Journal Issue: World Bank Research Observer, Volume 29, Issue 2

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The Promise of Performance Pay?: Reasons for Caution in Policy Prescriptions in the Core Civil Service
(Oxford University Press on behalf of the World Bank, 2014-08-05) Hasnain, Zahid ; Manning, Nick ; Pierskalla, Jan Henryk
There is a vast body of literature on performance-related pay (PRP), with strongly held views from opponents and proponents. This study reviews this literature, disaggregating the available evidence by the different public sector contexts, particularly the different types of public sector jobs, the quality of the empirical study, and the economic context (developing country or OECD settings), with the aim of distilling useful lessons for policy-makers in developing countries. The overall findings of the review are generally positive across these contextual categories. In particular, the findings from high quality studies, based on a simple scoring method for internal and external validity, of PRP in public sector-equivalent jobs show that explicit performance standards linked to some form of bonus pay can improve the desired service outcomes, at times dramatically. This evidence primarily concerns “craft” jobs, such as teaching, health care, and revenue administration, apparently negating (at least in the short term) the behavioral economics concern about the crowding out of intrinsic incentives. The available evidence suggests that if policy-makers are sensitive to design and vigilant about the risks of gaming, then PRP may result in performance improvements in these jobs in developing countries. However, it is difficult to draw firm conclusions from the review about the effect of PRP in core civil service jobs for three reasons. First, there are very few studies of PRP in these organizational contexts. The work of senior administrators in the civil service is very different from that of many private sector jobs and is characterized by task complexity and the difficulty of measuring outcomes. Second, although some studies have shown that PRP can work in even the most dysfunctional bureaucracies in developing countries, there are few cases illustrating its effectiveness or otherwise outside OECD settings. Finally, few studies follow PRP effects over time, providing little information on long-term effects and adjustments in staff behavior. We conclude that more empirical research is needed to examine the effects of PRP in the core civil service in developing countries.
Cash Transfers and Child Labor
(Oxford University Press on behalf of the World Bank, 2014-08-05) de Hoop, Jacobus ; Rosati, Furio C.
Cash transfer programs are widely used in settings where child labor is prevalent. Although many of these programs are explicitly implemented to improve children's welfare, in theory their impact on child labor is undetermined. This paper systematically reviews the empirical evidence on the impact of cash transfers, conditional and unconditional, on child labor. We find no evidence that cash transfer interventions increase child labor in practice. On the contrary, there is broad evidence that conditional and unconditional cash transfers lower both children's participation in child labor and their hours worked and that these transfers cushion the effect of economic shocks that may lead households to use child labor as a coping strategy. Boys experience particularly strong decreases in economic activities, whereas girls experience such decreases in household chores. Our findings underline the usefulness of cash transfers as a relatively safe policy instrument to improve child welfare but also point to knowledge gaps, for instance regarding the interplay between cash transfers and other interventions, that should be addressed in future evaluations to provide detailed policy advice.
Progress on Global Health Goals: Are the Poor Being Left Behind?
(Oxford University Press on behalf of the World Bank, 2014-08-05) Wagstaff, Adam ; Bredenkamp, Caryn ; Buisman, Leander R.
We examine differential progress on health Millennium Development Goals (MDGs) between the poor and the better off within countries. Our findings are based on an original analysis of 235 DHS and MICS surveys spanning 64 developing countries over the 1990–2011 period. We track five health status indicators and seven intervention indicators from all four health MDGs. In approximately three-quarters of countries, the poorest 40 percent have made faster progress than the richest 60 percent on MDG intervention indicators. On average, relative inequality in these indicators has been falling. However, in terms of MDG outcome indicators, in nearly half of the countries, relative inequality has been growing. Moreover, in approximately one-quarter of the countries, the poorest 40 percent have been slipping backwards in absolute terms on both MDG interventions and outcomes. Despite reductions in most countries, relative inequalities in MDG health indicators are still appreciable, with the poor facing higher risks of malnutrition and death in childhood and lower odds of receiving key health interventions.
Is Green Growth Good for the Poor?
(Oxford University Press on behalf of the World Bank, 2014-08-05) Dercon, Stefan
The developing world is experiencing substantial environmental change, and climate change is likely to accelerate these processes in the coming decades. Due to their initial poverty and their relatively high dependence on environmental capital for their livelihoods, the poor are likely to suffer most due to their low resources for mitigation and investment in adaptation. Economic growth is essential for any large-scale poverty reduction. Green growth, a growth process that is sensitive to environmental and climate change concerns, can be particularly helpful in this respect. We focus on the possible trade-offs between the greening of growth and poverty reduction, and we highlight the sectoral and spatial processes behind effective poverty reduction. High labor intensity, declining shares of agriculture in GDP and employment, migration, and urbanization are essential features of poverty-reducing growth. We contrast some common and stylized green-sensitive growth ideas related to agriculture, trade, technology, infrastructure, and urban development with the requirements of poverty-sensitive growth. We find that these ideas may cause a slowdown in the effectiveness of growth to reduce poverty. The main lesson is that trade-offs are bound to exist; they increase the social costs of green growth and should be explicitly addressed. If they are not addressed, green growth may not be good for the poor, and the poor should not be asked to pay the price for sustaining growth while greening the planet.
Entry Regulation and the Formalization of Microenterprises in Developing Countries
(Oxford University Press on behalf of the World Bank, 2014-08-05) Bruhn, Miriam ; McKenzie, David
The majority of microenterprises in most developing countries remain informal despite more than a decade of reforms aimed at making it easier and cheaper for them to formalize. This paper summarizes the evidence on the effects of entry reforms and related policy actions to promote firm formalization. Most of these policies result in only a modest increase in the number of formal firms, if there is any increase at all. Most informal firms appear to not benefit on net from formalizing. As a consequence, ease of formalization along will not induce most of them to become formal. Increased enforcement of rules can increase formality. Although there is a fiscal benefit of doing this with larger informal firms, it is unclear whether there is a public rationale for attempting to formalize subsistence enterprises.