Journal Issue: World Bank Economic Review, Volume 34, Issue 2

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Saving Water with a Nudge (or Two): Evidence from Costa Rica on the Effectiveness and Limits of Low-Cost Behavioral Interventions on Water Use
(Published by Oxford University Press on behalf of the World Bank, 2020-06) Miranda, Juan Jose ; Datta, Saugato ; Zoratto, Laura
The study uses a randomized controlled trial to test the impact of simple, inexpensive, and nonpersonalized behavioral interventions (or “nudges”) on water consumption in the context of a developing country. A descriptive social norm intervention using neighborhood comparisons reduces average water consumption in the first two postintervention months by 4.9 percent relative to the control group, while a planning postcard intervention reduces consumption by 4.8 percent. A descriptive social norm intervention using a town-level comparison also reduces water consumption by 3.2 percent, but this effect is not statistically significant. Finally, the study's one-time interventions continue to generate statistically significant reductions in water use for up to four months after they are implemented.
Is Predicted Data a Viable Alternative to Real Data?
(Published by Oxford University Press on behalf of the World Bank, 2020-06) Fujii, Tomoki ; van der Weide, Roy
It is costly to collect the household- and individual-level data that underlie official estimates of poverty and health. For this reason, developing countries often do not have the budget to update estimates of poverty and health regularly, even though these estimates are most needed there. One way to reduce the financial burden is to substitute some of the real data with predicted data by means of double sampling, where the expensive outcome variable is collected for a subsample and its predictors for all. This study finds that double sampling yields only modest reductions in financial costs when imposing a statistical precision constraint in a wide range of realistic empirical settings. There are circumstances in which the gains can be more substantial, but these denote the exception rather than the rule. The recommendation is to rely on real data whenever there is a need for new data and to use prediction estimators to leverage existing data.
Persistent Misallocation and the Returns to Education in Mexico
(Published by Oxford University Press on behalf of the World Bank, 2020-06) Levy, Santiago ; López-Calva, Luis F.
Over the last two decades, Mexico has experienced macroeconomic stability, an open trade regime, and substantial progress in education. Yet average workers’ earnings have stagnated, and earnings of those with higher schooling have fallen, compressing the earnings distribution and lowering the returns to education. This paper argues that distortions that misallocate resources toward less-productive firms explain these phenomena, because these firms are less intensive in well-educated workers compared with more-productive ones. It shows that while the relative supply of workers with more years of schooling has increased, misallocation of resources toward less-productive firms has persisted. These two trends have generated a widening mismatch between the supply of, and the demand for, educated workers. The paper breaks down worker earnings into observable and unobservable firm and individual worker characteristics, and computes a counterfactual earnings distribution in the absence of misallocation. The main finding is that in the absence of misallocation average earnings would be higher, and that earnings differentials across schooling levels would widen, raising the returns to education. A no-misallocation path is constructed for the wage premium. Depending on parameter values, this path is found to be rising or constant, in contrast to the observed downward path. The paper concludes arguing that the persistence of misallocation impedes Mexico from taking full advantage of its investments in the education of its workforce.
Do Information Technologies Improve Teenagers’ Sexual Education? Evidence from a Randomized Evaluation in Colombia
(Published by Oxford University Press on behalf of the World Bank, 2020-06) Chong, Alberto ; Gonzalez-Navarro, Marco ; Karlan, Dean ; Valdivia, Martín
This study reports results from a randomized evaluation of a mandatory six-month Internet-based sexual education course implemented across public junior high schools in 21 Colombian cities. Six months after finishing the course, the study finds a 0.4 standard deviation improvement in knowledge, a 0.2 standard deviation improvement in attitudes, and a 55 percent increase in the likelihood of redeeming vouchers for condoms as a result of taking the course. The data provide no evidence of spillovers to control classrooms within treatment schools. However, the analysis provides compelling evidence that treatment effects are enhanced when a larger share of a student's friends also takes the course. The low cost of the online course along with the effectiveness the study documents suggests this technology is a viable alternative for improving sexual education in middle-income countries.
Gender, Informal Employment and Trade Liberalization in Mexico
(Published by Oxford University Press on behalf of the World Bank, 2020-06) Yahmed, Sarra Ben ; Bombarda, Pamela
This paper studies how import liberalization affects formal employment across gender. The theory offers a mechanism to explain how male and female formal employment shares can respond differently to trade liberalization through labor reallocation across tradable and nontradable sectors. Using Mexican data over the period 1993–2001, we find that Mexican tariff cuts increase the probability of working formally for both men and women within four-digit manufacturing industries. The formalization of jobs within tradable sectors is driven by large firms. Constructing a regional tariff measure, we find that regional exposure to import liberalization increases the probability of working formally in the manufacturing sector for both men and women, and especially for men. However in the service sectors, the probability of working formally decreases for low-skilled women.
Exploring the Heterogeneous Effects of Export Promotion
(Published by Oxford University Press on behalf of the World Bank, 2020-06) Olarreaga, Marcelo ; Sperlich, Stefan ; Trachsel, Virginie
A semiparametric varying coefficient model is used to explore the heterogeneity in returns to export promotion across countries. Differences in characteristics of export-promotion agencies drive the heterogeneity in returns. Interestingly, characteristics that matter for export growth do not necessarily matter for GDP per capita growth. A 1 percent increase in export-promotion budgets is associated with an average increase in exports of 0.10 percent and an average increase in GDP per capita of 0.06 percent. However, these average returns hide a lot of heterogeneity. Returns in terms of exports vary from 0 percent in Cyprus and Vietnam to 0.22 percent in Portugal. Returns in terms of GDP per capita show less heterogeneity, varying from 0.05 in Malawi to 0.10 percent in Portugal and Nicaragua.
Education Spillovers in Farm Productivity: Revisiting the Evidence
(Published by Oxford University Press on behalf of the World Bank, 2020-06) Gille, Véronique
This paper exploits the social organization of India to revisit the question of education spillovers in farm productivity. The fact that social interactions mainly occur within castes in rural India provides tools to show that the observed correlation between farm productivity and neighbors’ education is likely to be a spillover effect. In particular, there are no cross-caste and no cross-occupation effects, which underlines that, under specific assumptions, which are stated and explored in the paper, the education of neighbors does not capture the effect of group unobservables. This evidence is complemented by separate estimations by crops, which show results that are consistent with education spillovers. The strategy used in this paper helps understand and interpret previous findings from the literature.
Informed Trading in Business Groups
(Published by Oxford University Press on behalf of the World Bank, 2020-06) Pedraza, Alvaro
Business groups, which are collections of legally independent companies with a significant amount of common ownership, dominate private sector activity in developing countries. This paper studies information flows within these groups by examining the trading performance of institutional investors in firms that belong to the same group. Using a novel dataset with complete transaction records in Colombia, this paper estimates the difference in returns between trades of asset managers in group-affiliated companies and trades of non-affiliated managers in the same stocks during the same period. The data show that affiliated managers display superior timing ability and that their trades outperform those of non-affiliated managers by 0.85 percent per month. The evidence suggests that institutional investors with group affiliation access information that is only available to members of the group. In order to limit the use of private information, financial authorities might need to expand their disclosure rules to monitor the trades of group-affiliated investors.
Training to Teach Science: Experimental Evidence from Argentina
(Published by Oxford University Press on behalf of the World Bank, 2020-06) Albornoz, Facundo ; Anauati, María Victoria ; Furman, Melina ; Luzuriaga, Mariana ; Podestá, María Eugenia ; Taylor, Inés
This paper evaluates the learning impact of different teacher training methods using a randomized controlled trial implemented in 70 state schools in Buenos Aires, Argentina. A control group receiving standard teacher training was compared with two alternative treatment arms: providing a structured curriculum unit or receiving both the unit and weekly coaching. Following a 12-week intervention, there are substantial learning gains for students whose teachers were trained using structured curriculum units, as well as for those whose teachers received coaching (between 55 percent and 64 percent of a standard deviation more than those students in the control group). Coaching teachers does not appear to be cost-effective, as the unit cost per 0.1 standard deviation is more than twice the cost of using only the structured curriculum unit. However, additional coaching is particularly beneficial for inexperienced teachers with less than two years of teaching science. Coaching teachers also showed specific gains for girls, who both learned and declared to enjoy science lessons more. High-performing students especially benefited from both interventions, with students from coached teachers performing particularly well in harder questions. Using structured curriculum units and providing coaching also affected teacher perceptions: teachers expressed that they enjoyed teaching science more and taught more hours of science, and that their students developed more skills. Results from a follow-up survey suggest persistent change in teacher practice, with the vast majority reporting using the structured curriculum unit one year after the intervention.
The Effect of Compulsory Schooling Expansion on Mothers’ Attitudes Toward Domestic Violence in Turkey
(Published by Oxford University Press on behalf of the World Bank, 2020-06) Gulesci, Selim ; Meyersson, Erik ; Trommlerová, Sofia K.
An extensive literature examines the intergenerational spillover effects of education, but evidence on the causal effects of children's education on their parents’ outcomes is scarce. This paper estimates the spillover effects of children's schooling on their mothers’ attitudes toward domestic violence in Turkey. To identify the causal effect of children's schooling, we take advantage of a reform that took place in Turkey in 1997 and expanded compulsory schooling from five to eight years. Using a regression discontinuity design based on monthly birth cohorts and data from the 2008 and 2013 waves of the Turkey Demographic and Health Surveys, this paper shows that mothers whose eldest daughters were exposed to higher compulsory schooling are by 12 percentage points less likely to find domestic violence justifiable, which represents a decrease by 43 percent. We find no similar effect for boys’ schooling. Our findings demonstrate that children's schooling can have impacts on their parents’ attitudes, and such effects are likely to vary by the gender of the child.
Call Me Maybe: Experimental Evidence on Frequency and Medium Effects in Microenterprise Surveys
(Published by Oxford University Press on behalf of the World Bank, 2020-06) Garlick, Robert ; Orkin, Kate ; Quinn, Simon
This study analyzes the effects of differences in survey frequency and medium on microenterprise survey data. A sample of enterprises were randomly assigned to monthly in-person, weekly in-person, or weekly phone surveys for a 12-week panel. The results show few differences across the groups in measured means, distributions, and deviations of measured data from an objective data-quality standard provided by Benford’s Law. However, phone interviews generated higher within-enterprise variation through time in several variables and may be more sensitive to social desirability bias. Higher-frequency interviews did not lead to persistent changes in reporting or increase permanent attrition from the panel but did increase the share of missed interviews. These findings show that collecting high-frequency survey data by phone does not substantially affect data quality. However, researchers who are particularly interested in within-enterprise dynamics should exercise caution when choosing survey medium.
How Mass Immigration Affects Countries with Weak Economic Institutions: A Natural Experiment in Jordan
(Published by Oxford University Press on behalf of the World Bank, 2020-06) Nowrasteh, Alex ; Forrester, Andrew C. ; Blondin, Cole
To what extent does immigration affect the economic institutions in destination countries? While there is much evidence that economic institutions in developed nations are either unaffected or improved after immigration, there is little evidence of how immigration affects the economic institutions of developing countries that typically have weaker institutions. Using the Synthetic Control Method, this study estimates a significant and long-lasting positive effect on Jordanian economic institutions from the surge of refugees from the First Gulf War. The surge of refugees to Jordan in 1990–1991 was massive, equal to 10 percent of Jordan’s population in 1990. Importantly, these refugees were able to have a large and direct impact on Jordanian economic institutions because they could work, live, and vote immediately upon entry due to a quirk in Jordanian law. The refugee surge was the main mechanism by which Jordan’s economic institutions improved in the decades that followed.
Migration and Urbanization in Post-Apartheid South Africa
(Published by Oxford University Press on behalf of the World Bank, 2020-06) Bakker, Jan David ; Parsons, Christopher ; Rauch, Ferdinand
Although Africa has experienced rapid urbanization in recent decades, little is known about the process of urbanization across the continent. This paper exploits a natural experiment, the abolition of South African pass laws, to explore how exogenous population shocks affect the spatial distribution of economic activity. Under apartheid, black South Africans were severely restricted in their choice of location, and many were forced to live in homelands. Following the abolition of apartheid they were free to migrate. Given a migration cost in distance, a town nearer to the homelands will receive a larger inflow of people than a more distant town following the removal of mobility restrictions. Drawing upon this exogenous variation, this study examines the effect of migration on urbanization in South Africa. While it is found that on average there is no endogenous adjustment of population location to a positive population shock, there is heterogeneity in the results. Cities that start off larger do grow endogenously in the wake of a migration shock, while rural areas that start off small do not respond in the same way. This heterogeneity indicates that population shocks lead to an increase in urban relative to rural populations. Overall, the evidence suggests that exogenous migration shocks can foster urbanization in the medium run.