Journal articles published externally

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These are journal articles by World Bank authors published externally.

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Student Support and Academic Performance: Experiences at Private Universities in Mexico

2010, Canton, Erik, Blom, Andreas

Financial aid to students in tertiary education can contribute to human capital accumulation through two channels: increased enrollment and improved student performance. We pay particular attention to the latter channel, and study its quantitative importance in the context of a student support program from the Sociedad de Fomento a la Educacion Superior (Society for the Promotion of Higher Education) (SOFES) implemented at private universities in Mexico. Administrative data provided by SOFES are analyzed using a regression-discontinuity design. The advantage of the regression-discontinuity method is that it represents a natural experiment with randomly assigned treatment so that selection issues are minimized. The empirical results suggest that this financial aid package (loans and scholarships) contributes to better academic performance.

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Informal Self-Employment and Macroeconomic Fluctuations

2010, Fiess, Norbert M., Fugazza, Marco, Maloney, William F.

Informal self-employment is a major source of employment in developing countries. Its cyclical behavior is important to our understanding of the functioning of LDC labor markets, but turns out to be surprisingly complex. We develop a flexible model with two sectors: a formal salaried (tradable) sector that may be affected by wage rigidities, and an informal (non tradable) self-employment sector faced with liquidity constraints to entry. This labor market is then embedded in a standard small economy macro model. We show that different types of shocks interact with different institutional contexts to produce distinct patterns of comovement between key variables of the model: relative salaried/self-employed incomes, relative salaried/self-employed sector sizes and the real exchange rate. Model predictions are then tested empirically for Argentina, Brazil, Colombia, and Mexico. We confirm episodes where the expansion of informal self-employment is consistent with the traditional segmentation views of informality. However, we also identify episodes where informal self-employment behaves "pro-cyclically"; here, informality is driven by relative demand or productivity shocks to the non tradable sector.

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The Price Effect of Tariff Liberalization: Measuring the Impact on Household Welfare

2009, Nicita, Alessandro

Trade policy literature has for many years emphasized open policies positive impact on economic growth and development. While these results generally hold when measured on averages, empirical evidence suggests that trade liberalization is unlikely to produce beneficial results across all households. This study adds to the literature by providing an analysis of the distributive effects of tariff liberalization in Mexico. The paper examines the effect of tariff liberalization from the perspective of households both as consumers and factor owners allowing for imperfect domestic price transmission. The results indicate the overall positive effect of tariff liberalization masks significant differences in the distribution of gains both across income levels and across geographic regions. Richer households are found to have gained relatively more. Urban areas, as well as Mexican states closest to the United States border, are also found to be larger beneficiaries while southernmost states have been largely bypassed by the effects of tariff liberalization. Those results can be explained not only in relation to the different endowments of the households, but also by the diverse effects on local prices that has resulted from Mexican trade liberalization.

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Conditional Cash Transfers, Adult Work Incentives, and Poverty

2008, Skoufias, Emmanuel

Conditional cash transfer (CCT) programmes aim to alleviate poverty through monetary and in-kind benefits, as well as reduce future incidence of poverty by encouraging investments in education, health and nutrition. The success of CCT programmes at reducing poverty depends on whether, and the extent to which, cash transfers affect adult work incentives. In this paper we examine whether the PROGRESA programme of Mexico affects adult participation in the labour market and overall adult leisure time, and we link these effects to the impact of the programme on poverty. Utilising the experimental design of PROGRESA's evaluation sample, we find that the programme does not have any significant effect on adult labour force participation and leisure time. Our findings on adult work incentives are reinforced further by the result that PROGRESA leads to a substantial reduction in poverty. The poverty reduction effects are stronger for the poverty gap and severity of poverty measures.

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Can Drought Increase Total Calorie Availability? The Impact of Drought on Food Consumption and the Mitigating Effects of a Conditional Cash Transfer Program

2010, Hou, Xiaohui

This study uses the panel data of a randomized experiment from the Mexican PROGRESA program to evaluate the impact of drought on total calorie availability and the mitigating effects of PROGRESA on food consumption in periods of drought. Drought reduced total expenditures and total food expenditures but increased the total availability of calories. This paradox can be explained by the impact of drought on the composition of calories; that is, it reduced the consumption of expensive calories in such foods as vegetables, fruits, and animal products but increased calories consumed from cheaper sources, such as grains. This study finds that PROGRESA can completely mitigate the negative effects of drought on calorie availability from vegetables, fruits, and other sources. However, PROGRESA cannot mitigate the impact of drought on calories available from grains. The analysis also shows that, during drought, households who increase their consumption of grains get them mainly from purchased sources rather than from home production. In these circumstances, decreased total expenditures and increased purchases of grains suggest that grains are inferior goods in rural Mexico. The Engel curve analysis further proves that grains are inferior goods.

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Trade Policy, Income Risk, and Welfare

2010, Krebs, Tom, Krishna, Pravin, Maloney, William

This paper develops a framework to study empirically the relationship between trade policy and individual income risk and to evaluate the associated welfare consequences. The analysis proceeds in three steps. First, longitudinal data on workers are used to estimate time-varying individual income risk parameters in various manufacturing sectors. Second, the estimated income risk parameters and data on trade barriers are used to analyze the relationship between trade policy and income risk. Finally, a simple dynamic incomplete-market model is used to assess the corresponding welfare costs. In the implementation of this methodology using Mexican data, we find that trade policy changes have a significant short-run effect on income risk. Further, while the tariff level has an insignificant mean effect, it nevertheless changes the degree to which macroeconomic shocks affect income risk.

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Nutrient Consumption and Household Income in Rural Mexico

2009, Skoufias, Emmanuel, Gonzalez-Cossio, Teresa, Rodriguez Ramirez, Sonia

We estimate the income elasticity for a variety of macro- and micronutrients using a sample of poor rural households in Mexico. The nutrient-income elasticity is estimated using both parametric and semiparametric methods. A special focus is placed on the nonlinearity of the relationship between nutrient intake and income and on measurement error and endogeneity issues. One major finding is that income elasticity for calories is close to zero when we control for measurement error issues. For some nutrients, namely fats, vitamin A and C, calcium, and heme iron, we find a sizeable positive income elasticity robust to the choice of the estimator and percentiles at which it is evaluated. These nutrients are also those for which we find the largest deficiency in our sample. In addition, we find that for the poorest households in our sample, the deficiency of total energy, protein, and zinc is not accompanied by a positive income elasticity.

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Changes in Returns to Education in Latin America : The Role of Demand and Supply of Skills

2010, Manacorda, Marco, Sanchez-Paramo, Carolina, Schady, Norbert

Using micro data for the urban areas of Argentina, Brazil, Chile, Colombia, and Mexico, the authors document trends in men's returns to education during the 1980s and the 1990s and estimate the role of supply and demand factors in explaining the changes in skill premia. They propose a model of demand for skills with three production inputs, corresponding to workers with primary-, secondary-, and university-level education. Further, the authors demonstrate that an unprecedented rise in the supply of workers having completed secondary-level education depressed their wages relative to workers with primary-level education throughout Latin America. This supply shift was compounded by a generalized shift in the demand for workers with tertiary education.

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Remittances and Vulnerability to Poverty in Rural Mexico

2010, De La Fuente, Alejandro

Remittances have been portrayed as the human face of globalization given their potential to alleviate poverty by directly increasing household income. Using a panel of rural households in Mexico from October 1998 to November 2000 this study assesses whether this is in fact the case. However, rather than examining whether remittances income would reduce future consumption poverty we asked if remittances are likely to reach people whose conditions are prone to worsen in the future. We found a negative and statistically significant relationship between the disbursement of remittances and the threat to future poverty that rural households could experience.

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Housing, Health, and Happiness

2009, Cattaneo, Matias D., Galiani, Sebastian, Gertler, Paul J., Martinez, Sebastian, Titiunik, Rocio

We investigate the impact of a large-scale Mexican program to replace dirt floors with cement floors on child health and adult happiness. We find that replacing dirt floors with cement significantly improves the health of young children measured by decreases in the incidence of parasitic infestations, diarrhea, and the prevalence of anemia, and an improvement in children's cognitive development. Additionally, we find significant improvements in adult welfare measured by increased satisfaction with their housing and quality of life, as well as by lower scores on depression and perceived stress scales.