This paper uses methods developed by the Commitment to Equity Institute and data from the Household Budget Survey to assess the effects of government taxation and social spending on poverty and inequality in Moldova.
... See More + The paper presents the first detailed distributional analysis of the tax and expenditure sides of the fiscal system, examining, in particular, the contribution of different taxes and transfers to poverty and inequality reduction in Moldova, as well as the cost-effectiveness of different taxes and transfers in achieving these poverty and inequality reduction goals. The analysis finds that the tax-benefit system in Moldova is quite pro-poor and has a significant effect on poverty and inequality, with the poverty reduction effect being stronger for lower poverty thresholds. Pensions provide much of the poverty-reducing effect which is not surprising, given that in an aging society like Moldova, pensions are the main income source for many households. Direct transfers are also quite effective in reducing poverty and are also efficient, providing a relatively high degree of poverty reduction per dollar allocated to these programs, but their overall effect on poverty is muted by their small budgetary allocations.
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Working Paper (Numbered Series) 141814 SEP 13, 2019
This paper examines the impact of the recent recession in Belarus on poverty and broader measures of household welfare and compares the recent recession episode to previous economic crises in Belarus.
... See More + The paper constructs a measure of vulnerability to poverty, based on an estimated probability of falling below the national poverty threshold not exceeding 10 percent, which is estimated for each year of the household survey data between 2014 and 2017. The analysis finds that the recession of 2014–16 was qualitatively different from earlier recent crisis episodes (2008–09 and 2010–11) in that it affected low-income households to a much greater extent, and the negative welfare effects lingered. The paper also documents that although the recession did not result in a substantial increase in absolute poverty by the official definition, it led to a considerable increase in the share of households that are vulnerable to poverty. The greater degree of vulnerability is also evident from the growing share of the population that faced a risk of poverty within a year (going in and out of poverty). Household types for which the impact of the recession was most pronounced are households with multiple children, single-parent households, residents of rural areas, as well as those who were not employed, partly employed, or low-skilled employees. Coping strategies that were employed by the population were largely related to reducing expenditures and, among vulnerable households, food expenditures in particular, as well asdrawing down on their savings.
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Working Paper (Numbered Series) 141815 SEP 10, 2019
This paper finds that informal workers are more likely to have inferior work conditions, but do not necessarily report worse subjective well-being.
... See More + Starting with lower wages, but also with less regularity of hours and paid vacation, informal workers have higher incidence of envelope payments than formal workers but not of hazardous or unstable jobs. After controlling for work conditions, informal workers do not have statistically significantly lower job satisfaction and under no specification are informal workers more likely to self-assess worse health than formal workers. Finally, there is some association between informal employment and household poverty and life satisfaction, but it is not robust to changes in econometric specification or sample composition. The authors conclude that the evidence indicates that informal employment in the Russian Federation is mostly a problem of labor productivity and the design of the social protection system, but worsening wages and some association between informality and household poverty indicate that informality may also be a social equity problem.
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Working Paper (Numbered Series) 141101 AUG 20, 2019
Attributing a rental value to homeowners’ dwellings is essential in different contexts, including poverty and inequality analysis, the compilation of national accounts, consumer price indexes, and estimation of purchasing power parity indexes.
... See More + The solution is often to use homeowners’ estimates of the market rent they would pay for their dwelling if they were renting it, which is usually referred to as homeowners’ self-assessed rent. Lack of alternative surveys and up-to-date and complete administrative data about dwellings’ market values typically bounds researchers to test the accuracy of homeowners’ self-assessed rent using only information from household budget surveys. Using 13 years of the Peruvian household budget survey, this paper compares two methods to assess the accuracy of homeowners’ self-assessed rent and finds that the average homeowner in Lima overestimates the market rent of her dwelling by between 8 and 15 percent. However, homeowners’ self-assessment inaccuracy fades away in most years when homeowners are compared with their most observationally similar tenants.
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Working Paper (Numbered Series) 141098 AUG 15, 2019
Enumeration areas are the operational geographic units for the collection, dissemination, and analysis of census data and are often used as a national sampling frame for various types of surveys.
... See More + Traditionally, enumeration areas are created by manually digitizing small geographic units on high-resolution satellite imagery or physically walking the boundaries of units, both of which are highly time, cost, and labor intensive. In addition, creating enumeration areas requires considering the size of the population and area within each unit. This is an optimization problem that can best be solved by a computer. This paper, for the first time, produces an automatic designation of predefined census enumeration areas based on high-resolution gridded populationand settlement data sets and using publicly available natural and administrative boundaries. This automated approach is compared with manually digitized enumeration areas that were created in urban areas in Mogadishu and Hargeisa for the United Nations Population Estimation Survey for Somalia in 2014. The automatically generated enumeration areas are consistent with standard enumeration areas, including having identifiable boundaries to field teams on the ground, and appropriate sizing and population for coverage by an enumerator. Furthermore, the automated urban enumeration areas have no gaps. The paper extends this work to rural Somalia, for which no records exist of previous enumeration area demarcations. This work shows the time,labor, and cost-saving value of automated enumeration area delineation and points to the potential for broadlyavailable tools that are suitable for low-income and data-poor settings but applicable to potentially wider contexts.
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Working Paper (Numbered Series) 140493 AUG 08, 2019
Sarchil Qader; Veronique Lefebvre; Amy Ninneman; Kastelic,Kristen Himelein; Pape,Utz Johann; Linus Bengstsson; Andy Tatem; Tomas BirdDisclosed
Housing is the largest durable good consumed by households. As such, any consumption-based measure of welfare, to be comprehensive, must include the value of the flow of services households derive from their dwellings, the so-called imputed rent.
... See More + However, estimating imputed rents is a daunting task, which researchers and practitioners tend to overlook. This paper is the first attempt to assess the distributional impact of including housing in the welfare aggregate; the paper tests two estimation methods and analyzes four developing countries. The distributional impact cannot be predicted a priori, and evidence suggests it is context and method specific. Although changes in poverty and inequality are always statistically significant, they are only occasionally larger than one percentage point. By contrast, shared prosperity exhibits sizable changes, which might also determine international re-rankings. Albeit the inclusion of imputed rents reshuffles the setof poor households, observed changes in the socioeconomic profiling of the poor are unlikely to affect pro-poor policy design.
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Working Paper (Numbered Series) 140352 AUG 06, 2019
Simple linear distances between origin and destination poorly describe travel in Nepal, where rugged terrain,underdeveloped transportation infrastructure, and diverse vegetation heavily influence favorable travel routes.
... See More + In this context, expected travel times explain more about the remoteness of starting locations than geographic distance. Applied to service facilities, these time‐based measures of remoteness amount to measures of physical accessibility to services. However, traditional survey‐based measures of time suffer from problems of inaccurate reporting and standard survey error. Instead, this study built a geographic information system–based cost time model of travel that enables more accurate and generalizable assessment of accessibility.Having validated the generic model and compared it with other popular metrics, the study demonstrates its value by inputting a variety of services into it. This paper provides descriptive analyses of accessibility trends to these services at national, provincial, municipal, and geographic scales and suggests research possibilities unlocked by such a general purpose model. The paper concludes with thoughts for how the data and analysis,both freely available public goods, can enable additional research and better policy making.
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Working Paper (Numbered Series) 140353 AUG 06, 2019
This paper analyzes whether taxation can be successfully used to reduce the incidence of labor informality and achieve higher equality in a globalized economy.
... See More + To this purpose, it develops a two-area model: a developed country and an emerging country. The two areas differ according to the size of the informal sector, which is characterized by a more flexible labor market and lower productivity. To illustrate the potential role of taxation in achieving a fairer income distribution, the paper introduces a trade shock to simulate the effects of trade liberalization. Trade expansion has often been blamed for leading to an expansion of the informal sector and a widening of wage income disparities. In this context, the paper analyzes whether a budget-neutral tax reform, switching the tax burden from payroll taxes paid by firms operating in the formal sector to a consumption tax, can mitigate possible adverse effects of trade liberalization and support labor formalization. The effects of taxation are seen in the context of the trade-offs between growth, labor formality and equity. The analysis suggests that small improvements in formalization, resulting from the tax reform, come at the cost of widening income inequality. To reduce the incidence of low-quality jobs, tax policy interventions should go hand in hand with more effective social protection systems and labor laws.
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Working Paper (Numbered Series) 141092 AUG 01, 2019
Carbon pricing is increasingly recognized as an important source of government revenue. Carbon revenues can be crucial in supporting cost-effective climate mitigation, industrial competitiveness and other economic and development objectives.
... See More + How carbon revenues are used and how these uses are communicated are also critical for public and stakeholder acceptability of carbon pricing. This report provides practical guidance on using carbon revenues by helping policymakers understand the implications, opportunities, and challenges associated with different approaches to carbon revenue use.
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Working Paper (Numbered Series) 140766 AUG 01, 2019
Carbon pricing is increasingly recognized as an important source of government revenue. Carbon revenues can be crucial in supporting cost-effective climate mitigation, industrial competitiveness and other economic and development objectives.
... See More + How carbon revenues are used and how these uses are communicated are also critical for public and stakeholder acceptability of carbon pricing. This report provides practical guidance on using carbon revenues by helping policymakers understand the implications, opportunities, and challenges associated with different approaches to carbon revenue use.
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Working Paper (Numbered Series) 140766 AUG 01, 2019
The coverage of pension systems in the Africa region is limited to the small segment of the population in the formal sector. Coverage is thin partly because traditional contributory pension schemes are not responding to the needs of the informal sector.
... See More + As a result, a large share of the region’s adult population has no access to contributory pension schemes during their working lives. This means they will not be eligible for a pension. It also means the elderly coverage gap will persist in most countries. Expanding coverage to a larger group of workers is especially important because the elderly is now often cared for by their children. As the children move to cities, their ties to the elderly and home villages weaken. As a result, the elderly may be left behind with fewer resources.
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Working Paper (Numbered Series) 139582 JUL 22, 2019
Rapid economic growth over the past two decades lifted millions of people out of poverty in Central Asia. But the uneven spread of prosperity left many communities struggling to catch up.
... See More + To support lagging regions within countries, each of the region's five national governments has made convergence a pillar of their development strategies. An imperfect patchwork of household surveys allows policy makers to monitor progress and identify some spatial disparities. But these share an important weakness: none of the official surveys in the region is representative when disaggregated to the level of districts. Islands of poverty and prosperity are thus lost in the averages—leading to targeting inaccuracies that can slow the pace of poverty reduction. This study partially addresses the challenge. The accuracy of key welfare indicators is sharpened well beyond what could be achieved for any country alone by: i) unifying survey data from across the region and ii) applying the techniques of small-area estimation. The results provide detailed measures of welfare that in turn can be disaggregated for each district in Central Asia. Comprehensive maps of where the poor and the middle class live are presented, for the entire region and individually for each country.
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Working Paper (Numbered Series) 139142 JUL 11, 2019
Investing in human capital is essential for Tanzania. To generate future income and achieve sustainable development, people are the most important asset countries have.
... See More + Part two of this economic update discusses where Tanzania stands in terms of its investments in human capital for both children and adults. The analysis is part of the World Bank Human Capital Project (HCP), which relies on both the Human Capital Index (HCI) and data on human capital wealth (HCW).
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Working Paper (Numbered Series) 139418 JUL 01, 2019
The paper updates the analysis of the fiscal policy response over the recent commodity cycle, contributes to the analysis of key drivers of fiscal policy procyclicality, and provides a stock-tacking of current fiscal vulnerabilities.
... See More + Countercyclical fiscal policy during good times has been a key factor affecting the ability of commodity exporters to sustainably support economic activity when prices started declining. Fiscal space to withstand the next shock has narrowed in many emerging and developing economies (EMDEs) and may also be constrained by contingent liabilities stemming from exposure of state-owned enterprises and public and systemic banks to the commodity-sector. Fiscal consolidation is still necessary in many commodity-exporting EMDEs to reduce debt risks, rebuild fiscal and external buffers, and facilitate access to affordable financing. Fiscal policy should particularly aim at reducing the high volatility of public investment spending in commodity-exporting countries, both in good and bad times.
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Working Paper (Numbered Series) 139449 JUL 01, 2019
Richaud,Christine M.; Galego Mendes,Arthur; Ayivodji,Gbetoho Firmin; Matta,Samer Naji; Essl,Sebastian MichaelDisclosed
A thriving region until the early 1990s, Slavonia, the eastern region of Croatia, has been confronted with stagnation and decline, ageing and outmigration as well as impoverishment ever since.
... See More + This followed Croatia's homeland war of 1991-1995, with Slavonia one of the frontlines, economic restructuring of its state-led economy during the 1990s and 2000s and the global economic crisis of the late 2000s. More recently, after Croatia's EU accession in 2013 and coinciding with the economic upswing since 2014 in Croatia and the EU, Slavonia's labor market has started to tighten, with registered vacancies now exceeding the number of job seekers for highly educated as well as some unskilled and semi-skilled occupations. However, inactivity and unemployment remain high. In 2017, the share of the working-age population in work was only 51 percent, 10 percentage points below the rest of Croatia (61 percent) and 17 percentage points below the 2017 EU28 average. A legacy of war, limited availability of care services, and especially lower education levels explain an important part of Slavonia's much higher inactivity and unemployment. On the demand side, labor productivity in Slavonia's firms is systematically lower than in the rest of the country (except in agriculture and forestry), also consistent with Slavonia's sizeablewage gap. This, together with general disenchantment of the Slavonian population with the economicand business environment, has prompted outmigration. At the same time, a small number of firms alsooutperform their sectoral competitors elsewhere in Croatia, signaling Slavonia's potential.Looking ahead, private sector job creation remains a top priority, especially focusing on Slavonia's lower educated, who make up the bulk of the unemployed and inactive. This especially requires a reduction in the regulatory burden and an increase in Slavonian firms' competitiveness, which will also help to close the substantial wage gap with the rest of Croatia. Given the large share of its population in agriculture and forestry-related activities (close to 30 percent), Program Slavonia's current focus on agriculture and forestry is clearly warranted. With Slavonia's longstanding history and labor force experience in manufacturing and the rising number of vacancies in this sector, so is attention to manufacturing.
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Working Paper (Numbered Series) 140884 JUL 01, 2019
The adoption of the value-added tax the Democratic Republic of Congo in 2012 led to price increases that are thought to adversely affect the welfare of most Congolese households.
... See More + To date, research has not yet examined the poverty and distributional impacts of this tax reform. Using data from the 2012 Living Standards Measurement Survey, this paper investigates whether the current value-added tax regime, with its exemptions, is progressive. Relying on the Quadratic Almost Ideal Demand System and several welfare measures, the analysis finds that the adoption of the value- added tax erodes the purchasing power of all Congolese households by a factor of 10 to 12 percent. Yet, the value-added tax appears to be highly progressive. Households in the top food expenditure quintile bears approximately 40 percent of the welfare loss compared with less than 10 percent among households in the bottom food expenditure quintile. Other inequality measures, such as the Gini coefficient, further support this finding that the value-added tax is progressive. Finally, the study finds that the adoption of the value-added tax leads to a worsening of the food poverty headcount by approximately 1.2 percentage points.
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Working Paper (Numbered Series) 138532 JUN 28, 2019
This study assesses the redistributive effects of fiscal policy in Mali and Niger. Fiscal policy is poverty increasing in Mali (by 2.4 percentage points) and Niger (2.5 percentage points).
... See More + This is a result of primarily two factors: indirect taxes (value-added taxes and import duties) and direct fiscal transfers. Although the richest people in Mali and Niger pay the majority of indirect taxes, the poorest people pay a nonnegligible amount (more than 8 and 10 percent for the bottom three deciles, respectively). Although existing direct fiscal transfers have poverty-reducing effects, they are too small (Mali) or not well targeted (Niger).
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Working Paper (Numbered Series) 137995 JUN 17, 2019
