Research

This paper studies the impact of education reforms in Estonia in the 1990s on adult skills using the OECD PIAAC surveys. Estonia implemented extensive education reforms in the early 1990s throughout Estonian-speaking schools while Russian-speaking schools were exposed to less comprehensive reforms, which were implemented later. A large minority of Estonia’s population at the time was enrolled in Russian-speaking schools providing a unique opportunity to measure the impact of education reforms on literacy, numeracy and problem-solving skills among adults by comparing improvements in PIAAC performance among Estonian and Russian speakers. Difference-in-difference estimation suggests that the reforms led to an adult skill dividend of around 15 to 30 percent of a standard deviation. This translates to a wage (productivity) premium of around 5 to 12 percent.

Can trade frictions limit access to improved health technologies? Rwanda encouraged and licensed domestic production of high-quality masks by a few selected textile manufacturers at the start of the COVID-19 pandemic. We exploit spatial variation in exposure to mask manufacturing through pre-licensing medical and textile trade networks within an event-study design using receipt-level transaction data. Local markets less exposed to mask manufacturing had higher mask prices, purchased fewer masks, and experienced faster growth in COVID-19 infections proxied by demand for anti-fever medicine.The dynamics of our results suggest that mask quality, rather than quantity, explains reduced infections caused by manufactured masks.

Digital technology facilitates trade but also increases the visibility of firms’ activity to the government. This paper examines the trade-off between technology adoption and regulatory exposure in the context of electronic billing machines (EBM) and business taxation in Rwanda. In December 2020, the government mandated that large firms’ tax deductions for purchases be validated by corresponding EBM receipts. Using a shift-share design, we find that receipt demand from large clients predicts EBM adoption and growth of small suppliers. We combine a model of invoicing in supply chains and a nationwide survey of firms to shed light on the underlying mechanisms.

Following the initial COVID-19 shock, developing countries have begun to transition to a COVID-19 economic recovery characterized by eased lockdowns and fiscal stimulus. We leverage high frequency administrative tax records from Rwanda on firm sales and employment to characterize the impacts of the COVID-19 shock and recovery. We show that the aggregate shock peaked in April 2020, with aggregate turnover and employment recovering to pre-COVID-19 levels by September. The aggregate recovery masks meaningful heterogeneity: while the initial shock impacted sectors in which in-person work was most necessary, the sectors in which face-to-face interactions with consumers are most necessary continue to experience a protracted recovery.