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Research Highlights April 2014

Research Highlights April 2014

Research Highlights April 2014

Disappointing results for vocational training for the unemployed in Turkey

The global economic recession that began in 2007 dramatically increased interest in policies to reduce unemployment. The persistence in labor market imbalances suggested that unemployment could be more structural in nature. The idea that vocational training could reduce skills mismatches led to a resurgence of vocational training programs. How successful were they? A randomized experiment is used to evaluate a large-scale, active labor market policy in Turkey which offered vocational training programs to the unemployed. A detailed follow-up survey of a large sample with low attrition enables precise estimation of treatment impacts and their heterogeneity. The average impact of training on employment proved positive, but close to zero and statistically insignificant, which is much lower than either program officials or applicants expected. Over the first year after training, training had statistically significant effects on the quality of employment and positive impacts were stronger when training was offered by private providers. But after three years the data show these effects dissipated.

The Impact of Vocational Training for the Unemployed: Experimental Evidence from Turkey, Sarojini Hirshleifer, David McKenzie, Rita Almeida, Cristobal Ridao-Cano, World Bank Policy Research Working Paper 6807, March 2014.

Microfinance expansion still good for poor households in Bangladesh

Microfinance lending in Bangladesh served 30 million members and disbursed over $2 billion over the past two decades. Are borrowing households better or worse off twenty years later? Using a dynamic model to estimate the long-term effects of microcredit programs this analysis addresses whether credit effects are declining over time, whether market saturation and village diseconomies are taking place, and the impact of multiple program membership, which is rising as a consequence of microcredit expansion. The results confirm that microcredit programs continued to benefit the poor by raising household welfare. Moreover, beneficial effects remained higher for female than male borrowers simply because females are more credit constrained than males in resource allocation. There are diseconomies of scale caused by higher levels of village-level borrowing, especially for male members. Multiple program membership is also growing with competition from microfinance institutions, but this has raised assets and net worth more than it has contributed to indebtedness.

Dynamic Effects of Microcredit in Bangladesh, Shahidur R. Khandker and Hussain A. Samad, World Bank Policy Research Working Paper 6821, March 2014.

Son preference increases the mortality risk of women with first-born daughters in India

Repeated and closely spaced pregnancies, medically known to increase the risk of maternal mortality and morbidity, are more common among women who have only daughters and want to conceive a son in India. This research uses survey data and compares the age structure and anemia status of women by the sex of their first-born. It shows that the share of living women with a first-born girl is a decreasing function of the women's age. And while there are no systematic differences at the time of birth, women with a first-born girl are significantly more likely to develop anemia under the age of 30. The findings are consistent with a selection effect in which maternal and adult mortality is higher for women with first-born girls, especially the poor and uneducated with limited access to health care and prenatal sex diagnostic technologies. Excess mortality among adult women can therefore be partly explained by strong preference for male children, the same cultural norm widely known to cause excess mortality before birth or at young ages. The observed sex ratios for first births imply that between 2 and 8 percent of women with first-born girls are missing because of son preference between the ages of 30 and 49.

Why Are Adult Women Missing? Son Preference and Maternal Survival in India, Annamaria Milazzo, World Bank Policy Research Working Paper 6802, March 2014.

How “REDD” might contribute to forest management in Tanzania

“REDD,” a United Nations program for reducing deforestation and forest degradation, seeks to reduce greenhouse gas emissions, protect forest ecosystems, and improve the economic well-being of forest communities. Analysis of lessons derived from Tanzania’s national forest management program finds that addressing land ownership is important for success in implementing REDD. While the national program has encouraged forest users to maximize profit from the sustainable use of the forest, the program varies in terms of the success of forest conservation. REDD+ may complement the national forest program by bringing new resources for local projects as well as payments for maintaining forests. However, it is necessary to determine how REDD activities can generate additional economic and environmental benefits over what the national program is already achieving. Because fuelwood demand for charcoal is a major source of pressure on forests, moreover, there is a need to consider how REDD can be implemented by modifying fuelwood demand.

Implementation of REDD+ Mechanisms in Tanzania, Paula Cordero Salas, World Bank Policy Research Working Paper 6815, March 2014.

Equal access to inputs may not be enough to close the gender gap in agricultural productivity in Nigeria

Female farmers in Sub-Saharan Africa have lower yields compared to male farmers. Given that smallholder agricultural productivity is low in the region, reducing the gender gap by increasing female productivity could increase overall productivity, and lead to higher incomes, poverty reduction, and better food security and nutritional outcomes. This study examines the size of the differences in agricultural productivity between male and female plot managers in Nigeria and decomposes the gender gap into the portion explained by differences in the level of inputs and the portion explained by differences in returns to the same inputs. The analysis is conducted separately for the North and South due to the broad socio-economic diversity in the country. In the North, not only do women produce 28 percent less than men after controlling for input levels, but also obtain lower returns with the same inputs. So if women in the North have the same level of inputs as men, the gender gap may still exist. While in the South, after controlling for level of inputs, no gender gap exists suggesting that if women have the same level of inputs as men the gap may close. The different regional results suggest that agricultural policies targeting women take into account the regional-specific cultural roles of men and women and the institutional factors that support them.

Explaining Gender Differentials in Agricultural Production in Nigeria, Gbemisola Oseni, Paul Corral, Markus Goldstein, and Paul Winters, World Bank Policy Research Working Paper 6809, March 2014.

Missing complements reduce efficacy of R&D and catch-up gains for poor countries

Most poor countries do far less research and development (R&D) than rich countries as a share of gross domestic product (GDP). This is arguably counter intuitive since the gains from investments in R&D required for technological catch up are thought to be very high and increasing with distance from the frontier. So why do developing countries fail to address market failures impeding private sector R&D investment, or even undertake it directly? Recent data show rates of return follow an inverted “U.” The rates rise with distance to the frontier and fall thereafter, potentially even turning negative for the poorest countries. These findings are consistent with the absence of complementary factors---the quality of scientific infrastructure and the overall functioning of the national innovation system, and the capacity of the private sector, which become increasingly scarce with distance from the frontier, and can retard the catch-up effect and the efficacy of R&D. In China and India the explosive growth in R&D investment trajectories despite expected low returns may be justified by partnerships with multinational corporations (and the complementary factors they embody) to gain access to patentable research.

Why Don't Poor Countries Do R&D? Edwin Goñi and William F. Maloney, World Bank Policy Research Working Paper 6811, March 2014.

The impact of exporting on firm performance differs by the income level of the destination country

Turkey presents a unique opportunity to revisit the inconclusive export destination-productivity link because it has a very high number of exporters and export entrants to both high-income and low-income destinations. To evaluate the role of export destinations on productivity, employment, and wages, firms in the same industry, location, government support, and ownership status groups are matched on the basis of their propensity scores computed by using a number of observables. Several important results emerge: (1) export entry has a positive causal effect on firm total factor productivity and employment and this effect is strengthened as a firm continues to export; (2) export entry has a moderate wage effect that emerges only with a lag; (3) exporting to low-income destinations does not result in significantly higher firm total factor productivity and wages, unlike exporting to high-income destinations; and (4) the employment effect of exporting to low-income destinations is comparable to that of exporting to high-income destinations.

Impact of Export Destinations on Firm Performance, Tolga Cebeci, World Bank Policy Research Working Paper 6743, January 2014.

Last updated: 2014-04-16