Pub Date : 2025-11-01DOI: 10.1016/j.jdeveco.2025.103677
Shan Jin , Tiancheng Liu , Zepeng Sun , Xiaomeng Zhang
Social isolation policies, often implemented during major public health or social crises, can exert profound effects on both mental health and economic behavior. This study exploits an abrupt campus-wide restriction on in-person interactions as a natural experiment to examine the consequences of prolonged isolation among young adults. Using both within-subject and between-subject analyses, we find that extended separation from normal social life significantly heightens negative emotions, which in turn partially mediate a decline in cooperative behavior and a rise in antisocial tendencies. Specifically, cooperation decreased by 25.2% and antisocial punishment rose by 86.2% after eight weeks of enforced isolation. These findings highlight the necessity of accounting for the psychological consequences of isolation policies when evaluating their broader societal impacts.
{"title":"Social isolation induced negative emotions affect economic behavior: A natural experiment study","authors":"Shan Jin , Tiancheng Liu , Zepeng Sun , Xiaomeng Zhang","doi":"10.1016/j.jdeveco.2025.103677","DOIUrl":"10.1016/j.jdeveco.2025.103677","url":null,"abstract":"<div><div>Social isolation policies, often implemented during major public health or social crises, can exert profound effects on both mental health and economic behavior. This study exploits an abrupt campus-wide restriction on in-person interactions as a natural experiment to examine the consequences of prolonged isolation among young adults. Using both within-subject and between-subject analyses, we find that extended separation from normal social life significantly heightens negative emotions, which in turn partially mediate a decline in cooperative behavior and a rise in antisocial tendencies. Specifically, cooperation decreased by 25.2% and antisocial punishment rose by 86.2% after eight weeks of enforced isolation. These findings highlight the necessity of accounting for the psychological consequences of isolation policies when evaluating their broader societal impacts.</div></div>","PeriodicalId":48418,"journal":{"name":"Journal of Development Economics","volume":"179 ","pages":"Article 103677"},"PeriodicalIF":4.6,"publicationDate":"2025-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145473633","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 : 2025-10-31DOI: 10.1016/j.jdeveco.2025.103680
Liping Chen , Jiada Lin , Zhifeng Wang
This study examines the role of peer personality in shaping the mental health of adolescent students. We use data from the China Education Panel Survey and focus on schools that implement random class assignment to identify causal peer effects. Exploiting the exogenous variation in peer personality across classes within the same school and grade, we find that peer openness significantly improves students’ mental health, while the effect of peer persistence is negligible. Moreover, a mechanism analysis reveals that the beneficial effects of peer openness operate through improvements in classroom environment and teacher–student relationships.
{"title":"Externalities of the personality traits: The effect of peer personality on students’ mental health","authors":"Liping Chen , Jiada Lin , Zhifeng Wang","doi":"10.1016/j.jdeveco.2025.103680","DOIUrl":"10.1016/j.jdeveco.2025.103680","url":null,"abstract":"<div><div>This study examines the role of peer personality in shaping the mental health of adolescent students. We use data from the China Education Panel Survey and focus on schools that implement random class assignment to identify causal peer effects. Exploiting the exogenous variation in peer personality across classes within the same school and grade, we find that peer openness significantly improves students’ mental health, while the effect of peer persistence is negligible. Moreover, a mechanism analysis reveals that the beneficial effects of peer openness operate through improvements in classroom environment and teacher–student relationships.</div></div>","PeriodicalId":48418,"journal":{"name":"Journal of Development Economics","volume":"179 ","pages":"Article 103680"},"PeriodicalIF":4.6,"publicationDate":"2025-10-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145528348","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 : 2025-10-29DOI: 10.1016/j.jdeveco.2025.103667
Ana María Ibáñez ⓡ , Sandra V. Rozo ⓡ , Dany Bahar ⓡ , María José Urbina
This paper examines the impacts of a regularization program that granted temporary economic rights to over 281,000 undocumented Venezuelan forced migrants in Colombia. The program resulted in a general reduction in crimes committed by forced migrants, while also increasing the number of domestic abuse and sex crimes female migrants reported. These findings suggest that empowerment and greater trust in local authorities are key mechanisms driving the behavioral changes for females, while proper enforcement facilitated by adequate documentation and the positive income effects of the program reduced the general propensity for migrants to commit crimes.
{"title":"Protecting the vulnerable: How migrant regularization reduces crime and empowers women","authors":"Ana María Ibáñez ⓡ , Sandra V. Rozo ⓡ , Dany Bahar ⓡ , María José Urbina","doi":"10.1016/j.jdeveco.2025.103667","DOIUrl":"10.1016/j.jdeveco.2025.103667","url":null,"abstract":"<div><div>This paper examines the impacts of a regularization program that granted temporary economic rights to over 281,000 undocumented Venezuelan forced migrants in Colombia. The program resulted in a general reduction in crimes committed by forced migrants, while also increasing the number of domestic abuse and sex crimes female migrants reported. These findings suggest that empowerment and greater trust in local authorities are key mechanisms driving the behavioral changes for females, while proper enforcement facilitated by adequate documentation and the positive income effects of the program reduced the general propensity for migrants to commit crimes.</div></div>","PeriodicalId":48418,"journal":{"name":"Journal of Development Economics","volume":"179 ","pages":"Article 103667"},"PeriodicalIF":4.6,"publicationDate":"2025-10-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145473632","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 : 2025-10-28DOI: 10.1016/j.jdeveco.2025.103658
Ella Kirchner , Elinor Benami , Andrew Hobbs , Michael R. Carter , Zhenong Jin
Agricultural index insurance aims to protect producers from widespread shocks within defined areas, often based on administrative boundaries. However, these boundaries may poorly reflect yield variation, imposing costs on both policyholders and the public. Advances in geospatial data accessibility and clustering techniques offer potential to define more homogeneous insurance zones. This study evaluates the impact of redrawing zone boundaries based on observed agri-environmental conditions in western Kenya. Using over 13,000 crop cut observations with satellite-based estimates on growing conditions, we assess how data-driven zones affect producer welfare in a simulated area-yield index insurance program. While some data-driven zones modestly improve risk reduction with a fixed number of zones, greater flexibility in zone number and field sampling intensity offers more potential to balance performance and cost. We present a conceptual model and empirical simulations to characterize how zone design and data collection intensity jointly shape insurance outcomes in resource-constrained settings.
{"title":"Get in the zone: The risk-adjusted welfare effects of data-driven vs. administrative borders for index insurance zones","authors":"Ella Kirchner , Elinor Benami , Andrew Hobbs , Michael R. Carter , Zhenong Jin","doi":"10.1016/j.jdeveco.2025.103658","DOIUrl":"10.1016/j.jdeveco.2025.103658","url":null,"abstract":"<div><div>Agricultural index insurance aims to protect producers from widespread shocks within defined areas, often based on administrative boundaries. However, these boundaries may poorly reflect yield variation, imposing costs on both policyholders and the public. Advances in geospatial data accessibility and clustering techniques offer potential to define more homogeneous insurance zones. This study evaluates the impact of redrawing zone boundaries based on observed agri-environmental conditions in western Kenya. Using over 13,000 crop cut observations with satellite-based estimates on growing conditions, we assess how data-driven zones affect producer welfare in a simulated area-yield index insurance program. While some data-driven zones modestly improve risk reduction with a fixed number of zones, greater flexibility in zone number and field sampling intensity offers more potential to balance performance and cost. We present a conceptual model and empirical simulations to characterize how zone design and data collection intensity jointly shape insurance outcomes in resource-constrained settings.</div></div>","PeriodicalId":48418,"journal":{"name":"Journal of Development Economics","volume":"180 ","pages":"Article 103658"},"PeriodicalIF":4.6,"publicationDate":"2025-10-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145840605","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 : 2025-10-28DOI: 10.1016/j.jdeveco.2025.103676
Xinjie Shi , Bingyu Huangfu , Yan Zhang , Peinan Hu , Xuwen Gao
This paper investigates the ecological consequences of grassland property rights reform in China, focusing on its relationship to economic incentives. Using remote sensing and plot-level data, we found that the Normalized Difference Vegetation Index (NDVI), a proxy for grassland ecology, decreased by 5.5 % in our study area following the implementation of the certification reform. Three potential mechanisms may explain these negative ecological outcomes. The first mechanism is the severe fragmentation of grasslands; contiguous large-scale grasslands were divided into smaller, fragmented plots after the reform, leading to increased grazing intensity. The second mechanism posits that economic incentives drive herders to expand their operations. This is closely linked to the third mechanism: the imperfection of grassland use rights. Due to incomplete property rights and frequent imperfections in grassland transfers, overgrazing primarily occurs on rented land rather than self-owned land, resulting in greater ecological degradation on rented plots. Additionally, while household-level aggregate livestock output increased and grassland rental markets became more efficient, we argue that, despite these anticipated improvements, property rights reforms have heightened the vulnerability of grassland ecology. These findings suggest that the trade-off between grassland sustainability and livestock productivity, driven by the grassland property rights reform, has impeded the development of more comprehensive strategies to mitigate grassland degradation.
{"title":"Grassland certification, grazing behavior, and ecological consequences: Evidence from pastoral China","authors":"Xinjie Shi , Bingyu Huangfu , Yan Zhang , Peinan Hu , Xuwen Gao","doi":"10.1016/j.jdeveco.2025.103676","DOIUrl":"10.1016/j.jdeveco.2025.103676","url":null,"abstract":"<div><div>This paper investigates the ecological consequences of grassland property rights reform in China, focusing on its relationship to economic incentives. Using remote sensing and plot-level data, we found that the Normalized Difference Vegetation Index (NDVI), a proxy for grassland ecology, decreased by 5.5 % in our study area following the implementation of the certification reform. Three potential mechanisms may explain these negative ecological outcomes. The first mechanism is the severe fragmentation of grasslands; contiguous large-scale grasslands were divided into smaller, fragmented plots after the reform, leading to increased grazing intensity. The second mechanism posits that economic incentives drive herders to expand their operations. This is closely linked to the third mechanism: the imperfection of grassland use rights. Due to incomplete property rights and frequent imperfections in grassland transfers, overgrazing primarily occurs on rented land rather than self-owned land, resulting in greater ecological degradation on rented plots. Additionally, while household-level aggregate livestock output increased and grassland rental markets became more efficient, we argue that, despite these anticipated improvements, property rights reforms have heightened the vulnerability of grassland ecology. These findings suggest that the trade-off between grassland sustainability and livestock productivity, driven by the grassland property rights reform, has impeded the development of more comprehensive strategies to mitigate grassland degradation.</div></div>","PeriodicalId":48418,"journal":{"name":"Journal of Development Economics","volume":"179 ","pages":"Article 103676"},"PeriodicalIF":4.6,"publicationDate":"2025-10-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145473634","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 : 2025-10-24DOI: 10.1016/j.jdeveco.2025.103659
Li Duan , Xiaoming Zhang
This paper examines meritocratic recruitment and incentive issues within the context of China’s initial industrialization. We analyze the impact of upper-tail human capital on entrepreneurship in China between 1840 and 1904, exploring how the Imperial Examination system influenced talent allocation between traditional sectors and modern firms. Our study leverages the treaty port system as an exogenous shock to China’s industrialization, revealing heterogeneous choices made by different echelons of the upper-tail human capital. We find that traditional human capital played a diverse role in modern entrepreneurship, with some intellectuals transitioning to new opportunities while others remained entrenched in bureaucratic roles. Our findings highlight the complex interplay between civil service examinations and economic modernization, offering insights into how bureaucratic structures can influence talent reallocation and industrial development.
{"title":"Awakening latent human capital: Economic opening up and entrepreneurship in 19th century China","authors":"Li Duan , Xiaoming Zhang","doi":"10.1016/j.jdeveco.2025.103659","DOIUrl":"10.1016/j.jdeveco.2025.103659","url":null,"abstract":"<div><div>This paper examines meritocratic recruitment and incentive issues within the context of China’s initial industrialization. We analyze the impact of upper-tail human capital on entrepreneurship in China between 1840 and 1904, exploring how the Imperial Examination system influenced talent allocation between traditional sectors and modern firms. Our study leverages the treaty port system as an exogenous shock to China’s industrialization, revealing heterogeneous choices made by different echelons of the upper-tail human capital. We find that traditional human capital played a diverse role in modern entrepreneurship, with some intellectuals transitioning to new opportunities while others remained entrenched in bureaucratic roles. Our findings highlight the complex interplay between civil service examinations and economic modernization, offering insights into how bureaucratic structures can influence talent reallocation and industrial development.</div></div>","PeriodicalId":48418,"journal":{"name":"Journal of Development Economics","volume":"179 ","pages":"Article 103659"},"PeriodicalIF":4.6,"publicationDate":"2025-10-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145416639","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 : 2025-10-24DOI: 10.1016/j.jdeveco.2025.103666
Jerónimo Carballo , Ignacio Marra de Artiñano , Christian Volpe Martincus
Countries make use of a wide range of policies to attract multinational firms, but identifying their effects is challenging. In this paper, we provide novel microeconometric evidence on the impacts of one of the most common of such policies: investment promotion. To do so, we combine firm-level data on both the location of multinational firms’ foreign affiliates and detailed service-specific information from Costa Rica’s investment promotion agency (IPA) over time. We find that IPA support significantly increases the probability that a multinational firm establishes its first affiliate in the country. We then show that this effect is particularly strong for information services and on multinational firms from home countries and in sectors potentially facing more severe information frictions.
{"title":"The impact of investment promotion on multinational production: Firm-level evidence","authors":"Jerónimo Carballo , Ignacio Marra de Artiñano , Christian Volpe Martincus","doi":"10.1016/j.jdeveco.2025.103666","DOIUrl":"10.1016/j.jdeveco.2025.103666","url":null,"abstract":"<div><div>Countries make use of a wide range of policies to attract multinational firms, but identifying their effects is challenging. In this paper, we provide novel microeconometric evidence on the impacts of one of the most common of such policies: investment promotion. To do so, we combine firm-level data on both the location of multinational firms’ foreign affiliates and detailed service-specific information from Costa Rica’s investment promotion agency (IPA) over time. We find that IPA support significantly increases the probability that a multinational firm establishes its first affiliate in the country. We then show that this effect is particularly strong for information services and on multinational firms from home countries and in sectors potentially facing more severe information frictions.</div></div>","PeriodicalId":48418,"journal":{"name":"Journal of Development Economics","volume":"180 ","pages":"Article 103666"},"PeriodicalIF":4.6,"publicationDate":"2025-10-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145791066","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 : 2025-10-22DOI: 10.1016/j.jdeveco.2025.103671
Lukas Vashold , Gustav Pirich , Maximilian Heinze , Nikolas Kuschnig
Mining operations in Africa are expanding rapidly, creating negative externalities that remain poorly understood. In this paper, we provide causal evidence for the impact of water pollution from mines on downstream vegetation and agriculture across the continent. We exploit a natural experiment, where mines cause a discontinuity in water pollution along river networks, to compare vegetation health in upstream and downstream locations. We find that mines significantly reduce peak vegetation downstream by 1.3–1.5%, impairing the productivity of over 74,000 km2 of croplands. These reductions correspond to annual losses of 91,000–205,000 tons of cereal crops in the immediate vicinity alone, with particularly severe effects in fertile regions and areas where gold mining predominates. Our findings highlight substantial externalities of mining and demonstrate an urgent need for oversight and regulation.
{"title":"Downstream impacts of mines on agriculture in Africa","authors":"Lukas Vashold , Gustav Pirich , Maximilian Heinze , Nikolas Kuschnig","doi":"10.1016/j.jdeveco.2025.103671","DOIUrl":"10.1016/j.jdeveco.2025.103671","url":null,"abstract":"<div><div>Mining operations in Africa are expanding rapidly, creating negative externalities that remain poorly understood. In this paper, we provide causal evidence for the impact of water pollution from mines on downstream vegetation and agriculture across the continent. We exploit a natural experiment, where mines cause a discontinuity in water pollution along river networks, to compare vegetation health in upstream and downstream locations. We find that mines significantly reduce peak vegetation downstream by 1.3–1.5%, impairing the productivity of over 74,000 km<sup>2</sup> of croplands. These reductions correspond to annual losses of 91,000–205,000 tons of cereal crops in the immediate vicinity alone, with particularly severe effects in fertile regions and areas where gold mining predominates. Our findings highlight substantial externalities of mining and demonstrate an urgent need for oversight and regulation.</div></div>","PeriodicalId":48418,"journal":{"name":"Journal of Development Economics","volume":"179 ","pages":"Article 103671"},"PeriodicalIF":4.6,"publicationDate":"2025-10-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145416641","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 : 2025-10-18DOI: 10.1016/j.jdeveco.2025.103663
Vinicius Curti Cícero , Laura Heras-Recuero
We study how a large, exogenous trade shock — triggered by China’s accession to the WTO in 2001 — reshaped income, inequality, and import behavior across Brazilian regions. Using a shift-share instrument based on pre-shock export structures, we show that regions more exposed to China’s demand boom experienced faster growth in per capita income and larger increases in within-region inequality relative to less exposed areas. These changes, in turn, led to rising import values and shifts in composition, especially toward consumption and medium- to high-tech manufactured goods. To analyze these shifts, we classify goods by necessity and luxury status using Brazilian household data and introduce a complementary classification based on the spending patterns of high-income households in the United States. Luxury imports rose most in regions that were initially more unequal or experienced sharper post-shock inequality growth, consistent with non-homothetic preferences and broader theories of stratified consumption. Our findings highlight inequality as a key channel through which trade shocks shape regional import demand in developing economies.
{"title":"The consumption side of trade shocks: Inequality dynamics and luxury imports","authors":"Vinicius Curti Cícero , Laura Heras-Recuero","doi":"10.1016/j.jdeveco.2025.103663","DOIUrl":"10.1016/j.jdeveco.2025.103663","url":null,"abstract":"<div><div>We study how a large, exogenous trade shock — triggered by China’s accession to the WTO in 2001 — reshaped income, inequality, and import behavior across Brazilian regions. Using a shift-share instrument based on pre-shock export structures, we show that regions more exposed to China’s demand boom experienced faster growth in per capita income and larger increases in within-region inequality relative to less exposed areas. These changes, in turn, led to rising import values and shifts in composition, especially toward consumption and medium- to high-tech manufactured goods. To analyze these shifts, we classify goods by necessity and luxury status using Brazilian household data and introduce a complementary classification based on the spending patterns of high-income households in the United States. Luxury imports rose most in regions that were initially more unequal or experienced sharper post-shock inequality growth, consistent with non-homothetic preferences and broader theories of stratified consumption. Our findings highlight inequality as a key channel through which trade shocks shape regional import demand in developing economies.</div></div>","PeriodicalId":48418,"journal":{"name":"Journal of Development Economics","volume":"179 ","pages":"Article 103663"},"PeriodicalIF":4.6,"publicationDate":"2025-10-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145362567","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 : 2025-10-17DOI: 10.1016/j.jdeveco.2025.103664
Leonardo Sánchez-Aragón , Gonzalo E. Sánchez , Wladimir Zanoni
This paper provides causal evidence on the economic impact of central-to-local government transfers in a developing country context. We exploit plausibly exogenous variation in municipal transfers generated by a 2018 reform to Ecuador’s intergovernmental allocation formula. Using a design-based instrumental variables strategy, we estimate that a 1% increase in government transfers led to a 0.94% increase in total business sales in 2018 and 1.05% in 2019. The strongest effects are found in non-VAT sales. Mechanism analysis shows that transfers boost local economic activity mainly through increased recurrent and capital spending, particularly wages and procurement, suggesting that well-designed transfers can act as effective local demand stimuli.
{"title":"Stimulating local economies through central transfers: A natural experiment from Ecuador","authors":"Leonardo Sánchez-Aragón , Gonzalo E. Sánchez , Wladimir Zanoni","doi":"10.1016/j.jdeveco.2025.103664","DOIUrl":"10.1016/j.jdeveco.2025.103664","url":null,"abstract":"<div><div>This paper provides causal evidence on the economic impact of central-to-local government transfers in a developing country context. We exploit plausibly exogenous variation in municipal transfers generated by a 2018 reform to Ecuador’s intergovernmental allocation formula. Using a design-based instrumental variables strategy, we estimate that a 1% increase in government transfers led to a 0.94% increase in total business sales in 2018 and 1.05% in 2019. The strongest effects are found in non-VAT sales. Mechanism analysis shows that transfers boost local economic activity mainly through increased recurrent and capital spending, particularly wages and procurement, suggesting that well-designed transfers can act as effective local demand stimuli.</div></div>","PeriodicalId":48418,"journal":{"name":"Journal of Development Economics","volume":"179 ","pages":"Article 103664"},"PeriodicalIF":4.6,"publicationDate":"2025-10-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145362565","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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