1Aid, Growth, and JobsGary S. FieldsCornell University and IZAMay, 2013
I. Defining the ProblemThe global poverty problem:• Of the world’s 6.7 billion people:• 1.3 billion people living on live ...
3II. Fighting Poverty through the Labor Market• This talk: Which policies in labor markets andpolicies impinging on labor ...
4How would L mkt policies affect people like these?
5III. Developing an Analytical Framework
6Working Hard, Working Poor• The poor want to work.• Not only do the great majority of the poor work, they worklong hours,...
7The Problems Workers in the Developing WorldFace• An insufficient number of good jobs• Uncertainty of work• Low earnings ...
8The Multi-Sector Labor Market Approach• Dualistic or segmented labor market framework• Key features of dualism/segmentati...
9IV. Helping the Poor Earn Their Way Out ofPoverty: Policies Considered in the InternationalLiterature1. Basic workplace p...
10Policy Evaluation Framework I Like to UsePolicy instrument(s) Model, including both theoretical and empiricalcomponents...
11Sound labor market policies requiresound labor market models.1. From a welfare economic point of view, the policy judgme...
12
13A problematical policy syllogism:1. We want to help the poor.2. The poor work disproportionately in the informal sector....
14Wrong!
15Another problematical policy syllogism:1. We want to help the poor.2. The poor will remain poor as long as they remain i...
16Wrong again!
17What is right?Social cost-benefit analysis:If our aim is to reduce poverty the most,we want to invest our resourcesin wh...
18V. Social Cost-Benefit Analysis in Action
19Which sectors and activities are most worthwhile?We can only know once we do careful,policy-relevant, context-specific l...
20
21What about education?World Bank mission to GambiaTask: Assess possible World Bank loan in education sectorQuestions:1. W...
22Some education policy options
23Per-Pupil Expenditures (in dalasis)Primary 178Secondary technical 257Secondary high 573Gambia College 1351
24Conclusion government reached:Primary education
25VI. Concluding ThoughtsPitfalls in policy-making1. Inappropriate use of “productivity”2. Reliance on the wrong kinds of ...
26Priorities for Labor Market Research1. How people in developing countries are working and whythey are doing what they ar...
27Some Final WordsLet us try to be:1. Bold enough to be explicit about our policy evaluationcriteria.2. Specific about our...
Upcoming SlideShare
Loading in …5
×

Labor Market Core Course 2013: Aid, Growth, and Jobs

382 views

Published on

Published in: Economy & Finance, Technology
  • Be the first to comment

  • Be the first to like this

Labor Market Core Course 2013: Aid, Growth, and Jobs

  1. 1. 1Aid, Growth, and JobsGary S. FieldsCornell University and IZAMay, 2013
  2. 2. I. Defining the ProblemThe global poverty problem:• Of the world’s 6.7 billion people:• 1.3 billion people living on live than US$1.25 per person perday, PPP-adjusted• Another 1.7 billion live on between $1.25 and $2.50, PPP-adjustedThe global employment problem:• 200 million unemployed• 900 million working poor2
  3. 3. 3II. Fighting Poverty through the Labor Market• This talk: Which policies in labor markets andpolicies impinging on labor markets would helpreduce poverty the most?• Definition of labor markets:o The places where labor services are bought and sold.o Includes wage-employment and self-employment.o Includes agriculture and non-agriculture.
  4. 4. 4How would L mkt policies affect people like these?
  5. 5. 5III. Developing an Analytical Framework
  6. 6. 6Working Hard, Working Poor• The poor want to work.• Not only do the great majority of the poor work, they worklong hours, but they earn very little for the work they do.• The composition of employment is very different indeveloping countries from that in developed countries.• Typically, the better jobs are in wage employment, not self-employment.• Unemployment rates are lower in the developing countriesthan in the richer countries.• What the developing countries have is an employment problem– that is, poverty among those who work - rather than anunemployment problem.
  7. 7. 7The Problems Workers in the Developing WorldFace• An insufficient number of good jobs• Uncertainty of work• Low earnings despite long hours• Few job-related social protections• Indecent work
  8. 8. 8The Multi-Sector Labor Market Approach• Dualistic or segmented labor market framework• Key features of dualism/segmentation:Existence of better and worse jobsBetter jobs rationed• Ingredients of multi-sector labor market analysis:How the “good jobs sector” worksHow the “poor jobs sector” worksLinkages between the two sectors
  9. 9. 9IV. Helping the Poor Earn Their Way Out ofPoverty: Policies Considered in the InternationalLiterature1. Basic workplace protections2. Harnessing the energies of the private sector3. Economic growth, international trade, and foreignassistance4. Labor market policies for generating more paidemployment5. Raising self-employment earnings
  10. 10. 10Policy Evaluation Framework I Like to UsePolicy instrument(s) Model, including both theoretical and empiricalcomponents Predicted outcomes Policy evaluation criterion(a) Policy evaluation judgment
  11. 11. 11Sound labor market policies requiresound labor market models.1. From a welfare economic point of view, the policy judgmentsare explicit, mutually consistent, and thoroughly worked out.2. From a theoretical point of view, the models are sufficientlydetailed and suitably rigorous.3. From an empirical point of view, the models guide and areguided by solid quantitative evidence.
  12. 12. 12
  13. 13. 13A problematical policy syllogism:1. We want to help the poor.2. The poor work disproportionately in the informal sector.3. Therefore, we should invest in the informal sector, which iswhere the poor are.
  14. 14. 14Wrong!
  15. 15. 15Another problematical policy syllogism:1. We want to help the poor.2. The poor will remain poor as long as they remain in poorsectors.3. The informal sector pays poorly relative to the formal sector.4. Therefore, we should invest in creating new formal sector jobsand formalizing existing informal jobs.
  16. 16. 16Wrong again!
  17. 17. 17What is right?Social cost-benefit analysis:If our aim is to reduce poverty the most,we want to invest our resourcesin whichever sector and whichever activityproduces the highest marginal social benefit(in poverty reduction terms)relative to the marginal social cost.
  18. 18. 18V. Social Cost-Benefit Analysis in Action
  19. 19. 19Which sectors and activities are most worthwhile?We can only know once we do careful,policy-relevant, context-specific labor market modeling.No general answer.My hunch: in many contexts, increasing self-employmentearnings through low-cost interventions such as affordablemicro-credit.
  20. 20. 20
  21. 21. 21What about education?World Bank mission to GambiaTask: Assess possible World Bank loan in education sectorQuestions:1. Which level of education to prioritize?2. How to intervene at that level?
  22. 22. 22Some education policy options
  23. 23. 23Per-Pupil Expenditures (in dalasis)Primary 178Secondary technical 257Secondary high 573Gambia College 1351
  24. 24. 24Conclusion government reached:Primary education
  25. 25. 25VI. Concluding ThoughtsPitfalls in policy-making1. Inappropriate use of “productivity”2. Reliance on the wrong kinds of empirical studies3. Fallacy of composition4. Attention to only a subset of the goods and bads5. Lack of social cost-benefit analysis
  26. 26. 26Priorities for Labor Market Research1. How people in developing countries are working and whythey are doing what they are doing.2. Empirically-grounded theoretical models of labor markets.3. Sector-level and market-level analysis of various labormarket outcomes.4. In-depth empirical analysis on which particular policyinterventions matter how much.
  27. 27. 27Some Final WordsLet us try to be:1. Bold enough to be explicit about our policy evaluationcriteria.2. Specific about our theoretical models.3. Comprehensive in our empirical evidence.4. Humble enough to know when the best policy conclusionis to draw no policy conclusion at all.For the world’s poor, the stakes are too high for carelessness.

×