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Abstract

This dissertation critically examines the impact of public policies in the fields of development economics and energy and environment economics. The first two chapters study the impact of two different nation-wide policies on child development in India. The third chapter demonstrates how an inefficient fuel allocation policy leads to power outages in India. Chapter 1 (co-authored with Karen Macours, Paris School of Economics) studies the impact of women's political empowerment in the form of reserved seats in local government on long-term child outcomes. We find that having a women legislator in early years of a child's life improves the health and nutritional environment in-utero and during the first few years of life, and this leads to long-term impacts on children's learning. In chapter 2, I study the effect of household employment shocks on the human capital of young children. Specifically, I exploit the phased roll-out of the National Rural Employment Guarantee Act of India to investigate the effect of caregiver employment on child height for age z-score. Using child level fixed effects, I show the importance of investment of caregivers' time on child development $-$ exposure to positive employment shocks because of NREGA causes a 0.25 standard deviation decline in height for age z-score over a period of 12 years. The adverse effect on children less than five years old at the time of exposure to NREGA is twice that of older children. Time allocation of children shows that when caregivers become employed, children share the load of household duties which could be driving the long-term adverse health outcome. Chapter 3 demonstrates how regulatory uncertainty can cause large welfare losses by distorting firms’ incentives and giving rise to inefficient production. Specifically, I analyze the production decisions of power plants in India that rely on state-regulated supply of coal for fuel. A court-ordered future reallocation of mining contracts in 2014 led to an unexpected increase in uncertainty about future coal supply for a subset of plants while leaving other plants with long-term supply contracts unaffected. I use this quasi-experimental variation in a difference-in-difference framework and a unique dataset linking coal mines and power plants to estimate the effect of future regulatory uncertainty on power production. I show that affected power plants under-report their generation capacity available for power generation and begin stockpiling fuel for future periods. The behavior of these power plants is driven by precautionary saving motive, and I provide empirical evidence that power plants began stockpiling coal by reducing consumption, even as the supply of coal remains unchanged. In the short run, this precautionary saving driven stockpiling led to a 7\% reduction in electricity generation. The negative impact on power production is persistent and the effects last for over 3 years in the long run. Using data on plants’ marginal cost of production, I compute the short-run welfare cost of this regulatory uncertainty to be between 0.3 and 1.5 billion dollars.

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