Weekly links November 17: What’s new in trade research, fungibility is too painful to think about, an employment program that worked, and more…
Tim Taylor has extracts from a Larry Summers CGD talk on re-thinking development “I remember as a young economist who was going to be the chief economist of the World Bank sitting and talking with Stan Fischer, who was my predecessor as the chief economist of the World Bank. And we were talking, and I was new to all this. I had never done anything in the official sector. And I said, "Stan, I don't get it. If a country has five infrastructure projects and the World Bank can fund two of them, and the World Bank is going to cost-benefit analyze and the World Bank is going to do all its stuff, I would assume what the country does is show the World Bank its two best infrastructure projects, because that will be easiest, and if it gets money from the World Bank, then it does one more project, but what the World Bank is actually buying is not the project it is being shown, it is the marginal product that it is enabling. And so why do we make such a fuss of evaluating the particular quality of our projects?" And Stan listened to me. And he looked at me. He's a very wise man. And he said, "Larry, you know, it is really interesting. When I first got to the bank, I always asked questions like that." "But now I've been here for two years, and I don't ask questions like that. I just kind of think about the projects, because it is kind of too hard and too painful to ask questions like that."
Straight Talk on Evidence on an employment and training program for low-income workers in the U.S. that did replicate – an RCT 8 years ago found the program led to a 32% earnings increase over 2 years; a new RCT by different researchers of the same program recently just found a 27% increase over 3 years using a new cohort of entrants. The program provides training and employment services in the information technology sector to low-income workers in the Bronx. Both programs were conducted in the same location, but with different labor market conditions (healthy labor market in mid-2000s vs weaker labor market following global financial crisis).