My dissertation aims to increase the understanding of the impact of government programs on household economic outcomes in developing countries. My research uses empirical methods to analyze this impact and also to understand the underlying economic mechanisms. The first chapter studies the impact of a unique macroeconomic policy by the Government of India, which made the two highest denomination currency notes invalid overnight. While the move was hoping to achieve benefits such as eradication of black money, wiping out 86% of the currency in a cash-dependent economy came at short-run costs. I study the impact of resulting liquidity constraints on household consumption using Consumer Pyramids panel data. I find that demonetization led to a decline in household durable and non-durable consumption in the initial months after demonetization. The decline was relatively higher for richer households. I also find that households increased informal borrowing after demonetization. The increase in borrowing was relatively higher for poorer households. The use of credit was also higher for households who rely more on cash. The results suggest that while richer households reduced their consumption because it came at a lower utility cost to them, poorer households had to rely on informal credit to maintain their consumption. The second chapter studies the impact of a financial transfer scheme, `Ladli', on parental investment in daughters. Many states in India rely on conditional cash transfer schemes, to reduce discrimination against females. These programs aim to increase the perceived value of the girl child in general. I study the impact of one such program on vaccination and birth intervals following the eligible girls. Using the District Level Household Survey (DLHS) data, I employ a difference-in-difference strategy, with boys as the control group. I find that the probability of vaccination for eligible girls goes up by 11 percentage points relative to boys in rural areas. However, I do not find evidence of a differential change in birth intervals following the eligible girls. My results suggest that while parents respond to the direct incentives for such schemes, they do not seem to respond by making investments that are not directly incentivized.
Wadhwa, Sagar,
"Essays on Private Responses to Public Policies in India"
(2020).
Economics Theses and Dissertations.
Brown Digital Repository. Brown University Library.
https://doi.org/10.26300/3v45-nx37
