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April 2014

Are certain sectors more favorable to women?

Asif Islam's picture

There is mounting consensus that gender equality generates both substantial equity and efficiency gains. However, there is still much to uncover about both the current state of gender equality in developing economies and the accompanying measures that should receive attention. Should the focus be on simple labor participation, or wages? Do any of these measures capture female empowerment? Data availability plays a substantial role in these decisions. For instance, given the dearth of gender wage data in developing economies, a lot of attention may shift to labor force participation as a convenient measure.  A primary concern in the feminist literature regarding participation measures is that even though more females may join the labor market there may be little improvement in their livelihoods. There is some evidence that women tend to be employed in the informal sectors which tend to have low wages and are more economically vulnerable. Thus a more informative measure could be one that attempts to capture female economic empowerment. Using this measure, the interesting question would then be for example, in what sectors of the economy are women typically more empowered?

Changing Mindsets, Empowering People

LTD Editors's picture

The following post is a part of a series that discusses 'mind and culture,' the theme of the World Bank’s upcoming World Development Report 2015.

When it comes to development, one size doesn’t fit all. It is about mindsets that can be transformed to see and do things differently. Taking a cue from this, The Hunger Project believes in empowering people to end their own hunger versus providing them with service delivery.  The Let’s Talk team caught up with John Coonrod, Executive Vice President, The Hunger Project, to know more about building self-reliant communities.

Friday roundup: Malaria, Piketty and Ravallion, Oxfam Challenges IFIs on Inequality, and Global Flows in the Digital Age

LTD Editors's picture

'Our goal: Defeat malaria forever' is the title of a Path blog to commemorate World Malaria Day. Written by Dr. Carlos C. (Kent) Campbell and Bindiya Patel to commemorate World Malaria Day, it stresses that malaria control alone won't be enough to stop the disease.

Meanwhile, the economics world continues to be rocked by Piketty. His powerpoint on Capital in the 21st Century, presented recently at an IMF event where Martin Ravallion played the role of discussant, can be downloaded here. Ravallion provided his own take on historic inequality trends and explained why he thinks there is still hope that extreme poverty in the developing world will continue to fall, thanks in no small part to growth and other factors.

Growth, Inequality, and Social Welfare: Cross-Country Evidence

LTD Editors's picture

Social welfare functions that assign weights to individuals based on their income levels can be used to document the relative importance of growth and inequality changes for changes in social welfare. This method is applied in a new working paper by David Dollar, Tatjana Kleineberg, and Aart Kraay. They find that, in a large panel of industrial and developing countries over the past 40 years, most of the cross-country and over-time variation in changes in social welfare is due to changes in average incomes. In contrast, the changes in inequality observed during this period are on average much smaller than changes in average incomes, are uncorrelated with changes in average incomes, and have contributed relatively little to changes in social welfare.

Teacher Opinions and the What, Who and How of Teacher Incentive Programs

Marlaine E. Lockheed's picture

In recent years, much has been written about the benefits of teacher incentive schemes for improving education in both developed and developing countries, but little is known about teachers’ opinions of incentives. Teachers’ opinions could vary as widely as the types of incentive schemes, since the schemes themselves can be as different as apples and oranges: differing in terms of what behavior is rewarded, whether an individual teacher or group of teachers is rewarded, and whether or not the incentive involves competition. Theoretically, teacher incentives motivate teacher behaviors that improve student learning and reward teachers who demonstrate desired behaviors or whose students show improved learning. But the empirical literature – especially from developing countries—is far from conclusive regarding these effects. Moreover, some research suggests that extrinsic rewards, such as salary bonuses, actually reduce motivation rather than stimulate it.

New Book: Right to Work? Assessing India's Employment Guarantee Scheme in Bihar

LTD Editors's picture

A new book by Puja Dutta, Rinku Murgai, Martin Ravallion, and Dominique van de Walle looks at how successful India’s 2005 National Rural Employment Guarantee Act has been in creating 100 days of wage employment per year to all rural households whose adult members volunteer to do unskilled manual work in public works projects at a stipulated minimum wage. The bulk of the study focuses on the scheme’s performance in one of India’s poorest states, Bihar. There the scheme seems to be falling well short of its potential impact on poverty. Workers are not getting all the work they want and they are not getting the full wages due. Many report that they had to give up some other income-earning activity when they took up work. The unmet demand for work is the single most important policy-relevant factor in accounting for the gap between actual performance and the scheme’s potential impact on poverty. The book suggests that supply-side constraints must be addressed in addition to raising public awareness, and identifies a number of specific supply-side constraints to work, including poor implementation capacity, weak financial management and monitoring systems.

Financial Education during Schooling Years Improves Financial Behavior Later

LTD Editors's picture

The proliferation of new financial products and services continues to outpace the capacity of individuals and families to make informed financial choices. Financial education geared toward adults has shown low uptake, so the focus has shifted to introducing financial literacy during the schooling years. This research looks at a comprehensive financial education program spanning six states, 868 schools, and approximately 20,000 high school students in Brazil through a randomized control trial. The program increased student financial knowledge by a quarter of a standard deviation and led to a 1.4 percentage point increase in saving for purchases, better likelihood of financial planning, and greater participation in household financial decisions. “Trickle-up” impacts showed improvements in parental financial knowledge, savings, and spending behavior. The evidence suggests the program affected students’ preferences and attitudes about financial decisions well beyond the schooling years. Read the entire paper here.

High energy Aghion on Shumpeterian growth

Merrell Tuck-Primdahl's picture

Philippe Aghion, Harvard economics professor and director of Industrial Organization at the Centre for Economic and Policy Research (CEPR) delivered a lecture at the Bank on April 17 on 'What do we Learn from Shumpeterian Growth Theory?'

It was interesting to hear from the co-founder of the Shumpeterian paradigm about the relationship between economic growth, innovation, creative destruction, and competition. Aghion’s approach is to examine how various factors interact with local entrepreneurs’ incentives to either innovate or to imitate frontier technologies.

Friday Roundup: DeLong on Piketty, Gentzkow wins Bates Medal, Mobile Money, and Remittances in Africa

LTD Editors's picture

Equitablog, run by the Washington Center for Equitable Growth, has launched a series of 'Notes and Finger Exercises on Thomas Piketty’s “Capital in the Twenty-First Century.' Brad DeLong's post, 'There Are Four r’s', details some alleged oversights in Piketty's book. In particular, DeLong focuses on how the real interest rate behaves at different levels of economic activity. He highlights Larry Summers' concern about secular stagnation and the risk that rich folks might retreat from investing in industry. And DeLong pulls out some sexy math.

Matthew Gentzkow has won the John Bates Clark Medal, an honor conferred by the American Economic Association for his contributions to "our understanding of the economic forces driving the creation of media products, the changing nature and role of media in the digital environment, and the effect of media on education and civic engagement..."

Poverty reduction, growth, and movements in income distribution

Jos Verbeek's picture

Last week the President of the World Bank Group launched at the Spring Meetings the report "Prosperity for All." One of the interesting areas the note reported on was the interrelationship between growth, movements in the income distribution and poverty reduction.

There are various ways of showing the impact of growth on people’s income and its interrelationship with a country’s income distribution.  In comparing distributions over time, one of the more useful graphs is a Pen’s Parade (figure 1a), named after another Dutch economist as so many inequality or poverty measures are (other examples are the Theil index and Thorbecke for the Foster-Greer-Thorbecke Poverty Measure).

Why don't poor countries do R&D?

William Maloney's picture

Poor countries invest far less in research and development (R&D) as a share of their GDP than rich countries. Even middle income countries often invest well under 0.5%, compared to 3% and above in advanced countries.  

This fact poses a profound development mystery, and at the surface, suggests huge missed opportunities. Estimates of the social rates of return to R&D - often above 40% - in advanced countries are so high, as to justify levels of investment in developing countries that are multiples greater than those actually found. The case appears to be particularly strong for poor countries, where R&D is essential to the "absorptive'' or "national learning'' capacity that is needed to exploit technological advance originating from rich countries. 

Dynamic Effects of Microcredit in Bangladesh

LTD Editors's picture

With the phenomenal growth of microfinance institutions representing 30 million members with over $2 billion of annual disbursement over the past two decades, it is important to understand the dynamics of microcredit expansion and its induced impact on household welfare. A new World Bank working paper by Shahidur R. Khandker and Hussain A. Samad uses long panel survey data spanning over 20 years to examine the dynamics of microcredit programs in Bangladesh.

WB President has conversation with Sachs and Basu moderated by Lowrey of the NYT

LTD Editors's picture

 Steven Shapiro / World BankPresident Jim Yong Kim, Prof Jeff Sachs, Chief Economist Kaushik Basu and Annie Lowrey of the New York Times participated in a panel last Friday titled 'Sharing Prosperity, Delivering Results.'

The four discussed the challenges of achieving the World Bank Group's goals of ending extreme poverty and boosting shared prosperity, and in so doing, all stressed the need to take on the goals with an activist's zeal.

Friday round up: Spring Meetings at the WB and IMF

LTD Editors's picture

From calling for a Data Revolution to analyzing the power of migration and development, to sharing prosperity and the moral imperative of ending poverty and discrimination, there are a dizzying array of events, meetings and ideas buzzing at this week's Spring Meetings of the WB and IMF.

On Data, you can watch the webcast of an event at the Bank where Jim Yong Kim, the Chief Economist of the AFDB and Haishan Fu of the Data Group in the Development Economics Vice Presidency spoke of their vision for better statistics harnessed for the greater good. Also, David Roodman has a compelling post on what it will take to overhaul methods of data collection and donor as well as country coordination.

Of Oxfam, inequality, public services and twinning

Dean Mitchell Jolliffe's picture

Last week, Oxfam released a powerful report on inequality, “Working for the Many: Public services fight inequality.” The report makes a persuasive case for the need to bring more attention to the issue of inequality in policy discussions. Indeed, at the recent World Economic Forum Annual Meeting, World Bank President Jim Yong Kim stated that “at Davos, income inequality should be front and center” as an important item on the global agenda. I was recently a discussant in a session on the Oxfam report at a Spring Meetings event alongside Max Lawson of Oxfam Great Britain and David Coady of the IMF's Fiscal Affairs Department. The case Oxfam makes that inequality is harmful to the global economy is well articulated and their prescription for a solution is highly focused: increase the amount of progressive taxation to fund free and universal health and education.  In the following slides, I provide a few examples of where we might want to broaden our thinking on the issue of inequality. In particular, I offer a couple of illustrations where a singular focus on inequality would lead us to undervalue some very important progress that has been made in the fight to eliminate poverty. In contrast, by ‘twinning’ the goals of eliminating extreme poverty and boosting shared prosperity, the policies we design may be more likely to ensure that everyone shares in growth and prosperity.

Emerging market sovereign bonds: Does it cost more to issue a bond under the English law?

Dilip Ratha's picture

It seems it does. During 2008-2012, post-crisis, launching under English law increased spreads by more than a third on average. In other words, by choosing the UK law, a nation rated B+ (for example, Ecuador, Ghana, Greece, Pakistan and Zambia) apparently paid 7.7% interest rate per annum instead of 6 percent, and a nation rated BB (for example, Bangladesh, Nigeria, Serbia or Vietnam) paid nearly 5.7% instead of 4.5% (figure 1). Such an increase in spread is equivalent to a rating downgrade of 3 notches or more.

When firefighting is not enough: The humanitarian community needs better risk management

Rasmus Heltberg's picture

A new report by the United Nations Office for Coordination of Humanitarian Affairs (OCHA) Saving Lives Today and Tomorrow is a wakeup call to the humanitarian community to improve risk management. The report builds on and has several parallels to the World Development Report (WDR) 2014 on Risk and Opportunity: Managing Risk for Development, and I was therefore invited to speak at its UN launch in New York last week.

New Working Paper by Aart Kraay and David McKenzie: Do poverty traps exist?

LTD Editors's picture

This paper reviews the empirical evidence on the existence of poverty traps, understood as self-reinforcing mechanisms through which poor individuals or countries remain poor. Poverty traps, understood as self-reinforcing mechanisms through which poor individuals or countries remain poor, have captured the interest of many development policy makers, because poverty traps provide a theoretically coherent explanation for persistent poverty. They also suggest that temporary policy interventions may have long-term effects on poverty. However, a review of the reduced-form empirical evidence suggests that truly stagnant incomes of the sort predicted by standard models of poverty traps are in fact quite rare. Read the entire paper here.

Aspiring to Understand Aspirations

Scott Abrahams's picture

The following post is a part of a series that discusses 'mind and culture,' the theme of the World Bank’s upcoming World Development Report 2015.

In Ethiopia, 3% of students will go to college.* But how many would you guess say that they want to?

The answer is 75%. That is how many of the 14 to 15 year-olds surveyed by the Young Lives team out of Oxford said they would like to complete a university degree. Of those kids, 9 in 10 expect to get there.

Friday Roundup: Malthusian worries, USAID global development lab, Hillary on ending poverty, Africa Impact Evaluation and a sharing prosperity event

LTD Editors's picture

Eduardo Porter's Apr 1 column 'Old Forecast of Famine May Yet Come True,' touches on Malthus, famine and the sweeping impacts of climate change highlighted in the latest IPCC report.

Virginia Gewin of Nature magazine carries a story on USAID's new Global Development Lab, a $100 million effort that will fund research into technological solutions for targeted problems related to food security and nutrition, maternal and child survival, energy access and sustainable water solutions.

Social Progress Index 2014 launched today

Merrell Tuck-Primdahl's picture

In April 2013, the Social Progress Imperative launched a research product, the Social Progress Index, during a forum at the University of Oxford. Now it's year two and they've grabbed headlines with the results of the 2014 index, finding New Zealand is on top and Chad at the bottom of the overall rankings. What also jumps out are big differences in social progress for countries with similar incomes.

According to Index, economic success alone doesn't explain social progress. The USA (16th), for example, ranks lower than New Zealand, even though the Kiwi nation's GDP is lower. The same pattern is seen for countries at all levels: Ghana (96th) has a similar GDP per capita as Nigeria (123rd), but scores a lot higher on social progress.

An outside view on the WDR 2015: Will adding a behavioral dimension to development mark a paradigm shift?

Chris Eldridge's picture

The following post is a part of a series that discusses 'mind and culture,' the theme of the World Bank’s upcoming World Development Report 2015.

Recently I was asked to give some feedback on the upcoming World Development Report 2015 (WDR 2015). WDR 2015 will be both important and timely. The following are some initial suggestions for the report.