Essays in Development Economics and Public Finance

Abstract

This dissertation analyzes key challenges to maximizing the impact of development policies. It focuses on three sectors - migration, taxation, and education. Each of these sectors offers massive development potential but is constrained by some combination of information asymmetry, policy barriers, and limited resources. I study these challenges in a global context with projects in the UAE, Philippines, Pakistan, and the US. I use several context and question-specific research designs: conducting randomized controlled trials, analyzing natural experiments, and evaluating policy interventions. I combine survey and administrative data, with novel identification strategies and statistical techniques to estimate causal effects.

The first chapter studies spousal communication among transnational households - households where one spouse temporarily migrates for work. Despite regular communication between spouses, information asymmetry persists in these households. I analyze if this information asymmetry is caused by spouses strategically misreporting information to influence resource allocation in the household. Misreporting, by definition, involves purposefully falsifying information, making it challenging to identify. I address this challenge using a novel field experiment among Filipino migrants in the UAE and their spouses staying behind in the Philippines. I find that both migrants and their spouses staying behind have biased beliefs about each other's finances and these biases are the result of strategic misreporting. Spouses staying behind and some subgroups of migrants underreport their income to influence the remittance decision in their favor. The results show that addressing information asymmetry requires interventions that increase the ability of spouses to verify and monitor each other's reported information. However, the welfare impacts of such interventions are a priori ambiguous because better information sharing may reduce remittances.

The second chapter, co-authored with Joel Slemrod and Mazhar Waseem, evaluates two Pakistani programs to study the impact of public disclosure and social recognition of tax payments on tax compliance. Pakistan began revealing the income tax paid by every taxpayer in the country from 2012. Simultaneously, another program began recognizing and rewarding the top 100 tax-paying corporations, partnerships, self-employed individuals, and wage-earners. We combine publicly disclosed and restricted administrative tax return data for the universe of tax filers to create an extended panel of tax records from 2006 to 2015. Using empirical strategies based on name commonness for the public disclosure program and cutoffs in the social recognition program's eligibility criteria, we show that both programs induced strong compliance responses. Our results suggest that such programs can be important policy levers to mobilize resources, especially in weak-enforcement-capacity economies.

The third chapter studies the joint educational attainment and migration decisions of international students choosing to study in the US. Immigration critics argue that international students are primarily come to the US for employment and use their student status to bypass restrictions on employment-based migration. I use exchange rate variations to analyze these competing educational and employment incentives for potential international students. A depreciation of the home currency reduces educational incentives by increasing the relative cost of US education but increases employment incentives by making US income relatively more valuable. I find that the cost of education effect dominates the higher relative income effect. A depreciation of the home currency reduces the stock and flow of international students from that country.