This thesis consists of three distinct essays on development economics. In chapter 2, I
examine the effect of variation in the intensity of trade policy changes across industries
over time on informal sector jobs in India, taking into account heterogeneous nature of
the labour market regulations, using difference-in-difference identification approach and
repeated cross sectional data for the period 1988 and 1994. The results suggest that the
probability of informal employment increases in more exposed industries to trade
liberalisation relative to less exposed industries, but industries experienced reduction in
informality if more exposed industries are located in states with flexible labour
regulations.
Chapter 3 of the thesis examines the relationship between parental income, child labour
and human capital accumulation in India, using the unanticipated trade liberalisation that
created exogenous variation in industry specific tariffs over time as instrument. The
variation in industry tariff leads to differences in earnings of parents across industries,
and this provides a good setting for the identification of the causal effect of changes in
parents’ income on child’s labour and schooling. Using instrumental variable (IV)
estimation approach, I find positive income effect for children’s schooling but a negative
effect on work, and the effect is larger for girls compared to boys.
Chapter 4 examinesthe effect of income shocks on household welfare, taking into account
various coping strategies adopted by households. Using the General Household Panel
survey data in Nigeria for the period 2010-2012 and fixed effects estimation approach,
idiosyncratic shocks are found to have little impact on consumption and the various riskcoping
strategies play only limited roles in providing the much needed insurance to
households in the face of shocks. Also, the effect of shocks vary according to households
characteristics, such as whether the household-head is male or female, and being urban
or rural dweller are crucial.