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World Bank Research E-Newsletter, March 2014
  Apr 01, 2014

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In this Issue
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Note from  Director
WPS Latest Media and Blog Posts
Blogs List of New Policy Research Working Papers
Policy Research Talk: Ensuring Equal Opportunities for the Bottom 40 Percent

In a range of countries there are striking differences in the educational attainment of children from the richest 20 percent of households compared to the poorest 40 percent. And in many countries the remaining gap in achieving universal primary education derives from these differences. These findings were discussed by Deon Filmer, lead economist in the World Bank’s research department, at March’s Policy Research Talk, a monthly event held by the department to foster a dialogue between researchers and operational colleagues.

Read the feature story | Watch the video »

Why Accurate Measures of Hunger Remain Elusive

Counting the number of hungry people in the world and monitoring trends in hunger is not easy. Current global counts rely on combining statistics on each country’s food availability with information on consumption patterns from household surveys. Recent research has advocated for estimating hunger directly from these same household surveys. Important to either approach is the quality and consistency of household surveys. A survey experiment in Tanzania shows great variability in hunger counts stemming from alternative survey designs. In particular, changing the design of the survey questionnaire (how questions are asked) greatly impacts the hunger estimate—by millions of people at the national level. As a consequence, comparable and valid estimates of the number of hungry in the world will remain out of reach until the design of household surveys, especially the consistency of questionnaires, is improved.

World Bank Policy Research Working Paper 6736 by Joachim De Weerdt, Kathleen Beegle, Jed Friedman, and John Gibson

Financial Education during Schooling Years Improves Financial Behavior Later

The proliferation of new financial products and services continues to outpace the capacity of individuals and families to make informed financial choices. Financial education geared toward adults has shown low uptake, so the focus has shifted to introducing financial literacy during the schooling years. This research looks at a comprehensive financial education program spanning six states, 868 schools, and approximately 20,000 high school students in Brazil through a randomized control trial. The program increased student financial knowledge by a quarter of a standard deviation and led to a 1.4 percentage point increase in saving for purchases, better likelihood of financial planning, and greater participation in household financial decisions. “Trickle-up” impacts showed improvements in parental financial knowledge, savings, and spending behavior. The evidence suggests the program affected students’ preferences and attitudes about financial decisions well beyond the schooling years.

World Bank Policy Research Working Paper 6723 by Miriam Bruhn, Luciana de Souza Leão, Arianna Legovini, Rogelio Marchetti, and Bilal Zia

Improving Access to Land and Housing in West and Central African Cities

This research applies a new type of land market analysis to the city of Bamako, Mali, which is tailored to the complex land issues prevailing in many West and Central African cities. The methodology hinges upon a systemic analysis of “land delivery channels,” which identifies how land is initially made available for circulation, how households can access land (including through market and non-market processes), and how tenure can be incrementally formalized. It combines analyses of the institutional framework and of the rules and actual practices identified through interviews with key informants, literature and press reviews, and a survey of more than 1,600 land transfers that occurred between 2009 and 2012. The study shows that land is mostly accessed through an informal channel whereby peri-urban land is transformed from agricultural to residential use, and through a public channel involving the administrative allocation of residential plots to households. Considering both land markets and land institutions in the analysis shows how the complexity of procedures and the extra-legality of practices affect the functioning of formal and informal markets and make access to land costly and insecure.

World Bank Policy Research Working Paper 6687 by Alain Durand-Lasserve, Maÿlis Durand-Lasserve, and Harris Selod

Dealing with Rising Regional Inequality in Bangladesh

Rising spatial inequality in developing countries is an important policy issue. This study develops a measure to capture and decompose spatial disparity in welfare. The analysis, based on household survey data from Bangladesh, suggests significant spatial convergence in living standards in urban areas and in the country as a whole, but no substantial change in rural areas between 2000 and 2010. The sustained difference in spatial disparity between urban and rural areas indicates slower mobility of workers across rural and urban activities due to skill constraint. The results also show that welfare differences across communities in both survey years can be explained mostly by three factors: average years of education, percentage of households with electricity, and percentage with a phone. To reduce spatial differences between urban and rural areas, countries with no formal and informal restrictions on migration could invest more in education and skill formation. And to keep regional inequality in check, there is a need to balance investments in infrastructure and services benefitting firms/farms with investments benefitting households. For basic infrastructure like electricity, this means providing it not only to firms/farms for productive use but also to households for its amenity value.

World Bank Policy Research Working Paper 6519 by Forhad Shilpi

Transactional and Unprotected Sex Rises among Women after Shocks

Transactional sex is believed to be a risk-coping mechanism for women in Sub-Saharan Africa and a leading contributor to the HIV/AIDS epidemic. This view is supported by data from a panel of women in rural Tanzania whose primary occupation is agriculture. After a negative shock (such as food insecurity), unmarried women are three times more likely to have been paid for sex. Regardless of marital status, after a shock women have more unprotected sex and are 36 percent more likely to have a sexually transmitted infection. These empirical findings support claims that transactional sex is not confined to commercial sex workers. And shocks such as food insecurity may drive women into transactional sex as a risk-coping behavior.

World Bank Policy Research Working Paper 6751 by Damien de Walque, William H. Dow, and Erick Gong

Public Sector Pay Affects the Intrinsic Motivation of Government Workers: Evidence from Indonesia

Does high public sector pay attract higher ability at the expense of motivation? Prior research has found that high pay increases ability but has insignificant effects on motivation when public sector wages are high and the public sector job has no private sector counterpart. Research using experimental methods in Indonesia finds different results when public sector pay is lower and private and public sector jobs are the same. The analysis examines the motivations of students who have selected into, but not yet worked in, the private and public sectors. The experiments precisely measure students’ ability to undertake the task, their intrinsic pro-sociality (their preferences for the public sector mission), and the financial sacrifice they make when choosing the public over the private sector. Three conclusions emerge. First, matching workers to mission is important: more pro-social workers exert higher effort in a pro-social task. Second, less pro-social individuals are more likely to join the public sector when public sector pay is higher. Third, students committed to joining the public sector (the Indonesian Ministry of Finance) exhibit greater pro-sociality than those who have not.

World Bank Policy Research Working Paper 6729 by Sheheryar Banuri and Philip Keefer

No Single Approach Is Best When It Comes to Aid-for-Trade

The demand for accountability in aid-for-trade is increasing, but monitoring has focused on case studies and impressionistic narratives. Evidence from a wide range of studies recognizes that multiple approaches are needed to learn what works and what does not. A review of recent studies concludes that reducing trade costs through investments in hard infrastructure (like ports and roads) and soft infrastructure (like customs) is warranted. But failure to implement complementary reform—especially the introduction of competition in transport services—may erode the benefits of these investments. Direct support to exporters seems to lead to diversification across products and destinations, but it is not yet clear that these benefits are durable. In general, it is difficult to rely on cross-country studies to direct aid-for-trade. More rigorous impact evaluation would be welcome, but situations of clinical interventions in trade are rare and adverse incentives (because of agency problems) and costs (because of the small size of projects) are a hurdle in implementation.

World Bank Policy Research Working Paper 6742 by Oliver Cadot, Ana Fernandes, Julien Gourdon, Aaditya Mattoo, and Jaime de Melo

The World Bank Research Digest (Fall 2013)

This quarter's Research Digest discusses: 1) Shared Prosperity and the Mitigation of Poverty; 2) The Simple Algebra of the Shared Prosperity Indicator; 3) The Global Income Distribution: 1988–2008; 4) Narrowing the Gap in India; 5) Is Workfare Really Cost-Effective?; 6) Growth Still Is Good for the Poor; 7) What Is the Effect of Growth on the Distribution of Opportunities?

The World Bank Research Digest.


Webinar Series, World Development Report 2015: Mind and Culture

The World Development Report 2015 is based on three main ideas: bounds on rationality, which limit individuals’ ability to process information and lead them to rely on rules of thumb; social interdependence, which leads people to care about other people as well as the social norms of their communities; and culture, which provides mental models that influence what individuals pay attention to, perceive, and understand (or misunderstand). The report has two main goals: to change the way we think about development problems by integrating knowledge that is now scattered across many disciplines; and to help development practitioners use the richer understanding of the human actor that emerges from the behavioral sciences in program design, implementation, and evaluation. An upcoming webinar organized by the e-Institute for Development and the World Development Report team on April 2 at 10:00am EDT will provide an overview of the key themes of the report as well as examples of how to apply these concepts to development practice.

For more information and to register for the event, please click here.

World Development Report 2016: The Internet and Development

The Internet has the potential to be a powerful tool in the fight against global poverty and in boosting prosperity. Along with mobile phones and advanced digital technologies, the Internet is lowering transaction costs, creating new economic opportunities, and improving accountability. It is fair conjecture that this is an area where much scope remains for new and imaginative applications and large gains. The World Development Report 2016 on The Internet and Development will assemble the best available evidence on the Internet’s potential impact on economic growth, on equity, and on the efficiency of public service provision.

Read the announcement.

Media and Blogs

Former Tunisia President Changed Business Rules to Family's Benefit (Financial Times, March 24)
“In Arabic it is called “wasta”, the connections and influence that grease the wheels of the bureaucracy and helps you get ahead. And the family of Zein al-Abidine Ben Ali, deposed president of Tunisia, had plenty of it. Now a new report by a team working through the World Bank has laid bare how Mr Ben Ali and those close to him were able to change the rules of business in Tunisia to benefit themselves even as they won praise in the west for their handling of the country’s economy.”

Read the article | Access the related working paper, co-authored by Bob Rijkers, Caroline Freund, and Antonio Nucifora.  


A Global Boom, but Only for Some (New York Times, March 18)
“But what globalization did achieve was to greatly improve the lot of hundreds of millions of people in China and other corners of Asia. The lopsided results have opened a rift between the experience of global capitalism between the developed world and many poor countries. Branko Milanovic, an expert on global development who was formerly at the World Bank and who is now at the City University of New York’s Graduate Center, puts it succinctly. From a global perspective, two decades of globalization have produced what “seems like a fairly benign outcome.” If you look at the world as a single nation, income inequality has, in fact, declined. Income in the middle has grown faster than at the top.”

Read the article.


Should Sovereign Wealth Funds Invest at Home (Let’s Talk Development blog, March 4)
“Sovereign Wealth Funds (SWFs) represent a large and growing pool of savings and an increasing number are owned by natural resource exporting countries. The funds have a variety of objectives, including intergenerational equity and macroeconomic stabilization. Traditionally they have invested abroad, increasingly in developing country assets, but always as part of a strategy to boost yields while remaining diversified. However, a recent trend sees an increasing number starting to invest in their domestic markets, including in infrastructure and other greenfield investments.”

Read the post | Access the related working paper.


Do Firms in Developing Countries Grow as They Age? (All About Finance blog, March 3)
“The answer is yes, but not as fast firms in developed countries. In a new paper, my co-authors Meghana Ayyagari, Vojislav Maksimovic and I focus on developing countries and look at what happens to firms in the formal sector as they age. We focus on formal firms because informal firms look very different from formal firms in terms of size, productivity and education level of managers and there is little evidence that growth occurs by informal firms eventually becoming large formal establishments. We see that there the average 40 year old plant employs almost five times as many workers as the average plant that is five years or younger.”

Read the post by Asli Demirgüç-Kunt, the World Bank’s research director.


The Golden Mean of Export Promotion (Project Syndicate, Feb. 19)
“Export promotion is most effective when it combines the virtue of helping needy smaller enterprises with the pragmatism of supporting well-resourced larger companies. And that optimal balance can be found among medium-size enterprises.”

Read the article by Aaditya Mattoo and Ana Fernandes, two economists in the World Bank’s research department.


International Labor Mobility and Inequality across Nations (People Move blog, Feb. 6)
“Academic research and policy thinking on migration and development are gathering more attention as evidenced by a new conference every month. The latest one was titled " International Labor mobility and Inequality Across Nations", hosted by FERDI in Clermont-Ferrand, France on January 23 and 24, 2014.”

Read the post by Çaglar Özden, a senior economist in the World Bank’s research department.

List of New Policy Research Working Papers