Millions of the world’s poorest people now live in middle-income democracies that, in theory, could use their resources to end extreme poverty. However, citizens in those countries have not succeeded in using the vote to ensure adequate progressive redistribution. Interventions aiming to provide the economically vulnerable with needed resources must go beyond assisting them directly, they must also improve democratic institutions so that vulnerable populations themselves can push their representatives to implement redistributive policies. Here, I review the literature on such interventions and then consider the “democracy catch-22”: How can the poor secure greater democratic influence when the existing democratic playing field is tilted against them?
Multiple field experiments report positive financial returns to capital shocks for male and not female microentrepreneurs. But these analyses overlook the fact that female entrepreneurs often reside with male entrepreneurs. Using data from experiments in India, Sri Lanka, and Ghana, we show that the observed gender gap in microenterprise responses does not reflect lower returns on investment, when measured at the household level. Instead, the absence of a profit response among female-run enterprises reflects the fact that women's capital is typically invested into their husband's enterprise. We cannot reject equivalence of household-level income gains for male and female capital shock recipients.
Multiple field experiments report positive financial returns to capital shocks for male and not female microentrepreneurs. But these analyses overlook the fact that female entrepreneurs often reside with male entrepreneurs. Using data from experiments in India, Sri Lanka, and Ghana, we show that the observed gender gap in microenterprise responses does not reflect lower returns on investment, when measured at the household level. Instead, the absence of a profit response among female-run enterprises reflects the fact that women's capital is typically invested into their husband's enterprise. We cannot reject equivalence of household-level income gains for male and female capital shock recipients.
Three decades of sustained growth have contributed to a halving of Indian poverty rates. Yet one in every four Indians is still classified as being extremely poor and lives on less than US$1.90 a day (Narayan and Murgai 2016).1 Further, income inequality in India is fast rising with limited changes in the well-being of many poor rural households. How can public policy in India best respond to the economic needs of its poor rural citizens?
Can small search costs that constrain information acquisition and monitoring across the administrative hierarchy provide a substantive explanation for poor bureaucratic performance in the developing world? In collaboration with the Indian Ministry of Rural Development and two major states, we conducted a field experiment in which a random sample of bureaucrats were given access to an internet- and mobile-based management and monitoring platform for wage payments associated with the world’s largest workfare program. The platform did not make new information available, but lowered costs of accessing information about the status of pending payments and helped identify subordinate employees who needed to take action. Our experiment also randomly varied which level of the administrative hierarchy had e-platform access - senior and/or immediate managers. Overall, we find delays are 29% lower in areas where search costs are reduced for intermediate management alone. Across all treatment arms, areas with above median pre-period delays see delay reductions. While supervisor-only information provision is most impactful, we find evidence that app usage by intermediate supervisors reduces delays, and this usage is higher when senior officials also have e-platform access, suggesting complementarities across the administrative hierarchy are non-trivial. The extent of delay reductions ∗The authors are from Evidence for Policy Design (Dodge and Troyer Moore), Brown University (Neggers), and Harvard University (Pande). We thank Kartikeya Batra for field work and research assistance, and the J-PAL Governance Initiative and Gates Foundation for financial support. 1 achieved through minimal usage of the tool point to important service delivery improvements enabled by technology now widely available in capacity constrained settings.
As an intrinsic part of the classic microfinance model, group meetings are intended to employ social capital to ensure timely repayment. Recent research suggests that more frequent meetings can increase social capital among first-time clients. Using randomized variation in group meeting frequency for 174 microfinance groups in India, we demonstrate that social capital gains associated with more frequent meetings continue to accrue across multiple lending cycles. However, these effects are reduced when group members differ in their borrowing history. In addition, clients who start with low levels of empowerment report higher social capital gains when matched with similar clients. We discuss how current microfinance policy debates overlook the creation of social capital, including through repayment meeting frequency, and we encourage regulators to undertake a holistic understanding of microfinance’s impacts.
Although in theory elections are supposed to prevent criminal or venal candidates from winning or retaining office, in practice voters frequently elect and reelect such candidates. This surprising pattern is sometimes explained by reference to voters’ underlying preferences, which are thought to favor criminal or corrupt candidates because of the patronage they provide. This article tests this hypothesis using 2010 data from the Indian state of Uttar Pradesh, where one in four representatives in the state legislature have a serious criminal record and where political corruption is widespread. Contrary to the voter preference hypothesis, voters presented with vignettes that randomly vary the attributes of competing legislative candidates for local, state, and national office become much less likely to express a preference for candidates who are alleged to be criminal or corrupt. Moreover, voters’ education status, ethnicity, and political knowledge are unrelated to their distaste for criminal and venal candidates. The results imply that the electoral performance of candidates who face serious allegations likely reflects factors other than voters’ preferences for patronage, such as limited information about candidate characteristics or the absence of credible alternative candidates with clean records.
Do the repayment requirements of the classic microfinance contract inhibit investment in high-return but illiquid business opportunities among the poor? Using a field experiment, we compare the classic contract which requires that repayment begin immediately after loan disbursement to a contract that includes a two-month grace period. The provision of a grace period increased short-run business investment and long-run profits but also default rates. The results, thus, indicate that debt contracts that require early repayment discourage illiquid risky investment and thereby limit the potential impact of microfinance on microenterprise growth and household poverty.
Do the repayment requirements of the classic microfinance contract inhibit investment in high-return but illiquid business opportunities among the poor? Using a field experiment, we compare the classic contract which requires that repayment begin immediately after loan disbursement to a contract that includes a two-month grace period. The provision of a grace period increased short-run business investment and long-run profits but also default rates. The results, thus, indicate that debt contracts that require early repayment discourage illiquid risky investment and thereby limit the potential impact of microfinance on microenterprise growth and household poverty.
Disclosure laws for politicians exist in over a hundred countries. But can public disclosures about politician performance and qualifications influence electoral accountability in settings characterized by weak institutions and less educated populations? In the run-up to the 2008 elections in Delhi we implemented a field experiment where we provided slum dwellers with newspapers containing report cards giving information on candidate qualifications and legislator performance obtained under India’s disclosure laws. Access to report cards increased voter turnout; this effect is larger when incumbent performance is worse. We also observe reductions in the incidence of cash-based vote buying and electoral gains for better performing incumbents. Finally, we observe significant voter sophistication in the use of information – voters make comparisons across spending categories and candidates to overcome political agency problems and reward better performing incumbents.