Nick Tsivanidis

Contract Labor and Firm Growth in India

with Marianne Bertrand and Chang-Tai Hsieh. Paper. Coverage by Chicago Booth Review.
Conditionally Accepted (data) at Econometrica

India’s Industrial Disputes Act (IDA) of 1947 requires firm with more than 100 workers to pay large costs if they shrink their employment. Since the early 2000s, large Indian manufacturing firms have increasingly relied on contract workers who are not subject to the IDA. By 2015, con- tract workers accounted for 38% of total employment at firms with more than 100 workers com- pared to 20% in 2000. Over the same time period, the thickness of the right tail of the firm size distribution in formal Indian manufacturing plants increased, the average product of labor for large firms declined, the job creation rate for large firms increased, and the probability that large firms introduce new products rose. We provide evidence that these outcomes were caused by an increased reliance on contract labor among large establishments. A model of firm growth subject to firing costs suggests the rise of contract labor increased TFP in Indian manufacturing by 7.6%, occurring all through a one-time reduction in misallocation between large and small firms with negligible change in the long-run growth rate.

Cities in the Developing World

with Gharad Bryan and Edward Glaeser, Annual Review of Economics, 2020 12:1, 273-297
Paper, NBER working paper.

The fast and often chaotic urbanization of the developing world generates both economic opportunity and challenges, like contagious disease and congestion, because proximity increases both positive and negative externalities. In this paper, we review the expanding body of economic research on developing world cities. One strand of this literature emphasizes the economic benefits of urban connection, typically finding that agglomeration benefits are at least as high in poor countries as they are in rich countries. Yet there remains an ongoing debate about whether slums provide a path to prosperity or an economic dead end. A second strand analyzes the negative externalities associated with urban density, and the challenges of building and maintaining infrastructure to moderate those harms. Researchers are just beginning to understand the links between institutions (such as Public Private Partnerships), incentives (such as congestion pricing) and the effectiveness of urban infrastructure spending. A third line of research addresses the spatial structure of cities directly with formal, structural models. These structural models seem particularly valuable when analyzing land use and transportation systems in the far more fluid cities of the developing world.

Working Papers

Spatial Spillovers from High-Rise Developments: Evidence from the Mumbai Mills

with Michael Gechter. Complete Paper (inc appendices). Online Appendix. Supplementary Material
Revise & Resubmit at Econometrica

This paper investigates local spillovers from high-rise, market-rate buildings in developing country cities. We exploit a unique natural experiment that led most of Mumbai’s 60 textile mills, which covered 15% of central city land, to be redeveloped into high rises during the 2000s. Using a unique set of newly digitized data, we document sizable local spillovers consistent with these new developments gentrifying their surrounding neighborhoods. To analyze the indirect and distributional effects, we develop and estimate a dynamic quantitative urban model with informality and slum evictions. The redevelopments benefit Mumbai’s residents in aggregate by increasing residential housing supply and providing valuable commercial floorspace for formal firms, but inflict large costs on forcibly relocated slum dwellers. Making Mumbai’s compensation policy for evicted slum residents significantly more generous would substantially reduce losses to the losers while mildly reducing aggregate surplus. This highlights an equity-efficiency trade-off inherent to slum redevelopment policy.

Public and Private Transit: Evidence from Lagos

with Dan Björkegren, Alice Duhaut and Geetika Nagpal
Draft coming soon

Many of the world’s fastest growing cities rely on private transit, most commonly informal minibuses. As these cities become wealthier they have been investing in centralized public transit lines. If private incumbents respond to government entry by changing frequencies or prices, these investments may lead to indirect effects on those who do not use the new system. This paper studies the effect of public provision of transit in Lagos, Africa’s largest city. We collect new panel data on the informal network to measure how it responds to the rollout of 14 new formal bus routes in the city’s Bus Reform Initiative. Bus departures fall in the informal network by around 26% following government entry, and prices fall on routes where the new option has relatively lower prices. To measure the impacts on consumer welfare, we develop a custom app to measure commuter valuations for price and wait time in an RCT. We combine these estimates with the reduced form results to measure the welfare impact of expanding the formal system that arises from the changes induced in the informal system.