Guess where the biggest difference in social spending between rich countries and others lies? Mason and Shetty show that education and health are about 2 times higher in advanced economies (as % of GDP), but spending in social protection is 10 times larger than elsewhere. In fact, their comprehensive new report on the sweeping changes underway in East Asia calls for “… strengthening social protection systems to ensure that people who have difficulty transitioning to the new economy do not fall into poverty”. Check out also box 4.3 (p.145), which provides some key insights into structural, policy and institutional challenges for government revenue mobilization.
A round of impacts of cash transfers! Parker and Vogl provide a handy recap of conditional cash transfers effects on women in Mexico: what’s the impact on years of education? +17%; on likelihood of working? +41%; on earnings? +65%; on durables ownership? +10%. A WD article by Prifti et al finds that cash transfers increase farm production by 33.5%, but how do they do so? This doesn’t involve more labor – neither hired nor family labor – but likely operate through the relaxation of farmer’s liquidity constraints, which in turn allow for renting machines or buying fertilizers. But would farmers prefer to receive in-kind agricultural inputs or cash transfers? Holden and Bezu’s experimental evidence from Ethiopia suggests that in-kind provisions might often be preferred given farmers’ loss aversion.
Some resources on universal basic income (UBI). A thoughtful IMF working paper by Francese and Prady quantifies a range of contextual trade-offs with UBI – including coverage at the bottom vs leakage at the top; transfer generosity vs incentives; and fiscal costs vs alternative investments. It seems that two countries are joining the experimentation of UBI or some sort of variant of it – India and Germany. The AEA interviews Hanna and Olken on basic income vs targeted cash transfers in Indonesia and Peru, including a 24-minute podcast. Key take away? Don’t stop at transfers’ face value, consider the net effect of tax and benefits. Bonus: Cambridge will host a conference on the history of UBI in January 2019 (h/t Shanta Devarajan). Extra bonus on Indonesia: an NBER paper by Banerjee et al shows that proxy means testing may affect short-term reporting of assets (TVs and SIM cards), although the effects dissipate quickly thereafter; also, PMT doesn’t seem to alter consumption patterns in general, hence cementing the evidence that targeted schemes do not have distortive effects.
Speaking of tax and benefits, a WIDER paper by Gasior et al sets out three facts on the poorest people in Africa: in Zambia and Mozambique, they pay relatively more taxes than the rich; in South Africa, they rely on cash transfers heavily; and throughout, they are stuck in (informal) self-employment. The paper also confirms the regressive nature of indirect taxes: in Tanzania and Ethiopia — the countries where VAT is found to cause the largest inequality increase — the poorest 40% claims a negligible share of the total disposable income, while they pay approximately 30% of the total VAT tax liability. BTW, five countries in the continent, namely Nigeria, DRC, Madagascar, South Sudan, and Mozambique, will host most of the world’s extremely poor people by 2030: a Brookings piece by Ingram and McArthur argues that these deserve special emphasis in advancing cash transfers research and implementation priorities.
More on distributional impacts: what would be the effects of energy subsidy removal in Bangladesh? A paper by Timilsina shows that the answer depends on how savings are used and a set of general equilibrium considerations. In general, reallocating those savings to households through lump-sum cash transfers would be the preferred option from a distributional perspective. Since I mentioned lumps sums… the new UN’s flagship report on disability and development shows that at least 168 countries have periodic cash transfers to persons with disabilities, while lump-sum benefits are provided in 11 countries.
From cash to a specific food-based safety net, school feeding: Aurino et al evaluate the national school feeding program in Ghana. Their IFPRI discussion paper finds that, after 2 years of implementation, the program led to moderate increases in test scores for the average pupil in school catchment areas, ranging between 0.12 and 0.16 standard deviations. In an IPC paper, Swensson reviews the legal mechanisms to support the implementation of public food procurement initiatives targeting smallholder farmers, with commodities used in local school feeding schemes – also known as ‘home-grown school feeding’.
Let’s move to child-sensitive social protection, with the IPC’s new special issue of In-Focus dedicated to the matter. What can I say, it is just too juicy to single out any of its 15 articles in the collection, including reflections on cash plus, effects on violence, links to social services in Kazakhstan, early childhood in Mozambique, displacement in Jordan and Lebanon, coverage in Argentina, and indigenous people in the Philippines.
Still on children, but in the United States: what explains the widespread material hardship among low-income families with children? An Urban Institute report by Karpman et al finds that more than two-thirds (68.5 percent) of low-income parents reported problems paying for housing, utilities, food, or medical care in 2017, with the highest prevalence of hardship found among parents of children under age 6. Physical and mental health problems and disabilities, unexpected declines in income, and unforeseen expenses were associated with an increased risk of hardship, after controlling for other characteristics.
Two pieces on labor markets! A working paper by Zaakhir et al investigates the effect of multiple minimum wages, known as remuneration orders (see table 5, p.6-7), on employment and working hours in Mauritius. Their analysis indicates that a 10% increase in the minimum wages brings about a slightly positive effect on employment in the covered sector, with an estimated employment elasticity of 0.113. The positive employment effect is also associated with a 2.3% increase in average working hours for men but a 1.8% decline for women. A short blog by ILO’s Van Doorn reflects on the challenges around formalization, the ILO itself has a useful report on the prospects of social protection for migrant workers in ASEAN, while an article by Crawley and Hagen-Zanken interview 250 migrants crossing the Mediterranean (the motivations of whom, like family reunification, question policies for deterrence).
Three resources on political factors that influence the adoption and performance of social protection. An ESID working paper by Chhotray et al examines the Indian PDS in the Chhattisgarh and Jharkhand states, both created at the same time (in 2000). In particular, the paper asks why the opportunities afforded by statehood allowed Chhattisgarh to politically prioritize the PDS, but not Jharkhand. It finds that the explanation lies in “… the interrelated dimensions of political competition, the nature of pressures exerted by electorally significant societal groups, and political enablement of bureaucratic capacity”. A short piece by Hundsbaek-Pedersen et al discusses the pros and cons of cash transfers helping to maintain governments in power. Finally, a thought-provoking article by Ouma and Adesina argues that Kenya’s uptake of social protection programs (CT-OVC and HSNP) are the result of knowledge and policy-transfer initiatives heavily influenced by international agencies and their alliances with various domestic actors.
From politics to values: standard theory suggests that ‘materialists’ will support economic growth at the cost of the environment, while ‘post-materialists’ will favor environmental protection. However, a CSSR paper by Loubser finds that at relatively low levels of GDP per capita, post-materialists support economic growth at the expense of the environment, perhaps in an attempt to alleviate poverty. The paper argues that it is not individuals’ personal economic environments shape their values, but the economic conditions of communities and countries as a whole.
Looking back, looking forward: McKenzie and the DI team share their compilation of favorite papers for 2018, while a video by IDS director Leach lays out next year’s development issues. And since this is the last edition of the year, here are some stats of our weekly links for 2018: we reached about 5,000 subscribers, produced 46 editions, and shared over 900 papers.
Links are back the week of January 8, happy holidays!