Person:
McKenzie, David J.

Development Research Group

Fields of Specialization

Microenterprises, Private Sector Development, Migration

ORCID

0000-0002-1885-2426

External Links

Development Impact
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Departments

Development Research Group

Last updated January 31, 2023

Biography

David McKenzie is a Lead Economist in the Development Research Group, Finance and Private Sector Development Unit. He received his B.Com.(Hons)/B.A. from the University of Auckland, New Zealand and his Ph.D. in Economics from Yale University. Prior to joining the World Bank, he spent four years as an assistant professor of Economics at Stanford University. His main research is on migration, microenterprises, and methodology for use with developing country data. He has published more than 100 articles in journals such as the Quarterly Journal of Economics, Science, Review of Economics and Statistics, Journal of the European Economic Association, Economic Journal, American Economic Journal: Applied Micro, Journal of Econometrics, and all leading development journals. He is currently on the editorial boards of the Journal of Development Economics, World Bank Economic Review, Journal of Economic Perspectives, and Migration Studies. He is also a co-founder and regular contributor to the Development Impact blog.

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Publication Search Results

Now showing 1 - 10 of 195

Remittances and the Brain Drain Revisited : The Microdata Show That More Educated Migrants Remit More

(World Bank, 2011-01-30) Bollard, Albert ; McKenzie, David ; Morten, Melanie ; Rapoport, Hillel

Two of the most salient trends in migration and development over the last two decades are the large rise in remittances and in the flow of skilled migrants. However, recent literature based on cross-country regressions has claimed that more educated migrants remit less, leading to concerns that further increases in skilled migration will impede remittance growth. Microdata from surveys of immigrants in 11 major destination countries are used to revisit the relationship between education and remitting behavior. The data show a mixed pattern between education and the likelihood of remitting, and a strong positive relationship between education and amount remitted (intensive margin), conditional on remitting at all (extensive margin). Combining these intensive and extensive margins yields an overall positive effect of education on the amount remitted for the pooled sample, with heterogeneous results across destinations. The microdata allow investigation of why the more educated remit more, showing that the higher income earned by migrants, rather than family characteristics, explains much of the higher remittances.
Learning from the Experiments That Never Happened : Lessons from Trying to Conduct Randomized Evaluations of Matching Grant Programs in Africa

(World Bank, Washington, DC, 2012-12) Campos, Francisco ; Coville, Aidan ; Fernandes, Ana M. ; Goldstein, Markus ; McKenzie, David

Matching grants are one of the most common policy instruments used by developing country governments to try to foster technological upgrading, innovation, exports, use of business development services and other activities leading to firm growth. However, since they involve subsidizing firms, the risk is that they could crowd out private investment, subsidizing activities that firms were planning to undertake anyway, or lead to pure private gains, rather than generating the public gains that justify government intervention. As a result, rigorous evaluation of the effects of such programs is important. The authors attempted to implement randomized experiments to evaluate the impact of seven matching grant programs offered in six African countries, but in each case were unable to complete an experimental evaluation. One critique of randomized experiments is publication bias, whereby only those experiments with "interesting" results get published. The hope is to mitigate this bias by learning from the experiments that never happened. This paper describes the three main proximate reasons for lack of implementation: continued project delays, politicians not willing to allow random assignment, and low program take-up; and then delves into the underlying causes of these occurring. Political economy, overly stringent eligibility criteria that do not take account of where value-added may be highest, a lack of attention to detail in "last mile" issues, incentives facing project implementation staff, and the way impact evaluations are funded, and all help explain the failure of randomization. Lessons are drawn from these experiences for both the implementation and the possible evaluation of future projects.
The Impact of Financial Literacy Training for Migrants at Destination

(World Bank, Washington, DC, 2012-05) Gibson, John ; McKenzie, David ; Zia, Bilal

Lowering the cost of sending remittances has become a major goal of policy efforts in migration, and an area the World Bank has worked on across the globe. Two main channels for lowering these costs are regulatory reforms to promote competition and the introduction of new products; and efforts to increase the disclosure of costs of remitting money through websites. However, the success of such policies depends on the ability of migrants to understand how to use the different methods available for remitting, and on their understanding of the costs implied by each method. Existing evidence suggests migrants often lack knowledge in these areas, suggesting scope for financial literacy efforts to change their behavior.
An Econometric Analysis of IBRD Creditworthiness

(World Bank, Washington, D.C., 2002-04) McKenzie, David

The author econometrically ascertains the determinants of default to the International Bank for Reconstruction and Development (IBRD) through panel logit analysis. Creditworthiness with a lag of one period is determined by the extent of arrears to private creditors, the proportion of total debt service that is being paid, the government budget deficit, the extent of military involvement in the government of a country, and by the G7's current account balance. Default to the IBRD falls into a graduated hierarchy, whereby default occurs first to Paris Club and commercial bank creditors, with subsequent default triggered by portfolios with high proportions of IBRD and short-term debt, as well as the factors mentioned above. Default to these other creditor groups can be explained by more traditional country risk variables, although Mckenzie's analysis highlights the importance of political and external factors in explaining default to all creditors studied. He finds sovereign default to be a state-dependent process, whereby the repayment behavior of a country changes once it enters into default. Operationally, the author arrives at a model that can be used to assess short-term creditworthiness, although data imperfections and availability still limit the usefulness of the model for some countries. Longer-term risk assessment proves more difficult, which raises operational questions for the IBRD.
Using Administrative Data to Evaluate Municipal Reforms : An Evaluation of the Impact of Minas Fácil Expresso

(Taylor and Francis, 2013-07-04) Bruhn, Miriam ; McKenzie, David

This study uses administrative data to evaluate the impact of Minas Fácil Expresso, a programme in the State of Minas Gerais, Brazil, which expanded a business start-up simplification programme to more remote municipalities. Using difference-in-differences with 56 months of registration data for 822 municipalities, the analysis finds introducing the programme actually led to a reduction in registration rates, and no change in tax revenues. The paper uses this evaluation to illustrate the design choices and the issues involved in using administrative data to evaluate reforms, also providing a template that can be used for evaluating similar reforms elsewhere.
Entry Regulation and Formalization of Microenterprises in Developing Countries

(World Bank, Washington, DC, 2013-06) 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 only in a modest increase in the number of formal firms, if at all. Less is known about the impact of other forms of business regulations on the performance of low-scale enterprises. Most informal firms appear not to benefit on net from formalizing, so ease of formalization alone will not lead to most of them formalizing. 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 trying to formalize subsistence enterprises.
A Helping Hand or the Long Arm of the Law? Experimental Evidence on What Governments Can Do to Formalize Firms

(World Bank, Washington, D.C., 2013-05) Henrique de Andrade, Gustavo ; Bruhn, Miriam ; McKenzie, David

Many governments have spent much of the past decade trying to extend a helping hand to informal businesses by making it easier and cheaper for them to formalize. Much less effort has been devoted to raising the costs of remaining informal, through increasing enforcement of existing regulations. This paper reports on a field experiment conducted in Belo Horizonte, Brazil, in order to test which government actions work in getting informal firms to register. Firms were randomized to a control group or one of four treatment groups: the first received information about how to formalize; the second received this information and free registration costs along with the use of an accountant for a year; the third group was assigned to receive an enforcement visit from a municipal inspector; while the fourth group was assigned to have a neighboring firm receive an enforcement visit to see if enforcement has spillovers. The analysis finds zero or negative impacts of information and free cost treatments, and a significant but small increase in formalization from inspections. Estimates of the impact of actually receiving an inspection give a 21 to 27 percentage point increase in the likelihood of formalizing. The results show most informal firms will not formalize unless forced to do so, suggesting formality offers little private benefit to them. But the tax revenue benefits to the government of bringing firms of this size into the formal system more than offset the costs of inspections.
Unilateral Facilitation Does Not Raise International Labor Migration from the Philippines

(World Bank, Washington, DC, 2013-11) Beam, Emily ; McKenzie, David ; Yang, Dean

Significant income gains from migrating from poorer to richer countries have motivated unilateral (source-country) policies facilitating labor emigration. However, their effectiveness is unknown. The authors conducted a large-scale randomized experiment in the Philippines testing the impact of unilaterally facilitating international labor migration. The most intensive treatment doubled the rate of job offers but had no identifiable effect on international labor migration. Even the highest overseas job-search rate that was induced (22 percent) falls far short of the share initially expressing interest in migrating (34 percent). The paper concludes that unilateral migration facilitation will at most induce a trickle, not a flood, of additional emigration.
The Impact of Expanding Simplified Start-up Procedures to More Remote Areas : The Minas Facil Expresso Program

(World Bank, Washington, DC, 2013-02) Bruhn, Miriam ; McKenzie, David

This note shows how the rich administrative data collected by many governments can be used to evaluate a policy reform, and provides an example where impact evaluation reveals that a policy didn t work as well as intended.
Business Training for New and Existing Female-Owned Firms in Sri Lanka

(World Bank, Washington, DC, 2012-10) de Mel, Suresh ; McKenzie, David ; Woodruff, Christopher

This note discusses one of a number of recent impact evaluations of business training programs. Further reading provides a link to a critical overview of this new literature.