Person:
Verme, Paolo
Author Name Variants
Fields of Specialization
Welfare,
Poverty,
Inequality,
Labor markets,
Refugees,
Middle East,
North Africa,
former Soviet Union
Degrees
ORCID
External Links
Departments
Global Practice on Poverty and Inequality
Externally Hosted Work
Contact Information
Last updated
January 31, 2023
Biography
Paolo Verme is Lead Economist at the World Bank. A Ph.D. graduate of the London School of Economics, he was Visiting Professor at Bocconi University in Milan (2004-2009) and at the University of Turin (2003-2010) before joining the World Bank in 2010. For almost two decades, he served as senior advisor and project manager for multilateral organizations, private companies and governments in the areas of labor market, welfare and social protection policies. His research is widely published in international journals, books and reports. His most recent book is on the welfare of Syrian refugees, a joint study between the World Bank and the UNHCR.
Publication Search Results
1 - 6 of 6
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Publication
Reforming Subsidies : A Tool-kit for Policy Simulations
(World Bank, Washington, DC, 2012-07)The paper provides basic guidelines and tools for simulating subsidy reforms with Stata using a single cross-section survey. Simulations are discussed under a partial equilibrium and medium-term framework using a marginal approach. The paper distinguishes between single priced products, such as fuel or bread, and multiple priced products, such as household utilities. Part I provides basic instructions for carrying out subsidy analyses. Part II outlines economic theory and formulae for the two types of products considered. Part III illustrates the use of the Stata codes, which are downloadable from the Internet. -
Publication
The Quest for Subsidy Reforms in Libya
(World Bank Group, Washington, DC, 2015-03)Shortly before the 2011 Libyan revolution, consumers' subsidies were rapidly increased by the regime in an effort to reduce social discontent. In the aftermath of the revolution, these subsidies became important for people's subsistence, but also a very heavy burden for the state budget. Since then, the Libyan government has been confronted with the necessity of reforming subsidies in a politically and socially complex environment. This paper uses household survey data to provide a distributional analysis of food and energy subsidies and simulate the impact of subsidy reforms on household wellbeing, poverty, and the government's budget. Despite the focus on direct effects only, the results indicate that subsidy reforms would have a major impact on household welfare and government revenues. The elimination of food subsidies would reduce household expenditure by about 10 percent and double the poverty rate while saving the equivalent of about 2 percent of the government budget. The elimination of energy subsidies would have a similar effect on household welfare, but a larger effect on poverty while government savings would be almost 4 percent of the budget. The size of these effects, the weakness of market institutions, and the current political instability make subsidy reforms extremely complex in Libya. It is also clear that subsidy reforms will call for some form of compensation for the poor, a gradual rather than a big bang approach, and a product-by-product sequence of reforms rather than an all-inclusive reform. -
Publication
Prices and welfare
(World Bank, Washington, DC, 2016-02)What is the welfare effect of a price change? This simple question is one of the most relevant and controversial questions in microeconomic theory and its different answers can lead to severe heterogeneity in empirical results. This paper returns to this question with the objective of providing a general framework for the use of theoretical contributions in empirical works, with a particular focus on poor people and poor countries. Welfare measures (such as Equivalent Variation or Consumer's Surplus) and computational methods (such as Taylor's approximations or the Vartia method) are compared to test how these choices result in different welfare measurement under different price shock scenarios. As a rule of thumb and irrespective of parameter choices, welfare measures converge to approximately the same result for price changes below 10 percent. Above this threshold, these measures start to diverge significantly. Budget shares play an important role in explaining such divergence, whereas the choice of demand system has a minor role. Under standard utility assumptions, the Laspeyers and Paasche variations are always the outer bounds of welfare estimates and consumer surplus is always the median estimate. The paper also introduces a new simple welfare approximation, clarifies the relation between Taylor's approximations and the income and substitution effects, and provides an example for treating nonlinear pricing. Stata codes for all computations are provided in annex. -
Publication
The Quest for Subsidies Reforms in the Middle East and North Africa Region: A Microsimulation Approach to Policy Making
(Cham, Switzerland: Springer, 2017)The objective of this book is to capitalize on the work undertaken by the World Bank in the MENA Region between 2010 and 2014 using a particular model specifically designed for the distributional analysis of subsidies and the simulation of subsidies reforms. The model is called “SUBSIM” and has been used uniformly in all the seven countries where the World Bank operated. The focus of the book is the distribution of subsidies and the simulation of subsidy reforms in a partial equilibrium framework. The distributional analysis of subsidies provides information on who benefits from existing subsidies, and the simulations of subsidy reforms provide information on the outcomes of the reforms in terms of government budget, household welfare, poverty, inequality, and the trade-offs between these outcomes. It is a partial equilibrium approach in that we focus on the final consumption market only. The book covers energy and food subsidies. The countries covered are Djibouti, the Arab Republic of Egypt, the Islamic Republic of Iran, Jordan, Libya, Morocco, Tunisia, and the Republic of Yemen. -
Publication
Prices and Welfare: An Introduction to the Measurement of Well-being When Prices Change
(Springer Nature, 2019)What is the welfare effect of a price change? This simple question is one of the most relevant and controversial questions in microeconomic theory and one of the main sources of errors in empirical economics. This book returns to this question with the objective of providing a general framework for the use of theoretical contributions in empirical works. Welfare measures and computational methods are compared to test how these choices result in different welfare measurement under different scenarios of price changes. As a rule of thumb and irrespective of parameter choices, welfare measures converge to approximately the same result for price changes below 10 percent. Above this threshold, these measures start to diverge significantly. Budget shares play an important role in explaining such divergence. Single or multiple price changes influence results visibly, whereas the choice of demand system has a surprisingly minor role. Under standard utility assumptions, the Laspeyres and Paasche variations are always the outer bounds of welfare estimates, and the consumer’s surplus is the median estimate. The book also introduces a new simple welfare approximation, clarifies the relation between Taylor’s approximations and the income and substitution effects and provides an example for treating non-linear pricing. -
Publication
A Comparative Analysis of Subsidy Reforms in the Middle East and North Africa Region
(World Bank, Washington, DC, 2016-07)The paper compares the distribution of energy and food subsidies across households and the impact of subsidy reforms on household welfare in the Middle East and North Africa region. The analysis uses a unified model and harmonized household data. The results show that the distribution of subsidies and the welfare effects of subsidy reforms are quite diverse across countries and products. Energy subsidies tend to be pro-rich in terms of absolute amounts, but tend to be more important for the poor in terms of expenditure shares. Instead, food subsidies are larger for the poor in absolute and relative terms. These findings do not apply everywhere, and the scale of these phenomena are different across countries and products. The welfare effect of a 30 percent reduction in subsidies can be important, especially considering the cumulated effect across products, but the cost of compensating the loss in welfare for the poor is generally low compared with the budget benefits of decreasing subsidies.