Kaivan Munshi

Networks in the Modern Economy: Mexican Migrants in the U. S. Labor Market

This paper attempts to identify job networks among Mexican migrants in the U. S. labor market. The empirical analysis uses data on migration patterns and labor market outcomes, based on a sample of individuals belonging to multiple origin-communities in Mexico, over a long period of time. Each communitys network is measured by the proportion of the sampled individuals who are located at the destination (the United States) in any year. We verify that the same individual is more likely to be employed and to hold a higher paying nonagricultural job when his network is exogenously larger, by including individual fixed effects in the employment and occupation regressions and by using rainfall in the origin-community as an instrument for the size of the network at the destination.

Inequality, Control Rights, and Rent Seeking: Sugar Cooperatives in Maharashtra

This paper presents a theory of rent seeking within farmer cooperatives in which inequality of asset ownership affects relative control rights of different groups of members. The two key assumptions are constraints on lump‐sum transfers from poorer members and disproportionate control rights wielded by wealthier members. Transfers of rents to the latter are achieved by depressing prices paid for inputs supplied by members and diverting resulting retained earnings. The theory predicts that increased heterogeneity of landholdings in the local area causes increased inefficiency by inducing a lower input price and a lower level of installed crushing capacity. Predictions concerning the effect of the distribution of local landownership on sugarcane price, capacity levels, and participation rates of different classes of farmers are confirmed by data from nearly 100 sugar cooperatives in the Indian state of Maharashtra over the period 1971–93.

How Efficiently is Capital Allocated? Evidence from the Knitted Garment Industry in Tirupur

This paper studies the effect of community identity on investment behaviour in the knitted garment industry in the South Indian town of Tirupur. We document very large and systematic differences in both levels of capital stock and the capital intensity of production in firms owned by people from two different community groups. We argue that the differences in investment cannot be explained by productivity differences alone. We suggest that the most likely explanation is that the two communities differ in their access to capital. Copyright 2004, Wiley-Blackwell.

NEW ROLES FOR MARRIAGE IN URBAN AFRICA: KINSHIP NETWORKS AND THE LABOR MARKET IN KENYA

This paper explores new roles that traditionally rural kinship networks organized around the marriage institution might play in improving labor market outcomes in urban Africa. Using new data from Kisumu, Kenya, and controlling for selection into marriage, we find that marriage significantly increases employment levels and incomes in our sample of migrants. At the same time, marriage increases the remittances that migrants send to the extended family, consistent with the view that the benefits of the network come with additional social obligations. These obligations appear to be borne disproportionately by high-ability individuals, who consequently defer marriage. The negative selection into marriage that we uncover has consequences for the future viability of the urban networks, with implications for long-term growth and distribution in this economy.

THE (MIS)ALLOCATION OF CAPITAL

Is capital allocated so that its marginal product is equated to the market interest rate? Is the marginal product of capital equalized across its alternative uses? This paper attempts to answer both of these questions using data from India, and concludes that both these standard properties fail by a wide margin. (JEL: O16, G2) Copyright (c) 2003 The European Economic Association.

Networks, Migration and Investment: Insiders and Outsiders in Tirupur's Production Cluster

This paper studies the effects of social network based lending. This is a pervasive phenomenon in most of the developing world. Access to such network capital has an obvious influence on investment. It also influences the pattern of migration since, ceteris paribus, migrants would prefer to be in locations where they have access to their communitys lending network. We show that under reasonable conditions such lending will generate a rather specific pattern of migration and investment. In particular, migrants to locations where they do not have access to their communitys lending networks will tend to have higher ability than the traditional residents of that location, but will invest less relative to their ability. Under some conditions this generates the possibility that migrants have higher ability but invest less in absolute terms than the local people. We test this implication using data from the knitted garment industry in the South Indian town of Tirupur. Comparing the growth rate of output (which, we argue, proxies well for ability) with investment between garment firms owned by migrants to Tirupur and local people, we find that local people have slower output growth but invest substantially more at all levels of experience. We also find a positive correlation between investment and growth within any single community, consistent with the view that capital access does not vary within each group.

Information Networks in Dynamic Agrarian Economies

Over the past 50 years, people living in developing countries have gained access to technologies, such as high yielding agricultural seed varieties and modern medicine, that have the potential to dramatically alter the quality of their lives. Although the adoption of these technologies has increased wealth and lowered mortality in many parts of the world, their uptake has been uneven. The traditional explanation for the observed differences in the response to new opportunities, across and within countries, is based on heterogeneity in the population. An alternative explanation, which has grown in popularity in recent years is based on the idea that individuals are often uncertain about the returns from a new technology. For example, farmers might not know the (expected) yield that will be obtained from a new and uncertain technology and young mothers might be concerned about the side effects from a new contraceptive. In these circumstances, a neighbors decision to use a new technology indicates that she must have received a favorable signal about its quality and her subsequent experience with it serves as an additional source of information. Because information must flow sequentially from one neighbor to the next, social learning provides a natural explanation for the gradual diffusion of new technology even in a homogeneous population. Social learning can also explain the wide variation in the response to external interventions across otherwise identical communities, simply as a consequence of the randomness in the information signals that they received. Recent research described in this chapter indicates that social learning can play an important role in the adoption of new agricultural technology, the fertility transition, and investments in health and education in developing countries.

MILK SUPPLY BEHAVIOR IN INDIA: DATA INTEGRATION, ESTIMATION AND IMPLICATIONS FOR DAIRY DEVELOPMENT

Abstract We develop and estimate a model to derive the sources of growth in Indian milk production. A substantial share of this growth is attributed to technological progress associated with the cooperative system. Directed interventions in the dairy sector can account for only a fraction of this technological progress. For instance, cross-breeding only partially explains the growth in cow milk production, suggesting improvement in the quality of indigenous cows. Diffuse determinants may thus play an important role in dairy development. In this regard, the cooperative system provides a channel for the dissemination of information as well as an infrastructure base for the adoption of new technology.

Urban passenger travel demand estimation: A household activity approach

The absence of a structural relationship between trip generation and transportation supply characteristics has been seen as a major drawback of conventional transportation demand models. We respond to this criticism by developing a model of household activity demand that underlies and generates transportation demand. Time is considered as an argument in an activity utility function that the individual attempts to maximize, subject to a time-budget constraint. Transportation system improvements relax the time-budget constraint, providing opportunities for additional nonhome activities, with a corresponding generation of trips. Trip generation is found to be insensitive to transportation system performance in the short run. However, our model provides a framework in which the impacts of large transportation improvements could be modeled in the future.

Marriage, Networks, and Jobs in Third World Cities

This paper reports on recent research that explores the role of the marriage institution in facilitating economic activity in two urban labor markets: Kisumu, Kenya and Bombay, India. Kin and affine networks, organized around the marriage institution, are shown to improve the individuals labor market outcomes, while at the same time increasing his social obligations, in Kisumu. Caste-based networks, also kept in place by the marriage institution, are shown to shape career choices in Bombay. Although the marriage institution may have demonstrated a significant degree of flexibility in transplanting traditional (rural) networks to the city, we argue that these networks will ultimately break down in the face of economic globalization. (JEL: J12, J24, O12) Copyright (c) 2004 The European Economic Association.