Dilip Mookherjee

• Boston University

Persistence of sharecropping tenancy, and increases in farm productivity resulting from regulations protecting tenant rights have been observed in many developing countries. This paper examines if these can be explained by alternative models of sharecropping with two sided efforts/investments, namely, complete contract models, either without wealth...

We conduct a field experiment in India comparing two ways of delegating selection of microcredit clients among smallholder farmers to local intermediaries: a private trader (TRAIL), versus a local–government appointee (GRAIL). Selected beneficiaries in both schemes were equally likely to take up and repay loans, and experienced similar increases in...

Using rural household survey data from West Bengal, we find that voters respond positively to excludable government welfare benefits but not to local public good programs, while reporting having benefited from both. Consistent with these voting patterns, shocks to electoral competition induced by exogenous redistricting of villages resulted in uppe...

For developing countries, decentralising power from central government to local authorities holds the promise of deepening democracy, empowering citizens, improving public services and boosting economic growth. But the evidence on when and how decentralisation can bring these benefits has been mixed. Under the wrong conditions, decentralised power...

We discuss reasons why traditional rural communities may be reluctant to voluntarily relinquish their access to land despite being compensated at market prices, thereby limiting the scope for reallocating land to more productive uses in agriculture or urban development. Owing to financial market imperfections, insurance and collateral benefits of l...

We develop a political economy model where political clientelism co-exists with elite capture and derive its implications for targeting of local government benefits. The model helps explain targeting impacts of gender and caste based political reservations in West Bengal local governments documented by previous empirical studies. We argue these tar...

We provide evidence of the role of community networks in emergence of Indian entrepreneurship in early stages of cotton and jute textile industries in the late 19th and early 20th century respectively, overcoming lack of market institutions and government support. From business registers, we construct a yearly panel dataset of entrepreneurs in thes...

Most analyses of randomized controlled trials of development interventions estimate an average treatment effect on the outcome of interest. However, the aggregate impact on welfare also depends on distributional effects. We propose a simple method to evaluate efficiency-equity trade-offs in the utilitarian tradition of Atkinson (1970). This involve...

We study the long run implications of workplace automation induced by capital accumulation. We describe a minimal set of sufficient conditions for sustained growth, along with a declining labor share of income in the long run: (i) a basic asymmetry between physical and human capital; (ii) the technical possibility of automation in each sector; (ii)...

In designing a contract with an agent privately informed about its cost, should a principal consult an expert who has already received a partially informative signal of the agent's cost? The expert has a prior relationship with the agent, facilitating (weak) ex ante collusion which coordinates their participation and reporting decisions with accomp...

We investigate the relation between economic growth, household firewood collection, and forest conditions in Nepal between 2003 and 2010. Comovements in these are examined at the household and village levels, combining satellite imagery and household (Nepal Living Standard Measurement Survey) data. Projections of the impact of economic growth based...

West Bengal potato farmers cannot directly access wholesale markets and do not knowwholesale prices. Local middlemen earn large margins; pass-through from wholesale to farmgate prices is negligible. When we informed farmers in randomly chosen villages about wholesale prices, average farmgate sales and prices were unaffected, but pass-through to far...

We explore the hypothesis that traditional joint-liability microfinance programs fail to increase borrower incomes in part because they cannot screen out unproductive borrowers. In randomly selected villages in West Bengal, India, we implemented trader-agent-intermediated lending (TRAIL), in which local trader-lender agents were incentivized throug...

We analyze an economy where principals and agents match and contract subject to moral hazard. Bankruptcy law defines the limited liability constraint in these contracts. We provide a Walrasian characterization of stable allocations and use this to show that weakening bankruptcy law causes redistribution of debt and welfare from poor agents and prin...

In the Indian state of West Bengal, potato farmers sell to local middlemen because they lack direct access to wholesale markets. High-frequency marketing surveys reveal large middleman margins and negligible pass-through from wholesale to farmgate prices. Farmers are uninformed about downstream wholesale and retail prices.To test alternative models...

We provide a theoretical analysis of effects of entry of a microfinance institution (MFI) into an informal credit market which is segmented, whereby informal lenders derive some market power owing to privileged information concerning borrower-specific default risks. Relative to informal lenders, the MFI has a cost advantage and an informational dis...

We consider mechanism design in which message sets are restricted owing to communication costs, preventing full revelation of information. A principal contracts with multiple agents each supplying a onedimensional good at a privately known cost. We characterize optimal mechanisms subject to incentive and communication constraints, without imposing...

In an experiment where potato farmers in randomly chosen villages in two Indian districts were provided information about prices at which middlemen resold their output, we find no significant average treatment effects on traded quantities or revenues, but both became more responsive to market price variations. The results confirm predictions of a m...

I provide a critical overview of the literature on political decentralization. After reviewing first- and second-generation theories of federalism, I describe recent empirical studies focusing mainly on determinants of capture and local government accountability emphasized by second-generation theories. The article concludes by describing emerging...

Purpose – This paper aims to provide an overview of recent research on accountability of local and state governments in India. Design/methodology/approach – The Downsian theory of electoral competition is used as a departure point for classifying different sources of government accountability failures. Subsequent sections deal with each of these s...

This paper uses two successive rounds of voter surveys in rural West Bengal in a household panel to find reasons for the recent decline in the Left Front's political popularity. It does not find evidence of any significant role of changes in voter age distribution, media exposure, private benefits received from development and welfare programmes ad...

This paper studies how land reform and population growth affect land inequality and landlessness, focusing particularly on indirect effects owing to their influence on household divisions and land market transactions. Theoretical predictions of a model of household division and land transactions are successfully tested using household panel data fr...

We study middleman margins, trading mechanisms and the role of asymmetric informa-tion about prices between potato farmers and local trade intermediaries, in West Bengal, India. Farmers in randomly chosen villages were provided daily information on prices in neighboring wholesale markets where the traders re-sell the potatoes. We estimate a lower b...

This paper reports results of a household survey in 12 Singur villages, six in which lands were acquired for the Tata car factory, and six neighbouring villages, with random sampling of households within each village. The results show that (a) the size of plots acquired were non-negligible; (b) the majority of those affected were marginal landowner...

A household panel data set is used to investigate the effects of economic growth on firewood collection in Nepal between 1995 and 2010. Results from preceding cross-sectional analyses are found to be robust: (a) rising consumptions for all but the top decile were associated with increased firewood collections, contrary to the Poverty-Environment hy...

Theories based on partial equilibrium reasoning alone cannot explain the widespread negative cross-sectional correlation between parental wages and fertility, without restrictive assumptions on pref- erences and childcare costs. We argue that incorporating a dynamic general equilibrium analysis of returns to human capital can help explain observed...

We estimate the role of private investments in irrigation in farm productivity growth in West Bengal, India between 1982 and 95. Using a state-wide farm panel, we find that falling groundwater costs generated sig-nificant growth in value added per acre for farms. These resulted from investments in minor irrigation which was stimulated by tenancy re...

It is generally presumed that strengthening legal enforcement of lender rights increases credit access for all borrowers, by expanding the set of incentive compatible loan contracts. This is based on an implicit assumption of infinitely elastic supply of loans. With inelastic supply, strengthening enforcement generates general equilibrium effects w...

Sustainable development has been one of the buzzwords of the 1990s, a problem of global dimension which is variously believed to be the result of poverty, inequality, population pressure, commercialization, agricultural intensification, inappropriate market incentives, property rights and/or local collective action institutions. While many differen...

Most analyses of the recent ¯nancial crisis in the US focus on the consequences of the dramatic slump in housing prices that started in the mid-2000s, which led to rising mortgage defaults, shrinking home equity credit and liquidity in the banking system. Yet these accounts do not explain what caused the reversal of housing price growth in the ¯rst...

This paper addresses the question of how farmers displaced by acquisition of agricultural land for the purpose of industrialization ought to be compensated. Prior to acquisition, the farmers are leasing in land from a landlord, either a private owner or a local government. There are three sets of relevant incentive eects in the model: the decision...

While land reforms have long been motivated as a potential policy lever of rural growth and development, there is remarkably little evidence of the direct impacts of such reforms. In an effort to fill this lacunae, this paper examines South Africa's Land Redistribution for Agricultural Development (LRAD) program. We show that the implementation of...

Summary This paper assesses degradation of forests managed by local communities (Van Panchayats (VPs)), relative to state protected and open access forests in the Indian state of Uttaranchal. It is based on ground-level ecological measures of forest quality (including canopy cover, biomass, lopping, and regeneration) in forest areas adjoining a ran...

This paper studies income distribution in an economy with borrowing constraints. Parents leave both financial and educational bequests; these determine the occupational choices of children. Occupational returns are determined by market conditions. If the span of occupational investments is large, long-run wealth distributions display persistent ine...

By incorporating occupational choice into a theory of endogenous fertility, this paper provides an explanation of observed patterns linking parental incomes to fertility. Our approach does not rely on assumptions concerning the relative strength of substitution and wealth effects in parental preferences. While arguing that the wage-fertility relati...

We investigate determinants of household firewood collection in rural Nepal, using 1995-96 and 2002-3 World Bank Living Standards Measurement Survey (LSMS) data. We incorporate village fixed effects, endogenous censoring, measurement error in living standards and heterogeneous effects of different household assets. We find no evidence in favor of t...

We investigate political determinants of land reform implementation in the Indian state of West Bengal. Using a village panel spanning 1974-1998, we do not find evidence supporting the hypothesis that land reforms were positively and monotonically related to control of local governments by a Left Front coalition vis-à-vis the right-centrist Congres...

What are the effects of restricting bonded labor clauses in tenancy or debt contracts? While such restrictions reduce agents' ability to credibly commit ex ante to repay principals in states where they default on their financial obligations, they also generate a pecuniary externality on other principal-agent pairs by reducing the equilibrium profit...

Poor families around the world spend a large fraction of their income consuming goods that do not appear to alleviate poverty, while saving at low rates. We suggest that individuals care about economic status and hence we interpret this behavior as conspic-uous consumption that is intended to provide a signal about unobserved income. We show that i...

This paper studies human capital investment in a spatial setting with interpersonal complementarities. A mixture of local and global social interactions affects the cost of acquiring education, and the return to human capital is determined endogenously in the market. We study how spatially segregated investment equilibria are affected by an increas...

We examine how formal and informal contract enforcing institutions interact in a competitive market with asymmetric information where consumers do not observe quality before purchase. Firm level incentives for producing high qual-ity can be achieved with an informal enforcement mechanism, reputation, the efficacy of which is enhanced by consumers i...

Data is an important ingredient for economic analysis. This paper discusses the various sources of data in the context of India and argues for reform in the Indian Statistical System. In particular, its focus is on maintenance of a panel micro data, helpful in conducting economic research.

We examine the role of delivery of subsidized seeds and fertilizers in the form of agricultural minikits by local governments in three successive farm panels in West Bengal spanning 1982-1995. These programs significantly raised farm value added per acre, accounting for almost two-thirds of the observed growth. The estimates are robust to possible...

Since the late 1970s the West Bengal government has implemented a comprehensive set of reforms of agrarian institutions involving land reform (land redistribution, tenancy registration) and democratic decentralization (devolution of administration of agricultural development programs to elected local governments). We evaluate the effectiveness of t...

We present a dynamic OLG model of educational signaling and inequality with missing credit markets. Agents are characterized by two sources of unobserved heterogeneity: ability and parental income, consistent with empirical evidence on returns to schooling. Both quantity and quality of human capital evolve endogenously. The model generates a Kuznet...

This paper uses recall data from a household survey to evaluate the roles of land reforms and demographic changes in explaining changes in land distribution in West Bengal between 1967-2004. The direct role of the land reforms was insignificant relative to household division, migration and land market transactions. We develop a model of how househo...

Yujiro Hayami has been a leader in village studies of institutions and community governance in Asia (Hayami, 1999 and 2001). In the context of community governmence, he has argued elegantly that communities play a central role in making local governments accountable and effectively implementing development programs, such as the distribution of agri...

We study the intergenerational transmission of inequality using a model in which parents can make both financial and occupational bequests to their children. An equal steady state with high per capita skill can co-exist with unequal steady states with low per capita skill. We investigate dynamics starting from arbitrary initial conditions. The main...

Political reservation for disadvantaged groups is believed to be a way of improving targeting of publicly provided goods to those groups. This paper examines the impact of political reservations for women and scheduled castes and tribe (SC/ST) candidates in local governments in West Bengal, India between 1998-2004 on targeting to landless, low cast...

This paper examines factors underlying the unusual stability of political power in rural West Bengal, using data pertaining to the functioning of local democracy from a household survey conducted by the authors during 2003-05. It examines patterns of political awareness, participation, distribution of benefits by gram panchayats, and voting across...

This paper examines the evolution of poverty in India through the prism of agricultural wages and employment. It links the movement in wages (and hence poverty) to the fundamental process of sectoral labour flow that underlies economic development. It finds that despite the rapid growth of the non-farm sector, its success in drawing labour from lan...

This paper estimates respective roles of private investments in irrigation and local government programs (land reforms, extension services, and infrastructure investments) in the growth of farm productivity in West Bengal, India between 1981-95. Using a farm panel from a stratified random sample of farms from major agricultural districts of West Be...

We introduce a new hybrid approach to joint estimation of Value at Risk (VaR) and Expected Shortfall (ES) for high quantiles of return distributions. We investigate the relative performance of VaR and ES models using daily returns for sixteen stock market indices (eight from developed and eight from emerging markets) prior to and during the 2008 fi...

This paper estimates respective roles of private investments in irrigation and local government programs (land reforms, extension services, and infrastructure investments) in the growth of farm productivity in West Bengal, India between 1981-95. A farm panel from a stratified random sample of farms from major agricultural districts of West Bengal i...

This paper provides an overview of mechanism design theory, and explains the roles played by Leonid Hurwicz, Eric Maskin and Roger Myerson in the development of this field. Copyright © The editors of the "Scandinavian Journal of Economics" 2008 .

The celebration of communitarianism by political philosophers (Sandel, M. 1982 Liberalism and the Limits of Justice. Cambridge: Cambridge University Press) has apparently been extended to strategic analyses of ascriptively attuned norms (Fearon, J. and D. Laitin. 1996. "Explaining Interethnic Cooperation." American Political Science Review 90: 715-...

This paper examines the steady states of an overlapping generations economy with a given distribution of household locations over a one-dimensional interval. Parents decide whether or not to educate their children. Educational decisions are affected by location: There are local complementarities in investment incentives stemming from aspirations fo...

We compare the long-run effects of replacing unconditional transfers to the poor by transfers conditional on the education of children. Unlike Mirrlees' income taxation model, the distribution of skill evolves endogenously. Human capital accumulation follows the Freeman-Ljungqvist-Mookherjee-Ray OLG model with missing capital markets and dynastic b...

Most analyses of the impact of community management of common property resources are based on cross-sectional comparisons in case studies or small samples, perception-based measurement of resource conditions, and absence of controls for unobserved community characteristics and non-random assignment of management types. This paper compares forests m...

This paper provides evidence concerning political participation (turnout, awareness, attendance at meetings, campaign involvement, voting) and its relation to local governance (targeting of public services) in a developing country, based on a rural household survey in West Bengal, India. With the exception of education and immigrant status, we find...

If we are to learn the right lessons from the tragedy of Nandigram, then we must ensure that the government is involved in the land acquisition process and that we correctly deal with three sets of issues: the size and form of compensation, the eligibility for compensation and the credibility of the process.

A large literature on ‘endogenous inequality’ has argued that persistent differences in macroeconomic performance across countries can be explained by historical inequality, owing to indivisibilities in occupational choice and borrowing constraints. These models are characterized by homogenous agents, a continuum of steady states (SSs) and lack of...

This paper assesses the relation between living standards and forest degradation in the Indian mid-Himalayas, and related policy questions. It is based on detailed household, village and ecology surveys in a sample of 165 villages in Uttaranchal and Himachal Pradesh. Our prior fieldwork in this region indicates that forest degradation rather than d...

We develop a theory of mechanism design in a principal-multiagent setting with private information, where communication involves costly delay. The need to make production decisions within a time deadline prevents agents from communicating their entire private information to the principal, rendering revelation mechanisms infeasible. The mechanism de...

We develop a theory of mechanism design for a production team comprised of self-interested agents working for a Principal, in which communication involves delay. The need to make pro- duction decisions within a time deadline prevents agents from communicating their entire private information to others. We examine trade-offs between centralization a...

Separation of ownership from management, multidivisional firm organizations, delegation of production decisions to worker teams, delegation of pricing and advertising decisions to retail franchisers, reliance on intermediaries in trade or finance, and distribution of regulatory authority across different agencies represent examples of organizations...

This volume presents 28 essays on poverty by some of the leading experts in the field of economics. The book is divided into three sections, beginning with an essay about how poverty is measured. The first section is about the causes of poverty and its persistence, and the ideas range from the impact of colonialism and globalization to the problems...

by economists. 3 Conspicuous by its absence is a coherent analysis of what causes poverty in the rst place, its implications for the functioning of the economy and the persistence of poverty into the future. The key questions seem to never be posed. What are the mechanisms by which people get trapped into chronic, long term poverty? What kinds of p...

Many developing countries are experimenting with decentralisation of public service delivery to elected local governments instead of bureaucrats appointed by a central government. We study the resulting implications in a theoretical model in which the central government is uninformed about local need and unable to monitor service allocations. Burea...

A commonly alleged pitfall of decentralization is that poverty, socio-economic inequality and lack of political competition allow local elites to capture local governments. This hypothesis is empirically examined using a longitudinal sample of 80 West Bengal villages concerning targeting of credit, agricultural input kits, employment programs and f...

Incl. bibl., index

A traditional view of markets is that they equalize wealth across individuals. A more recent literature suggests that markets are inherently disequalizing. A third viewpoint argues that initial history is crucial in determining whether inequalities persist or not. By constructing a theory of equilibrium investment allocation between human capital a...

This study analyzes the effects of right-wing extremism on the well-being of immigrants based on data from the German Socio-Economic Panel (SOEP) for the years 1984 to 2006 merged with state-level information on election outcomes. The results show that the life satisfaction of immigrants is significantly reduced if right-wing extremism in the nativ...

We introduce intentional idiosyncratic play in a standard stochastic evolutionary model of equilibrium selection in bargaining games. We define intentional mutations as rare play of mixed strategies that are supported only on the set of strategies that would give the idiosyncratic player a higher payoff were it to become an equilibrium. In contract...

We study the effects on accountability in government service delivery of decentralizing administration of an antipoverty program. While governments at both central and local levels are vulnerable to antipoor policy biases owing to political capture, centralized delivery systems are additionally prone to bureaucratic corruption, owing to problems in...

In recent years a group of researchers at Cambridge (UK) have (re)introduced conceptions of open and closed systems into economics. In doing so they have employed these categories in ways that, in my assessment, both facilitate a significant critique of current disciplinary practices and also point to more fruitful ways of proceeding. In an issue o...