Verme, Paolo

Person:
Verme, Paolo

Global Practice on Poverty and Inequality

Fields of Specialization

Welfare, Poverty, Inequality, Labor markets, Refugees, Middle East, North Africa, former Soviet Union

ORCID

0000-0002-8754-1138

External Links

RePEc
Research Gate

Departments

Global Practice on Poverty and Inequality

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.

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Publication Search Results

Now showing 1 - 10 of 13

Top Incomes and the Measurement of Inequality in Egypt

(World Bank, Washington, D.C., 2013-08) Hlasny, Vladimir ; Verme, Paolo

By all accounts, income inequality in Egypt is low and had been declining during the decade that preceded the 2011 revolution. As the Egyptian revolution was partly motivated by claims of social injustice and inequalities, this seems at odds with a low level of income inequality. Moreover, while income inequality shows a decline between 2000 and 2009, the World Values Surveys indicate that the aversion to inequality has significantly increased during the same period and for all social groups. This paper utilizes a range of recently developed statistical techniques to assess the true value of income inequality in the presence of a range of possible measurement issues related to top incomes, including item and unit non-response, outliers and extreme observations, and atypical top income distributions. The analysis finds that correcting for unit non-response significantly increases the estimate of inequality by just over 1 percentage point, that the Egyptian distribution of top incomes follows rather closely the Pareto distribution, and that the inverted Pareto coefficient is located around median values when compared with 418 household surveys worldwide. Hence, income inequality in Egypt is confirmed to be low while the distribution of top incomes is not atypical compared with what Pareto had predicted and compared with other countries in the world. This would suggest that the increased frustration with income inequality voiced by Egyptians and measured by the World Values Surveys is driven by factors other than income inequality.
Labor Mobility, Economic Shocks, and Jobless Growth : Evidence from Panel Data in Morocco

(World Bank, Washington, DC, 2014-03) Verme, Paolo ; Barry, Abdoul Gadiry ; Guennouni, Jamal ; Taamouti, Mohamed

During the past 20 years, Morocco has implemented a wide range of macroeconomic, social, and labor market reforms that have delivered in terms of growth of gross domestic product and household welfare. Yet, these positive developments are not reflected by the main labor market indicators, a phenomenon observed elsewhere in developed and developing economies alike and labeled as "jobless growth." For the first time for Morocco, this paper uses quarterly panel data to investigate the question of labor mobility in an effort to determine whether people have moved to better sectors and jobs. The results point to significant labor mobility between labor statuses with quite distinct features across population groups. All groups experience some form of labor market mobility every quarter and women are as mobile as men. However, the transitions that women experience are very different from the transitions than men experience and women's performance is worse than men s performance in almost all aspects of labor mobility.
Individual Diversity and the Gini Decomposition

(World Bank, Washington, DC, 2014-01) Ceriani, Lidia ; Verme, Paolo

The paper defines the Gini index as the sum of individual contributions where individual contributions are interpreted as the degree of diversity of each individual from all other members of society. Among various possible forms of individual contributions to the Gini found in the literature, the paper shows that only one form satisfies a set of desirable properties. This form can be used for decomposing the Gini into population subgroups. An empirical illustration shows the use of this approach.
Social Assistance and Poverty Reduction in Moldova, 2001-2004 : An Impact Evaluation

(World Bank, Washington, DC, 2008-06) Verme, Paolo

This paper assesses the impact of social assistance benefits on household welfare in Moldova. Ignoring standard issues of impact evaluations such as selection bias, behavioral responses, unobserved heterogeneity and endogeneity, an incidence analysis suggests that increased spending on social assistance enhances the probability of moving out of poverty and reduces the probability of moving into poverty. However, double difference estimates (based on a mimicked randomized experiment) and parametric estimates (based on panel data) indicate that social benefits have not contributed to improve household welfare or reduce poverty. Double difference estimates point to a negative impact on welfare. Parametric estimates do not yield any consistent significant impact on welfare or poverty. The author concludes that the growth in population coverage and expenditure on cash benefits that characterized social assistance policies in recent years has not resulted in a significant improvement in welfare, all other factors being equal.
Constraints to Growth and Job Creation in Low-Income Commonwealth of Independent States Countries

(World Bank, Washington, DC, 2006-04) Verme, Paolo

Despite sustained output growth since 1997, low-income Commonwealth of Independent States (CIS) countries (CIS-7) have not experienced growth in employment, a phenomenon observed elsewhere in transitional economies and labeled as "jobless growth." The author addresses the causes of this phenomenon in the CIS-7. He argues that the lack of job creation is explained by a combination of structural factors, including capital-intensive growth, large potential for productivity gains among existing workers, and compartmentalized economies best depicted by a dual labor market framework. Agriculture and industry have performed asymmetrically and grown apart during the recession and during the growth periods. Agriculture provides subsistence and refuge from urban poverty and unemployment but is unable to grow beyond subsistence because it is disconnected from industrial manufacturing and because the agricultural infrastructure is depleted and underinvested. Industry has progressively lost its manufacturing capacity, and focuses on capital-intensive, highly productive sectors, and provides good wages for the few highly skilled workers. With governments and the international community currently refraining from investing in agricultural and industrial policies focused on reviving manufacturing, jobless growth is likely to persist.
Reforming Subsidies : A Tool-kit for Policy Simulations

(World Bank, Washington, DC, 2012-07) Araar, Abdelkrim ; Verme, Paolo

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.
A Multiple Correspondence Analysis Approach to the Measurement of Multidimensional Poverty in Morocco, 2001–2007

(World Bank, Washington, DC, 2012-06) Ezzrar, Abdeljaouad ; Verme, Paolo

The measurement of multidimensional poverty has been advocated by most welfare scholars and is experiencing a growth in interest, partly explained by controversial debates that have emerged across academics and practitioners. This paper follows one of the least explored approaches -- Multiple Correspondence Analysis -- to assess multidimensional poverty in Morocco between 2001 and 2007. Multiple Correspondence Analysis provides two major advantages for the measurement of multidimensional poverty: it generates a matrix of "weights" based on the variance-covariance matrix of all welfare dimensions selected and provides a natural approach for constructing a composite welfare indicator that satisfies essential poverty ordering axioms. The application shows that poverty in Morocco has declined according to both monetary and multidimensional indicators and that these findings are robust to stochastic dominance tests. The paper concludes that the sustained positive growth that Morocco experienced during the last decade has translated in improvements in living conditions well beyond monetary returns.
The Quest for Subsidy Reforms in Libya

(World Bank Group, Washington, DC, 2015-03) Araar, Abdelkrim ; Choueiri, Nada ; Verme, Paolo

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.
An Evaluation of the 2014 Subsidy Reforms in Morocco and a Simulation of Further Reforms

(World Bank Group, Washington, DC, 2015-03) Verme, Paolo ; El-Massnaoui, Khalid

Under increasing budget pressure, Morocco carried out an extensive set of subsidy reforms in 2014 and is planning for further reforms for 2015–2017, which will eliminate most consumers' subsidies. This paper evaluates (ex post) the 2014 reforms and simulates (ex ante) the impact on household welfare, poverty, and the government budget of the total elimination of subsidies. The paper considers food and energy subsidies and estimates direct and indirect effects using SUBSIM, a subsidies simulation model designed by the World Bank. It finds that the 2014 reforms have been a good mix of reforms from a distributional, welfare, poverty, and government budget perspectives. They are perhaps the most rational reforms undertaken in the Middle East and North Africa region in recent years. The analysis also finds further reforms costly for the poor and more complex from a political economy perspective, especially for liquefied petroleum gas.
Prices and welfare

(World Bank, Washington, DC, 2016-02) Araar, Abdelkrim ; Verme, Paolo

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.