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World Bank Research E-Newsletter, September-October 2016
  Oct 28, 2016

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September/October 2016 — Theme: Informality
Arrow-bullet Causes of the informal sector and links with economic growth
Arrow-bullet Testing incentives to formalize firms in Benin
Arrow-bullet Incentivizing firms to formalize in Malawi
Arrow-bullet New Georgia tax regime on micro businesses increased formal business registration
Arrow-bullet Mandatory pension contributions encourage informality in Chile
Arrow-bullet Testing the evaluations of programs to formalize firms in Brazil
Arrow-bullet Research Brief: Productivity as the Key to Economic Growth and Development
Arrow-bullet Upcoming Events
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Causes of the informal sector and links with economic growth

Two schools of thought dominate discussions of informality. The first claims that informality is a consequence of a lack of development, and a failure to establish sufficient protections for workers. The second argues that it’s the result of bad governance — whether through excessive regulation or poor government services. In a recent talk Norman Loayza focused on the trade-offs leading to informality that various social and economic agents face. Policy makers face a trade-off between taxation for the provision of public services and the possibility of tax evasion. Likewise, owners of firms face a trade-off between high relative costs of labor in the formal sector and high relative costs of capital in the informal sector. Informality arises both from a lack of development and poor governance, and each of them to a different extent. For instance, when comparing Peru and Chile, regulatory burdens appear to be the main driver of higher informality in Peru. Comparing Indonesia and South Korea, however, the gap in terms of educational achievement seems to explain the higher informality in Indonesia. Loayza also presented a study to understand informal labor, placing it in the process of development, allowing for heterogeneity, and linking it to migration, modernization, and economic growth. Based on this study, Loayza announced a tool that will estimate the size of the informal sector in nearly 100 countries over the next two decades based on a range of scenarios and parameters. These projections will hopefully guide policy makers in developing reform programs that will reduce informality, and support the creativity of small-scale entrepreneurs while allowing firms and the whole economy to grow.

Event | Story | Video | Presentation | Policy Research Working Paper 7858 | Toolkit for Informality Scenario Analysis

Testing incentives to formalize firms in Benin

In 2009, the Benin national statistics agency estimated the informal sector at 70 percent of GDP and 95 percent of employment. In April 2014, the government launched the entreprenant status, a simplified and free legal regime offered to small informal businesses to enter the formal economy. A randomized impact evaluation tested three versions of the entreprenant status on business registration decisions. The first version tested whether simplifying entry regulation and providing information alone could be effective. The second version tested the notion that businesses may need additional incentives to formalize and additional support to access benefits and grow. In the third version businesses received tax mediation services as an additional incentive to formalize. The study randomly allocated 3,600 informal businesses operating in Cotonou to the three treatment groups and one control group. After one year, formalization rates rose in all three groups: 9.1 percentage points in the first treatment group; 13 percentage points in the second treatment group; and 15.8 percentage points in the third treatment group. The program had a higher impact on male business owners, those with more education, operating outside Dantokpa Market (the biggest informal market), in sectors other than trade.

World Bank Policy Research Working Paper 7510 by Najy Benhassine, David McKenzie, Victor Pouliquen, and Massimiliano Santini,, December 2015.

Incentivizing firms to formalize in Malawi

Informality remains extremely high among firms in Sub-Saharan Africa despite efforts to simplify formalization. In most of the region, business registration in a national registry is a separate process from tax registration. In Malawi 93 percent of firms have not registered with the government. An experiment to encourage formalization involved randomly allocating firms to a control group and three treatment groups: Group 1 was offered assistance for costless business registration; Group 2 was offered assistance with costless business registration and (separate) tax registration; and Group 3 was offered assistance for costless business registration along with an information session at a bank that ended with the offer of business bank accounts. All three treatments boosted business registration, with 75 percent of those that offered assistance receiving a business registration certificate. Information and assistance had a limited impact on tax registration, which is consistent with other studies. Measures of the short-term impacts of formalization on financial access and usage showed business registration alone has no impact for either men or women on bank account usage, savings, or credit. However, the combination of formalization assistance and the bank information session resulted in significant impacts on obtaining a business bank account, financial practices, savings, and use of complementary financial products.

World Bank Policy Research Working Paper 7183 by Francisco Campos, Markus Goldstein, and David McKenzie, February 2015.

New Georgia tax regime on micro businesses increased formal business registration

Tax policy and administration are important instruments affecting businesses’ formalization decisions and their related growth potential, as well as the relationship between governments and their constituents, particularly in developing economies. This research examines the introduction of preferential tax regimes in Georgia for micro and small businesses in 2010, and how it affected formal firm creation and tax compliance. The new tax regime for micro businesses increased the number of newly registered formal firms by 18–30 percent below the eligibility threshold during the first year of the reform, but not in subsequent years. Overall there is no effect of the new tax regime for small businesses on formal firm creation in any year. Policy makers are often concerned about abuse risks stemming from differentiated tax treatment of micro and small businesses. This analysis reveals reduced tax compliance in 2010 around the micro business eligibility threshold, but does not find significant evidence of reduced compliance by Georgian firms in later years.

World Bank Policy Research Working Paper 7010 by Miriam Bruhn and Jan Loeprick, August 2014.

Mandatory pension contributions encourage informality in Chile

One-third of legal economic activities are concealed from public authorities to avoid paying taxes and social security contributions, and to elude regulation. Large informal economies pose formidable challenges for pension systems. Higher informality rates lower pension contributions and tax revenue and may increase the elderly’s reliance on costly safety nets. At the same time, mandatory pension contributions and retirement income transfers can themselves create incentives for workers to avoid formal employment, making it hard to reconcile old-age poverty reduction and budget balancing. These fiscal and welfare trade-offs are assessed using a life-cycle model of labor supply and saving decisions in which household preferences and earnings opportunities in the formal and informal sectors are estimated from data on Chilean households. The analysis finds limited support for formal jobs rationing. Instead, mandatory pension contributions do significantly encourage informality. Policy experiments show that Chile could lower pension spending by 23 percent — while guaranteeing the same minimum income to retirees — by choosing a higher minimum pension clawback rate (thee rate at which the non-contributory government-funded pension is reduced as an individual’s contributory pension increases). This is because the clawback rate does not strongly impact the decision to work formally and contribute to the pension system.

Pension Design with a Large Informal Labor Market: Evidence from Chile, Clement Joubert, International Economic Review 56(2): 673–94, 2015.

Testing the evaluations of programs to formalize firms in Brazil

Most evaluations of programs to help informal firms formalize conclude they do not work. One of the few exceptions is a study that shows large effects of a tax simplification program in Brazil called SIMPLES. Another study using the same dataset but a different identification strategy, concludes that the program had a limited effect on formalization rates. This work reconciles the conflicting conclusions and investigates the plausibility of the identification strategy used in both studies. It turns out the conflicting results are caused by the dates used to identify when the program was put into effect. Further analysis suggests that “data heaping” and seasonality around November in the microdata cast doubts on the identification strategy used in both studies.

World Bank Policy Research Working Paper 7605 by Caio Piza, March 2016

RESEARCH POLICY BRIEF

Productivity as the Key to Economic Growth and Development (Research Policy Brief, August 2016)
Productivity is key to economic growth and is defined in economic theory as the ratio of output over input. Productivity is mainly driven by four interrelated components each influencing one another: (1) innovation, including the creation of new technologies; (2) education to spread these new technologies and develop the capacity of the workforce; (3) efficiency to promote the effective and flexible allocation of resources for production in various sectors; and (4) infrastructure, both physical (transports, energy supply, and telecommunication systems) and intangible (public institutions and macroeconomic environment) to support private activity. This brief discusses each component and illustrates them by analyzing three countries in Asia (Malaysia, Singapore, and Vietnam) and three Latin America countries (Chile, Mexico and Peru). All are members of a free trade agreement signed in February 2016, the TransPacific Partnership.

UPCOMING EVENTS

All upcoming events

MEDIA AND BLOGS

Four Nations Are Winning the Global War for Talent

The Wall Street Journal, 18 October 2016

New World Bank research shows women outnumber men for the first time in the global army of highly skilled migrant workers

The world’s highly skilled immigrants are increasingly living in just four nations: the U.S., U.K., Canada and Australia, according to new World Bank research highlighting the challenges of brain drain for non-English-speaking and developing countries.

Falling transport costs combined with growing competition for talented workers have seen the ranks of highly skilled immigrant workers living in a group of mostly advanced nations (members of the Organization for Economic Cooperation and Development) swell 130% to 28 million over the two decades to 2010, with the number from non-OECD (typically poorer) countries surging 185% to 17.6 million.

The rise has come despite a dramatic fall in the cost of communication, suggesting the salience of other factors such as wage and cultural differences, the demands of multinational companies or the appeal of living close to other talented workers.

“The weight of the evidence points to high-skilled immigrants boosting innovation and productivity — mainly through the increased quantity of skilled individuals pursuing innovative work,” the authors said.

Read the blog.

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Inequality in the typical country in the last 25 years — a strong increase followed by a recent decline

Let’s Talk Development, October 17, 2016

This is the first of three blog posts on recent trends in national inequality.

Inequality has featured prominently in the public debate in recent times. Media outlets highlight the apparent surge in the incomes of the richest, many books have been written on this issue, and numerous academic studies have attempted to assess the nature and magnitude of inequality over time. Most studies of inequality focus on the extent of inequality within a country; this makes sense since most policies operate at this level, too. Despite the attention this issue has received, it has been constrained by the quality of data on inequality. Household surveys collected by national authorities around the world are the most readily available source of data on inequality. However, compiling and harmonizing household surveys from different countries is extremely difficult as they are not always collected consistently or frequently enough. It is also well-known that household surveys often fail to capture the top tail of the distribution, as we will discuss in more detail in a future blog.

Bearing in mind these caveats, for the World Bank’s latest flagship report Poverty and Shared Prosperity report 2016, an effort was made to compile the most recent data for as many countries as possible. This database was constructed primarily from PovcalNet, the World Bank’s online repository of data on poverty and inequality, but also from the All the Gini’s database compiled by Branko Milanovic. Not all countries have data for every year, so the annual data were grouped into five-year intervals from 1988 to 2013. The resulting database contains data on Gini indices from more than 600 household surveys from 162 countries, representing between 71 and 91% of the world population (depending on the year).

Read the blog by Christoph Lakner, José Cuesta, Mario Negre, and Ani Silwal.

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Did Peru’s CCT program halve its stunting rate?

Development Impact, 17 October 2016

On September 30, the Guardian ran several articles (see here, here, and an editorial here) linking the halving of Peru’s stunting rate (from 28 to 14% between mid-2000s and 2015) to its CCT program Juntos. Of course, it is great to hear that the share of stunted children in Peru declined dramatically over a short period. However, as I know that while CCT programs (conditional or not) have been successful in improving various outcomes including child health, the effect sizes are never this dramatic, I was curious to see whether the decline was part of a secular trend in Peru or actually could be attributed primarily to Juntos

Read the blog by Berk Ozler.

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When does pollution policy work? The water quality and infant mortality impacts of Mehta vs. Union of India

Let’s Talk Development, 13 October 2016

India’s rivers are heavily polluted. According to official estimates, 302 of 445 river stretches fail to meet even bathing criteria (Central Pollution Control Board [CPCB], 2014). This is known to have a heavy disease burden: each year, 37.7 million Indians are affected by waterborne diseases, 73 million working days are lost, and 1.5 million children are estimated to die of diarrhea alone (Water Aid, 2008).

The holiest of India’s rivers, the Ganga, is one of the most polluted of all. According to recent estimates, each day 501 million liters of industrial effluent are emptied into the Ganga’s waters from 764 “Grossly Polluting Industries” (CPCB, 2013). National legislation and policy efforts to address the challenge of water pollution have widely been characterized as failures (Greenstone and Hanna, 2014).

Read the blog by Quy-Toan Do, Shareen Joshi, and Samuel Stolper.

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Pathways to profits for micro and small enterprises

All about Finance, 11 October 2016

Numerous research studies on micro and small firms from around the world have shown that (a) microenterprises are ubiquitous; and (b) only a very small percentage of such firms scale up to become SMEs.

The obvious question is why?

It is not for want of help. Each year billions of dollars in aid is given to developing economies to help entrepreneurs establish and grow their ventures. Yet evidence suggests that this money is having little impact in some of the key areas it is directed towards improving.

Take microcredit for example. A recent review of six randomized evaluations from four continents suggests that, while microcredit has some benefits, it has not led to the transformative improvements in business performance and poverty reduction widely expected.

Read the blog by Bilal Zia.

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Do households use improved cook stoves? What are the benefits? An Ethiopian case study

Let’s Talk Development, 7 October 2016

About 40% of the human population, or about 2.8 billion people, find commercial fuels like electricity and gas inaccessible, too expensive or too irregularly supplied to use for cooking and heating (Smith et al., 2013; IEA, 2012). Instead, they rely on solid fuels like coal, fuelwood, dung and charcoal that are combusted inside their homes (Jeuland and Pattanayak, 2012, Grieshop et al., 2011, Smith et al., 2013). Biomass fuels in particular are often self-collected and easy to use in inexpensive traditional stoves. This leads to severe public health problems, especially for women and children exposed to indoor smoke, and also can lead to forest degradation. Without major policy and/or technology changes, the global number of people depending on such fuels is projected to remain very large at least through 2030 (IEA, 2006, IEA and World Bank 2015).

Improved biomass cookstoves that use less fuel and burn fuel more fully often are recommended as relatively affordable ways to deal with these concerns.

Read the blog by Michael Toman and Randall Bluffstone.

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Low socio-economic groups travel far to access high quality health care: Study

The Indian Express, 6 October 2016

Does the quality of healthcare providers that people use vary systematically by socio-economic status (SES) in rural India? A new study published Thursday in the special issue of the Health Affairs Journal said the quality of health care depends mainly on where people live than who they are.

Researchers Jishnu Das and Aakash Mohpal, economists with the World Bank, Washington, surveyed more than 23,000 households in 100 villages of Madhya Pradesh and collected data between 2009 and 2011 on the quality of health care providers and primary care visits.”We were able to study for the first time the key question of whether households that have low socio economic status in rural India receive lower quality care and if so by how much,” Das, who is also a senior visiting fellow at the Centre for Policy Research, New Delhi told The Indian Express.

Read the article.

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Study makes case to train non-formal medicare providers

The Hindu BusinessLine, 5 October 2016

The first port of call for medical treatment in an average village in the country seems to be from providers without any formal medical training, suggests a recent study done by two economists from the World Bank.

The study undertaken in Madhya Pradesh covering 100 villages, 23,275 households and data collected between 2009 and 2011 was published recently in the Health Affairs journal.

“The average village in our sample could access 11 healthcare providers and 49 per cent of these providers had no formal medical training. Usage data are even more striking: 77 per cent of all primary care visits were to providers without any formal medical training. Only 11 per cent of all primary care visits were to the public sector and only 4 per cent were to providers with an MBBS degree,” the study noted.

The study stops short of calling the non-formal medicare providers quacks, and Jishnu Das, one of the authors of the study explains why. “We don’t call them that because the word implies that they have no medical knowledge, whereas the quality of the care they provide is comparable to the public sector,” Das told BusinessLine. Nevertheless, they had no formal medical training, he added. Das along with Aakash Mohpal undertook the study.

In fact, the MP study did represent a microcosm of healthcare delivery across the country, Das indicated. “From small scale studies throughout India we find similar results,” he added.

Read the article.

***

Islamic militant groups’ recruits likely to be well educated, study finds

The Guardian, 5 October 2016

World Bank study based on leaked Islamic State records finds no link between poverty or educational levels and radicalisation

Recruits to Islamic militant groups are likely to be well educated and relatively wealthy, with those aspiring to be suicide bombers among the best off, a study by the World Bank has found.

The research, based on internal records from the Islamic State group, will reinforce the growing conclusion among specialists that there is no obvious link between poverty or educational levels and radicalisation.

The data, leaked by a disaffected former member of Isis in March, includes basic information on 3,803 foreign recruits from all over the Islamic world and Europe who joined the organisation between early 2013 and late 2014, when the flow of volunteers to the organisation reached a peak.

Read the article.

***

Increase Top Tax Rates to Cut Taxes to Middle-Class Workers Hurt by Automation

New York Times, 4 October 2016

While automation has substantially reduced the costs of consumer goods, it has also hindered the wage growth of middle income workers. My recent work with Paul Gaggl suggests that automation is responsible for about a third of the growth in per-capita income since the 1990s, but that the gains are not equally shared.

Redistributing gains from beneficiaries of technology toward its victims is a reasonable way to spread the benefits of progress.

The advent of computers has made it possible to automate middle income jobs, such as administrative or manufacturing jobs. At least for the time being, however, high-skilled work that involves creative thinking cannot be automated. Consequently, the growth in middle income wages has not kept pace with the growth in high income wages.

In addition, research suggests that automation tended to favor business owners over wage earners. For example, the automation of manufacturing work meant that plant owners were able to economize on labor costs and retain a larger share of their profits.

Read the opinion piece by Maya Eden.

***

A rebuttal to the “elephant graph” discussion — or “elephants are tough animals…”

Let’s Talk Development, 4 October 2016

Recently, a discussion erupted over our paper and the so-called “elephant graph”. This graph (reproduced below) is the anonymous growth incidence curve, which shows how each percentile of the global income distribution has grown between 1988 and 2008. The discussion was sparked by a report by the Resolution Foundation’s Adam Corlett. Whether or not this was Corlett’s intention, some commentators have used his results to (erroneously) claim that our empirical results are not robust and/or that the policy implications drawn from our research are unwarranted for example, see this Financial Times article.

Read the blog by Christoph Lakner and Branko Milanovic.

***

A politically incorrect observation about political governance

Future Development Brookings, 3 October 2016

Government failure to pursue policies on the basis of technical evidence is prevalent in both rich and poor countries. Governance may not be an area where the poor world necessarily has much to learn from the rich. It could even be the other way around. Citizens in the rich world may be too complacent and too smug about their superiority, while citizens in the poor world are all too aware of political problems and are hungry to do something about it. Public investments in children’s education, health, and well-being can be a concrete way to find common ground in highly polarized societies and to mobilize people to hold their governments accountable in highly corrupt societies.

Read the blog by Stuti Khemani.

***

Let’s take on inequality seriously, seriously

Let’s Talk Development, 2 October 2016

As we worked on a new World Bank flagship report that provides the latest and most accurate estimates on trends in global poverty and shared prosperity, it became apparent as to what we wanted for the title — Poverty and Shared Prosperity 2016: Taking on Inequality.

Because in our minds it became clear that inequality is becoming increasingly critical to meeting the World Bank’s goals of ending poverty and sharing prosperity. In fact, we find that tackling inequality will make or break the goal of ending poverty by 2030.

Read the blog by Mario Negre, José cuesta, Christoph Lakner, and Maura K. Leary.

***

How long is the maturity of corporate borrowing?

All About Finance, 29 September 2016

The extent to which firms borrow short versus long term has generated much interest in policy and academic discussions in recent years. For example, concerns of a shortage of long-term investment in the corporate sector have led several institutions to promote policy initiatives aimed at extending the maturity structure of debt, which is often considered to be at the core of sustainable financial development (World Bank, 2015). There is also evidence that more short-term debt increases around financial crises, both as a cause and as a result of financial instability. However, there is little evidence on the actual maturity at which firms borrow around the world.

In a new working paper (Cortina, Didier, and Schmukler, 2016), we study how firms in developed and developing countries have used the expansion in different debt markets (domestic and international bonds and syndicated loans) to obtain finance at different maturities, and how their borrowing maturity evolved during the global financial crisis of 2008–09.

Read the blog by Sergio Schmukler, Tatiana Didier, and Juan Jose Cortina Lorente.

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Biting back at malaria: On treatment guidelines and measurement of health service quality

Let’s Talk Development, 20 September 2016

Growing up in a tropical country, one of us (Alfredo) was acutely aware of mosquito-borne diseases such as dengue and malaria. For many years now, vector-control strategies were — and still are — promoted by government- and school-led campaigns to limit the spread of these diseases. Consequently, it is somewhat alarming to know that diseases spread by mosquitoes remain an enormous challenge facing large parts of the developing and even developed world, particularly sub-Saharan Africa. It is perhaps less surprising that our shared interest in the health sector has resulted in a joint paper on assessing the overall quality of the health care system via compliance with established treatment guidelines.

Read the blog by Arndt Reichert and Alfredo Paloyo.

***

How many years do refugees stay in exile?

Development for Peace, 15 September 2016

“The average length of time that refugees spend in camps is 17 years.” This cruel statistic has been quoted many times, influencing our perception of refugee crises as never-ending events which are spinning out of control. It has significant implications when deciding the type of aid that is needed, the combination of humanitarian and development support, and the possible responses to the crisis.

But is it true? Not so.

In fact, the “17 year” statistic comes from a 2004 internal UNHCR report, and it was accompanied by many caveats which have been lost along the way. The statistic does not refer to camps, since the overwhelming majority of refugees live outside camps. It is limited to situations of five years or more, so it is an average duration of the longest situations, not of all situations. Most importantly, it refers to the duration of situations, not to the time people have stayed in exile.

Take the situation of Somali refugees in Kenya. Refugees started to arrive massively around 1993, about 23 years ago. Their number now stands at 418,000. But can we say that all 418,000 have been in exile for 23 years?

Read the blog by Xavier Devictor and Quy-Toan Do.

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Financial inclusion has a big role to play in reaching the SDGs

Let’s Talk Development, 15 September 2016

Scan the United Nations’ 17 Sustainable Development Goals (SDGs). You’ll see inclusive growth, clean water and greater equality, among other objectives. But you won’t see this: Giving people access to savings accounts, loans, insurance and other financial services.

Yet achieving the SDGs would be tougher without bringing people into the banking system, as my colleagues and I will argue in this blog series. The series, along with a recent paper, “ Achieving the Sustainable Development Goals: The Role of Financial Inclusion,” highlights the link between financial inclusion and development. Over the coming weeks, several bloggers with a wide range of expertise will highlight the role financial inclusion can play to attain many SDGs. This includes eliminating poverty, creating jobs, improving gender equality or good health, to name some. Financial inclusion can help ease the refugee crisis, too. Tens of thousands of Syrian refugees and others are landing on European shores without a bank account or access to financial services.

Read the blog by Leora Klapper.

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To trade or not to trade elephant ivory? That’s going to be the question

Development Impact, 14 September 2016

As the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) convenes its 17th Conference of the Parties later this month, the elephant conservation policy space continues to be polarized, with some countries advocating for a continuation of the complete ban on international legal trade in ivory while others, such as Namibia and Zimbabwe proposing to resume a regulated international trade in their legal ivory stocks. The legal ivory trade is generally opposed by countries with small or declining elephant populations that are against the consumptive use of wildlife. They fear that a legal trade will increase demand for ivory and thereby increase poaching in their countries. On the other hand, the legal trade is supported by countries with stable or growing elephant populations, who believe in sustainable consumptive use. They feel that a continued ban on the ivory trade penalizes them for their conservation successes and removes an important incentive for the conservation of elephants and other wildlife and their habitats by providing funding for management and incentives to local communities.

Read the blog by Quy-Toan Do, Andrei Levchenko, and Lin Ma.

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The microfinance business model: Enduring subsidy and modest profit

Let’s Talk Development, 7 September 2016

Microfinance institutions aim to serve customers ill-served by traditional commercial banks and thus the associated business model is challenging by definition. And yet the industry has achieved impressive scale reaching 211 million customers globally in 2013. Paradoxically, recent evidence suggests that the benefits of microcredit to borrowers may be modest. For example, six prominent randomized controlled trials found small impacts of access to microcredit on the incomes and consumption levels of marginal borrowers, though the studies found some “potentially important” (though modest) impacts on “occupational choice, business scale, consumption choice, female decision power, and improved risk management.” (Banerjee et al., 2015, p. 14).

Read the blog by Bob Cull, Asli Demirgüç-Kunt, and Jonathan Morduch.

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Migration and development: A role for the World Bank Group

People Move, 2 September 2016

Ahead of the UN General Assembly’s Summit on “Large Movements of Refugees and Migrants” on September 19, 2016 and the Leaders’ Summit on September 20, 2016, the World Bank Group has released a paper “Migration and Development: A Role for the World Bank Group.”

Read the blog by Dilip Ratha, Caglar Ozden, and Sonia Plaza.

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Simulated patient study sheds new light on antibiotic use in India

McGill University, 25 August 2016

As a result of the overuse or misuse of antibiotics, antimicrobial resistant superbugs represent an extraordinary threat to global health. This threat is particularly great in India, the world’s largest consumer of antibiotics and the country facing the highest burden of tuberculosis (TB) in the world.

In a study published in The Lancet Infectious Diseases, researchers at McGill University’s Faculty of Medicine, the Research Institute of the McGill University Health Centre, The World Bank’s Development Research Group, and other partners, used standardized patients (also called ‘simulated or mystery patients’) to understand how pharmacies in three Indian cities treated patients presenting with TB symptoms or diagnoses and to determine whether these pharmacies were contributing to the inappropriate use of antibiotics.

The researchers showed that pharmacies frequently dispensed antibiotics to simulated patients who presented with typical TB symptoms. However, none of the pharmacies dispensed first-line anti-tuberculosis drugs. The use of all antibiotics and steroids (which can be harmful to individuals who actually have TB), as well as the total number of medicines given, decreased sharply when the pharmacy staff decided to refer the patient to a doctor, which was far more commonly done when the patient presented with a lab test confirming TB, thus making the diagnosis apparent to the pharmacist.

Read the press release.

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Pharmacists key to tackling India’s growing TB burden

SciDevNet, 16 August 2016

India’s tuberculosis burden may be more than twice the 1.56 million patients recorded in its official surveillance system, according to studies released on 25 August.

India’s private healthcare sector may have treated around 2.2 million TB patients in 2014, a number that was not captured in the surveillance system, according to one of two studies in Lancet Infectious Diseases.

A second study, published simultaneously, finds that pharmacists frequently delay the treatment of TB patients by dispensing wrong drugs and also fail to refer them to qualified doctors. On the other hand, the study suggests, pharmacists can play a major role in the management of TB and help prevent the development of drug resistance.

Read the article.

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Underestimating inequality in Egypt: Evidence from house prices

VoxEU, 11 August 2016

Household income surveys underestimate income inequality because they fail to capture top incomes. A popular solution is to combine household survey with data from income tax records, though for countries like Egypt these records are not available, leading to an underestimate of inequality. This column argues that data on house prices can instead be used to estimate the top tail of the income distribution. Using this method the Gini index for urban Egypt increases from a survey-based figure of 0.36, which suggests that it is one of the world’s most equal countries, to 0.47.

Read the blog by Roy van der Weide, Christoph Lakner, and Elena Ianchovichina.

Also on Let’s Talk Development blog.

List of New Policy Research Working Papers
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