Policy Research Working Paper series publication roundup for December 1 - 15

This blog is a biweekly feature highlighting recent working papers from around the World Bank Group that were published in the World Bank’s Policy Research Working Paper Series. This entry introduces four papers published from December 1 to December 15 on various topics, including the impact of COVID-19 on education, the effect of tariffs on job opportunities and interest rates.

The first two papers we introduce in this roundup examine the economic and educational impact the COVID-19 pandemic had. In Capturing the Educational and Economic Impacts of School Closures in Poland, Harry Patrinos and coauthors estimate the effect of school closures in the spring of 2020 on the math, science, and reading skills of secondary school students in Poland. In The Impact of COVID-19 on Education in Latin America: Long-Run Implications for Poverty and Inequality, Jessica Bracco and coauthors examine the impact that COVID-19 and school closures had on education in Latin America.

• In Poland the COVID-19-induced school closures lasted 26 weeks in Poland, one of Europe’s longest periods of shutdown . Capturing the Educational and Economic Impacts of School Closures in Poland shows that significant learning losses have been experienced by Polish students due to the COVID-19 closures. In mathematics and science, the learning losses are equal to more than a year's worth of schooling, even though schools were closed for only part of an academic year. These skills losses are likely to affect the future economic success of the students as well as the country. Future earnings are projected to decline by PLN 74,693 (more than US$15,000) per year for the affected students. The economic loss in future student earnings may amount to 7.2 percent of Poland’s gross domestic product.
   
• In Latin America in 2020 and 2021 schools were closed on average for 269 days due to the COVID-19 pandemic . The Impact of COVID-19 on Education in Latin America: Long-Run Implications for Poverty and Inequality uses recently released microdata from national household surveys for 2020 to explore changes in school enrollment. The paper shows how the process of human capital accumulation of children and youths was severely affected in Latin America. Some children and youths dropped out of school, and those who remained had to adapt to a new learning environment. The results show that enrollment rates and enrollment in private education were significantly lower in 2020 than in previous years. The losses were large and asymmetric: children from disadvantaged families were more likely to drop out of school (see table 1 below). The disruption in human capital formation is likely to have long-run consequences on earnings, and hence on poverty and inequality. The authors find that the COVID-19 pandemic may imply a substantial increase in income poverty in the future for the shocked cohort: between 8.4% to 20.7%, depending on the indicator  and on the effectiveness of the reactions of governments and families during the pandemic to compensate for the school closures.

Table 1: Values of educational loss by group. Latin America

The last two papers we introduce in 2022 deal with the U.S. economy. In Did the 2018 Trade War Improve Job Opportunities for US Workers?, Katherine Stapleton and coauthors study the impact of the 2018 trade war on US job opportunities. In How Do Rising U.S. Interest Rates Affect Emerging and Developing Economies? It Depends, Carlos Arteta and coauthors examine the implications of different types of interest rate shocks in the United States for emerging market and developing economies.  

• Did the 2018 Trade War Improve Job Opportunities for US Workers? investigates how the trade war affected the posting of online job adverts during the immediate aftermath of the tariff hikes in 2018. The paper develops measures of labor market exposure to three key channels of impact from the trade war: import protection for US producers, the higher cost of imported inputs for US producers, and exposure of US exporters to retaliatory tariffs. The authors find evidence that both tariffs on imported inputs and retaliatory tariffs led to a relative decline in online job postings in affected commuting zones. These effects were stronger for lower skilled postings than for higher skill postings. By contrast, it does not find any evidence of positive impacts of import protection on job openings. It estimates that the tariffs led to a combined effect of 175,000 fewer job postings in 2018, or 0.6 percent of the US total. Figure 1 below displays the evolution of high skilled and low skilled job postings over time. Although both are increasing over time, a gap can be seen between the progression of the two types with high skill postings increasing more slowly than low skill postings over the period.

Figure 1: High and low skilled job postings over time

• How Do Rising U.S. Interest Rates Affect Emerging and Developing Economies? It Depends explores the impact of rising U.S. interest rates on Emerging Markets and Developing Economies (EMDE). The paper classifies changes in U.S. interest rates into those caused by changes in inflation expectations (inflation shocks) and changes in perceptions of the Federal Reserve’s reaction function (reaction shocks). The authors attribute this year’s sharp increases in U.S. interest rates almost exclusively to inflation and reaction shocks. These types of shocks are found to be associated with especially adverse effects: EMDE financial conditions tighten, consumption and investment fall, and governments cut spending to improve budget balances. By comparison, rising U.S. interest rates stemming from real shocks are not only associated with benign outcomes for EMDE financial conditions but also improvements in budget balances  that reflect higher revenues as well as lower expenditures. Finally, the paper documents that rising U.S. interest rates driven by reaction shocks are especially likely to push EMDEs into financial crisis.

The following are other interesting papers published in the first half of December. Please make sure to read them as well. We will be back in 2023.

1. Policy Options for Broadband Infrastructure Strategies : A Simulation Model for Affordable Universal Broadband in Africa
2. Are All State-Owned Enterprises Equal ? A Taxonomy of Economic Activities to Assess SOE Presence in the Economy
3. Using ORBIS to Build a Global Database of Firms with State Participation
4. Factors Explaining Child Work and Education in Myanmar
5. Integrating Survey and Geospatial Data to Identify the Poor and Vulnerable: Evidence from Malawi
6. Fewer Questions, More Answers : Truncated Early Stopping for Proxy Means Testing
7. Capacity Building as a Route to Export Market Expansion : A Six-Country Experiment in the Western Balkans∗
8. Combining Remote Sensing and Cell Phone Users’ Mobility Data to Monitor the Impact of Transportation on NO2 Concentrations in India
9. Program Targeting with Machine Learning and Mobile Phone Data : Evidence from an Anti-Poverty Intervention in Afghanistan
10. Field and Natural Experiments in Migration
11. Information and Spillovers from Targeting Policy in Peru's Anchoveta Fishery
12. Asset Transfers and Anti-Poverty Programs : Experimental Evidence from Tanzania