Pub Date : 2026-04-01Epub Date: 2026-02-08DOI: 10.1016/j.jdeveco.2026.103750
Natalia Candelo , Jingping Gu , Sherry Xin Li
We conduct a lab-in-the-field experiment to investigate how parents', teachers', and peers' behavior and advice affect children's altruism in disadvantaged neighborhoods in Colombia. Elementary school children choose how much to help a child-in-need in a real-effort task before and after learning about their parents', teachers', or peers' decisions or receiving their advice. We find that both information and advice from these sources enhance children's willingness to share. Their sharing increases after observing others' decisions, except when it is costly to access information about parents' behavior. However, when children must incur a small cost to observe others' behavior, their sharing responds substantially more to their teachers' and peers' behavior than to their parents'. By contrast, advice from all sources—parents, teachers, peers, and high-status peers—consistently enhances sharing. Our findings highlight the crucial role of children's social environments and shed light on multiple policy-relevant channels for fostering altruism among underprivileged children.
{"title":"Social information, advice and altruistic behavior by underprivileged children: Experimental evidence from Colombia","authors":"Natalia Candelo , Jingping Gu , Sherry Xin Li","doi":"10.1016/j.jdeveco.2026.103750","DOIUrl":"10.1016/j.jdeveco.2026.103750","url":null,"abstract":"<div><div>We conduct a lab-in-the-field experiment to investigate how parents', teachers', and peers' behavior and advice affect children's altruism in disadvantaged neighborhoods in Colombia. Elementary school children choose how much to help a child-in-need in a real-effort task before and after learning about their parents', teachers', or peers' decisions or receiving their advice. We find that both information and advice from these sources enhance children's willingness to share. Their sharing increases after observing others' decisions, except when it is costly to access information about parents' behavior. However, when children must incur a small cost to observe others' behavior, their sharing responds substantially more to their teachers' and peers' behavior than to their parents'. By contrast, advice from all sources—parents, teachers, peers, and high-status peers—consistently enhances sharing. Our findings highlight the crucial role of children's social environments and shed light on multiple policy-relevant channels for fostering altruism among underprivileged children.</div></div>","PeriodicalId":48418,"journal":{"name":"Journal of Development Economics","volume":"181 ","pages":"Article 103750"},"PeriodicalIF":4.6,"publicationDate":"2026-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146189297","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-04-01Epub Date: 2026-02-05DOI: 10.1016/j.jdeveco.2026.103742
Martina Jakob , Konstantin Büchel , Daniel Steffen , Aymo Brunetti
While participatory teaching methods have been shown to be more successful than traditional rote learning in high-income countries, it is less clear if they can help address the learning crisis in low- and middle-income countries, where classes tend to be large and teachers have fewer resources at their disposal. Based on a field experiment with 440 teachers from 220 schools in Tanzania, we use official standardized student examinations to assess the impact of a pedagogy-centered intervention. A five-day in-service teacher training on participatory and practice-based methods improved students’ test scores 18 months later by 0.13. The additional provision of laptops with a learning software allowing a random subset of teachers to refresh their content knowledge did not yield further learning gains for students. We also find limited evidence of spillover effects on indirectly exposed teachers and their students, even though knowledge-sharing activities were a key component of the program. Complementary findings from participant surveys and interviews suggest that the program was highly appreciated by different stakeholders, but that participants were unable to assess its impact along different dimensions, giving equally positive evaluations of its successful and its unsuccessful elements.
{"title":"Participatory teaching improves learning outcomes: Evidence from a field experiment in Tanzania","authors":"Martina Jakob , Konstantin Büchel , Daniel Steffen , Aymo Brunetti","doi":"10.1016/j.jdeveco.2026.103742","DOIUrl":"10.1016/j.jdeveco.2026.103742","url":null,"abstract":"<div><div>While participatory teaching methods have been shown to be more successful than traditional rote learning in high-income countries, it is less clear if they can help address the learning crisis in low- and middle-income countries, where classes tend to be large and teachers have fewer resources at their disposal. Based on a field experiment with 440 teachers from 220 schools in Tanzania, we use official standardized student examinations to assess the impact of a pedagogy-centered intervention. A five-day in-service teacher training on participatory and practice-based methods improved students’ test scores 18 months later by 0.13<span><math><mi>σ</mi></math></span>. The additional provision of laptops with a learning software allowing a random subset of teachers to refresh their content knowledge did not yield further learning gains for students. We also find limited evidence of spillover effects on indirectly exposed teachers and their students, even though knowledge-sharing activities were a key component of the program. Complementary findings from participant surveys and interviews suggest that the program was highly appreciated by different stakeholders, but that participants were unable to assess its impact along different dimensions, giving equally positive evaluations of its successful and its unsuccessful elements.</div></div>","PeriodicalId":48418,"journal":{"name":"Journal of Development Economics","volume":"181 ","pages":"Article 103742"},"PeriodicalIF":4.6,"publicationDate":"2026-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146189299","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Can trade frictions limit access to improved health technologies? Rwanda encouraged and licensed domestic production of high-quality masks by a few selected textile manufacturers at the start of the COVID-19 pandemic. We exploit spatial variation in exposure to mask manufacturing through pre-licensing textile trade networks within an event-study design using receipt-level transaction data. Local markets less exposed to mask manufacturing had higher mask prices, purchased fewer masks, and experienced faster growth in COVID-19 infections proxied by demand for anti-fever medicine. The dynamics of our results suggest that mask quality, rather than quantity, explains reduced infections caused by manufactured masks.
{"title":"A few good masks: Mask manufacturing and supply networks in Rwanda during the COVID-19 pandemic","authors":"Kieran Byrne , Florence Kondylis , John Loeser , Denis Mukama","doi":"10.1016/j.jdeveco.2025.103715","DOIUrl":"10.1016/j.jdeveco.2025.103715","url":null,"abstract":"<div><div>Can trade frictions limit access to improved health technologies? Rwanda encouraged and licensed domestic production of high-quality masks by a few selected textile manufacturers at the start of the COVID-19 pandemic. We exploit spatial variation in exposure to mask manufacturing through pre-licensing textile trade networks within an event-study design using receipt-level transaction data. Local markets less exposed to mask manufacturing had higher mask prices, purchased fewer masks, and experienced faster growth in COVID-19 infections proxied by demand for anti-fever medicine. The dynamics of our results suggest that mask quality, rather than quantity, explains reduced infections caused by manufactured masks.</div></div>","PeriodicalId":48418,"journal":{"name":"Journal of Development Economics","volume":"181 ","pages":"Article 103715"},"PeriodicalIF":4.6,"publicationDate":"2026-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146189301","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-04-01Epub Date: 2026-01-19DOI: 10.1016/j.jdeveco.2026.103726
Marion Richard , Oliver Vanden Eynde
The effectiveness of security operations often depends on cooperation between national armies. Such cooperation can be particularly important when international borders are porous and armed groups can operate across borders. We investigate how the creation of an international armed force that could operate across international borders (the G5-Sahel Joint Force) together with improved communication between national armies affected conflict dynamics in the Sahel region. Relying on a regression discontinuity design, we find that the G5 mission lowered the intensity of conflict locally in its zone of operation, especially along border segments more porous due to their geographical features or ethnic composition. Further analysis of geographical conflict propagation patterns indicates that the G5-Sahel force facilitated security operations in border areas.
{"title":"Cooperation between national armies: Evidence from the Sahel borders","authors":"Marion Richard , Oliver Vanden Eynde","doi":"10.1016/j.jdeveco.2026.103726","DOIUrl":"10.1016/j.jdeveco.2026.103726","url":null,"abstract":"<div><div>The effectiveness of security operations often depends on cooperation between national armies. Such cooperation can be particularly important when international borders are porous and armed groups can operate across borders. We investigate how the creation of an international armed force that could operate across international borders (the G5-Sahel Joint Force) together with improved communication between national armies affected conflict dynamics in the Sahel region. Relying on a regression discontinuity design, we find that the G5 mission lowered the intensity of conflict locally in its zone of operation, especially along border segments more porous due to their geographical features or ethnic composition. Further analysis of geographical conflict propagation patterns indicates that the G5-Sahel force facilitated security operations in border areas.</div></div>","PeriodicalId":48418,"journal":{"name":"Journal of Development Economics","volume":"181 ","pages":"Article 103726"},"PeriodicalIF":4.6,"publicationDate":"2026-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146039646","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-04-01Epub Date: 2026-01-29DOI: 10.1016/j.jdeveco.2026.103732
Maria Bas , Pamela Bombarda
We investigate how access to foreign technology embodied in imported inputs affects formalization in Mexico. Using household microdata, we exploit the significant reduction in Mexico’s tariffs on U.S. goods (both final and intermediate) across manufacturing industries between 1993 and 2001. We find that individuals working in manufacturing industries experiencing an average reduction in input tariffs (12 percentage points) are 4 percentage points more likely to be formally employed. The effect is particularly pronounced among high-skilled workers, consistent with an input-skill complementarity mechanism. In contrast, lower output tariffs, by inducing tougher import competition, increased the probability of informal employment by more than 1.5 percentage points. These findings enhance our understanding of the role that access to advanced technology, facilitated by trade liberalization, plays in promoting formal employment.
{"title":"Foreign technology and informal employment: Evidence from Mexico","authors":"Maria Bas , Pamela Bombarda","doi":"10.1016/j.jdeveco.2026.103732","DOIUrl":"10.1016/j.jdeveco.2026.103732","url":null,"abstract":"<div><div>We investigate how access to foreign technology embodied in imported inputs affects formalization in Mexico. Using household microdata, we exploit the significant reduction in Mexico’s tariffs on U.S. goods (both final and intermediate) across manufacturing industries between 1993 and 2001. We find that individuals working in manufacturing industries experiencing an average reduction in input tariffs (12 percentage points) are 4 percentage points more likely to be formally employed. The effect is particularly pronounced among high-skilled workers, consistent with an input-skill complementarity mechanism. In contrast, lower output tariffs, by inducing tougher import competition, increased the probability of informal employment by more than 1.5 percentage points. These findings enhance our understanding of the role that access to advanced technology, facilitated by trade liberalization, plays in promoting formal employment.</div></div>","PeriodicalId":48418,"journal":{"name":"Journal of Development Economics","volume":"181 ","pages":"Article 103732"},"PeriodicalIF":4.6,"publicationDate":"2026-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146189304","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-04-01Epub Date: 2026-02-02DOI: 10.1016/j.jdeveco.2026.103727
Hai Hong , Kevin Chen
Environmental regulations can trigger unintended pollution externalities if they lack well-designed economic incentives or fail to account for the responses of polluters. This paper examines the effectiveness and unintended consequences of the Universal Prohibition on Straw Burning (UPSB) policy in China. By exploiting a generalized difference-in-differences design, we find that the UPSB policy significantly reduces agricultural fires and air pollution through top-down campaign-style enforcement. However, as straw burning is commonly used to kill pests and fertilize the soil, the UPSB policy also increases the use of chemical fertilizers and pesticides, leading to magnified water pollution. Cost-benefit analysis suggests that much of the health benefit from improved air quality is offset by the health cost from degraded water quality. Our findings highlight the importance of considering the potential responses of individuals subject to the regulation when conducting policy evaluation.
{"title":"When the fire ends: Straw burning, regulation, and pollution substitution","authors":"Hai Hong , Kevin Chen","doi":"10.1016/j.jdeveco.2026.103727","DOIUrl":"10.1016/j.jdeveco.2026.103727","url":null,"abstract":"<div><div>Environmental regulations can trigger unintended pollution externalities if they lack well-designed economic incentives or fail to account for the responses of polluters. This paper examines the effectiveness and unintended consequences of the Universal Prohibition on Straw Burning (UPSB) policy in China. By exploiting a generalized difference-in-differences design, we find that the UPSB policy significantly reduces agricultural fires and air pollution through top-down campaign-style enforcement. However, as straw burning is commonly used to kill pests and fertilize the soil, the UPSB policy also increases the use of chemical fertilizers and pesticides, leading to magnified water pollution. Cost-benefit analysis suggests that much of the health benefit from improved air quality is offset by the health cost from degraded water quality. Our findings highlight the importance of considering the potential responses of individuals subject to the regulation when conducting policy evaluation.</div></div>","PeriodicalId":48418,"journal":{"name":"Journal of Development Economics","volume":"181 ","pages":"Article 103727"},"PeriodicalIF":4.6,"publicationDate":"2026-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146189305","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-04-01Epub Date: 2026-02-06DOI: 10.1016/j.jdeveco.2026.103734
Leandro Carvalho , Damien de Walque , Crick Lund , Heather Schofield , Vincent Somville , Jingyao Wei
Mental health conditions are strongly associated with reduced labor market participation, but the underlying channels through which such conditions impact labor supply remain unclear. We conduct a two-phase study decomposing this relationship by examining (i) job take-up decisions and (ii) labor supply, output, and earning conditional on job take-up, and (iii) quit rates. In Phase 1, women in rural Ghana are asked whether they would be willing to take-up a cash-for-work job during the lean season when alternative work is scarce. We find that individuals with depression and anxiety, which are common in this population, are much more likely to decline work offers outside the home but equally likely to accept work-from-home positions. In Phase 2, we randomly offer jobs at home to those who were willing to work from home, avoiding selection effects. Neither depression nor anxiety predict work completion, income, or quit rates when working from home. These findings suggest that poor mental health may harm labor market outcomes in traditional jobs outside of the home via reduced take-up, above and beyond the established negative impacts of mental health on productivity in work outside of the home. But, the results also suggest an alternative approach to improving labor market outcomes for those in poor mental health: work-from-home opportunities, which are not associated with lower take-up or lower productivity on the job for those in poor mental health.
{"title":"Psychological barriers to participation in the labor market: Evidence from rural Ghana","authors":"Leandro Carvalho , Damien de Walque , Crick Lund , Heather Schofield , Vincent Somville , Jingyao Wei","doi":"10.1016/j.jdeveco.2026.103734","DOIUrl":"10.1016/j.jdeveco.2026.103734","url":null,"abstract":"<div><div>Mental health conditions are strongly associated with reduced labor market participation, but the underlying channels through which such conditions impact labor supply remain unclear. We conduct a two-phase study decomposing this relationship by examining (i) job take-up decisions and (ii) labor supply, output, and earning conditional on job take-up, and (iii) quit rates. In Phase 1, women in rural Ghana are asked whether they would be willing to take-up a cash-for-work job during the lean season when alternative work is scarce. We find that individuals with depression and anxiety, which are common in this population, are much more likely to decline work offers outside the home but equally likely to accept work-from-home positions. In Phase 2, we randomly offer jobs at home to those who were willing to work from home, avoiding selection effects. Neither depression nor anxiety predict work completion, income, or quit rates when working from home. These findings suggest that poor mental health may harm labor market outcomes in traditional jobs outside of the home via reduced take-up, above and beyond the established negative impacts of mental health on productivity in work outside of the home. But, the results also suggest an alternative approach to improving labor market outcomes for those in poor mental health: work-from-home opportunities, which are not associated with lower take-up or lower productivity on the job for those in poor mental health.</div></div>","PeriodicalId":48418,"journal":{"name":"Journal of Development Economics","volume":"181 ","pages":"Article 103734"},"PeriodicalIF":4.6,"publicationDate":"2026-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146189298","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-04-01Epub Date: 2026-01-20DOI: 10.1016/j.jdeveco.2026.103720
Loren Brandt , Johannes Van Biesebroeck , Luhang Wang , Yifan Zhang
China’s manufacturing sector has been a key source of the economy’s dynamism. Analysis after 2007 however is hampered by problems in the key data source for empirical analysis, the National Bureau of Statistics’ (NBS) annual survey of industrial firms. Issues include missing information on value added and intermediate inputs, and concerns of over-reporting. The annual survey of firms conducted by China’s State Taxation Administration (STA) provides a reliable, alternative source of firm-level data for the years 2007 to 2013. Since the sample is not representative and the precise sampling scheme is not known, the data cannot be used directly to draw inferences on China’s manufacturing sector. By comparing the joint distribution of key variables for which both surveys provide reasonably reliable information, we recover the sampling scheme of the STA survey and use it to simulate samples for 2007 to 2013 that are comparable to the NBS sample in earlier years. Our estimates reveal a marked slowdown in revenue-based total factor productivity growth that cuts across all industries, ownership types, and regions. The loss of dynamism in the private sector, and the reduced contribution of firm entry to aggregate productivity growth are especially prominent.
{"title":"Where has all the dynamism gone? Productivity growth in China’s manufacturing sector, 1998–2013","authors":"Loren Brandt , Johannes Van Biesebroeck , Luhang Wang , Yifan Zhang","doi":"10.1016/j.jdeveco.2026.103720","DOIUrl":"10.1016/j.jdeveco.2026.103720","url":null,"abstract":"<div><div>China’s manufacturing sector has been a key source of the economy’s dynamism. Analysis after 2007 however is hampered by problems in the key data source for empirical analysis, the National Bureau of Statistics’ (NBS) annual survey of industrial firms. Issues include missing information on value added and intermediate inputs, and concerns of over-reporting. The annual survey of firms conducted by China’s State Taxation Administration (STA) provides a reliable, alternative source of firm-level data for the years 2007 to 2013. Since the sample is not representative and the precise sampling scheme is not known, the data cannot be used directly to draw inferences on China’s manufacturing sector. By comparing the joint distribution of key variables for which both surveys provide reasonably reliable information, we recover the sampling scheme of the STA survey and use it to simulate samples for 2007 to 2013 that are comparable to the NBS sample in earlier years. Our estimates reveal a marked slowdown in revenue-based total factor productivity growth that cuts across all industries, ownership types, and regions. The loss of dynamism in the private sector, and the reduced contribution of firm entry to aggregate productivity growth are especially prominent.</div></div>","PeriodicalId":48418,"journal":{"name":"Journal of Development Economics","volume":"181 ","pages":"Article 103720"},"PeriodicalIF":4.6,"publicationDate":"2026-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146039649","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2025-12-05DOI: 10.1016/j.jdeveco.2025.103697
Cihan Artunç , Mohamed Saleh
We use a newly assembled dataset covering all Egyptian corporations, their founders, and political officeholders, to demonstrate the differential impact of political connections on firm performance across two distinctive political and economic contexts. Before Egypt’s independence in 1922, political connections reduced firm profitability, as connected firms were perceived to be aligned with the anti-colonial, nationalist movement, unsettling investors. After independence, connections improved firm outcomes by granting preferential access to incorporation and shielding connected companies from competition. These dynamics reflect the shift from a laissez-faire colonial regime to a nationalist industrial policy that selectively favored politically connected firms.
{"title":"Connected national capital: Corporations in colonial and independent Egypt","authors":"Cihan Artunç , Mohamed Saleh","doi":"10.1016/j.jdeveco.2025.103697","DOIUrl":"10.1016/j.jdeveco.2025.103697","url":null,"abstract":"<div><div>We use a newly assembled dataset covering all Egyptian corporations, their founders, and political officeholders, to demonstrate the differential impact of political connections on firm performance across two distinctive political and economic contexts. Before Egypt’s independence in 1922, political connections reduced firm profitability, as connected firms were perceived to be aligned with the anti-colonial, nationalist movement, unsettling investors. After independence, connections improved firm outcomes by granting preferential access to incorporation and shielding connected companies from competition. These dynamics reflect the shift from a laissez-faire colonial regime to a nationalist industrial policy that selectively favored politically connected firms.</div></div>","PeriodicalId":48418,"journal":{"name":"Journal of Development Economics","volume":"180 ","pages":"Article 103697"},"PeriodicalIF":4.6,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145840606","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-01-07DOI: 10.1016/j.jdeveco.2025.103714
Matteo Neri-Lainé
This paper studies the effect of insecurity on formal firms’ existence. We develop a flexible theoretical framework in which insecurity, a latent production cost, affects firms’ market entry, exit, and formality decisions. In our empirical analysis, we combine an original dataset on Afghan firms with georeferenced data on military events that we use to proxy insecurity. In the state-building context of post-2003 Afghanistan, military events reflect not only violence but also state capacity expansion. For formal firms, this latter channel dominates. As a result, increased exposure to military events conveys on average a reduction in effective insecurity and positively impacts formal firm existence. Nonetheless, this effect is highly heterogeneous depending on actors, location, timing and firms’ characteristics. The Afghan conflict has the specificity of deeply involving foreign countries. Mobilizing this particular source of exogenous variation, we identify the causal effect of an insecurity reduction on formal firms’ existence. We show that an increase of 1% in the exposure to instrumented military events raises the formal activity probability by 3.8%.
{"title":"Firms under fire! How insecurity affects formal firms’ existence","authors":"Matteo Neri-Lainé","doi":"10.1016/j.jdeveco.2025.103714","DOIUrl":"10.1016/j.jdeveco.2025.103714","url":null,"abstract":"<div><div>This paper studies the effect of insecurity on formal firms’ existence. We develop a flexible theoretical framework in which insecurity, a latent production cost, affects firms’ market entry, exit, and formality decisions. In our empirical analysis, we combine an original dataset on Afghan firms with georeferenced data on military events that we use to proxy insecurity. In the state-building context of post-2003 Afghanistan, military events reflect not only violence but also state capacity expansion. For formal firms, this latter channel dominates. As a result, increased exposure to military events conveys on average a reduction in effective insecurity and positively impacts formal firm existence. Nonetheless, this effect is highly heterogeneous depending on actors, location, timing and firms’ characteristics. The Afghan conflict has the specificity of deeply involving foreign countries. Mobilizing this particular source of exogenous variation, we identify the causal effect of an insecurity reduction on formal firms’ existence. We show that an increase of 1% in the exposure to instrumented military events raises the formal activity probability by 3.8%.</div></div>","PeriodicalId":48418,"journal":{"name":"Journal of Development Economics","volume":"180 ","pages":"Article 103714"},"PeriodicalIF":4.6,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145977313","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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