| Summary: | In this dissertation I use experimental data from the field and from the laboratory to address questions in two topic areas: the effects of transfer programs on household choices and welfare; and the existence of information spillovers across markets. In Chapter 2, I study the effects of in-kind versus cash transfers on the welfare of poor households in rural Mexico. Using data from a program which randomly transferred either a food basket or cash, I estimate a demand system and use it to simulate welfare under both subsidies. Results suggest that transfers in-kind are valued by recipients at 78 percent of their face value, but are nevertheless as cost-efficient as cash. Moreover, I find that in-kind transfers have a regressive effect: welfare gains are larger among relatively richer households. In Chapter 3, I investigate the impact of cash and in-kind transfers on child labour supply. I present a simple model that delivers testable implications about the heterogeneous response of child labour across the income distribution of recipient households. To test the model predictions, I exploit data from a randomized control trial in rural Mexico. I document reductions in the number of working hours for children from low and middle income households. However, work participation decreases only for the latter. In Chapter 4, I study the informational channel of financial contagion in the laboratory. In the experiment, two markets with privately informed subjects open sequentially. Subjects in the second market observe the history of trades and prices in the first market. Although in both markets private information is imperfectly aggregated, subjects in the second market make correct inferences from the information coming from the first market. As theory predicts, when fundamentals are correlated, contagion occurs in the laboratory; in contrast, with independent fundamentals, there is no contagion effect.
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