World Bank Economic Review

doi:http://dx.doi.org/10.1596/39236

Journal:
World Bank Economic Review

ISSN

1564-698X

Publisher

Oxford University Press for the World Bank

The World Bank Economic Review publishes and disseminates innovative theoretical and empirical research that identifies, analyzes, measures, and evaluates the macro and micro-economic forces that promote or impede economic development. It aims to provide the knowledge necessary for designing, implementing, and sustaining effective development policies in low and middle income countries.

The World Bank Economic Review is aimed at readers familiar with economic theory and analysis but not necessarily proficient in advanced mathematical or econometric techniques. Material comes from work conducted by World Bank staff and consultants, as well as outside researchers.

Articles are reviewed by three referees, one from the World Bank and two from outside the institution.

Published three times per year 1996 to Present

Editors: Eric Edmonds, Nina Pavcnik

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Now showing 1 - 10 of 634

Minimum Wage Policy and Poverty in Indonesia
(Published by Oxford University Press on behalf of the World Bank, 2025-02-13) Merdikawati, Nurina; Al Izzati, Ridho
This paper investigates whether the minimum wage policy significantly reduced poverty in Java Island, Indonesia, between 2002 and 2014. Its identification strategy exploits variation in minimum wages over time within pairs of geographically proximate districts. The study finds that the minimum wage has a distributional impact on wage workers just below the 20th percentile up to those in the middle of the wage distribution, with no overall loss of employment. However, the minimum wage policy has no distributional impact on per capita household expenditure and a limited effect on changes in poverty status.
Free Trade and Subnational Development: Economic Activity and Human Welfare
(Published by Oxford University Press on behalf of the World Bank, 2025-02-11) Cruzatti C, John
This paper delves into the subnational relationship between free trade agreements (FTAs) and human development worldwide. Utilizing a difference-in-differences and an event-study approach with high-spatial-resolution land-cover data and a comprehensive time series of national-level FTA indicators for 207 countries, the study quantifies the effects of FTAs on subnational development. The findings indicate a small negative impact of FTAs on the Human Development Index but a notable positive impact on economic activity, with urbanized regions benefiting the most. Unequal and more vulnerable regions grapple with declining human development indicators. The depth of FTAs does not sway these outcomes. These patterns raise questions about the inclusivity and equitable distribution of the benefits of trade liberalization. While prior literature has examined the national implications of FTAs, this paper provides insight into the subnational repercussions of FTAs. It emphasizes the role of inequality in hindering holistic developmental benefits from FTAs.
Child Labor Bans, Employment, and School Attendance: Evidence from Changes in the Minimum Working Age
(Published by Oxford University Press on behalf of the World Bank, 2025-02-13) Kozhaya, Mireille; Flores, Fernanda Martínez
This paper investigates the effect of a unique child labor ban regulation on employment and school enrollment. The ban, implemented in Mexico in 2015, increased the minimum working age from 14 to 15, introduced restrictions to employing underage individuals, and imposed stricter penalties for violation of the law. Our identification strategy relies on a DiD approach that exploits the date of birth as a natural cutoff to assign individuals into treatment and control groups. The ban led to a decrease in the probability of working by 1.2 percentage points, resembling a 16 percent decrease relative to the pre-reform mean, and an increase in the likelihood of being enrolled in school by 2.2 percentage points for the treatment group. These results are driven by reduced employment in paid work and the manufacturing and services sectors. The effects have been persistent for several years after the ban.
Better Roads, Better Off? Evidence on Upgrading Roads in Tanzania
(Published by Oxford University Press on behalf of the World Bank, 2025-02-12) Dumas, Christelle; Játiva, Ximena
Spatial isolation is considered to be one of the main determinants of poverty. Therefore, many transport investments are undertaken with the stated objective of poverty reduction. This paper evaluates the effect of a Tanzanian program that rehabilitated 2,500 km of major roads on rural livelihoods. The analysis uses a large set of variables describing household behavior to provide a complete picture of the adjustments. The identification combines a household fixed effects strategy with propensity score matching. Some damaging effects of the program are found on the rural population in the two years following the intervention: the price of rice decreases; households reallocate labor away from agriculture and provide more wage work, but the increase in wage income does not compensate for the loss in agricultural income. Nor do households seem to be benefiting from the fall in the price of rice at the consumption level. These results are consistent with rural households facing increased competition due to reduced transportation costs.
Too Hard, Too Easy, or Just Right: The Productivity of Schooling and the Match between Child Skill and School Complexity
(Published by Oxford University Press on behalf of the World Bank, 2025-02-07) Castro, Juan F; Villacorta, Lucciano
This study proposes a novel way of modeling the heterogeneous effects of schooling based on the notion that learning is maximized when the skill of the child matches the complexity of the learning experiences at school. It offers direct evidence about the importance of this match using longitudinal information on test scores and schooling attained by children from Peru, India, and Vietnam. Using data from Peru, it also finds that the relation between the effect of schooling and early childhood skill can follow an inverted-U shape. Increasing early childhood skill will raise the productivity of the school up to the point where it matches school complexity. Further increases in child skill, however, will reduce the productivity of schooling as they will widen the mismatch. If one relates the quality of schools to the amount of learning they produce, this framework predicts that quality gains can be achieved by reducing these mismatches.
Do Factory Jobs Improve Welfare? Experimental Evidence from Ethiopia
(Published by Oxford University Press on behalf of the World Bank, 2025-02-12) Abebe, Girum; Buehren, Niklas; Goldstein, Markus
This study explores the impact of a light-touch job-facilitation intervention that supported young female job seekers during the application process for factory work in a newly constructed industrial park in Ethiopia. Using data from a panel of 687 job seekers and randomized access to the support intervention, the study finds that treated applicants are more likely to be employed and have higher earnings and savings eight months after baseline, although these impacts are short-lived. Four years later, the effects on employment and income largely dissipated. The results suggest that young women face significant barriers to engaging in factory work in the short run that a simple job-facilitation intervention can help overcome. In the long term, however, these jobs do not offer a better alternative than other income-generating opportunities.
The Gendered Impact of Digital Jobs Platforms: Experimental Evidence from Mozambique
(Published by Oxford University Press on behalf of the World Bank, 2025-02-12) Jones, Sam; Sen, Kunal
This study examines the impact of digital labor-market platforms on job outcomes using a randomized encouragement design embedded in a longitudinal survey of Mozambican technical-vocational college graduates. We differentiate between platforms targeting formal jobs, where jobseekers direct their search, and informal tasks, where clients seek workers. Our analysis reveals statistically insignificant intent-to-treat and complier average treatment effects for headline employment outcomes in the full sample. Notably, while the average male moderately benefits from platform usage, women do not. Instead, they are less responsive to the encouragement nudge, and female treatment compliers report higher reservation wages and lower job searches. This suggests digital platforms can inadvertently perpetuate gender disparities in labor markets.
The Temptation of Social Networks under Job Search Frictions
(Published by Oxford University Press on behalf of the World Bank, 2025-02-07) Matsuda, Norihiko; Nomura, Shinsaku
This paper presents descriptive evidence that although social networks help find jobs, the jobs found through social networks tend to be mismatched. The paper uses nationally representative matched employer-employee data in Bangladesh that includes direct measures of match quality. Less educated and seemingly poorer workers are more likely to have found their jobs through social networks. Compared to workers at the same occupation level in the same firm who were matched through formal channels, those matched through social networks found their jobs quicker but had lower match quality and earned less. The mechanism, suggested by a theoretical model, is as follows: even when social networks are connected to mismatched jobs, workers can be tempted to use social networks to find mismatched jobs for fear of finding nothing. This temptation is more potent for less skilled and poorer workers because costly formal channels are less rewarding and affordable for them.
Measuring the Size of the “Third Pillar”: A Global Dataset
(Published by Oxford University Press on behalf of the World Bank, 2024-03-22) Schiltz, Fritz; MacKay, Kelsey J.; Vandekerckhove, Philippe
Balancing the state and the market, the third pillar (i.e., any association of people that is neither public nor private) is a key sector in society. In contrast to the first two pillars (the public sector and the private sector), the third pillar has received very little attention in academic and policy debates. This paper aims to facilitate research on the third pillar’s relevance by constructing the first global dataset on the size of the third pillar, including estimates for 120 countries. Results show that the size of the third pillar is substantial, both when measured as third pillar time (TPT) or third pillar participation (TPP). Global TPT is equivalent to 5.1 percent of total employment, more than half of the global agricultural sector. Moreover, findings indicate that TPP equals 13.4 percent, suggesting that more than one person in eight of the world’s adult population is active as a volunteer in the third pillar.
Infrastructure and Structural Change in Africa
(Published by Oxford University Press on behalf of the World Bank, 2024-03-08) Herrera Dappe, Matías; Lebrand, Mathilde
Past investments in electricity, Internet, and road infrastructure, in isolation and bundled, have contributed to structural transformation and economic development in Africa. Using new data on the expansion of the road, electricity, and Internet networks over the past two decades, the paper shows that having access to both paved roads and electricity has led to a significant reallocation of labor from agricultural to both manufacturing and services. Adding access to fast Internet has had a major impact on structural change, with an even larger impact on reallocating labor away from agriculture. The paper then uses a spatial general-equilibrium model to quantify the impacts of future regional transport investments, bundled with electricity and Internet investments, on economic development in countries in the Horn of Africa and Lake Chad region.