Prachi Mishra

Trade Liberalization and Wage Inequality: Evidence from India

We evaluate empirically the impact of the dramatic 1991 trade liberalization in India on the industry wage structure. The empirical strategy uses variation in industry wage premiums and trade policy across industries and over time. In contrast to earlier studies on developing countries, we find a strong, negative, and robust relationship between changes in trade policy and changes in industry wage premiums over time. The results are consistent with liberalization-induced productivity increases at the firm level, which get passed on to industry wages. Since tariff reductions were proportionately larger in sectors that employ a larger share of unskilled workers, the increase in wage premiums in these sectors implies that unskilled workers experienced an increase in their relative incomes. Thus, our findings suggest that trade liberalization has led to decreased wage inequality in India.

Does Health Aid Matter

This paper examines the relationship between health aid and infant mortality, using data from 118 countries between 1973 and 2004. Health aid has a beneficial and statistically significant effect on infant mortality: doubling per capita health aid is associated with a 2 percent reduction in the infant mortality rate. For the average country, this implies that increasing per capita health aid by US

Do Interest Groups Affect US Immigration Policy

1.60 per year is associated with 1.5 fewer infant deaths per thousand births. The estimated effect is small, relative to the 2015 target envisioned by the Millennium Development Goals. It implies that achieving the MDG target through additional health aid alone would require a roughly 15-fold increase in current levels of aid.

Health Aid and Infant Mortality

While anecdotal evidence suggests that interest groups play a key role in shaping immigration policy, there is no systematic empirical analysis of this issue. In this paper, we construct an industry-level dataset for the United States, by combining information on the number of temporary work visas with data on lobbying activity associated with immigration. We find robust evidence that both pro- and anti-immigration interest groups play a statistically significant and economically relevant role in shaping migration across sectors. Barriers to migration are lower in sectors in which business interestgroups incur larger lobby expenditures and higher in sectors where labor unions are more important.

Monetary Transmission in Low Income Countries

This paper examines the relationship between health aid and infant mortality, using data from 118 countries between 1973 and 2004. Health aid has a statistically significant effect on infant mortality: doubling per capita health aid is associated with a 2 percent reduction in the infant mortality rate. For the average country, this implies that increasing per capita health aid by US

Impact of Fed Tapering Announcements on Emerging Markets

1.60 per year is associated with 1.5 fewer infant deaths per thousand births. The estimated effect is small, relative to the targets envisioned by the Millennium Development Goals.

Do Interest Groups Affect U.S. Immigration Policy

This paper reviews monetary transmission mechanisms in low-income countries (LICs) to identify aspects of the channels that may operate differently in LICs relative to advanced and emerging economies. Given the weak institutional frameworks, reduced role of securities markets, imperfect competition in the banking sector and the resulting high cost of bank lending to private firms, the traditional channels (interest rate, bank lending, and asset price) are impaired in LICs. The exchange rate channel is also undermined by central bank intervention in the foreign exchange market. These conclusions are supported by review of the institutional frameworks, statistical analysis, and previous literature.

Exchange Rates and Wages in an Integrated World

This paper analyzes market reactions to the 2013–14 Fed announcements relating to tapering of asset purchases and their relationship to macroeconomic fundamentals and country economic and financial structures. The study uses daily data on exchange rates, government bond yields, and stock prices for 21 emerging markets. It finds evidence of markets differentiating across countries around volatile episodes. Countries with stronger macroeconomic fundamentals, deeper financial markets, and a tighter macroprudential policy stance in the run-up to the tapering announcements experienced smaller currency depreciations and smaller increases in government bond yields. At the same time, there was less differentiation in the behavior of stock prices based on fundamentals.

Protection for Free? The Political Economy of U.S. Tariff Suspensions

While anecdotal evidence suggests that interest groups play a key role in shaping immigration policy, there is no systematic empirical analysis of this issue. In this paper, we construct an industry-level dataset for the United States, by combining information on the number of temporary work visas with data on lobbying activity associated with immigration. We find robust evidence that both pro- and anti-immigration interest groups play a statistically significant and economically relevant role in shaping migration across sectors. Barriers to migration are lower in sectors in which business interest groups incur larger lobby expenditures and higher in sectors where labor unions are more important.

Wall Street, Capitol Hill, and K Street: Political Influence and Financial Regulation

We analyze how the pass-through from exchange rate to domestic wages depends on the degree of integration between domestic and foreign labor markets. Using data from 66 countries over the period 1981–2005, we find that the elasticity of domestic wages to real exchange rate is 0.1 after a year for countries with high barriers to external labor mobility, but about 0.4 in countries with low barriers to mobility. The results are robust to the inclusion of various controls, different measures of exchange rates, and concepts of labor market integration. These findings call for including labor mobility in macro models of external adjustment.