Three essays on agriculture, environment and human capital formation in India

This dissertation present three studies related to environmental factors that may help explain early life mortality outcomes, household consumption decisions during childhood that could drive human capital development in later life, and potential market failures that affect farmers' returns in rural agricultural markets. The setting for all three studies is India where indicators of health and human development remain low, particularly in rural areas where majority of the households rely on agriculture as a primary source of livelihood. In chapter two, I analyze the impact of exposure to air pollution on risk of early childhood mortality. I exploit variation in the incidence of agricultural fires used by farmers combined with changes in wind direction to estimate the causal impact of air pollution on infant mortality at a countrywide scale. I find that \emph{in-utero} pollution exposure increases infant mortality risk by more than six percent, with the mortality burden being higher among rural households and the urban poor. In chapter three, I examine whether informal contracts provide incentives for improving product quality in agricultural markets. Using a novel field experiment, we show that farmers receive only \$0.80 for a potential \$1 payoff for improved grain quality. However, we also find that social connections between a farmer and a trader improve the farmer’s payoff for quality suggesting that informal, long-term relational contracts can provide incentives for investing in product quality. Finally, in chapter four, I examine the unintended consequences of regulating addictive consumption on intergenerational human capital transmission using evidence from alcohol prohibition laws in India. I use the variation in “partial” alcohol bans that prohibited sale and consumption of cheaper varieties of alcohol across states in India. I show that households exposed to these partial alcohol bans shift consumption expenditure towards costlier alcohol and reduce private investment on health and education of children. In the long term, this results in an average reduction in the years of schooling among children who were exposed to these bans of more than four percent compared to the sample mean