How to reform large-scale food subsidies is a complex, sensitive and tantalizing question. Few times have we encountered cases of bold, rapid and successful reform… until now: after 25 years of “Rastra” in-kind rice provision (10kg/month) to 15M households, in 3 years Indonesia gradually replaced it with electronic food vouchers (“BPNT”) for an equal number of people. And in the process, an experimental evaluation by Banerjee et al compared results on the two modalities: the shift toward vouchers led to a “dramatic concentration” of benefits among poorer households who received 45% more assistance than before. Why? Better administration of the voucher modality allowed for more progressivity (the rich got much less). The costs of managing vouchers were less than half of in-kind’s (0.75-2% vs 4% of benefits), and no food inflation was detected in the reform.
Speaking of food… what can be done to reduce global food insecurity? The IMF’s latest WEO report has a special feature discussing various “transmission channels” and estimated that increasing “social transfers” spending by 1% would reduce undernourishment by 0.2% (see p.30-34 of the main report and the annex for econometric specifications) (h/t Ervin Prifti). The other newly-released IMF flagship, the Fiscal Monitor, discusses the scale up of social protection measures on p.12-13 (see great graph 1.13 on the wide variance in coverage).
Let’s dig deeper on Covid responses! The World Bank released a great JobsWatch brief examining 1,300+ labor market responses to the pandemic. The brief builds on our global social protection response database – btw, new update (v.15) will be out shortly! – and conducts a rich, precious analysis of both supply and demand-side labor market measures for 55 low and middle-income countries. Among the findings on firms, 91% of countries provided them with liquidity support, chiefly through tax relief (72%), credit facilities (67%), and loan payment support (51%). On the supply side, about 38% of cash transfer programs are directed to workers which, as Weber and Newhouse argue in an accompanying blog, “… emphasizes the role of safety nets for informal workers in countries that have no other social security mechanisms”.
… more on the practicalities of pandemic responses! The “Maintains” initiative by OPM and UK Aid has a fantastic set of lessons on shock-responsive social protection: six detailed case studies examine, on one hand, how programs have been expanded vertically and horizontally, and on the other hand how these were delivered via operational and administrative adaptations – see the conceptual framework and policy briefs for Bangladesh, Ethiopia, Kenya, Pakistan, Sierra Leone and Uganda (full country reports are available in the “research output” section here).
From the pandemic to a country at the epicenter of multiple shocks: Ghorpade and Ammar have an excellent paper examining the state of humanitarian and social protection interactions in Yemen. Their analysis reveals a high level of fragmentation among approaches, but also that the combined scale of humanitarian and development programs could potentially cover the entire Yemeni population. In terms of benefit amounts, for example, data from 14 programs show that households receive between $10 and $119 (p.27), with huge variation in administrative costs (between 11-77% of program benefits, p.29). Importantly, figure 14 (p.32) outlines a practical set of entry-points for enhanced humanitarian and social protection collaborations at strategic, program and delivery level.
News from Africa? Bertrand et al evaluate a public works program for low-skill youth (18-30) in urban and peri-urban Cote d’Ivoire. They find that during the program, dimensions like earning (the higher income quintile earns 2.2 times than the poorest), savings, psychological wellbeing and work habits improved. However, post-program impacts on earnings are limited, with the other benefits also not being long-lasting. While not all possible outcomes are being measured, the cost-benefit ratio is generally high. For instance, “… compared to the benchmark scenario with self-targeting based on the formal minimum wage, the cost-effectiveness ratio would improve by 30% to 52% by targeting women only, or by targeting youths with low predicted baseline earning”.
Speaking of targeting… are universality in access to healthcare and significant cost reductions enough for automatically reducing gender inequalities in health? In India, Dupas and Jain show that “… gender-neutral policies may increase female levels of utilization, but closing gender gaps requires strategies that explicitly target barriers to female care-seeking and gender bias”.
What’s new on the labor and skills front (h/t Michael Weber)? Duleep et al present a novel theory that immigrants facilitate innovation and entrepreneurship by being willing and able to invest in new skills. Jung et al discuss region-specific labor market policies in Germany using hiring subsidies, layoff taxes, unemployment insurance benefits and transfers financed by social insurance contributions. Alessandrini and Milla explore 136 minimum wage amendments across Canadian provincial jurisdictions and found that a 10% increase in the minimum wage increases community-college enrollment by 6% and reduces university enrollment by 5%. Harju et al estimate the effects of worker voice on job quality and separations in Finland and found no effects on the latter and small ones on the former (job security, health, subjective job quality, and wages). Bonus on Finland: Maczulskij shows that as labor markets evolve, routine cognitive workers being more able to move to abstract tasks and adjust with smaller wage costs than routine manual workers.
And to conclude this edition… two juicy events on the horizon: a fascinating “Directions in Development” discussion is planned for May 5 with Debraj Ray, Abhijit Banerjee, Pinelopi Goldberg, Eliana La Ferrara, and Christopher Udry. And the World Bank, IZA, the Network on Jobs and Development, and UNU-WIDER are organizing the 2021 Jobs and Development Conference on “Building better jobs for the post-Covid19 era” (Sept 1-3).