Nick Bloom, Labor Topics 247, 2014 LABOR TOPICS Nick Bloom Learning

Nick Bloom, Labor Topics 247, 2014 Technologies – like pineapples - are not used by everyone. Question is why? Suri (2011, Econometrica)

Nick Bloom, Labor Topics 247, 2014 Conley and Udry (2008) is based around a learning story, with some key points Learning appears to happen slowly over time – pineapple does not immediately spread to every farmer in every village Information spreads best through friends and close contacts, suggesting people do not trust all information equally Spread also depends on success of trusted contacts, suggesting process of discovery – not everything known at t=0

Nick Bloom, Labor Topics 247, 2014 The original classic – Griliches (1957) – also focused on learning and discovery

Nick Bloom, Labor Topics 247, 2014 Hybrid seen corn is a way of developing appropriate corn for different growing conditions – breeding is done for each area A single impactful technology that spread slowly across the US So Griliches splits adoption delays into – The “acceptance” problem (the lag in uptake by farmers) which is learning within markets – The “availability” problem (breeding appropriate seed corn by market) which is discovery across markets, driven by profits The original classic – Griliches (1957) shows gradual learning about hybrid seed corn

Nick Bloom, Labor Topics 247, 2014 Duflo, Kremer and Robinson (2011, AER) suggest other non-learning stories Experiment on fertilizer use in Kenya where returns to fertilizer is about 50% to 100% per year – so a highly profitable investment Despite this farmers do not take up fertilizer, and this is despite being a well known effective technology (i.e. not learning issues) They have a model around hyperbolic discounting, and show in experiments with pre-commitment get large (profitable) uptake – Discount at harvest (rather than planting) time increases adoption by 17%, equivalent to a 50% subsidy Interestingly, these are not persistent – it appears to be a commitment issue rather than a learning story

Nick Bloom, Labor Topics 247, 2014 Suri (2011, Econometrica) suggests a heterogeneity interpretation instead Looks at hybrid maize adoption in Kenya over Stable rates of adoption and 30% of households switch (upside of using panel data, which Besley and Case 1993 also push) Find heterogeneity in costs and returns explains apparent adoption paradox, in particular three groups of households: – Small group very high returns, but blocked by distance to seed/fertilizer distributors – Larger group of adopters with high returns – Larger group of switchers that have about zero returns