Journal Issue: World Bank Economic Review, Volume 36, Issue 1
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Volume
36
Number
1
Issue Date
2022-02-01
Journal Title
Journal ISSN
1564-698X
Journal
World Bank Economic Review
1564-698X
Journal Volume
Other issues in this volume
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Articles
Labor Market Experience and Falling Earnings Inequality in Brazil: 1995–2012
(Published by Oxford University Press on behalf of the World Bank, 2021-03-25) Ferreira, Francisco H G; Firpo, Sergio P; Messina, Julián
The Gini coefficient of labor earnings in Brazil fell by nearly a fifth between 1995 and 2012, from 0.50 to 0.41. The decline in other measures of earnings inequality was even larger, with the 90-10 percentile ratio falling by almost 40 percent. Applying micro-econometric decomposition techniques, this study parses out the proximate determinants of this substantial reduction in earnings inequality. Although a falling education premium did play a role, in line with received wisdom, this study finds that a reduction in the returns to labor market experience was a much more important factor driving lower wage disparities. It accounted for 53 percent of the observed decline in the Gini index during the period. Reductions in horizontal inequalities – the gender, race, regional and urban-rural wage gaps, conditional on human capital and institutional variables – also contributed. Two main factors operated against the decline: a greater disparity in wage premia to different sectors of economic activity, and the “paradox of progress”: the mechanical inequality-increasing effect of a more educated labor force when returns to education are convex.
Wealth Inequality in South Africa, 1993–2017
(Published by Oxford University Press on behalf of the World Bank, 2021-07-31) Chatterjee, Aroop; Czajka, Léo; Gethin, Amory
This article estimates the distribution of personal wealth in South Africa by combining microdata covering the universe of income tax returns, household surveys, and macroeconomic balance sheet statistics. South Africa is characterized by unparalleled levels of wealth concentration. The top 10 percent own 86 percent of aggregate wealth and the top 0.1 percent close to one-third. The top 0.01 percent of the distribution (3,500 individuals) concentrate 15 percent of household net worth, more than the bottom 90 percent as a whole. Such levels of inequality can be accounted for in all forms of assets at the top end, including housing, pension funds, and financial assets. There has been no sign of decreasing inequality since the end of apartheid.
Local Water Quality, Diarrheal Disease, and the Unintended Consequences of Soda Taxes
(Published by Oxford University Press on behalf of the World Bank, 2021-04-19) Gutierrez, Emilio; Rubli, Adrian
Could taxing sugar-sweetened beverages in areas where clean water is unavailable lead to increases in diarrheal disease? An excise tax introduced in Mexico in 2014 led to a significant 6.6 percent increase in gastrointestinal disease rates in areas lacking safe drinking water throughout the first year of the tax, with evidence of a diminishing impact in the second year. Suggestive evidence of a differential increase in the consumption of bottled water by households without access to safe water two years post-tax provides a potential explanation for this declining pattern. The costs implied by these results are small, particularly compared to tax revenues and the potential public health benefits. However, these findings inform the need for accompanying soda taxes with policy interventions that guarantee safe drinking water for vulnerable populations.
What We Learn about Girls’ Education from Interventions That Do Not Focus on Girls
(Published by Oxford University Press on behalf of the World Bank, 2021-05-19) Yuan, Fei; Evans, David K.
What is the best way to improve
access and learning outcomes for girls This review brings
together evidence from 267 educational interventions in 54
low- and middle-income countries – regardless of whether the
interventions specifically target girls – and identifies
their impacts on girls. To improve access and learning,
general interventions deliver average gains for girls that
are comparable to girl-targeted interventions. General
interventions have similar impacts for girls as for boys.
Taken together, these findings suggest that many educational
gains for girls may be achieved through nontargeted
programs. Many of the most effective interventions to
improve access for girls relax household-level constraints
(such as cash transfer programs), and many of the most
effective interventions to improve learning for girls
involve improving the pedagogy of teachers. Girl-targeted
interventions may make the most sense when addressing
constraints that are unique to, or most pronounced for, girls.
Unfolding Trade Effect in Two Margins of Informality
(Published by Oxford University Press on behalf of the World Bank, 2021-10-20) Cisneros-Acevedo, Camila
This paper studies the effect of an
increase in import competition on informality along two
margins. It considers the extensive margin, where workers
are hired by unregistered employers, and the intensive
margin, where even though jobs are carried out by registered
firms, employees are off the books. Peru’s relentless
informal employment and its unprecedented trade-driven
growth provides an ideal case study. Using a rich household
survey, this study finds that exposure to trade impacts on
informality through two competing and contrasting
mechanisms. On the one hand, extensive-informal employment
declines as unregistered employers shrink or exit due to
their low productivity. On the other hand,
intensive-informal employment rises as registered employers
reduce costs by hiring informal workers. Furthermore,
results suggest that the intensive margin drives the overall
effect. Hence, trade liberalization increases informality.
Oil Price Shocks and Civil Conflict
(Published by Oxford University Press on behalf of the World Bank, 2021-06-04) Nwokolo, Arinze
When and for what reason do
governments choose to monopolize violence and consolidate
power Theory suggests three channels: when the government
has coercive power against the opposition, if it shifts the
distribution of power in its favor, and when contingent
spoils are large. Using international oil price shocks and a
novel dataset on oil-producing local government areas, this
article examines how commodity prices affect civil conflict
in Nigeria. Results show that a rise in oil price leads to a
more than proportionate increase in government attacks on
rebel groups in the oil region. The findings are consistent
with the theoretical predictions: positive oil price shocks
increase the monopoly of violence by the government through
an increase in coercion, a rise in regaining territories
from rebel groups, and an increase of violence in areas with
large oil fields.
Knowledge and Adoption of Complex Agricultural Technologies
(Published by Oxford University Press on behalf of the World Bank, 2021-12-09) Hörner, Denise; Bouguen, Adrien; Frölich, Markus; Wollni, Meike
In most of Sub-Saharan Africa,
agricultural extension models have become more decentralized
and participatory and thus rely on effective
farmer-to-farmer learning, while increasingly including
nontraditional forms of education. At the same time,
agricultural technologies become more complex and are now
often promoted as integrated packages, which are likely to
increase the complexity of the diffusion process. Based on a
randomized controlled trial, this study assesses the effects
of “farmer-to-farmer” extension and a video intervention on
adoption of a complex technology package among 2,382
smallholders in Ethiopia. Both extension-only and extension
combined with video increase adoption and knowledge of the
package, especially of its more complex components; on
average, however, the video intervention has no additional
effect on adoption. Knowledge and the number of adopted
practices also increase among farmers not actively
participating in extension activities, which suggests
information diffusion. For this group, the additional video
intervention has a reinforcing effect, and particularly
fosters adoption of the integrated package.
The Demand for Advice
(Published by Oxford University Press on behalf of the World Bank, 2021-02-17) Naeher, Dominik; Schündeln, Matthias
Low levels of investment into modern
technologies, and limited use of measures that have low
monetary cost but the potential for high yields, are often
regarded as obstacles to further agricultural development.
This paper investigates farmers’ demand for one such
measure, namely agricultural advisory services. These have
modest (most frequently zero) monetary user cost but,
according to some recent research, have the potential to
result in large increases of yields. Yet demand for these
extension services is often low. We propose that costly
attention may be part of the explanation for this. In our
model, advisory services are available free of charge, but
positive effects on production are only realized if farmers
devote attention to listening to and implementing the
provided advice. Modeling farmers as rational decision
makers facing scarce attention, we identify the
circumstances under which farmers may optimally abstain from
demanding advisory services. The model complements the
insights of other theories commonly used to explain
suboptimal farm decisions and outcomes, and generates
testable predictions, which are consistent with empirical
evidence based on a large farm-level panel dataset from
Sub-Saharan Africa.
Does Local Female Political Representation Empower Women to Run for Higher Office? Evidence from State and National Legislatures in India
(Published by Oxford University Press on behalf of the World Bank, 2021-08-14) Brown, Ryan; Mansour, Hani; O’Connell, Stephen D
Does increasing the number of women
in career stages that precede high-level positions affect
female representation at the top of the career ladder State
legislature elections narrowly won by female candidates in
India are exploited to examine the effect of expanding the
pipeline of women in local politics on subsequent female
representation and success in national legislature
elections. For each additional state legislature election
won by a woman, there is a 34 percent increase in the number
of female candidates contesting in the subsequent national
election, and a 2.6 percentage-point increase in the average
vote share won per female candidate. This relationship is
driven by new female politicians and not by the progression
of female state legislators nor by continued candidacy of
previous female candidates for the national legislature.
The Spillover Impact of Index Insurance on Agricultural Investment by Cotton Farmers in Burkina Faso
(Published by Oxford University Press on behalf of the World Bank, 2021-06-04) Stoeffler, Quentin; Carter, Michael; Guirkinger, Catherine; Gelade, Wouter
This paper examines whether
agricultural insurance can boost investment by small scale
farmers in West Africa. It is based on a randomized
evaluation designed to analyze the impacts of index
insurance for cotton farmers in Burkina Faso. No impact of
insurance was found on cotton, but, consistent with
microeconomic theory, significant spillover impacts on
investment in other agricultural activities were measured.
Furthermore, the effects of insurance payouts on farmers hit
by a shock confirm the potential of index insurance as a
risk management tool. However, this research uncovers
important flaws in the implementation of the project that
limited its impact on cotton. Overall, this study suggests a
promising role for index insurance in stimulating
investment, but also draws attention to key challenges to
the efficient delivery of insurance to small farmers.
Finally, the study’s hybrid, mixed methods RCT offers
lessons for the evaluation of complex interventions where
trust, understanding, and timing are all important.
Decomposing Learning Inequalities in East Africa
(Published by Oxford University Press on behalf of the World Bank, 2021-08-10) Anand, Paul; Behrman, Jere R.; Dang, Hai-Anh H.; Jones, Sam
Inequalities in learning
opportunities arise from both household, and school-related
factors. Although these factors are unlikely to be
independent, few studies have considered the extent to which
sorting between schools and households might aggravate
educational inequalities. To fill this gap, this article
presents a novel variance decomposition, which is then
applied to data from over one million children from East
Africa. Results indicate that sorting accounts for around 8
percent of the test-score variance, similar in magnitude to
the contribution of differences in school quality. Empirical
simulations of steady-state educational inequalities reveal
that policies to mitigate sorting could substantially reduce
educational inequalities over the long run.