Journal Issue: World Bank Economic Review, Volume 35, Issue 1
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Volume
35
Number
1
Issue Date
2021-02-01
Journal Title
Journal ISSN
1564-698X
Journal
World Bank Economic Review
1564-698X
Journal Volume
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Articles
Changing Pedagogy to Improve Skills in Preschools: Experimental Evidence from Peru
(Published by Oxford University Press on behalf of the World Bank, 2019-12-11) Gallego, Francisco A.; Näslund-Hadley, Emma; Alfonso, Mariana
Changing pedagogical practices is a promising, cost-effective avenue for improving education in developing countries, especially when done without changing current inputs such as teachers and instruction time. This article presents the results of a randomized evaluation of a program that aimed at changing the pedagogical approach used to teach the existing national mathematics curriculum. The program provides tools to regular preschool teachers to use an inquiry- and problem-based learning approach to tailor instruction to preschoolers in Peru. The results show an improvement of overall mathematics outcomes, which persist for some content areas even one year after the program ended. In contrast to results from previous research that suggest mathematics programs are biased along gender and socioeconomic lines, there is no evidence of differential effects by gender, language spoken at home, or proxies for socioeconomic status. Results also imply persistent stronger impacts on students whose teachers have university degrees.
Minimum Age Regulation and Child Labor: New Evidence from Brazil
(Published by Oxford University Press on behalf of the World Bank, 2019-12-19) Bargain, Olivier; Boutin, Delphine
This study presents new evidence on the effects of minimum age regulations obtained from a natural experiment. In 1998, a constitutional reform in Brazil changed the minimum working age from 14 to 16. The reform was the legislative counterpart of a broad set of measures taken by a government strongly committed to eliminating child labor. This article investigates the role of the minimum working age in this context. The setting allows for improvements upon past approaches based on comparing employment rates of children at different ages. A discontinuity in treatment is exploited, namely the fact that only children who turned 14 after the enactment date (mid-December 1998) are banned from work. According to regression discontinuity and difference-in-discontinuity designs, the null hypothesis of no overall effect of the ban cannot be rejected. Throughout the methods and specifications, an employment effect in a confidence interval of [−0.06,0.03]
(in percentage points) is found. A detailed heterogeneity analysis is performed and provides suggestive evidence of diminishing child labor trends in regions characterized by higher labor inspection intensity, which is interpreted as a trace of there being a law. However, contrary to what has been claimed in recent studies, the law seems not to have produced sizeable effects overall, at least in the short run. Power calculations and extensive sensitivity checks support these conclusions.
Societal Poverty: A Relative and Relevant Measure
(Published by Oxford University Press on behalf of the World Bank, 2019-11-02) Jolliffe, Dean
Poverty lines are typically higher in richer countries, and lower in poorer ones, reflecting the relative nature of national assessments of who is considered poor. In many high-income countries, poverty lines are explicitly relative, set as a share of mean or median income. Despite systematic variation in how countries define poverty, global poverty counts are based on fixed-value lines. To reflect national assessments of poverty in a global headcount of poverty, this paper proposes a societal poverty line. The proposed societal poverty line is derived from 699 harmonized national poverty lines, has an intercept of $1 per day and a relative gradient of 50 percent of median national income or consumption. The societal poverty line is more closely aligned with national definitions of poverty than other proposed relative lines. By this relative measure, societal poverty has fallen steadily since 1990, but at a much slower pace than absolute extreme poverty.
Twenty Years of Wage Inequality in Latin America
(Published by Oxford University Press on behalf of the World Bank, 2019-12-06) Messina, Julian
This article documents an inverse U-shape in the evolution of wage inequality in Latin America since 1995, with a sharp reduction starting in 2002. The Gini coefficient of wages increased from 42 to 44 between 1995 and 2002 and declined to 39 by 2015. Between 2002 and 2015, the 90/10 log hourly earnings ratio decreased by 26 percent. The decline since 2002 was characterized by rising wages across the board, but especially at the bottom of the wage distribution in each country. Triggered by a rapid expansion of educational attainment, the wages of college and high school graduates fell relative to the wages of workers with only primary education. The premium for labor market experience also fell significantly. However, the compression of wages was not entirely driven by changes in the wage structure across skill groups. Two-thirds of the decline in the variance of wages took place within skill groups. Changes in the sectoral, occupational, and formal/informal composition of jobs matter for the process of reduction in inequality, but they do not fully account for the fall in within-skill variance. Evidence based on longitudinal matched employer-employee administrative data suggests that an important driver was falling wage dispersion across firms.
The Role of Historical Christian Missions in the Location of World Bank Aid in Africa
(Published by Oxford University Press on behalf of the World Bank, 2020-02-05) Alpino, Matteo; Hammersmark, Eivind Moe
This article documents a positive and sizable correlation between the location of historical Christian missions and the allocation of present-day World Bank aid at the grid-cell level in Africa. The correlation is robust to an extensive set of geographical and historical control variables that predict settlement of missions. The study finds no correlation with aid effectiveness, as measured by project ratings and survey-based development indicators. Mission areas display a different political aid cycle than other areas, whereby new projects are less likely to arrive in years with new presidents. Hence, political connections between mission areas and central governments could be one likely explanation for the correlation between missions and aid.
Paying More for Less: Why Don’t Households in Tanzania Take Advantage of Bulk Discounts?
(Published by Oxford University Press on behalf of the World Bank, 2020-01) Dillon, Brian; De Weerdt, Joachim; O’Donoghue, Ted
Do poor households shop in a way that leaves money on the table? A simple way to maximize consumption, conditional on available cash, is to avoid regularly purchasing small amounts of nonperishable goods when bulk discounts are available at modestly larger quantities. Using two-week transaction diaries covering 48,501 purchases by 1,493 households in Tanzania, this article finds that through bulk purchasing the average household could spend 8.7 percent less without reducing purchasing quantities. Several explanations for this pattern are investigated, and the most likely mechanisms are found to be worries about over-consumption of stocks and avoidance of social taxation. Contrary to prior work, there is little indication that liquidity constraints prevent poorer households in the sample from buying in bulk, possibly because the bulk quantities under examination are not very large.
Markups, Market Imperfections, and Trade Openness: Evidence from Ghana
(Published by Oxford University Press on behalf of the World Bank, 2019-10-31) Damoah, Kaku Attah
This article investigates the impact of Ghana’s World Trade Organization (WTO) accession on firm-level product and labor market imperfections. The article exploits a rich dataset of firm-level information to estimate markups and the degree of monopsony power enjoyed by manufacturing firms. The results indicate that price-cost margins declined while the degree of monopsony power increased in the wake of WTO accession. These diverging dynamics suggest that firms compress real wages to offset loss of market power in the product market due to increased international competition. This gives rise to an increase in the market imperfection gap, which gradually erodes the pro-competitive gains from trade. The article contributes to the literature by identifying channels through which allocative inefficiencies and misallocation can persist even after trade liberalization.
Latent Trade Diversification and Its Relevance for Macroeconomic Stability
(Published by Oxford University Press on behalf of the World Bank, 2019-10-31) Lederman, Daniel; Rojas, Diego
This paper examines the economic implications of a novel concept of trade diversification—latent diversification. In contrast to traditional measures, latent diversification accounts for potential movements of factors of production into activities where the country has previous exporting experience, hence presenting an additional margin through which countries can respond to shocks. The paper shows that the gap between traditional measures of diversification and latent diversification is sizeable and that latent diversification is in its own right an important determinant of macroeconomic stability. More diversified latent export baskets are associated with lower terms-of-trade volatility and, in turn, lower GDP per capita volatility, even after controlling for the degree of contemporaneous export diversification and other country characteristics.
Trade Effects of Customs Reform: Evidence from Albania
(Published by Oxford University Press on behalf of the World Bank, 2019-11-09) Fernandes, Ana Margarida; Alcántara, Alejandra Mendoza
Despite enormous academic interest in international trade costs and keen policy interest in efforts to reduce them, little is known about the effects of trade facilitation measures. This study evaluates a significant Albanian reform that sharply reduced physical inspections of import shipments. An estimation strategy that isolates quasi-random variation in the allocation of shipments to physical inspections is used to show that reduced inspections significantly increase imports. Import flows that are observed least frequently see the largest trade responses to reduced inspections. The effect of inspections on imports is virtually independent of changes in clearance time and clearance time uncertainty. Tariff and other tax revenues collected at the border rise in direct proportion to growth in declared import value. There is no compelling evidence that reduced inspections increase evasive behavior, perhaps because most of Albania's imports are tariff-free.
Lights Off, Lights On: The Effects of Electricity Shortages on Small Firms
(Published by Oxford University Press on behalf of the World Bank, 2019-11-09) Hardy, Morgan; McCasland, Jamie
Entrepreneurs in developing countries report that unreliable electricity imposes a serious constraint, yet little evidence exists on how blackouts impact the micro-firms that account for the majority of employment. This article estimates the effects of outages on small firms using original firm-level panel data and finds evidence of differential effects by firm size. Firms without employees experience large reductions in revenues and profits. Outages have no measurable effect on the output of firms with employees, where worker hours increase, weekly wages paid decrease, and the analysis fails to reject the null hypothesis that blackouts have no effect on (average firm-level) worker hourly wages.
Productivity Losses and Firm Responses to Electricity Shortages: Evidence from Ghana
(Published by Oxford University Press on behalf of the World Bank, 2019-11-02) Abeberese, Ama Baafra; Ackah, Charles Godfred; Asuming, Patrick Opoku
One of the commonly cited obstacles to firms’ operations in developing economies is inadequate access to electricity. This paper explores the impact of electricity outages on firm productivity using arguably exogenous variation in outages, induced by an electricity rationing program, across small and medium-sized Ghanaian manufacturing firms. The results indicate that eliminating outages in this setting could lead to an increase in firm productivity. Further analyses of the strategies firms use to cope with outages show that changing the firm's product mix to favor less electricity-intensive products mitigates the negative impacts of outages on productivity. However, using a generator, a common strategy in many parts of the world, is unable to insulate firms from the negative impacts of outages on productivity.