03. Journals

2,963 items available

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http://hdl.handle.net/10986/2210

These are journal articles published in World Bank journals as well as externally by World Bank authors.

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The Political Economy of Multidimensional Child Poverty Measurement: A Comparative Analysis of Mexico and Uganda

(Taylor and Francis, 2020-03-11) Cuesta, Jose ; Biggeri, Mario ; Hernandez-Licona, Gonzalo ; Aparicio, Ricardo ; Guillen-Fernandez, Yedith

As part of the 2030 Agenda, much effort has been exerted in comparing multidimensional child poverty measures both technically and conceptually. Yet, few countries have adopted and used any of these measures in policymaking. This paper explores the reasons for this absence from a political economy perspective. It develops an innovative political economy framework for poverty measurement and a hypothesis whereby a country will only produce and use reliable and sustainable multidimensional child poverty (MDCP) measures if and only if three conditions coalesce: consensus, capacity and polity. We explore this framework with two relevant case studies, Mexico and Uganda. Both countries satisfy the capacity condition required to measure MDCP but only Mexico satisfies the other two conditions. Our proposed political economy framework is normatively relevant because it identifies the conditions that need to change across multiple contexts before the effective adoption and use of an MDCP measure becomes more likely.
Can Wage Subsidies Boost Employment in the Wake of an Economic Crisis? Evidence from Mexico

(Taylor and Francis, 2020-01-31) Bruhn, Miriam

This paper measures the employment effect of a program in Mexico that granted firms wage subsidies during the recent economic crisis. I use monthly administrative data at the industry level, along with Euclidean distance matching to construct groups of eligible and ineligible durable goods manufacturing industries that display statistically identical preprogram trends in employment. Difference-in-difference results show a positive but not statistically significant effect of the wage subsidies on employment during the program’s eight-month duration. The size of the effect increases to 18 per cent after the program ended and the results indicate that employment after the program recovered faster in eligible industries than in ineligible industries. Additional analysis suggests that the program did not incentivize firms to retain workers with job-specific skills as originally intended. Instead, the payment of subsidy funds, which only happened towards the end of the program, seems to have provided liquidity for hiring back workers.
Evolving Wage Cyclicality in Latin America

(Published by Oxford University Press on behalf of the World Bank, 2018-10) Gambeti, Luca ; Messina, Julian

This paper examines the evolution of the cyclicality of real wages and employment in four Latin American economies, Brazil, Chile, Colombia, and Mexico, during the period 1980–2010.Wages were highly procyclical during the 1980s and early 1990s, a period characterized by high inflation. As inflation declined wages became less procyclical, a feature that is consistent with emerging downward wage rigidities in a low inflation environment. Compositional effects associated with changes in labor participation along the business cycle appear to matter less for estimates of wage cyclicality than in developed economies.
The Role of Bank and Corporate Balance Sheets on Early Warning Systems of Currency Crises—An Empirical Study

(Taylor and Francis, 2016-06-30) Mulder, Christian ; Perrelli, Roberto ; Duarte Rocha, Manuel

This study analyzes the role of bank and corporate balance sheets on early warning systems (EWS) of currency crises. Using firm-level data on debt structure, leverage, liquidity, and profitability, this study presents estimations of EWS for a panel of emerging markets. Using calibration experiments, we assess the performance of alternative EWS specifications in a comprehensive range of crisis-probability cut-offs‏. These models supplement EWS based on traditional macroeconomic indicators, improving forecasting performance substantially. The results support the third-generation models of currency crises and can assist policymakers on the design of surveillance strategies tailored for heterogeneous levels of risk tolerance and country specificities.
Cross-Sector Misallocation with Sector-Specific Distortions

(Published by Oxford University Press on behalf of the World Bank, 2016-04-10) Leal, Julio

In this paper, the author seeks to sharpen the understanding of the economic channels through which sector-specific distortions affect aggregate outcomes. Thea author pay special attention on how cross-sector misallocation might arrive as a result of these distortions, and clarify how models of resource misallocation across heterogeneous firms differ from models of resource misallocation across sectors. The author present facts that suggest the presence of such distortions in Mexico, a noteworthy developing country. The paper highlights the importance of understanding the origin and nature of sector-specific distortions for policy design.
Global Supply Chains and Trade Policy Responses to the 2008 Crisis

(Oxford University Press on behalf of the World Bank, 2015-01) Gawande, Kishore ; Hoekman, Bernard ; Cui, Yue

The collapse in trade and the contraction of output that occurred during 2008–9 was comparable to, and in many countries more severe than, the Great Depression of the 1930s. However, it did not give rise to the rampant protectionism that followed the Great Crash. The idea that the rise in the fragmentation of production across global value chains – vertical specialization – may be a deterrent against protectionism is underappreciated in the literature. Institutions also played a role in limiting the extent of protectionist responses. World Trade Organization discipline raises the cost of using trade policies for member countries and has proved to be a stable foundation for the open multilateral trading system that has been built over the past 50 years. Using trade and protection data for seven large emerging market countries that have a history of active use of trade policy, the influence of these and other factors on trade policy responses to the 2008 crisis are empirically examined. An instrumental variables strategy is used to identify their impact. Participation in global value chains is found to be a powerful economic factor determining trade policy responses.
Stability and Vulnerability of the Latin American Middle Class

(Taylor and Francis, 2013-09-27) Torche, Florencia ; Lopez-Calva, Luis F.

Using panel data-sets from Mexico and Chile for the first years of the 21st century, the authors examine the determinants of middle-class intra-generational mobility. The middle class is defined by means of a latent index of economic well-being that is less sensitive to short-term fluctuation and measurement error than standard measures of income. The authors find high rates of both upward and downward mobility in Mexico and Chile, indicating that the middle class has opportunities to move to higher levels of well-being but is also vulnerable to falling into poverty. In both countries, labour-market resources (education and occupational status of the household head and number of members in the labour market) are much stronger determinants of mobility than demographic factors, suggesting the importance of policies that foster human capital and protect workers from shocks. Rural middle-class households are substantially more vulnerable to falling into poverty and have little chance of advancing to upper classes than their urban counterparts.
Information and Participation in Social Programs

(Oxford University Press on behalf of the World Bank, 2013-01) Coady, David ; Martinelli, César ; Parker, Susan W.

Participation in social programs, such as clubs and other social organizations, results from a process in which an agent learns about the requirements, benefits, and likelihood of acceptance related to a program, applies to be a participant, and, finally, is accepted or rejected. We propose a model of this participation process and provide an application of the model using data from a social program in Mexico. Our empirical analysis illustrates that decisions at each stage of the process are responsive to expectations about the decisions and outcomes at the subsequent stages and that knowledge about the program can have a significant impact on participation outcomes.
Trade Liberalization and Investment : Firm-level Evidence from Mexico

(Oxford University Press on behalf of the World Bank, 2012-06-01) Kandilov, Ivan T. ; Leblebicioğlu, Aslı

Plant-level panel data from Mexico's Annual Industrial Survey is employed to evaluate the impact of reductions in tariffs and import license coverage on final goods, as well as intermediates, on firms'investment decisions. Using data from 1984 to 1990, a period during which a large scale trade liberalization occurred, a dynamic investment equation is estimated using the system-GMM estimator developed by Arellano and Bover (1995) and Blundell and Bond (1998). Consistent with theory, the empirical analyses show that a reduction in import protection on final goods leads to lower plant-level investment, whereas reductions in tariffs and import license coverage on intermediate inputs result in higher investment. Also, firms with larger import costs experience a larger increase in investment following a reduction in import protection. On the other hand, higher markup firms lower investment more aggressively following reductions in tariffs and import license coverage on final goods.
Are The Poverty Effects of Trade Policies Invisible?

(World Bank, 2011-05-31) Verma, Monika ; Hertel, Thomas W. ; Valenzuela, Ernesto

Beginning with the WTO's Doha Development Agenda and establishment of the Millennium Development Goal of reducing poverty by 50 percent by 2015, poverty impacts of trade reforms have become central to the global development agenda. This has been particularly true of agricultural trade reforms due to the importance of grains in the diets of the poor, presence of relatively higher protection in agriculture, as well as heavy concentration of global poverty in rural areas where agriculture is the main source of income. Yet some in this debate have argued that, given the extreme volatility in agricultural commodity markets, the additional price and therefore poverty impacts due to trade liberalization might well be indiscernible. This paper formally tests the “invisibility hypothesis” using the method of stochastic simulation in a trade-poverty modeling framework. The hypothesis test is based on the comparison of two samples of price and poverty distributions. The first originates solely from the inherent variability in global staple grains markets, while the second combines the effects of inherent market variability with those of trade reform in these same markets. Results, at the national and stratum level indicate that the short-run poverty impacts of full trade liberalization in staple grains trade worldwide, are distinguishable in only four of the fifteen countries, suggesting that impacts of more modest agricultural trade reforms are indeed likely to be invisible in short run. Countries that show statistically significant short run impacts are the ones characterized by high staple grains tariffs and/or a moderate degree of grain markets variability. Within each country, results are heterogeneous. In two thirds of the sample countries, agriculturally self-employed poor experience statistically significant poverty impacts from trade liberalization. However, this figure is under a third for all the other strata.