Published on Development Impact

Weekly links May 12: poor fiscal policy, labor market churn, an unusual correlate of CEO success, and more…

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·       in most low and middle-income countries, poor households are made poorer by fiscal policy” – on Let’s Talk Development, Pierre Bachas and co-authors highlight the difference between rich and poor country tax, transfer, and subsidy systems. Part of the reason is a reliance on consumption taxes rather than progressive income taxes to raise money, and poorly targeted subsidy programs and tax exemption policies.

·       On the World Bank’s Getting Infrastructure Finance Right blog, a summary of some of the research on the development impacts of infrastructure by Maria Vagliasindi and Nisan Gorgulu.

·       Developing country labor markets have more churn. Yale’s EGC summarizes a forthcoming paper by Kevin Donovan and co-authors showing this and arguing that this reflects greater matching frictions.

·       BBC World Services’s Mary Harper re-visits Kenyan villages 5-years into the Give Directly UBI trial  - she visits a village where all households are getting $20/month for a 12-year period. Interviewees highlight positive impacts on building their own houses, all the kids now attending school more regularly, more use of health services and better nutrition for kids; And about what happens when everyone gets it – savings groups can talk about how to use the money; people can no longer say they can’t afford to feed their children, since everyone knows that everyone else in the village is getting money; and then she visits the village right next door where people are not treated – and directly asks them how they felt when they heard the neighboring village was getting free money – and hears how some villagers blamed the village elders for not getting the program for their village- but they do get some spillovers from being able to sell to the treated village; and a village which got a single lump-sum transfer and some of the regret from how they had spent their one-time windfall.

·       A very nice visual introduction to machine learning decision trees (h/t Justin Wolfers)

·       Scott Cunningham’s interview with Rocío Titiunik discusses her unusual path to a PhD, and highlights another win for Berkeley’s ARE program, as well as providing a really nice analogy of how you know when you’ve found the right thing for you to work on – she notes how in running you are sometimes told to find the steady pace that you could just keep on going all day at – and when she found the combination of econometric tools and political science, this was finally the feeling of “yes, I can spend all day doing this”.

·       End of week fun study: I’ve spent years looking at how to measure and improve management in firms. But only this week did I see this Quartz summary of a 2014 working paper showing that what you really need is a CEO that runs marathons! “Using a panel of more than 9,500 firm-year observations, we find that CEOs who finish a marathon in a given year – denoted as fit CEOs – are associated with a significantly higher firm value (Tobin’s Q). Results are found both on univariate and multivariate level and are economically significant: firm value is between 4% and 10% larger for firms managed by a fit CEO”. So perhaps we need to make running RCTs more literal…

·       Conference deadline soon: The 5th World Bank/IFS/ODI tax conference is on the political economy of public finances this year. Deadline for submissions is May 15.


David McKenzie

Lead Economist, Development Research Group, World Bank

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