Policy Research Working Paper series publication roundup for May 1-May 15, 2022

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 4 papers published from May 1 to May 15, 2022, on various topics related to employment, housing policy and the impact of COVID-19 on educational outcomes.

The Policy Research Working Paper (PRWP) series hit an important milestone a few weeks ago when the 10,000th paper was published. For more information on this please read Aart Kraay’s recent retrospective blogpost that commemorates this achievement.

The first two papers we introduce this month transport us to India. In The Impact of Lifting Firing Restrictions on Firms: Evidence from a State-Level Labor Law Amendment, Sarur Chaudhary and Siddharth Sharma examine the impact of employment protection laws on aggregate manufacturing and employment output in India. In Housing Demand and Affordability in India: Implications for Housing Policy, Nadeem M. Karmali and Xinyu Weng examine the demand for housing in urban India.

• In 2014, the Indian state of Rajasthan amended labor laws to increase employment flexibility in firms. The Impact of Lifting Firing Restrictions on Firms: Evidence from a State-Level Labor Law Amendment conducts a synthetic control analysis of the policy change using state-level panel data from 1980 to 2018, finding no evidence of an impact on aggregate manufacturing employment and output. The paper then uses firm-level panel data to conduct a difference-in-differences analysis of the main amendment, exploiting its size-dependent feature for identification. This analysis finds that the amendment reduced the implicit regulatory cost of labor in firms, but there is no discernible impact on their total employment and output.

Figure 1: Trends in total output and employment- Rajasthan versus average of other states in the donor pool

• Housing Demand and Affordability in India: Implications for Housing Policy finds that income elasticities of housing demand are high and elastic across time. This high elasticity is driven by high demand for improved water and sanitation amenities that are attached to the consumption of housing. Further, the demand estimations show that rental markets in urban India and in megacities are becoming more efficient. All the results suggest that household subsidies or other demand-side interventions are less warranted, but rather investments to increase housing supply through better service infrastructure for water, sanitation, and connectivity are better uses of public resources.

The next two papers we introduce examine the impact that the COVID-19 pandemic has had on education. In An Analysis of COVID-19 Student Learning Loss, Harry A. Patrinos and coauthors analyze learning loss as a result of lockdowns and associated measures during the pandemic. In School Is Closed: Simulating the Long-Term Impact of the COVID-19 Pandemic–Related School Disruptions in Kuwait, Simon Bilo and coauthors analyze the impacts of schooling disruption caused by COVID-19 in Kuwait.

• An Analysis of COVID-19 Student Learning Loss examines to what extent COVID-19 lead to student learning losses across the world. The authors developed a comprehensive review that consolidated the research that has been completed related to the impact of COVID-19 on student learning progress and built a public use database; responded to the research question of the extent to which there is evidence of pandemic-related learning losses and identified significant gaps in the literature giving relevant guidance for further research. Findings suggest learning losses on average amounting to 0.17 of a standard deviation, equivalent to roughly a half years’ worth of learning. These findings confirm that learning loss is real and significant.

• School Is Closed: Simulating the Long-Term Impact of the COVID-19 Pandemic–Related School Disruptions in Kuwait estimates the present value of lost income for a future Kuwaiti civil servant whose studies were disrupted by the COVID-19 pandemic. Kuwait is among the countries with the longest school closures for in-person education caused by the COVID-19 pandemic. Public schools were closed for in-person learning for 62 weeks (see figure 2 below). This paper shows that students in school during the COVID-19 pandemic face significant reductions in the present value of their lifetime income. Students that were in higher grades during the pandemic are likely to face larger reductions in lifetime earnings than students in lower grades. Kuwaiti females in secondary school who will become civil service workers face a reduction of close to $40,000. The corresponding reduction for males is more than $70,000.

Figure 2: Distribution of the length of school closures during the pandemic across countries

The following are other interesting papers published in the first half of May. Please make sure to read them as well.

1. Data Triangulation Strategies to Design a Representative Household Survey of Hosts and Rohingya Displaced in Cox’s Bazar, Bangladesh (Endara,Joaquin,Genoni,Maria Eugenia,Khan,Afsana Iffat,Kosmidou-Bradley,Walker Turnbull,Munoz,Juan Eduardo,Palaniswamy,Nethra,Vishwanath,Tara)
2. Incentivizing Social Learning for the Diffusion of Climate-Smart Agricultural Techniques (Adjognon,Guigonan Serge,Nguyen Huy,Tung,Guthoff,Jonas Christoph,van Soest,Daan)
3. The Growth and Performance of Affordable Housing Finance Lenders in India (Karmali,Nadeem M.,Guillermo J. Rodriguez Ruiz)
4. Does It Matter Where You Grow Up Childhood Exposure Effects in Latin America and the Caribbean (Munoz Saavedra,Ercio Andres)
5. The Geography of Intergenerational Mobility in Latin America and the Caribbean (Munoz Saavedra,Ercio Andres)
6. When Is There Enough Data to Create a Global Statistic (Mahler,Daniel Gerszon,Serajuddin,Umar,Maeda,Hiroko)
7. Skills, Human Capital, and Economic Development (Raju,Sudhakar Satyanarayan,Sosale,Shobhana)