We experimentally investigate in village India how belief systems that hierarchize social groups affect the groups’ responses to economic opportunities. Earlier we found that making caste salient hurt low caste performance both absolutely and relative to the high caste’s. To examine the possible role of mistrust, we manipulate the scope for discretion in rewarding performance. When offered a ga...

We examine whether the Colombian government’s expansion of publicly provided health insurance in the early nineties created incentives for people to become informal. Using variation in the onset of the Census of the Poor across municipalities and over time, we find robust and consistent estimates of an increase in informal employment between 2 and 5 percentage points after the expansion. As rob...

Policy interest since the early 1980s has focused in different ways on the creation of a large, productive, taxable economy – in which entrepreneurship plays a role for employment, income growth and innovation. The current understanding of various forms of entrepreneurship remains incomplete, focusing largely on productive and unproductive entrepreneurship. However, destructive entrepreneurship...

Corruption has fierce impacts on economic and societal development and is subject to a vast range of institutional, jurisdictional, societal and economic conditions. Research indicates that corruption’s predominantly negative effects have arisen to a massive trans-border threat while creating high obstacles to sustainable and prospective development, ultimately impairing everybody’s life. This ...

Th e multiplicity of policies proposed to support the informal sector refl ects the lack of a common defi nition. Although they may produce positive eff ects, these are limited and fail to constitute a comprehensive strategic approach. Th e diff erent interpretations in the absence of a common defi nition as well as the strategies emerging from them are reviewed. Th e identifi cation of informa...

Corruption and the Shadow Economy: An Empirical Analysis This paper analyzes the influence of the shadow economy on corruption and vice versa. We hypothesize that corruption and shadow economy are substitutes in high income countries while they are complements in low income countries. The hypotheses are tested for a crosssection of 120 countries and a panel of 70 countries for the period 1994-2...

We study the effects on accountability in government service delivery of decentralizing administration of an antipoverty program. While governments at both central and local levels are vulnerable to antipoor policy biases owing to political capture, centralized delivery systems are additionally prone to bureaucratic corruption, owing to problems in monitoring bureaucratic performance. Decentral...

This paper studies the electoral effects of town hall meetings based on programmatic, nonclientelist platforms. The experiment involves the cooperation of leading candidates in a presidential election in Benin. A campaign strategy based solely on these meetings was assigned to randomly selected villages and compared to the standard strategy of clientelist rallies. We find that treatment reduces...

We study the interaction between product quality, prices and demand in a dynamic model of asymmetric information. Sellers choose between producing high quality goods which gives low profits today but increases probability of future survival in the market and low quality ones which gives higher returns today but lowers future survival. However, demand depends on expected quality. Multiple steady...

This chapter surveys the new institutional economics, a rapidly growing literature combining economics, law, organization theory, political science, sociology and anthropology to understand social, political and commercial institutions. This literature tries to explain what institutions are, how they arise, what purposes they serve, how they change and how they may be reformed. Following conven...