Maloney, William Francis
Office of the Chief Economist Latin America and the Caribbean Region
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Fields of Specialization
Innovation, Labor Economics, Trade, Productivity, Private Sector Development, Financial Sector, Spatial economics
Office of the Chief Economist Latin America and the Caribbean Region
Externally Hosted Work
Last updated April 4, 2023
William F. Maloney is Chief Economist for the Latin America and Caribbean (LAC) region. Mr. Maloney, a U.S. national, joined the Bank in 1998 as Senior Economist for the Latin America and Caribbean Region. He held various positions including Lead Economist in the Office of the Chief Economist for Latin America, Lead Economist in the Development Economics Research Group, Chief Economist for Trade and Competitiveness and Global Lead on Innovation and Productivity. He was most recently Chief Economist for Equitable Growth, Finance and Institutions (EFI) Vice Presidency. From 2011 to 2014 he was Visiting Professor at the University of the Andes and worked closely with the Colombian government on innovation and firm upgrading issues. Mr. Maloney received his PhD in Economics from the University of California Berkeley (1990), his BA from Harvard University (1981), and studied at the University of the Andes in Bogota, Colombia (1982-83). His research activities and publications have focused on issues related to international trade and finance, developing country labor markets, and innovation and growth, including several flagship publications about Latin America and the Caribbean.He has published in academic journals on issues related to international trade and finance, developing country labor markets, and innovation and growth as well as several flagship publications of the Latin American division of the Bank, including Informality: Exit and Exclusion; Natural Resources: Neither Curse nor Destiny and Lessons from NAFTA, Does What you Export Matter: In Search of Empirical Guidance for Industrial Policy. Most recently, he published The innovation paradox: Developing Country Capabilities the Unrealized Potential of Technological Catch-Up and Harvesting Prosperity: Technology and Productivity Growth in Agriculture as part of the World Bank Productivity Project.
Publication Search Results
Now showing 1 - 10 of 12
Publication(World Bank, Washington, DC, 2014-03) Maloney, William F. ; Sarrias, MauricioUsing detailed survey data on management practices, this paper uses recent advances in unconditional quantile analysis to study the changes in the within country distribution of management quality associated with country convergence to the managerial frontier. It then decomposes the contribution of potential explanatory factors to the distributional changes. The United States emerges as the frontier country, not because of better management on average, but because its best firms are far better than those of its close competitors. Part of the process of convergence to the frontier across the development process represents a trimming of the left tail, much is movement of the central mass and, for rich countries, it is actually the best firms that lag the frontier benchmark. Among potential explanatory variables that may drive convergence, ownership and human capital appear critical, the former especially for poorer countries and that latter for richer countries suggesting that the mechanics of convergence change across the process. These variables lose their explanatory power as firm and average country management quality rises. Hence, once in the advanced country range, the factors that improve management quality are less easy to document and hence influence.
Publication(World Bank, Washington, DC, 2001-12) Maloney, William F.Emergency programs are designed to soften the impact of economic crises-income shocks experienced by an entire community or country-on consumption and human capital accumulation. Of particular concern are poor people: as a result of inadequate savings or inadequate access to credit or insurance markets, the poor are unable to draw on resources from better times to offset a loss in income today. Further, the systemic nature of the shocks means that risk cannot be effectively pooled through local informal insurance mechanisms. Emergency interventions have included social funds, workfare programs, training programs, conditional transfers (linked to health center visits or children's school attendance, for example), and traditional direct, unconditional transfers in kind (such as communal tables or targeted food handouts). The author highlights some conceptual problems in choosing among these options and evaluating one program of a certain type relative to another. It argues that most such interventions can be thought of as containing both a transfer and an investment component and that their evaluation as emergency programs needs to more explicitly incorporate the intertemporal nature of their design. More specifically, the mandated investments in physical or human capital will benefit the poor, but only in the future-after the crisis-and their implementation diverts resources from alleviating present hardship. This needs to be reflected in the discount factor used to evaluate these investments. Maloney argues that the way emergency programs are financed, particularly the way the burden is shared between central and municipal governments, also has important implications for the criteria for evaluation. The analysis suggests that most conventional means of evaluating projects-net present value at market discount rates, labor intensity, cost per job created-may not be relevant or are at least ambiguous in the context of emergency programs. As a result, policymakers are left with few "hard" indicators with which to evaluate such programs. Maloney argues for an approach in which the policymaker weighs the appropriateness of deviations from the theoretically "ideal" benchmark program, which delivers a "smart" transfer costlessly to the target beneficiary, and discusses the arguments for or against these deviations. The modest goal of the proposed approach is to clarify the key issues and provide more solid grounding for the necessarily subjective judgment calls that policymakers will inevitably have to make.
Publication(World Bank, Washington, DC, 2001-08) Fajnzylber, Pablo ; Maloney, William F.The authors present the first comparable dynamic panel estimates of labor demand elasticity, using data from Chile, Colombia, and Mexico. They examine the benefits, and limits of the Arellano, and Bond GMM in differences estimator, and the Blundell, and Bond GMM system estimator. They also explore the limitations of such measures for diagnosing flexibility in the labor market. Even accounting for the large variance induced by different estimation techniques, one probably cannot say much about the flexibility of different labor markets based on comparisons of the estimated elasticity of demand. Colombia, for example, which has severe restrictions on firing workers, has much higher long-run wage elasticity than Chile, which has no such restrictions. Three factors make such comparisons difficult: 1) Elasticity differ greatly across industries, so the composition of industry in each country probably affects the aggregate elasticity. Estimates are extremely dependent on the estimation approach, and specification. 2) Even for specific industries, the elasticity of labor demand differs greatly across countries. And the authors find no common pattern of country rankings across industries, which suggests that those differences cannot be attributed solely to systematic characteristics of the countries' labor markets. 3) Estimates for Chile over fifteen years, suggest substantial, and significant variations in elasticity over time. So comparisons across countries depend not only on the industries involved, but also on the sample periods of time used. Estimates change greatly, if not secularly, with sample period.
Publication(World Bank, Washington, DC, 2001-08) Fajnzylber, Pablo ; Maloney, William F. ; Ribeiro, EduardoThere are increasing fears that trade reform - and globalization generally - will increase the uncertainty the average (especially less skilled) worker faces. If product markets become more competitive and the access to foreign inputs is increased, will demand for workers among existing firms become more elastic? Will labor markets become more volatile because bad shocks to output will translate into greater impacts on wages and employment? So far the literature on this question has focused almost entirely on labor demand within continuing firms. But much of the movement in the job market arises from the entry and exit of firms. The authors show that firms entering and exiting a market contribute almost as much to employment changes as firms continuing in a market. In several samples, firms entering and exiting affected the net change in-positions more than the expansion of continuing plants did, although contributions varied greatly across the business cycle and period of adjustment. Estimates of labor demand elasticities of entering and exiting firms were surprisingly similar in Chile and Colombia and somewhat higher than elasticities for firms that survived. Estimates of the effect of trade liberalization offer only ambiguous lessons on trade reform's probable impact on these elasticities. The data suggest that in Chile greater exchange rate protection does reduce the wage-employment elasticity of entering and exiting plants, but the results are reversed in Colombia's case. Moreover, in Colombia higher import penetration lowers the elasticity of labor demand and in Chile higher tariffs increase it. These findings, combined with very ambiguous results from probit regressions on the determinants of plant exit, suggest that circumspection is warranted in asserting that trade liberalization will increase the wage elasticity of labor demand.
Publication(World Bank, Washington, DC, 2001-04) Maloney, William F. ; Nunez, Jairo ; Cunningham, Wendy ; Fiess, Norbert ; Montenegro, Claudio ; Murrugarra, Edmundo ; Santamaria, Mauricio ; Sepulveda, ClaudiaThe authors provide an overview of minimum wage levels in Latin America and their true impact on the distribution of wages, using both numerical measures and kernal density plots for eight countries (Argentina, Bolivia, Brazil, Chile, Colombia, Honduras, Mexico, and Uruguay). They especially try to identify "numeraire" effects--where the minimum is used as a reference higher in the wage distribution--and "lighthouse" effects--where it influences wage setting in the unregulated or "informal" sector. Their main findings: First, statutory minimum wages are often misleading, and graphical methods may be more reliable. Second, the minimum wage's effect on wage setting extends far beyond what is usually considered and probably beyond the effect in industrial countries. Using panel employment data from Colombia, where minimum wages seem high and binding, the authors quantify the minimum wage's effects on wages and on the probability of becoming unemployed. The Colombian case confirms the evidence offered by kernal density estimates: 1) The minimum wage can have an important impact on wage distribution in the neighborhood of the minimum wage. 2) The effects echo up the wage distribution in a clear demonstration of the "numeraire" effect. That this effect is stronger in Latin America than in the United States suggests that the minimum wage induces further-reaching rigidities in the labor market. The trade-off between any possible effect on poverty and reduced flexibility is likely to be more severe in countries where this is the case. The effects on employment, and unemployment, are substantial. 3) Informal salaries wages are also affected, confirming the graphical evidence of strong lighthouse effects. Self-employment earnings are not, however, confirming that the minimum wage is not simply serving as a measure of inflationary expectations.
Publication(World Bank, Washington, DC, 2012-10) Falco, Paolo ; Maloney, William F. ; Rijkers, Bob ; Sarrias, MauricioUsing an extraordinarily rich panel dataset from Ghana, this paper explores the nature of self-employment and informality in developing countries through the analysis of self-reported happiness with work and life. Subjective job satisfaction measures allow assessment of the relative desirability of different jobs in ways that, conditional wage comparisons cannot. By exploiting recent advances in mixed (random parameter) ordered probit models, the distribution of subjective well-being across sectors of employment is quantified. There is little evidence for the overall inferiority of the small firm informal sector: there is not a robust average satisfaction premium for formal work vs. self-employment or informal salaried work, and owners of informal firms that employ others are on average significantly happier than workers in the formal private sector. Moreover, the estimated distribution of parameters predicting satisfaction reveal substantial heterogeneity in subjective well-being within sectors that conventional fixed parameter models, such as standard ordered probit models, cannot detect: Whatever the average satisfaction premium in a sector, all job categories contain both relatively happy and disgruntled workers. Specifically, roughly 67, 50, 40 and 59 percent prefer being a small-firm employer, sole proprietor, informal salaried, civic worker respectively, than formal work. Hence, there is a high degree of overlap in the distribution of satisfaction across sectors. The results are robust to the inclusion of fixed effects and alternate measures of satisfaction. Job characteristics, self-perceived autonomy and experimentally elicited measures of attitudes toward risk do not appear to explain these distributional patterns.
Publication(World Bank, Washington, DC, 2005-12) Arias, Omar ; Blom, Andreas ; Bosch, Mariano ; Cunningham, Wendy ; Fiszbein, Ariel ; Lopez Acevedo, Gladys ; Maloney, William ; Saavedra, Jaime ; Sanchez-Paramo, Carolina ; Santamaria, Mauricio ; Siga, LucasThis paper selectively synthesizes much of the research on Latin American and Caribbean labor markets in recent years. Several themes emerge that are particularly relevant to ongoing policy dialogues. First, labor legislation matters, but markets may be less segmented than previously thought. The impetus to voluntary informality, which appears to be a substantial fraction of the sector, implies that the design of social safety nets and labor legislation needs to take a more integrated view of the labor market, taking into account the cost-benefit analysis workers and firms make about whether to interact with formal institutions. Second, the impact of labor market institutions on productivity growth has probably been underemphasized. Draconian firing restrictions increase litigation and uncertainty surrounding worker separations, reduce turnover and job creation, and poorly protect workers. But theory and anecdotal evidence also suggest that they, and other related state or union induced rigidities, may have an even greater disincentive effect on technological adoption, which accounts for half of economic growth. Finally, institutions can affect poverty and equity, although the effects seem generally small and channels are not always clear. Overall, the present constellation of labor regulations serves workers and firms poorly and both could benefit from substantial reform.
Publication(Washington, DC: World Bank, 2012) Lederman, Daniel ; Maloney, William F.Does the content of what economies export matter for development? And, if it does, can governments improve on the export basket that the market generates through the shaping of industrial policy? This book considers these questions by reviewing relevant literature and taking stock of what is known from conceptual, empirical, and policy viewpoints. A large literature answers affirmatively to the first question and suggests the characteristics that distinguish desirable exports. More prosaically, but no less controversially, goods which are intensive in unskilled labor are thought to promote 'pro-poor' or 'shared growth,' whereas those which are skilled-labor intensive are thought to generate positive externalities for society as a whole. Concerns about macroeconomic stability have led to a focus on the overall composition of the export basket. This book revisits many of these arguments conceptually and, wherever possible, imports heuristic approaches into frameworks where, as more familiar arguments, they can be held up to the light, rotated, and their facets examined for brilliance or flaws. Second, the book examines what emerges empirically as a basis for policy design. Specifically, given certain conceptual arguments in favor of public sector intervention, do available data and empirical methods allow for actually doing so with a high degree of confidence? In asking this question, the book assumes that policy makers are competent and seek to raise the welfare of their citizens. This assumption permits sidestepping the debate about whether government failures trump market failures generically: In this sense, the book attempts to 'give industrial policy a chance.'
Microenterprise Dynamics in Developing Countries : How Similar are They to Those in the Industrialized World? Evidence from Mexico(Oxford University Press on behalf of the World Bank, 2006-09-01) Fajnzylber, Pablo ; Maloney, William ; Montes Rojas, GabrielA rich panel data set from Mexico is used to study the patterns of entry, exit, and growth of microenterprises and to compare these with the findings of the mainstream theoretical and empirical work on firm dynamics. The Mexican self-employment sector is much larger than its counterpart in the United States, which is reflected in higher unconditional rates of entry into the sector. The evidence for Mexico points to the significant presence of well-performing salaried workers among the likely entrants into self-employment, as opposed to the higher incidence of poorer wageworkers among the entrants into the U.S. self-employment sector. Despite these differences, however, the patterns of entry, survival, and growth with respect to age, education, and many other covariates are very similar in Mexico and the United States. These strong similarities suggest that mainstream models of worker decisions and firm behavior are useful guides for policymaking for the developing-country microenterprise sector. Furthermore, they suggest that, as a first approximation, the developing-country microenterprise should probably be viewed as they are in the advanced countries as offering potentially desirable job opportunities to low-productivity workers.
Publication(Washington, DC: World Bank, 2007) Perry, Guillermo E. ; Maloney, William F. ; Arias, Omar S. ; Fajnzylber, Pablo ; Mason, Andrew D. ; Saavedra-Chanduvi, JaimeInformality: exit and exclusion analyzes informality in Latin America, exploring root causes and reasons for and implications of its growth. The authors use two distinct but complementary lenses: informality driven by exclusion from state benefits or the circuits of the modern economy, and driven by voluntary 'exit' decisions resulting from private cost-benefit calculations that lead workers and firms to opt out of formal institutions. They find both lenses have considerable explanatory power to understand the causes and consequences of informality in the region. Informality: exit and exclusion concludes that reducing informality levels and overcoming the 'culture of informality' will require actions to increase aggregate productivity in the economy, reform poorly designed regulations and social policies, and increase the legitimacy of the state by improving the quality and fairness of state institutions and policies. Although the study focuses on Latin America, its analysis, approach, and conclusions are relevant for all developing countries.