Alix Naugler

We study firm turnover (i.e., entry and exit) and its consumer implications in a market characterized by asymmetric information. Using a three-round census of agro-dealers in Tanzania’s Morogoro Region, we document annual firm entry and exit rates of 33 and 17 percent, respectively. These rates are more than double those observed for non-agricultural micro-, small-, and medium-enterprises in comparable low-income countries. To analyze how these high rates of entry and exit affect consumers, we develop a theoretical model of firm turnover under asymmetric information and empirically test its predictions for farmers. We find that farmers’ market-level beliefs about agricultural input quality are systematically related to agro-dealer turnover, with the relationship depending on farmers’ prior perceptions of market quality. Farmers report more favorable beliefs about agricultural input quality in markets with recent agro-dealer exits, consistent with our model when consumers perceive exiting firms as having sold low-quality products. In contrast, farmers who usually purchased agricultural inputs from the same agro-dealer expect new market entrants to provide lower-quality agricultural inputs, suggesting farmers rely on incumbent relationships to manage quality uncertainty in markets with information asymmetries. As a result, agro-dealer turnover may shape and even attenuate farmers’ technology adoption.

This paper examines the unintended consequences of size-dependent formalization policies that raise the cost of informality for firms, focusing on a provision in Vietnam’s Labor Code 2012. The policy sharply increases the financial penalty for firms with at least 10 formally contracted, paid employees that fail to comply with pre-existing labor regulations at this threshold. I develop a profit maximization model illustrating how this policy incentivizes firms to avoid compliance by substituting toward unregulated labor arrangements or partially formalizing. Using Vietnamese micro-, small-, and medium-enterprise panel data, I employ a difference-in-discontinuities design to estimate the causal effect of the increased financial penalty at the threshold. McCrary density tests indicate no evidence of bunching below the 10-formal, paid employee threshold post-policy. Instead, firms adjusted along alternative margins: those just below the threshold increased their reliance on unpaid labor while those just above it registered with the government but continued using informal labor. Firms just above the threshold also realized profit and labor productivity gains. These findings show that threshold-based labor policies can lead to selective—rather than comprehensive—firm formalization, suggesting informality is restructured instead of reduced.

This research examines Mexican immigrants’ motivations for crossing into the US to evaluate whether macroeconomic conditions affect these motivations. Using a data set of 44,017 Mexican migrants from 2010 through September 2016 and controlling for personal factors, results indicate economic motivations are moderated by US macroeconomic conditions and in the expected way, i.e. the US unemployment rate (growth rate) is inversely (directly) associated with economic motivations to cross into the US and positively associated with non-economic (familial-based) motivations. Results also suggest that Mexican migrants coming to the US in the wake of the Great Recession (i.e. in 2010 and 2011) were much less likely to cross for economic reasons than those crossing in 2015 and 2016, while those crossing in 2013 and 2014 were more likely to cross for economic reasons. We suspect nationalistic rhetoric amplified by Trump’s campaign for US president may have crowded out economic motivations as immigrants expected the proposed anti-immigrant policies to reduce the availability of US economic opportunities. Similar support for macroeconomic “push” effects from the Mexican economy were not found. Additionally, economic and familial-based motivations for migrating appear to be substitutes and both respond to US macroeconomic conditions though in opposite ways.