Three Essays in Development Economics

Abstract

This dissertation is composed of three essays that explore policy-relevant issues in developing countries using techniques in applied microeconomics. The first chapter examines how parents’ preferences and beliefs about their children’s academic performance shape educational investment decisions and skill disparities. Using detailed data on parental beliefs and a randomized information intervention in Malawi (Dizon-Ross, 2019), I estimate a structural model of parental investments that embeds beliefs distortions into parents’ trade-off between own consumption and improvements in children’s academic performance. I find that distortions on parents’ beliefs have sizable impacts on skill formation and in narrowing skill disparities. This conclusion stems from two main findings. First, parents show a strong preference for compensating for initial differences in siblings’ performance: when offered a subsidy for educational inputs they direct investments toward lower scorers, leading to reductions in within household disparities. Second, distortions in parents’ beliefs interfere with their intended investment strategy: while they believe they target lower-performing children, widespread optimistic biases lead to underinvestment. Correcting information frictions increases investments significantly for students at the bottom of the score distribution and is twice as effective at reducing within household inequality compared to a subsidy alone. In the second chapter, I study the effect of different policies on voter turnout and representation. I use the context of Peru, where voting is mandatory and abstention is penalized with a monetary fine. I use data from local elections and a field experiment designed by Leon (2017) that introduced exogenous variation in perceived abstention penalties to estimate a model of turnout. In this model, citizens first update their beliefs about the monetary cost of abstention and compare it to the net benefit from voting. I use the estimated model to quantify the effect of eliminating the abstention fine, and the effect of an intervention that targets social image concerns. I find that removing fines reduces turnout by 7–11 percentage points, with the largestdrops among left-leaning and low-income voters. However, interventions that activate social image concerns—such as being surveyed about voting behavior—can recover much of this decline. The third chapter explores how commodity price shocks influence who voters elect, focusing on the local democracy of Peru during a mining boom period. I use a difference-in-differences strategy that exploits exogenous time variation from international metal prices and variation across municipalities based on their exposure to mining. I find that, when prices rise, the probability of electing a left-wing mayor is higher. To understand why and among which populations a resource boom is a shock to voters’ interests, I construct a georeferenced data set that matches electoral outcomes at the polling place level to nearby mines and exploit a fixed rule of distribution of mining income taxes. The evidence suggests that the shift to left-leaning parties is stronger among voters for whom externalities from metal extraction are potentially more costly, although it is not clear whether environmental or rent seeking concerns are driving support for left-wing parties among this population.