Insurance and Propagation in Village Networks
We study the dual role of networks in providing insurance and in propagating idiosyncratic shocks by using variation in the timing of severe shocks on health spending experienced by households in Thai villages. We find no impacts on food consumption. Smoothing is largely achieved through local gift and loan networks. However, insurance is partial for some households so they adjust their production decisions-drawing on their working capital, cutting input spending, and reducing labor hiring, hence propagating the shocks to other households. Wefind that upstream businesses close to the underinsured households in the supply chain network experience reduced local sales and increased inventories. Likewise, workers closer to the underinsured households in the labor network experience declined probability of working locally and reduced earnings. We find evidence of ex-post adjustments of these upstream households through shifting resources towards activities with lower exposure to local shocks. Our results suggest that social (village-level) gains of expanding health insurance might be higher than private (household-level) gains.
The Impact of Regional Isolationism: Disentangling Real and Financial Factors
Recently, there is a pressure for isolation policies both within the United States and among the EU members. The pressure arises due not only to the difference between regions in the U.S. and/or countries in the EU, but also to the difference across their population which affect the gains and losses from economic integration, both real as from trade in a common market and financial as in a monetary financial union. To get a better understanding of this pressure, one would need a model of trade and capital flows that takes into account the difference between individuals in a region and differences across regions. There is also a need for detail data at the individual and aggregated level, which often are not available. In this paper, we use unique long-panel data of households in Thailand, and from these data, we construct the household financial accounts, the village economic accounts, and the village balance of payments account. We also provide stylized facts on factor prices, factor intensities, financial obstacles, and village openness document differences across regions. Finally at the national level it is clear there is co-mingled variation in trade via devaluations and in finance via policies toward off shore bank and within-country financial infrastructure.
We develop a heterogeneous-agent/occupational-choices/trade model with financial frictions carefully built up and calibrated around micro and regional facts, that is, at both the individual level and the aggregate level. Then, we conduct two counterfactual policy experiments. In the first counterfactual experiment, we distinguish the effects of trade from the effects of capital flows. More specifically, we determine what would happen if we allow the prices of goods to change as in baseline scenario while keep borrowing limits and interest rates constant, and vice versa. In the second counterfactual experiment, we determine the effect of isolation policies that impede trade and/or capital flows across regions. We find through these counterfactual experiments that both real and financial factors are at play, that there are differences across regions in impact even when (policy) movements in variables such as interest rates and relative prices, which are exogenous to the regions, are common; impacts can be large, and vary with policy; and impacts are significant heterogeneous with both gains and losses and non-monotone movement across wealth classes and occupations, even allowing for occupation shifts which apriori might have mitigated impact.
Parenthood Penalty and Gender Wage Gap: Recent Evidence from Thailand
This study first examines the evolution of gender wage gap in Thailand, using cross-sectional data from the Labor Force Survey (LFS) for 1985–2017. We find that education, occupation, and industry significantly contribute to gender wage gap convergence in Thailand. Furthermore, for females, the wage gap between mothers and non-mothers has increased over time, while for males, the changes are relatively small. Thereafter, we examine the gender wage gap associated with marriage and parental status, using panel data from the Socio-Economic Survey (SES) for 2005– 2012, and find wage penalty for both motherhood and fatherhood in Thailand.
The Journey to Less-Cash Society: Thailand’s Payment System at a Crossroads
Digital technology is changing the way we transact and pay each other, but cash usage remains dominant in many countries. In Thailand, it remains a question whether and to what extent electronic payments (e-payment) can replace cash. What is the role of a central bank amid challenges and opportunities at this crossroads? The paper explores global trends in cash and e-payment and outlines Thailand’s existing retail payment landscape. Both physical and IT/ICT infrastructure are assessed at micro-level with regard to Thailand’s readiness to move away from cash. However, given coexistence of cash and e-payment at present, we explore ways in which efficiency of cash management process can be improved. Data on cash distribution by geographical area are utilized to illustrate usage of Thai consumers and identify costs and inefficiency associated with cash management. On the other hand, adoption of e-payment can play a critical role in moving toward a less-cash society, if not a cashless one. The paper highlights the latest data on e-payment behavior in Thailand, especially PromptPay transactions as well as mobile/internet transactions after the transfer fee reduction in March 2018.
Household Debt and Delinquency over the Life Cycle
This paper uses loan-level data from Thailand’s National Credit Bureau to study household debt over the life cycle of borrowers. The wide coverage and the granularity of the data allow us to decompose the aggregate, commonly-used debt per capita and delinquency rate into components that unveil the extensive and intensive margins of household indebtedness. This decomposition allows us to analyze debt holding, debt portfolio, and delinquency for each age and cohort. We find the striking inverted-U life cycle patterns of indebtedness as predicted by economic theories. However, peaks are reached at different ages for different loan products and different lenders. We also find that debt has expanded over time for all age groups. In particular, the younger cohorts seem to originate debt earlier in their lives than the older generations. Meanwhile, older borrowers remain indebted well past their retirement age. Finally, we find a downward pattern of delinquency over the life cycle. Our findings have important policy implications on financial access and distress of households as well as economic development and financial stability of the economy.
Stylized Facts on Thailand’s Residential Electricity Consumption: Evidence from the Provincial Electricity Authority
This paper documents a few stylized facts of the residential electricity consumption in Thailand. Using an administrative billing records of 16 million residential meters, we find the following stylized facts and potential uses of the data. First, electricity consumption pattern can be used as proxies for household’s wealth and wealth inequality since it reflects ownership of durable electrical appliances. Second, bill payment choices suggest that a majority of the households still face non-trivial transaction costs in paying their utility bills. Lastly, the electricity consumption pattern suggests that wealthier households are more sensitive to the temperature change but are less sensitive to the change in price.
Labour Supply of Married Women in Thailand: 1985-2016
This study investigates the labour supply behaviour of married Thai women with reference to their own and their spouse’s wages. By utilising data of the national Labour Force Survey in Thailand from 1985 to 2016, the wage imputation technique and the instrumental variables approach are applied to correct sample selection and to alleviate endogeneity, common issues that cause bias in estimating female labour supply. By controlling for spousal education and number of children, the main findings indicate an inverse relationship between married women’s labour supply and wages, contrary to the results found in most developed countries. The estimated own wage elasticity ranges from -1.70 to -2.40 and cross elasticity ranges from -0.16 to -0.17, indicating that the impact of own wage on labour supplied is much larger than spouse’s wage. The results from disaggregation classified according to different socioeconomic backgrounds also show the negative elasticities between own and spouses’ wage across all subgroups, except for those with university degrees and higher income.
Evaluating Thailand’s Free Basic Electricity Program
This study evaluates the performance of Thailand’s Free Basic Electricity (FBE) program along three dimensions: targeting effectiveness, benefit adequacy, and subsidy burden distribution. While the FBE benefits reaches the targeted population (low-income families) quite well, the benefit leakage to the non-targeted population could result in a significant increase in the overall subsidy cost. Furthermore, the current 50-unit free quota given by the FBE program is insufficient for the basic need of many low-income families. Lastly, the FBE subsidy burden falls exclusively on the industrial/commercial customers, but the cost increase has been rather small. Therefore, Thailand’s FBE program can be markedly improved by introducing a more effective targeting approach to reduce leakage, which will allow the government to raise the free electricity quota while maintaining the same overall subsidy cost.
Targeting Credit through Community Members
Delegating the allocation of public resources to community members is an increasingly popular form of delivering development programs and are associated with a tradeoff between improved information about potential beneficiaries and favoritism towards local elites. Unlike targeting cash transfers to the poor, the optimal targeting of credit is a more complex problem involving issues of productivity, repayment, and market responses: This paper analyzes this problem using a large-scale lending program, the Thai Million Baht Credit Fund, which decentralizes the allocation of loans to an elected group of community members, and provides three main results. First, exploiting a long and detailed panel, I recover pre-program structural estimates of household total factor productivity and find that resources from the program were not allocated to high-productivity, poor households, which is inconsistent with poverty and productive efficiency as targeting criteria. Second, using socioeconomic networks data, I show that actual targeting is strongly driven by connections to village elites and is related to lower program profitability, which suggests favoritism as a reason for mistargeting. Finally, I exploit quasi-experimental variation in the rollout of the program and uncover evidence that, in general equilibrium, informal credit markets compensate for targeting distortions by redirecting credit towards unconnected households, albeit at higher interest rates than those provided by the program. The results highlight the limitations of community-driven approaches to program delivery and the role of markets in attenuating potential targeting errors.
The Impact of Cash Transfers on Child Outcomes in Rural Thailand: Evidence from a Social Pension Reform
Unlike standard literature on the social pension policy and children’s outcomes, this paper provides evidence from Thailand that an introduction of small (equivalent to 2-3 days of minimum wage) but universally covered social pension can affect educational choice and work status of children living with eligible pensioners. Such a result seems to be driven by the characteristics of newly eligible pensioners who are not as poor as the pensioners under the targeted program before the reform. Our findings also show differential effects of the social pension by genders of the children and pensioners. In particular, teenage boys living with male pensioners are more likely to enroll in the secondary school compared to children in the control group living with almost eligible seniors, while the results for teenage girls are rather inconclusive.