Nidhiya Menon

Labor Disputes and the Economics of Firm Geography: A Study of Domestic Investment in India

Abstract Acrimonious relations between employers and employees in developing countries have often been cited as impediments to progress. This article considers various measures of labor disputes and investigates whether these have detrimental effects on the location choice of new domestic investment across the various states of India. Conventional wisdom holds that an increase in measures such as the number of strikes, the number of man‐days lost in work stoppages, and the percentage of unionized workers would hinder the location of new projects. Using panel data and a fixed‐effects methodology that controls for the effect of state‐specific unobservables, we find significant evidence that this is indeed the case in India. Furthermore, disaggregation by industrial classifications shows that, although labor disputes continue to exert negative effects, location choices are also conditioned on factors such as proximity to raw materials and minerals.

War and women's work: evidence from the conflict in Nepal

This article examines how Nepal’s 1996–2006 civil conflict affected women’s decisions to engage in employment. Using three waves of the Nepal Demographic and Health Survey, we employ a difference-in-difference approach to identify the impact of war on women’s employment decisions. Results indicate that women’s likelihood of employment increased as a consequence of the conflict, a conclusion that holds for self-employment decisions and is robust to numerous sensitivity tests. The findings support the argument that women’s additional employment—rather than greater dependence on remittances and subsistence work—serves as an important source of resilience during times of crisis.

Rainfall Uncertainty and Occupational Choice in Agricultural Households of Rural Nepal

Abstract Although agriculture is the main occupation in rural Nepal, evidence suggests that households strive to diversify their sources of income. This paper investigates why this is the case. Using household data from the World Bank and information on rainfall for the various rural districts of Nepal, we find that occupational choice is highly correlated to the uncertainty associated with historical rainfall patterns. Where the head is employed in agriculture, other family members are less likely to choose agriculture as an occupation in districts where rain is more uncertain. Estimates indicate that for a 1 per cent increase in the coefficient of variation of rain, there is a 0.61 per cent decrease in the probability of choosing the same occupation as the household head, where the head is classified as self-employed in agriculture. The negative effect of rainfall uncertainty on occupational choice is less evident in households that have access to credit, and in households with relatively high levels of human capital.

How Access to Credit Affects Self-employment: Differences by Gender during India's Rural Banking Reform

Abstract Household survey data for 1983–2000 from Indias National Sample Survey Organisation are used to examine the impact of credit on self-employment among men and women in rural labour households. Results indicate that credit access encourages womens self-employment as own-account workers and employers, while it discourages mens self-employment as unpaid family workers. Ownership of land, a key form of collateral, also serves as a strong predictor of self-employment. Among the lower castes in India, self-employment is less likely for scheduled castes prone to wage activity, but more likely for scheduled tribes prone to entrepreneurial work.

Investment credit and child labour

It is generally assumed that credit has a positive effect on childrens schooling among poor households. This article shows that need not be the case when households obtain credit for investment purposes. In fact, investment loans may not have any effect on the likelihood of schooling for children who work in their family business. Our estimates confirm that this is the case; credit used to finance investments has no effect on the odds of schooling for employed children. This may be because investment loans increase childrens labour productivity, which in turn increases the opportunity cost of schooling. The results of this study suggest that improving access to credit may not, by itself, constitute a solution to the problem of child labour in developing countries.

Non-linearities in returns to participation in Grameen Bank programs

Abstract This paper studies the benefits of participation in micro-finance programs, where benefits are measured in terms of the ability to smooth the effect of seasonal shocks that cause consumption fluctuations. It is shown that although membership in these programs is an effective instrument in combating inter-seasonal consumption differences, there is a threshold level of length of participation beyond which benefits begin to diminish. Returns from membership are modelled using an Euler equation approach. Fixed effects non-linear least squares estimation of parameters using data from 24 villages of the Grameen Bank suggests that returns to participation, as measured by the ability to smooth seasonal shocks, begin to decline after approximately two years of membership. This implies that membership alone no longer has a mitigating marginal effect on seasonal shocks to per capita consumption after four years of participation. Such patterns suggest that the ability to smooth consumption as a function of length of membership, need not accrue indefinitely in a linear fashion.

Labor Regulations and Job Quality: Evidence from India

The authors examine whether measures of job quality in Indias manufacturing sector differ systematically across states with varying types of labor regulation. Their analysis uses repeated cross sections of Indias National Sample Survey Organization (NSSO) household survey data from 1983 to 2004 merged with data on state-level regulations covering employment adjustment and dispute resolution. Results from a differences-in-differences procedure show that restrictions on employment adjustment and dispute settlement in a pro-worker direction contribute to improved job quality for women along most measures. Such regulations yield mixed results for men, however; results indicate that higher wages come at the expense of fewer hours, substitution toward in-kind compensation, and less job security. The authors conclude that Indias labor legislation does have a silver lining with respect to job quality, but that silver lining applies selectively.

The Impact of Trade Liberalization on Gender Wage Differentials in India's Manufacturing Sector

As trade liberalization in India has unleashed a new wave of competitive forces in the economy since 1991, firms have faced growing pressure to cut costs in order to continue production. This study addresses the question of whether the increasing competitive forces from Indias trade liberalization affected the wages of male and female workers differently. Neoclassical theory implies that costly discrimination against female workers should diminish over time with increased competition (Becker 1971). We incorporate this idea into a theoretical model of competition and industry concentration in which the net impact of international trade on the gender wage gap could be positive or negative depending on the initial size of Beckers discrimination coefficient. Our study tests the theoretical model using repeated cross sections of Indias NSSO household survey data merged with trade and production data from 1983 to 2004. We employ OLS and Fixed Effects techniques at the industry level to estimate the relationship between the male-female residual wage gap and measures of domestic concentration and international trade competition. Results indicate that increasing openness to trade is associated with a widening in the wage gap in Indias concentrated manufacturing industries. This result is consistent with female workers in India having weak bargaining power and a lower workplace status. They are thus less able to negotiate for favorable working conditions and higher pay, a situation that places them in a vulnerable position as firms compete in the global market place.

Public Programs Pare Poverty: Evidence from Chile

This study examines the effect of government health care and education programs on the poor in Chile from 2000 to 2006. Results are obtained from a country-wide provincial-level panel data set with information on poverty and indigence head-count ratios, measures on the severity of poverty as captured by the Foster–Greer–Thorbecke P statistic, per capita public expenditures on health and education, as well as other variables that are thought to influence well-being. We use fixed-effects techniques to correct for time-invariant province-specific characteristics that may affect program placement. Our analysis demonstrates that per capita public health and education expenditures significantly reduce the incidence of poverty and indigence in Chile. In particular, for a 10,000 pesos (about

The Effect of Investment Credit on Children's Schooling: Evidence from Pakistan

23) increase in provincial per capita health spending, the poverty head-count ratio decreases by 0.48 percent. Per capita education expenditures are particularly important to reducing the severity of poverty. Our results indicate that for a 10,000 pesos increase in education spending, the severity of poverty declines by as much as 1.53 percent. Furthermore, we provide evidence that public spending in Chile is non-random. In particular, government education expenditures may be allocated in keeping with compensatory motives.