Lack of access to finance is often cited as a key reason for why poor people remain poor. This paper uses data on the Indian rural branch expansion program to provide empirical evidence on this issue. Between 1977 and 1990, the Indian central bank mandated that a commercial bank can open a branch in a location with one or more bank branches only if it opens four locations with no bank branches. We show that, between 1977 and 1990, this rule caused banks to open relatively more rural branches in Indian states with lower initial financial development. The reverse was true outside this period. We exploit this fact to identify the impact of opening a rural bank on poverty and output. Our estimates suggest that the Indian rural branch expansion program significantly lowered rural poverty, and increased non-agricultural output.

Exploiting a randomized natural experiment in India, we show that female leadership influences adolescent girls’ career aspirations and educational attainment. A 1993 law reserved leadership positions for women in randomly selected village councils. Using 8,453 surveys of adolescents aged 11–15 and their parents in 495 villages, we find that, compared to villages that were never reserved, the gender gap in aspirations closed by 25% in parents and 32% in adolescents in villages assigned to a female leader for two election cycles. The gender gap in adolescent educational attainment is erased and girls spent less time on household chores. We find no evidence of changes in young women’s labor market opportunities, suggesting that the impact of women leaders primarily reflects a role model effect.

A basic premise of representative democracy is that all those subject to policy should have a voice in its making. However, policies enacted by electorally accountable governments often fail to reflect the interests of disadvantaged minorities. This paper exploits the institutional features of political reservation, as practiced in Indian states, to examine the role of mandated political representation in providing disadvantaged groups influence over policy-making. I find that political reservation has increased transfers to groups which benefit from the mandate. This finding also suggests that complete policy commitment may be absent in democracies, as is found in this case. (JEL D72, D78, H11, H50)

This paper studies the productivity and distributional effects of large irrigation dams in India. Our instrumental variable estimates exploit the fact that river gradient affects a district's suitability for dams. In districts located downstream from a dam, agricultural production increases, and vulnerability to rainfall shocks declines. In contrast, agricultural production shows an insignificant increase in the district where the dam is located but its volatility increases. Rural poverty declines in downstream districts but increases in the district where the dam is built, suggesting that neither markets nor state institutions have alleviated the adverse distributional impacts of dam construction. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Recent years have seen a remarkable expansion in economists' ability to measure corruption. This, in turn, has led to a new generation of well-identified, microeconomic studies. We review the evidence on corruption in developing countries in light of these recent advances, focusing on three questions: how much corruption is there, what are the efficiency consequences of corruption, and what determines the level of corruption. We find robust evidence that corruption responds to standard economic incentive theory, but also that effects of anti-corruption policies often attenuate as officials find alternate strategies to pursue rents.