Michael Walker


Working papers Publications Work in progress

Working Papers

General Equilibrium Effects of Cash Transfers: Experimental Evidence from Kenya (with Dennis Egger, Johannes Haushofer, Edward Miguel and Paul Niehaus).
NBER Working Paper #26600, December 2019. Ungated copy
R&R at Econometrica

Abstract: How large economic stimuli generate individual and aggregate responses is a central question in economics, but has not been studied experimentally. We provided one-time cash transfers of about USD 1000 to over 10,500 poor households across 653 random- ized villages in rural Kenya. The implied fiscal shock was over 15 percent of local GDP. We find large impacts on consumption and assets for recipients. Importantly, we docu- ment large positive spillovers on non-recipient households and firms, and minimal price inflation. We estimate a local fiscal multiplier of 2.7. We interpret welfare implications through the lens of a simple household optimization framework.
AEA Study Registry
Selected Coverage: Washington Post , Economist, NPR, Vox , Behavioral Scientist, Econimate (video summary)

Informal Taxation and Cash Transfers: Experimental Evidence from Kenya
(Under revision, please e-mail for most recent version.)

Abstract: Informal taxation, whereby households contribute to public goods outside the formal tax system, plays an important role in local public good financing in many low-income countries, yet little is known about its magnitude or incidence. Informal taxation is implemented by local leaders and trades off information advantages with potential elite capture and reduced enforcement. In contrast to formal tax systems, it is unclear how household informal tax payments respond to changes in income. This paper uses panel data on households and local leaders, combined with exogenous variation in household income from a large-scale randomized controlled trial of a one-time unconditional cash transfer to poor households, to study how informal taxation and public goods provision responds to household income shocks. The (temporary) cash transfers are not captured by local leaders: I find no effect on household informal tax payments, and recipient household payments are in line with their pre-treatment income. Informal taxes do respond to non-experimental changes in permanent income in panel data. Recipient households pay more formal self-employment taxes, though the magnitude of the increase is small relative to the transfer amount: less than 1 percent of total transfer income is captured by formal or informal taxes. I find no effects of the cash transfers on public goods provision. This suggests local leaders emphasize equity considerations by exempting these cash transfers to poor households from taxation, but miss out on opportunity to meaningfully increase public goods investment.
AEA Study Registry
Coverage: World Bank Development Impact Blog

The Twenty Year Economic Impacts of Deworming (with Joan Hamory Hicks, Edward Miguel, Michael Kremer , and Sarah Baird.*)

*=author order randomized
NBER Working Paper #27611, July 2020.

Abstract: This study exploits a randomized school health intervention that provided deworming treatment to Kenyan children and utilizes longitudinal data to estimate impacts on economic outcomes up to 20 years later. The effective respondent tracking rate was 84%. Individuals who received 2 to 3 additional years of childhood deworming experience an increase of 14% in consumption expenditure, 13% in hourly earnings, 9% in non-agricultural work hours, and are 9% more likely to live in urban areas. Most e ects are concentrated among males and older individuals. Given deworming's low cost, a conservative annualized social internal rate of return estimate is 37%.
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Repo runs: evidence from the tri-party repo market (with Antoine Martin and Adam Copeland), 2014. Journal of Finance 69(6): pp.2343-2380.

Abstract: The repo market has been viewed as a potential source of financial instability since the 2007 to 2009 financial crisis, based in part on findings that margins increased sharply in a segment of this market. This paper provides evidence suggesting that there was no system-wide run on repo. Using confidential data on tri-party repo, a major segment of this market, we show that, the level of margins and the amount of funding were surprisingly stable for most borrowers during the crisis. However, we also document a sharp decline in the tri-party repo funding of Lehman in September 2008.

Selected Work in Progress

How Cash Transfers Shape Citizen-State Interactions (with Kate Orkin)

AEA Study Registry