Exploiting a randomized natural experiment in India, we show that female leadership influences adolescent girls’ career aspirations and educational attainment. A 1993 law reserved leadership positions for women in randomly selected village councils. Using 8,453 surveys of adolescents aged 11–15 and their parents in 495 villages, we find that, compared to villages that were never reserved, the gender gap in aspirations closed by 25% in parents and 32% in adolescents in villages assigned to a female leader for two election cycles. The gender gap in adolescent educational attainment is erased and girls spent less time on household chores. We find no evidence of changes in young women’s labor market opportunities, suggesting that the impact of women leaders primarily reflects a role model effect.

New goods play a central role in many trade and growth models. We use detailed trade and firm-level data from a large developing economy-India-to investigate the relationship between declines in trade costs, the imports of intermediate inputs and domestic firm product scope. We estimate substantial static gains from trade through access to new imported inputs. Accounting for new imported varieties lowers the import price index for intermediate goods on average by an additional 4.7 percent per year relative to conventional gains through lower prices of existing imports. Moreover, we find that lower input tariffs account on average for 31 percent of the new products introduced by domestic firms, which implies potentially large dynamic gains from trade. This expansion in firms' product scope is driven to a large extent by international trade increasing access of firms to new input varieties rather than by simply making existing imported inputs cheaper. Hence, our findings suggest that an important consequence of the input tariff liberalization was to relax technological constraints through firms' access to new imported inputs that were unavailable prior to the liberalization.

Using a panel of firm-level data, this paper examines the effects of India's trade reforms in the early 1990s on firm productivity in the manufacturing sector, focusing on the interaction between this policy shock and industry, firm and environment characteristics. The rapid and comprehensive tariff reductions-part of an IMF-supported adjustment program with India in 1991-allow us to establish a causal link between inter-industry and inter-temporal variations in output tariffs, input tariffs, and effective rates of protection and consistently estimated firm productivity. Specifically, reductions in trade protectionism led to higher levels of firm productivity, with this effect strongest in industries that were import-competiting and were not subject to excessive domestic regulation. A significant productivity boost was generated by the lower tariffs on intermediate inputs as well. Interestingly, state-level characteristics, such as labor regulations, investment climate, and financial development, do not appear to influence the effect of trade liberalization on firm productivity. Finally there is strong suggestive evidence of complementarities between trade liberalization and industrial policies that encourage domestic competition. JEL Classification Numbers: F14, O19, F13, O53.

Why do many households remain exposed to large exogenous sources of non-systematic income risk? We use a series of randomized field experiments in rural India to test the importance of price and non-price factors in the adoption of an innovative rainfall insurance product. Demand is significantly price sensitive, but widespread take-up would not be achieved even if the product offered a payout ratio comparable to U.S. insurance contracts. We present evidence suggesting that lack of trust, liquidity constraints and limited salience are significant non-price frictions that constrain demand. We suggest contract design improvements to mitigate these frictions.

T he second half of the twentieth century witnessed one of the greatest increases in trade openness in the history of the world. Significant declines in tariffs and transportation costs have caused international trade to affect the economy of nearly every country. Yet, while theory and cross-country studies suggest that trade liberalization increases overall welfare, credible evidence on how trade liberalization affects the distribution of income within a country is relatively scant, providing inconsistent results (see Pinelopi Koujianou Goldberg and Nina Pavcnik (2007a) for a literature review). Even less is known about the mechanisms through which trade effects work. These questions are particularly important in light of recent criticism of globalization from both developed and developing countries, and particularly relevant for developing countries with large vulnerable populations, inflexible industrial structure, and inadequate social safety nets, where the long-run benefits of trade reforms may come at a substantial social cost.Standard economic theory (i.e., the Heckscher-Ohlin model) provides the sharp prediction that with perfect factor mobility, gains to trade flow to the abundant factors, such as unskilled labor in developing countries. Recent trade models have challenged this theoretical finding, demonstrating that trade liberalization could