Assistant Professor Román David Zárate studies how people experience the economy in different places, harnessing the power of maps and population data
From its beginnings in the 1700s, economics has been concerned with worldwide phenomena. But today’s economists have state-of-the-art tools — satellite images of earth and computer models — that allow them to more precisely see how people’s resources and actions can be affected differently depending on their geographical location, even within the same city.
Román David Zárate is one of these researchers taking advantage of this new age of spatial analysis.
Zárate, who this fall joined the faculty of the UC San Diego School of Global Policy and Strategy (GPS) as an assistant professor, researches market integration (when two or more formerly separate markets open trade with each other) and resource misallocation (when resources, including labor, goods and services, are not distributed in the most efficient way). Almost by their very nature, these topics lend themselves well to spatial analysis.
Formalizing the way people work
In one thread of his research, Zárate has examined the role that improved transportation infrastructure can play in helping a city’s economy run more efficiently — meaning that resources, including workers, are used in the most productive way possible.
Zárate explained that in developing countries, there is a tendency for workers to have jobs in what economists call the informal sector, where employees work under the table and the government is not made aware of the business arrangement. The opposite situation, called the formal economy, allows for governments to collect necessary taxes, and it also supports employees by incorporating them into social security schemes.
Zárate has provided evidence that people in developing countries would be more likely to work in informal, under-the-table jobs, even if they were low-paid, as long as it meant they didn’t have to commute far to a formal job.
But through his analysis of Mexico City, Zárate found that when the government improved the city’s transit system, workers were more willing to take formal jobs because their commutes were substantially shortened. As a result, the economy became more efficient as workers filled in-demand jobs and the government was able to raise money, improving resource allocation.
This has significant implications for how transit systems are designed in developing countries with growing populations, an example of the type of policy challenge that GPS graduates could go on to address in their careers.
The typical way to determine transit routes, Zárate explained, is simply to look at where most people live and where they work, and then connect those places.
“What my research suggests is that when people are making those decisions about where to make a transportation investment, it is important to consider people living on the margins,” he said. “Otherwise, they’re more likely to work in the informal economy.”
The case of the shrinking lake
Another aspect of Zárate’s research is the study of economic shocks using spatial models, particularly trade models.
One of the most vivid examples of this study comes from Lake Chad, which has borders with four of the poorest nations on earth: Chad, Cameroon, Nigeria and Niger. Once among the largest freshwater lakes in the world and about the size of Massachusetts, the lake has shrunk by a staggering 95% between the 1960s and the 1990s due to rainfall shocks in other countries whose rivers feed it.
Because the countries surrounding the lake are so poor, they lack the infrastructure to measure population and monitor economic conditions reliably.
To fill in this gap, Zárate and colleagues first needed to measure how populations changed in areas around the lake.
For this, they consulted historical census data of the four countries from the mid-20th century and up until recent years, subdividing each country into many districts to allow for a more granular view of population changes.
By putting this data into a regression framework, the researchers could see that the population around Lake Chad indeed plummeted as the lake shrank. Even when the lake’s water content balanced out starting in the 1990s, the population never rebounded.
Using this precise population data, Zárate and the other researchers were then able to model how a variety of factors, including migration patterns, trade routes and other variables affected economic output and measures of welfare.
The results were stark. Overall, the welfare of people living within 450 kilometers of Lake Chad dropped by about 11%, while those parts of the country further away only experienced a 1.5% drop — strongly suggesting that the lake’s disappearance played a major role in the quality of life for those living nearest to it.
While the damage has already been done to the lake’s ecosystem and the people who depend on it, Zárate said he hopes that these findings will help policymakers address the inequities that people around Lake Chad are facing.
In the case of the research on Lake Chad’s disappearance, the implications go beyond central Africa. He and his co-authors note that nearly 40% of the world’s population lives near the shores of lakes, and these areas’ economic importance is comparable to that of areas near sea coasts.
While the damage has already been done, Zárate said he hopes that these findings will help policymakers address the inequities that people around Lake Chad are facing.
As climate change intensifies, more lakes worldwide will face similar challenges. By looking at the particularly dramatic example of Lake Chad, Zárate hopes that the research can also benefit these other lakeside areas.
There’s another forum where Zárate is hoping his research will have a concrete impact: the classroom.
Zárate, who worked as a research economist at the World Bank before coming to GPS, is excited to apply his research to his teaching at GPS.
“I’m looking forward to teaching class here,” he said. “That was one of the things that I missed when I was at the bank. I like to walk through campus and interact with the students.”
