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Labor and Social Protection

Why education matters for economic development

Harry A. Patrinos's picture
Young girl stands to read. Photo: © Steve Harris / World Bank

At the Global Conference on Equity and Excellence in Basic Education, in Shanghai, China, May 17-19, 2016, the World Bank will be discussing Shanghai’s eminence in ranking highly in international achievement tests. The conference will also cover how good policy can help improve education quality in other countries. See slideshow, press release, key findings . 

“Give a man a fish and he will eat for a day. Teach a man to fish and he will eat for a lifetime.”- Laozi (老子), ancient Chinese philosopher and writer, known as the reputed author of the Tao Te Ching. He is the founder of philosophical Taoism and is worshipped as a deity in Taoism and traditional Chinese religions.

There are more children in school today than ever before.  For example, in 1950 the average level of schooling in Africa was less than two years. It is more than five years today.  In East Asia and the Pacific, the schooling of the population went from two to seven years between 1950 and 2010. This is a more than a 200 percent increase! Globally, average years of schooling are now projected to rise to 10 years by 2050.  This is larger than a five-fold increase within a century and a half.

Immigrant labor: Can it help Malaysia’s economic development?

Rafael Munoz Moreno's picture

Malaysia has been able to reach remarkable achievements over the past decades, including extreme poverty eradication and promotion of inclusive growth. It aims to reach a high-income nation status by 2020, which goes beyond merely reaching a per capita GDP threshold. As the 11th Malaysia Plan points out, the goal is to achieve a growth path that is sustainable over time, reflects greater productivity, and is inclusive. High-income status can be achieved if we ensure that future generations have access to all the resources, such as education and productive opportunities, necessary to realize their ambitions and if Malaysia’s economy is globally competitive and resource-sustainable.

Over the years, immigrants have played a crucial role in the economic development of Malaysia, with around 2.1 million immigrants registered and over 1 million undocumented as of 2013. Education levels among the Malaysian population have increased remarkably over the last two decades, and immigrant workers have become one of the primary sources of labor for low-skilled occupations, most commonly in labor-intensive sectors such as construction, agriculture and manufacturing. Economic studies show that a 10% net increase in low-skilled foreign workers could raise Malaysia’s GDP by 1.1% and create employment and increase wages for most Malaysians.

'Making the case for trade': Winning voters’ trust by strengthening social safety nets

Christopher Colford's picture

Policy persuasion is most effective when it draws on the evidence base of all the social-science disciplines. Every strand of the social sciences – not just the mathematical precision of economics, but also the nuanced interpretations of history and the subtle trajectories of sociology – has a great deal to contribute as policymakers balance competing priorities.

That multidisciplinary approach – emphasized in such recent works as The History Manifesto, in which Harvard and Brown University historians call for policymakers’ greater reliance on the combined reasoning of all the social sciences – was thoroughly borne out in the recent Development Economics Series lecture by economist David Autor of MIT (who is a scholar at the National Bureau of Economic Research). Presenting a research paper on trade policy, and underscoring the importance of public opinion in shaping policymakers’ approach to it, Autor’s presentation used the logic of political science to highlight the electoral mood swings that help shape countries’ position on international trade.

Using the perspectives of political science – in the paper, “Importing Political Polarization? The Electoral Consequences of Rising Trade Exposure” (co-authored with colleagues from the University of Zurich; the University of California, San Diego; and Lund University) – was a valuable way to help remind Autor's economics-focused World Bank Group audience that policymaking does not occur in an academic vacuum. Even though the Bank’s economics-heavy analyses may try to distill policy options into quantifiable formulae, the policymakers whom the Bank advises get their political mandate from their countries’ volatile voters – who do not always follow homo economicus’ coldly rational approach to decision-making.

Amid the topsy-turvy 2016 electoral cycle in many countries – in which voters’ fears about job losses due to international trade have been inflamed amid an upsurge of populism and protectionism – you don’t have to be a public-opinion pollster to affirm Autor's assertion in his analysis of recent U.S. voting patterns: “We detect an ideological realignment that is centered in trade-exposed local labor markets and that commences prior to the divisive 2016 U.S. presidential election. Exploiting the exogenous component of rising trade with China and classifying legislator ideologies by their congressional voting record, we find strong evidence that congressional districts exposed to larger increases in import competition disproportionately removed moderate representatives from office in the 2000s.”

Translation: If you’re a pro-trade lawmaker in a district that has a high degree of imports from overseas, in a region that has endured what Autor calls “economic scarring,” then you’re likely to pay a heavy price at the ballot box – and, if you’re defeated, your successor just might be a strident protectionist. The Autor analysis shrewdly underscores the adjective “political” in the anodyne textbook phrase, “political economy.”

Urbanization, climate change and jobs in Africa

Anton Cartwright's picture
Concern about climate change is often deemed a luxury; the domain of those that do not have to worry about famine, surviving the pending winter, local conflict, or political instability. But in the next three decades, an anticipated 900 million people will be added to Africa’s cities: a tripling of the current urban population. The small affluent-class aside, the clarion call of Africa’s newly urban population is not around climate change or industrialization, but jobs and access to work.

Retreat from mandatory pension funds in Eastern and Central Europe

Agnieszka Chłoń-Domińczak's picture
Over the next few decades, the consequences of an ageing population will be particularly visible in Central and Eastern Europe. These developments were behind the multi-pillar pension systems reforms at the end of 1990s and at the beginning of the century. After the financial and fiscal crisis of 2008, these reforms were slowed down and partially or fully reversed. In our recent study of this retreat from mandatory pension funds in Central and Eastern European countries, we look at the causes and consequences of these changes.

Starting life off on the wrong foot

Markus Goldstein's picture
I was recently at the GW conference on the economics & political economy of Africa where I saw an interesting paper by Richard Akresh, Emilie Bagby, Damien de Walque, and Harounan Kazianga on Burkina Faso.    Akresh and co. make another compelling argument for focusing on early childhood (and indeed, in utero).   Kids whose household has a shock during this critical period are less smart – and this leads to them going to school less. 

Can North Africa leapfrog together in work and welfare?

Heba Elgazzar's picture
Dana Smilie

It was December 8, 2010, when I boarded a plane after a routine trip to Tunisia.  There was nothing out of the ordinary that would have provided a clue as to the dramatic upheaval to come.   The taxi drivers rarely spoke of politics, poverty was an untouchable topic of conversation, and YouTube was blocked.  However, over the course of that winter, uprisings erupted throughout Tunisia, Libya, Egypt and beyond that called for greater social justice.  Investment policies had privileged elites for too long. Social and labor policies had not been that effective at promoting inclusiveness.   Each country has since struggled to maintain political stability while addressing demands for improving work and welfare, with mixed results. 

Opportunity entrepreneurs are key to jobs and growth

Madhur Jha's picture
What makes some entrepreneurs grow their businesses and employ hundreds, or even thousands, of people? Knowing this is crucial for all governments keen to drive economic growth. For economic development, it is important to focus on opportunity entrepreneurs instead of subsistence entrepreneurs. They are likely to grow their business faster, employ more people, and introduce innovation that could help fill important gaps in the market, while boosting productivity in the economy.

Underlying determinants: the starting point on the path to youth employment

Matt Hobson's picture
On May 1st, the world marks International Worker’s Day. Sadly, hundreds of millions of young people have little to celebrate. Instead, they struggle to find work or secure a decent livelihood – and right now, their options don’t look to be getting much better. We have developed a conceptual pathway to employment that shows how all stakeholders can work together to achieve youth employment at scale.  At the same time, our framework recognizes that youth take their first steps on the pathway beset with what we may call ‘underlying determinants’ or characteristics that can shape choices or affect their opportunities.

Improving compliance with minimum wage standards

Uma Rani's picture
Minimum wage standards have the force of law. Yet, establishing a legally binding minimum wage does not in itself mean that these are applied in practice. In reality, compliance is always less than perfect in both advanced and developing countries. Understanding which factors determine compliance is important. Our analysis shows that compliance is affected by both the level at which minimum wages are set relative to average wages, as well as by institutional factors.