What we’ve been reading: Jobs and spatial economics

This blog is based on the November 2020 edition of the Knowledge4Jobs newsletter, curated by the World Bank’s Jobs Group and Labor and Skills Global Solutions Group. Click here to sign up for the Knowledge4Jobs newsletter.

Well-functioning cities bring people together. Physical proximity enables social and economic interactions. This is the hallmark of city life, making people more productive and creating demand for more and better jobs.

The COVID-19 pandemic is putting the brakes on urban economies and highlighting the downsides of urban density. The pandemic will have spatially differentiated impacts on jobs within countries.  How large metropolitan areas, secondary cities, and small towns fare will depend on local economic dynamics, driven by sectoral composition and the nature of jobs. The challenge is exacerbated by the dynamics of working in the informal sector, often in crowded places with no social protection.

While the spatially differentiated nature of the jobs challenge has been highlighted by COVID-19, the patterns have been shaped by larger forces  that include automation, geographically localized trade shocks, stymied structural transformation of countries, and the slow pace of domestic labor mobility within countries.

The publications and readings recommended this month provide a broader perspective on the spatially differentiated nature of the jobs and development challenge. 

Jobs and Spatial Transformation

• In this immersive World Bank blog, the authors say that risk of contagion increases in neighborhoods where residents have no option but to go out every day in search of employment or services.  This implies that economic geography not physical geography determines contagion risk.
• A paper in the Journal of Economic Perspectives concludes that reforms to place-based jobs policies should focus on greater targeting of distressed areas and using more cost-effective policies.
• From the same journal, here’s an overview of the growing literature on urban-rural gaps in the developing world. 
• A working paper explores quantitative models of economic geography which are based on the differences across locations and the proximity of economic agents relative to one another.

Essential Readings

• How do we define cities, towns, and rural areas? Standardizing classifications and applying them at the global level can help measure the effectiveness of policies in different countries, this World Bank blog says.
• Economists used spatially disaggregated data for London from 1801 to 1921 to show that the invention of the steam railway led to the first large-scale separation of workplace and residence.
• In developing regions, urbanization appears to be concentrated in “consumption cities” for countries that are heavily dependent on resource exports and “production cities” for countries that have industrialized and are more dependent on manufacturing.
• High pre‐colonial density areas tend to be denser today due to locational fundamentals and agglomeration effects, according to this piece in The Economic Journal.
• Countries that developed earlier are more spatially equal in their distribution of education and economic activity than late developers.
• From the National Bureau of Economic Research: A review of the literature on place-based policies in the contexts of transport improvements, economic corridors, special economic zones, lagging regions, and urban policies.

Broader Jobs Agenda

• Moonlighting made easy: A unique reform in Germany that allowed workers to hold small secondary jobs tax-free resulted in a dramatic increase in workers taking up more jobs, according to this working paper.
• Here’s an exploration of how cognitive and socioemotional skills of adults relate to their labor market outcomes in the context of Colombia.
• What role will agri-food systems play as a source of employment in the future? This paper reviews several policy options, including inclusive value chain development and better immigration policies.
• A study analyzing gender differences in labor productivity in the formal private sector finds a sizable unconditional gap, with labor productivity being approximately 11 percent lower among firms managed by women.

COVID-19 Related Articles

• The book Going Viral: COVID-19 and the Accelerated Transformation of Jobs in Latin American and the Caribbean focuses on three important pre-pandemic trends observed in Latin America and the Caribbean.
• The book South Asia Economic Focus, Fall 2020: Beaten of Broken? Informality and COVID-19 presents an in-depth analysis of the current economic situation in South Asia 
• A World Bank and S4YE brief highlights six trends on operational responses to youth employment amidst COVID-19. 
• This paper identifies the need for policies that improve the employment prospects of early career workers and older workers that have been displaced.
• This paper provides a comprehensive assessment of the short-term impact of the COVID-19 pandemic on businesses worldwide with a focus on developing countries. 
• A recent webinar presents an overview of the labor market impacts of the COVID-19 pandemic among individuals in Ethiopia, Malawi, Nigeria and Uganda.