Education and infrastructure are two important development strategies in low-income countries. They foster economic growth by improving labor productivity and facilitating market integration. Evaluating them poses a considerable challenge because schooling choices and infrastructure constructions are influenced by unobserved characteristics that bias OLS estimates. This dissertation uses appropriate natural experiment and instrumental variable strategies to study the effect of skilled emigration prospects on human capital investment, identify intersibling spillovers in education, and evaluate the impact of proximity to road on farm profits.
Chapter 1 focuses on a natural experiment that involves the recruitment of Nepali men of Gurkha ethnicity into the British Army to identify whether improved prospects for skilled emigration may stimulate human capital investment at home. While the recruitment originated during the British colonial rule in South Asia, a change in the education requirement for Nepali recruits in 1993 resulted in an exogenous, differential increase in their skilled versus unskilled emigration prospects. I use individual-level information on ethnicity, gender, and age to estimate positive effects on school attainment of Gurkha men. I extend this analysis in chapter 2 to study its impact on education of Gurkha women and estimate the net trade-offs between siblings’ human capital investments. While I find that eligible men responded to the rule change by raising their schooling by over one year, a 30 % increase over their average, part of the improvements in their education came at the expense of their female counterparts living in the same household, whose education decreased by 0.11 years.
In chapter 3, I estimate the benefits of having easier access to road on farm profits. I overcome endogenous selection in road placement by constructing an instrument based on a geographic feature. Because mountains in Nepal stretch in a north-south direction, the cheaper cost of constructing a north-south road relative to an east-west road to connect the district headquarters led to greater access for villages in north-south hinterlands relative to those in east-west hinterlands. I find that farmlands appreciate in value by 0.25 percent when the travel time to road decreases by 1 percent.PHDEconomicsUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/96142/1/slesh_1.pd
