63672 Finance & PSD Impact DECEMBER 2010 The Lessons from DECFP Impact Evaluations ISSUE 12 Our latest impact note profiles a case where Government regulatory action, Government actions to facilitate a labor market, World Bank advice, and the actions of private employers have combined to result in one of the most effective development policies evaluated to date. Spurring Development through a levels, ensure worker protection, limit Seasonal Migration Program displacement of native workers, and thereby John Gibson and David McKenzie ensure sustainability of the program. A notable explicit goal of the RSE Lack of mobility of labor is likely was to aid economic development in the the biggest distortion in global factor Pacific Islands, in addition to easing labor markets, resulting in large differences in the shortages for New Zealand industry. productivity and income a given worker can have in different places. As a result of this Facilitating a Labor Market fact, facilitating emigration has the potential There were many employers in New to be one of the most effective development Zealand interested in getting reliable interventions available. workers, along with many potential workers Seasonal worker programs are seen in the Pacific Islands interested in working as one way to overcome many of the abroad. However, despite this large willing concerns associated with migration, thereby supply and potential demand, the cost to an offering a “triple-win� in which migrants, individual farmer or wine-grower of trying the sending country, and the receiving to identify and hire workers from abroad country can all benefit. would be very high in the absence of market A 2006 report by the World Bank’s facilitation. East Asia and Pacific region presented the Governments on both sides played economic case for seasonal migration important roles in developing the new labor programs in the Pacific, which was followed market for seasonal workers. On the New by collaboration with the New Zealand Zealand side, the Government registered and Government in piloting such a program. regulated employers, set in place New Zealand then launched the mechanisms for rapid processing of visas, Recognised Seasonal Employer (RSE) and through its aid agency, provided kick- program in 2007, which set up a new start support to Pacific Governments. The migration category to allow workers to be Pacific Governments for their part organized recruited for seasonal work in New how labor could be recruited from their Zealand’s horticulture and viticulture countries –directly screening and enrolling industries. Migrants work for an accredited workers in a “work-ready pool� that employer, for up to seven months per 11 employers could then access, as well as in month period, and may return if recruited some countries licensing agents. They also again. The employers first have to show that ensured extremely fast processing of no New Zealanders are available for the passports, medical checks, and police work, and then gives preference to workers clearances. Workers could be interviewed by from Pacific Island Forum countries. an employer, and 2-3 weeks later arriving in Design of the RSE program paid New Zealand to work. careful attention to lessons from previous temporary worker programs, and includes features designed to minimize overstay Do you have a project you want evaluated? DECRG-FP researchers are always looking for opportunities to work with colleagues in the Bank and IFC. If you would like to ask our experts for advice or to collaborate on an evaluation, contact us care of the Impact editor, David McKenzie (dmckenzie@worldbank.org) The Evaluation Household subjective well-being Despite the enormous policy interest improves. in seasonal worker programs, to date there Households increase ownership of was no evidence as to their impact. We durable assets, and do more home therefore designed an evaluation to measure improvements. how the RSE was affecting development. In Tonga, school attendance rates Between 2007 and 2010 we increased 20 percent for 16-18 year olds. conducted four waves of surveys in the two Community-level effects were generally countries providing 70 percent of the Pacific modest, but positive. Island workers in the RSE - Tonga and Vanuatu. In each country we surveyed 450 Policy Implications households drawn from about 50 Our research provides the first communities, including households rigorous evaluation of the impact of a supplying workers, households with RSE seasonal migration policy on households in applicants who were not recruited and non- the sending country, and finds gains in applicant households. Our baseline survey household well-being which greatly exceed was before workers left to work in New those measured for other popular Zealand in the first season, and then re- development interventions like microfinance interviews were 6, 12 and 24 months later. and conditional cash transfers. Coupled with Using these rich baseline data and analysis which shows very low rates of institutional knowledge of how recruitment overstaying and modest impacts on the for the program occurred, we use native labor force (New Zealand Department propensity-score matching to identify an of Labour, 2010), these results suggest more appropriate set of households to act as a countries should give seasonal worker comparison group for the households programs a chance. participating in the RSE, and then use panel In doing so, the New Zealand difference-in-differences and fixed effects experience shows the need for market estimation to assess the impacts of the RSE facilitation in setting up job matching in a on household incomes, consumption, new labor market. It also highlights a case durable assets and subjective well-being. where Governments did process efficiently passports, visa applications, and other steps Results needed to ensure the migration market can Our evaluation shows that the RSE function effectively. In many other countries has had large positive effects on bureaucratic delays in these areas may serve development in the two countries: as a further impediment to the ability of Per-capita household income increases individuals to migrate and therefore benefit by over 30 percent in each country; per- from the global disparities in wages. capita expenditure increases by just over 10 percent, indicating much of this extra income is saved. For further reading see: J. Gibson and D. McKenzie (2010) “The Development Impact of a Best Practice Seasonal Worker Policy�, World Bank Policy Research Working Paper no. 5488. New Zealand Department of Labour (2010) Final Evaluation Report of the Recognised Seasonal Employer Policy (2007-2009). Department of Labour, Wellington. http://dol.govt.nz/publications/research/rse-evaluation-final- report/rse-final-evaluation.pdf World Bank (2006) At Home & Away: Expanding Job Opportunities for Pacific Islanders through Labour Mobility. Recent impact notes are available on our website: http://econ.worldbank.org/programs/finance/impact