's pro-environmental behaviors, we find that children uniquely shape their parents' attitudes toward climate change and perceptions of environmental risks. Interestingly, joint participation by both parent and child does not lead to stronger results than targeting either member individually, suggesting that selective targeting may be more cost-effective for environmental education programs.

Speaker: Vaidehi Tandel, University of Manchester

Discussant: Aradhya Sood, University of Toronto

Paper Title: The impact of urban floods on housing markets: Evidence from Mumbai

Authors: Thomas Bearpark, Amine Ouazad, Ashwin Rode, and Vaidehi Tandel

Abstract: Urban floods can have large negative impacts on a city’s residential real estate market. At the same time, extreme events can provide information to homebuyers and developers about the potential flood-risk of areas within a city. This could result in a correction in property prices in risky areas and new development moving to safer areas. A devastating precipitation event in Mumbai allows us to test these propositions. We find that prices fell by 15% in areas that were exposed to flooding. Further, incomes of buyers purchasing properties in these areas were almost 27% lower relative to buyers in safer areas. We find no evidence of real estate development moving away from risky areas.

Speaker: Chinmaya Kumar, Azim Premji University

Discussant: Juni Singh, World Bank

Paper Title: Minority Employers and Discrimination from Below: Experimental Evidence from India

Author: Chinmaya Kumar

Abstract: Minorities are underrepresented in enterprise ownership and leadership positions. This paper investigates one potential cause: discrimination against minority employers by subordinate workers. Using a field experiment in the hiring process of a private Indian firm, this paper examines whether minority employers face bias in the quantity and quality of job applicants. The experiment randomized employer identity (minority vs. non-minority) and the disclosure of reference checks to test for social image concerns as a motive for discrimination. Results show that applicants assigned to a minority employer were 2.8 percentage points (10%) less likely to accept interview offers, and the average quality of applicants—measured by educational attainment—was significantly lower. The results also show no evidence that social image concerns drive this discrimination, as reference checks had no differential effect. Heterogeneity analysis reveals that non-minority workers disproportionately discriminate against minority employers, while minority workers exhibit less bias.