This Newsletter of the Asian Development Bank (ADB) Pakistan Resident Mission (PRM) aims to enhance communications between ADB and its client groups. News from Pakistan disseminates information on ADB activities and provides a forum on development issues related to ADB s work in Pakistan.
This article examines how a policy oriented toward a specific group within the population can have collateral effects on the economic decisions of other groups. In 1996, the Chilean government approved the extension of the school day from half- to full-day school. This article exploits the quasi-experimental nature of the reform's implementation by time, municipality, and age targeting of the program in order to examine how the maternal labor supply is affected by the childcare subsidy implicit in the lengthening of the school day. Using data from the Chilean socioeconomic household survey and administrative data from the Ministry of Education for 1990-2011, the authors estimate that, on average, there is a 5 percent increase in labor participation and employment rates of single mothers with eligible children (between 8 and 13 years old) with no younger children, who are the group that would be mainly affected by the policy. No significant labor supply responses are detected among others mothers with eligible children.
This paper studies tax withholding on business sales, a widely used compliance mechanism which is largely ignored by public finance theory. The study introduces a withholding scheme, whereby the payer in a transaction collects tax from the payee, in a standard evasion model. If the taxpayer can fully reclaim the tax withheld, withholding is irrelevant to her evasion decision. If reclaim is costly, however, withholding establishes a compliance default. To show this empirically, the analysis exploits a ten-year panel of registration, income tax and sales tax records from 400,000 firms in Costa Rica, and over 20 million third-party information and withholding reports. The paper first documents the anatomy of compliance, providing novel measures of compliance gaps on the extensive, intensive and payment margins. It then shows that interventions leveraging the existing third-party information reduce these compliance gaps only marginally. Coverage by a withholding scheme, in contrast, is correlated with higher reported taxable income both across firms and within firms across time. Quasi-experimental estimations show that a doubling of the withholding rate leads to a 40 percent increase in tax payment among treated firms and a 10 percent increase in aggregate revenue. The mechanisms are incomplete reclaim of the tax withheld and reduced misreporting.
The quarterly newsletter of the Asian Development Bank (ADB) Nepal Resident Mission (NRM) aims to enhance communications between ADB and its client groups. News from Nepal disseminates information on ADB activities and provides a forum on development issues in Nepal.
The youth unemployment rate is exceptionally high in developing countries. Because the quality of education is arguably one of the most important determinants of youth's labor force participation, governments worldwide have responded by creating job training and placement services programs. Despite the rapid expansion of skill-enhancement employment programs across the world and the long history of training program evaluations, debates about the causal impact of training-based labor market policies on employment outcomes still persist. Using a quasi-experimental approach, this report presents the short-run effects of skills training and employment placement services in Nepal. Launched in 2009, the intervention provided skills training and employment placement services for more than 40,000 Nepalese youth over a three-year period, including a specialized adolescent girls' initiative that reached 4,410 women ages 16 to 24. The report finds that after three years of the program, the Employment Fund intervention positively improved employment outcomes. Participation in the Employment Fund training program generated an increase in non-farm employment of 15 to 16 percentage points for an overall gain of about 50 percent. The program also generated an average monthly earnings gain of about 72 percent. The report finds significantly larger employment impacts for women than for men, but younger women ages 16 to 24 experienced the same improvements as older females. These employment estimates are comparable, although somewhat higher, than other recent experimental interventions in developing countries.
This paper exploits data from a rotating panel that follows individuals for four quarters to shed light on the factors driving the time use decisions and restrictions faced by Mexican youth. The results of the analysis imply that: (i) once youth aged 15 to 18 years old leave school, it is very unlikely that they will return; (ii) being "neither in work nor in school" (Nini) is a highly persistent condition; and (iii) marriage (perhaps motivated by teen pregnancy) increases the probability of girls leaving school and raising children by themselves, which may in turn increase their future likelihood of being Ninis, as well as the probability of their children growing up to become Ninis, potentially creating an intergenerational transmission of Nininess. Similar results are found for other countries in the region (Brazil and Argentina).
The Middle East and North Africa region is in turmoil. Syria, Iraq, Libya and Yemen are in civil war, causing untold damage to human lives and physical infrastructure. Fifteen million people have fled their homes, many to fragile or economically strapped countries such as Jordan, Lebanon, Djibouti and Tunisia, giving rise to the biggest refugee crisis since World War II. Palestinians are reeling from deadly attacks and blockades. With recruits from all over the world, radicalized terrorist groups and sectarian factions like Daesh are spreading violence around the globe, threatening some governments' ability to perform basic functions. Countries undergoing political transitions, such as Egypt, Tunisia, Morocco and Jordan, face periodic attacks and political unrest, leading them to address security concerns over inclusive growth. Even relatively peaceful oil exporters, such as Algeria, Iran and the GCC, are grappling with youth unemployment and poor-quality public services, the same problems that contributed to the Arab Spring, alongside low oil prices. Finally, the author will develop and monitor input indicators that are consistent with the theory of change associated with the new strategy. We will have indicators that show whether our interventions are helping to renew the social contract (the use of citizen engagement in projects is an example). Household surveys can tell us whether the welfare of refugees and host communities is improving. Preparedness indicators can be used to inform progress on the recovery and reconstruction pillar. And standard indicators such as the share of electricity production that is traded will be used for the regional integration pillar.
This note provides guidance on how to use social accountability (SA) approaches in oil, gas, and mining projects, with particular emphasis on World Bank projects in the extractive industry (EI) sectors. It highlights some consequences of poor transparency and accountability in EI sectors and identifies opportunities for addressing these issues. It demonstrates how the use of SA approaches and tools can improve the implementation and outcomes of EI projects. Although the note is written primarily for a World Bank/International Finance Corporation (IFC) audience and project cycle, it is hoped that it will be a resource for government, industry, and civil society partners as well.
Limited state capacity to carry out core government and service delivery functions poses a major constraint in post conflict countries, especially those with low income levels. With regard to scope, the research carried out for this note primarily focuses on developing a detailed understanding of how civil service institutes are established and function, and to reflect on available information about their impact. This note synthesizes the findings from case studies covering three countries and four public service training institutes: Rwanda (Rwanda Management Institute (RMI)); Uganda (Civil Service College Uganda (CSCU)); and Liberia (Liberia Institute of Public Administration (LIPA) and the Financial Management Training Program (FMTP)). The general policy rationale for establishing institutes of public service has been to improve national public sector capacity; while a key choice involves investing in longer and more in-depth or shorter-term training. To deliver training, a mix of some permanent staff with consultants recruited from the public sectors has worked well.
This paper uses a large national household panel from 1999/2000 and 2007/08 to analyze the short-term effects of India's Mahatma Gandhi National Rural Employment Guarantee Scheme on wages, labor supply, agricultural labor use, and productivity. The scheme prompted a 10-point wage increase and higher labor supply to nonagricultural casual work and agricultural self-employment. Program-induced drops in hired labor demand were more than outweighed by more intensive use of family labor, machinery, fertilizer, and diversification to crops with higher risk-return profiles, especially by small farmers. Although the aggregate productivity effects were modest, total employment generated by the program (but not employment in irrigation-related activities) significantly increased productivity, suggesting alleviation of liquidity constraints and implicit insurance provision rather than quality of works undertaken as a main channel for program-induced productivity effects.
Drawing on a new set of nationally representative, internationally comparable household surveys, this paper provides an overview of key features of structural transformation—labor allocation and labor productivity—in four African economies. New, micro-based measures of sector labor allocation and cross-sector productivity differentials describe the incentives households face when allocating their labor. These measures are similar to national accounts-based measures that are typically used to characterize structural changes in African economies. However, because agricultural workers supply far fewer hours of labor per year than do workers in other sectors, productivity gaps disappear almost entirely when expressed on a per-hour basis. What look like large productivity gaps in national accounts data could really be employment gaps, calling into question the prospective gains that laborers can achieve through structural transformation. These employment gaps, along with the strong linkages observed between rural non-farm activities and primary agricultural production, highlight agricultures continued relevance to structural change in Sub-Saharan Africa.
This paper hypothesizes that labor and credit market imperfections—by discouraging off-farm income-generating activities and restricting access to inputs, respectively—affect female farm productivity more deeply than male productivity. The paper develops a theoretical model that decomposes the contribution of various market imperfections to the gender productivity gap. The paper shows empirically that agricultural labor productivity is on average 44 percent lower on plots managed by female heads of household than on those managed by male heads. Thirty-four percent of this gap is explained by differences in labor market access and 29 percent by differences in credit access.
Even nearly ten years of solid growth cannot guarantee long-term income convergence. The countries of the Latin America and Caribbean region (LAC), like other emerging economies, have benefited from a decade of remarkable growth and some income per capita convergence towards the United States and other industrialized countries. Yet, despite this recent progress, LAC still faces a significant per capita income gap with the developed world. The studies in this volume contribute to the ongoing debate on the reasons for this persistent income gap and the potential drivers of convergence, and propose some broad avenues for reform.
This reports focus is making global value chains (GVCs) more inclusive. This is achieved by overcoming participation constraints for Small and Medium Enterprises (SMEs) and facilitation access for Low Income Developing Countries (LIDCs).The two major points of this report are 1) participation in GVCs is heterogeneous and uneven, across and within countries and 2) available data and survey-based evidence suggest that SME participation in GVCs is mostly taking place through indirect contribution to exports, rather than through exporting directly.
The youth unemployment rate is exceptionally high in the developing world. Because quality of education is arguably one of the most important determinants of youth's labor force participation, governments worldwide have responded by creating job training and placement services programs. Despite the rapid expansion of skill-enhancement employment programs across the world and the long history of training program evaluations, debates about the causal impact of training based labor market policies on employment outcomes still persist. Using a quasi-experimental approach, this report presents the short-run effects of skills training and employment placement services in Nepal. Launched in 2009, the intervention provided skills training and employment placement services for over 40,000 Nepalese youth over a three-year period, including a specialized adolescent girls' initiative that reached 4,410 women aged 16 to 24. The authors find, after three years of the program, the EF intervention positively improved employment outcomes. EF training program participation generated an increase in non-farm employment of 15 to 16 percentage points for an overall gain of about 50 percent. The program also generated an average monthly earnings gain by about 72 percent. The authors find significantly larger employment impacts for women than for men, but younger women aged 16 to 24 experienced the same improvements as older females. These employment estimates are comparable, though somewhat higher, than other recent experimental interventions in developing countries.