Abstract:A long standing question in social science is whether management matters. To investigate this we run a field experiment on 28 plants in large Indian textile firms to evaluate the causal impact of modernizing management practices. We do this by providing free management consulting to a set of randomly chosen treatment plants, and compare their performance to a set of control plants. We find that improving management practices had three main effects. First, it led to significantly higher efficiency and quality, and lower inventory levels. These changes increased productivity by 10.5% and profitability by 16.8% on average. Second, it increased the decentralization of decision making, as better production monitoring enabled the owners to delegate more decisions to their plant managers. Third, it increased the use of computers, necessitated by the extensive data collection, analysis and dissemination involved in modern management. Since these management practices were profitable, and firms were able to transfer them from their treatment plants to their other plants, this raises the question of why they had not adopted these practices before? Our results suggest that informational barriers were initially a primary factor in explaining this lack of adoption. Modern management practices are a type of technology that diffuse slowly between firms, with many Indian firms simply unaware of their impact or existence. A secondary factor constraining management appears to be the ability and behavior of the family firm CEOs.JEL No. L2, M2, O14, O32, O33.

International migration is costly and initially only the middle class of the wealth distribution may have both the means and incentives to migrate, increasing inequality in the sending community. However, the migration networks formed lower the costs for future migrants, which can in turn lower inequality. This paper shows both theoretically and empirically that wealth has a nonlinear effect on migration, and then examines the empirical evidence for an inverse U-shaped relationship between emigration and inequality in rural sending communities in Mexico. After instrumenting, we find that the overall impact of migration is to reduce inequality across communities with relatively high levels of past migration. We also find some suggestive evidence for an inverse U-shaped relationship among communities with a wider range of migration experiences.JEL Classification: O15, J61, D31.

We present new evidence on the randomization methods used in existing experiments, and new simulations comparing these methods. We find that many papers do not describe the randomization in detail, implying that better reporting is needed. Our simulations suggest that in samples of 300 or more, the different methods perform similarly. However, for very persistent outcome variables, and in smaller samples, pair-wise matching and stratification perform best and appear to dominate the rerandomization methods commonly used in practice. The simulations also point to specific recommendations for which variables to balance on, and for which controls to include in the ex post analysis. (JEL C83, C93, O12)

Small and informal firms account for a large share of employment in developing countries. The rapid expansion of microfinance services is based on the belief that these firms have productive investment opportunities and can enjoy high returns to capital if given the opportunity. However, measuring the return to capital is complicated by unobserved factors such as entrepreneurial ability and demand shocks, which are likely to be correlated with capital stock. We use a randomized experiment to overcome this problem, and to measure the return to capital for a sample of microenterprises. We accomplish this by providing cash and equipment grants to small firms in Sri Lanka, and measuring the increase in profits arising from this exogenous (positive) shock to capital stock. We find the average real return to capital to be 4.6 to 5.3 percent per month, substantially higher than the market interest rate. We then examine the heterogeneity of treatment effects to explore whether missing credit markets or missing insurance markets are the most likely cause of the high returns. Returns are found to vary with entrepreneurial ability and with household wealth, but not to vary with measures of risk aversion or uncertainty. Treatment impacts are also significantly larger for enterprises owned by males, and indeed, we find no positive return in enterprises owned by females.

D31, C81, J10, Inequality, asset indicators, measurement,

This paper examines the impact of migration on educational attainment in rural Mexico. Using historical migration rates by state to instrument for current migration, we find evidence of a significant negative effect of migration on schooling attendance and attainment of 12 to 18 year-old boys and 16 to 18 year-old girls. IV-Censored Ordered Probit results show that living in a migrant household lowers the chances of boys completing junior high school and of boys and girls completing high school. The negative effect of migration on schooling is somewhat mitigated for younger girls with low educated mothers, which is consistent with remittances relaxing credit constraints on education investment for the very poor. However, for the majority of rural Mexican children, family migration depresses educational attainment. Comparison of the marginal effects of migration on school attendance and on participation in other activities shows that the observed decrease in schooling of 16 to 18 year-olds is accounted for by the current migration of boys and increased housework for girls.

Standard business training programs aim to boost the incomes of the millions of self-employed business owners in developing countries by teaching basic financial and marketing practices, yet the impacts of such programs are mixed. We test whether a psychology-based personal initiative training approach which teaches and promotes a proactive mindset that focuses on entrepreneurial behaviors can have more success. A randomized controlled trial in Togo assigned microenterprise owners to a control group (N=500); a leading business training program (N=500); or to personal initiative training (N=500). Four follow-up surveys track firm outcomes over two years and show personal initiative training increases firm profits by 30 percent, compared to a statistically insignificant 11 percent for traditional training. The training is cost-effective, paying for itself within one year.

This paper examines the role of migration networks in determining self-selection patterns of Mexico-U.S. migration. We first present a simple theoretical framework showing how such networks impact on migration incentives at different education levels and, consequently, how they are likely to affect the expected skill composition of migration. Using survey data from Mexico, we then show that the probability of migration is increasing with education in communities with low migrant networks, but decreasing with education in communities with high migrant networks. This is consistent with positive self-selection of migrants being driven by high migration costs, as advocated by Chiquiar and Hanson (2005), and with negative self-selection of migrants being driven by lower returns to education in the U.S. than in Mexico, as advocated by Borjas (1987 Abstract: This paper examines the role of migration networks in determining self-selection patterns of Mexico-U.S. migration. We first present a simple theoretical framework showing how such networks impact on migration incentives at different education levels and, consequently, how they are likely to affect the expected skill composition of migration. Using survey data from Mexico, we then show that the probability of migration is increasing with education in communities with low migrant networks, but decreasing with education in communities with high migrant networks. This is consistent with positive self-selection of migrants being driven by high migration costs, as advocated by Chiquiar and Hanson (2005), and with negative self-selection of migrants being driven by lower returns to education in the U.S. than in Mexico, as advocated by Borjas (1987).