Research Interests: International Trade, Innovation, Organizational Economics, Development Economics
Research Paper(s) in Progress:
Paper(s) Under Review:
Publications:
Journal Articles:
Other Journal Articles:
Chapters in Books:
Policy Reports:
Media and Other Writings:
Future Research:
Research Paper(s) in Progress:
- Import Competition and Formalization of Workforce (with R. Singh and V. Soundararajan)
- [pdf] Coming soon
Paper(s) Under Review:
- Intellectual Property Regimes and Wage Inequality (with C. Chatterjee and S. Bhattacharya)
- We use The Patents (Amendment) Act, 2002 in India as a quasi-natural experiment to identify the causal effect of higher incentives for innovation on a firm's compensation structure. We find that stronger intellectual property (IP) protection has a sharper impact on the demand for managerial skill for technologically advanced firms. Firms that were a-priori above the industry median (in terms of technology adoption, more so for R&D expenditure) witness a rise in the share of managerial compensation by 1.3--8.3% higher than the rest. This effect is completely driven by the firms between 60th-90th percentile. The increase in wage inequality can partly be attributed to a stronger performance pay for high-tech firms. Associatedly, the reform also leads to a significant reallocation of resources between firms. The high-tech firms invested more in technology adoption, started to produce more product varieties at higher quality and filed for more product patent claims. Broadly, we demonstrate that stronger IP protection leads to higher wage inequality between firms.
- [pdf] Revise and Resubmit at Journal of Development Economics
- We use The Patents (Amendment) Act, 2002 in India as a quasi-natural experiment to identify the causal effect of higher incentives for innovation on a firm's compensation structure. We find that stronger intellectual property (IP) protection has a sharper impact on the demand for managerial skill for technologically advanced firms. Firms that were a-priori above the industry median (in terms of technology adoption, more so for R&D expenditure) witness a rise in the share of managerial compensation by 1.3--8.3% higher than the rest. This effect is completely driven by the firms between 60th-90th percentile. The increase in wage inequality can partly be attributed to a stronger performance pay for high-tech firms. Associatedly, the reform also leads to a significant reallocation of resources between firms. The high-tech firms invested more in technology adoption, started to produce more product varieties at higher quality and filed for more product patent claims. Broadly, we demonstrate that stronger IP protection leads to higher wage inequality between firms.
- Bank Ownership, Exports and Misallocation
- Does a bank's ownership matter for a firm's performance (to which it is connected)? Especially, in the event of a crisis? I study this question through the effect of 2008-09 crisis on Indian manufacturing firms to provide evidence on a new channel which matters significantly for a firm's export performance -- bank ownership. In particular, I find: (a) firms connected to private and/or foreign banks earn around 7.7--39% less in terms of their export earnings during the crisis as compared to firms' having banking relationships with public-sector banks. This happened as the public-sector banks were differentially affected (in terms of credit supply and deposits) due to a clause in the Indian Banking Act of 1969; (b) drop in exports is driven by firms' client to big domestic-private banks and banks of US origin; (c) firms not connected to public-sector banks also laid-off workers (both managers and non-managers), employed less capital and imported less raw materials; and (d) effect is concentrated only on the intensive margin of trade. In addition, I also find that firms with lower average product of capital (than the median) received about 50% more loans, suggesting a significant reinforcement of inefficiency in the Indian economy due to misallocation of credit.
- [pdf] Submitted
- Does a bank's ownership matter for a firm's performance (to which it is connected)? Especially, in the event of a crisis? I study this question through the effect of 2008-09 crisis on Indian manufacturing firms to provide evidence on a new channel which matters significantly for a firm's export performance -- bank ownership. In particular, I find: (a) firms connected to private and/or foreign banks earn around 7.7--39% less in terms of their export earnings during the crisis as compared to firms' having banking relationships with public-sector banks. This happened as the public-sector banks were differentially affected (in terms of credit supply and deposits) due to a clause in the Indian Banking Act of 1969; (b) drop in exports is driven by firms' client to big domestic-private banks and banks of US origin; (c) firms not connected to public-sector banks also laid-off workers (both managers and non-managers), employed less capital and imported less raw materials; and (d) effect is concentrated only on the intensive margin of trade. In addition, I also find that firms with lower average product of capital (than the median) received about 50% more loans, suggesting a significant reinforcement of inefficiency in the Indian economy due to misallocation of credit.
- Import Competition, Labour Regulations, and Firm Outsourcing (with A. Sundaram)
- Using unique information on firm level outsourcing of manufacturing jobs by Indian firms, we propose two novel channels as determinants of the fragmentation of production: import competition and labour market regulation. We find that greater import competition from China is associated with a significant increase in outsourcing of manufacturing tasks -- a 10-percentage point increase in the import penetration ratio leads to a 0.24--0.63 percentage point increase in the share of outsourcing expenses in total expenses of a firm. This effect is attenuated for firms operating in states with pro-worker labour laws by 0.31--0.48 percentage points. These results are primarily driven by domestic, multi-product firms producing final goods. Outsourcing firms reduce their costs, charge a lower price, and increase output and the number of product varieties they produce in response to import competition. In addition, we find a corresponding increase in the likelihood that informal sector firms, particularly those located in rural areas, engage in an outsourcing contract with other enterprises in states where labour laws are pro-worker.
- [pdf] Submitted
- Using unique information on firm level outsourcing of manufacturing jobs by Indian firms, we propose two novel channels as determinants of the fragmentation of production: import competition and labour market regulation. We find that greater import competition from China is associated with a significant increase in outsourcing of manufacturing tasks -- a 10-percentage point increase in the import penetration ratio leads to a 0.24--0.63 percentage point increase in the share of outsourcing expenses in total expenses of a firm. This effect is attenuated for firms operating in states with pro-worker labour laws by 0.31--0.48 percentage points. These results are primarily driven by domestic, multi-product firms producing final goods. Outsourcing firms reduce their costs, charge a lower price, and increase output and the number of product varieties they produce in response to import competition. In addition, we find a corresponding increase in the likelihood that informal sector firms, particularly those located in rural areas, engage in an outsourcing contract with other enterprises in states where labour laws are pro-worker.
- Trade Liberalization, Business Investments and Family Firms (with Huan Yang)
- We investigate the role of trade liberalization on business investments of a firm. In particular, we estimate the rise in foreign competition through drop in output tariffs as a result of the Indian trade liberalization process in the 1990s and estimate the business investment responses of manufacturing firms. We find that higher degree of product market competition, or a 10% drop in output tariffs reduces business investments of a firm by around 2.5%. Our results show substantial heterogeneity when dividing firms by family-owned and others: the response of the former is in contrast to the latter. The drop in investments is 55-98% less for family firms when compared to non-family firms, especially in R&D-intensive and industries that depend more on external finance. In addition, out of the family firms, the ones which are a part of a business group or "family-network" (Karaivanov et al., 2019) do the opposite: they increase their investments. We explain this differential behaviour between family and non-family firms by their risk-taking behaviour and connection to the state-owned banks. Our results highlight two important points, both from theoretical and empirical perspective, how ownership of a firm influences its business decisions and how internal financial markets allocate resources while firms compete with external forces.
- [pdf] Submitted
- We investigate the role of trade liberalization on business investments of a firm. In particular, we estimate the rise in foreign competition through drop in output tariffs as a result of the Indian trade liberalization process in the 1990s and estimate the business investment responses of manufacturing firms. We find that higher degree of product market competition, or a 10% drop in output tariffs reduces business investments of a firm by around 2.5%. Our results show substantial heterogeneity when dividing firms by family-owned and others: the response of the former is in contrast to the latter. The drop in investments is 55-98% less for family firms when compared to non-family firms, especially in R&D-intensive and industries that depend more on external finance. In addition, out of the family firms, the ones which are a part of a business group or "family-network" (Karaivanov et al., 2019) do the opposite: they increase their investments. We explain this differential behaviour between family and non-family firms by their risk-taking behaviour and connection to the state-owned banks. Our results highlight two important points, both from theoretical and empirical perspective, how ownership of a firm influences its business decisions and how internal financial markets allocate resources while firms compete with external forces.
- Compensate to Innovate: Cross-border Environmental Regulation and Firm Labor Demand (with A. Chakrabarti and C. Chatterjee)
- In 1994, due to environmental concerns, Germany banned a chemical called `Azo-dyes' which used to be the primary input for the firms producing leather and textiles goods in India (a key exporter). Exploiting this as a quasi-natural experiment, we examine the effects of this cross-border regulatory change on labor compensation, particularly managerial, for both Indian upstream (dye-producing) and downstream (leather and textile) firms. We find that it is the combination of changes such as product churning, undertaking of higher R&D, and import of intermediates, due to the ban, which led increase in demand for managerial workers; in particular, the regulation increased compensation of managers by 3.7--18% in dye-producing firms compared to other chemical firms. Our results further show that it is the fixed and not variable component of the compensation which drives the increase in overall compensation. We find no such effects for downstream firms. We believe, our study is one of the first to show that just like tariff, non-tariff barriers can also significantly affect firm labor composition.
- [pdf] Submitted
- In 1994, due to environmental concerns, Germany banned a chemical called `Azo-dyes' which used to be the primary input for the firms producing leather and textiles goods in India (a key exporter). Exploiting this as a quasi-natural experiment, we examine the effects of this cross-border regulatory change on labor compensation, particularly managerial, for both Indian upstream (dye-producing) and downstream (leather and textile) firms. We find that it is the combination of changes such as product churning, undertaking of higher R&D, and import of intermediates, due to the ban, which led increase in demand for managerial workers; in particular, the regulation increased compensation of managers by 3.7--18% in dye-producing firms compared to other chemical firms. Our results further show that it is the fixed and not variable component of the compensation which drives the increase in overall compensation. We find no such effects for downstream firms. We believe, our study is one of the first to show that just like tariff, non-tariff barriers can also significantly affect firm labor composition.
Publications:
Journal Articles:
- Chinese Competition and Product Variety of Indian firms (with M. Henry)
- Journal of Comparative Economics 47 (2): 367-395, 2019 [pdf]
- Input-trade Liberalization and the Demand for Managers: Evidence from India (with O. Raveh)
- Journal of International Economics 111: 159-176, 2018 [pdf]
- The Great Trade Collapse and Indian Firms
- World Economy 41 (1): 100-125, 2018 [pdf]
- Environmental Standards, Trade and Innovation: Evidence from a Natural Experiment
- Environment and Development Economics 22 (4): 414-446, 2017 [pdf]
- Does Environmental Regulation Indirectly Induce Upstream Innovation? New Evidence from India (with C. Chatterjee)
- Research Policy 46 (5): 939-955, 2017 [pdf]
- Top three 2017 articles w/the most social media attention @ResearchPolicy
- Research Policy 46 (5): 939-955, 2017 [pdf]
- Judicial Quality and Regional Firm Performance: The Case of Indian States
- Journal of Comparative Economics 44 (4): 902-918, 2016 [pdf]
- Does openness affect inequality? A Case Study for India (with A. Barua)
- Review of Development Economics 14 (3): 447-465, 2010 [pdf]
Other Journal Articles:
- Effect of Environmental Regulation on Firm Performance: Evidence from a Policy Experiment
- Economic and Political Weekly 51 (24): 104-111, 2016 [pdf]
- Standards or Hazards: Environmental Compliance and Market Access Concerns for India’s Marine and Agricultural Products
- Asia Pacific Journal of Environmental Law 12 (1): 85-116, 2009 [pdf]
- Environmental Regulations and Indian Leather Industry (with D. Chakraborty)
- Economic and Political Weekly 42 (19): 1669-1672, 2007 [pdf]
Chapters in Books:
- Trade Reform, Managers, and Skill Intensity: Evidence from India [pdf]
- in M. Bacchetta and M. Helble (eds.), Trade Adjustment in Asia: Past Experiences and Lessons Learned, pp. 229-275, scheduled
- Trade and Industrial Performance since the WTO Reforms: What Indian Evidences Suggest? (with A. Barua and D. Chakraborty) [pdf]
- in R. M. Stern and A. Barua (eds.), India and the WTO: Issues and Negotiating Strategies, pp. 121-144, 2010
- Environmental Service Negotiation and India: Priorities and Concerns (with O. De) [pdf]
- in B. DebRoy et al. (eds.) the trade game: negotiation trends at WTO and concerns of developing countries, pp. 203-214, 2006
Policy Reports:
- Mainstreaming Gender in Trade Policy – A Case Study on Bhutan [link]
- UNCTAD
- Asian and African Development Trajectories: Revisiting Facts and Figures (with G. Carbonnier and E. Dalle Mulle) [link]
- International Development Policy Brief, Graduate Institute (IHEID), Geneva
Media and Other Writings:
- Import Competition, Formalization, and Role of Contract Workers (with R. Singh and V. Soundararajan)
- Ideas for India: 27th January, 2021 [https://www.ideasforindia.in/topics/trade/import-competition-formalisation-and-the-role-of-contract-workers.html]
- Is the ban on BS-III vehicles really bad? (with C. Chatterjee)
- livemint 11 (86): 15, April 11, 2017 [http://www.livemint.com/Opinion/BV8SwjKy9dM5V8eEMEkfSI/Is-the-ban-on-BSIII-vehicles-really-bad.html]
- Assure a better future for the leather industry (with R. Kher)
- The Financial Express: 7, Feb 17, 2005 [http://archive.financialexpress.com/news/assure-a-better-future-for-the-leather-industry/147818/1]
Future Research:
- Banking Reforms, Access to Credit, and Misallocation (with N. Mitra)
- Product Market Competition, Efficiency Gains, and Customer Capital (with M. Henry and R. Singh)
- Trade and Networks (with D. DeSilva and M. Chen)
- Product Market Competition and Organizational Design (with C. Chatterjee and S. Bhattacharya)
- Board Quotas, Female Participation, and Firm Performance: New Evidence from a Developing Country (with O. Kaur and S. Sharma)
- Trade and Innovation (with R. Ahsan)
- Trade and Gender (In)Equality (with Luis Castro)
- Trade and Types of Outsourced Jobs (with Luis Castro and A. Sundaram)
- TBTs and Indian Exporters
