Jobs About the cover In almost every language there is a range of words related to jobs, each emphasizing a different angle. Some words hint at the nature of the activity being performed, evoking the skill or expertise that is required. Others refer to the volume of human inputs used in production, bringing images of effort and con- veying a sense of physical exertion. There are also words asso- ciated with the sheer numbers of people engaged in economic Arabic Mapuche Bulgarian Malagasy activity, which are more easily associated with aggregate sta- Indonesian/Malaysian Lithuanian Welsh Bahasa Tagalog tistics. In other cases, what seems to be at stake is a contrac- French Finnish Icelandic Ga Chinese Korean tual relationship, involving mutual obligations and a degree of Italian Thai stability. In some languages, there are even words to designate Urdu Swedish Greek Guaraní Georgian the place where the person works, or at least a slot in a produc- Burmese German Hebrew Tswana tion process. This multiplicity of words clearly shows that jobs English Croatian Maori Basque are multi-dimensional and cannot be characterized by a single Portuguese Bengali Mohawk Farsi term or measured by a single indicator. Swahili Romanian Afrikaans Hindi Yorùbá Words related to jobs do not always translate well from one Russian Shona Portuguese Tibetan Polish language to another, as the range of options available in each Tamil Hungarian Aymara Ukrainian Zulu Kirundi Dutch case can be different. If languages shape thinking, there are Quechua Turkish Vietnamese times when the ways in which people refer to jobs seem to be Romansh Albanian Juba Arabic Roma Gaelic Tajiki at odds. Gaps probably arise from the different characteristics Amharic Spanish Dinka Japanese Roma of jobs being emphasized in different societies. They also sug- gest that jobs’ agendas can differ across countries. Galician In many languages, words related to jobs serve not only as common nouns but also as proper nouns. Throughout his- tory family names have been associated with specific skills or trades: Vankar in Hindi, Hattori in Japanese, Herrero in Span- ish, or Mfundisi in Zulu, just to mention a few. The use of job-related words as household identifiers shows that people associated themselves with what they did. Nowadays, people aspire to choose their jobs based on what motivates them and on what could make their lives more meaningful. In almost every language there are also several words to express the lack of a job. Almost invariably these words have a negative connotation, close in spirit to deprivation; at times they even carry an element of stigma. In all these ways, language conveys the idea that jobs are more than what people earn, or what they do at work: they are also part of who they are. Jobs © 2012 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 15 14 13 12 Revised 2016 This work is a product of the staff of The World Bank with external contributions. Note that The World Bank does not necessarily own each component of the content included in the work. The World Bank therefore does not warrant that the use of the content contained in the work will not infringe on the rights of third parties. The risk of claims resulting from such infringement rests solely with you. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Nothing herein shall constitute or be considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved. Rights and Permissions This work is available under the Creative Commons Attribution 3.0 Unported license (CC BY 3.0) http://creativecommons.org/licenses/ by/3.0. Under the Creative Commons Attribution license, you are free to copy, distribute, transmit, and adapt this work, including for com- mercial purposes, under the following conditions: Attribution—Please cite the work as follows: World Bank. 2012. World Development Report 2013: Jobs. Washington, DC: World Bank. DOI: 10.1596/978-0-8213-9575-2. License: Creative Commons Attribution CC BY 3.0. Translations—If you create a translation of this work, please add the following disclaimer along with the attribution: This translation was not created by The World Bank and should not be considered an official World Bank translation. The World Bank shall not be liable for any content or error in this translation. All queries on rights and licenses should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Softcover ISSN: 0163-5085 ISBN: 978-0-8213-9575-2 e-ISBN: 978-0-8213-9576-9 DOI: 10.1596/978-0-8213-9575-2 Hardcover ISSN: 0163-5085 ISBN: 978-0-8213-9620-9 DOI: 10.1596/978-0-8213-9620-9 Photo credits: page 67: Garimpeiros (independent prospectors) at the Serra Pelada gold mine, in Brazil © Sebastião Salgado/Amazonas—Press Images. Used with permission of Sebastião Salgado/Amazonas—Press Images. Further permission required for reuse. page 91: Day laborer in a pineapple plantation in Pontian, Malaysia © Justin Guariglia/Redux. Used with permission of Justin Guariglia/ Redux. Further permission required for reuse. page 145: Shopkeeper and a friend at a foodstuff shop in Mpape, Nigeria © Ayemoba Godswill/World Bank; Rural migrants working in construction in China © Curt Carnemark/World Bank. page 222: Farmers in a pomegranate field in Tajikistan © Gennadiy Ratushenko/World Bank; Wage worker at a garment factory in Vietnam © Lino Vuth/World Bank; Street vendor in Kabul, Afghanistan © Steve McCurry/Magnum Photos; Drying peppers in the street in Mexico © Curt Carnemark/World Bank. page 248: Employees at a call center in Poland © Piotr Malecki/Panos Pictures. page 318: Worker at a construction site in Jakarta, Indonesia © Sebastião Salgado/Amazonas—Press Images. Used with permission of Sebastião Salgado/Amazonas. Further permission required for reuse. Cover design: Will Kemp, World Bank Interior design: Debra Naylor Contents Foreword xiii Acknowledgments xv Abbreviations and data notes xvii Overview Moving jobs center stage 2 Jobs wanted 3 Development happens through jobs 8 Valuing jobs 14 Jobs agendas are diverse . . . but connected 17 Policies through the jobs lens 21 Jobs are center stage, but where are the numbers? 34 Questions When is the conventional wisdom right? 36 Notes 39 References 41 1 The jobs challenge 48 A job, but not always a salary 49 Youth bulges, aging societies, and migrant nations 51 Cities, wages, and women 52 Jobs are changing in surprising ways 54 Prosperity, but a changing distribution of earnings 56 The role of the private sector 58 Vulnerability on a global scale 58 Question 1 What is a job? 63 Notes 68 References 69 v vi CONTENTS Part 1 Jobs are transformational 74 2 Jobs and living standards 76 Jobs improve material well-being 76 Jobs are more than just earnings 82 Jobs and life satisfaction 84 Question 2 Growth strategies or jobs strategies? 87 Notes 92 References 93 3 Jobs and productivity 98 Employment turbulence, not jobless growth 98 Most jobs are in very small farms and firms 104 In farms, uneven technological progress 106 Among firms, much churning and few gazelles 107 Question 3 Can entrepreneurship be fostered? 114 Notes 119 References 121 4 Jobs and social cohesion 126 Jobs can help manage social tensions 127 Jobs (or the lack of jobs) can shape social interactions 134 Question 4 Can policies contribute to social cohesion? 140 Notes 146 References 147 Part 2 What are good jobs for development? 152 5 Valuing jobs 154 Rights as the foundation 155 The value of jobs to individuals and society 158 Spillovers from jobs 159 Can the development payoffs from jobs be quantified? 162 Question 5 Skills or jobs—which comes first? 174 Notes 179 References 182 6 Diverse jobs agendas 190 Agrarian economies 190 Conflict-affected countries 193 Urbanizing countries 197 Resource-rich countries 199 Small island nations 203 Contents vii Countries with high youth unemployment 206 Formalizing economies 210 Aging societies 213 Question 6 A targeted investment climate? 217 Notes 223 References 225 7 Connected jobs agendas 232 Migration of workers 232 Migration of jobs 237 Question 7 Competing for jobs? 243 Notes 249 References 250 Part 3 Policies through the jobs lens 256 8 Labor policies revisited 258 Labor regulations: A “plateau” effect 260 Collective representation: New forms of voice 263 Active labor market programs: Effective within limits 267 Social insurance: The challenge of expanding coverage 272 Question 8 Protecting workers or protecting jobs? 277 Notes 281 References 284 9 Beyond labor policies 292 Establishing the fundamentals 293 Setting policy priorities for jobs 298 Diverse jobs agendas, diverse policy priorities 301 Connected jobs agendas: Global partnerships for jobs 305 Jobs are center stage, but where are the numbers? 311 Question 9 How to accelerate labor reallocation? 313 Notes 319 References 321 Appendixes 328 Glossary 329 Bibliographical note 332 Background papers and notes 334 Selected indicators 337 Index 381 viii CONTENTS Boxes 1 How does women’s labor force participation increase? 30 5.3 The concept of Decent Work and the Decent Work 1.1 The nature of work and leisure change as cities Agenda 158 develop 53 5.4 Economics and the social sciences deal with spillovers from 1.2 Jobs bring earnings opportunities to women, but also new jobs, under different names 160 difficulties 54 5.5 Several data sources can be used to quantify the development 1.3 The temporary staffing industry is growing in developing payoffs from jobs 163 countries 57 5.6 International definitions of green jobs can be too narrow for 1.4 Responses to the crisis went beyond income support for the developing countries 170 unemployed 62 5.7 How skills are formed, and how they can be 1.5 Few countries produce statistics on informality 64 measured 175 1.6 Not all child work is child labor 66 5.8 Manpower planning has given way to dynamic skills 2.1 There are many dimensions of living standards and many development 177 ways to measure them 77 6.1 Can agrarian Ethiopia compete in manufacturing? 194 2.2 Most poor people work 80 6.2 Conflict can increase labor force participation among 2.3 The value of job attributes can be quantified through hedonic women 194 pricing 83 6.3 Solving jobs challenges is urgent in South Sudan 195 2.4 Work can pose risks to health and safety 84 6.4 Development pessimism about Bangladesh was 2.5 The relationship between growth and employment is not understandable, but has been proven wrong 197 mechanical 88 6.5 The entrepreneurs of Bangladesh are local 198 2.6 Korea went from a growth to a jobs strategy, and Singapore 6.6 Landowner companies can build capacity while spreading the oher way around 90 the wealth 203 3.1 What drives economic growth? 99 6.7 The debate on how to reduce informality is intense 3.2 Microenterprises account for most job creation and in Mexico 212 destruction 106 6.8 In Ukraine, the impact of aging is compounded by migration 3.3 Most microenterprises are in rural areas and engage in and declining fertility 216 commerce 110 6.9 Once again, the debate rages over industrial policy 218 3.4 What explains the boom in the garment industry in Bangladesh? 117 6.10 Caution is needed when interpreting results from enterprise surveys 219 4.1 What is social cohesion? 128 6.11 Special economic zones have a mixed record 221 4.2 Do jobs cause trust? Analysis of Eurobarometer and Latinobarómetro Surveys 132 7.1 Why do multinationals locate where they do? 240 4.3 Displacement and unemployment can lead to the erosion of 7.2 E-links create job opportunities in developing countries, trust and ties 133 but the scale is still modest 240 4.4 Jobs, motivation, and identity in Risaralda, 7.3 Globalization is often viewed as jobs migrating Colombia 134 abroad 244 4.5 Voice can be extended to the self-employed: The case of 8.1 Employment protection legislation covers more than SEWA 135 firing rules 260 4.6 Some jobs connect people across ethnic boundaries 136 8.2 Are bargaining councils the cause of unemployment in 4.7 Measuring inequality of opportunities in access to South Africa? 265 jobs 138 8.3 New forms of collective bargaining are emerging 4.8 Domestic workers: The journey to an ILO in China 266 convention 141 8.4 Recicladores forced changes in Bogotá’s solid waste 4.9 From laws on the books to laws in action in Cambodia’s management policies 267 garment sector 142 8.5 E-links to jobs: New technologies open new frontiers 268 4.10 In post-conflict settings, well-designed programs reduce 8.6 The Mahatma Gandhi National Rural Employment social tensions 143 Guarantee Act launched the biggest public works program 5.1 Children do perilous work in artisanal gold mines in in the world 271 Mali 155 8.7 Modern technology can reduce social protection costs, 5.2 Compliance with core labor standards is partial 157 leakage, and corruption 276 Contents ix 8.8 Kurzarbeit has become a new word in labor market 9.3 Improving business practices facilitates compliance with policies 280 labor standards 307 9.1 How does women’s labor force participation 9.4 Knowledge gaps on jobs and development chart the research increase? 300 agenda 312 9.2 There have been successes in tackling jobs challenges around 9.5 China’s hukou system has been partially liberalized 315 the world 302 Figures 1 A job does not always come with a wage 5 1.6 The skills mix changes with economic development 56 2 Among youth, unemployment is not always the issue 6 1.7 Jobs provide higher earnings and benefits as countries 3 In China, employment growth is led by the private grow 57 sector 8 1.8 Wages in developing countries are catching up 59 4 Jobs are transformational 8 1.9 Returns to education are higher in poorer countries 60 5 Jobs provide higher earnings and benefits as countries 1.10 In China, employment growth is led by the private grow 9 sector 60 6 Jobs account for much of the decline in extreme 1.11 In developing countries, the crisis affected earnings more poverty 10 than employment 61 7 Simultaneous job creation and destruction characterize all 1.12 A majority of countries have ratified the core labor economies 11 standards 65 8 Larger firms pay higher wages 12 2.1 Working hours vary across ages 78 9 The employment share of microenterprises is greater in 2.2 Women spend more time in activities not directly generating developing countries 13 income 79 10 People who are unemployed, or do not have motivating jobs, 2.3 Jobs are the most important source of household participate less in society 14 income 80 11 Views on preferred jobs and most important jobs 2.4 Jobs take households out of poverty, especially in developing differ 16 countries 81 12 Some jobs do more for development 17 2.5 Jobs account for much of the decline in extreme poverty 82 13 The individual and social values of jobs can differ 17 2.6 Workers often care more about job security than about 14 Good jobs for development are not the same income 85 everywhere 20 2.7 Life satisfaction is lower among farmers and the 15 Manufacturing jobs have migrated away from high-income unemployed 86 countries 22 3.1 Economic growth does not occur at the expense of jobs in the 16 Three distinct layers of policies are needed 23 medium term 99 17 Finance and electricity are among the top constraints faced 3.2 Simultaneous job creation and destruction characterize all by formal private enterprises 24 economies 100 18 Combining work and training increases the success rates of 3.3 Labor reallocation across sectors was a driver of productivity programs 27 growth in East Asia 101 19 A decision tree can help set policy priorities 28 3.4 Efficiency gains at the firm level are the main driver of 20 Which countries succeeded at addressing their jobs challenges productivity growth 102 and how? 32 3.5 Efficiency gains and employment growth can go 1.1 A job does not always come with a wage 50 together 103 1.2 Among youth, unemployment is not always the issue 51 3.6 Smallholder farming is dominant outside Latin 1.3 Employment growth is needed to cope with population America 104 growth 52 3.7 The employment share of microenterprises is greater in 1.4 Moving from farms to cities does not always bring economic developing countries 105 growth 53 3.8 Crop yields have diverged vastly across regions 107 1.5 Labor productivity remains low in developing 3.9 The dispersion of productivity in manufacturing is greater in countries 55 developing countries 108 x CONTENTS 3.10 Large firms tend to perform better and to pay better than 6.4 Migration matters for small island nations, even more so in small ones 109 the Pacific 205 3.11 Young firms are more likely than old ones to engage in 6.5 Youth unemployment rates are extremely high in some innovative activities 109 countries 207 3.12 Surviving firms were born larger and grew less in Ghana than 6.6 Having higher education does not bring better employment in Portugal 111 chances in Tunisia 208 3.13 The majority of firms grew little in India and Mexico 112 6.7 Labor regulation may not be the biggest obstacle to 3.14 Some among the self-employed have the potential to become formalization 211 successful entrepreneurs 115 6.8 The labor force will shrink if age-specific participation rates 3.15 Management scores vary widely across small enterprises in remain constant 214 Sub-Saharan Africa 116 6.9 Labor productivity has to increase to avoid declines in living 4.1 Trust and civic engagement go together with peaceful standards 215 collective decision making 129 6.10 The assessment of constraints to business varies across 4.2 People who are unemployed trust and participate enterprises 220 less 130 7.1 Manufacturing jobs have migrated away from high-income 4.3 People with motivating jobs trust and participate countries 238 more 131 7.2 The global number of manufacturing jobs has not varied 4.4 Having a job means more community participation in much 239 Indonesia 132 7.3 Policies for jobs may or may not harm other 4.5 Inequality of job opportunities varies across countries 247 countries 139 8.1 The mix of labor policies and institutions varies across 5.1 Views on preferred jobs and most important jobs countries 259 differ 159 8.2 The coverage of collective bargaining is low in developing 5.2 Some jobs do more for development 160 countries 264 5.3 The individual and social values of jobs can differ 162 8.3 Combining work and training increases the success rates of programs 269 5.4 Some earnings gaps decrease with the level of development; some do not 165 8.4 In Romania, public works programs have the lowest placement rate and highest placement costs 272 5.5 A higher women’s share of household income raises food expenditures in the Republic of Congo 166 8.5 Labor taxes and social contributions vary across different countries facing different job challenges 275 5.6 Who gets the jobs matters for poverty reduction in Bulgaria and Latvia 166 8.6 Workers are willing to give up earnings for access to health insurance and pensions 275 5.7 Agglomeration effects vary across industrial sectors in Taiwan, China 167 8.7 Decoupling between job creation and job destruction was massive in the United States during recessions 278 5.8 Knowledge spillovers from foreign direct investment increase domestic productivity 168 9.1 Three distinct layers of policies are needed 293 5.9 High emissions per worker can go hand in hand with low 9.2 Finance and electricity are among the top constraints faced emissions per unit of output 169 by formal private enterprises 295 5.10 Proximity of garment factories stimulates schooling among 9.3 The rule of law is associated with development 297 young girls in Bangladesh 171 9.4 A decision tree can help set policy priorities 299 5.11 Not all jobs provide social identity, networks, or a sense of 9.5 Chile reduced its dependence on mineral exports 304 fairness 172 9.6 Unemployment rates for youth have fallen in 5.12 Gender and father’s education account for a large share of Slovenia 305 inequality of opportunity in access to jobs 173 9.7 Offers to liberalize services are generally modest 309 5.13 Relative to other obstacles, skills have become more severe 9.8 Is there a “missing middle” in the distribution of constraint to business 175 manufacturing firms in India? 314 6.1 In the absence of a Green Revolution, poverty remains high 9.9 Export processing zones were a driver of foreign direct in agrarian economies 192 investment in Sri Lanka 316 6.2 Instability and poor infrastructure are severe constraints on 9.10 Restrictions to hukou conversion increase with city size and business in conflict-affected countries 196 income 317 6.3 Small island nations are located far away from economic centers 204 Contents xi Maps Tables 1 Only in some countries are migrants a substantial share of 3.1 Few small firms grew in Mexico 113 the population 21 6.1 Projects in extractive industries are capital intensive and 3.1 Manufacturing activities are sprawling out of the main urban create few jobs 200 centers in the Republic of Korea 102 6.2 Cities in resource-rich developing countries are among the 7.1 Only in some countries are migrants a substantial share of most expensive in the world 201 the population 233 8.1 There is a wave of new empirical evidence on the impacts 7.2 Many migrants are highly skilled 235 of EPL 261 8.1 Coverage of social insurance remains low in many 8.2 The impacts of minimum wages are a favorite research topic countries 274 in labor economics 262 Foreword Today, jobs are a critical concern across the globe—for policy makers, the business community, and the billions of men and women striving to provide for their families. As the world struggles to emerge from the global crisis, some 200 million people—includ- ing 75 million under the age of 25—are unemployed. Many millions more, most of them women, find themselves shut out of the labor force altogether. Looking forward, over the next 15 years an additional 600 million new jobs will be needed to absorb burgeoning working-age populations, mainly in Asia and Sub-Saharan Africa. Meanwhile, almost half of all workers in developing countries are engaged in small-scale farming or self-employment, jobs that typically do not come with a steady paycheck and ben- efits. The problem for most poor people in these countries is not the lack of a job or too few hours of work; many hold more than one job and work long hours. Yet, too often, they are not earning enough to secure a better future for themselves and their children, and at times they are working in unsafe conditions and without the protection of their basic rights. Jobs are instrumental to achieving economic and social development. Beyond their critical importance for individual well-being, they lie at the heart of many broader societal objec- tives, such as poverty reduction, economy-wide productivity growth, and social cohesion. The development payoffs from jobs include acquiring skills, empowering women, and stabilizing post-conflict societies. Jobs that contribute to these broader goals are valuable not only for those who hold them but for society as a whole: they are good jobs for development. The World Development Report 2013 takes the centrality of jobs in the development pro- cess as its starting point and challenges and reframes how we think about work. Adopting a cross-sectoral and multidisciplinary approach, the Report looks at why some jobs do more for development than others. The Report finds that the jobs with the greatest development payoffs are those that make cities function better, connect the economy to global markets, protect the environment, foster trust and civic engagement, or reduce poverty. Critically, these jobs are not only found in the formal sector; depending on the country context, informal jobs can also be transformational. Building on this framework, the Report tackles some of the most pressing questions policy makers are asking right now: Should countries design their development strategies around growth or focus on jobs? Are there situations where the focus should be on protecting jobs as opposed to protecting workers? Which needs to come first in the development process— creating jobs or building skills? The private sector is the key engine of job creation, accounting for 90 percent of all jobs in the developing world. But governments play a vital role by ensuring that the conditions are in place for strong private sector–led growth and by alleviating the constraints that hinder the private sector from creating good jobs for development. The Report advances a three-stage approach to help governments meet these objectives. First, policy fundamentals—including macroeconomic stability, an enabling business envi- ronment, investments in human capital, and the rule of law—are essential for both growth and job creation. Second, well-designed labor policies can help ensure that growth translates into employment opportunities, but they need to be complemented by a broader approach to job creation that looks beyond the labor market. Third, governments should strategically identify xiii xiv F O R E WO R D which jobs would do the most for development given their specific country context, and re- move or offset the obstacles that prevent the private sector from creating more of those jobs. In today’s global economy, the world of work is rapidly evolving. Demographic shifts, tech- nological progress, and the lasting effects of the international financial crisis are reshaping the employment landscape in countries around the world. Countries that successfully adapt to these changes and meet their jobs challenges can achieve dramatic gains in living standards, productivity growth, and more cohesive societies. Those that do not will miss out on the trans- formational effects of economic and social development. The World Development Report 2013 is an important contribution to our collective under- standing of the role of jobs in development. Its insights will provide valuable guidance for the World Bank Group as we collaborate with partners and clients to advance their jobs agendas. Working together, we can foster job creation and maximize the development impact of jobs. Jim Yong Kim President The World Bank Group Acknowledgments This Report was prepared by a team led by Martín Rama, together with Kathleen Beegle and Jesko Hentschel. The other members of the core team were Gordon Betcherman, Samuel Freije-Rodriquez, Yue Li, Claudio E. Montenegro, Keijiro Otsuka, and Dena Ringold. Research analysts Thomas Bowen, Virgilio Galdo, Jimena Luna, Cathrine Machingauta, Daniel Pala- zov, Anca Bogdana Rusu, Junko Sekine, and Alexander Skinner completed the team. Addi- tional research support was provided by Mehtabul Azam, Nadia Selim, and Faiyaz Talukdar. The team benefited from continuous engagement with Mary Hallward-Driemeier, Roland Michelitsch, and Patti Petesch. The Report was cosponsored by the Development Economics Vice Presidency (DEC) and the Human Development Network (HDN). Overall guidance for the preparation of the Report was provided by Justin Lin, former Senior Vice President and Chief Economist, Development Economics; Martin Ravallion, acting Senior Vice President and Chief Economist, Develop- ment Economics; and Tamar Manuelyan-Atinc, Vice President and Head of the Human Development Network. Asli Demirgüç-Kunt, Director for Development Policy, oversaw the preparation process, together with Arup Banerji, Director for Social Protection and Labor. Former World Bank President Robert B. Zoellick, President Jim Yong Kim, and Manag- ing Directors Caroline Anstey and Mahmoud Mohieldin provided invaluable insights during the preparation process. Executive Directors and their offices also engaged constructively through various meetings and workshops. An advisory panel, comprising George Akerlof, Ernest Aryeetey, Ragui Assaad, Ela Bhatt, Cai Fang, John Haltiwanger, Ravi Kanbur, Gordana Matkovic, ´ and Ricardo Paes de Barros, contributed rich analytical inputs and feedback throughout the process. Seven country case studies informed the preparation of the Report. The case study for Bangladesh was led by Binayak Sen and Mahabub Hossain, with Yasuyuki Sawada. Nelly Agu- ilera, Angel Calderón Madrid, Mercedes González de la Rocha, Gabriel Martínez, Eduardo Rodriguez-Oreggia, and Héctor Villarreal participated in Mexico’s case study. The study for Mozambique was led by Finn Tarp, with Channing Arndt, Antonio Cruz, Sam Jones, and Fausto Mafambisse. For Papua New Guinea, Colin Filer and Marjorie Andrew coordi- nated the research. The South Sudan study was led by Lual Deng, together with Nada Eissa. AbdelRahmen El Lahga coordinated the Tunisian work, with the participation of Ines Bouassida, Mohamed Ali Marouani, Ben Ayed Mouelhi Rim, Abdelwahab Ben Hafaiedh, and Fathi Elachhab. Finally, Olga Kupets, Svitlana Babenko, and Volodymyr Vakhitov con- ducted the study for Ukraine. The team would like to acknowledge the generous support for the preparation of the Report by the Government of Norway through its Ministry of Foreign Affairs, the multi- donor Knowledge for Change Program (KCP II), the Nordic Trust Fund, the Government of Denmark through its Royal Ministry of Foreign Affairs, the Swiss State Secretariat for Eco- nomic Affairs (SECO), the Canadian International Development Agency (CIDA), the Gov- ernment of Sweden through its Ministry for Foreign Affairs, and the Government of Japan xv xvi AC K N OW L E D G M E N T S through its Policy and Human Resource Development program. The German Ministry for Economic Cooperation and Development Cooperation (BMZ) through the German Agency for International Cooperation (GIZ) organized a development forum that brought together leading researchers from around the world in Berlin. Generous support was also received for the country case studies by the Australian Agency for International Development (AusAID), Canada’s International Development Research Centre (IDRC), the Government of Denmark through its Royal Ministry of Foreign Affairs, the Japan International Cooperation Agency (JICA) through the JICA Institute, and the United Nations University World Institute for Development Economics Research (UNU-WIDER). The United Kingdom’s Overseas Development Institute (ODI) assisted the team through the organization of seminars and workshops. A special recognition goes to the International Labour Organization (ILO) for its contin- ued engagement with the team. José Manuel Salazar-Xiriñachs and Duncan Campbell coor- dinated this process, with the participation of numerous colleagues from the ILO. Interagency consultations were held with the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), and the United Nations Economic and Social Council (ECOSOC). The team also benefited from an ongoing dialogue with the Inter- national Trade Union Confederation (ITUC). Country consultations were conducted in Bangladesh, Canada, China, Denmark, Finland, France, Germany, India, Japan, the Republic of Korea, Mexico, Mozambique, Norway, Papua New Guinea, Singapore, Sweden, Switzerland, Tunisia, Turkey, Ukraine, and the United King- dom. All consultations involved senior government officials. Most included academics, business representatives, trade union leaders, and members of civil society. In addition, bilateral meet- ings were held with senior government officials from Australia, the Netherlands, South Africa, and Spain. Consultations with researchers and academics were arranged with the help of the African Economic Research Consortium (AERC) in Kenya, the Economic Research Forum (ERF) in the Arab Republic of Egypt, and the Latin American and Caribbean Economic Associa- tion (LACEA) in Chile. The Institute for the Study of Labor (IZA) organized special work- shops with its research network in Germany and Turkey, coordinated by Klaus Zimmerman. Forskningsstiftelsen Fafo in Norway undertook a household survey in four countries, which this Report draws on. The production of the Report and the logistics supporting it were assured by Brónagh Murphy, Mihaela Stangu, Jason Victor, and Cécile Wodon, with a contribution by Quyên Thúy Ðinh. Ivar Cederholm coordinated resource mobilization. Irina Sergeeva and Sonia Joseph were in charge of resource management. Martha Gottron, Bruce Ross-Larson, Gerry Quinn, and Robert Zimmermann participated in the editing of the Report. The Development Data Group, coordinated by Johan Mistiaen, contributed to the preparation of its statistical annex. The Office of the Publisher coordinated the design, typesetting, printing, and dissemina- tion of both the hard and soft versions of the Report. Special thanks go to Mary Fisk, Stephen McGroarty, Santiago Pombo-Bejarano, Nancy Lammers, Stephen Pazdan, Denise Bergeron, Andres Meneses, Theresa Cooke, Shana Wagger, Jose De Buerba, and Mario Trubiano, as well as to the Translations and Interpretation Unit’s Cecile Jannotin and Bouchra Belfqih. The team also thanks Vivian Hon, as well as Claudia Sepúlveda, for their coordinating role; Merrell Tuck-Primdahl for her guidance on communication; Vamsee Krishna Kanchi and Swati P. Mishra for their support with the website; Gerry Herman for his help with the prepa- ration of the movie series associated with the Report; and Gytis Kanchas, Nacer Mohamed Megherbi, and Jean-Pierre S. Djomalieu for information technology support. Many others inside and outside the World Bank contributed with comments and inputs. Their names are listed in the Bibliographical Note. Abbreviations and data notes ABBREVIATIONS ADB Asian Development Bank ALMP active labor market program ARB Asociación de Recicladores de Bogotá (Bogotá Association of Recyclers) BPO business process outsourcing CAFTA Central America Free Trade Agreement CASEN La Encuesta de Caracterizacíon Socioeconomica Nacional (Chile National Socioeconomic Characterization) CIRAD Centre de coopération internationale en recherche agronomique pour le développement (Center for International Cooperation in Agronomic Research for Development) CFA Committee on Freedom of Association COSATU Confederation of South African Trade Unions CSR corporate social responsibility ECLAC Economic Commission for Latin America and the Caribbean ECOSOC United Nations Economic and Social Council EMBRAPA Empresa Brasileira de Pesquisa Agropecuária (Brazilian Enterprise for Agricultural Research) EPL employment protection legislation EPZ export processing zone EU European Union FAO Food and Agriculture Organization of the United Nations FAFO Forskningsstiftelsen Fafo (Fafo Research Foundation) FDI foreign direct investment FACB freedom of association and collective bargaining GATT General Agreement on Tariffs and Trade GATS General Agreement on Trade in Services GDP gross domestic product GNP gross national product HOI Human Opportunity Index I2D2 International Income Distribution Database IC Industrial Council ICLS International Conference of Labour Statisticians ICTWSS Institutional Characteristics of Trade Unions, Wage Setting, State Intervention and Social Pacts IDA Industrial Disputes Act (India) IDRC International Development Research Center IEA International Energy Agency IFC International Finance Corporation xvii xviii A B B R E V I AT I O N S A N D DATA N O T E S IFPRI International Food Policy Research Institute ILO International Labour Organization IMF International Monetary Fund IPCC International Panel on Climate Change ISSP International Social Survey Programme IT information technology IZA Forschungsinstitut zur Zukunft der Arbeit (Institute for the Study of Labor) KILM Key Indicators of the Labor Market KUT Korea University of Technology and Education MDG Millennium Development Goal MERCOSUR Mercado Común del Sur (Southern Cone Common Market) MFA Multi-Fiber Arrangement MGNREGA Mahatma Gandhi National Rural Employment Guarantee Act MIS Management Information System NASSCOM National Association of Software and Service Companies NEET not in education, employment, or training NGO nongovernmental organization ODI Overseas Development Institute OECD Organisation for Economic Co-operation and Development PISA Programme for International Student Assessment PPP purchasing power parity R&D research and development SEWA Self Employed Women’s Association SEZ special economic zone SME small and medium enterprise SNA System of National Accounts SOE state-owned enterprise TEWA Termination of Employment of Workmen Act TFP total factor productivity TVE technical and vocational education UN United Nations UNDP United Nations Development Programme UNECE United Nations Economic Commission of Europe UNEP United Nations Environment Programme UNESCO United Nations Educational, Scientific and Cultural Organization WDR World Development Report WTO World Trade Organization WIEGO Women in Informal Employment: Globalizing and Organizing DATA NOTES The use of the word countries to refer to economies implies no judgment by the World Bank about the legal or other status of territory. The term developing countries includes low- and middle-income economies and thus may include economies in transition from central plan- ning, as a matter of convenience. Dollar figures are current U.S. dollars, unless otherwise specified. Billion means 1,000 million; trillion means 1,000 billion. OVERVIEW Moving jobs center stage J obs are the cornerstone of economic and social development. Indeed, development happens through jobs. People work their way out of poverty and hardship through bet- • While jobs can contribute to social cohesion, is there anything governments can do about it, apart from trying to support job creation? ter livelihoods. Economies grow as people get • Are greater investments in education and training a prerequisite for employability, or better at what they do, as they move from farms can skills be built through jobs? to firms, and as more productive jobs are cre- ated and less productive ones disappear. Soci- • Should efforts to improve the investment cli- eties flourish as jobs bring together people mate target the areas, activities, or firms with from different ethnic and social backgrounds greater potential for job creation? and nurture a sense of opportunity. Jobs are thus transformational—they can transform • What is the risk that policies to foster job creation in one country will come at the ex- what we earn, what we do, and even who we pense of jobs in other countries? are. No surprise, then, that jobs are atop the • When confronted with large shocks and ma- development agenda everywhere—for every- jor restructuring, is it advisable to protect jobs one from policy makers to the populace, from and not just people? business leaders to union representatives, from activists to academics. Looking to seize oppor- • How can the reallocation of workers be ac- celerated from areas and activities with low tunities for job creation presented by massive productivity to those with greater potential? demographic shifts, technological innovations, global migrations of people and tasks, and deep Individuals value jobs for the earnings and changes in the nature of work, policy makers ask benefits they provide, as well as for their contri- difficult questions: butions to self-esteem and happiness. But some jobs have broader impacts on society. Jobs for • Should countries build their development women can change the way households spend strategies around growth or should they money and invest in the education and health rather focus on jobs? of children. Jobs in cities support greater spe- • Can entrepreneurship be fostered, especially cialization and the exchange of ideas, making among the many microenterprises in devel- other jobs more productive. Jobs connected oping countries, or are entrepreneurs born? to global markets bring home new technologi- Moving jobs center stage 3 cal and managerial knowledge. And in turbulent tries grow richer, the policy environment environments, jobs for young men can provide must be conducive to growth. That requires alternatives to violence and help restore peace. attending to macroeconomic stability, an en- Through their broader influence on living abling business environment, human capital standards, productivity, and social cohesion, accumulation, and the rule of law. these jobs have an even greater value to society than they do for the individual. But some jobs • Labor policies. Because growth alone may not be enough, labor policies need to facilitate can have negative spillovers. Jobs supported job creation and enhance the development through transfers or privilege represent a bur- payoffs from jobs. Policies can address labor den to others or undermine their opportunities market distortions while not being a drag on to find remunerative employment. Jobs damag- efficiency. But they should avoid distortion- ing the environment take a toll on everybody. ary interventions that constrain employ- Thus it is that some jobs do more for develop- ment in cities and global value chains—and ment, while others may do little, even if they are provide voice and protection for the most appealing to individuals. vulnerable. Which jobs have the greatest develop- ment payoffs depends on the circumstances. • Priorities. Because some jobs do more for Countries differ in their level of development, development than others, it is necessary to demography, endowments, and institutions. identify the types of jobs with the greatest Agrarian societies face the challenge of making development payoffs given a country’s con- agricultural jobs more productive and creat- text, and to remove—or at least offset—the ing job opportunities outside farms. Resource- market imperfections and institutional fail- rich countries need to diversify their exports, ures that result in too few of those jobs being so that jobs are connected to global markets created. rather than supported through government The centrality of jobs for development transfers. Formalizing countries need to de- should not be interpreted as the centrality of sign their social protection systems in ways labor policies and institutions. Nearly half that extend their coverage without penalizing the people at work in developing countries employment. are farmers or self-employed and so are out- A vast majority of jobs are created by the side the labor market. And even in the case of private sector. Governments, though, can sup- wage employment, labor policies and institu- port—or hinder—the private sector in creat- tions may or may not be the main obstacle to ing jobs. The idea that development happens job creation. Often, the most relevant obstacles through jobs sheds new light on the strategies, lie outside of the labor market. The catalysts policies, and programs governments can pur- for job creation may be policies that make cit- sue. Strategies should identify which types of ies work better, help farmers access and apply jobs would have the highest development pay- appropriate agricultural techniques, or allow offs, given a country’s circumstances. Policies firms to develop new exports. Jobs are the cor- should remove the obstacles that prevent the nerstone of development, and development private sector from creating jobs. Programs for policies are needed for jobs. generating employment may also be warranted, for instance, in conflict-affected countries. But the costs and benefits of these policies and pro- Jobs wanted grams have to be assessed, taking into account the potential spillovers from jobs, both positive To many, a “job” brings to mind a worker with and negative. an employer and a regular paycheck. Yet, the At a more practical level, this jobs lens on majority of workers in the poorest countries development leads to a three-layered policy are outside the scope of an employer-employee approach: relationship. Worldwide, more than 3 billion • Fundamentals. Because jobs provide higher people are working, but their jobs vary greatly. earnings and broader social benefits as coun- Some 1.65 billion are employed and receive reg- 4 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 1.6 billion people working for a wage or a salary 1.5 billion people working in farming and self-employment 77% labor force participation by women in Vietnam 28% labor force participation by women in Pakistan 39% of the manufacturing are in microenterprises in Chile jobs 97% of the manufacturing are in microenterprises in Ethiopia jobs 2x employment growth in a firm in Mexico over 35 years 10x employment growth in a firm in the United States over 35 years 115 million children working in hazardous conditions 21 million victims of forced labor 600 million jobs needed over 15 years to keep current employment rates 90 million people working abroad 248 million youth neither working nor studying 22x the productivity gap between manufacturing firms in the 90th and 10th percentiles in India 9x the productivity gap between manufacturing firms in the 90th and 10th percentiles in the United States 10 million entrants to the labor force per year in Sub-Saharan Africa 30 million postsecondary students in China 3% international migrants as a share of the world population 60% foreign-born population in Kuwait, Qatar, and the United Arab Emirates Moving jobs center stage 5 ular wages or salaries. Another 1.5 billion work rights as the boundaries of what is unacceptable. in farming and small household enterprises, or Among them are the United Nations Universal in casual or seasonal day labor. Meanwhile, 200 Declaration of Human Rights (1948) and the million people, a disproportionate share of them International Labour Organization Declaration youth, are unemployed and actively looking for on Fundamental Principles and Rights at Work work. Almost 2 billion working-age adults, the (1998), which further specifies core labor stan- majority of them women, are neither working dards. Combining these different perspectives, nor looking for work, but an unknown number jobs are activities that generate income, mone- of them are eager to have a job. Clarifying what tary or in kind, without violating human rights. is meant by a job is thus a useful starting point. The meaning of the words used to de- Different places, different jobs scribe what people do to earn a living varies across countries and cultures. Some words re- The world of work is particularly diverse in de- fer to workers in offices or factories. Others are veloping countries. This variety refers not only broader, encompassing farmers, self-employed to the number of hours worked and the number vendors in cities, and caregivers of children and of jobs available, the usual yardsticks in indus- the elderly. The distinction is not merely seman- trial countries, but also to the characteristics of tic. The varied meanings hint at the different jobs. Two main aspects stand out. One is the aspects of jobs that people value. And views on prevalence of self-employment and farming.2 what a job is almost inevitably influence views The other is the coexistence of traditional and on what policies for jobs should look like. modern modes of production, from subsistence For statisticians, a job is “a set of tasks and agriculture and low-skilled work to technology- duties performed, or meant to be performed, driven manufacturing and services and highly by one person, including for an employer or skilled knowledge work. in self-employment.”1 Jobs are performed by While nearly half of the jobs in the developing the employed. These are defined as people who world are outside the labor market, the shares of produce goods and services for the market or wage work, farming, and self-employment differ for their own use. But the statistical definition greatly across countries.3 Nonwage work repre- is mute about what should not be considered sents more than 80 percent of women’s em- a job. International norms view basic human ployment in Sub-Saharan Africa—but less than FIGURE 1 A job does not always come with a wage men women 100 wage employment share of total employment, % 80 self-employment 60 nonwage 40 employment 20 farming 0 Europe and Latin America South Middle East East Asia Sub-Saharan Central Asia and the Asia and and Pacific Africa Caribbean North Africa Source: World Development Report 2013 team. Note: Data are for the most recent year available. 6 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 for both men and women in Tanzania and Viet- FIGURE 2 Among youth, unemployment is not always the nam. Beyond these stark contrasts in participa- issue tion, women continue to earn significantly less than men, and the differences are not fully ex- not in school or at work plained by education, experience, or sector of work. While a growing share of youth between not looking for work looking for work ages 15 and 24 allocate most of their time to Pakistan women schooling and training, youth unemployment is 2008 men still alarming in some countries (above 40 per- Turkey cent in South Africa since early 2008 and above 2005 50 percent in Spain in early 2012).5 Even in India countries where it is low, youth unemployment 2009 is twice the national average or more. In addi- Indonesia 2010 tion, 248 million young people are “idle”—not in school or training, not employed, and not Chile 2009 looking for work. Rates of idleness vary across Brazil countries, ranging between 10 and 50 percent 2009 among 15- to 24-year-olds (figure 2).6 Many Ukraine youth work in unpaid jobs; if paid, they are less 2005 likely to have social insurance.7 Ghana 2005 Tanzania The changing world of work 2009 This complex picture is compounded by mas- 0 10 20 30 40 50 60 sive demographic shifts. To keep employment share of population ages 15–24, % as a share of the working-age population con- stant, in 2020 there should be around 600 mil- Source: World Development Report 2013 team. lion more jobs than in 2005, a majority of them in Asia and Sub-Saharan Africa. While some countries have experienced very large increases in their labor force—nearly 8 million new en- 20 percent in Eastern Europe and Central Asia trants a year in China since the mid-1990s and 7 (figure 1). million in India—others face a shrinking popu- Work across the developing world is also lation. Ukraine’s labor force, for example, is es- characterized by a high prevalence of informal- timated to fall by about 160,000 people a year.8 ity, whether defined on the basis of lack of firm Rapid urbanization is changing the com- registration, lack of social security coverage, or position of employment. More than half the lack of an employment contract. Informal em- population in developing countries is expected ployment is not under the purview of labor reg- to be living in cities and towns before 2020.9 ulations, either because of their limited scope or As a result, the growth of the nonagricultural because of deliberate avoidance or evasion. Re- labor force will vastly exceed the growth of the gardless of the specific definition used, informal- agricultural labor force. This structural change, ity is generally associated with lower productiv- which in industrial countries took decades, now ity. However, this does not necessarily mean that transforms lives in developing countries in a formalization would result in greater efficiency. generation. Structural change can bring about Informality can be a symptom of lower produc- remarkable improvements in efficiency, and tivity as much as it can be a cause of it.4 some developing countries have narrowed the Gender and age differences are striking. productivity gap with industrial countries rap- Worldwide, fewer than half of women have jobs, idly. But others have failed to catch up.10 Over- compared with almost four-fifths of men. In all, the gap between developing and developed Pakistan, 28 percent of women but more than regions remains wide. 82 percent of men participate in the labor force, Globalization is also changing the nature whereas participation rates are above 75 percent of jobs. Industrial countries are shifting from Moving jobs center stage 7 primary and traditional manufacturing indus- Between 1995 and 2005, the private sector ac- tries toward services and knowledge-intensive counted for 90 percent of jobs created in Bra- activities.11 At the same time, technological zil, and for 95 percent in the Philippines and improvements and outsourcing to developing Turkey.21 The most remarkable example of the countries are leading to a decline in medium- expansion of employment through private sec- skilled jobs.12 Production tasks have been splin- tor growth is China. In 1981, private sector em- tered so that they can be performed in different ployment accounted for 2.3 million workers, locations.13 Transnational companies have built while state-owned enterprises (SOEs) had 80 integrated value chains to tap into national skill million workers.22 Twenty years later, the private pools around the world.14 Outsourcing is oc- sector accounted for 74.7 million workers, sur- curring in services as well as in manufacturing. passing, for the first time, the 74.6 million work- The share of developing countries in exports of ers in SOEs (figure 3). world services nearly doubled to 21 percent be- In contrast to the global average, in some tween 1990 and 2008.15 countries in the Middle East and North Africa, Technology is changing the way workers and the state is a leading employer, a pattern that can firms connect, through their access to much be linked to the political economy of the post- larger, even global, employment marketplaces. independence period, and in some cases to the Some of the new marketplaces operate through abundance of oil revenues.23 For a long period, the internet; others use mobile phone technol- public sector jobs were offered to young college ogy.16 Part-time and temporary wage employ- graduates. But as the fiscal space for continued ment are now major features of industrial and expansion in public sector employment shrank, developing countries. In South Africa, tempo- “queuing” for public sector jobs became more rary agency workers make up about 7 percent of prevalent, leading to informality, a devaluation the labor force; the temporary staffing industry of educational credentials, and forms of social provides employment to an average of 410,000 exclusion.24 A fairly well-educated and young workers a day. In India, the number of tempo- labor force remains unemployed, or underem- rary workers that employment agencies recruit ployed, and labor productivity stagnates.25 grew more than 10 percent in 2009 and 18 per- Overall, countries have been successful at cent in 2010.17 creating jobs. More people have jobs now than This changing landscape of global produc- ever before, and those jobs provide generally tion has also brought about shifts in skill en- higher earnings. Indeed, amid rapid social and dowments and in the world distribution of top economic change, poverty has declined in de- talent. China and India rank high in perceived veloping countries. The share of the popula- attractiveness as outsourcing hubs because of tion of the developing world living on less than their exceptionally high ratings in the avail- US$1.25 a day (in purchasing power parity) fell ability of skills.18 India has close to 20 million from 52 percent in 1981 to 22 percent in 2008, students in higher education, nearly as many as or from 1.94 billion people to 1.29 billion.26 the United States; both countries are outpaced This reduction is the result of multiple factors, by China, with 30 million postsecondary stu- but the creation of millions of new, more pro- dents.19 The United States still accounts for a ductive jobs, mostly in Asia but also in other large share of top scores in international student parts of the developing world, has been the assessments, but the Republic of Korea has the main driving force.27 same share as Germany, and both are closely fol- Jobs are vulnerable to economic downturns, lowed by the Russian Federation. The number though, much more so in the private sector than of high-performing students in Shanghai alone the public sector. Short-term crises may wipe is one-fifth that of Germany and about twice out years of progress. They may start in a single that of Argentina.20 country but now, through globalization, spread over entire regions or to the world. The recent financial crisis created 22 million new unem- The role of the private sector ployed in a single year. Growth in total employ- In such rapidly changing times, the private sec- ment, hovering around 1.8 percent a year before tor is the main engine of job creation and the 2008, fell to less than 0.5 percent in 2009, and source of almost 9 of every 10 jobs in the world. by 2011 had not yet reached its pre-crisis level.28 8 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 FIGURE 3 In China, employment growth is led by the private sector 110 100 90 number of workers, millions 80 70 60 50 40 30 20 10 0 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 state-owned enterprises private rms (8 workers or more) individual rms (fewer than 8 workers) foreign-owned companies Source: Kanamori and Zhao 2004. Note: Data for foreign-owned companies in 2002 and for non-state-owned enterprises in 2003 are not available. Policy responses to prevent and mitigate the im- Demography, urbanization, globalization, pact of crises involve different combinations of technology, and macroeconomic crises bring instruments, with potentially diverse implica- about formidable jobs challenges. Countries tions for jobs.29 that fail to address them may fall into vicious circles of slow growth in labor earnings and job-related dissatisfaction affecting a sizable FIGURE 4 Jobs are transformational portion of the labor force.30 Youth unemploy- ment and idleness may be high, and women may have fewer job opportunities, leaving po- tential economic and social gains untapped.31 A repeating pattern of small gains in living DEVELOPMENT standards, slow productivity growth, and erod- ing social cohesion can set in. In contrast, countries that address these jobs challenges can develop virtuous circles. The results—pros- perous populations, a growing middle class, LIVING PRODUCTIVITY SOCIAL COHESION increased productivity, and improved oppor- STANDARDS tunities for women and youth—may then be self-reinforcing. Development happens through jobs Jobs are more than just the earnings and benefits JOBS they provide. They are also the output they gen- erate, and part of who we are and how we interact Source: World Development Report 2013 team. with others in society. Through these outcomes, Moving jobs center stage 9 jobs can boost living standards, raise productiv- not refer to identical workers. But growth also ity, and foster social cohesion (figure 4). improves the living standards of workers whose skills have not changed. More than two decades of research on pov- Jobs are what we earn erty dynamics, spanning countries as different Jobs are the most important determinant of as Canada, Ecuador, Germany, and South Africa, living standards. For most people, work is the show that labor-related events trigger exits from main source of income, especially in the poorest poverty.33 These events range from the head of countries. Many families escape or fall into pov- a household changing jobs to family members erty because family members get or lose a job. starting to work and to working family mem- Opportunities for gainful work, including in bers earning more. Conversely, a lack of job op- farming and self-employment, offer households portunities reduces the ability of households the means to increase consumption and reduce to improve their well-being.34 In a large set of its variability. Higher yields in agriculture, ac- qualitative studies in low-income countries, get- cess to small off-farm activities, the migration ting jobs and starting businesses were two of the of family members to cities, and transitions to main reasons for people to rise out of poverty.35 wage employment are milestones on the path to Quantitative analysis confirms that changes prosperity.32 And as earnings increase, individ- in labor earnings are the largest contributor to ual choices expand—household members can poverty reduction (figure 6). In 10 of 18 Latin choose to stay out of the labor force or to work American countries, changes in labor income fewer hours and dedicate more time to educa- explain more than half the reduction in poverty, tion, to retirement, or to family. and in another 5 countries, more than a third. In Earnings from work increase with economic Bangladesh, Peru, and Thailand, changes in edu- development, and the benefits associated with cation, work experience, and region of residence jobs improve as well. The relationship is not mattered, but the returns to these characteristics mechanical, but growth is clearly good for jobs (including labor earnings) mattered most. Just (figure 5). Admittedly, as economies become having work was not enough, given that most more developed, the average skills of jobhold- people work in less developed economies. What ers increase, implying that observations across made a difference for escaping poverty was in- countries are not strictly comparable, as they do creasing the earnings from work.36 FIGURE 5 Jobs provide higher earnings and benefits as countries grow a. Average wage b. Social security coverage 100,000 100 programs, % of total employment average wage in manufacturing, contributors to social security 80 2005 PPP US$ 10,000 60 40 1,000 20 100 0 300 3,000 30,000 300 3,000 30,000 GDP per capita, 2005 PPP US$ GDP per capita, 2005 PPP US$ Source: World Development Report 2013 team. Note: GDP = gross domestic product; PPP = purchasing power parity. Each dot represents a country. 10 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 FIGURE 6 Jobs account for much of the decline in extreme poverty 200 percentage of total change in extreme poverty 150 100 50 0 –50 –100 ia or ico ile va ica a r ay nd a il a as a l sh ru pa do az in an bi m an ad ur de gu Pe do Ch la aR ex nt m Ne na Br ua Gh m nd ai lv la ra ol lo ge M Pa st Ec Th Ro Sa ng M Pa Ho Co Co Ar El Ba family composition labor income nonlabor income consumption-to-income ratio Sources: Azevedo and others 2012; Inchauste and others 2012; both for the World Development Report 2013. Note: Family composition indicates the change in the share of adults (ages 18 and older) within the household. Labor income refers to the change in employment and earnings for each adult. Nonlabor income refers to changes in other sources of income such as transfers, pensions, and imputed housing rents. If a bar is located below the horizontal axis, it means that that source would have increased, instead of decreased, poverty. The changes are computed for Argentina (2000–10); Bangladesh (2000–10); Brazil (2001–09); Chile (2000–09); Colombia (2002–10); Costa Rica (2000–08); Ecuador (2003–10); El Salvador (2000-09); Ghana (1998–2005); Honduras (1999–2009); Mexico (2000–10); Moldova (2001–10); Panama (2001–09); Paraguay (1999–2010); Peru (2002–10); Nepal (1996–2003); Romania (2001–09); and Thailand (2000–09). The changes for Bangladesh, Ghana, Moldova, Nepal, Peru, Romania, and Thailand are computed using consumption-based measures of poverty, while the changes for the other countries are based on income measures. Beyond their fundamental and immediate are created and less productive jobs disappear. contribution to earnings, jobs also affect other These gains may ultimately be driven by new dimensions of well-being, including mental and goods, new methods of production and trans- physical health. Not having a job undermines portation, and new markets, but they material- life satisfaction, especially in countries where ize through a constant restructuring and real- wage employment is the norm and where the location of resources, including labor.38 Net job lack of opportunities translates into open un- creation figures hide much larger processes of employment rather than underemployment. gross job creation and gross job destruction. On Among those employed, the material, nonmate- average across developing countries, between rial, and even subjective characteristics of jobs 7 and 20 percent of jobs in manufacturing are can all have an impact on well-being.37 Other created within a year, but a similar proportion features such as workplace safety, job security, disappear (figure 7).39 learning and advancement opportunities, and Because economies grow as high-productivity health and social protection benefits are valued jobs are created and low-productivity jobs dis- by workers. But relatively few jobs offer these appear, the relationship between productivity advantages in developing countries. gains and job creation is not mechanical. In the medium term, employment trends align closely with trends in the size of the labor force, so Jobs are what we do growth is truly jobless in very few cases. In the Economic growth happens as jobs become more short term, however, innovations can be associ- productive, but also as more productive jobs ated with either increases or decreases in em- Moving jobs center stage 11 ployment.40 The popular perception is that pro- ductivity grows through downsizing, but some FIGURE 7 Simultaneous job creation and destruction firms are able to achieve both productivity and characterize all economies employment gains.41 In Chile, Ethiopia, and Romania, successful “upsizers” contributed to net job gross job gross job output and employment growth substantively; creation creation destruction sometimes they are more numerous than the ECONOMY-WIDE successful “downsizers.”42 And the combination of private sector vibrancy and state sector re- Latvia structuring led to rapid output and employ- ment growth in transition economies and in Mexico China in the late 1990s and the early 2000s.43 Successful upsizers tend to be younger, Argentina leaner, and more innovative.44 But overall, large firms are both more innovative and more pro- Estonia ductive. They invest more in machinery. They are much more likely than small firms to de- Hungary velop new product lines, to introduce new tech- nology, to open and close plants, to outsource, Slovenia and to engage in joint ventures with foreign partners.45 These firms produce more with a Romania given amount of labor, and export more as well. industrial economies They also pay substantively higher wages than (average) micro- and small enterprises (figure 8). In de- veloping countries, however, many people work MANUFACTURING SECTOR ONLY in very small and not necessarily very dynamic Ethiopia economic units. Family farms dominate in agriculture. At 1.8 Indonesia and 1.2 hectares, respectively, average farm size is small in Sub-Saharan Africa, and especially Brazil in Asia.46 The Green Revolution has led to both higher cereal yields and more job creation be- Chile cause the new technologies are labor intensive. But progress has been uneven across regions Taiwan, China and has not taken place on a large scale in Sub- Saharan Africa. More mechanized farms have Colombia higher productivity, but constraints in land markets usually slow mechanization; without it, yields per hectare tend to be higher on smaller Venezuela, RB farms. industrial economies Outside agriculture there are massive (average) numbers of microenterprises and household businesses (figure 9). These small units play –5 0 5 10 15 20 significant roles in job creation, even in high- share of total employment, % middle-income countries. They account for 97 percent of employment in the manufacturing sector in Ethiopia, but still for a sizable 39 per- Sources: World Development Report 2013 team estimates based on Bartelsman, Haltiwanger, and Scarpetta 2009b and Shiferaw and Bedi 2010. cent in Chile. In the services sector, their role is Note: The figure shows annual job flows. Data are from Argentina (1996–2001); Brazil (1997–2000); often more important. Even in Eastern European Canada (1984–97); Chile (1980–98); Colombia (1983–97); Estonia (1996–2000); Ethiopia (1997–2007); countries, where the private sector is only two Finland (1989–97); France (1989–97); Germany (1977–99); Hungary (1993–2000); Indonesia (1991–94); Italy (1987–94); Latvia (1983–98); Mexico (1986–2000); the Netherlands (1993–95); Portugal (1983–98); Romania decades old, microenterprises are the source of (1993–2000); Slovenia (1991–2000); Taiwan, China (1986–91); the United Kingdom (1982–98); the United 10 to 20 percent of employment in manufactur- States (1986–91, 1994–96); and República Bolivariana de Venezuela (1996–98). 12 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 enterprises, the gazelles, invest and earn higher FIGURE 8 Larger firms pay higher wages returns.50 While large firms are more productive, they 6 were not all born large. In industrial countries, some of the more resounding successes, from Honda to Microsoft, started in garages. Many successful companies in developing countries also grew out of small household businesses. Thailand’s Charoen Pokphand Group, founded 4 in 1921 as a small seed shop in Bangkok by two estimates, % brothers, has grown into one of the largest multi- national conglomerates in agribusiness, operat- ing in 15 countries and encompassing close to 100 companies. India’s Tata Group transformed 2 from a Mumbai-based family-owned trading firm in the late 19th century to a multinational conglomerate, comprising 114 companies and subsidiaries across eight business sectors on several continents. Many of China’s success- 0 ful clusters, such as the footwear industry in 0 20 50 80 120 Wenzhou, also started from small family busi- wage premium, relative to microenterprises (%) nesses working close to each other.51 small large Unfortunately, in many developing coun- tries, larger and older firms tend to be stagnant while smaller and younger enterprises are prone Source: Montenegro and Patrinos 2012 for the World Development Report 2013. to churning. A vibrant dynamic process is usu- Note: The figure uses 138 household and labor force surveys spanning 33 countries over 1991–2010. The horizontal axis reports the estimated wage premium of small firms (10 to 50 workers) and large firms (more ally absent. In Ghana, many firms were born than 50 workers) relative to microenterprises, controlling for worker characteristics. large and showed little growth over 15 years; in Portugal, by contrast, many firms born as mi- croenterprises grew substantially.52 The major- ing and 30 to 50 percent of employment in ser- ity of firms in India is also born small, but they vices. The large numbers of economic units are tend to stay small, without displaying much associated with a very wide dispersion of total variation in employment over their life cycle. factor productivity. In India, even within nar- A revealing comparison involves the size of rowly defined sectors, a manufacturing plant 35-year old firms relative to their size at birth. at the 10th percentile of the distribution gener- In India, the size declines by a fourth; in Mex- ates 22 times less output than a plant in the 90th ico, it doubles. In the United States, it becomes percentile would produce with the same inputs. 10 times bigger.53 The potential gains from This pattern is similar in a number of Latin greater entrepreneurial vibrancy, and from a American countries. By comparison, the ratio is more substantial reallocation of labor from 1 to 9 in the United States.47 low- to high-productivity units, are sizable.54 While microenterprises have lackluster per- But helping those gains materialize is a daunt- formance as a group, they are also very diverse. ing task. Microenterprises and household businesses are a means of survival for the poor and a way of di- Jobs are who we are versifying out of farming activities. On average, their owners do not earn much.48 But in middle- Having, or not having, a job can shape how peo- income countries, many among the owners of ple view themselves and relate to others. While micro- and small enterprises are as entrepreneur- some jobs can be empowering, in extreme cases ial as their peers in industrial countries. Their a lack of job opportunities can contribute to vi- weak performance may be due to an adverse olence or social unrest. Youth may turn to gangs investment environment—for example, limited to compensate for the absence of identity and access to credit.49 Yet a small number of micro- belonging that a job might provide. In Ecua- Moving jobs center stage 13 FIGURE 9 The employment share of microenterprises is greater in developing countries Ethiopia Egypt, Arab Rep. India Bolivia Colombia Ghana Mexico Venezuela, RB Argentina Poland Turkey Hungary South Africa Uruguay Czech Republic Slovenia Chile Romania Vietnam industrial countries (average) 0 20 40 60 80 100 share of employment, % manufacturing sector services sector Sources: World Development Report 2013 team estimates and EUROSTAT. Note: Microenterprises are firms, formal or informal, with fewer than 10 workers. Data for developing countries are from Argentina (2006–10), Bolivia (2005, 2007), Chile (2006, 2009), Colombia (2009), the Czech Republic (2005–07), the Arab Republic of Egypt (2006), Ethiopia (1999), Ghana (1991), Hungary (2007–08), India (2004, 2009), Mexico (2004–10), Poland (2005–07), Romania (2005–07), Slovenia (2005–07), South Africa (2005–07), Turkey (2006–10), Uruguay (2009), República Bolivariana de Venezuela (2004–06), and Vietnam (2009). Data for industrial countries are from Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, and the United Kingdom over 2005–07. dor, for instance, they did so “because they were whose fathers did not have formal sector jobs searching for the support, trust, and cohesion— were significantly less likely to have such jobs social capital—that they maintained their fami- themselves.58 lies did not provide, as well as because of the lack The distribution of jobs within society—and of opportunities in the local context.”55 perceptions about who has access to opportu- The workplace can be a place to encounter nities and why—can shape expectations for the new ideas and interact with people of different future and perceptions of fairness. Children’s genders or ethnicities. Bosnians interviewed aspirations may be influenced by whether their in the late 1990s commented that “the area in parents have jobs and the types of jobs they which there is the greatest support for ethnic co- have. The Arab Spring was not merely about operation is in the workplace.”56 Business people employment. But disappointment, especially in Trinidad and Tobago reported that they in- among youth, about the lack of job opportuni- teracted with people of a wider range of ethnic- ties and frustration with the allocation of jobs ities at work than they did in their social lives.57 based on connections rather than merit echoed Networks can also exclude. In Morocco, people across countries. 14 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 F I G U R E 10 People who are unemployed, or do not have motivating jobs, participate less in society a. Active membership and unemployment b. Active membership and motivating job 0.1 –0.02 N 0 N 0.01 marginal probability N marginal probability –0.1 N N 0 –0.2 N –0.3 –0.01 N –0.4 N –0.5 –0.02 –0.6 high upper lower low high upper lower low income middle middle income income middle middle income income income income income Source: Wietzke and McLeod 2012 for the World Development Report 2013. Note: The vertical axis shows the probability of the respondent being an active member of one or more of nine types of associations, controlling for the income, education, and demographic characteristics of respondents. In panel a, the probability is linked to being unemployed, and panel b to having a job characterized as cognitive, creative, or independent. The vertical lines indicate the 95 percent confidence interval of the estimated probability. Jobs influence how people view themselves, The nature of jobs matters as well. Jobs that how they interact with others, and how they empower, build agency, and respect rights are perceive their stake in society.59 Jobs also can associated with greater trust and willingness to have collective consequences. They can shape participate in civil society. Jobs that create eco- how societies handle collective decision making, nomic and social ties may build incentives to manage tensions between diverse groups, and work across boundaries and resolve conflict. avoid and resolve conflicts. The relationship is And if people believe that job opportunities are not immediate or direct, however. Jobs are only available to them either now or in the future, one factor contributing to the capacity of socie- their trust in others and their confidence in in- ties to manage collective decision making peace- stitutions may increase. Ultimately, jobs can in- fully. And social cohesion can in turn influence fluence social cohesion through their effects on jobs by shaping the context in which entrepre- social identity, networks, and fairness. neurs make business decisions. Trust beyond one’s own group and civic en- gagement are two indicators of social cohesion. Valuing jobs Unemployment and job loss are associated with lower levels of both trust and civic engagement Not all forms of work are acceptable. Activities (figure 10). While causality is difficult to es- that exploit workers, expose them to dangerous tablish, there is more than just a correlation at environments, or threaten their physical and stake. Indonesian men and women who were mental well-being are bad for individuals and working in 2000 but not in 2007 were less likely societies alike. Child prostitution and forced la- to be participating in community activities than bor contravene principles of human dignity and those still at work. And those who were working undermine individual and collective well-being. in 2007 but not in 2000 were significantly more Today, an estimated 21 million people globally likely to be involved in the community than are victims of bonded labor, slavery, forced pros- those who were still out of work.60 titution, and other forms of involuntary work.61 Moving jobs center stage 15 In 2008, 115 million children between the ages household income contributed by women of- of 5 and 17 were involved in hazardous work.62 ten results in improvements in children’s edu- International norms of human rights and labor cational attainment and health. In Bangladesh, standards reject forced labor, harmful forms of where the garment industry employs women child labor, discrimination, and the suppression in large numbers, the opening of a garment of voice among workers. factory within commuting distance of a vil- Beyond rights, the most obvious outcome lage is seen as a signal of opportunity and leads of a job is the earnings it provides to its holder. to increased schooling for girls.64 Among dis- These earnings can be in cash or in kind and advantaged castes in Southern Indian villages, may include a range of associated benefits. an increase of US$90 in a woman’s annual in- Other characteristics, such as stability, voice, come is estimated to increase schooling among and fulfillment at work, also affect subjective her children by 1.6 years.65 well-being. Several of these dimensions of jobs Similarly, a job created or sustained through have been combined into the concept of De- foreign direct investment (FDI) matters for cent Work, introduced by the International La- other jobs, and thus for other people. With the bour Organization (ILO) in 1999.63 Defined as investment come knowledge and know-how. “opportunities for women and men to obtain These raise productivity not only in the foreign decent and productive work in conditions of subsidiary but also among local firms interact- freedom, equity, security and human dignity,” ing with the subsidiary or operating in its vicin- this concept has been used by many govern- ity. Such knowledge spillovers are sizable in low- ments to articulate their policy agendas on and middle-income countries.66 Conversely, a jobs. The concept of Decent Work has also been job in a protected industry that needs to be sup- embraced by the United Nations and several ported through transfers (either by taxpayers international organizations and endorsed by or by consumers) generates a negative spillover, numerous global forums. even more so when the need for protection is As jobs provide earnings, generate output, associated with the use of outdated technology and influence identity, they shape the well- that results in high environmental costs. being of those who hold them—and they also Jobs can also affect other people by shaping affect the well-being of others. To understand social values and norms, influencing how groups how much jobs contribute to development, it is coexist and manage tensions. In Bosnia and necessary to assess these effects—the spillovers Herzegovina and the former Yugoslav Republic from jobs. Jobs that generate positive spillovers of Macedonia, surveys found that the number of have a greater value to society than they have people willing to work together or do business to the individual who holds the job, while the with someone of a different ethnicity was greater opposite is true when spillovers are negative. In- than the number of people in favor of intereth- tuitively, many people have notions about such nic cooperation in schools or neighborhoods.67 broader payoffs. When asked about their most And in the Dominican Republic, a program tar- preferred jobs, respondents in China, Colombia, geted to youth at risk shows that jobs can change Egypt, and Sierra Leone give different answers behaviors with positive implications for society. from those they offer when asked to identify Participation in the Programa Juventud y Em- the most important jobs to society (figure 11). pleo (Youth and Employment Program), which Working as a civil servant or as a shop owner is provides a combination of vocational and life generally preferred by individuals, while teach- skills training, reduced involvement in gangs, ers and doctors are quite often mentioned as the violence, and other risky behaviors.68 most important jobs for society. For the same level of earnings and benefits, Who gets a job makes a difference too, and the larger the positive spillovers from a job, the not just for individuals. In a society that values more transformational the job can be, and the poverty reduction, jobs that take households greater its value to society. In everyday parlance, out of hardship generate a positive spillover, good jobs are those that provide greater well- because they improve the well-being of those being to the people who hold them. But good who care. Female employment also matters be- jobs for development are those with the highest yond the individual. An increase in the share of value for society. Understanding these wider 16 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 F I G U R E 11 Views on preferred jobs and most important jobs differ a. China b. Egypt, Arab Rep. 50 50 D 40 40 social value social value 30 T C 30 F T 20 20 F D 10 10 C S S 0 0 0 10 20 30 40 50 0 10 20 30 40 50 individual value individual value c. Colombia d. Sierra Leone 50 50 D 40 40 D D social value social value 30 30 20 T 20 F F T C 10 10 CS S 0 0 0 10 20 30 40 50 0 10 20 30 40 50 individual value individual value C D F S T civil doctor farmer shop teacher servant owner Sources: Bjørkhaug and others 2012; Hatløy and others 2012; Kebede and others 2012; and Zhang and others 2012; all for the World Development Report 2013. Note: The figure shows the share of respondents who would want the job for themselves (individual value) and those who think the job is good for society (social value). payoffs to jobs has shaped recent development tribute to common goals, such as poverty reduc- thinking.69 tion, environmental protection, or fairness. Spillovers from jobs can be identified across Because a job can affect the well-being of all three transformations (figure 12). Some di- others as well as that of the jobholder, two jobs rectly affect the earnings of others, as when a job that may appear identical from an individual is supported through government transfers, or perspective could be different from a social per- restrictive regulations that reduce employment spective (figure 13). The individual perspective opportunities for others. Other spillovers take provides a useful starting point, because it often place through interactions: in households in the coincides with the social perspective. A high- case of gender equality, at the workplace when paying job in Bangalore’s information technol- knowledge and ideas are shared, or in society ogy sector is probably good for the worker; it is more broadly in the case of networks. Spillovers also good for India because it contributes to the also occur when jobs and their allocation con- country’s long-term growth. In other cases, the Moving jobs center stage 17 two perspectives may conflict. For instance, Viet- nam’s poverty rate declined with unprecedented F I G U R E 12 Some jobs do more for development speed in the 1990s when land was redistributed to farmers and agricultural commercialization Jobs was liberalized.70 From the individual perspec- Jobs in connected to Jobs that are global markets tive, farming jobs involve difficult working con- functional environmentally cities benign ditions, substantial variability in earnings, and no formal social protection. But they can make a major contribution to development, as a ticket DEVELOPMENT out of poverty for many. Conversely, bloated Jobs for Jobs that give public utilities often offer a range of privileges to the poor a sense of fairness their employees even if the utilities themselves LIVING PRODUCTIVITY SOCIAL STANDARDS COHESION provide only limited coverage and unreliable Jobs that Jobs that services and are obstacles to economic growth empower link to women networks and poverty reduction. Such jobs may look ap- pealing from an individual perspective, but are Jobs that do not Jobs that less so to society. shift burden shape social to others JOBS identity Source: World Development Report 2013 team. Jobs agendas are diverse . . . but connected the biggest payoff may be for jobs that reduce Jobs challenges are not the same everywhere. poverty or defuse conflict. Certainly, the level Creating more jobs may be a universal goal, but of development matters. The jobs agenda is not the types of jobs that can contribute the most the same in an agrarian economy as in one that to development depend on the country context. is rapidly urbanizing. It is bound to be different Jobs that connect the economy to the world may still in countries already grappling with how far matter the most in some situations; in others, the formal economy can be extended. F I G U R E 13 The individual and social values of jobs can differ urban job connected to a global value chain for a woman job offering an opportunity to a agglomeration young person effects informal job giving a chance to social global spillover a poor person identity integration job in a protected sector using outdated social value poverty sense gender technology of fairness equality reduction individual burden value shifted individual environmental value cost Source: World Development Report 2013 team. 18 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 But the nature of good jobs for development jobs that do no environmental damage have in a particular context is not simply a function particularly positive development impacts. of income per capita. It may be influenced by conflict that is ongoing or still reverberating. • Formalizing countries. Large and growing ur- ban populations generally lead to more de- A country’s geography or its natural endow- veloped economies, where a fairly substantial ments can also be determining factors. Small is- proportion of firms and workers are covered land nations have unique jobs challenges, as do by formal institutions and social programs. resource-rich economies. Or demography may But further increasing formality to levels typi- be the key characteristic—witness the imposing cal of industrial countries involves tradeoffs but very different challenges in countries facing between living standards, productivity, and high youth unemployment and those with ag- social cohesion. There is a premium on jobs ing populations. that can be formalized without making labor too costly and on jobs that reduce the divide A typology of jobs challenges between those who benefit from formal insti- tutions and those who do not. A country’s level of development, institutional strength, endowments, and demography de- In some countries, the jobs challenge is fine where the development payoff from jobs shaped by demography and special circum- is greatest. The jobs agenda in one country will stances affecting particular groups. thus be different from that in another country, depending on their dominant features. The • In countries with high youth unemployment young people do not see opportunities for challenges facing countries as they move along the future. Many of these countries have large the development path are illustrated by the youth bulges, which can put downward pres- agrarian, urbanizing, and formalizing cases: sure on employment and earnings. Many also • Agrarian countries. Most people are still en- have education and training systems that are gaged in agriculture and live in rural areas. not developing the kinds of skills needed by Jobs that improve living standards have a the private sector. On closer inspection, the substantial development payoff because of problem is often more on the demand side high poverty rates. Cities need to be more than the supply side, with limited compe- functional to reap the benefits from agglom- tition reducing employment opportunities, eration and global integration, so jobs that especially in more skill-intensive sectors. In set the foundation for cities to eventually be- these settings, removing privilege in business come economically dynamic are good jobs entry and access to jobs is likely to have large for development. Even in the most optimistic development payoffs. scenario, however, it may take decades before • Aging societies also face generational issues, urbanization is complete, so increasing pro- but these stem from a shrinking working-age ductivity in agriculture is a priority. population and the high cost of providing and caring for a growing number of elderly • Urbanizing countries. Productivity growth in people. The impact of the declining working- agriculture has risen enough to free up large age population can be mitigated through pol- numbers of people to work in cities. Job icies for active aging, ensuring that the most opportunities for women, typically in light productive members of society, including manufacturing, can have positive impacts the highly skilled elderly, can work. Contain- on the household allocation of resources. ing the increase in pension, health care, and Jobs that deepen the global integration of long-term care costs can be achieved through urbanizing countries, especially in higher- reforms in program design, but these reforms value-added export sectors, are also good can be a source of social strain. for development. As countries urbanize, congestion, pollution, and other costs of Natural endowments, including geography, high density become increasingly serious, so and institutions can create unique jobs challenges. Moving jobs center stage 19 • Resource-rich countries may have substantial that would make the greatest contribution to foreign exchange earnings, but this wealth development in each case. This focus allows may not translate into employment creation for a richer analysis of the potential tradeoffs beyond the exploitation of natural resources. between living standards, productivity, and Indeed, the abundance of foreign exchange social cohesion in a specific context. It pro- can hamper the competitiveness of other ex- vides clues about the obstacles to job creation port activities. Some resource-rich countries and, ultimately, the priorities for policy makers distribute part of their wealth through trans- (figure 14). fers or subsidized public sector jobs, while relying on migrants to do menial work. This Migration of people—and of jobs approach can maintain living standards but at the expense of productivity growth and social The movement of people and jobs implies that cohesion. In those countries, jobs that sup- jobs challenges, while being country specific, port the diversification of exports can have also have a global scope. These processes have large development payoffs. implications for living standards and productiv- ity at both the sending and the receiving ends, • Small island nations, because of their size and and they can transform families and entire com- remoteness, cannot reap the benefits from munities, for better or for worse. Tradeoffs are agglomeration and global integration except inevitable, and coping with them only through through tourism. So the productivity spill- the policies of receiving countries alone may overs from jobs are limited, as are employ- prove unsatisfactory. ment opportunities outside basic services and At the turn of the 21st century, there were government. Outmigration offers an alter- more than 200 million international migrants native for improving living standards, while worldwide, nearly 90 million of them work- return migration and diaspora communities ers. Many migrants are temporary or seasonal can stimulate the diffusion of new business workers who eventually return home. Some ideas among locals. countries are mainly recipients, while others are • In conflict-affected countries, the most imme- sources, and yet others neither host nor send diate challenge is to support social cohesion. significant numbers of migrants (map 1). Some Employment for ex-combatants or young are large recipients either in absolute numbers men vulnerable to participation in violence (for instance, the United States) or in relative takes on particular importance. With fragile terms (Jordan and Singapore). Migrants from institutions and volatile politics, attracting Bangladesh, Mexico, and India represent a large private investment and connecting to global share of total migrants worldwide; Fiji, Jamaica, value chains may be out of reach for quite and Tonga have a large share of their population some time. Yet construction can boom even overseas. Figures for some of the smaller coun- in poor business environments, and it is la- tries are striking. For instance, about a fifth of bor intensive. Investments in infrastructure all Salvadorians live abroad, while more than 60 can not only support social cohesion through percent of the populations of Kuwait, Qatar, and their direct employment impact, they can also the United Arab Emirates are foreign-born.71 be a step in preparing for future private sector International migration increases the in- job creation. comes of migrants and their families through earnings and remittances. The majority of the These criteria are not mutually exclusive. studies find either no effect or a very small nega- Chad and the Democratic Republic of Congo tive effect on the labor earnings of locals in re- are both resource rich and conflict affected; ceiving countries. Migrants also contribute to Jordan and Armenia are formalizing and also global output if their productivity abroad is have high youth unemployment. Still, look- higher than it would be at home, which is usually ing through the jobs lens and focusing on the the case. They may even contribute to output in key features of the different country types can the sending country, as networks of migrants help identify more clearly the kinds of jobs and returnees channel investments, innovation, 20 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 F I G U R E 14 Good jobs for development are not the same everywhere Jobs challenge What are good jobs for development? Agrarian More productive smallholder farming economies Urban jobs connected to global markets Conflict-affected Jobs demobilizing combatants countries Jobs reintegrating displaced populations Jobs providing alternatives to confrontation Urbanizing Jobs providing opportunities for women countries Jobs moving the country up the export ladder Jobs not leading to excessive congestion Jobs integrating rural migrants Resource-rich Jobs supporting export diversification countries Jobs not subsidized through transfers Small island Jobs connected to global markets nations Jobs not undermining fragile ecosystems Countries with high Jobs not supported through rents youth unemployment Jobs not allocated on the basis of connections Formalizing Jobs with affordable social benefits countries Jobs not creating gaps in social protection coverage Aging Jobs keeping the skilled active for longer societies Jobs reducing the cost of services to the elderly Source: World Development Report 2013 team. and expertise. Social effects are more mixed. computer and information services, legal and On the positive side, migration connects people technical support, and other business services. from different cultures in ways bound to widen India was the pioneer, but other countries— their horizons. On the negative side, the separa- Brazil, Chile, China, and Malaysia, to name a tion from family and friends can be a source of few—have also seized the opportunity.72 distress and isolation. Migration may also bring The obvious winners of job migration are the racial prejudice and heighten social tensions in workers and entrepreneurs in countries to which host countries, especially when migrants are se- industries and splintered service jobs have mi- cluded in segregated occupations or neighbor- grated. This migration, along with the transfer hoods, preventing their integration in society. of new technologies and advanced management Jobs are on the move as well. The past four methods, contributes to productivity growth decades have been marked by the outsourcing of and higher living standards. The hidden win- manufacturing tasks from industrial countries ners of job migration are consumers worldwide. to the developing world, especially to East Asia The improved international division of labor in- (figure 15). More recently, the same pattern is creases the availability of goods and services and observable for service tasks. In fact, services are enhances the possibility of gaining from trade. the fastest-growing component of global trade. The clear losers are those who have seen their Developing countries are now exporting not jobs disappear because of the declining compet- only traditional services, such as transportation itiveness of their industries and services. Among and tourism, but also modern and skill-inten- the losers, many skilled workers find comparable sive services, such as financial intermediation, jobs without a substantial loss in salary, but oth- Moving jobs center stage 21 MAP 1 Only in some countries are migrants a substantial share of the population a. Immigrants, % of labor force Percent 0–1.99 2.00–4.99 5.00–9.99 10.00–14.99 15.00–100 no data b. Emigrants, % of native labor force Percent 0–1.99 2.00–4.99 5.00–9.99 10.00–14.99 15.00–100 no data This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. Sources: World Development Report 2013 team based on Özden and others 2011, and Artuc and others 2012, using census data around 2000. ers do not. Low-skilled workers or those with service is critically important for development, industry- or occupation-specific skills that are whether it is teachers building skills, agricul- no longer in demand are those who suffer most. tural extension agents improving agricultural productivity, or urban planners designing func- tional cities. Temporary employment programs Policies through the jobs lens for the demobilization of combatants are also justified in some circumstances. But as a general While it is not the role of governments to create rule it is the private sector that creates jobs. The jobs, government functions are fundamental for role of government is to ensure that the condi- sustained job creation. The quality of the civil tions are in place for strong private-sector-led 22 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 growth, to understand why there are not enough F I G U R E 15 Manufacturing jobs have migrated away from good jobs for development, and to remove or high-income countries mitigate the constraints that prevent the cre- ation of more of those jobs. a. High-income countries Government can fulfill this role through a 45 three-layered policy approach (figure 16): 40 • Fundamentals. Because jobs improve with 35 development, providing higher earnings and benefits as countries grow rich, a prerequisite percent 30 is to create a policy environment that is con- 25 ducive to growth. Macroeconomic stability, an enabling business environment, human 20 capital accumulation, and the rule of law are 15 among the fundamentals. Ensuring macro- 1970 1980 1990 2000 2008 economic stability involves containing volatil- ity and avoiding major misalignments of rela- manufacturing share of GDP tive prices. Adequate infrastructure, access to manufacturing share of employment finance, and sound regulation are key ingredi- b. Japan and the Republic of Korea ents of the business environment. Good nutri- 45 tion, health, and education outcomes not only improve people’s lives but also equip them for 40 productive employment. The rule of law in- 35 cludes protection of property rights and also the progressive realization of rights at work, to percent 30 avoid a situation where growth coexists with 25 unacceptable forms of employment. 20 • Labor policies. Because growth does not me- chanically deliver employment, a second layer 15 is to ensure that labor policies do not under- 1970 1980 1990 2000 2008 mine job creation and instead enhance the de- manufacturing share of GDP (Japan) velopment payoffs from jobs. But labor mar- manufacturing share of employment (Japan) ket imperfections should not be addressed manufacturing share of GDP (Republic of Korea) through institutional failures. Instead, they manufacturing share of employment (Republic of Korea) should remain on a range—a plateau—where c. Other East Asian countries negative efficiency effects are modest. Labor 45 policy should avoid two cliffs: the distortion- ary interventions that clog the creation of jobs 40 in cities and in global value chains, and the 35 lack of mechanisms for voice and protection percent for the most vulnerable workers, regardless of 30 whether they are wage earners. The first cliff 25 undermines the development payoffs from agglomeration and global integration; the 20 second leads to low living standards and a so- 15 cial cohesion deficit. 1991 1995 2000 2005 2008 • Priorities. Because some jobs do more for de- manufacturing share of GDP velopment than others, it is necessary to un- manufacturing share of employment derstand where good jobs for development lie, given the country context. More selective Sources: World Development Report 2013 team estimates based on data from the United Nations Indus- trial Development Organization (UNIDO) and the United Nations Statistics Division. policy interventions are justified when in- Note: Japan is not included in panel a. GDP = gross domestic product. centives are distorted, resulting in too few of Moving jobs center stage 23 those jobs. If this is the case, policies should remove the market imperfections and institu- F I G U R E 16 Three distinct layers of policies are needed tional failures that prevent the private sector from creating more good jobs for develop- ment. If the failures and imperfections can- not be clearly identified, or cannot be easily removed, offsetting them may be an option, Know your jobs challenge but the costs and benefits of doing so need to PRIORITIES Remove or offset the constraints be carefully assessed. Fundamentals: Ensuring the basics Stay on the efficiency plateau Avoid misguided interventions Macroeconomic stability. Volatility hurts em- LABOR POLICIES Provide voice and extend protection ployment and earnings, often immediately. Ac- cording to a recent estimate, a 1.0 percent decline in gross domestic product (GDP) is associated with an increase in the unemployment rate of Macroeconomic stability 0.19 percentage point in Japan, 0.45 percentage An enabling business environment point in the United States, and 0.85 percentage Human capital FUNDAMENTALS Rule of law and respect for rights point in Spain.73 In developing countries, where farming and self-employment are more preva- lent and income support mechanisms are more limited, the short-term impact of macroeco- Source: World Development Report 2013 team. nomic instability is less on open unemployment and more on earnings from work.74 Volatility can originate internally or be lead to an overvaluation of its currency, making caused by external shocks. Internally, it is often imports more affordable and exports less com- the outcome of unsustainable budget deficits petitive. Resource-rich countries face similar and lax monetary policy. But tight budgets and pressures for their currencies to appreciate, and rigid monetary policy rules may not be a magic the commodity booms of the last few years have wand. Budget deficits are more or less worri- only made these pressures stronger. Currency some depending on how quickly an economy is overvaluation can also happen in countries growing, whereas the independence of central where large volumes of foreign assistance are banks needs to be weighed against the overall needed to jump-start development, cope with coherence of the country’s development strat- natural disasters, or facilitate recovery after a egy. Assessing the soundness of macroeconomic conflict. An analysis of 83 developing countries management requires taking account of the between 1970 and 2004 confirms that aid fosters impact of fiscal and monetary policies on eco- growth (albeit with decreasing returns) but in- nomic growth.75 duces overvaluation and has a negative impact Volatility may also result from external shocks, on export diversification.77 including natural disasters and crises originat- An enabling business environment. Finance, ing abroad. Precautionary policies can cushion infrastructure, and business regulations set the those shocks, if and when they occur. Most often, quality of the investment climate and thus in- short-term stimulus or adjustment packages are fluence job creation by private firms. Access to needed—but these tend to be less effective in the finance, a chief constraint to business expan- developing world than in developed countries sion in countries in every development phase, because of lower multiplier effects.76 is the top constraint in low- and upper-middle- Avoiding exchange rate misalignment is nec- income countries (figure 17). Financial markets essary to sustain a vibrant export sector—and have the potential to allocate resources toward thus to create jobs connected to international more productive uses, thwart the channeling markets and global value chains. Surges in a of resources to those with political connections country’s foreign exchange earnings generally or economic power, and expand financial in- 24 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 F I G U R E 17 Finance and electricity are among the top constraints faced by formal private enterprises Firm size Income level Constraint Small Medium Large Low Lower middle Upper middle High All Access to finance Power shortage Lack of skills Informal competition Tax rates most severe second-most severe third-most severe Source: IFC, forthcoming. Note: The analysis is based on World Bank enterprise surveys covering 46,556 firms in 106 countries. Small firms have fewer than 20 employees, medium firms have 21–99, and large firms 100 and more. clusion. But regulatory oversight is needed to takes to comply with regulations or to receive ensure transparency and competition in how permits.81 Business regulations also affect com- funds are allocated.78 The financial crisis of 2008 petition and thus the pressure to innovate and reopened heated debates on the appropriate increase productivity. Across countries, regula- regulation of the financial sector and the need tions on business entry are inversely correlated to balance prudence and stability with innova- with productivity and firm creation, with stron- tion and inclusion. ger effects in sectors that have higher rates of Access to affordable and quality infrastruc- entry.82 In Mexico, easing entry requirements ture is a prerequisite for firms to operate. Power increased business registration and employ- shortages are the number-two constraint to ment and drove down consumer prices, largely firm growth and job creation mentioned by through creating new firms rather than formal- entrepreneurs the world over—and number izing informal firms.83 one in low-income countries. Telecommunica- Human capital. Good outcomes in nutrition, tions allow for a better flow of information with health, and education are development goals suppliers and customers, and the internet and in themselves, because they directly improve mobile technology facilitate the spread of new people’s lives. But they also equip people for ideas. Roads provide greater access to markets, productive employment and job opportuni- as do ports and airports.79 The way infrastruc- ties—and through this channel, human capi- ture is regulated is important as well. Inad- tal drives economic and social advances. There equate pricing policies and regulations amplify is robust evidence from throughout the world the gap in needed infrastructure services. In that an additional year of schooling raises earn- many countries, monopolies based on politi- ings substantially, and that this earnings pre- cal connections have led to reduced quantities mium reflects the higher productivity of more of infrastructure services at higher prices and educated workers.84 Together, nutrition, health, lower quality.80 and education combine to form human skills Business regulation also affects the oppor- and abilities that have been powerfully linked to tunities for businesses to grow and create jobs. productivity growth and poverty reduction in Regulations can increase the cost of doing busi- the medium to longer run.85 Also, better health ness, in money or in time needed to comply. brings, directly, higher labor productivity. As Steps taken to meet requirements or to pay fees such, human capital is a fundamental ingredi- are a burden for businesses, as are delays or dis- ent for desirable job outcomes. cretionary decisions, such as those for permits Human capital formation is cumulative. or licenses. There is great variation across firms Of crucial importance are adequate health in the same location with regard to the time it and nutrition during “the first 1,000 days,” Moving jobs center stage 25 from conception to two years of age. Brain consistently find crime and corruption to be ob- development in this time period affects physi- stacles to conducting business.95 cal health, learning abilities, and social be- An effective judicial system is a key institu- havior throughout life.86 Ensuring adequate tion for enforcing property rights and reduc- nutrition, health, and cognitive stimulation ing crime and corruption. An independent, through a nurturing environment from the accountable, and fair judiciary can contribute womb through the first years raises returns to to private sector growth and job creation by en- later child investments significantly.87 While forcing the rules that govern transactions and foundations are laid early on, human capital by helping ensure that the costs and benefits of and skills continue to be formed throughout growth are fairly distributed. The justice system childhood and young adulthood. School- can enforce contracts, reduce transaction costs ing is fundamental for the further develop- for firms, and create a safe and more predictable ment of cognitive and social skills until the business environment.96 And effective courts in- end of the teenage life. Social skills remain crease the willingness of firms to invest.97 malleable through adolescence and the early An institutional environment that respects adult years.88 Young adults can continue rights is an important ingredient of the rule of into more specialized skill-building, includ- law and a foundation for good jobs for develop- ing at tertiary levels, but success depends on ment. The ILO’s core labor standards provide a whether the generic skills needed to learn floor in the areas of child labor, forced labor, and adapt to different tasks and problem- discrimination, and freedom of association solving environments have been acquired. and collective bargaining.98 Health and safety These general skills are especially important in at work also call for attention by governments more dynamic economic environments. and employers. Ensuring that standards are Unfortunately, the evidence shows that many applied in practice requires providing access to countries are falling short in building up the information to workers and employers. It also human capital of their children and youth. The implies expanding legal coverage to workers in quality of delivery systems has often failed to jobs that fall outside formal laws and regula- keep pace with the expansion of access to basic tions. Associations of informal workers can social services. In a large majority of develop- inform them about their rights, help them use ing countries that took part in the Programme legal mechanisms, and offer them collective for International Student Assessment (PISA) in voice.99 2009, at least one-fifth of 15-year-old students were functionally illiterate (not reaching at least Labor policies: Avoiding the two cliffs level 2 in the PISA reading assessment).89 The rule of law. Across countries, the pres- A malfunctioning labor market may prevent ence of institutions that protect property rights, economic growth from translating into more uphold the rule of law, and rein in corruption is and better jobs. Traditional analyses focus on associated with higher levels of development.90 labor supply, labor demand, and their matching Property rights foster private sector growth by to explain why there may not be enough employ- allowing firms to invest without the fear that ment, or not enough wage employment in the their assets will be stolen or confiscated.91 The case of developing countries. By not addressing ability to enforce contracts widens the circle labor market imperfections, or by creating them, of potential suppliers and customers, as per- labor policies can indeed constrain job creation, sonal connections become less important in even seriously. In many cases, however, the con- establishing trust.92 The rule of law has direct straints to creating transformational jobs are not implications for the growth of firms and jobs. connected to the labor code. The low productiv- Entrepreneurs who believe their property rights ity of smallholder farming in agrarian econo- are secure reinvest more of their profits than mies is probably more closely related to failures those who do not.93 Conversely, rampant crime in agricultural research and extension. And the and violence are likely to drive firms away and lack of competition in technologically advanced discourage domestic and foreign investment.94 activities that could boost the demand for skilled Across countries, investment climate surveys work in countries with high youth unemploy- 26 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 ment is more likely to stem from cronyism and youth, women, and the less skilled. In Colombia political favoritism. and Indonesia, minimum wage increases had There is no consensus on what the content only a modest overall effect but the employment of labor policies should be. Views are polarized, impact was stronger for young workers.101 Reg- reflecting differences in fundamental beliefs. To ulations more clearly affect job flows, creating some, labor market regulations and collective “stickiness” in the labor market and slowing the bargaining are sources of inefficiency that re- pace of labor reallocation.102 While this hinders duce output and employment, while protecting economic efficiency, the evidence on produc- insiders at the expense of everyone else. In this tivity is fairly inconclusive, though admittedly view, unemployment insurance and active labor scarce.103 market programs create work disincentives and In developing countries, collective bargain- are a waste of money. To others, these policies ing does not have a major impact outside the provide necessary protection to workers against public sector and activities characterized by the power of employers and the vagaries of the limited competition, where there are rents to market. They can even contribute to economic share.104 Unions consistently raise wages for efficiency by improving information, insuring workers. Studies place this premium in the 5 to against risks, and creating conditions for long- 15 percent range in Mexico; around 5 percent term investments by both workers and firms. in Korea; and at 10 to 20 percent in South Af- Advocates of both views can find examples rica.105 The costs in terms of reduced jobs are to support their positions. Those who see labor not so clear, however. In some countries, though policies and institutions as part of the problem not all, the tradeoff seems to be lower employ- point to the impressive long-term job creation ment, but even then the magnitudes are rela- record of the United States, a country with lim- tively small. The limited evidence on union ef- ited interventions in the labor market. They also fects on productivity is also mixed.106 The main point to the protective job security rules that challenges are extending voice to those who are have impeded young people from finding work not wage earners, so that the constraints facing in many North African and Southern European their farms and microenterprises can be ad- countries. By contrast, those who see labor poli- dressed, and organizing collective bargaining in cies as part of the solution point to job-sharing a way that enhances productivity. as decisive in Germany’s relative success in Active labor market programs, such as train- weathering the financial crisis. ing, employment services, wage subsidies, and A careful review of the actual effects of labor public works, have a mixed record.107 When they policies in developing countries yields a mixed are not well grounded in the needs and realities picture. Most studies find that impacts are mod- of the labor market or when administration is est—certainly more modest than the intensity poor and not transparent, they are of little use of the debate would suggest.100 Across firm sizes or even worse. When they are well designed and and country levels of development, labor poli- implemented, they can help facilitate job match- cies and regulations are generally not among the ing, mitigate the negative impacts of economic top three constraints that formal private enter- downturns, and fill the gap when employers prises face. Excessive or insufficient regulation or workers underinvest in training (figure 18). of labor markets reduces productivity. But in Even when this is the case, though, effects tend between these extremes is a plateau where ef- to be modest, so expectations about what active fects enhancing and undermining efficiency can labor market policies can achieve need to be be found side by side and most of the impact held in check. is redistributive, generally to the advantage of Social insurance coverage is limited even in middle-aged male workers (as opposed to own- the most formalized developing countries. Un- ers of capital, women, and younger workers). employment insurance can help workers man- In most countries that have been studied, age the risks of job loss, but it can also weaken job security rules and minimum wages have a job search efforts. When unemployment insur- small effect on aggregate employment. These ance, pensions, health care, and other benefits rules offer benefits for those who are covered, are financed through the payroll, high contri- while negative effects tend to be concentrated on bution rates can create hiring disincentives. In Moving jobs center stage 27 developing countries where formal sectors are small, funding these programs through general F I G U R E 18 Combining work and training increases the taxation is increasingly discussed,108 but any success rates of programs taxes create distortions. In the end, there is no substitute for affordable social protection ben- 0.15 efits that are valued by workers. The main issue is coherently integrating social protection and 0.10 social assistance to minimize gaps and overlaps. In sum, labor policies and institutions can success indicator 0.05 improve labor market information, manage risk, and provide voice. But these advantages 0 can come at the expense of labor market dy- namism, reduced incentives for job creation –0.05 and job search, and a gap in benefits between –0.10 the covered and uncovered. The challenge is to set labor policies on a plateau—a range where –0.15 regulations and institutions can at least partially in-class workplace in-class training in-class and address labor market imperfections without training only training only and workplace workplace training training combined reducing efficiency. Labor market rules that combined plus other services are too weak or programs that are too modest or nonexistent can leave problems of poor in- Source: Fares and Puerto 2009. formation, unequal power, and inadequate risk Note: The figure shows the correlation coefficient between type of training and reported success of a management untreated. In contrast, rules that program, with success defined as improving employment or earnings and being cost-effective. are too stringent and programs that are too am- bitious can compound market imperfections with institutional failures. the health insurance program for the poor in The focus on good jobs for development of- Vietnam are encouraging in this respect.109 This fers some insights to assess where the edges of cliff may be less visible than excessive labor mar- the plateau, the cliffs, may lie. At one end of the ket rigidity, but it is no less real. plateau are labor policies that slow job creation in cities, or in global value chains, and make Priorities: Realizing the development countries miss out on jobs supporting agglom- payoffs from jobs eration effects and knowledge spillovers. Forgo- ing the development payoffs from urbanization In addition to ensuring that the fundamen- and global integration would be a consequence tals support growth and that labor policies are of falling off the cliff. This is not necessarily an adequate, decision makers can help realize the argument for minimum regulation. There is also development payoffs that come from jobs. Some scope for arrangements strengthening spatial jobs do more than others for living standards, coordination, and thus increasing efficiency, as productivity, and social cohesion. What those suggested by China’s recent experience with col- jobs are depends on the country context—its lective bargaining. level of development, demography, endow- At the other end of the plateau, the absence ments, and institutions. In some circumstances, of mechanisms for voice and protection for there will be no constraints to the emergence of those who do not work for an employer, or do so good jobs for development, and no specific pol- in the informal sector, is also a concern. Extend- icy will be needed. In others, governments can ing voice for workers who are often among the support the private sector in creating more of poorest may result in higher living standards. these jobs. Sometimes this can be achieved by re- Limiting abuses by employment intermediar- moving constraints that impede the creation of ies should enhance efficiency, and building in- jobs with high development payoffs. When this clusive social protection systems can contribute is not possible, policies can be more proactive to greater social cohesion. The experience of and bypass the constraints, provided that the India’s Self Employed Women’s Association and gains to society from doing so outweigh the cost. 28 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 F I G U R E 19 A decision tree can help set policy priorities No intervention is needed. Remove the Step 4 constraints. Step 1 Can the constraints YES What are good jobs be removed? for development? O set NO the constraints. Are there enough YES Can the constraints YES Can the constraints YES of these jobs? be identi ed? be o set? Design NO NO NO engagement strategy. Step 2 Step 3 Step 5 Source: World Development Report 2013 team. A simple approach to setting policy priorities In the absence of gaps of this sort, it is difficult follows five steps (figure 19): to justify government interventions beyond establishing the fundamentals and adopting • Step one: What are good jobs for development? adequate labor policies. Assessing the development payoffs from Data and analysis can be used to iden- jobs in a particular country context is the first tify misaligned incentives, indicated by a step in identifying priorities. The nature of gap between the individual and the social those jobs varies with the characteristics of value of jobs. Several research areas deal with the country, including its phase of develop- these gaps. For instance, the tools of pub- ment, demography, endowments, and insti- lic finance can measure the tax burden that tutions. Jobs challenges are not the same in applies to capital and labor and assess the cross- agrarian economies, resource-rich countries, subsidization between individuals or firms. conflict-affected countries, or in countries The methods of labor economics can uncover with high youth unemployment. And the jobs gaps between the actual earnings of specific with the greatest development impact differ groups of workers and their potential earnings, as well, resulting in diverse jobs agendas. or between the social and individual returns to • Step two: Are there enough of these jobs? A schooling. Poverty analyses help in identifying country may or may not face constraints in the kind of jobs that are more likely to provide creating good jobs for development. For ex- opportunities to the poor, or the locations ample, light manufacturing can offer employ- where job creation would have a greater im- ment opportunities for women, with signifi- pact on reducing poverty. Productivity stud- cant impacts on poverty. If a boom is under ies allow for quantifying the spillovers from way, the development value of new manufac- employment in foreign-owned investment turing jobs might materialize. But it might companies, or in cities. Environmental studies not if, for example, inadequate urbanization shed light on the carbon footprint and pollu- policies limit the establishment of new firms. tion created by various types of jobs. And val- Moving jobs center stage 29 ues surveys can discover which types of jobs But there are cases when constraints can nei- provide social networks and social identity. ther be removed nor offset. An engagement strat- egy involving a deeper analysis of the options • Step three: Can the constraints be identified? and buy-in by key stakeholders is needed then. The gaps between the individual and social Policy making to remove or offset constraints values of specific types of jobs indicate un- needs to be selective and supported by good exploited spillovers from jobs. The gaps typi- public finance principles. The costs and benefits cally arise from market imperfections and in- of policy options need to be assessed, but calcu- stitutional failures that cause people to work lations are different when the overall develop- in jobs that are suboptimal from a social point ment impact is the guiding objective. An em- of view, lead firms to create jobs that are not ployment program to demobilize ex-combatants as good for development as they should be, or in a conflict-affected country could be assessed connect people less through jobs than would in terms of whether the earnings gains of par- be socially desirable. But identifying those ticipants justify the program costs, but a full constraints is not always easy. For instance, accounting should also incorporate the poten- a broad set of cultural, social, and economic tially positive effects from reintegration and forces may result in insufficient employment peace building. In the Democratic Republic of opportunities for women. Similarly, the ob- Congo, the cost of an integration program for stacles to more jobs in cities could be in the ex-combatants was about US$800 per benefi- land market, or in the institutional arrange- ciary.110 Such a program would likely be judged ments to coordinate urban development, as cost inefficient by traditional standards. or in the ability to raise revenue to finance Whether or not it is still worth implementing infrastructure. depends on the value policy makers attach to so- cial cohesion benefits. These benefits should be • Step four: Can the constraints be removed? If stated for the policy decision to be transparent. the institutional failures and market imper- fections leading to misaligned incentives can be identified, reforms should be considered. It Diverse jobs agendas, diverse policy is a good economic principle to target reforms priorities on the failures and imperfections at the root Some countries have successfully set policy to of the problem. Where reforms are technically bring out the development payoffs from jobs, in and politically feasible, policy makers can di- ways that provide a model to others. rectly tackle the major constraints hindering As an agrarian country, in the 1990s Viet- the creation of more good jobs for develop- nam concentrated on increasing productivity ment by the private sector. in agriculture, freeing labor to work in rural off-farm employment and eventually support- • Step five: Can the constraints be offset? Reforms ing migration to cities. In 1993, more than 70 might not be feasible, technically or politically. percent of employment was in agriculture, 58 Or perhaps the constraints for jobs are not percent of the population lived in poverty, and identifiable. An alternative then is to adopt famine was still a real concern.111 Two decades offsetting policies that can restore the incen- later, Vietnam is the second-largest exporter tives for job creation. For instance, if a dif- of rice and coffee; the largest exporter of black fuse but entrenched set of norms and beliefs pepper and cashew nuts; and a top exporter of makes it difficult for women to work, efforts tea, rubber, and seafood products. Poverty has could aim at increasing their employability declined dramatically. Combined with a strong through targeted investments in social and emphasis on agricultural extension, land reform physical infrastructure (box 1). Similarly, if and deregulation led to rapidly growing agri- politically charged regulations slow down the cultural productivity on very small farm plots. reallocation of labor toward more productive These policies were part of a broader package activities, urban infrastructure and logistics of reforms, or Doi Moi, that took Vietnam from could enhance the attractiveness of jobs in central planning to a market economy with a cities and jobs connected to world markets. socialist orientation.112 Policies also aimed at 30 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 1 How does women’s labor force participation increase? Some developing countries have experienced important increases returns to their earnings. These investments can be categorized into in women’s labor participation over a relatively short period of time. three groups. They can address shortages in the availability of ser- Nowhere has the change been faster than in Latin America. Since vices (such as lack of electricity or daycare facilities) that force women the 1980s, more than 70 million women have entered the labor to allocate large amounts of time to home production. They can force, raising the female labor participation rate from 36 percent to make it easier for women to accumulate productive assets, such 43 percent. In Colombia, the rate increased from 47 percent in 1984 as education, capital, and land, facilitating their entry into high- to 65 percent in 2006. By contrast, in the Middle East and North productivity market activities. And they can remove norms or regula- Africa, women’s labor force participation has only grown by 0.17 tions that imply biased or even discriminatory practices, preventing percentage points per year over the last three decades. women from having equal employment opportunities. Recent research attributes this rapid transformation to increases There are successful experiences with targeted investments in labor force participation among married or cohabiting women and interventions of each of these three sorts. Public provision or with children, rather than to demographics, education, or business subsidization of child care can reduce the costs women incur at cycles. Changes in social attitudes contributed to the transforma- home when they engage in market work. Examples include pub- tion, but this is a complex area with limited scope—and justifica- licly provided or subsidized day care such as Estancias Infantiles in tion—for direct policy intervention. For instance, women’s partici- Mexico, Hogares Comunitarios in Colombia, and similar programs pation rates are very low in the West Bank and Gaza, particularly in Argentina and Brazil. Improvements in infrastructure services— among married women. But this cannot be mechanically attributed especially in water and electricity—can free up women’s time to religion, as countries like Indonesia have high participation rates. spent on domestic and care work. Electrification in rural South Other social norms and regulations prevent women from participat- Africa, for instance, has increased women’s labor force participa- ing, despite their willingness and capacity to do so. tion by about 9 percent. Correcting biases in service delivery insti- While the scope to influence social attitudes is limited, evidence tutions, such as the workings of government land distribution and suggests that public policies and programs in other areas have an registration schemes, allows women to own and inherit assets. important role to play. It also suggests that a combination of tar- Finally, the use of active labor market policies, the promotion of geted investments and interventions in social and physical infra- networks, and the removal of discriminatory regulations are impor- structure can modify women’s labor force participation and the tant to make work more rewarding for women. Sources: World Development Report 2013 team based on Amador and others 2011, Chioda 2012, and World Bank 2011d. creating employment opportunities outside ag- expressed satisfaction with their social integra- riculture. The country opened to foreign inves- tion, and 85 percent of community members tors, first in natural resource exploitation and felt there was trust between the two groups.115 light manufacturing, and then more broadly in While ex-combatants were only a small share of the context of its accession to the World Trade Rwanda’s population of 10 million, their reinte- Organization in 2007. Registered FDI increased gration had payoffs for social cohesion. Rwanda fourfold in just two years, from 1992 to 1994; has built on this start by rejuvenating the private over the past five years, FDI inflows exceeded 8 sector through reforms of institutions and busi- percent of GDP.113 ness regulations.116 The coffee industry has cre- Rwanda, a conflict-affected country, has re- ated thousands of new jobs.117 bounded after the ethnic conflict and destruction Chile, a resource-rich country, has managed of the mid-1990s. By 2000, Rwanda’s economy its copper riches in a way compatible with job had returned to precrisis levels as a result of the creation in nonresource sectors. Home to more cessation of conflict as well as an aggressive pack- than a quarter of the world’s copper reserves, age of reforms.114 Growth has continued, reach- Chile diversified its exports and its economy ing an estimated 8.8 percent in 2011, and the while effectively managing resource-related poverty rate fell by 12 percentage points between risks such as currency appreciation and infla- 2005 and 2010. In the wake of the conflict, the tion. Unemployment fell to single digits from government supported the reintegration and de- around 20 percent in the early 1980s.118 A re- mobilization of more than 54,000 former com- source stabilization fund (since 1987) together batants. In 2012, 73 percent of ex-combatants with a transparent fiscal rule (since 1999) al- Moving jobs center stage 31 lowed the country to save for difficult times and New Zealand in 2007 to provide employment avoid a loss of competitiveness. Governance re- opportunities through migration, leading to forms in all areas of public sector management higher remittances, improved knowledge of promoted accountability and transparency. An agricultural techniques, computer literacy, active export-oriented growth policy, including and English-language skills.125 Brazil provides the welcoming of foreign investment, supported an example of a rapidly formalizing country. productivity spillovers from jobs connected to Over the past decade, job creation in the for- global markets. Competitive innovation funds mal sector has been three times as rapid as in for nonmineral export sectors, especially in the informal sector. Just in the five years lead- agribusiness, have broadened the export base.119 ing up to the crisis, the formal share of total The public budget boosted education spending, employment increased by about 5 percentage which almost doubled between 1990 and 2009, points.126 Non-contributory social protection leading to an unprecedented expansion of sec- programs such as Bolsa Familia, a simplifica- ondary and tertiary education.120 tion of tax rules for small business, increased Slovenia has successfully tackled its very high incentives for firms to formalize their work- youth unemployment rate, reducing the ratio of ers, and improved enforcement of tax and youth to adult unemployment from three in labor regulations contributed to this success. the 1990s to around two today.121 The success Poland, an aging society, has seen its employ- in reducing youth unemployment cannot be ment ratio increase from 60 percent in 2006 to attributed to spending on active labor market 65 percent in 2009. This was due to changes in programs (about average for transition coun- the application of eligibility rules of disabil- tries), liberalizing the labor market (rules re- ity pensions, and pension reforms adjusting main more restrictive than the average in de- the level of benefits down as life expectancy veloped countries), or low minimum wages increases. In 2012, a new wave of pension re- (still on the high side).122 Potential distortions forms raised the retirement age to 67 for men from these policies seem to be somewhat off- and women from the current 65 for men and set, however, by a model of consensus-based 60 for women.127 decision making whereby trade unions and employer organizations, with broad coverage, Connected jobs agendas: Global set wages that respond well to macroeconomic partnerships for jobs trends and sectoral productivity.123 Sustained growth before the global crisis is ultimately Policies for jobs in one country can have spill- responsible for much of Slovenia’s decline in overs to other countries, both positive and nega- youth unemployment. Taking advantage of tive. An important issue is whether international European integration, the economy success- coordination mechanisms could influence gov- fully restructured its export sector. Very good ernment decisions to enhance the positive spill- infrastructure and a fairly well-skilled work- overs and mitigate the negative. Several areas force helped as well. lend themselves to more and better coordination. Examples of successful policies can actu- Rights and standards. Cross-border mecha- ally be found across the entire typology of jobs nisms exist to set standards and provide chan- challenges (figure 20). As an urbanizing coun- nels for improving compliance with rights. ILO try, Korea carefully designed and phased poli- conventions can influence domestic legislation cies to accompany the transition of jobs from and be a channel for voice and coordination in- agriculture to light manufacturing and then ternationally, as demonstrated by the process of to industries with higher value added.124 Land adopting the conventions for home-based and development programs were established first, domestic workers. The support for core labor followed by a land-use regulation system, and standards in the 1998 Declaration on Funda- then by comprehensive urban planning. Hous- mental Principles and Rights at Work suggests ing and transportation policies held the dis- that countries respond to pressure from the in- economies of urbanization in check. Tonga, a ternational community.128 Yet the pressure only small island nation, is actively using the Recog- goes so far. The persistence of forced labor, chil- nized Seasonal Employer program launched by dren working in hazardous conditions, discrimi- 32 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 FIGURE 20 Which countries succeeded at addressing their jobs challenges and how? Jobs challenge Which countries and which policies? Agrarian Vietnam economies Land reform, agricultural extension, and market incentives Conflict-affected Rwanda countries Reintegration of former combatants and business reforms Urbanizing Korea, Rep. countries Land-use policies and comprehensive urban planning Resource-rich Chile countries Fiscal stability rules and export-oriented policies Small island Tonga nations Active use of return migration agreements Countries with high Slovenia youth unemployment Competition in product markets through trade integration Formalizing Brazil countries Noncontributory programs, rules simplified and enforced Aging Poland societies Disability and pension reform, higher retirement age Source: World Development Report 2013 team. nation, and lack of voice suggest that ratification nied by two projects, one to build capacity for on its own is not sufficient. monitoring working conditions in garment fac- Trade agreements are a potential instrument tories and one to support an arbitration council for international coordination on rights. They to resolve collective labor disputes.129 can incorporate incentives for attention to voice Beyond the initiatives of governments and working conditions by linking trade access through conventions and trade agreements, a to the adoption and enforcement of labor laws growing emphasis is being placed on private and standards. Whether linking rights to trade sector accountability and the broader corporate actually leads to better outcomes for workers on social responsibility (CSR) agenda, whereby either side of a trade agreement is less clear. La- companies voluntarily bring social and envi- bor clauses can be used as a protectionist tool, ronmental concerns into their operations.130 undermining trade and employment opportu- Codes of conduct are most likely to be adopted nities in developing countries. Moreover, in the by companies based in the European Union and absence of capacity and institutions to moni- North America, which then make engagement tor and enforce compliance, trade agreements with labor standards a condition of business on their own can be weak instruments. For with suppliers. But there is limited evidence on instance, Cambodia’s successful bilateral trade the extent to which codes of conduct translate agreement with the United States was accompa- into improved enforcement of standards. Be- Moving jobs center stage 33 cause of the complexity of global supply chains, can be more mixed. They are clearly positive seasonal and temporary workers are outside the when cell phones connect people (and especially reach of CSR frameworks. Workers outside of the poor) to product markets, to employment global supply chains are not covered.131 To be ef- opportunities, or to government services. They fective, CSR efforts should focus more on build- can be negative when the disappearance of retail ing the capacity of local firms to comply and the trade leads to the decline of urban centers and capacity of labor inspectorates to do their work. affects the livelihoods of older shopkeepers who Trade and investment. International trade may not find alternative employment easily. An in goods has been gradually liberalized over adequate sequencing of services liberalization time, and the notion that freer trade is mutu- and domestic regulatory reform is needed to ally beneficial for the transacting parties is manage these tradeoffs, and, in doing so, ad- now widely shared. However, many developing dress the concerns of developing countries.136 countries still lack the competitiveness to har- International collaboration can fill the knowl- ness the benefits from global integration. Direct edge gaps and facilitate implementation.137 assistance to reduce logistic costs and improve International agreements can also promote the competitiveness of firms and farms is thus global public goods. One case in point is gen- a priority. Aid for trade has increased substan- der equality. Trade is not gender neutral, imply- tially and now accounts for about a third of ing that liberalization changes women’s access total aid to developing countries. But there is to jobs. Traditionally men were more likely to scope for making the assistance more effective, have “brawn jobs,” involving stronger physi- by focusing on the export activities most suited cal requirements, while “brain jobs” involving to address the specific jobs challenges that re- dexterity, attention, or communication—from cipient countries face. Increasing the involve- stitching garments to processing data—present ment by the private sector would also enhance more opportunities for women. Call centers in the effectiveness of the assistance.132 Delhi and Mumbai employ more than 1 million In contrast to trade in goods, progress in people, most of them women. Preferential ac- services liberalization has been slow, at both cess for imports from sectors with more “brain the multilateral and the regional levels. Offers jobs” can thus create employment opportunities to the Doha Round currently being negotiated for women in countries where gender equality promise greater security in access to markets is far from attained.138 But as countries move but no additional liberalization compared to up the ladder of global value chains, gender the policies in force.133 Services are character- opportunities can change. This was the case in ized by well-known market imperfections— Malaysia, where the share of women working in from network externalities in infrastructure to manufacturing declined in the mid-1980s.139 asymmetric information and moral hazard in Migration. In contrast to the movement of finance—and are thus subject to more perva- goods and services across borders, few interna- sive regulations. Liberalizing trade in services tional agreements pertain to migration in gen- requires adequate domestic regulation. Setting eral and the migration of workers in particular. up markets for electricity, or cushioning the so- Those in existence have limited coverage. ILO cial impacts of large distributors on retail trade, conventions 97 and 143, in force since 1952 and is challenging.134 Not surprisingly, liberalization 1978, refer to the prevention of discrimination of services is much less advanced in developing or abusive conditions against migrants and call countries than in industrial countries.135 for penalties and sanctions against those who The productivity gains from liberalizing promote clandestine or illegal migration. But services would be substantial. Many services they have been ratified by only 49 and 23 coun- are inputs into the production process. Elec- tries, respectively. Liberalizing the provision of tricity, finance, telecommunications, and trade services by natural persons, in line with Mode 4 have a direct impact on business costs, affecting of the General Agreement on Trade in Services the competitiveness of downstream sectors. By (GATS), is not on the agenda of many countries, boosting job creation and raising labor earn- industrial or developing. And the United Na- ings, these productivity gains should also lead tions international convention on the rights of to improved living standards. Social impacts migrant workers and their families, which en- 34 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 tered into force in 2003, has been ratified by only tionship between jobs and movements in and 22 countries—mostly sending countries. out of poverty; the dynamics of micro- and While migration occurs across borders, leg- small enterprises in the informal sector; and the islation is mostly driven by country-specific links between jobs and human behaviors and laws. This is an area where a global perspec- norms. Research on the magnitude of spillovers tive is warranted, but views on what needs to from jobs could identify good jobs for devel- be done are diverse. One view focuses on the opment tailored to country contexts. Another large earnings differentials between countries, important research area concerns the impact of suggesting that global productivity and pov- jobs on the acquisition of cognitive and non- erty reduction would accelerate enormously cognitive skills, and how this impact varies de- with the free movement of labor.140 Another pending on the characteristics of the job and the perspective focuses instead on national secu- person who holds it. Similarly, more evidence rity and the protection of communities and on productivity spillovers from jobs across cit- their cultures, implying the need for barriers ies with different characteristics would have a to contain migration. Yet another highlights high value for development policy. Estimates of the moral imperative of protecting the human the environmental impacts of different types of rights of migrants, no matter their legal status, jobs are, today, scarce at best. In the area of la- and giving shelter to those who suffer any form bor policies, more empirical work is needed on of persecution.141 None of these views suffices, the boundaries of the plateau, depending on the however, because any one of them alone cannot characteristics of the country. More research is address the complex tradeoffs that migration also needed on how international trade, invest- poses for policy design. ment across borders, and migration affect the In many instances, both sending and re- composition of employment across countries. ceiving countries can benefit from migration More solid knowledge on the sequencing of in- through a collaborative approach. Most abuses ternational commitments and domestic policies perpetrated by traffickers, firms, or workers related to services could address the reluctance are associated with illegal migrant flows, so the of developing countries to make further prog- formalization of these flows is a basic tool for ress in the direction of liberalization and reap protecting the rights of migrant workers. This the gains from global integration. formalization cannot be enforced without the Setting policy priorities for jobs needs to be cooperation of institutions in both sending and based on reliable data. Given that a large share of receiving countries. That is why bilateral agree- the people at work in developing countries are ments are also needed, with provisions for quo- not wage employees, and that even fewer have a tas by occupation, industry, region, and dura- formal sector job, the measurement of employ- tion of stay.142 The agreements can distinguish ment is challenging. Determining which jobs between temporary movements of workers have the greatest payoffs for poverty reduction and steps to permanent migration, with condi- requires linking information on a household’s tions and protocols to go from one to another. income or consumption with information on They can include considerations about taxa- the employment of its members. Understand- tion, social security, and even financing higher ing which economic units create more jobs, or education—a special concern in the case of whether labor reallocation leads to substantial “talent” migration. These agreements can design growth rather than just churning, requires in- incentives so that stakeholders in both sending formation on the inputs and outputs of very and receiving countries have an interest in en- diverse production units. Assessing how the forcing the provisions.143 composition of employment affects trust and willingness to participate in society requires in- formation on individual values and behaviors. Jobs are center stage, but where are The paucity of empirical analyses on the em- the numbers? ployment impact of the global crisis in devel- oping countries and the difficulty of compar- A significant research and data agenda lies ing measures of informal employment across ahead. Further analysis is needed on the rela- countries suggest that data quality and avail- Moving jobs center stage 35 ability remain a constraint for policy making. standardized and include informal firms and Much effort goes into measuring unemploy- microenterprises in establishment surveys. Such ment rates, and measuring them often.144 But an approach would move jobs center stage. open unemployment is not a very telling in- dicator in countries where a large fraction of the labor force is not salaried. The Millennium * * * Development Goal on eradicating poverty lists four indicators to monitor progress toward the Countries have a choice in responding to the jobs employment target, defined as “achieving full challenges of demographics, structural shifts, and productive employment and decent work technological progress, and periodic macroeco- for all, including women and young people.” nomic crises. They can simply pursue growth, But these indicators only partially capture ad- ensure that the labor market functions well, and vances in the quantity and quality of jobs in the hope that jobs will follow. Or they can recog- developing world.145 nize that growth does not mechanically deliver Today’s challenges for labor statistics can be the jobs that do most for development. Jobs for regrouped into three key areas: data gaps; data women, jobs in cities and in global value chains, quality issues; and planning, coordination, and and jobs providing voice and protection for the communication issues. Data gaps concern coun- most vulnerable in society may come high on tries where labor statistics do not exist at all or the list. The precise nature of the jobs challenge are collected only sporadically. Whenever such depends on a country’s geography, endowments, statistics exist, data quality is a concern through- institutions, and level of development. What is out the statistical production chain, from the common to all is the need to remedy the insti- use of appropriate definitions to questionnaire tutional failures and market imperfections that design, from sampling frame to interviewer prevent the private sector from creating more processes, and from data entry and coding to of those good jobs for development. Coun- verification and estimation procedures. Plan- tries can then return to the difficult questions ning, coordination, and communication issues posed at the outset. For each of them, there is arise when different institutions are responsible a conventional wisdom that practitioners do for collecting and disseminating the data.146 not consider to be totally satisfactory. The jobs A quarter of a century ago, a renewed em- lens in development does not lead to a flat rejec- phasis on poverty reduction as the key objec- tion of the conventional wisdom, but to a quali- tive of development policy launched a long- fication of when it holds and when it does not. term data effort. Across the world, information In short, countries can leave themselves open on household living standards was collected to small gains in living standards, slow produc- through standardized surveys. The sampling tivity growth, and fractious societies. Or, by ad- methods and the variable definitions used were dressing their jobs challenges, they can enjoy duly documented. And the data and documen- a self-reinforcing pattern of more prosperous tation were made available to researchers and livelihoods, rising productivity, and the stron- practitioners whenever possible. For jobs, em- ger social cohesion that comes from improving ployment modules attached to household sur- employment opportunities and fairness in ac- veys used for poverty analyses would need to be cess to jobs. QUESTIONS When is the conventional wisdom right? Growth strategies or jobs strategies? The conventional wisdom preneurial potential can thus make a substantial difference is to focus on growth as a precondition for continued in living standards and productivity. increases in living standards and strengthened social cohe- sion. But lags and gaps among the three transformations of Can policies contribute to social cohesion? The conventional living standards, productivity, and social cohesion are not wisdom is that a lack of jobs is detrimental to social cohesion, uncommon. The impact of growth on poverty reduction var- but other than ensuring full employment there is little that ies considerably across countries. And in some cases, growth governments can or should do. Yet open unemployment is is not accompanied by increased social cohesion—even not the main challenge in many countries, as the characteris- though poverty may fall and living standards improve for tics of jobs also matter. While not all jobs can positively affect some, the expectations of others remain unfulfilled. The social cohesion, those that shape social identity, build net- employment intensity of different sectors and fairness in works— particularly for excluded groups— and increase fair- access to employment opportunities matter as well. It is thus ness can help defuse tensions and support peaceful collective jobs that bring together the three transformations. decision making. Tradeoffs among improving living standards, accelerating Measures that support inclusion, extend access to voice productivity growth, and fostering social cohesion arguably and rights, and improve transparency and accountability in reflect a measurement problem, more than a real choice. If the labor market can increase the extent to which people per- growth indicators captured the intangible social benefits ceive that they have a stake in society. This perception can be from jobs, from lower poverty to greater social cohesion, a especially critical when risks of social unrest from youth growth strategy and a jobs strategy would be equivalent. But unemployment and conflict are high. Employment programs a growth strategy may not pay enough attention to female can undermine social cohesion if they have weak governance employment, or to employment in secondary cities, or to or divisive targeting, but can have positive effects when they idleness among youth. When potentially important spill- are well-designed. Jobs policies for youth at risk can incorpo- overs from jobs are not realized, a jobs strategy may provide rate counseling and training in conflict resolution. Public more useful insights. works programs can facilitate community participation and engagement between citizens and local authorities. Policies Can entrepreneurship be fostered? The conventional wisdom can thus focus not only on the number of jobs, but on expand- is that most micro- and small enterprises in developing ing job opportunities for excluded groups. countries are just forms of survivorship, with limited chances to grow. But self-employed workers account for a large share Skills or jobs—what comes first? The conventional wisdom is of employment in developing countries. Even if only a frac- that investing in skills will lead to job creation and to higher tion of them succeeded in building a viable business, the productivity and labor income. High unemployment and aggregate impact on living standards and productivity would skills mismatches are often attributed to shortcomings in be substantial. Moreover, in developing countries many large education and training systems. But in reality they can also enterprises are born large, often the result of government result from market distortions, which send the wrong signals support or privileged access to finance and information. to the education system or lead to a lack of dynamism in pri- Breaking privilege is one more reason why the success of vate firms. In such situations, massive investments in train- micro- and small enterprises is so important. ing systems, as seen in many parts of the world, might show Management practices are important in explaining firm disappointing results as hoped-for job outcomes do not productivity, even in small and medium-size firms. The materialize. capacity to acquire skills and to apply them to business is one A core set of basic skills, both cognitive and social, is of the most important characteristics of successful entrepre- necessary for productive employment, and they cannot just neurs. Yet markets fail to nurture entrepreneurship, because be acquired on the job. Without such generic skills, the knowledge spillovers imply that some of the returns to prospects of improving employment opportunities and acquiring or developing new managerial ideas and knowl- earnings are thin. Skills are also critical for countries to edge are appropriated by others. And the potential to absorb move up the value-added ladder, as they can ignite innova- management practices differs greatly among beneficiaries. tion, produce the benefits of mutual learning, and hence Observable characteristics of small business owners can pre- lead to job creation themselves. But in between, much dict entrepreneurial potential, and programs to upgrade learning can happen through work: job opportunities can their managerial capacity have been shown to make a differ- shape social skills and create demand for education and ence. Programs targeted to small business owners with entre- training. Learning on the job leads to significantly higher Moving jobs center stage 37 earnings in many settings, with the return to one year of Protecting workers or protecting jobs? The conventional wis- work experience being around a third to half of the return dom is that policies that protect people are preferable, because to an additional year of schooling. they mitigate welfare losses while at the same time allowing the reallocation of labor, hence supporting creative destruc- A targeted investment climate? The conventional wisdom is tion. Protecting jobs that are no longer economically viable that a level playing field is preferable because governments through government transfers and employment protection do not have enough information to pick winners and tar- legislation freezes an inefficient allocation of resources. Pro- geting can be captured by interest groups. But given the tecting jobs also entails a high risk of capture. It may lead to often limited fiscal space and administrative capacity of enduringly unproductive jobs, stifle technological advance, developing countries, creating an enabling business envi- prevent structural change, and eventually undermine growth. ronment across the board can be challenging, and the rele- However, there are times when many jobs are lost or vant question is how policy priorities should be set. The threatened at once and few are being created. There are also conventional wisdom views targeting with a skepticism jobs generating substantial productivity spillovers, whose that stems from failed experiences with industrial policy. disappearance in large numbers can lead to ghost towns and However, targeting may not necessarily be aimed at indus- depressed regions. Protecting people should have primacy if trial sectors. Supporting job creation in sectors with high shocks are idiosyncratic—if the employment dislocation is rates of female employment, or productivity gains in small- local and limited and if turnover continues to be the norm. holder farming, or more jobs connected to global value Protecting jobs may be warranted in times of systemic crises chains may have high development payoffs depending on or major economic restructuring. But job protection policies country contexts. can create permanent inefficiency, especially in countries When there is clarity about where the good jobs for devel- with weak institutions, making it indispensable to establish opment are, and there is sufficient information to under- and enforce trigger rules and sunset clauses that define the stand what can be done to support the creation of those jobs, extent and size of the protection. a targeted investment climate may be warranted. But this is provided that targeted interventions can be designed in a way How to accelerate the reallocation of workers? The conven- that makes them resilient to capture by interest groups. The tional wisdom is to focus policy on removing the labor risk of capture is easier to contain when the number of market rigidities that keep workers in firms or areas with beneficiaries is very large, such as the case of farmers, urban low productivity. But reforms may not always be politically businesses, and female micro-entrepreneurs. It is much feasible. In India, complex and cumbersome labor market higher in the case of industrial policy. institutions have unambiguously negative effects on eco- nomic efficiency but these institutions have remained largely Competing for jobs? The conventional wisdom is that the num- untouched for 60 years. ber of jobs is not finite, so that policies for jobs in one country Tolerance for the avoidance or evasion of distortive regu- cannot be harmful to other countries. Indeed, in the medium lation can help contain their cost but not ensure dynamism. to long term, total employment is roughly determined by the In India, widespread noncompliance has been the dominant size of the labor force. But policies may alter global trade, response to cumbersome labor regulations. However, labor- investment, and migration flows, affecting the composition of intensive manufacturing sectors remain sluggish despite employment. The concern is that the share of good jobs for buoyant performance of the overall economy. Other coun- development may decline in one country as it increases in tries with similarly stringent regulatory obstacles have another. Policies aimed at capturing a larger global share of accomplished more efficiency-enhancing labor reallocation the jobs with the largest productive spillovers can reduce well- by actively taking advantage of productivity spillovers from being abroad, even if global well-being increases. jobs in industrial clusters, dynamic cities, or global value However, not all efforts to support job creation amount to chains to make the regulations less binding. In Sri Lanka, beggar-thy-neighbor policies. Whether they do so depends on the development of export processing zones (EPZs) drove the type of instruments used and the nature of the spillovers the takeoff of the garment industry. In Brazil, the surge of from jobs. A key question is what purpose policies serve. Poli- internal migration is closely associated with the country’s cies that aim to improve compliance with rights, prosecuting continuing integration into the global economy and a devel- forced labor and harmful forms of child labor, amount to opment policy that favors clusters and agglomeration. In providing a global public good. On the other hand, policies China, labor reallocation is rooted in the development of that aim at reaping the benefits from productive externalities competitive cities, supported by regional competition and may adversely affect other countries, especially when they experimentation. A strategic focus on enhancing productiv- undermine an open trading system and are not aligned with a ity spillovers from jobs, through urbanization and global country’s dynamic comparative advantage. integration, can overcome the labor rigidity. 38 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Jobs drive They should not be an development afterthought of growth It is not just the Some have greater number of jobs development payoffs Jobs are created by Public action the private sector sets the stage Many jobs in developing countries are Informal in farms and very small firms is normal Some work is Rights should not unacceptable be overlooked One size does Jobs challenges vary not fit all across countries Get the policy They have a bearing regardless fundamentals right of the jobs challenge The main constraints to Labor policies matter job creation may lie elsewhere less than assumed Set priorities for Focus on the jobs with public action greater development payoffs Data and cooperation on cross-border A global agenda investments and migration lag for jobs is needed Moving jobs center stage 39 Notes 23. Nabli, Silva-Jáuregui, and Faruk Aysan 2008. 24. Assaad 2012; Assaad and Barsoum 2007. 1. Article 2, ILO 2007. Also see UN 2009. 25. Mryyan 2012; Gatti and others 2012; Stampini 2. Ghose, Majid, and Ernst 2008. and Verdier-Choucane 2011; ILO 2011. 3. Gindling and Newhouse 2012 for the World 26. Based on an update by the WDR team of Chen Development Report 2013. and Ravallion (2010). 4. Kanbur 2009. 27. World Bank 2011b. 5. International Labour Organization, Depart- 28. ILO 2012a. ment of Statistics, http://laborsta.ilo.org/sti/ 29. ILO and World Bank 2012. sti_E.html. 30. Bell and Blanchflower 2011; Farber 2011. 6. Lyon, Rosati, and Guarcello 2012 for the World 31. World Bank 2011c. Development Report 2013. 32. Ravallion 2009. 7. World Bank 2006b. 33. Inchauste 2012 for the World Development Re- 8. World Development Report 2013 team esti- port 2013. mates based on data from the International 34. Baulch 2011; Fields and others 2003. Labour Organization, http://laborsta.ilo.org/ 35. Narayan, Pritchett, and Kapoor 2009. applv8/data/EAPEP/eapep_E.html, and World 36. Azevedo and others 2012 for the World Devel- Development Indicators, http:/data-worldbank opment Report 2013. This report uses methods .org/data/catalog/world-development- developed by authors, including Paes de Barros indicators. and others (2006) and Bourguignon and Fer- 9. United Nations 2011. reira (2005). 10. Lin 2012; Pagés 2010; World Bank 1992. 37. Blanchflower and Oswald 2011. 11. European Centre for the Development of Voca- 38. Haltiwanger 2011; Nelson 1981; Schumpeter tional Training 2008. 1934. 12. Autor and Dorn 2011; Gratton 2011; Holzer 39. Bartelsman, Haltiwanger, and Scarpetta 2009; and Lerman 2009. Davis, Haltiwanger, and Schuh 1996. 13. Feenstra 2010. 40. Bartelsman, Haltiwanger, and Scarpetta 2009. 14. Brown, Ashton, and Lauder 2010. See Selim 41. Baily, Bartelsman, and Haltiwanger 1996. 2012 for the World Development Report 2013. 42. World Development Report 2013 team 15. Goswami, Mattoo, and Sáez 2011. estimates. 16. Examples include oDesk, https://www.odesk 43. Bartelsman, Haltiwanger, and Scarpetta 2004; .com/; Babajob, http://www.babajob.com/; Brandt, Van Biesebroeck, and Zhang 2012; Lin Google Trader (for example, http://www 2012; Rutkowski and others 2005. .google.co.ug/africa/trader/search?cat=jobs); 44. World Development Report 2013 team esti- and SoukTel, http://www.souktel.org/. mates, and Dutz and others 2011. 17. TeamLease 2010. 45. Ayyagari, Demirgüç-Kunt, and Maksimovic 18. A.T. Kearney 2011. 2011; IFC, forthcoming. 19. UNESCO Institute of Statistics, http://stats 46. South Africa is excluded from this estimate be- .uis.unesco.org/unesco/TableViewer/tableView cause it is an outlier, with average farm size of .aspx?ReportId=175. 288 hectares. 20. WDR team estimates of the top 20 percent 47. Hsieh and Klenow 2009; Pagés 2010. of ratings among countries in the 2009 Pro- 48. Banerjee and Duflo 2011; Fox and Sohnesen gramme for International Student Assessment 2012; Schoar 2010; Sutton and Kellow 2010. of 15 year-olds. See http://www.pisa.oecd.org. 49. de Soto 1989; Perry and others 2007. 21. International Labour Office database on labor 50. Grimm, Kruger, and Lay 2011; McKenzie and statistics, Laborsta, http://laborsta.ilo.org/e. Woodruff 2008. 22. Private sector employment refers here to “pri- 51. Mertens 2011; Witze 2010. vate firms” and to “individuals” according to the 52. Sandefur 2010. official Chinese classsification. The former are 53. Hsieh and Klenow 2011. defined as for-profit units invested in and estab- 54. Bartelsman, Haltiwanger, and Scarpetta 2009; lished by natural persons or controlled by per- Haltiwanger 2011; Hsieh and Klenow 2009; sons using more than seven workers. The latter Syverson 2011. includes units that hire fewer than eight workers. 55. Moser 2009, 240. Foreign-invested firms and collectives are not 56. Dani and others 1999, 3. part of the private sector in official statistics. For 57. Kilroy 2011. more details, see Kanamori and Zhao (2004). 58. Gatti and others 2012. 40 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 59. Akerlof and Kranton 2010. 98. ILO 1998. 60. Giles, Mavridis, and Witoelar 2012 for the 99. Chen and others 2012 for the World Develop- World Development Report 2013. ment Report 2013. 61. ILO 2012b. 100. Betcherman 2012. 62. ILO 2010. 101. Alatas and Cameron 2003; Arango and Pachón 63. ILO 2002. 2004; Rama 2001; SMERU Research Institute 64. Heath and Mobarak 2011. 2001. 65. Luke and Munshi 2011. 102. Haltiwanger, Scarpetta, and Schweiger 2008. 66. Alfaro and Chen 2011; Romer 1993. 103. Betcherman 2012 for the World Development 67. UNDP 2003a; UNDP 2003b. Report 2013; Freeman 2009; OECD 2006. 68. Ibarraran and others 2012. 104. Aidt and Tzannatos 2002. 69. As an example, recent World Development Re- 105. Freeman 2009. 106. Aidt and Tzannatos 2002. ports on youth (World Bank 2006b), geography 107. Card, Kluve, and Weber 2010; OECD 2006; (World Bank 2009b), conflict (World Bank Almeida and others 2012 for the World Devel- 2011a), and gender (World Bank 2011c) look at opment Report 2013. spillovers from jobs in different contexts. 108. Bird and Smart 2012; Levy 2008. 70. Glewwe 2004. 109. Bhatt 2006; Chen and others 2012 for the World 71. IOM 2010. Development Report 2013. 72. Goswami, Mattoo, and Sáez 2011. 110. World Bank 2010. Note that this unit cost is the 73. Ball, Leigh, and Loungani 2012. aggregate cost of the Multi-Country Demobi- 74. World Bank 2012, various issues. lization and Reintegration Program, including 75. Commission on Growth and Development all forms of reintegration support, not only 2008. employment. 76. Kraay 2012. 111. Glewwe 2004. 77. Elbadawi, Kaltani, and Soto 2009. 112. Rama 2009. 78. King and Levine 1993; Levine 2005. 113. World Development Indicators 2012. World 79. IFC, forthcoming. Development Indicators, World Bank, Wash- 80. Foster and Briceño-Garmendia 2010. ington, DC. http://data-worldbank.org/data- 81. Djankov, Freund, and Pham 2010; Hallward- catalog/world-developmentindicators. Driemeier, Khun-Jush, and Pritchett 2010. 114. World Bank 2007. 82. Klapper, Laeven, and Rajan 2006. 115. Rwanda Demobilization and Reintegration 83. Bruhn, 2008. Commission 2012. 84. See, for example, Psacharopoulos and Patrinos 116. Rwanda was named a top reformer by Doing (2004); Montenegro and Patrinos 2012 for the Business in 2010. World Development Report 2013. 117. Dudwick and Srinivasan, forthcoming; World 85. See, for example, Hanushek and Woessmann Bank 2011a. (2008) and Commander and Svejnar (2011) 118. World Development Indicators 2012. World on the productivity link. Structural change and Development Indicators, World Bank, Wash- poverty links are explored in Lee and Newhouse ington, DC. http://data-worldbank.org/data- catalog/world-developmentindicators. (2012) for the World Development Report 2013. 119. Consejo Nacional de Innovación 2008; World 86. Engle and others 2007; Grantham-McGregor Bank 2008. and others 2007; Heckman 2008; Walker and 120. World Bank 2006a; World Development Indi- others 2007; Young and Richardson 2007. cators 2011. World Development Indicators, 87. Engle and others 2007. World Bank, Washington, DC. http://data-world 88. Heineck and Anger 2010; Cunha, Heckman and bank.org/data-catalog/world-development Schennach 2010. indicators. 89. OECD PISA 2009, http://www.pisa.oecd.org. 121. OECD 2010. 90. IMF 2003; Rodrik 2000. 122. OECD 2009. 91. Keefer 2009; North 1981, 1990. 123. OECD 2009. 92. Acemoglu, Johnson, and Robinson 2001; North 124. Yusuf and Nabeshima 2006; Park and others 1990; Rodrik, Subramanian, and Trebbi 2004. 2011. 93. World Bank 2004. 125. See World Bank 2010; Gibson, McKenzie, and 94. World Bank 2010. Rohorua 2008. 95. World Bank 2004. 126. Fajnzylber, Maloney, and Montes-Rohas 2011; 96. World Bank 2004. OECD and ILO 2011. 97. Laeven and Woodruff 2007. 127. World Bank 2011d. Moving jobs center stage 41 128. Chau and Kanbur (2002) find evidence of a vices Location Index, 2011. Chicago: A.T. Kearney peer effect whereby ratification depends on the Global Services Location Index. number of similar countries that have already Acemoglu, Daron, Simon Johnson, and James A. Rob- ratified the convention. inson. 2001. “The Colonial Origins of Compara- 129. Adler and Hwang 2012 for the World Develop- tive Development: An Empirical Investigation.” ment Report 2013. American Economic Review 91 (5): 1369–401. 130. Levi and others 2012 for the World Develop- Adler, Daniel, and Hans Hwang. 2012. “From Law on ment Report 2013; Newitt 2012 for the World the Books to Law in Action: A Note on the Role Development Report 2013. of Regulation in the Production of Good Jobs in 131. Locke, forthcoming; Locke, Quin, and Brause Cambodia’s Garment Sector.” Background paper 2007. for the WDR 2013. 132. Hoekman 2011. Aidt, Toke, and Zafiris Tzannatos. 2002. Unions and 133. Borchert, Gootiiz and Mattoo 2011. Collective Bargaining: Economic Effects in a Global 134. François and Hoekman 2010. Environment. Washington, DC: World Bank. 135. Hoekman and Mattoo 2011. Akerlof, George A., and Rachel E. Kranton. 2010. 136. Fink, Mattoo, and Rathindran 2003; François Identity Economics: How Our Identities Shape Our and Hoekman 2010. Work, Wages, and Well-Being. Princeton, NJ: 137. Hoekman and Mattoo 2011. Princeton University Press. 138. World Bank 2011c. Alatas, Vivi, and Lisa Ann Cameron. 2003. “The Im- 139. Randriamaro 2007. pact of Minimum Wages on Employment in a 140. See, for instance, Winters and others (2002); Low Income Country: An Evaluation Using the World Bank (2005). Difference-in-Differences Approach.” Policy Re- 141. See, for instance, EFRA (2011) and Angenendt search Working Paper Series 2985, World Bank, (2012). Washington, DC. 142. Regional agreements, such as the European Alfaro, Laura, and Maggie Xiaoyang Chen. 2011. “Se- Union’s Schengen area, can also cover specific lection, Reallocation, and Knowledge Spillovers: areas such as visas or social security of migrant Identifying the Impact of Multinational Activity workers. Several Latin American countries, on Aggregate Productivity.” Paper presented at the Spain, and Portugal have been developing com- World Bank Conference on Structural Transfor- mon principles about social security rights and mation and Economic Growth, Washington, DC, regulations for migrants. October 6. 143. For a discussion on these issues, see Pritchett (2006). Almeida, Rita, David Margolis, David Robalino, and 144. Sixty-five countries produce monthly or quar- Michael Weber. 2012. “Facilitating Labor Market terly labor force surveys, whereas 116 produce Transitions and Managing Risks.” Background annual surveys. paper for the WDR 2013. 145 . The four indicators are GDP per employed Amador, Diego, Raquel Bernal and Ximena Peña person (a measure of productivity), the 2011. “The Rise in Female Participation in Co- employment-to-population rate, the propor- lombia: Fertility, Marital Status or Education?” tion of the employed population living on less Background paper for the World Development than US$1.25 a day (the so-called working Report 2012. poor), and the proportion of own-account and Angenendt, Steffen. 2012. “Migration and Social In- unremunerated workers in employed popu- clusion–Looking through the Good Jobs Lens.” In lation (also called vulnerable workers). See Moving Jobs to the Center Stage, BMZ (Bundes- United Nations Development Group 2010. ministerium fuer Wirtschaftliche Zussamenar- 146. ILO 2012c. See Kanbur and Svejnar (2009) on beit), Berlin Workshop Series. Berlin. the importance of data for labor analysis and Arango, Carlos, and Angelica Pachón. 2004. “Mini- policy mum Wages in Colombia: Holding the Middle with a Bite on the Poor.” Borradores de Economía Serie 280, Banco de la República de Colombia, References Bogotá. Artuc, Erhan, Frederic Docquier, Caglar Özden, and The word processed describes informally reproduced Chris Parsons. 2012. “Education Structure of Global works that may not be commonly available through Migration Patterns: Estimates Based on Census libraries. Data.” World Bank, Washington DC. Processed. Assaad, Ragui. 2012. “The MENA Paradox: Higher A.T. Kearney. 2011. Offshoring Opportunities amid Education but Lower Job Quality.” In Moving Jobs Economic Turbulence: A.T. Kearney Global Ser- to the Center Stage. BMZ (Bundesministerium 42 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 fuer Wirtschaftliche Zussamenarbeit), Berlin Bhatt, Ela. 2006. We Are Poor But So Many: The Workshop Series. Berlin. Story of Self-Employed Women in India. New York: ———. 1997. “The Effects of Public Sector Hir- Oxford University Press. ing and Compensation Policies on the Egyptian Bird, Richard M., and Michael Smart. 2012. “Financ- Labor Market.” World Bank Economic Review 11 ing Social Expenditures in Developing Countries: (1): 85–118. Payroll or Value Added Taxes?” International Cen- Assaad, Ragui, and Ghada Barsoum. 2007. “Youth Ex- ter for Public Policy Working Paper Series 1206, clusion in Egypt: In Search of ‘Second Chances.’ ” Andrew Young School of Policy Studies, Georgia Middle East Youth Initiative Working Paper Series State University, Atlanta. 2, Wolfensohn Center for Development, Dubai Bjørkhaug, Ingunn, Anne Hatløy, Tewodros Kebede, School of Government, Dubai. and Huafeng Zhang. 2012. “Perception of Good Autor, David H., and David Dorn. 2011. “The Growth Jobs: Colombia.” Background paper for the WDR of Low-Skill Service Jobs and the Polarization of 2013. the U.S. Labor Market.” Massachusetts Institute of Blanchflower, David G., and Andrew J. Oswald. 2011. Technology, Cambridge, MA. Processed. “International Happiness.” Working Paper Series Ayyagari, Meghana, Asli Demirgüç-Kunt, and Vojislav 16668. National Bureau of Economic Research, Maksimovic. 2011. “Firm Innovation in Emerging Cambridge, MA. Markets: The Roles of Governance and Finance.” Borchert, Ingo, Batshur Gootiiz, and Aaditya Mattoo. Journal of Financial and Quantitative Analysis 46 2011. “Services in Doha: What’s on the Table?” In (6): 1545–80. Unfinished Business: The WTO’s Doha Agenda, ed. Azevedo, João Pedro, Gabriela Inchauste, Sergio Will Martin and Aaditya Mattoo, 115–44. Lon- Olivieri, Jaime Saavedra Chanduvi, and Hernan don: London Publishing Partnership. Winkler. 2012. “Is Labor Income Responsible for Bourguignon, François, and Francisco H. G. Ferreira. Poverty Reduction? A Decomposition Approach.” 2005. “Decomposing Changes in the Distribution Background paper for the WDR 2013. of Household Incomes: Methodological Aspects.” Baily, Martin Neil, Eric J. Bartelsman, and John Halti- In The Microeconomics of Income Distribution Dy- wanger. 1996. “Downsizing and Productivity namics in East Asia and Latin America, ed. Fran- çois Bourguignon, Francisco H. G. Ferreira, and Growth: Myth or Reality?” Small Business Eco- Nora Lustig, 17–46. Washington, DC: World Bank. nomics 8 (4): 259–78. Brandt, Loren, Johannes Van Biesebroeck, and Yifan Ball, Laurence, Daniel Leigh, and Prakash Loungani. Zhang. 2012. “Creative Accounting or Creative Forthcoming. “Okun’s Law: Fit at 50?” Working Destruction? Firm-Level Productivity Growth in Paper, International Monetary Fund, Washington, Chinese Manufacturing.” Journal of Development DC. Economics 97 (2): 339–51. Banerjee, Abhijit V., and Esther Duflo. 2011. Poor Eco- Brown, Philip, David Ashton, and Hugh Lauder. nomics: A Radical Rethinking of the Way to Fight 2010. Skills Are Not Enough: The Globalization Global Poverty. New York: Public Affairs. of Knowledge and the Future of the UK Economy. Bartelsman, Eric, John Haltiwanger, and Stefano Wath upon Dearne, U.K.: U.K. Commission for Scarpetta. 2004. “Microeconomic Evidence of Employment and Skills. Creative Destruction in Industrial and Develop- Bruhn, Miriam. 2008. “License to Sell: The Effect of ing Countries.” Discussion Paper Series 1374, Business Registration Reform on Entrepreneur- Institute for the Study of Labor, Bonn. ial Activity in Mexico.” Policy Research Working ———. 2009. “Measuring and Analyzing Cross- Paper Series 4538, World Bank, Washington, DC. Country Differences in Firm Dynamics.” In Pro- Card, David, Jochen Kluve, and Andrea Weber. ducer Dynamics: New Evidence from Micro Data, 2010. “Active Labour Market Policy Evaluations: ed. Timothy Dunne, J. Bradford Jensen, and Mark A Meta-Analysis.” Economic Journal 120 (11): J. Roberts, 17–76. Cambridge, MA: National 452–77. Bureau of Economic Research. Chau, Nancy H., and Ravi Kanbur. 2001. “The Adop- Baulch, Bob, ed. 2011. Why Poverty Persists: Poverty tion of International Labor Standards Conven- Dynamics in Asia and Africa. Cheltenham, U.K.: tions: Who, When and Why?” In Brookings Trade Edward Elgar. Forum: 2001, ed. Nancy H. Chau, Ravi Kanbur, Bell, David N. F., and David G. Blanchflower. 2011. Ann E. Harrison, and Peter Morici, 113–56. Wash- “The Crisis, Policy Reactions and Attitudes to ington, DC: Brookings Institution. Globalization and Jobs.” Discussion Paper Series Chen, Martha, Chris Bonner, Mahendra Chetty, Lucia 5680, Institute for the Study of Labor, Bonn. Fernandez, Karin Pape, Federico Parra, Arbind Betcherman, Gordon. 2012. “Labor Market Institu- Singh, and Caroline Skinner. 2012. “Urban Infor- tions: A Review of the Literature.” Background mal Workers: Representative Voice and Economic paper for the WDR 2013. Rights.” Background paper for the WDR 2013. Moving jobs center stage 43 Chen, Shaohua, and Martin Ravallion. 2010. “The De- Children in the Developing World.” Lancet 369 veloping World Is Poorer Than We Thought, but (9557): 229–42 No Less Successful in the Fight against Poverty.” European Centre for the Development of Vocational Quarterly Journal of Economics 125 (4): 1577–625. Training. 2008. Future Skill Needs in Europe, Chioda, Laura. 2012. Work and Family: Latin America Medium-Term Forecast, Synthesis Report. Brussels: and Caribbean Women in Search of a New Balance. European Centre for the Development of Voca- Washington, DC: World Bank. tional Training. Commander, Simon, and Jan Svejnar. 2011. “Business Fajnzylber, Pablo, William F. Maloney, and Gabriel V. Environment, Exports Ownership, and Firm Per- Montes-Rojas. 2011. “Does Formality Improve formance.” Review of Economics and Statistics 93 Micro-Firm Performance? Quasi-Experimental (1): 309–37. Evidence from the Brazilian SIMPLES Program.” Commission on Growth and Development. 2008. The Discussion Paper Series 4531, Institute for the Growth Commission Report: Strategies for Sustained Study of Labor, Bonn. Growth and Inclusive Development. Washington, Farber, Henry S. 2011. “Job Loss in the Great Reces- DC: Commission on Growth and Development. sion: Historical Perspective from the Displaced Consejo Nacional de Innovación. 2008. Hacia una Es- Workers Survey, 1984–2010.” Discussion Paper trategia Nacional de Innovación para la Competitiv- Series 5696, Institute for the Study of Labor, Bonn. idad. Santiago: Consejo Nacional de Innovación. Fares, Jean, and Olga Susana Puerto. 2009. “Towards Cunha, Flavio, James J. Heckman, and Susanne Comprehensive Training.” Social Protection Dis- Schennach. 2010. “Estimating the Technology of cussion Paper Series 0924, World Bank, Washing- ton, DC. Cognitive and Noncognitive Skill Formation.” Feenstra, Robert C. 2010. Offshoring in the Global Econometrica 78 (3): 883–931. Economy: Microeconomic Structure and Macroeco- Dani, Anis, Sarah Forster, Mirsada Muzur, Dino nomic Implications. Cambridge, MA: MIT Press. Djipa, Paula Lytle, and Patrizia Poggi. 1999. A So- Fields, Gary, Paul Cichello, Samuel Freije-Rodriguez, cial Assessment of Bosnia and Herzegovina. Wash- Marta Menendez, and David Newhouse. 2003. ington, DC: World Bank. “Household Income Dynamics: A Four-Country Davis, Steven J., John C. Haltiwanger, and Scott Story.” Journal of Development Studies 40 (2): 30–54. Schuh. 1996. Job Creation and Destruction. Cam- Fink, Carsten, Aaditya Mattoo, and Randeep Rathin- bridge, MA: MIT Press. dran. 2003. “An Assessment of Telecommunica- de Soto, Hernando. 1989. The Other Path: The Invisi- tions Reform in Developing Countries.” Informa- ble Revolution in the Third World. New York: tion Economics and Policy 15 (4): 443–66. Harper & Row. Foster, Vivien, and Cecilia Briceño-Garmendia, eds. Djankov, Simeon, Caroline Freund, and Cong S. 2010. Africa’s Infrastructure: A Time for Transfor- Pham. 2010. “Trading on Time.” Review of Eco- mation. Washington, DC: World Bank. nomics and Statistics 92 (1): 166–73. Fox, Louise, and Thomas Sohnesen. 2012. “House- Dudwick, Nora, and Radhika Srinivasan, with Jose hold Enterprise in Sub-Saharan Africa: Why They Cueva and Dorsati Madani. Forthcoming. Creat- Matter for Growth, Jobs, and Poverty Reduction.” ing Value Chains in Africa’s Fragile States: Are Value Policy Research Working Paper Series 6184, World Chains an Answer? Directions in Development Bank, Washington, DC. Series. Washington, DC: World Bank. François, Joseph F., and Bernard Hoekman. 2010. Dutz, Mark A., Ioannis Kessides, Stephen O’Connell, “Services Trade and Policy.” Journal of Economic and Robert D. Willig. 2011. “Competition and Literature 48 (3): 642–92. Innovation-Driven Inclusive Growth.” Policy Re- Freeman, Richard. 2009. “Labor Regulations, Unions, search Working Paper Series 5852, World Bank, and Social Protection in Developing Countries: Washington, DC. Market Distortions or Efficient Institutions?” In EFRA (European Union Agency for Fundamental Handbook of Development Economics, Volume 5, Rights). 2011. Fundamental Rights of Migrants in an ed. Dani Rodrik and Mark Rosenzweig, 4657–702. Irregular Situation in the European Union. Luxem- Amsterdam: Elsevier. bourg: Publications Office of the European Union. Gatti, Roberta, Diego Angel-Urdinola, Joana Silva, Elbadawi, Ibrahim, Linda Kaltani, and Raimundo and Andras Bodor. 2012. Striving for Better Jobs: Soto. 2009. Aid, Real Exchange Rate Misalignment The Challenge of Informality in the Middle East and Economic Performance in Sub-Saharan Africa. and North Africa. Washington, DC: World Bank. Santiago: Universidad Católica de Chile. Ghose, Ajit K., Nomaan Majid, and Christoph Ernst. Engle, Patrice L, Maureen M. Black, Jere R. Behrman, 2008. The Global Employment Challenge. Geneva: Meena Cabral de Mello, Paul J. Gertler, Lydia International Labour Organization. Kapiriri, Reynaldo Martorell, and Mary Eming Gibson, John, David McKenzie, and Halahingano Young. 2007. “Strategies to Avoid the Loss of De- Rohorua. 2008. “How Pro-Poor is the Selection of velopmental Potential in More than 200 Million Seasonal Migrant Workers from Tonga Under 44 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 New Zealand’s Recognized Seasonal Employer Heath, Rachel, and Mushfiq Mobarak. 2011. “Sup- Program.” Working Paper Series 4698, World ply and Demand Side Constraints on Educational Bank, Washington, DC. Investment: Evidence from Garment Sector Jobs Giles, John, Dimitris Mavridis, and Firman Witoelar. and a Girls’ Schooling Subsidy Program in Bangla- 2012. “Subjective Well-Being, Social Cohesion, desh.” Yale University, New Haven, CT. Processed. and Labor Market Outcomes in Indonesia.” Back- Heckman, James J. 2008. “The Case for Investing in ground paper for the WDR 2013. Disadvantaged Young Children.” In Big Ideas for Gindling, T. H., and David Newhouse. 2012. “Self- Children: Investing in Our Nation’s Future, 49–58. Employment in the Developing World.” Back- Washington, DC: First Focus. ground paper for the WDR 2013. Heineck, Guido, and Silke Anger. 2010. “The Returns Glewwe, Paul W. 2004. “An Overview of Economic to Cognitive Abilities and Personality Traits in Germany.” Labour Economics 17 (3): 535–46. Growth and Household Welfare in Vietnam in the Hoekman, Bernard. 2011. “Aid for Trade: Why, What, 1990s.” In Economic Growth, Poverty and House- and Where Are We?” In Unfinished Business? The hold Welfare in Vietnam, ed. Paul Glewwe, Bina WTO’s Doha Agenda, ed. Will Martin and Aad- Agarwal, and David Dollar, 1–26. Washington, itya Mattoo, 233–54. London: London Publishing DC: World Bank. Partnership. Goswami, Arti Grover, Aaditya Mattoo, and Sebastián Hoekman, Bernard, and Aaditya Mattoo. 2011. Sáez, eds. 2011. Exporting Services: A Develop- “Services Trade Liberalization and Regulatory ing Country Perspective. Washington, DC: World Reform: Re-invigorating International Coopera- Bank. tion.” Policy Research Working Paper Series 5517, Grantham-McGregor, Sally, Yin Bun Cheung, San- World Bank, Washington, DC. tiago Cueto, Paul Glewwe, Linda Richter, Barbara Holzer, Harry, and Robert Lerman. 2009. The Future Strupp, and the International Child Development of Middle-Skill Jobs. Washington, DC: Center on Steering Group. 2007. “Development Potential in Children and Families, Brookings Institution. the First 5 Years for Children in Developing Coun- Hsieh, Chang-Tai, and Peter J. Klenow. 2009. “Misal- tries.” Lancet 369 (January): 60–70. location and Manufacturing TFP in China and Gratton, Lynda. 2011. The Shift: The Future of Work India.” Quarterly Journal of Economics 124 (4): Is Already Here. London: HarperCollins. 1403–48. Grimm, Michael, Jens Kruger, and Jann Lay. 2011. ———. 2011. “The Life Cycle of Plants in India and “Barriers to Entry and Returns to Capital in Infor- Mexico.” Chicago Booth Research Paper 11-33, mal Activities: Evidence from Sub-Saharan Africa.” Booth School of Business, University of Chicago. Review of Income and Wealth 57 (S1): S27–S53. Ibarrarán, Pablo, Laura Ripani, Bibiana Taboada, Hallward-Driemeier, Mary, Gita Khun-Jush, and Lant Juan Miguel Villa, Brigida Garcia. 2012. “Life Pritchett. 2010. “Deals Versus Rules: Policy Imple- Skills, Employability and Training for Disadvan- mentation Uncertainty and Why Firms Hate It.” taged Youth: Evidence from a Randomized Evalu- Working Paper Series 16001, National Bureau of ation Design.” IZA Conference Paper, May 12, Economic Research, Cambridge, MA. 2012. Processed. IFC (International Finance Corporation). Forthcom- Haltiwanger, John. 2011. “Globalization and Eco- ing. IFC Job Study: Assessing Private Sector Contri- nomic Volatility.” In Making Globalization Socially butions to Job Creation. Washington, DC: IFC. Sustainable, ed. Marc Bacchetta and Marion Jan- ILO (International Labour Organization). 1998. Dec- sen, 119–46. Geneva: International Labour Orga- laration on Fundamental Principles and Rights at nization and World Trade Organization. Work. Adopted by the International Labour Con- Haltiwanger, John, Stefano Scarpetta, and Helena ference at its 86th session, ILO, Geneva, June 18. Schweiger. 2008. “Assessing Job Flows across ———. 2002. Decent Work and the Informal Econ- Countries: The Role of Industry, Firm Size, and omy. Geneva: ILO. Regulations.” Working Paper 13920. National ———. 2007. Resolution Concerning Updating the Bureau of Economic Research, Cambridge, MA. International Standard Classification of Occupa- Hanushek, Eric A., and Ludger Woessmann. 2008. tions. Adopted by the Tripartite Meeting of Ex- “The Role of Cognitive Skills in Economic De- perts on Labour Statistics on Updating the Inter- velopment.” Journal of Economic Literature 46 (3): national Standard Classification of Occupations, 607–88. ILO, Geneva, December 6. Hatløy, Anne, Tewodros Kebede, Huafeng Zhang, ———. 2010. Accelerating Action against Child La- and Ingunn Bjørkhaug. 2012. “Perception of bour. Geneva: ILO. Good Jobs: Sierra Leone.” Background paper for ———. 2011. Global Employment Trends for Youth. the WDR 2013. Geneva: ILO. Moving jobs center stage 45 ———. 2012a. Global Employment Trends 2012: Pre- Kraay, Aart. 2012. “How Large Is the Government venting a Deeper Jobs Crisis. Geneva: ILO. Spending Multiplier? Evidence from World Bank ———. 2012b. ILO Global Estimate of Forced Labour: Lending.” Quarterly Journal of Economics 127 (2): Results and Methodology. Geneva: ILO. 1–59. ———. 2012c. “What Are the Key Challenges Facing Laeven, Luc, and Christopher Woodruff. 2007. “The Labour Statistics Today?” ILO, Geneva. Processed. Quality of the Legal System, Firm Ownership, and ILO and World Bank. 2012. Inventory of Policy Re- Firm Size.” Review of Economics and Statistics 89 sponses to the Financial and Economic Crisis: Joint (4): 601–14. Synthesis Report. Washington, DC: ILO and World Lee, Jean, and David Newhouse. 2012. “Cognitive Bank. Skills and Labor Market Outcomes.” Background IMF (International Monetary Fund). 2003. “Growth paper for the WDR 2013. and Institutions.” In World Economic Outlook: Levi, Margaret, Christopher Adolph, Aaron Erlich, April 2003; Growth and Institutions, 95–128. Anne Greenleaf, Milli Lake, and Jennifer Noveck. Washington, DC: IMF. 2012. “Aligning Rights and Interests: Why, When, Inchauste, Gabriela. 2012. “Jobs and Transitions out and How to Uphold Labor Standards.” Back- of Poverty: A Literature Review.” Background pa- ground paper for the WDR 2013. per for the WDR 2013. Levine, Ross. 2005. “Finance and Growth: Theory and Evidence.” In Handbook of Economic Growth, ed. Inchauste, Gabriela, Sergio Olivieri, Jaime Saavedra Philippe Aghion and Steven Durlauf, 865–934. Chanduvi, and Hernan Winkler. 2012. “Decom- Amsterdam: Elsevier. posing Recent Declines in Poverty: Evidence from Levy, Santiago. 2008. Good Intentions, Bad Outcomes, Bangladesh, Peru, and Thailand.” Background pa- Social Policy, Informality, and Economic Growth in per for the WDR 2013. Mexico. Washington, DC: Brookings Institution IOM (International Organization for Migration). Press. 2008. World Migration Report 2008: Managing Lin, Justin Yifu. 2012. Demystifying the Chinese Econ- Labor Mobility in the Evolving Global Economy. omy. Cambridge, U.K.: Cambridge University Press. Geneva: IOM. Locke, Richard. Forthcoming. Beyond Compliance: ———. 2010. World Migration Report 2010. The Fu- Promoting Labor Justice in a Global Economy. New ture of Migration: Building Capacities for Change. York: Cambridge University Press. Geneva: IOM. Locke, Richard, Fei Quin, and Alberto Brause. 2007. Kanamori, Tokishi, and Zhijun Zhao. 2004. Pri- “Does Monitoring Improve Labor Standards? vate Sector Development in the People’s Repub- Lessons from Nike.” Industrial and Labor Relations lic of China. Manila: Asian Development Bank Review 61 (1): 3–31. Institute. Luke, Nancy, and Kaivan Munshi. 2011. “Women as Kanbur, Ravi. 2009. “Conceptualizing Informality: Agents of Change: Female Income and Mobility Regulation and Enforcement.” Indian Journal of in India.” Journal of Development Economics 94 Labour Economics 52 (1): 33–42. (1): 1–17. Kanbur, Ravi, and Jan Svejnar, eds. 2009. Labor Mar- Lyon, Scott, Furio C. Rosati, and Lorenzo Guarcello. kets and Economic Development. Routledge. 2012. “At the Margins: Young People neither in Kebede, Tewodros, Anne Hatløy, Huafeng Zhang, Education nor in Employment.” Background pa- and Ingunn Bjørkhaug. 2012. “Perception of per for the WDR 2013. Good Jobs: Egypt.” Background paper for the Maloney, William F., and Jairo Núñez Méndez. WDR 2013. 2003.“Measuring the Impact of Minimum Wages: Keefer, Philip. 2009. “Governance.” In The SAGE Evidence from Latin America.” Working Paper Se- Handbook of Comparative Politics, ed. Todd Land- ries 9800, National Bureau of Economic Research, man and Neil Robinson, 439–62. London: SAGE Cambridge, MA. Publications. McKenzie, David, and Christopher Woodruff. 2008. Kilroy, Austin. 2011. “Business Bridging Ethnicity.” “Experimental Evidence on Returns to Capital Ph.D. thesis, Massachusetts Institute of Technol- and Access to Finance in Mexico.” World Bank ogy, Cambridge, MA. Economic Review 22 (3): 457–482. King, Robert, and Ross Levine. 1993. “Finance and Mertens, Brian. 2011. “Forbes Asia’s Businessman of Growth: Schumpeter Might Be Right.” Quarterly the Year.” Forbes Asia Magazine, December 5. Journal of Economics 108 (3): 717–37. Montenegro, Claudio E., and Harry Anthony Pa- Klapper, Leora, Luc Laeven, and Raghuram Rajan. trinos. 2012. “Returns to Schooling around the 2006. “Entry Regulation as a Barrier to Entrepre- World.” Background paper for the WDR 2013. neurship.” Journal of Financial Economics 82 (3): Moser, Caroline O. N. 2009. Ordinary Families, Ex- 591–629. traordinary Lives: Assets and Poverty Reduction in 46 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Guayaquil, 1978–2004. Washington, DC: Brook- Jaime Saavedra-Chanduvi. 2007. Informality: Exit ings Institution. and Exclusion. Washington, DC: World Bank. Mryyan, Nader. 2012. “Demographics, Labor Force Pritchett, Lant. 2006. Let Their People Come: Breaking Participation, and Unemployment in Jordan.” the Gridlock on Global Labor Mobility. Washing- Working Paper Series 670, Economic Research ton, DC: Center for Global Development. Forum, Giza, Egypt. Psacharopoulos, George, and Harry Anthony Patrinos. Nabli, Mustapha K., Carlos Silva-Jáuregui, and Ahmet 2004. “Returns to Investment in Education: A Fur- Faruk Aysan. 2008. “Authoritarianism, Credibility ther Update.” Education Economics 12 (2): 111–34. of Reforms, and Private Sector Development in the Rama, Martín. 2001. “The Consequences of Doubling Middle East and North Africa.” Working Paper Se- the Minimum Wage: The Case of Indonesia.” In- ries 443, Economic Research Forum, Cairo. dustrial and Labor Relations Review 54 (4): 864–81. Narayan, Deepa, Lant Pritchett, and Soumya Kapoor. ———. 2009. “Making Difficult Choices: Vietnam in 2009. Moving Out of Poverty: Success from the Transition.” Working Paper Series 40, Growth and Bottom Up. New York: Palgrave Macmillan; Wash- Development Commission, World Bank, Wash- ington, DC: World Bank. ington, DC. Nelson, Richard R. 1981. “Research on Productivity Randriamaro, Zo. 2007. Gender and Trade: Overview Growth and Productivity Differences: Dead Ends Report (2006). Brighton, U.K.: BRIDGE. and New Departures.” Journal of Economic Litera- Ravallion, Martin. 2009. “Are there lessons for Africa ture 19 (3): 1029–64. from China’s Success against Poverty?” World De- Newitt, Kirsten. 2012. “Private Sector Voluntary Ini- velopment 37 (2): 303–13. tiatives on Labour Standards.” Background paper Rodrik, Dani. 2000. “Institutions for High-Quality for the WDR 2013. Growth: What They Are and How to Acquire North, Douglass C. 1981. Structure and Change in Them.” Studies in Comparative International De- Economic History. New York: W. W. Norton. velopment 35 (3): 3–31. ———. 1990. Institutions, Institutional Change and Rodrik, Dani, Arvind Subramanian, and Francesco Economic Performance. New York: Cambridge Trebbi. 2004. “Institutions Rule: The Primacy of University Press. Institutions over Geography and Integration in OECD (Organisation for Economic Co-operation Economic Development.” Journal of Economic and Development). 2006. OECD Employment Growth 9 (2): 131–65. Outlook: 2006. Paris: OECD. Romer, Paul Michael. 1993. “Idea Gaps and Ob- ———. 2009. OECD Reviews of Labour Market and ject Gaps in Economic Development.” Journal of Social Policies: Slovenia. Paris: OECD. Monetary Economics 32 (3): 543–73. ———. 2010. Off to a Good Start? Jobs for Youth. Rutkowski, Jan, Stefano Scarpetta, Arup Banerji, Paris: OECD. Philip O’Keefe, Gaëlle Pierre, and Milan Vodop- OECD and ILO. 2011. G20 Country Policy Briefs: ivec. 2005. Enhancing Job Opportunities: Eastern Brazil—Share of Formal Employment Continues Europe and the Soviet Union. Washington, DC: to Grow. Paris: OECD and ILO. World Bank. Özden, Çaglar, Christopher Parsons, Maurice Schiff, Rwanda Demobilization and Reintegration Commis- and Terrie L. Walmsley. 2011. “Where on Earth sion. 2012. Tracer: Community Dynamics and Pay- Is Everybody? The Evolution of Global Bilateral ment Verification Study. Kigali: Rwanda Demobili- Migration 1960–2000.” World Bank Economic Re- zation and Reintegration Commission. view 25 (1): 12–56. Sandefur, Justin. 2010. “On the Evolution of the Firm Paes de Barros, Ricardo, Mirela de Carvalho, Samuel Size Distribution in an African Economy.” Work- Franco, Rosane Mendoça. 2006. “Uma Análise das ing Paper Series 2010-5, Centre for the Study of Principais Causas da Queda Recente na Desigual- African Economies, Oxford. dade de Renda Brasileira.” Revista Econômica 8(1): Schoar, Antoinette. 2010. “The Divide between Sub- 117–147. sistence and Transformational Entrepreneurship.” Pagés, Carmen, ed. 2010. The Age of Productivity: In Innovation Policy and the Economy, vol. 10, ed. Transforming Economies from the Bottom Up. New Josh Lerner and Scott Stern, 57–81. Cambridge, York: Palgrave Macmillan. MA: National Bureau of Economic Research. Park, Jaegil, Daejong Kim, Yongseok Ko, Funnan Schumpeter, Joseph Alois. 1934. The Theory of Eco- Kim, Keunhyun Park, and Keuntae Kim. 2011. nomic Development: An Inquiry into Profits, Capi- “Urbanization and Urban Policies in Korea.” tal, Credit, Interest, and the Business Cycle. Cam- Korea Research Institute for Human Settlements. bridge, MA: Harvard University Press. Perry, Guillermo E., William F. Maloney, Omar S. Selim, Nadia. 2012. “Innovation for Job Creation.” Arias, Pablo Fajnzylber, Andrew D. Mason, and Background paper for the WDR 2013. Moving jobs center stage 47 Shiferaw, Admasu, and Arjun S. Bedi. 2010. “The Dy- ———. 2004. World Development Report 2005: A namics of Job Creation and Job Destruction: Is Better Investment Climate for Everyone. New York: Sub-Saharan Africa Different?” Poverty, Equity Oxford University Press. and Growth Discussion Papers 22, Courant Re- ———. 2005. Global Economic Prospects: Economic search Centre, Göttingen, Germany. Implications of Remittances and Migration. Wash- SMERU Research Institute. 2001. Wage and Employ- ington, DC: World Bank. ment Effects of Minimum Wage Policy in the Indo- ———. 2006a. Chile Development Policy Review. nesian Urban Labor Market. Jakarta: SMERU Re- Washington, DC: World Bank. search Institute. ———. 2006b. World Development Report 2007: Stampini, Marco, and Audrey Verdier-Choucane. Development and the Next Generation. Washing- 2011. “Labor Market Dynamics in Tunisia: The ton, DC: World Bank. Issue of Youth Unemployment.” Discussion Paper ———. 2007. Rwanda: Toward Sustained Growth and Series 5611, Institute for the Study of Labor, Bonn. Competitiveness, Volume I, Synthesis and Priority Sutton, John, and Nebil Kellow. 2010. An Enterprise Measures. Washington, DC: World Bank. Map of Ethiopia. London: International Growth ———. 2008. Chile: Toward a Cohesive and Well Gov- Centre. erned National Innovation System. Washington Syverson, Chad. 2011. “What Determines Productiv- DC: World Bank. ity?” Journal of Economic Literature (49) 2: 326–65. ———. 2009a. Doing Business 2010. Washington, TeamLease. 2010. Temp Salary Primer 2010. Ahmed- DC: World Bank. abad, India: TeamLease Services Pvt. Ltd. ———. 2009b. World Development Report 2009: Re- shaping Economic Geography. Washington, DC: United Nations. (UN). 2009. System of National Ac- World Bank. counts. New York: UN. ———. 2010. MDRP (Multi-Country Demobiliza- ———. 2011. World Urbanization Prospects: The tion and Reingration Program) Report. Washing- 2011 Revision. New York: United Nations, Depart- ton, DC: World Bank. ment of Economic and Social Affairs. ———. 2011a. World Development Report 2011: Con- UNDP (United Nations Development Programme). flict, Security, and Development. Washington, DC: 2003a. Early Warning Report: FYR Macedonia. World Bank. New York: UNDP. ———. 2011b. More and Better Jobs in South Asia. ———. 2003b. Early Warning System: Bosnia and Washington, DC: World Bank. Herzegovina. New York: UNDP. ———. 2011c. World Development Report 2012: Gen- United Nations Development Group. 2010. Thematic der Equality and Development. Washington, DC: Paper on MDG1: Eradicate Extreme Poverty and World Bank. Hunger, Review of Progress. New York: United ———. 2011d. Capabilities, Opportunities and Par- Nations. ticipation. Gender Equality and Development in Walker, Susan P., Theodore D. Wachs, Julie Meeks the Middle East and North Africa Region. A Com- Gardner, Betsy Lozoff, Gail A. Wasserman, Ern- panion Report to the World Development Report ersto Pollitt, and Julie A. Carter. 2007. “Child De- 2012. Washington, DC: World Bank. velopment: Risk Factors for Adverse Outcomes in ———. 2011e. “Fueling Growth and Competitive- Developing Countries.” Lancet 369 (9556): 145–57. ness in Poland through Employment, Skills, Wietzke, Frank-Borge, and Catriona McLeod. 2012. and Innovation.” Technical report, World Bank, “Jobs, Well-Being, and Social Cohesion: Evidence Washington, DC. from Value and Perception Surveys.” Background ———. 2012. Job Trends. Washington, DC: World paper for the WDR 2013. Bank. Winters, Alan, Terrie Walmsley, Zhen Kun Wang, and Young, Mary Eming, and L. M. Richardson, eds. 2007. Roman Grynberg. 2002. “Negotiating the Liber- Early Child Development From Measurement to alization of the Temporary Movement of Natural Action: A Priority for Growth and Equity. Washing- Persons.” University of Sussex Discussion Paper ton, DC: The World Bank. 87, Sussex, U.K. Yusuf, Shahid, and Kaoru Nabeshima. 2006. Post- Witze, Morgen. 2010. “Case Study: Tata.” Financial Industrial East Asian Cities: Innovation for Growth. Times, December 29. Palo Alto: Stanford University Press. World Bank. 1992. World Development Report 1992: Zhang, Huafeng, Ingunn Bjørkhaug, Anne Hatløy, and Development and the Environment. New York: Tewodros Kebede. 2012. “Perception of Good Jobs: Oxford University Press. China.” Background paper for the WDR 2013. CHAPTER 1 The jobs challenge Demographic transitions, structural change, technological progress, and global volatility are changing the world of work. Yet, traditional farming and self-employment remain dominant in many countries. W orldwide, more than 3 billion people In the next 15 years, half of the population in have jobs, but the nature of their jobs developing countries will reside in urban areas, varies greatly. Some 1.65 billion have the result of a migration that is rapidly shifting regular wages or salaries. Another 1.4 billion work from the farm to the factory or the street. work in farming and small household enterprises, The rural-urban shift generally improves indi- or in casual or seasonal day labor. The majority vidual well-being, especially for those who find of workers in the poorest countries are engaged wage employment. Still, workers’ share of global in these types of work, outside the scope of an income may be declining, a pattern attributed in employer-employee relationship. Another 200 part to globalization and technological change. million people, a disproportionate share of them Wages for the same occupation are converging youth, are unemployed and actively looking for across countries, but a higher premium is paid work. Almost 2 billion working-age adults are for more skilled occupations. Women’s earnings neither working nor looking for work; the still lag behind those of men, and the fraction of majority of these are women, and an unknown them who work varies enormously across coun- number are eager to have a job.1 tries. While women’s labor force participation The jobs challenge facing the world is multi- exceeds 75 percent in Vietnam, it is only 28 per- faceted, ranging from improving aspects of the cent in Pakistan. work people do, to supporting the reallocation As the world changes, so do jobs. Despite im- of people to better jobs, to creating jobs for provements in workers’ education levels, many those who want to work. Youth bulges in some firms report that they have difficulty finding the countries are bringing in millions of new job skilled workers they seek. Part-time and tempo- seekers. Sub-Saharan Africa’s labor force grows rary work appear to be increasing. In India and by about 8 million people every year. South South Africa, for example, there has been a Asia’s grows by 1 million people every month. sharp rise in the number of temporary employ- Elsewhere, the working population is rapidly ag- ment services and labor brokers. Outsourcing ing, and more and more workers are putting off was once concentrated in manufacturing, but retirement. By 2020, more than 40 million ad- new technology is now enabling the splintering ditional jobs will be needed for people 65 years of tasks in services. Meanwhile, new platforms and older.2 on the internet and mobile phones offer innova- Structural and technological changes are tions for matching workers and employers, and moving more people from rural areas to cities. not only for highly skilled jobs. The jobs challenge 49 A job, but not always a salary people would like to work more hours, whereas others would rather not. More than 15 percent To many, the word job brings to mind a worker of those employed in Armenia, Colombia, Gua- with an employer and a regular paycheck. Yet, temala, and Peru, but less than 3 percent in this narrow definition excludes nearly 1.4 billion Hungary, Pakistan, Portugal, and the United people who work for a living. The concept of a States worked fewer hours than desired.5 Some job is actually much broader than wage employ- people who would like to work have no job. ment. Jobs are activities that generate actual or Unemployment rates vary over the business cy- imputed income, monetary or in kind, formal or cle; around 2009 and 2010, when the worst of informal. But not all forms of work can be the international crisis hit most countries in deemed jobs. Activities performed against the the world, they ranged from more than 20 per- will of the worker or involving violations of fun- cent in South Africa and Spain to less than 5 per- damental human rights should not be consid- cent in Austria, Korea, Malaysia, Singapore, Sri ered jobs. Some other activities that entail work Lanka, and Thailand.6 effort, such as cooking and cleaning at home, are The world of work is more diverse in devel- not considered jobs unless they are performed by oping countries than in developed countries. people hired and paid for the work. This diversity refers not only to the number of hours worked and number of jobs available, usual yardsticks in developed countries, but Multiple forms of work also to characteristics of jobs. Two main aspects Defining and measuring jobs is challenging be- stand out. First, there is prevalence of self- cause the ways people spend their time and work employment, which often makes measures of are diverse (question 1). Economists usually dis- unemployment and underemployment inade- tinguish between work and leisure, but the real- quate.7 Second, the coexistence of traditional ity is more complex. Time can be allocated to and modern modes of production leads to nonproduction and production activities. The large variations in the nature of work, from first category includes time spent eating, sleep- subsistence agriculture and menial work to ing, schooling, and at recreation. Production in- technology-driven manufacturing and services. cludes both market and nonmarket work. Work across the developing world is charac- Whether an activity is considered production terized by a high prevalence of informality, can be assessed based on a third-person test: “if whether defined on the basis of firm registra- an activity is of such character that it might be tion, social security coverage, or a written em- delegated to a paid worker, then that activity ployment contract. Informal employment is shall be deemed productive.”3 not under the purview of labor regulations, ei- Patterns in time allocated to production dif- ther because of their limited scope or because fer across countries and over time. Jobs that they are deliberately avoided or evaded. Re- span eight hours a day, five days a week, with gardless of the specific definition used, infor- paid vacation, are not the norm in developing mal employment is generally associated with countries. Some jobs involve a few hours of lower productivity. However, this does not nec- work during certain days of the week or certain essarily mean that firm registration, social secu- weeks of the year; others entail long hours most rity coverage, or a written contract would result days of the week almost every week of the year. in greater efficiency. Informality can be a symp- Some people have had only one job in the pre- tom of lower productivity as much as it can be vious week, while others have engaged in two a cause of it. or more jobs. In 2011, temporary employment represented more than one-fifth of total wage Different places, different jobs employment in the Republic of Korea and Spain, but around 5 percent in Australia and the Slovak Self-employment and farming represent almost Republic.4 half the jobs in the developing world. The vast The measurement of unemployment or un- majority of those in self-employment work deremployment is equally challenging. Some in small enterprises with no paid employees.8 50 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 F I G U R E 1.1 A job does not always come with a wage men women 100 wage employment share of total employment, % 80 self-employment 60 nonwage 40 employment 20 farming 0 Europe and Latin America South Middle East East Asia Sub-Saharan Central Asia and the Asia and and Pacific Africa Caribbean North Africa Source: World Development Report 2013 team. Note: Data are for the most recent year available. But shares of wage work, farming, and self- explained by education, experience, or sector of employment differ greatly by gender and across work. countries. Nonwage work represents more A growing share of youth, typically defined than 80 percent of women’s employment in as people ages 15 to 24, is in schooling or in Sub-Saharan Africa, but less than 20 percent in training. Still, youth unemployment reaches countries of Eastern Europe and Central Asia alarming levels in some countries (above 40 per- (figure 1.1). cent in South Africa since early 2008 and above Gender differences are also striking.9 World- 50 percent in Spain in early 2012).10 Even in wide, less than 50 percent of women have jobs, countries where it is relatively low, the youth un- whereas almost 80 percent of men do. Roughly employment rate is twice or more the national 50 percent of both working men and working average. In addition, a large share of young peo- women are wage earners, but this statistic hides ple are considered “idle”—not in education, not substantial variation across countries and re- employed, and not in training or looking for gions. Women are significantly underrepre- work (figure 1.2).11 In some countries, more sented in wage employment in low- and lower- than one-third of 15- to 24-year-olds are idle; in middle-income countries, but are more likely most countries, unemployment rates are small than men to work for wages in middle-income compared to idleness rates.12 In many cases, countries. In countries such as Pakistan, where when youth work they do so in unpaid jobs. If 28 percent of women but more than 82 percent paid, they are less likely to have access to social of men participate in the labor force, wage em- security.13 ployment is a much lower share of total employ- Although child labor is in decline, it still af- ment among women than among men. Even in fects 1 in 8 children (1 in 14 in the case of haz- countries such as Tanzania and Vietnam, where ardous work). The International Labour Orga- participation rates are above 75 percent for both nization (ILO) defines child labor as any work men and women, wage employment still lags by a child under age 12 or, for a child above behind for women. Beyond these stark con- age 12, any work that impedes education or is trasts, women continue to earn significantly less damaging to health and personal development. than men. And these differences are not fully Worldwide, 306 million children were at work in The jobs challenge 51 2008. Of these, 215 million were engaged in ac- tivities that constituted child labor, and 115 mil- F I G U R E 1. 2 Among youth, unemployment is not always lion were involved in hazardous work.14 Most of the issue these children are unpaid family workers or par- ticipate in farming. More than half live in Asia not in school or at work and the Pacific; but the share is highest is in Sub- not looking for work looking for work Saharan Africa, where child labor affects 1 in 4 children (or 65 million of them). Pakistan women 2008 men Turkey 2005 Youth bulges, aging societies, and migrant nations India 2009 Indonesia Demographic shifts can be massive, but they do 2010 not always go in the same direction. The most Chile populous countries in the world have experi- 2009 enced very large increases in their labor force: Brazil 2009 nearly 8 million new entrants a year in China and 7 million a year in India since the early Ukraine 2005 1990s. (These rates are now decelerating rapidly, Ghana particularly in China.) Many smaller countries 2005 face large relative increases, even if the absolute Tanzania numbers are less astounding. In other countries, 2009 the overall population and the labor force are 0 10 20 30 40 50 60 shrinking. For example, Ukraine’s labor force is share of population ages 15–24, % estimated to decrease by 0.75 percent annually, the equivalent of approximately 160,000 fewer people every year.15 Source: World Development Report 2013 team. A simple conceptual exercise illustrates the challenges raised by these dramatic demographic transitions. To keep the ratio of employment to working-age population constant, in 2020, there 42 million jobs will have to be generated by 2020 should be around 600 million more jobs than in to cope with the growth in the number of older 2005. More than 175 million of them, or nearly people. One-quarter of these jobs will need to be 1 million a month, would be needed in East Asia in China, even though the size of the Chinese and the Pacific as well as in South Asia (figure labor force will have started to decline in abso- 1.3). The number of jobs in Sub-Saharan Africa lute terms.16 would have to increase by about 50 percent, International migration is also changing the which translates into employment growth of 2.7 size and composition of the labor force in many percent a year. But in Eastern Europe and Cen- countries. At the turn of the century, there were tral Asia, where populations are aging, only 2.4 more than 200 million international migrants million new jobs would be needed during the worldwide, and nearly 90 million of them were same period. workers. If international migrants constituted a The age structure of the labor force, not sim- nation, theirs would be the fifth-largest in the ply its size, matters as well. Youth are staying in world, ahead of Brazil. Precise estimates diverge school longer and entering the labor market but there is agreement that migrants represent later, whereas adults are living longer and nearly 3 percent of the world population.17 healthier lives. The labor force participation rate These aggregate figures hide important dif- of people 65 years of age and older has remained ferences across countries. Some are large migra- relatively stable over the past two decades. Even tion recipients either in absolute numbers (for with a stable participation rate, however, close to instance, the United States) or in relative terms 52 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 F I G U R E 1. 3 Employment growth is needed to cope with population growth a. Jobs per year b. Annual change in employment South Asia Sub-Saharan Africa Middle East East Asia and Paci c and North Africa Sub-Saharan Africa South Asia Latin America Latin America and the Caribbean and the Caribbean Middle East East Asia and Paci c and North Africa Europe and Central Asia Europe and Central Asia 0 5 10 15 0 1.0 2.0 3.0 millions percent Source: World Development Report 2013 team based on data from the International Labour Organization and World Development Indicators. Note: Estimations are for the period 2005–20, based on projected population growth assuming constant employment rates. (Jordan and Singapore). Migrants from coun- been the case.22 Population movements away tries such as Bangladesh, India, and Mexico rep- from agriculture were indeed associated with resent a large share of total migrants worldwide; rapid economic growth in East Asia; much less countries such as Fiji, Jamaica, and Tonga have a so in Sub-Saharan Africa (figure 1.4). large share of their population overseas. Figures Technological change induces families to in- for some of the smaller countries are striking. crease market production in place of home pro- For instance, nearly one-fifth of all Salvadorians duction.23 Structural change has increased the live abroad, while more than three-fifths of the time devoted to consumption or investment population in Kuwait, Qatar, and the United activities but it has also meant more work. In Arab Emirates is foreign-born.18 some cases, structural change has even led to reduced leisure,24 particularly for workers who shift to market jobs with low productivity.25 In Cities, wages, and women the past, this process of structural change often took decades, but in many developing coun- Economic development brings significant tries, it is transforming lives within a generation changes in the composition of the labor force, a (box 1.1). process known as structural transformation.19 The shift from home to market production is Before 2020, more than half of the total popula- not gender neutral, because women have tended tion in developing countries is expected to be to specialize in home production whereas men living in cities and towns.20 That means that the traditionally have focused more on market pro- growth of the nonagricultural labor force will duction. As women move into jobs, they often vastly exceed the growth of the agricultural la- continue to work at home. When both jobs and bor force.21 Urbanization derives from growth home activities are considered, women are gen- in agricultural productivity that sustains higher erally busier than men. This is so in rich and standards of living. It can also be associated poor countries. Evidence from Sub-Saharan Af- with rapid economic growth at the aggregate rica, Europe, and India shows that women spend level, because urban jobs tend to be more pro- more time on production activities than men ductive than rural jobs. But that has not always do.26 But when they take on jobs—especially The jobs challenge 53 F I G U R E 1. 4 Moving from farms to cities does not always bring economic growth a. East Asia and Paci c b. Sub-Saharan Africa 75 75 Malaysia Liberia 60 60 Cameroon share of urban population, % share of urban population, % Nigeria Indonesia Ghana 45 45 China Guinea- Bissau 30 30 Thailand Madagascar Zimbabwe Vietnam 15 15 Kenya Ethiopia 0 0 80 800 8,000 80 800 8,000 GDP per capita, constant 2000 US$ GDP per capita, constant 2000 US$ Source: World Development Indicators. Note: Data correspond to changes between 1985 and 2010. GDP = gross domestic product. BOX 1.1 The nature of work and leisure change as cities develop The process of structural transformation can be seen today in small are preferred. Practices surrounding recruitment have also become and medium-size cities throughout the developing world. The pro- tighter. “It is public knowledge,” he added, “that to be accepted in cess has been so fast that most people, even young ones, remem- the company, candidates must have an inside connection because ber the old rural setting. As they have embraced the traits of mod- more and more people need work, while the number of job oppor- ern urban life, their jobs and their leisure have changed so much tunities is limited.” Many factory workers in the neighborhood that they do not contemplate returning to the old mores. work on a six-month contract and hope for its renewal. The best A neighborhood of 5,000 outside the city of Tangerang, Indone- local job available is often reported to be running one’s own busi- sia, started coming to life 25 years ago, when iron, rubber, garment, ness. Even when faced with possible unemployment, a 41-year-old and thread factories sprang up in the surrounding areas. Some in noted he had “never thought of returning to the village. That is the neighborhood still work as farmhands. But most women and desperate. Don’t be desperate. Find another job and don’t get men earn their living in the factories, as well as in a variety of jobs picky.” that rose up alongside them. Many men drive ojeks (motorcycle Comparing the situation now to the early days, a local official taxis); women sell sweets and other items by the gates of the facto- described the neighborhood’s busy market as “cleaner and more ries. Residents also make a living through home-based garment strategic now, and there are more sellers or merchants, so there are piecework, handicrafts such as broom-making, and construction more options. Public transportation to the market is more accessible work; some are civil servants and teachers. Poorer women collect now. It used to be hard to find, and the streets used to be muddy.” and resell scraps of fabric. The flow of newcomers has also offered He estimated that poverty in the neighborhood had fallen by half, an income-generating opportunity to local families from renting from 20 percent at the turn of the century to around 10 percent now. rooms for lodging. Seemingly everyone in the neighborhood has a He indicated that the neighborhood had weathered the global cell phone and gets around on their own motorcycle. financial crisis well and that factory workers had been able to keep A 28-year-old steelworker and father of one said that getting their jobs. These changes to work come with changes in leisure. factory work used to be a lot easier when the community was Young men now spend time on computer chats and playing video newer. Junior high school graduates were still accepted for work games. “We used to send letters through the post office,” recalls then. Now, he said, production workers must have at least a senior a 22-year-old. “Now, nobody wants to go to the post office. . . . high school degree, and vocational school graduates under age 30 It’s beneath them. Now everyone has cell phones.” Source: World Bank 2011a. 54 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 1.2 Jobs bring earnings opportunities to women, but also new difficulties Jobs can transform women’s roles in households and in society more easily than men because employers have “more confidence in more broadly. In a community of 3,000 inhabitants outside Durban, them [the women].” South Africa, 80 percent of the women were estimated to be work- Increased labor force participation is not without challenges. ing outside their home, mainly as teachers and nurses but also in The women in Santiago worry about their safety because of assaults, offices and retail outlets or with the police. Women did not have theft, and gang violence; many think it is too dangerous to work at such opportunities 10 years ago. “Women are no longer regarded night. Despite the expansion of work opportunities, mobility con- as housewives,” a young woman remarked in a Durban focus tinues to be a constraint not only because of poor transportation group. and safety risks but also because of the roles women play as income- In a bustling neighborhood in East Jakarta, in Indonesia, women earners and as caregivers in the household. In rural areas, women work as street sellers, peddling food, glasses, plates, and carpets. face difficulties in traveling for farm work and other jobs outside Young women explained that selling carpets is hard work that their villages because of traditional cultural and gender norms. women do “because they have to help support their families. Their In a semi-urban area outside Cuzco, in Peru, large numbers of husbands’ jobs don’t generate enough income.” With more educa- women are now engaged in home-based handicrafts, sewing, and tion than their elders, young women in this area of Jakarta are more diverse agricultural activities. Outside the home, they take up farm likely to be working in the nearby ceramic factory or in one of the jobs, run their own small shops or restaurants, or work for hire in shops or beauty salons in the neighborhood’s markets or at the new these places. The women explained, however, that they consider shopping malls in the city. home-based activities (such as raising livestock) to be better jobs In a poor neighborhood of Santiago de los Caballeros, the than jobs outside the home, because “it’s peaceful work, and we can second-largest city in the Dominican Republic, only a few women look after the kids.” sold clothes and sweets in the streets a decade ago. Many are now Women encounter many difficulties in commuting across cities earning incomes from activities such as selling lottery tickets or run- for work. In Lautoka, an urban area in Fiji, the local economy is stag- ning small clothing stores and beauty salons. The incomes of these nant, and women are working in much larger numbers to help their women are vitally important to their families because men are households cope. Focus group participants explained that only men struggling. Factory opportunities and other jobs associated with “can take up jobs in a different town . . . but not the wife because the city’s free trade zone have been shrinking in recent years. Par- she has responsibilities at home to look after the kids and in-laws.” ticipants in a Santiago focus group said that women found work Source: World Bank 2011a. those that are outside the household setting— Transnational companies have built integrated their economic role changes (box 1.2). value chains and can tap into national skill pools around the world.30 Outsourcing is occurring in services as well as manufacturing. The share of Jobs are changing in surprising ways developing countries in exports of world services rose from 11 percent in 1990 to 21 percent in New technologies, globalization, and structural 2008.31 India has led the way in the information transformation have brought about remarkable technology (IT) sector, but other countries, such improvements in efficiency. Some developing as the Arab Republic of Egypt, have begun to fo- countries have managed to narrow the produc- cus attention on exporting services.32 tivity gap with industrial countries in only a few This changing landscape of global produc- decades.27 But others have failed to catch up and tion has also brought about shifts in skills en- the gap remains considerable for all developing dowments and in the distribution of top talent regions (figure 1.5). across countries. India and China rank high in The nature of work is changing as well. perceived attractiveness as hubs of outsourcing Industrial countries are experiencing a sus- because of their exceptionally high ratings in tained shift away from primary and traditional people skills and availability.33 India has close to manufacturing industries toward services and 20 million students in higher education, nearly knowledge-intensive jobs. At the same time, as many as the United States; both countries are technology improvements and greater reliance outpaced by China, with 30 million postsecond- on outsourcing to developing countries is lead- ary students.34 The United States still accounts ing to a decline in middle-skilled jobs.28 Technol- for a large share of international top scorers in ogy has allowed production tasks to be splintered student assessments, but Korea has the same and therefore performed in different locations.29 share as Germany, and both are closely followed The jobs challenge 55 F I G U R E 1. 5 Labor productivity remains low in developing countries 0.40 Europe and Central Asia 0.35 Latin America and the Caribbean GDP per worker relative to that in 0.30 high-income countries 0.25 Middle East and North Africa 0.20 0.15 East Asia and Paci c South Asia 0.10 Sub-Saharan Africa 0.05 0 1991 1995 2000 2005 2009 Source: World Development Indicators. Note: GDP = gross domestic product. Ratio is measured in 2005 purchasing power parity US$. by the Russian Federation. The number of high- attractiveness as hubs for the outsourcing of ser- performing students in the city of Shanghai vices. Ghana and Senegal, ranked 26th and 28th, alone is one-fifth of that of Germany and about come in significantly ahead of emerging market double that of Argentina.35 powerhouses like South Africa or Turkey.39 Skills are not one-dimensional, however. Dif- High-skilled niches are developing the world ferent jobs require different combinations of over. They tend to be located in close proximity manual skills (needed for physical tasks), cogni- to centers of higher education in metropolitan tive skills (needed for mental tasks), and social areas with good infrastructure, from Cairo’s skills (needed to interact with others). The dis- Smart Village Business Park to Ghana’s IT En- tribution of employment by occupation can be abled Service Industry cluster. 40 Bangalore and used to estimate the skill intensity of produc- Chennai in India and Suzhou in China have tion. As incomes rise, countries tend to use fewer emerged as global research and development manual skills in production, and more nonrou- hotspots. tine cognitive skills. 36 However, even for a given Technology itself is changing the way work- level of gross domestic product (GDP) per cap- ers and firms connect, through their access to ita, countries can use nonroutine skills to vary- much larger, even global, marketplaces for em- ing degrees (figure 1.6).37 ployment. Some of these marketplaces operate Technological progress expands the possibili- through the Internet; others use mobile phone ties for emerging and even low-income coun- technology.41 These changes are affecting work- tries to create jobs in higher-skilled production ers in developing countries and not just those in activities as well as to link to international value high-skilled occupations. Babajobs, for example, chains in services and manufacturing. In other was launched in 2009 and is now the largest words, technological progress enables countries digital marketplace for blue-collar jobs in India, to diverge from a linear evolutionary path from with more than 320,000 job listings and more manual skill intensity to the use of higher-order than 80,000 job seekers. cognitive and social skills.38 India and China top With changes in technology and the organi- the list of countries in an index measuring their zation of work, permanent jobs are becoming 56 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 F I G U R E 1. 6 The skills mix changes with economic development a. Manual skills b. Nonroutine cognitive skills 130 105 Rwanda 125 Lithuania 100 index, 100 = U.S. level index, 100 = U.S. level 120 India Egypt, Arab Rep. Egypt, Arab Rep. 115 95 Turkey Peru Turkey India 110 Indonesia Peru 90 Indonesia 105 Lithuania Rwanda 100 85 200 2,000 20,000 200 2,000 20,000 GDP per capita, constant 2000 US$ GDP per capita, constant 2000 US$ Source: Aedo and others 2012 for the World Development Report 2013. Note: GDP = gross domestic product. All skill intensities are measured relative to the U.S. level. Each data point shows the skill intensity of national production, derived from tran- scribing the occupational structure to individual skills, following Autor, Levy, and Murnane 2003. less common. Part-time and temporary wage Prosperity, but a changing employment (also called nonstandard employ- distribution of earnings ment) is now a major feature of industrial coun- tries. More than half the firms in the United Earnings from work increase with economic de- States expect to raise the share of their part-time velopment, and the benefits associated with jobs and temporary employees over the next five improve as well (figure 1.7). The relationship is years.42 The trend is also evident in developing not mechanical, but growth is unambiguously countries (box 1.3). good for jobs. Part of the change in earnings and People’s jobs may not match their aspirations. benefits stems from the higher average skills that Surveys in high-income countries show that as economies gain as they become more devel- many as half of all workers—among both self- oped; part comes from workers with the same employed and wage employees—would prefer skills enjoying better opportunities. to be their own bosses.43 Percentages are lower Poverty has declined in the developing world, in low- and middle-income countries, where to a large extent through jobs. The share of the a larger fraction of the labor force works in population of the developing world living on household enterprises or on farms. On average, less than US$1.25 a day (in purchasing power about one-fourth of adults from 35 countries in parity, or PPP) fell from 52 percent in 1981 to 22 Eastern Europe and Central Asia prefer self- percent in 2008, or from 1.94 billion to 1.29 bil- employment, but the rate varies from 10 percent lion people.47 This reduction is the result of in Azerbaijan and Hungary to 43 percent in multiple factors, but the creation of millions of Belarus and Turkey.44 In poorer countries, self- new, more productive jobs, mostly in Asia but employment is often a choice of last resort, in also in other parts of the developing world, has part because of the inability to find salaried em- been the main driving force.48 More people have ployment.45 Owning a small business is a goal to jobs now than ever before, and those jobs pro- which the poor do not always aspire.46 vide generally higher earnings. The jobs challenge 57 BOX 1.3 The temporary staffing industry is growing in developing countries A decade ago, the temporary staffing industry was seen as irrele- the modern industry of temporary staffing is only 15 years old, vant outside of high-income countries. But it is now growing rapidly and is developing rapidly. The number of temporary workers in some developing countries, even beyond large cities.a This recruited by labor brokers grew more than 10 percent in 2009 and growth is often viewed as a response to the complex regulatory 18 percent in 2010. According to some media reports, workers are framework facing employers. Temporary staffing also allows more quitting permanent jobs to move into more attractive temporary flexibility in the management of peak workloads and in adjusting roles. Some firms claim that as many as 15 percent of new recruits staffing levels up or down in line with business demands. are permanent employees switching to temporary jobs.d Competi- Depending on the context, the temporary staffing industry tion in the Indian temporary staffing industry is strong. Agencies employs different types of workers, from mainly entry-level, previ- have introduced lower recruitment fees to gain more market share ously unemployed workers seeking to gain experience to highly edu- and to drive growth. Large temporary staffing firms are entering cated, mid-level career employees looking to fast-track their careers. niche activities such as business consulting (Manpower) and train- In South Africa, temporary workers make up about 7 percent of ing (TeamLease).e the labor force; the temporary staffing industry provides employ- As temporary staffing grows, so do calls to examine the regula- ment to an average of 410,000 workers a day.b Finance—the sector in tory framework of the industry.f Some of those calls focus on the statistics that includes temporary staffing—was a close second addressing vulnerability. Workers in these jobs typically face lower to retail in employment growth from 1994 to 2009. Unskilled jobs earnings (because a portion of the pay is diverted to temporary and service-related occupations dominate the employment distri- staffing agencies). They also face a lack of benefits, coverage by bution within the labor brokering subsector. A worker employed in labor laws, and job security. Other efforts focus on professionalizing temporary staffing services is less likely to contribute to pension the industry. For instance, in 2011 TeamLease and seven other staff- funds or health insurance and is generally seen as more vulnerable. ing firms formed the Indian Staffing Federation to advocate for Temporary forms of employment have existed in India for changes in labor laws and more acceptance for the industry in a decades, partly as a way to circumvent rigid labor laws.c However, country where a vast majority of the labor force is unorganized. Source: World Development Report 2013 team. a. Dourgarian (2011) remarks that it is not the Group of 8 countries that led the pack in the growth in the staffing industry in 2011, but the BRICs (Brazil, India, the Russian Federation, and China), along with Indonesia, Mexico, and Pakistan. b. The discussion on South Africa is drawn from Bhorat (2012) for the World Development Report 2013. c. World Bank 2011b. d. TeamLease 2010. e. Bajaj 2011. f. ILO 2011; Musgrave 2009. F I G U R E 1. 7 Jobs provide higher earnings and benefits as countries grow a. Average wage b. Social security coverage 100,000 100 programs, % of total employment average wage in manufacturing, contributors to social security 80 2005 PPP US$ 10,000 60 40 1,000 20 100 0 300 3,000 30,000 300 3,000 30,000 GDP per capita, 2005 PPP US$ GDP per capita, 2005 PPP US$ Source: World Development Report 2013 team. Note: GDP = gross domestic product; PPP = purchasing power parity. Each dot represents a country. 58 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Yet in a majority of countries, both indus- does not have a role to play. The quality of the trial and developing, the share of labor in total civil service is critically important for develop- income is declining.49 This trend, which has ment, whether it is teachers building skills, agri- been observed since the mid-1980s and early cultural extension agents improving agricul- 1990s, has been attributed to various forces, tural productivity, or urban planners designing from technological progress biased toward functional cities. Public works programs or em- skilled workers to global competition under- ployment programs for the demobilization of mining workers’ bargaining power. The en- combatants are also justified in some circum- trance of China and India in world trade has stances. But the private sector is the main en- doubled the size of the globalized labor force, gine of job creation and the source of roughly hence reducing the price of labor relative to that nine of 10 jobs in the world. Between 1995 and of other factors of production.50 2005, the private sector accounted for almost 90 Changes in the distribution of income in percent of jobs created in Brazil. In the Philip- recent years have actually taken place not only pines and Turkey, the fraction reached 95 between factors of production but between percent.51 workers. Two distinctions are relevant in this re- But the most remarkable example of the spect: between high- and low-skill workers, and expansion of employment through private between those who work in tradable sectors and sector growth is the case of China. In 1981, those who do not. Tradable sectors produce private sector employment accounted for 2.3 goods and services that can be exported or im- million workers while state-owned enterprises ported, such as shirts or computers. A turning (SOEs) had 80 million workers. Two decades point came in the mid-1990s, when labor earn- later, employment in private sector firms ac- ings in developing countries started to grow counted for 74.7 million workers surpassing, faster than those in industrial countries, regard- for the first time, the 74.6 million workers in less of level of skill. But the trend is more pro- SOEs (figure 1.10).52 nounced in tradable sectors, whereas low-skill In contrast to the global average, in some workers in nontradable sectors continue to be countries in the Middle East and North Africa, the most disadvantaged (figure 1.8). the state keeps a leading role as an employer—a The relatively lower wages among low-skill pattern that can be linked to the political econ- workers compared with high-skill workers, par- omy of the post-independence period and, in ticularly in nontradable sectors in developing some cases, to the abundance of oil revenues.53 countries, are consistent with an increase in re- For a long period, public sector jobs were of- turns to education. Returns to education mea- fered to young college graduates. In recent years, sure the wage premium on higher educational however, the fiscal space for continued expan- attainment for workers of the same sex with the sion in public sector employment shrank, and same age and work experience. In all regions, “queuing” for public sector jobs became more more schooling is associated with higher labor prevalent, leading to increasing transitions into earnings, but the gain is not linear. The labor informality, a devaluation of education creden- earnings of workers with tertiary education are tials, and forms of social exclusion.54 A relatively double or more than those of workers with sec- well-educated and young labor force remains ondary education only. However, workers with unemployed, or underemployed, and labor pro- only a secondary education earn little more than ductivity stagnates.55 those with elementary education. The education premium is generally higher the lower the in- come level of the country (figure 1.9). Vulnerability on a global scale Jobs are vulnerable to economic downturns— The role of the private sector and much more so in the private than in the public sector. Short-term crises may wipe out The solution to all these demographic and years of progress. They may start in a single technological challenges rests with the private country and through globalization spread over sector. That does not mean that the government entire regions or, as in the recent one, to the The jobs challenge 59 F I G U R E 1. 8 Wages in developing countries are catching up a. Relative wages in nontradable sectors b. Relative wages in nontradable sectors 50 50 non-U.S. wages to U.S. wages, % non-U.S. wages to U.S. wages, % 40 40 30 30 20 20 10 10 0 0 1985 1990 1995 2000 2005 1985 1990 1995 2000 2005 low skilled (laborer in construction) low skilled (sewing machine operator) high skilled (accountant) high skilled (chemical engineer) c. Dispersion of wages in nontradable sectors d. Dispersion of wages in tradable sectors 1.4 1.4 cross -country wage inequality, cross-country wage inequality, 1.2 1.2 coe cient of variation coe cient of variation 1.0 1.0 0.8 0.8 0.6 0.6 1985 1990 1995 2000 2005 1985 1990 1995 2000 2005 low skilled (laborer in construction) low skilled (sewing machine operator) high skilled (accountant) high skilled (chemical engineer) Source: Based on Oostendorp 2012 for the World Development Report 2013. Note: The database used to construct this figure contains wage data by occupations for an unbalanced panel of more than 150 countries from 1983 to 2008. The data are derived from the International Labour Organization (ILO) October Inquiry database by calibrating the data into a normalized wage rate for each occupation. For a description of the data, see Freeman, Oostendorp, and Chor 2011. The vertical axis in panels a and b represents the ratio between U.S. wages and non-U.S. wages. The vertical axis in panels c and d repre- sents the coefficient of variation of wages—a measure of wage inequality—across all countries in the sample. whole world. In 1995, a financial crisis in Mex- rea. In 2007, an alarming rise in food prices be- ico engulfed most of Latin America as well as got problems with food supply and inflation, other emerging countries. In 1997, a speculative increasing poverty and reducing real wages in attack on Thailand’s currency severely affected parts of the developing world.56 the economies of Indonesia, Malaysia, and Ko- 60 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 F I G U R E 1. 9 Returns to education are higher in poorer countries 25 private annual returns to education, % 20 15 10 5 0 world low income lower-middle income upper-middle income high income primary secondary tertiary Source: Montenegro and Patrinos 2012 for the World Development Report 2013. Note: Reported figures are unweighted averages of country-level private returns, for the most recent year within the period 2000–10 in a sample of 69 countries. F I G U R E 1.10 In China, employment growth is led by the private sector 110 100 90 number of workers, millions 80 70 60 50 40 30 20 10 0 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 state-owned enterprises individual rms (fewer than 8 workers) private rms (8 workers or more) foreign-owned companies Source: Kanamori and Zhao 2004. Note: Data for foreign-owned companies in 2002 and for non-state-owned enterprises in 2003 are not available. In 2008, the bursting of asset price bubbles creating 22 million new unemployed in a single and the resulting collapse of financial institu- year. Growth in total employment, which had tions in the United States and some European been hovering around 1.8 percent a year before countries initiated a crisis of worldwide span, 2008, fell to less than 0.5 percent in 2009, and by The jobs challenge 61 F I G U R E 1.11 In developing countries, the crisis affected earnings more than employment East Asia and Pacific Europe and Central Asia Latin America and the Carribean 0 –2 change in growth rate, % –4 –6 –8 –10 –12 GDP growth employment growth earnings growth Source: Khanna, Newhouse, and Paci 2010. Note: GDP = gross domestic product. The vertical axis measures the difference in growth rates before and after the beginning of the crisis. 2011 had not yet returned to its pre-crisis level.57 countries. The less formalized the labor market, As Europe struggles with high levels of public the more earnings shrank and the less employ- debt, vulnerabilities in its banking sector, and ment numbers gave away. In Central and East- uncertainties about the euro, and as growth de- ern Europe, where the labor market is largely celerates in China and India, it is by no means formalized, the growth rate of GDP dropped on clear that the global crisis is over. average by 12 percentage points, employment The impact of the 2008–09 crisis varied contracted by 3 percent, and earnings fell by across developing countries. Some, such as the more than 8 percent (figure 1.11).62 In East Asia, Baltic countries, the Kyrgyz Republic, Mexico, where formal employment rates are very low, Romania, Russia, South Africa, and Turkey, had the average decline in GDP growth was 5.5 per- absolute declines in employment; other coun- centage points and total employment numbers tries such as Brazil, China, and Indonesia expe- barely changed.63 rienced only a brief deceleration. Country- The policy response to the crisis was unprec- specific studies shed further light on employment edented in its scale, but it also involved different impacts across different population groups. For combinations of instruments, with potentially example, it is estimated that the crisis cost China different implications for jobs. Fiscal stimulus between 20 million and 36 million jobs, particu- across the world amounted to US$5.5 trillion larly among migrant workers in export-oriented in purchasing power parity, with China, Japan, sectors.58 In Mexico, it caused a decline of half a and the United States accounting for more than million jobs between 2008 and the second quar- 70 percent of it.64 Of 77 countries for which ter of 2009, particularly among women, youth, data are available, 80 percent used fiscal ex- and older workers, as well as a 10 percent drop pansion. Higher-income countries favored tax in real wages.59 In Indonesia, although the ef- cuts, higher unemployment benefits, and di- fects of the crisis were mild, young, casual, and rect support for enterprises. Low- and middle- informal workers were affected.60 Across coun- income countries boosted expenditures, includ- tries, the young bore the largest brunt.61 ing spending on training and income-support Adjustment patterns, in terms of jobs lost or measures.65 Across countries, responses mainly earnings declines, also varied in developing aimed at preventing or mitigating employment 62 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 1.4 Responses to the crisis went beyond income support for the unemployed Countries worldwide used an array of policy responses to confront initiatives reached 3.3 percent of the employed in Italy, 3.2 percent the jobs crisis. Macroeconomic stimulus and targeted sector policies in Germany, and 2.7 percent in Japan. were supplemented by policies to strengthen income support for Low- and middle-income countries spent 67 percent of their those affected; measures to boost labor demand through wage resources on direct job creation measures and public works pro- subsidies, credit policies, and public works programs; and invest- grams. Mexico, for example, extended its temporary works program ments in skills and tailor-made employment services for those most to around 250,000 workers, or 0.5 percent of the labor force. Wage affected. subsides were popular in Europe. They were most often imple- Globally, unemployment insurance played a minor role. Only mented through a reduction in social security contributions and 15.4 percent of the unemployed received benefits during the crisis, were targeted to small and medium enterprises or to disadvantaged because of the low effective coverage of unemployment insurance groups such as long-term job seekers and the young. To reach an programs. In 23 countries in the Organisation for Economic Co- effective scale in a timely manner, though, countries needed to have operation and Development, Central Europe, and Latin America, the had such programs in place before the crisis. duration of benefits was extended. Countries with large informal In comparison, efforts to ramp up training, employment ser- sectors or without unemployment schemes relied on a mix of cash vices, or specific support programs for vulnerable groups were rela- transfers and public works schemes to provide additional income tively modest in scope and scale. Building or maintaining skills took support for those in need. Colombia’s Familias en Acción—a pro- the lion’s share of the budget in this category, with Chile, Italy, Mex- gram focusing on strengthening nutrition and education for chil- ico, Turkey, and the United States spending the most. dren—increased its coverage from 1.8 million to 2.7 million families. Overall, countries with more mature social protection systems as Argentina expanded the coverage of family benefits to all informal well as established employment programs were able to respond sector workers. quickly and reduce the impact of the crisis on jobs. With few excep- Countries across all income levels took measures to boost labor tions, though, little is known about possible unintended effects of demand. Of the resources devoted to creating and protecting jobs, their programs such as whether preserving some jobs came at the high-income countries spent more than half (56 percent) on credit expense of destroying others. Careful impact analysis is only in its policies for firms. They also implemented work-sharing arrange- initial stages. ments to cushion the impact of the crisis. Take-up rates for these Sources: ILO and World Bank 2012. losses, rather than trying to offset earnings tion of the labor force.66 Youth unemployment shortfalls (box 1.4). and idleness may be high, and women may face limited job opportunities, leaving potential eco- nomic and social gains untapped.67 A repeating * * * pattern of small gains in living standards, slow productivity growth, and eroding social cohe- Demography, urbanization, globalization, tech- sion may emerge. In contrast, countries that suc- nological progress, and macroeconomic crises cessfully address these job challenges can develop bring about formidable jobs challenges. Coun- virtuous circles. The results—prosperous popu- tries that fail to address them may fall into vi- lations, a growing middle class, increased produc- cious circles of slow growth in labor earnings and tivity, and improved opportunities for women job-related dissatisfaction affecting a sizable por- and youth—may then be self-reinforcing. QUESTION 1 What is a job? The world of work is diverse, especially in devel- on what a job is and what it means almost inevi- oping countries, and it is changing rapidly. tably influence views on what policies for jobs Against this backdrop, the diversity of the words should look like. Those for whom the word job used to describe what people do to earn a living is associated with the image of a worker in an across countries and cultures should not be sur- office or a factory, with an employer and a pay- prising. Even people who speak the same lan- check, may focus on a supportive investment guage can have vastly different interpretations climate for firms. Those for whom the word also of the meaning of a job. For some, the word encompasses farming, street vending, waste conjures up an image of a worker in an office picking, and domestic employment may think or a factory, with an employer and a regular of jobs policies as including land reform, agri- paycheck. Others may think of farmers, self- cultural extension, urban policies, or the provi- employed vendors in cities, and caregivers of sion of voice to the most vulnerable workers. children or elderly relatives. According to the International Conference of Labour Statisticians (ICLS), which sets standard definitions for official use across countries, a job Work matters and words matter is “a set of tasks and duties performed, or meant The varied interpretations capture the different to be performed, by one person, including for an aspects of jobs that people value. A woman in employer or in self-employment.”71 Under this Hanoi, Vietnam, explained, “an old woman who definition, a job is not the same as employment. just sells vegetables can gain respect from others The existence of job vacancies and people with and people listen to her.”68 A man who had more than one job means that the number of worked his way out of poverty in Satgailijhara, jobs is greater than the number of people em- Bangladesh, linked the value of his job as a rice ployed. The existence of unemployment means farmer to being able to invest in his children, “I that people do not find the jobs they want. Jobs have been able to get my children educated. refer to tasks, while the wage employed, farmers, That’s the best achievement in life.”69 and the self-employed refer to the people who Ela Bhatt, a lawyer and the founder of Self do them. Employed Women’s Association (SEWA) in In- dia, described her struggle with the language of Some gray areas work, given the multiplicity of tasks that people do every day and over time: “A small farmer The ICLS definition excludes some forms of works on her own farm. In tough times, she also work from official employment statistics. The works on other farms as a laborer. When the ag- employed are part of the economically active riculture season is over, she goes to the forest to population, defined as people who contribute to collect gum and other forest produce. Year “the production of goods and services as de- round, she produces embroidered items either at fined by the United Nations systems of national a piece rate for a contractor or for sale to a trader accounts and balances.”72 The system of national who comes to her village to buy goods. Now, accounts (SNA) includes “all production actu- how should her trade be categorized? Does she ally destined for the market, whether for sale or belong to the agricultural sector, the factory sec- barter,” as well as the production of goods for tor, or the home-based work sector? Should she one’s own use, but “excludes all production of be categorized as a farmer or a farm worker? Is services for own final consumption within she self-employed or is she a piece-rate worker?”70 households.”73 This definition thus leaves out of These questions are not merely semantic. official statistics activities such as child-rearing, The words and categories that are used to de- care of the elderly, or home cooking, as well as scribe work have tangible implications. Views traveling to work. 64 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Some countries are starting to develop esti- Informality is another important gray mates of these other types of activities. The area. After nearly four decades of debates SNA offers guidelines to countries for produc- about the concept of informality, there is still ing satellite accounts reflecting forms of house- no consensus on what is meant by informal hold work that are not considered jobs. Ac- jobs. Some schools of thought link informality cording to these guidelines, “a job can refer to characteristics of firms—whether the busi- to unpaid household service and volunteer ness is registered or pays taxes. Others focus work performed by one person for a household on characteristics of workers—whether they outside the SNA production boundary but are covered by social protection or have an within the general production boundary.”74 employment contract. And yet others stress Mexico, for instance, has used this guidance to modes of production and levels of productiv- estimate the value of unremunerated activities ity to define informality. A consensus is start- in households, such as housekeeping and child ing to emerge on how to measure informality, care. These activities represented nearly a quar- but the definitions used still leave out types of ter of Mexican GDP between 2003 and 2009 work that some consider informal. Meanwhile, and were equivalent to about two-thirds of relatively few countries produce regular statis- worker wages and benefits.75 tics on informality (box 1.5). BOX 1.5 Few countries produce statistics on informality The concept of dual economies has an old lineage.a Based on the the Delhi Group has been working with the ILO on a forthcoming recognition of dual economies and the Harris and Todaro two-sector “Manual of Surveys of Informal Employment and Informal Sector.” In model, the term informality was first coined by a U.K. anthropologist 2008, the newest version of the United Nation’s system of national in a paper about Ghana. The concept gained popularity with a accounts adopted most of the previous resolutions and recommen- widely cited report from a mission of the International Labour Orga- dations on the measurement of informality. That resulted in a broad nization (ILO) to Kenya.b Since then, studies on informality have pro- definition that includes both the informal sector and informal liferated, and the concept has become standard in development employment. However, gray areas remain in relation to activities studies, labor economics, and other disciplines. Today the causes such as farming, independent professionals, and activities among and implications of informality are the subject of an intense aca- rural workers in general. demic debate and an extended research agenda aimed at under- Few countries produce regular official statistics on informality. standing how labor markets function in developing countries.c The dearth of data is apparent in global repositories such as the A variety of approaches can be used to measure informality, ILO’s Key Indicators of the Labor Market database, which, in its most informal employment, and the informal sector. Measurement be- recent version, includes data on informality for only 60 countries.d A comes even more complex when informality is combined with report on informality across the world by the ILO and Women in other concepts like illegal and underground activities or nonstan- Informal Employment: Globalizing and Organizing (WIEGO) makes dard work. The lack of systematic country-level data on informality systematic use of the most thorough definition of informality, cover- has led researchers to construct their own estimates using similar ing informal employment and employment in informal firms, to but not identical criteria, which sometimes lead to diverging present data on 47 countries.e The ILO-WIEGO report shows infor- conclusions. mality rates ranging from 40 percent in Uruguay and 42 percent in Recommendations on the measurement of informality were first Thailand to 75 percent in Bolivia and 80 percent in India. drafted in 1993 by the 15th International Conference of Labour The extent of informality varies with differences in productivity Statisticians (ICLS). Four years later, the United Nations created the across firms and workers, as well as with differences in the nature of Delhi Group to document and recommend methods for defining regulations and the degree to which they are enforced. Whether and collecting data on the informal sector. In 2003, the 17th ICLS, informality is the result of exit, exclusion, uneven enforcement, or through the document “Guidelines Concerning a Statistical Defini- low firm productivity is still a matter of debate. Better measurement tion of Informal Employment,” introduced a definition of informal can provide information on the magnitude of informality and pro- employment and a series of rules for its measurement. Since 2006, vide more data for the advancement of studies in this area. Source: World Development Report 2013 team. a. Boeke 1942; Lewis 1954. b. Harris and Todaro 1970; Hart 1973; ILO 1972. c. A few among the most recent are Guha-Khasnobis and Kanbur 2006; Perry and others 2007; Kanbur 2009; Blades, Ferreira, and Lugo 2011; and Vanek and others 2012. d. ILO Key Indicators of the Labour Market (database). e. Vanek and others 2012. The jobs challenge 65 What is not a job? are discriminated against, such as migrants, women, and indigenous people. Migrant work- While views about what a job means vary, a ers in sweatshops in Latin America, child sol- broad consensus exists on the types of activities diers in conflict-afflicted areas of Africa, people that should never be considered a job. Interna- trafficked for sexual exploitation in Europe and tional norms define basic human rights as the Asia, and temporary migrant workers under boundaries of what is unacceptable. The United sponsorship contracts in the Middle East are Nations Universal Declaration of Human Rights, the subjects of the most conspicuous forms of which the UN General Assembly embraced forced labor and trafficking in the world. unanimously in 1948, provides for the right to Child labor provides another striking exam- work and protection from discrimination.76 The ple (box 1.6). Although it is covered by the core Declaration on Fundamental Rights and Princi- labor standards and many countries have rati- ples at Work adopted at the ILO conference in fied the relevant ILO conventions and the UN 1998 further specifies core labor standards that Convention on the Rights of the Child, the ILO call for an end to forced and compulsory labor, estimates that 115 million children worldwide child labor, and labor discrimination, and that were involved in hazardous work in 2008. Mea- provide for freedom of association and collec- surement is complicated by legal and moral tive bargaining.77 Most countries have ratified concerns, as well as by the flawed design of sur- the conventions on forced labor, child labor, and veys that may induce parents to misreport chil- discrimination; fewer have ratified the conven- dren’s work.80 These statistics may actually rep- tions on freedom of association and collective resent only a lower boundary on the size of the bargaining (figure 1.12).78 problem. While international agreements help define Recent research shows that children work for what forms of work are unacceptable, in prac- diverse and complex reasons.81 They range from tice many people work in activities that violate household poverty to the relative accessibility their rights. Some 21 million people are esti- and affordability of schooling and from the mated to be subject to forced labor, and around preferences of families and even children re- 1 million to trafficking.79 In many cases, forced garding work and play to the influence of tech- labor is inflicted upon minorities or groups that nological change, international trade, and ur- F I G U R E 1.12 A majority of countries have ratified the core labor standards 180 175 170 number of rati cations, out of 185 countries 165 160 155 150 145 140 135 Con. 87 Con. 98 Con. 29 Con. 105 Con. 100 Con. 111 Con. 138 Con. 182 freedom of association forced labor discrimination child labor Source: ILO 2012c. Note: Con. = Convention. 66 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 may affect schooling, health, fertility, and behav- ior, although establishing these links has been BOX 1.6 Not all child work is child labor challenging. Rarely is there a one-to-one trad- According to the International Labour Organization (ILO), children engaged in eoff between school and work. In many places, child labor include “all persons aged between 5 and 17 years who during a the majority of children who work are also at- specified time period were engaged in one or more of the following activities: tending school. Moreover, a child may have (a) hazardous work; (b) worst forms of child labor other than hazardous work; dropped out of school for reasons unrelated to and (c) other forms of child labor (depending on age of the child and weekly child labor. The participation of children 12 hours worked).”a The “worst forms of child labor” include any work that jeopar- dizes the health, safety, or morals of a child. Such work is determined to be haz- years and older in family farming and small ardous depending on its specific nature, the demands on children in particular household enterprises can in some cases con- industries, and the general working conditions. Apart from hazardous work, tribute to the acquisition of skills.83 the worst forms of child labor include all forms of slavery, bondage, military In sum, jobs are activities that generate actual conscription, trafficking, and using, procuring, or offering children for prostitu- income, monetary or in kind, and do not violate tion, pornography, or other illicit activities. fundamental rights and principles at work. This definition of child labor is governed by two ILO Conventions (132 and This definition includes the categories of work 182), two ILO recommendations (146 and 190), and the UN Convention on the Rights of the Child. However, international standards also provide countries covered by ICLS guidelines: wage or salary em- with some latitude in setting allowed boundaries for the involvement of chil- ployment, employers, members of cooperatives, dren in productive activities (regarding ages or the definition of hazardous family workers (including unpaid family mem- work, for example). The standards also permit limited work in the performance bers), and the self-employed. In many instances, of household chores or in light productive activities that are not considered however, these categories may fail to uniquely or harmful. clearly classify certain individuals. For instance, small farmers are sometimes wage employed or Source: World Development Report 2013 team. self-employed, but they may also be employers a. ILO 2008a. if they hire unpaid family workers. Jobs include labor activities that generate income for the household, even if no income measure can be at- banization. Children in wealthier households tributed to a person’s specific labor, as in the case may, in some settings, be engaged in child labor of household enterprises and farming. if household assets and access to finance, land, By this definition, jobs are much broader or other resources generate more demand for than just working in an office or a factory, with work from household members.82 Child labor an employer and a regular paycheck. The jobs challenge 67 © Sebastião Salgado/Amazonas—Press Images Garimpeiros (independent prospectors) at the Serra Pelada gold mine, in Brazil 68 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Notes 1970; Hart 1973; ILO 1972. For a recent study of the process of structural change in Africa, see 1. World Development Report 2013 team estimates. Losch, Freguin-Gresh, and White (2012). 2. World Development Report 2013 team estimates 23. Freeman and Schettkat 2005; Ngai and Pissarides based on data from the International Labour 2008. Organization, http://laborsta.ilo.org/applv8/data/ 24. Bardasi and Wodon 2006; Lee, McCann, and EAPEP/eapep_E.html, and World Development Messenger 2007; Maddison 2001; Ramey and Indicators, http:/data-worldbank.org/data/cata Francis 2009. log/world-development-indicators. 25. Bardasi and Wodon 2010; Gammage 2010. 3. Reid 1934, 11. 26. Charmes 2006; Gálvez-Muñoz, Rodríguez- 4. Organisation for Economic Co-operation and Modroño, and Domínguez-Serrano 2011; Hir- Development Employment database, http:// way and Jose 2012. Burda, Hamermesh, and Weil www.oecd.org/employment/database. Tempo- (2011) argue that differences in total work by rary work refers to a mixture of seasonal jobs, gender change over the business cycle but con- fixed-term contracts, on-call workers, and verge over the long term. temporary help agency workers that varies by 27. ILO 2009a; Pagés 2010. country, depending on national definitions and 28. Autor and Dorn 2011; Gratton 2011; Holzer and available statistics. Lerman 2009. 5. Lee, McCann, and Messenger 2007. 29. Feenstra 2010. 6. ILO Department of Statistics, “Short term indi- 30. Brown, Ashton, and Lauder 2010. For U.S. parent cators of the labour market,” http://laborsta.ilo companies, according to the National Science .org/sti/sti_E.html. Foundation, the share of research performed by 7. Ghose, Majid, and Ernst 2008. Asia-located affiliates outside of Japan rose from 8. Gindling and Newhouse 2012 for the World De- 5 to 14 percent from 1997 to 2008, mainly in velopment Report 2013. China, Korea, Singapore, and India (http://nsf 9. World Bank (2011c) offers a more in-depth re- .gov/statistics/seindl12/c4/c4s4.htm). view of these issues. 31. Goswami, Mattoo, and Sáez 2011. 10. ILO Department of Statistics, “Short term indi- 32. Goswami, Mattoo, and Sáez 2011. cators of the labour market,” http://laborsta.ilo 33. A.T. Kearney 2011. .org/sti/sti_E.html. 34. United Nations Educational, Scientific and Cul- 11. Youth not in employment, education, or training tural Organization Institute of Statistics, http:// are also sometimes referred to as “NEETs.” See the stats.uis.unesco.org/unesco/TableViewer/ statistical annex for more information. Kovrova, tableView.aspx?ReportId=175. Lyon, and Rosati 2012 for the World Develop- 35. WDR team estimates of the top 20 percent of ment Report 2013; Ranzani and Rosati 2012 for PISA ratings among 12 countries in the 2009 the World Development Report 2013. Programme for International Student Assess- 12. Lyon, Rosati, and Guarcello 2012 for the World ment (PISA) of 15-year-olds. Development Report 2013. 36. This skill definition broadly follows Autor, Levy, 13. World Bank 2006. and Murnane (2003) and Acemoglu and Autor 14. ILO 2010. (2011). Other approaches distinguish, for exam- 15. United Nations Population Division, World Pop- ple, between cognitive, noncognitive, and techni- ulation Prospects 2011; ILO, Labor Force Partici- cal skills (World Bank 2010) or cognitive/problem pation Estimates and Projections. solving, learning, personal/behavioral/ethical, and 16. Rozelle and Huang 2012 and estimates from In- social and communication skills (ILO 2008b). ternational Labour Office database on labor sta- 37. Aedo and others 2012 for the World Develop- tistics, Laborsta, http://laborsta.ilo.org/, October ment Report 2013. 2011. 38. Brown, Ashton, and Lauder 2010. 17. IOM 2008; Lucas 2005; Özden and others 2011. 39. A.T. Kearney 2011. 18. IOM 2010. 40. Yoshino 2011. 19. Chenery and Syrquin 1975; Clark 1940; Kuznets 41. Examples include oDesk (https://www.odesk 1966; Rostow 1960. .com/), babajob (http://www.babajob.com/), 20. UN 2011b. Google trader (for example, http://www.google 21. Herrmann and Khan 2008. .co.ug/africa/trader/search?cat=jobs), and Souk- 22. This is the main observation that sparked the re- Tel (http://www.souktel.org/). search on the informal sector: Harris and Todaro 42. McKinsey Global Institute 2011. The jobs challenge 69 43. Blanchflower, Oswald, and Stutzer 2001. More 70. Bhatt 2006, 17. recent (2005) data of the International Social 71. Article 2, ILO 2007. Also see UN (2009). Survey Programme show similar patterns. 72. Article 9, ILO 1982, http://www.ilo.org/wcmsp5/ 44. WDR team estimates from the 2010 Life in Tran- groups/public/---dgreports/---stat/documents/ sitions Survey. normativeinstrument/wcms_087481.pdf. 45. Banerjee and Duflo 2011; Perry and others 2007. 73. UN 2009, 6–7. 46. Banerjee and Duflo 2011. Although, it is not al- 74. ILO 2009b, 42. ways the case that the self-employed always report 75. INEGI 2011. lower well-being. In their study from Ghana, Falco 76. UN 1948, http://www.un.org/en/documents/ and others 2012 for the WDR 2013 find that infor- udhr/, article 23 (1). mal firm owners who employ others are on aver- 77. ILO 1998. age substantially happier than formal workers. 78. The core international labor standards are the 47. Based on an update by the authors Chen and subject of eight conventions covering the four Ravallion 2010. areas: Convention 87 (1948), the Freedom of As- 48. World Bank 2011b. sociation and Protection of the Right to Organize 49. Guscina 2006; Lübker 2007; Rodriguez and Convention; Convention 98 (1949), the Right to Jayadev 2010. Organize and Collective Bargaining Convention; 50. Bentolila and Saint-Paul 2003; Freeman 2008. Convention 29 (1930), the Forced Labour Con- 51. International Labour Office database on labor vention; Convention 105 (1957), the Abolition statistics, Laborsta, http://laborsta.ilo.org/. of Forced Labour Convention; Convention 100 52. The definition of “private sector” in China is (1951), the Equal Remuneration Convention; broad and sometimes not clearly defined in offi- Convention 111 (1958), the Discrimination (Em- cial statistics. There is differentiation between ployment and Occupation) Convention; Con- what are labeled “private firms” (a profit-making vention 138 (1973), the Minimum Age Conven- unit invested in and established by natural per- tion; and Convention 182 (1999), the Worst sons or controlled by persons hiring more than Forms of Child Labour Convention. See “Con- seven workers) and “individual firms” (those ventions,” NORMLEX Database: Information on with fewer than eight employees). Foreign- International Labour Standards, International invested firms and collectives are not part of the Labour Organization, Geneva. ILO (2012). http:// private sector in official statistics. For more de- www.ilo.org/dyn/normlex/en/. tails, see Kanamori and Zhao (2004). 79. Andrees and Belser 2009; ILO 2009c; ILO 2012b. 53. Nabli, Silva-Jaurengui, and Faruk Aysan 2008. 80. Dillon and others 2012. 54. Assaad 2012; Assaad and Barsoum 2007. 81. Basu 1999; Basu and Tzannatos 2003; Cigno and 55. Mryyan 2012. Rosati 2005; Edmonds 2008. 56. For a study of previous crises, see Fallon and 82. Del Carpio and Loayza 2012; Hazarika and Lucas (2002). For the food price crisis, see Ivanic Sarangi 2008. and Martin (2008). 83. Edmonds (2008) offers a review of the theoretical 57. ILO 2012a. and empirical evidence on child labor. 58. Giles and others 2012 for the World Develop- ment Report 2013. These losses were temporary and currently worker shortages are experienced instead. References 59. Freije-Rodriguez, Lopez-Acevedo, and Rodriguez- Oreggia 2011. The word processed describes informally reproduced 60. McCulloch, Grover, and Suryahadi 2011. works that may not be commonly available through 61. Cho and Newhouse 2010. libraries. 62. Khanna, Newhouse, and Paci 2010. 63. Khanna, Newhouse, and Paci 2010; World Bank A.T. Kearney. 2011. Offshoring Opportunities amid 2012. Economic Turbulence: A.T. Kearney Global Services 64. ILO and World Bank 2012. Location Index, 2011. Chicago: A.T. Kearney 65. ILO and World Bank 2012; Robalino, New- Global Services Location Index. house, and Rother forthcoming. Acemoglu, Daron, and David Autor. 2011. “Skills, 66. Bell and Blanchflower 2011; Farber 2011. Tasks and Technologies: Implications for Employ- 67. World Bank 2011c. ment and Earnings.” In Handbook of Labor Eco- 68. World Bank 2011a. nomics Volume 4, ed. Orley Ashenfelter and David 69. Narayan, Pritchett, and Kapoor 2009, 19. E. Card. Amsterdam: Elsevier. 70 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Aedo, Cristian, Jesko Hentschel, Javier Luque, and Blades, Derek, Francisco H. G. Ferreira, and Maria Martin Moreno. 2012. “Skills Around the World: Ana Lugo. 2011. “The Informal Economy in De- Structure and Recent Dynamics.” Background veloping Countries: An Introduction.” Review of paper for the WDR 2013. Income and Wealth 57 (Special Issue): S1–S7. Andrees, Beate, and Patrick Belser. 2009. Forced La- Blanchflower, David G., Andrew J. Oswald, and Alois bour: Coercion and Exploitation in the Private Econ- Stutzer. 2001. “Latent Entrepreneurship across omy. Geneva: International Labour Organization. Nations.” European Economic Review 45 (4–6): Assaad, Ragui. 2012. “The MENA Paradox: Higher 680–91. Education but Lower Job Quality.” In Moving Boeke, Julius H. 1942. Economies and Economic Policy Jobs to the Center Stage. Berlin: BMZ (Bundesmin- in Dual Societies. Haarlem: Tjeenk Willnik. isterium für Wirstchaftliche Zussamenarbeit), Brown, Philip, David Ashton, and Hugh Lauder. 2010. Berlin Workshop Series. Skills Are Not Enough: The Globalization of Knowl- Assaad, Ragui, and Ghada Barsoum. 2007. “Youth Ex- edge and the Future of the UK Economy. Wath clusion in Egypt: In Search of ‘Second Chances.’ ” upon Dearne, U.K.: United Kingdom Commis- Middle East Youth Initiative Working Paper Series sion for Employment and Skills. 2, Wolfensohn Center for Development, Dubai Burda, Michael C., Daniel S. Hamermesh, and School of Government, Dubai. Philippe Weil. 2011. “Total Work, Gender and So- Autor, David H., and David Dorn. 2011. “The Growth cial Norms.” Working Paper Series 13000, Na- of Low-Skill Service Jobs and the Polarization of tional Bureau of Economic Research, Cambridge, the U.S. Labor Market.” Massachusetts Institute of MA. Technology, Cambridge, MA. Processed. Charmes, Jacques. 2006. “A Review of Empirical Evi- Autor, David H., Frank Levy, and Richard J. Murnane. dence on Time Use in Africa from UN-Sponsored 2003. “The Skill Content of Recent Technological Surveys.” In Gender, Time Use, and Poverty in Sub- Change: An Empirical Exploration.” Quarterly Saharan Africa, ed. C. Mark Blackden and Quen- Journal of Economics 118 (4): 1279–333. tin Wodon, 39–72. Washington, DC: World Bank. Bajaj, Vikas. 2011. “Outsourcing Giant Finds It Must Chen, Shaohua, and Martin Ravallion. 2010. “The Be Client, Too.” New York Times, November 30. Developing World Is Poorer Than We Thought, Banerjee, Abhijit V., and Esther Duflo. 2011. Poor Eco- but No Less Successful in the Fight against Pov- nomics: A Radical Rethinking of the Way to Fight erty.” Quarterly Journal of Economics 125 (4): Global Poverty. New York: Public Affairs. 1577–625. Bardasi, Elena, and Quentin Wodon. 2006. “Poverty Reduction from Full Employment: A Time Use Chenery, Hollis Burnley, and Moises Syrquin. 1975. Approach.” Munich Personal RePEc Archive Paper Patterns of Development, 1957–1970. London: Ox- 11084, Munich. ford University Press. ———. 2010. “Working Long Hours and Having No Cho, Yoonyoung, and David Newhouse. 2010. “How Choice: Time Poverty in Guinea.” Feminist Eco- Did the Great Recession Affect Different Types nomics 16 (3): 45–78. of Workers? Evidence from 17 Middle-Income Basu, Kaushik. 1999. “Child Labor: Cause, Conse- Countries.” Discussion Paper Series 5681, Insti- quence, and Cure, with Remarks on International tute for the Study of Labor, Bonn. Labor Standards.” Journal of Economic Literature Cigno, Alessandro, and Furio C. Rosati. 2005. The 37 (3): 1083–119. Economics of Child Labour. Oxford: Oxford Uni- Basu, Kaushik, and Zafiris Tzannatos. 2003. “Child versity Press. Labor and Development: An Introduction.” World Clark, Colin. 1940. The Conditions of Economic Prog- Bank Economic Review 17 (2): 145–6. ress. London: Macmillan & Company. Bell, David N. F., and David G. Blanchflower. 2011. Del Carpio, Ximena, and Norman Loayza. 2012. “The “The Crisis, Policy Reactions and Attitudes to Impact of Wealth on the Amount and Quality Globalization and Jobs.” Discussion Paper Series of Child Labor.” Policy Research Working Paper 5680, Institute for the Study of Labor, Bonn. Series 5959, World Bank, Washington, DC. Bentolila, Samuel, and Gilles Saint-Paul. 2003. “Ex- Dillon, Andrew, Elena Bardasi, Kathleen Beegle, and plaining Movement in the Labor Share.” Contri- Pieter Serneels. 2012. “What Explains Variation in butions to Macroeconomics 3 (1). Child Labor Statistics? Evidence from a Survey Bhatt, Ela. 2006. We Are Poor but So Many: The Story Experiment in Tanzania.” Journal of Development of Self-Employed Women in India. New York: Ox- Economics 98 (1): 136–47. ford University Press. Dourgarian, Gregg. 2011. “Five Staffing Industry Bhorat, Haroon. 2012. “Temporary Employment Ser- Trends for 2011.” Staffing Talk, January 3. vices in South Africa.” Background paper for the Edmonds, Eric. 2008. “Child Labor.” In Handbook of WDR 2013. Development Economics, Vol. 4, ed. T. Paul Shultz The jobs challenge 71 and John Strauss, 3607–709. Oxford: North Hol- Guha-Khasnobis, Basudeb, and Ravi Kanbur, eds. land Elsevier. 2006. Informal Labour Markets and Development. Falco, Paolo, William Maloney, Bob Rijkers, and Mau- New York: Palgrave Macmillan. ricio Sarrias. 2012. “Subjective Well-Being, Infor- Guscina, Anastasia. 2006. Effects of Globalization on mality, and Preference Heterogeneity in Africa.” Labor’s Share in National Income. Washington, Background paper for the WDR 2013. DC: International Monetary Fund. Fallon, Peter, and Robert Lucas. 2002. “The Impact of Harris, John R., and Michael P. Todaro. 1970. “Migra- Financial Crises on Labor Markets, Household In- tion, Unemployment and Development: A Two- comes and Poverty: A Review of Evidence.” World Sector Analysis.” American Economic Review 60 Bank Research Observer 17 (1): 21–45. (1): 126–42. Farber, Henry S. 2011. “Job Loss in the Great Reces- Hart, Keith. 1973. “Informal Income Opportunities sion: Historical Perspective from the Displaced and Urban Employment in Ghana.” Journal of Workers Survey, 1984–2010.” Discussion Paper Modern African Studies 11 (1): 61–89. Series 5696, Institute for the Study of Labor, Bonn. Hazarika, Gautam, and Sudipta Sarangi. 2008. Feenstra, Robert C. 2010. Offshoring in the Global “Household Access to Microcredit and Child Economy: Microeconomic Structure and Macroeco- Work in Rural Malawi.” World Development 36 nomic Implications. Cambridge, MA: MIT Press. (5): 843–59. Freeman, Richard B. 2008. “The New Global Labor Herrmann, Michael, and Haider Khan. 2008. “Rapid Market.” Focus 26 (1): 1–6. Urbanization, Employment Crisis and Poverty Freeman, Richard, Remco H. Oostendorp, and Davin in African LDCs: A New Development Strategy Chor. 2011. “The Standardized ILO October In- and Aid Policy.” Munich Personal RePEc Archive quiry 1953–2008.” National Bureau of Economic Paper 9499, Munich. Research, Cambridge, MA. Hirway, Indira, and Sunny Jose. 2012. “Understand- Freeman, Richard, and Ronald Schettkat. 2005. ing Women’s Work Using Time-Use Statistics: The “Marketization of Household Production and the Case of India.” Feminist Economics 17 (4): 67–92. EU-US Gap in Work.” Economic Policy 20 (41): Holzer, Harry, and Robert Lerman. 2009. The Future 5–50. of Middle-Skill Jobs. Washington, DC: Center on Freije-Rodriguez, Samuel, Gladys Lopez-Acevedo, Children and Families, Brookings Institute. and Eduardo Rodriguez-Oreggia. 2011. “Effects of ILO (International Labour Organization). 1972. Em- the 2008–09 Economic Crisis on Labor Markets in ployment, Incomes and Equality: A Strategy for In- Mexico.” Policy Research Working Paper Series creasing Productive Employment in Kenya. Geneva: 5840, World Bank, Washington, DC. ILO. Gálvez-Muñoz, Lina, Paula Rodríguez-Modroño, and ———. 1982. Resolution Concerning Statistics of the Mónica Domínguez-Serrano. 2011. “Work and Economically Active Population, Employment, Time Use By Gender: A New Clustering of Euro- Unemployment and Underemployment. Adopted pean Welfare Systems.” Feminist Economics 17 (4): by the Thirteenth International Conference of La- 125–57. bour Statisticians, ILO, Geneva, October 29. Gammage, Sarah. 2010. “Time Pressed and Time ———. 1998. Declaration on Fundamental Princi- Poor: Unpaid Household Work in Guatemala.” ples and Rights at Work. Adopted by the Interna- Feminist Economics 16 (3): 79–112. tional Labour Conference at its Eighty-sixth Ses- Ghose, Ajit K., Nomaan Majid, and Christoph Ernst. sion, ILO, Geneva, June 18. 2008. The Global Employment Challenge. Geneva: ———. 2007. Resolution Concerning Updating the International Labour Organization. International Standard Classification of Occupa- Giles, John, Albert Park, Fang Cai, and Yang Du. tions. Adopted by the Tripartite Meeting of Ex- 2012. “Weathering a Storm: Survey-Based Per- perts on Labour Statistics on Updating the Inter- spectives on Employment in China in the After- national Standard Classification of Occupations, math of the Global Financial Crisis.” Policy Re- ILO, Geneva, December 6. search Working Paper Series 5984, World Bank, ———. 2008a. Resolution Concerning Statistics of Washington, DC. Child Labour. Adopted by the Eighteenth Interna- Gindling, T. H., and David Newhouse. 2012. “Self- tional Conference of Labour Statisticians, ILO, Employment in the Developing World.” Back- December 5. ground paper for the WDR 2013. ———. 2008b. Skills for Improved Productivity, Em- Goswami, Arti Grover, Aaditya Mattoo, and Sebastián ployment Growth and Development. Geneva: ILO. Sáez, eds. 2011. Exporting Services: A Developing ———. 2009a. Protecting People, Promoting Jobs: A Country Perspective. Washington, DC: World Bank. Survey of Country Employment and Social Protec- Gratton, Lynda. 2011. The Shift: The Future of Work Is tion Policy Responses to the Global Economic Crisis. Already Here. London: HarperCollins. Geneva: ILO. 72 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 ———. 2009b. Report of the Conference, 18th Interna- Kuznets, Simon. 1966. Modern Economic Growth. tional Conference of Labour Statisticians. Geneva: New Haven, CT: Yale University Press. ILO. Lee, Sangheon, Deidre McCann, and Jon C. Messen- ———. 2009c. The Cost of Coercion. Geneva: ILO. ger. 2007. Working Time around the World. New ———. 2010. Accelerating Action against Child La- York: Routledge; Geneva: International Labour bour. Geneva: ILO. Organization. ———. 2011. Private Employment Agencies, Promo- Lewis, W. Arthur. 1954. “Economic Development tion of Decent Work and Improving the Functioning with Unlimited Supplies of Labor.” The Manches- of Labour Markets in Private Services Sectors. ter School 22 (2): 139–91. Geneva: ILO. Losch, Bruno, Sandrine Freguin-Gresh, and Eric ———. 2012a. Global Employment Trends 2012: Pre- Thomas White. 2012. Structural Transformation venting a Deeper Jobs Crisis. Geneva: ILO. and Rural Change Revisited: Challenges for Late ———. 2012b. ILO Global Estimate of Forced Labour Developing Countries in a Globalizing World. 2012: Results and Methodology. Geneva: ILO. Washington, DC: World Bank. ———. 2012c. NORMLEX Database: Information Lübker, Malte. 2007. “Labour Shares.” Technical Brief System on International Labour Standards. ILO, 1, International Labour Organization, Geneva. Geneva. http://www.ilo.org/dyn/normlex/en/f?p= Lucas, Robert E. B. 2005. International Migration and NORMLEXPUB:1:0. Economic Development: Lessons from Low-Income ILO and World Bank. 2012. Inventory of Policy Re- Countries. Cheltenham, U.K.: Edward Elgar sponses to the Financial and Economic Crisis: Joint Publishing. Synthesis Report. Washington, DC: ILO and World Lyon, Scott, Furio C. Rosati, and Lorenzo Guarcello. Bank. 2012. “At the Margins: Young People neither in INEGI (Instituto Nacional de Estadística y Geografía Education nor in Employment.” Background pa- per for the WDR 2013. de México). 2011. Sistema de Cuentas Nacionales Maddison, Angus. 2001. The World Economy: A Mil- de México. Cuenta Satélite del Trabajo no Remu- lennial Perspective. Paris: Organisation for Eco- nerado de los Hogares de México, 2003–2009. Mex- nomic Co-operation and Development. ico, DF: INEGI. McCulloch, Neil, Amit Grover, and Asep Suryahadi. IOM (International Organization for Migration). 2011. The Labor Market Impact of the 2009 Finan- 2008. World Migration Report 2008: Managing cial Crisis in Indonesia. Sussex, U.K.: Institute of Labor Mobility in the Evolving Global Economy. Development Studies. Geneva: IOM. McKinsey Global Institute. 2011. An Economy That ———. 2010. World Migration Report 2010—The Fu- Works: Job Creation and America’s Future. Wash- ture of Migration: Building Capacities for Change. ington, DC: McKinsey Global Institute. Geneva: IOM. Montenegro, Claudio E., and Harry Anthony Patri- Ivanic, Maros, and Will Martin. 2008. “Implications nos. 2012. “Returns to Schooling around the of Higher Global Food Prices for Poverty in Low- World.” Background paper for the WDR 2013. Income Countries.” Agricultural Economics 39 (1): Mryyan, Nader. 2012. “Demographics, Labor Force 405–16. Participation, and Unemployment in Jordan.” Kanamori, Tokishi, and Zhijun Zhao. 2004. Private Working Paper Series 670, Economic Research Sector Development in the People’s Republic of Forum, Giza, Egypt. China. Manila: Asian Development Bank Institute. Musgrave, Amy. 2009. “Labor Broking Industry Likely Kanbur, Ravi. 2009. “Conceptualizing Informality: to Face Regulation.” Business Day, August 25. Regulation and Enforcement.” Indian Journal of Nabli, Mustapha K., Carlos Silva-Jáuregui, and Ahmet Labour Economics 52 (1): 33–42. Faruk Aysan. 2008. “Authoritarianism, Credibility Khanna, Gaurav, David Newhouse, and Pierella Paci. of Reforms, and Private Sector Development in 2010. “Fewer Jobs or Smaller Paychecks? Labor the Middle East and North Africa.” Working Paper Market Impacts of the Recent Crisis in Middle- Series 443, Economic Research Forum, Cairo. Income Countries.” Economic Premise April Narayan, Deepa, Lant Pritchett, and Soumya Kapoor. 2010, Number 11, Poverty Reduction and Equity 2009. Success from the Bottom Up. Vol. 2 of Moving Group and the Human Development Network Out of Poverty. New York: Palgrave Macmillan; Social Protection Division, World Bank, Washing- Washington, DC: World Bank. ton, DC. Ngai, Rachel L., and Christopher A. Pissarides. 2008. Kovrova, Irina, Scott Lyon, and Furio Camillo Rosati. “Trends in Hours and Economic Growth.” Review 2012. “NEET Youth Dynamics in Indonesia and of Economic Dynamics 11 (2): 239–56. Brazil: A Cohort Analysis.” Background paper for Oostendorp, Remco. 2012. “The Occupational Wages the WDR 2013. around the World (OWW) Database: Update for The jobs challenge 73 1983–2008.” Background paper for the WDR TeamLease. 2010. Temp Salary Primer 2010. Ahmed- 2013. abad, India: TeamLease Services Pvt. Ltd. Özden, Çaglar, Christopher Parsons, Maurice Schiff, UN (United Nations). 1948. Universal Declaration of and Terrie L. Walmsley. 2011. “Where on Earth Human Rights. Adopted by the UN General As- Is Everybody? The Evolution of Global Bilateral sembly, New York, December 10. Migration 1960–2000.” World Bank Economic Re- ———. 2009. System of National Accounts. New York: view 25 (1): 12–56. UN. Pagés, Carmen, ed. 2010. The Age of Productivity: ———. 2011b. World Urbanization Prospects: The Transforming Economies from the Bottom Up. New 2011 Revision. New York: UN, Department of York: Palgrave Macmillan. Economic and Social Affairs. Perry, Guillermo E., William F. Maloney, Omar S. Vanek, Joann, Martha Chen, Ralf Hussmanns, James Arias, Pablo Fajnzylber, Andrew D. Mason, and Heintz, and Françoise Carré. 2012. Women and Jaime Saavedra-Chanduvi. 2007. Informality: Exit Men in the Informal Economy: A Statistical Picture. and Exclusion. Washington, DC: World Bank. Geneva: Women in Informal Employment: Glo- Ranzani, Marco, and Furio Camillo Rosati. 2012. balizing and Organizing and International Labour “The NEET Trap: A Dynamic Analysis for Mex- Organization. ico.” Background paper for the WDR 2013. World Bank. 2006. World Development Report 2007: Ramey, Valerie A., and Neville Francis. 2009. “A Cen- Development and the Next Generation. Washing- tury of Work and Leisure.” American Economic ton, DC: World Bank. Journal: Macroeconomics 1 (2): 189–224. ———. 2010. Stepping Up Skills for More Jobs and Reid, Margaret. 1934. Economics of Household Produc- Higher Productivity. Washington, DC: World tion. New York: John Wiley and Sons. Bank. Robalino, David, David Newhouse, and Friederike ———. 2011a. Defining Gender in the 21st Century: Rother. Forthcoming. “Labor and Social Protec- Talking with Women and Men around the World, A tion Policies during the Crisis and Recovery.” In Multi-Country Qualitative Study of Gender and Labor Markets in Developing Countries during the Economic Choice. Washington, DC: World Bank. Great Recession: Impacts and Policy Responses, ed. ———. 2011b. More and Better Jobs in South Asia. Arup Banerji, David Newhouse, David Robalino, Washington, DC: World Bank. and Pierella Paci. Washington, DC: World Bank. ———. 2011c. World Development Report 2012: Gen- Rodriguez, Francisco, and Arjun Jayadev. 2010. “The der Equality and Development. Washington, DC: Declining Labor Share of Income.” Human Devel- World Bank. opment Research Paper 2010/36, United Nations ———. 2012. Job Trends. Washington, DC: World Development Programme, New York. Bank. Rostow, Walt Whitman. 1960. The Stages of Economic Yoshino, Yutaka, ed. 2011. Industrial Clusters and Growth: A Non-Communist Manifesto. Cambridge, Micro and Small Enterprises in Africa: From Sur- U.K.: Cambridge University Press. vival to Growth. World Bank Directions in Devel- Rozelle, Scott, and Jikun Huang. 2012. “China’s Labor opment Series. Washington, DC: World Bank. Transition and the Future of China’s Rural Wages and Employment.” Background paper for the WDR 2013. PART 1 Jobs are transformational Introduction to Part 1 E conomic development is about improve- ments in living standards supported by productivity growth. It also involves so- DEVELOPMENT cial change associated with urbanization, inte- gration in the world economy, and the drive toward gender equality. All of these transforma- tions are related to jobs. The development pro- cess is about some jobs becoming better and LIVING PRODUCTIVITY SOCIAL STANDARDS COHESION others disappearing, about people taking jobs and changing jobs, and about jobs migrating to other places within and across countries. Development often entails the movement of labor from rural, agricultural, and mostly sub- sistence activities to urban, nonagricultural, and mostly market-oriented activities. This move- ment transforms the lives of families and com- JOBS munities, the organization of firms, and the norms and values of societies. It can boost pro- ductivity and improve living standards and also affect the cohesiveness of society. Jobs are thus a key driver of development. haviors, they can influence trust and civic engagement. • Living standards: Jobs provide earnings op- portunities to lift people out of poverty, raise Distinguishing these three transformations pro- their consumption, and contribute to indi- vides an understanding of how jobs contribute vidual well-being more broadly. to development. People’s well-being is the ulti- mate goal, and the transformation of living • Productivity: Through job creation and de- standards captures this link directly. But sus- struction within sectors and reallocations tained improvements in living standards are im- across sectors and countries, jobs are also at possible without productivity growth or when the root of economic growth. resources are wasted through confrontation. • Social cohesion: Jobs define who people are That is why it is necessary to look at the three in many ways; by shaping values and be- transformations jointly. 75 CHAPTER 2 Jobs and living standards Jobs are the main source of income for the majority of households and a key driver of poverty reduction. But their contribution to well-being goes beyond the earnings they provide. J obs are the most important determinant of living standards around the world. For the vast majority of people, their work is the main source of income, especially in the poorest Jobs also influence how workers see them- selves and relate to others. Most people feel that jobs should be meaningful and contribute to so- ciety. Together with other objective job charac- countries. And jobs-related events are the most teristics, the self-esteem a job provides is an im- frequent reasons for families to escape or fall portant determination of satisfaction with life. into poverty. Furthermore, as earnings increase, individual choices expand—household mem- bers can opt to stay out of the labor force or to Jobs improve material well-being work fewer hours and dedicate more time to education, retirement, or family. Opportunities Over the course of a country’s development, for gainful work, including in farming and higher productivity and labor earnings allow self-employment, offer households the means to households to allocate more time to invest- increase consumption and reduce its variability. ment and consumption activities and less to Higher crop yields, access to small off-farm en- production. Thus, schooling and retirement terprise activities, the migration of family mem- gain importance relative to work. For the past bers to cities, and transitions to wage employ- century or so, the number of hours worked by ment are milestones on the path to prosperity. youth in industrial countries has declined In addition to their fundamental and imme- steadily as access to education has increased. diate contribution to earnings, jobs affect other Similarly, the number of years in retirement dimensions of well-being, positively and nega- has increased in parallel with longer life expec- tively. Not having a job undermines mental tancy.1 Higher earnings also facilitate longer health, especially in countries where wage em- periods of job seeking, especially among ployment is the norm and the lack of employ- younger household members, often leading to ment opportunities translates into open unem- higher unemployment rates. Among men and ployment rather than underemployment. But a women of prime age (25 to 54), total working job prone to occupational accidents or work- hours (market and nonmarket) have remained related diseases can damage physical health or relatively stable, with the main change being worse. More generally, monetary, nonmonetary, the growing share of market activities among and even subjective characteristics of jobs can all women (figure 2.1). These general trends are have an impact on well-being (box 2.1). not ironclad, however. Jobs and living standards 77 BOX 2.1 There are many dimensions of living standards and many ways to measure them Debates on how to define and measure living standards go far back of standards of living and poverty reduction worldwide. Advances in social sciences. The work by Rowntree and Booth in late 19th cen- toward the first Millennium Development Goal (Eradicate extreme tury England is usually mentioned as seminal, especially in relation poverty) have been documented using global monetary poverty to the measurement of poverty. In the 1930s, the creation of the Sys- measures. The availability of richer datasets, in turn, has supported tem of National Accounts concentrated on measuring the total mar- the emergence of newer measures of living standards, many of ket value of the goods and services produced in an economy and them multidimensional in nature. These measures combine both made gross domestic product (GDP) per capita the main indicator monetary and nonmonetary indicators of well-being, as well of living standards in general. By the 1970s and 1980s, there was a as information on their distribution across different population growing agreement that important aspects of well-being, such as groups.b health status, or exposure to crime, pollution, and urban conges- Despite this progress, important controversies remain, particu- tion, were not fully accounted for in GDP. Research also showed that larly on which indicators are more appropriate for gauging each the distribution of material amenities affected individual well- dimension of well-being and on the weights that should be attrib- being. There is now consensus that living standards depend not uted to each. Some recent proposals even suggest a revamping of only on average incomes and consumption but also on access to statistical systems to formulate better measures of production that benefits as diverse as health and education, sanitation and housing, take into consideration changes in the quality of goods, govern- and security and freedom.a ment services, and time allocated to home activities and leisure. There are ongoing systematic efforts to collect individual, There are also proposals to include among measures of living stan- household, and community data to better understand and com- dards subjective indicators of well-being and indicators on the level pare living standards in developing and developed countries. Com- and sustainability of human, physical, and environmental assets.c plete poverty profiles for different groups of the population within Other proposals emphasize subjective indicators building on a phil- a country, based on the comparison of income or consumption osophical point of view.d Aggregating indicators and comparing aggregates to international or national poverty lines, have prolifer- them over time and across space becomes more intricate in this ated. Microdata collection efforts have allowed a close monitoring case, because of differences in values and beliefs. Source: World Development Report 2013 team. a. Adelman and Morris 1973; Chenery and Syrquin 1975; Nordhaus and Tobin 1973; Sen and Hawthorn 1987; Steckel 1995; Streeten 1979. b. Among these indicators are the Human Development Index (UNDP 1990), the Human Opportunity Index (Paes de Barros and others 2009), and a large variety of multi­ dimensional poverty indexes (Alkire and Foster 2011; Bourguignon and Chakravarty 2003; Kakwani and Silber 2008). See also OECD 2011. c. Fitoussi, Sen, and Stiglitz 2010. d. This is the case, for instance, of the measures of Gross National Happiness in Bhutan by the Center for Bhutan Studies. The nature of production, consumption, nied by higher market participation among and investment activities varies across coun- women.3 Developed and developing econ- tries as well. In some, low hours of work among omies allocate a similar share of the day to youth are associated more with idleness than work. But women allocate a larger share than with schooling; in others, schooling has pro- men to activities not directly generating income ceeded at an accelerated pace. Similarly, job (figure 2.2). characteristics change with development. In Jobs do not automatically guarantee sus- rural economies where agricultural activities tained improvements in earnings and well- predominate, the purpose of household pro- being. Working people often remain mired in duction is often direct consumption. Less de- poverty. In many countries, adults in poor veloped economies tend to be characterized households are more likely to be working than by more working time dedicated to jobs with- those in nonpoor households. The poor are not out wage payments, including farming and usually characterized by lack of jobs or hours of other types of self-employment. Development work; they often have more than one job and changes the organization of work from home work long hours, but their jobs are poorly remu- to market production.2 As economies develop, nerated (box 2.2). more work is remunerated through wages and In more affluent societies, a larger share of salaries. This reallocation is usually accompa- income is derived from capital, transfers (social 78 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 F I G U R E 2 .1 Working hours vary across ages age group 24–54 years 70 54–65 years Costa Rica 14–24 years 2004 United 60 States United States 2005 Ghana 1900 United States average weekly work hours, men 2006 1950 50 40 Russian Guatemala Federation 2006 1994 Mexico Latvia 2009 30 2003 20 10 100 1,000 10,000 40,000 GDP per capita Sources: Berniell and Sanchez­Paramo 2011; Ramey and Francis 2009. Note: GDP = gross domest product. The vertical axis measures weekly hours spent on production activities (market and nonmarket work), including some outside the boundaries of the system of national accounts, such as child care. The measure does not include time allocated to schooling or leisure. The horizontal axis measures real GDP per capita in 2000 US$. assistance), or savings (social insurance and qualitative studies in low-income countries, get- pensions). Still, the majority of households ting jobs and starting businesses were two of the worldwide make their living through their work, main reasons people gave to explain their rise and labor earnings represent the largest share of out of poverty.5 Conversely, a lack of job op- total household income (figure 2.3). The main portunities reduces the ability of households to change that comes with development is the improve their well-being.6 composition of labor income.4 Jobs are not the only force that determines Job-related events are the main escape route whether a household escapes from poverty. De- from poverty in developing and developed mographic changes, such as the arrival of a new- countries alike. More than two decades of re- born, relatives moving in, or a family split be- search on poverty dynamics, spanning countries cause of death or separation, affect expenditures as different as Canada, Ecuador, Germany, and per capita, hence the household’s poverty status. South Africa, show that labor-related events The same is true of changes in nonlabor income trigger household exits from poverty (figure from assets or transfers, be they private remit- 2.4). These events range from the head of a tances, public social assistance, or pensions. household taking a new job, to family members These developments may all interact and often starting to work, to working family members occur simultaneously. For example, the migra- earning more from their labor. In a large set of tion of family members to a city for a job may Jobs and living standards 79 FIGURE 2.2 Women spend more time in activities not directly generating income 100 90 80 70 time allocation, percent 60 50 40 30 20 10 0 men women men women men women men women India Guatemala Spain United States income-generating activities investment other activities Source: World Development Report 2013 team based on ISSP 2005 for Spain and the United States, 1999 Time Use Survey of India, and 2006 Guatemala Household Survey. Note: The figure refers to people aged 15 years and more. Income-generating activities is the time devoted to wage or salaried employment; farming, own­account work, self­employment with hired labor, and unpaid family labor in household enterprises; investment refers to time allocated to education, health care, and job search; other activities includes work outside the system of national accounts, for example child care, housework. Leisure and other activities associated with consumption (for example, shopping and social interactions), as well as sleep, are not included. improve the well-being not only of the migrants (education, work experience, or region of resi- but also of those who stay in the rural village. In dence) were important, but that the returns addition to receiving remittances, those who stay to these characteristics mattered more. Among behind may have access to the migrants’ land to those returns is the relative price of labor. 9 cultivate and work more as a result.7 The connection between jobs and poverty With all these changes occurring at the same reduction is not mechanistic, and not all transi- time, gauging the contribution of labor earnings tions out of poverty require a change in the type to poverty reduction is difficult. However, recent of work undertaken. Changes in the productiv- methods allowing to decompose changes in pov- ity of the same job may also be at play. In Ban- erty by sources of income confirm the funda- gladesh and Vietnam, for example, poverty tran- mental contribution of change in labor earnings sitions have been dominated not by changes in (figure 2.5). In 10 of 18 countries considered for income sources from farm to nonfarm income, the analysis, labor income explains more than but by higher income within the same sector.10 half of the change in poverty, as measured by the Richer insights on the connection between US$2.50-a-day poverty line. In another 5 coun- labor-related events and transitions out of pov- tries, it accounts for more than a third of the erty can be obtained from studies that follow reduction in poverty.8 A further decomposition the same households over extended periods of of the contribution of labor income to poverty time. Studies in several countries in Asia and in reduction in Bangladesh, Peru, and Thailand Sub-Saharan Africa show that farming and off- found that changes in individual characteristics farm activities are intricately related and not 80 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 2.2 Most poor people work It is not lack of work that defines the poor. This realization has Caution is needed in interpreting this concept, however. Outside brought to the fore the concept of the working poor, and questions the group of the working poor, there may be individuals who have about who they are, and why they remain poor even when they very low labor earnings but whose expenditures are above the pov- have jobs. First studied by researchers in some countries such as the erty line because they have other sources of income such as private United States, this concept of the working poor is now recognized transfers or earnings from social insurance or social assistance pro- globally. The International Labour Organization (ILO) has included grams. In other words, being excluded from the category of working the working poor in its statistics since the mid-1990s, and measure- poor does not mean one has high labor earnings. ments of this group have been added as a Millennium Development Another concept that indicates whether job earnings are indicator. sufficient to ensure an adequate standard of living for a person The working poor are defined as employed persons in house- or a household is the living wage. This is the level of earnings holds whose members are living below one of the two international that would provide a satisfactory standard of living to workers poverty lines—either US$1.25 or US$2 a day.a Household expendi- and their families. But moving from this definition to measurement ture surveys allow for a classification of the population as poor and is difficult. With more than half of all working people engaged nonpoor, based on the level of consumption per person. These sur- in nonwage work, accurate measures of labor earnings may not veys also provide information on household members who work. be available. Moreover, there are diverse interpretations of what According to the ILO’s most recent estimate, 910 million workers— constitutes a standard family and a lack of consensus on computa- nearly 30 percent of total global employment—were living on less tion methods.d An alternative is measuring the percentage of the than US$2 a day.b The incidence is much higher among low-income population that cannot reach the poverty line with labor incomes countries. It reaches 63.7 percent in Africa and 54.2 percent in Asia.c only, as the Poverty Labor Trend Index in Mexico does.e Source: World Development Report 2013 team. Notes: For a review of the working poor in developed countries, see Blank, Danziger, and Schoeni (2006) and Brady, Fullerton, and Cross (2010); for developing countries, see Fields (2011). The content and scope of the Millennium Development Goals can be found in United Nations, “We Can End Poverty, 2015: Millennium Development Goals,” United Nations, New York. a. Indicator 18, “Poverty, income distribution and the working poor,” KILM (Key Indicators of the Labour Market) (database), 7th ed. 2011, International Labour Organization, Geneva. b. ILO 2011, 41–42. c. Estimates are for 2009 for a selection of low­income countries from the ILO KILM. d. Anker 2011. e. Poverty Labor Trend Index, National Council for the Evaluation of Social Development Policy (CONEVAL), Mexico City. FIGURE 2.3 Jobs are the most important source of household income 100 90 percentage of household income 80 70 60 50 40 30 20 10 0 1) ) ) ) ) 5) ) ) 1) 5) ) ) 2) 5) 7) 9) ) ) 4) 05 00 05 03 03 06 05 05 01 04 00 00 00 99 Gh 200 00 00 00 00 20 0 20 20 20 20 20 20 20 20 (2 (2 (2 (2 1 2 (2 2 (2 ( a( a( ( a( ( a( ( ( a( ( r( i( ria a sia sh Gu pal n r ia m an ia ria aw do ca ni ny m al gu an ta liv an na de ist ga ge ne em as ba Ne na kis ua al Ke ra Bo nz et jik la l Ni ag do M Bu Al Pa ca Pa Ec at Vi ng Ta Ta ad In Ni Ba M self-employment wage employment transfers other Source: Covarrubias and others 2012 for the World Development Report 2013. Jobs and living standards 81 FIGURE 2.4 Jobs take households out of poverty, especially in developing countries 100 90 80 transitions out of poverty, percent 70 60 50 40 30 20 10 0 ca ile a es r ru y il a en da m n s do nd an az in ric ai do Pe at Ri Ch na ed nt Sp Br ua Af rm la St a ng Ca Sw ge er st Ec h Ge d Ki th Co ut Ar ite Ne So d Un ite Un labor events nonlabor events Source: Inchauste 2012 for the World Development Report 2013. Note: Nonlabor events include changes in nonlabor earnings (such as rents or pensions) and demographic changes. A trigger event is defined as the most important event occurring during a poverty reduction spell among a set of mutually exclusive categories of events such as changes in family structure, in sources of income, and in needs of the household. necessarily substitutes for each other. Access to vestments, also raised the odds of escaping pov- land, increases in farm yields, and access to mar- erty, particularly in Uganda. All of these factors kets are fundamental for the growth of off-farm affect the labor productivity of farmers but jobs and hence for diversification in family in- originate in land markets or food markets comes.11 Simply having work is not what mat- rather than labor markets. ters most, according to these studies, since most The largest poverty reductions documented people work in rural economies. What is impor- are associated with jobs in agriculture. The cases tant for escaping poverty is deriving greater of China and Vietnam, in the 1980s and 1990s earnings from work. respectively, testify to the importance of agricul- Other factors of production are critical for tural productivity and the forces unleashed by explaining poverty reduction through jobs, land reform, investments in rural infrastructure, particularly in rural areas. Studies from Uganda and off-farm job opportunities.13 In rural China, and Pakistan, using rural data spanning 4 and poverty reduction was associated with off-farm 10 years respectively, show that higher agricul- activities, but the workers engaged in these ac- tural productivity, the growing commercializa- tivities tended to be those who had benefited tion of agriculture, and an increase in cash crop from increased farm incomes and by obtaining production contributed substantially to pov- more education.14 Furthermore, easier access to erty reduction. The increase in the price of cash off-farm employment and opportunities for mi- crops over this period also helped.12 Improve- gration reduced the exposure of households to ments in land rights and better access to input income shocks. A similar pattern of events has and output markets, due to infrastructure in- been documented in other Asian and Sub- 82 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 FIGURE 2.5 Jobs account for much of the decline in extreme poverty 200 percentage of total change in extreme poverty 150 100 50 0 –50 –100 ia or ico ile va ica a r ay nd a il a as a l sh ru pa do az in an bi m an ad ur de gu Pe do Ch la aR ex nt m Ne na Br ua Gh m nd ai lv la ra ol lo ge M Pa st Ec Th Ro Sa ng M Pa Ho Co Co Ar El Ba family composition labor income nonlabor income consumption-to-income ratio Sources: Azevedo and others 2012; Inchauste and others 2012; both for the World Development Report 2013. Note: Family composition indicates the change in the share of adults (ages 18 and older) within the household. Labor income refers to the change in employment and earnings for each adult. Nonlabor income refers to changes in other sources of income such as transfers, pensions, and imputed housing rents. If a bar is located below the horizontal axis, it means that that source would have increased, instead of decreased, poverty. The changes are computed for Argentina (2000–10); Bangladesh (2000–10); Brazil (2001–09); Chile (2000–09); Colombia (2002–10); Costa Rica (2000–08); Ecuador (2003–10); El Salvador (2000­09); Ghana (1998–2005); Honduras (1999–2009); Mexico (2000–10); Moldova (2001–10); Panama (2001–09); Paraguay (1999–2010); Peru (2002–10); Nepal (1996–2003); Romania (2001–09); and Thailand (2000–09). The changes for Bangladesh, Ghana, Moldova, Nepal, Peru, Romania, and Thailand are computed using consumption­based measures of poverty, while the changes for the other countries are based on income measures. Saharan African countries. Whereas poverty re- among households with few assets. Studies from duction in rural areas in Asia is associated with Uganda and Pakistan show that the share of diversification into nonfarm activities, in Sub- household members who work also has a con- Saharan Africa, it may be more closely associ- siderable impact. Households with rising de- ated with increases in farm productivity.15 pendency ratios were more likely to remain Jobs and relapses into poverty are also con- poor or fall into poverty, while households nected. Widespread shocks such as droughts, whose share of working-age adults increased floods, and conflicts can drive households into were less likely to fall into poverty or remain in a poverty or even chronic poverty. Events specific state of poverty.18 to individuals, such as illness or poor health of the head of household, can have the same effect. In these cases it is not joblessness per se that Jobs are more than just earnings pushes families into poverty but rather the de- struction of personal and household assets.16 Jobs have consequences beyond wages and earn- And even taking these shocks into account, job ings. Other aspects such as workplace safety, loss of the head of household remains a critical stability, commuting time, learning and ad- determinant of a fall into poverty.17 vancement opportunities, entitlements to pen- The poor clearly rely on their labor to make sion benefits, and other amenities are highly val- a living. The death or disability of an income ued by some workers. However, quantifying the earner significantly increases the odds of falling monetary value of these other aspects of a job into poverty or remaining poor, particularly is not easy. Comparable surveys in Jianyang, Jobs and living standards 83 BOX 2.3 The value of job attributes can be quantified through hedonic pricing Workers place a value on jobs that goes beyond income. At the indi- in Colombia and China to 4.2 percent in Egypt and 5.1 percent in vidual level, people assess the impact a job might have on their Sierra Leone.a This is significantly lower than the explicit valuations physical and mental well-being, as well as on their families. In addi- answered by those surveyed: 4.9 percent in China, 10 percent in tion to the earnings the job provides, they can value the stability of Colombia and Sierra Leone, and, at the highest, 25 percent in Egypt. a job, its earnings, the possibilities of advancement, or the flexibility This indicates that the revealed preference of individuals for health of working hours. Workers might also value how well a job connects insurance benefits in the job are lower than the price they express them to society, the prestige associated with it, or its contribution to they would be willing to pay. Hedonic pricing can also identify the social goals. revealed preference to pay for other less tangible job charac- Hedonic pricing assesses how people value specific job charac- teristics. Salaried workers in Colombia, China, and Egypt would teristics through their job satisfaction or happiness more broadly. forgo up to 1.5 percent of hourly wages for jobs that are “meaning- Indicators of subjective well-being are linked through statistical ful.” In Egypt, salaried workers reveal a price tag equivalent of up analysis to various job characteristics, including earnings. Statistical to 2.1 percent of hourly wages for jobs that are non-manual or methods can be used to assess the contribution of each of these job nonroutine. characteristics to happiness or job satisfaction. This approach is especially relevant in the assessment of job The weights associated with different job characteristics in the benefits. These benefits involve a deduction from earnings in ex- estimated hedonic price function allow an assessment of the value change for access to a pension in old age, for instance. Jobholders workers attach to each job characteristic. The monetary value of a typically value these benefits, but they may value them less than the job characteristic can be assessed by comparing the corresponding associated deductions in earnings through social security contribu- weight in the hedonic price function with the weight of earnings. tions. If the expected value of the pension is low or uncertain, Thus, for instance, a hedonic function reveals the share of earnings they may prefer to remain in the informal sector. In contrast, a well- respondents would be willing to forgo in exchange for stability, or designed program that allows longevity risks to be pooled with for creativity at work, or for a job providing voice in the workplace.b other jobholders may be valued by the jobholder more than the Using surveys commissioned for this Report, hedonic valuation deductions associated with participation. of health insurance benefits range from 1.5 percent of hourly wages Source: World Development Report 2013 team. a. Calculations by the World Development Report 2013 team of the FAFO (Forskningsstiftelsen Fafo [Fafo Research Foundation]) 2012 Survey on Good Jobs. b. Recent examples are Hintermann, Alberini, and Markandya 2010 and Falco and others 2012. China; Risaralda, Colombia; Cairo and Fayoum, dents and diseases kill an average of 6,000 peo- the Arab Republic of Egypt; and Port Loko and ple a day, or 2.2 million a year. Most of these Free Town, Sierra Leone, showed the limited deaths (1.7 million) result from work-related ability of respondents to attach a monetary value diseases; the remainder is linked to fatal acci- to job benefits, despite expressing willingness to dents in the workplace and during commutes pay.19 Among those who do give an explicit valu- to or from work.20 Every year, more than 400 ation, the willingness to pay for pension benefits million people (nearly 15 percent of the global goes from 5 percent of monthly wages in China labor force) suffer from occupational accidents to 7 percent in Colombia and 13 percent in or illnesses involving work-related diseases. In Egypt. Lower values are given for transportation some cases, the incidence is intolerably high: allowances (2, 1, and 7 percent, respectively), but half of slate pencil workers in India and 37 per- having a permanent contract is valued more, es- cent of the miners in Latin America suffer from pecially in Egypt (3, 8, and 22 percent, respec- some stage of silicosis (an occupational lung tively) (box 2.3). disease caused by inhalation of silica dust).21 Characteristics of jobs have other less tan- Mental health can be threatened by abusive re- gible, but no less real, effects on well-being. In lations between managers and workers and particular, jobs can have a direct impact on sexual harassment. Health risks are not con- workers’ health, a key component of human fined to wage employment. Collecting and car- development and personal well-being (box rying water or cooking over open stoves, as 2.4). Exposure to hazardous substances causes many self-employed workers do, poses risks, an estimated 651,000 deaths annually, mainly and these risks are more likely to affect women in developing countries. Work-related acci- than men.22 84 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 by the system of social benefits, and from dis- BOX 2.4 Work can pose risks to health and safety crimination. In any case, a lower employment rate is one of the main channels through which Surveys of workers in garment factories in three countries underscore the disability may lead to poverty. health and safety hazards they face in their jobs. Garment workers in Indonesia, In countries where wage employment is Jordan, and Haiti have reported physical stresses linked to work, including hun- the norm, joblessness may severely affect well- ger, thirst, and severe fatigue. being. Together with income, social status has In Indonesia, more than half the workers surveyed reported that they had experienced severe thirst often or every day. Heat is a likely contributor. Asked been recognized as an important factor in the whether the factory is too hot or too cold, only about half (52 percent) reported development and maintenance of mental that temperature was not a concern. Occupational safety is an issue for many: health.26 Studies document the detrimental ef- 59 percent of workers reported concerns about dangerous equipment; 73 per- fects of unemployment and the positive effects cent were concerned about accidents; 64 percent, about dusty or polluted air; when finding a job.27 Medical research has as- and 69 percent, about chemical odors. sociated unemployment with stress, depression, In factories in Jordan, 37 percent of workers reported concerns about dan- heart disease, and alcoholism.28 Psychological gerous equipment, and 45 percent reported concerns about accidents and injuries. hardship, marital dissolutions, and suicide have In Haiti, 40 percent of workers reported that they had experienced severe also been associated with job loss.29 Depression fatigue or exhaustion occasionally, often, or every day; 41 percent reported and stress-related illnesses are becoming more frequent headaches, dizziness, backaches, or neck aches. A stunning 63 per- common with the expansion of outsourcing, cent of workers reported that they had experienced severe thirst often or labor informality, and mobility in the modern every day. workplace.30 The impact of unemployment on mental Source: IFC and ILO 2011. health appears to occur independently of the availability of social insurance or other mecha- nisms of protection.31 This is because the psy- Occupational accidents and work-related chological hardship of unemployment is also diseases have economic costs. These costs are associated with social stigma. Studies show that difficult to compute because the estimates a worker who is unemployed or who has a vul- ought to include spending on health care and nerable job faces less duress if the phenomenon sickness benefits, as well as the forgone earn- is more pervasive or if there is less inequality in ings from workdays lost. Estimating these costs the incidence of unemployment or the distribu- is particularly difficult in the case of the self- tion of vulnerable jobs. This finding demon- employed. The few studies that have tried to do strates the close interaction between a person’s so suggest that the burden on society could be job and their place in society.32 high. In Spain, in the industrial sector alone, these costs were estimated to amount to 1.72 percent of gross domestic product (GDP) in Jobs and life satisfaction 2004. In Mauritius, the cost of work-related in- juries represented around 2.8 percent of GDP Happiness, both a personal goal and a social as- in 2003.23 Global estimates put the cost asso- piration, is related to employment status. A large ciated with work-related sickness at around 4 body of literature shows that unemployed peo- percent of GDP.24 ple report lower happiness and life satisfaction Opportunities to participate in labor markets than their employed counterparts.33 For in- for people with disabilities vary across countries. stance, in Indonesia subjective well-being in- The employment ratio of people with disabilities creases when gaining a job and decreases when ranges from 70 percent, in Poland, to 20 percent, losing it.34 Some researchers argue that this dis- in Switzerland and Zambia, lower than the ratio content is transitory, but others point out that, for the overall population.25 Disabilities may be as long as concerns about job stability persist, preexisting conditions or the result of job-related so does unhappiness. This “unhappiness effect” injuries or conditions. Different labor outcomes is more typically reported in men than in among persons with disabilities stem from pro- women, but evidence indicates that women are ductivity differentials, from disincentives created affected by the unemployment of their spouse. Jobs and living standards 85 The lack of employment can lower the self- esteem and undermine the social status of other FIGURE 2.6 Workers often care more about job security family members.35 than about income When jobs are in short supply and unem- ployment becomes a problem, people change 4.9 their expectations and attitudes. Data from the World Value Surveys for a large set of countries 4.7 (both developed and developing) show that mean score, job security higher unemployment rates are associated with 4.5 lower ambitions to do meaningful work, per- haps indicating that a lack of available jobs im- 4.3 pels individuals to accept any job. It is not only one’s joblessness that may be 4.1 important to life satisfaction. In the United Kingdom, the unemployed are less unhappy in 3.9 districts in which the unemployment rate is higher, suggesting that joblessness always hurts 3.7 but that it hurts less if there are many unem- ployed people in the local area.36 The effect on 3.5 happiness of not having a job seems to be par- 3.5 3.7 3.9 4.1 4.3 4.5 4.7 4.9 tially offset by the lower social stigma when mean score, job income the lack of jobs is widespread. Joblessness also leads to a loss of contact with people through the workplace and to a contraction in related Source: ISSP 2005. Note: The analysis covers 29 countries, each represented in the figure by a dot. Respondents scored the social networks, which can erode social capital importance of job security and job income on a scale from 1 to 5, with 5 = very important, 4 = important, and undermine the sense of engagement with 3 = neither important nor unimportant, 2 = unimportant, 1 = not important at all. others.37 Simply having a job does not guarantee higher life satisfaction. Feeling insecure at work employed have higher levels of satisfaction because of earnings variability, job instability, or than the unemployed. health and safety concerns also affects a person’s Whether the self-employed express greater sense of well-being (figure 2.6).38 For wage satisfaction than wage workers depends on the workers, the type of contract and its duration context. In industrial countries and in Eastern are important; part-timers and seasonal work- Europe and Central Asia, life satisfaction is, on ers express less job satisfaction. Even workers average, similar among both groups, but in with long-term contracts may feel insecure.39 In Latin America, it is substantially lower among factories in Haiti, Jordan, and Vietnam, earn- the self-employed.42 ings from work did not influence the reported Jobs contribute to how people view them- level of life satisfaction, but working conditions selves and relate to others. Most people feel did.40 In more developed countries, jobs that strongly that their jobs should be meaningful provide more autonomy are linked to higher life and contribute to society. A 2005 survey of 29 satisfaction.41 countries asked people about the characteristics Most research on the links between jobs and that they valued in their jobs.43 Over three- life satisfaction has been conducted in settings quarters reported that it is important to have a where wage employment is the norm. A grow- job that is useful to society, and a similar share ing literature on life satisfaction in developing agreed that it is important that their jobs help regions, where a smaller share of those who other people. In nine countries, the share who work are wage earners, shows that farmers have reported that it is important for jobs to be so- the lowest levels of life satisfaction relative to cially useful was higher than the share reporting other workers and the unemployed (figure that high income is important. While most of 2.7). Meanwhile, wage workers and the self- these are high-income countries, preferences for 86 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 and social norms. Notwithstanding this, other Life satisfaction is lower among farmers and the FIGUR E 2.7 health variables used as proxies of job satisfac- unemployed tion such as absence of fear or sadness also show an association with working conditions. Research for Haiti, Jordan, and Vietnam finds working conditions such as basic hygiene and 50 health, workplace facilities, or presence of 45 unions to be associated with fewer feelings of 40 fear or sadness.44 35 30 * * * percent 25 20 Jobs have an impact on the well-being of the 15 high income person who holds them, but they can also have Latin America and the Caribbean an impact on the well-being of others. Some 10 Europe and Central Asia East Asia and Paci c jobs bring more poverty reduction and, as 5 Middle East and North Africa such, benefit those who consider eradicating 0 South Asia ed poverty to be a fundamental societal goal. ploy loye d Sub-Saharan Africa e em ers Some jobs promote higher employment rates wag l f - emp farm oye d se mpl une among women, giving more say on the way household resources are allocated, typically leading to greater spending on raising children. Sources: Gallup 2009, 2010. Gender equality, much the same as poverty re- duction, is a broadly shared societal goal. Jobs socially useful and high-income jobs did not dif- that have these additional impacts do more for fer greatly in the Dominican Republic, Mexico, development. Given such spillover effects, jobs or South Africa. play a fundamental role in the well being of Job satisfaction and other measures of non- individuals and entire societies. Jobs may thus material well-being such as happiness or iden- be the center piece of a development strategy tity may be affected by cultural differences (Question 2). QUESTION 2 Growth strategies or jobs strategies? Rapid and sustained growth is generally viewed come and the possibility of redistributing re- as the main priority for developing countries, sources through the growth process itself and and as a precondition for continued increases in through government transfers.51 living standards and strengthened social cohe- Behind these sensible qualifiers, it is possible sion. Economic growth, living standards, and to point to the role of jobs. Growth is “inclusive” social cohesion can indeed move together, and when higher earnings are driven by employ- they often do—as shown, for example, by the ment opportunities for the majority of the labor remarkable experience of East Asian economies, force, particularly the poor. Recent studies show including the Republic of Korea and Singa- that the impact of economic growth on poverty pore.45 Building on the East Asian experience, reduction depends critically on the employment the conventional wisdom is to focus on growth intensity of different sectors.52 Employment and assume that increased living standards and opportunities also matter for social cohesion. greater social cohesion will follow. This is the It is thus jobs that bring together the three main tenet behind “growth strategies,” “growth transformations. diagnostics,” and “binding constraints analyses,” Realizing the role jobs play implies going be- all of which aim to identify and remove obsta- yond the sequential view in which growth issues cles to economic growth and to sustain it over are addressed first and employment follows prolonged periods of time. from increased demand. Instead, jobs are seen But transformations in living standards, pro- as a medium that can make the development ductivity, and social cohesion do not necessarily transformations a reality. From a statistical happen at the same pace. Lags and gaps in rising point of view, the relationship between growth living standards can be illustrated by the differ- and employment (or unemployment) shows ent impacts growth has on poverty reduction substantial variation over time, across countries, across countries. A 2 percent annual growth rate and across sectors. In light of this diversity, a can reduce poverty rates by 1 percent in some given rate of growth does not guarantee a given countries and by 7 percent in others.46 Ethiopia, level of job creation or a given composition of Tanzania, and Zambia experienced periods of employment (box 2.5). economic growth with very little change in pov- erty incidence.47 On the other hand, important When a growth strategy may not be advances in poverty reduction have also hap- sufficient pened during periods of slow growth, as oc- curred in Brazil and Mexico during the 1990s Focusing on the aggregate relationship be- and the first half of the 2000s.48 And in some tween growth and employment downplays cases, growth is not accompanied by increased some of the most important channels through social cohesion—even though poverty may fall which jobs connect to development. The very and living standards improve for some, the ex- notion of employment as derived labor de- pectations of others remain unfulfilled. Tunisia mand does not reflect the situation of the many is a clear example in this regard: its growth rate working people in developing countries who is well above the average of the region, but it has are farmers and self-employed. The focus on nonetheless experienced serious social and po- the labor market as the transmission chain be- litical tensions.49 tween growth and employment also does not The recognition of these lags and gaps has capture the interaction of working people with led to more nuanced approaches to economic others in households, at the workplace, and in growth in which the growth being sought is society more broadly. Focusing solely on the “pro-poor,” “shared,” or “inclusive.”50 In these relationship between growth and employment versions, it is not just the rate of growth that may fail to measure how jobs can foster gender matters but also the initial distribution of in- equality, support urbanization, or contribute 88 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 2.5 The relationship between growth and employment is not mechanical The statistical connection between economic growth and employ- ment and the percentage change in GDP. These elasticities show ment is sometimes termed Okun’s Law. In 1962 Arthur Okun found great variability over time and space, too, making it difficult to fore- that in the years immediately following World War II, a 1 percent cast net job creation over the course of development. For instance, increase in gross domestic product (GDP) in the United States in Tanzania growth elasticities of employment declined from 1.04 in brought about a 0.3 percent decline in unemployment. Since then, the period 1992–96 to 0.27 in the period 2004–08. Similar trends this empirical regularity has found support in a wide variety of coun- have been reported for Ethiopia, Ghana, and Mozambique.c In Latin tries. Recent research, however, suggests that Okun’s Law is not as America, recent estimates show that growth elasticities of employ- stable as its name implies.a ment were much lower during the global financial crisis than in pre- The debate on the stability of Okun’s Law sheds light on the char- vious crises. In other words, the Great Recession produced compara- acteristics of economic recessions and expansions. A recent study tively less net employment destruction in that region.d indicates that, in industrial countries, unemployment has become While employment and unemployment are aggregates, growth more responsive to output declines over the past 20 years. This has may also affect the composition of unemployment. Important con- been attributed to institutional reforms that have made labor mar- troversies, such as why manufacturing employment in India has kets more flexible. Interestingly, economies that suffer financial cri- stagnated despite rapid growth in the sector can be interpreted in ses and large housing price busts (such as the United States and this light.e Other studies show that, given their different labor inten- Spain in recent years) have deeper and longer increases in unem- sities, economic growth in some sectors like agriculture, construc- ployment than Okun’s Law would have predicted; whereas econo- tion, or services generates more employment than does economic mies with large short-time work schemes (like Germany, Italy, Japan, growth in manufacturing.f Investment projects in agribusiness in and the Netherlands) show less unemployment than predicted.b Ukraine, in construction in India, and in tourism in Rwanda have had While Okun’s Law relates to unemployment, other studies focus large employment impacts, not only because of the direct jobs cre- on the growth elasticity of employment. In its simplest form, this ated but also because of indirect job creation in their large network elasticity is the ratio between the percentage change in employ- of distribution channels.g Source: World Development Report 2013 team. a. Cazes, Verick, and Al Hussami 2011; Moosa 2012. b. Balakrishnan, Das, and Kannan 2009. c. Martins 2012 for the World Development Report 2013. d. World Bank 2010. e. Bhalotra 1998; Roy 2004. f. Arias­Vasquez and others 2012 for the World Development Report 2013. g. IFC, forthcoming. to peaceful collective decision making. Under- In practice, however, tradeoffs between the standing how to enhance these positive spill- three transformations can amount to more than overs from jobs might be difficult when only just lags and gaps. Depending on the nature of aggregates are considered. the jobs challenges facing a country, tensions The case of urbanizing economies such as may emerge between growth that generates jobs Bangladesh may support the idea that the three for living standards and growth that generates major transformations happen simultaneously. jobs for productivity growth or for social cohe- Taking advantage of their abundance of rela- sion. Examples abound: tively low-skilled labor, such economies can engage in world markets through light manu- • In agrarian economies, increasing productiv- facturing. Wage employment is created in large ity in smallholder farming is fundamental for numbers, providing opportunities for rural mi- poverty reduction, given the share of the pop- grants, and cushioning social tensions at a time ulation living in rural areas. But urban jobs in of rapid social change. In Bangladesh, the ex- activities that connect the economy to world pansion of the light manufacturing sector has markets and global value chains are necessary allowed for the integration of young women for growth. With limited resources to support into the labor market, at a time of falling fertility both, a tradeoff between living standards and rates. Employment opportunities for women productivity may arise. have in turn led to growing female schooling, better human development outcomes, and • In resource-rich countries, massive invest- faster poverty reduction. ments in extractive industries support accel- Jobs and living standards 89 erated rates of growth and connections with fully accounting for the negative impact of cur- international markets but generate little di- rent pollution on workers’ future health would rect (or even indirect) employment and of- make a more complete evaluation of the output ten little poverty reduction. Moreover, the potential of a growth strategy based on a given abundance of foreign exchange undermines technology. Opting for defused tensions or the competitiveness of other activities, mak- greater integration in world trade would lay the ing it difficult to create productive jobs in ground for accelerating growth in the future in a other sectors. sustainable way, which a short-term evaluation based on output growth alone would fail to con- • In countries with high youth unemployment, sider. If measures of growth captured the intan- job opportunities are not commensurate with gible social benefits from jobs, a growth strategy the expectations created by the expansion of and a jobs strategy would be equivalent. How- education systems. And the active labor mar- ever, when focusing on measured growth only, ket programs needed to defuse social tensions spillovers from jobs can easily be overlooked, in the short term may not do much for pov- and this is why a jobs strategy may be needed. By erty reduction because many of the jobless focusing on the spillovers from jobs, a jobs strat- come from middle-class families, and devot- egy highlights the different outcomes of interest ing public resources to finance them may re- in a development process. duce economic dynamism. Considering a jobs strategy is a way to call • In formalizing economies, there is an effort attention to the social value of jobs. A jobs strat- to support social cohesion by extending the egy assesses the types of jobs that do more for coverage of social protection to as many development in a particular country context. It workers as possible. Broad coverage regard- relies on qualitative and quantitative analyses to less of the type of job is often seen as part of a identify how jobs contribute to living standards, social compact. But extending coverage with- productivity, and social cohesion. And it seeks to out distorting incentives to work, save, and identify where the constraints to the creation of participate in formal systems is difficult and the jobs with the highest development payoff may have adverse impacts on productivity lie in practice. In some cases, a jobs strategy will and long-term growth. focus on increasing female labor participation, in others on creating employment opportuni- ties for youth, yet in others on creating a sup- When a jobs strategy may be appropriate portive environment for the creation of jobs in Tradeoffs between improving living standards, cities, or jobs connected to global value chains. accelerating productivity growth, and fostering This may not be too different from preparing social cohesion arguably reflect a measurement a more comprehensive growth strategy, except problem. While the contribution jobs make to that jobs would be center stage. output can be quantified, some of the spillovers Jobs strategies are not needed under all cir- from jobs cannot. Measured output does not cumstances. A jobs strategy is warranted only increase when jobs defuse social tensions, even when potentially important spillovers from though these outcomes are valued by society jobs are not realized, leading to tensions be- and may increase productivity in the future. tween living standards, productivity, and social Conversely, measured output does not decline cohesion. When improvements in living stan- when jobs in export sectors are replaced by jobs dards, productivity, and social cohesion happen producing for the domestic market, even together, as was the case in several East Asian though the opportunities to acquire technical countries, and may now be the case in urbaniz- and managerial knowledge through work tend ing economies such as Bangladesh, a growth to be higher in the export sectors. strategy may be more appropriate. Yet even re- If the spillovers from jobs could be appro- markably successful East Asian economies such priately quantified, the tradeoffs would be fully as Korea and Singapore, which undoubtedly de- understood and an adequate evaluation of the livered inclusive growth over many decades, also output and employment potential of a given had jobs strategies at specific points in their de- growth strategy would be possible. For example, velopment histories (box 2.6). 90 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 2.6 Korea went from a growth to a jobs strategy, and Singapore the other way around The Republic of Korea and Singapore are success stories combining The strategy identifies four pillars to achieve the 70 percent tar- long-term economic growth with rapid poverty reduction and get. The first recognizes the importance of collaboration between strong social cohesion. But at different points in time, both coun- the public and private sectors for employment creation and consists tries relied on jobs strategies. of implementing economic and industrial policies in a job-friendly Singapore was confronted with a tense social situation at inde- manner. The second aims at improving flexibility and fairness in the pendence, with both high unemployment and inter-ethnic tension. workplace and consists of a series of reforms to increase regulation Its first development strategy focused on jobs, housing, and wage in certain areas of the labor law, while decreasing regulation in oth- moderation. As unemployment subsided, the next strategy was ers. Thus the 40-hour workweek became enforceable for all compa- geared toward raising labor costs to encourage higher-value-added nies, regardless of size,a with the obligatory introduction of the work activities. This cost drive resulted in a recession, however, and since time savings system.b Simultaneously, regulations on duration of con- then Singapore has focused on growth, rather than jobs. tracts for temporary workers and fixed-term contracts were relaxed Conversely, Korea abandoned development planning in 1996, to allow for more hiring flexibility. The third pillar focuses on increas- but in 2010, it adopted a jobs strategy for the next decade as its ing labor force participation and skill development of women, youth, highest-level policy document. In October 2010, the Korean govern- and older workers. This involves developing the option of perma- ment launched the “National Employment Strategy 2020 for the Bal- nent part-time jobs, thus allowing parents to both work and care for ance of Growth, Employment and Welfare.” In the tradition of long- their children, especially in sectors suffering from labor shortages range plans, this national strategy has a clear target for 2020: an and unable to fill full-time jobs. Older workers would be retained increase in the employment rate of the working-age population longer in the active labor force by having the option to work shorter (15–64 years) to a minimum of 70 percent—the average among hours under the wage peak system.c Last but not least, the inten- industrial economies. The strategy was rooted in the mismatch tion is to facilitate welfare-to-work transitions, by encouraging able- between macroeconomic indicators that pointed to a recovering bodied welfare recipients to enroll in employment assistance pro- economy and the inability of individuals—especially youth—to find grams and by reinforcing their obligation to pursue employment. adequate employment. Sources: World Development Report 2013 team based on Huff 1994, 1995; Republic of Korea 2010. a. The 40­hour workweek was introduced in 2004 and applied only to companies with over 1,000 employees. b. This system allows employees to take leave to compensate for overtime, work during holidays, or night work. c. The wage peak system allows companies to rehire workers after they retire. © Justin Guariglia / Redux Day laborer in a pineapple plantation in Pontian, Malaysia Notes 22. Al-Tuwaijri and others 2008; Brenner 1979. 23. Estimates for both Spain and Mauritius are from 1. Gershuny 2000; Krueger and others 2009; Ramey Ramessur (2009). and Francis 2009. 24. ILO 2005. 2. Ngai and Pissarides 2008. 25. WHO and World Bank 2011. 3. See Hongqin, MacPhail, and Dong (2011) for the 26. Wilkinson and Marmot 1998. case of growing female participation in China. 27. Baingana and others 2004; Murphy and Athana- On the other hand, see Gammage and Mehra sou 1999. (1999) for the case of stagnant female participa- 28. Brenner 1971; Brenner 1975; Dooley, Catalano, tion in the Middle East. and Wilson 1994; Dooley, Prause, and Ham- 4. Davis and others 2010. Rowbottom 2000. 5. Narayan, Pritchett, and Kapoor 2009. 29. Lundin and Hemmingsson 2009; Stuckler and 6. See the studies cited in Baulch 2011; Fields and others 2009a, 2009b. others 2003; and Fields and others 2007. 30. ILO 2010. 7. de Brauw and Giles 2008; Giles and Murtazash- 31. Ouweneel 2002. vili 2010. 32. Helliwell and Putnam 2004; Stutzer and Lalive 8. Azevedo and others 2012 for the World Develop- 2004. ment Report 2013. In El Salvador and Romania, 33. Blanchflower and Oswald 2011; Winkelmann nonlabor incomes compensated for lower labor and Winkelmann 1998. There are valid concerns incomes as a result of the financial crisis. For about how to compare self-reported subjective Mexico, although earnings increased for the em- outcomes across countries and cultures. See King ployed, this effect was compensated for by a de- and others 2004. cline in occupied adults, resulting in a relatively 34. Gales, Mavridis, and Witoelar 2012 for the World lower contribution of labor income to poverty Development Report 2013. reduction when compared to transfers. 35. Björklund 1985. 9. Inchauste and others 2012 for the World Devel- 36. Clark and Oswald 1994. opment Report 2013. 37. Helliwell and Putnam 2004. 10. Dang and Lanjouw 2012. 38. Dooley, Prause, and Ham-Rowbottom 2000; 11. Estudillo, Sawada, and Otsuka 2008; Himanshu, Winefield 2002. Bakshi, and Dufour 2011; Lanjouw and Lanjouw 39. Bardasi and Francesconi 2004; Origo and Pagani 2001; Lanjouw and Murgai 2009; Otsuka, Estudi- 2009. llo, and Sawada 2009; Takahashi and Otsuka 2009. 40. Dehejia, Brown, and Robertson 2012 for the 12. Mansuri and others 2012a for the World Devel- World Development Report 2013. opment Report 2013. 41. Wietzke and McLeod 2012 for the World Devel- 13. Glewwe, Gragnolatti, and Zaman 2002; Ravallion opment Report 2013. and Chen 2007; Ravallion, Chen, and Sangraula 42. Graham 2008. 2009. 43. ISSP 2005. 14. Christiaensen and others 2009; de Brauw and 44. Dehejia, Brown, and Robertson 2012 for the others 2002; Giles 2006; Giles and Yoo 2007. World Development Report 2013. 15. Christiaensen and Todo 2009; Estudillo and oth- 45. Gill and Kharas 2007; Stiglitz 1996; World Bank ers 2012; Himanshu and others 2011. 1993. 16. Dercon and Porter 2011; Fields and others 2003; 46. Ravallion 2001; Ravallion 2011. Lawson, McKay, and Okidi 2006; Lohano 2011; 47. Bigsten and others 2003; Demombynes and Quisumbing 2011; Woolard and Klasen 2005. Hoogeeven 2007. 17. Fields and others 2003; Fields and others 2007. 48. Ferreira, Leite, and Ravallion 2010; Hanson 2010. 18. Mansuri and others 2012b for the World Devel- 49. The GDP per capita (in real 2000 US$) grew in opment Report 2013. Tunisia at an annual average rate of 3.4 percent 19. Bjørkhaug and others 2012 for the World Devel- between 1990 and 2008, whereas the average for opment Report 2013; Hatløy and others 2012 the Middle East and North Africa region was 2.0 for the World Development Report 2013; Kebede percent in the same period (World Development and others 2012 for the World Development Re- Indicators). port 2013; Zhang and others 2012 for the World 50. There are several measures that gauge “pro-poor” Development Report 2013. growth. See Ravallion 2004. 20. ILO 2010. 51. Ianchovichina and Lundstrom 2009; Ravallion 21. ILO 2005. 2001. Jobs and living standards 93 52. Christiaensen, Demery, and Kuhl 2011; Loayza Berniell, M. Inés, and Carolina Sanchez-Paramo. and Raddatz 2010. 2011. “Time Use Database.” World Bank, Wash- ington, DC. Processed. Bhalotra, Sonia R. 1998. “The Puzzle Of Jobless Growth in Indian Manufacturing.” Oxford Bulle- References tin of Economics and Statistics 60 (1): 5–32. Bigsten, Arne, Kebede Bereket, Abebe Shimeless, The word processed describes informally repro- and Mekonnen Taddesse. 2003. “Growth and Pov- duced works that may not be commonly avail- erty Reduction in Ethiopia: Evidence from House- able through libraries. hold Panel Surveys.” World Development 31 (1): 87–106. Adelman, Irma, and Cynthia Taft Morris. 1973. Eco- Bjørkhaug, Ingunn, Anne Hatløy, Tewodros Kebede, nomic Growth and Social Equity in Developing and Huafeng Zhang. 2012. “Perception of Good Countries. Stanford, CA: Stanford University Press. Jobs: Colombia.” Background paper for the WDR 2013. Al-Tuwaijri, Sameera, Igor Fedotov, Ilise Feitshans, Björklund, Anders. 1985. “Unemployment and Men- Malcolm Gifford, David Gold, Seiji Machida, Mi- tal Health: Some Evidence from Panel Data.” Jour- chele Nahmias, Shengli Niu, and Gabor Sandi. nal of Human Resources 20 (4): 469–83. 2008. Beyond Death and Injuries: The ILO’s Role in Blanchflower, David G., and Andrew J. Oswald. 2011. Promoting Safe and Healthy Jobs. Geneva: Interna- “International Happiness.” Working Paper Series tional Labour Organization. 16668, National Bureau of Economic Research, Alkire, Sabina, and James Foster. 2011. “Understand- Cambridge, MA. ings and Misunderstandings of Multidimensional Blank, Rebecca M., Sandra K. Danziger, and Robert F. Poverty Measurement.” Journal of Economic In- Schoeni. 2006. Working and Poor. New York: Rus- equality 9 (2): 289–314. sell Sage Foundation. Anker, Richard. 2011. Estimating a Living Wage: A Bourguignon, François, and Satya Chakravarty. 2003. Methodological Review. Geneva: International “The Measurement of Multidimensional Poverty.” Labour Organization. Journal of Economic Inequality 1 (1): 25–49. Arias-Vasquez, Javier, Jean N. Lee, and David New- Brady, David, Andrew Fullerton, and Jennifer Moren house. 2012. “The Role of Sectoral Growth Pat- Cross. 2010. “More Than Just Nickels and Dimes: terns in Labor Market Development.” Background A Cross-National Analysis of Working Poverty paper for the WDR 2013. in Affluent Democracies.” Social Problems 57 (4): Azevedo, João Pedro, Gabriela Inchauste, Sergio 559–85. Olivieri, Jaime Saavedra Chanduvi, and Hernan Brenner, Harvey. 1971. “Economic Changes and Winkler. 2012. “Is Labor Income Responsible for Heart Disease Mortality.” American Journal of Poverty Reduction? A Decomposition Approach.” Public Health 65 (12): 606–11. Background paper for the WDR 2013. ———. 1975. “Trends in Alcohol Consumption and Baingana, Florence, Andrew Dabalen, Essimi Menye, Associated Illnesses: Some Effects of Economic Menahem Prywes, and Michael Rosholm. 2004. Changes.” American Journal of Public Health 65: 1279–92. “Mental Health and Socio-Economic Outcomes ———. 1979. “Mortality and the National Economy.” in Burundi.” Health, Nutrition and Population The Lancet 26: 568–73. Discussion Paper, World Bank, Washington, DC. Cazes, Sandrine, Sher Verick, and Fares Al Hussami. Balakrishnan, Ravi, Mitali Das, and Prakash Kannan. 2011. “Diverging Trends in Unemployment in the 2009. “Unemployment Dynamics during Reces- United States and Europe: Evidence from Okun’s sions and Recoveries: Okun’s Law and Beyond.” Law and the Global Financial Crisis.” Employ- In IMF World Economic Outlook: Rebalancing ment Working Paper Series 106, International Growth, 69–108. Washington, DC: International Labour Organization, Geneva. Monetary Fund. Chenery, Hollis Burnley, and Moises Syrquin. 1975. Bardasi, Elena, and Marco Francesconi. 2004. “The “Patterns of Development: 1950–1970.” In Redis- Impact of Atypical Employment on Individual tribution with Growth: Policies to Improve Income Wellbeing: Evidence from a Panel of British Work- Distribution in Developing Countries in the Con- ers.” Social Science & Medicine 58 (9): 1671–88. text of Economic Growth, ed. Hollis Burnley Chen- Baulch, Bob, ed. 2011. Why Poverty Persists: Poverty ery, Richard Jolly, Montek S. Ahluwalia, C. L. Bell, Dynamics in Asia and Africa. Cheltenham, U.K.: and John H. Duloy. Oxford: Oxford University Edward Elgar Publishing. Press. 94 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Christiaensen, Luc, Ruchira Bhattamishra, Lei Pan, Dooley, David, Ralph Catalano, and Georjeanna and Sangui Wang. 2009. “Pathways Out of Poverty Wilson. 1994. “Depression and Unemployment: in Lagging Regions: Evidence from Rural Western Panel Findings from the Epidemiologic Catch- China.” World Bank, Washington, DC. Processed. ment Area Study.” American Journal of Commu- Christiaensen, Luc, Lionel Demery, and Jesper Kuhl. nity Psychology 61 (3): 745–65. 2011. “The (Evolving) Role of Agriculture in Pov- Dooley, David, JoAnn Prause, and Kathleen Ham- erty Reduction—An Empirical Perspective.” Jour- Rowbottom. 2000. “Inadequate Employment and nal of Development Economics 96 (2): 239–54. High Depressive Symptoms: Panel Analyses.” In- Christiaensen, Luc, and Yasuyuki Todo. 2009. “Pov- ternational Journal of Psychology 35: 294. erty Reduction during the Rural-Urban Transfor- Estudillo, Jonna P., Tomoya Matsumoto, Ziauddin mation: The Role of the Missing Middle.” Paper Hayat Chowdhury, Nandika Kumanayake, and presented at the International Association of Agri- Keijiro Otsuka. 2012. “Labor Markets, Occupa- cultural Economists 2009 Conference, Beijing, tional Choice, and Rural Poverty in Selected August 16. Countries in Asia and Sub-Saharan Africa.” Back- Clark, Andrew, and Andrew J. Oswald. 1994. “Un- ground paper for the WDR 2013. happiness and Unemployment.” Economic Journal Estudillo, Jonna P., Yasuyuki Sawada, and Keijiro 104: 648–59. Otsuka. 2008. “Poverty and Income Dynamics in Covarrubias, Katia, Benjamin Davis, Aminata Bak- Philippine Villages, 1985–2004.” Review of Devel- ouan, and Stefania Di Giuseppe. 2012. “House- opment Economics 12 (4): 877–90. hold Income Generation Strategies.” Background Falco, Paolo, William Maloney, Bob Rijkers, and paper for the WDR 2013. Mauricio Sarrias. 2012. “Subjective Well-Being, Dang, Hai-Anh, and Peter Lanjouw. 2012. “Measur- Informality, and Preference Heterogeneity in ing Poverty Dynamics and Labor Transitions Africa.” Background paper for the WDR 2013. with Synthetic Panels Based on Cross-Sections.” Ferreira, Francisco H. G., Phillippe G. Leite, and Processed. Martin Ravallion. 2010. “Poverty Reduction and Davis, Benjamin, Katia Covarrubias, Kostas Stamoulis, Economic Growth? Explaining Brazil’s Poverty Paul C. Winters, Carlogero Carletto, Esteban Qui- Dynamics 1985–2004.” Journal of Development ñones, Alberto Zezza, and Stefania DiGiuseppe. Economics 93 (1): 20–36. 2010. “A Cross-Country Comparison of Rural In- Fields, Gary. 2011. Working Hard, Working Poor. New come Generating Activities.” World Development York: Oxford University Press. 38 (1): 48–63. Fields, Gary, Paul Cichello, Samuel Freije-Rodriguez, de Brauw, Alan, and John Giles. 2008. “Migrant Labor Marta Menendez, and David Newhouse. 2003. Markets and the Welfare of Rural Households in “Household Income Dynamics: A Four-Country the Developing World: Evidence from China.” Story.” Journal of Development Studies 40 (2): Policy Research Working Paper Series 4585, World 30–54. Bank, Washington, DC. Fields, Gary, Robert Duval Hernández, Samuel Freije, de Brauw, Alan, Jikun Huang, Scott Rozelle, Linxiu and María Laura Sánchez Puerta. 2007. “Intragen- Zhang, and Yigang Zhang. 2002. “The Evolution erational Income Mobility in Latin America.” of China’s Rural Labor Markets during the Re- Economía 7 (2): 101–54. forms.” Journal of Comparative Economics 30 (2): Fitoussi, Jean-Paul, Amartya Sen, and Joseph E. 329–53. Stiglitz. 2010. Mismeasuring Our Lives: Why GDP Dehejia, Rajeev, Drusilla Brown, and Raymond Doesn’t Add Up. New York: The New Press. Robertson. 2012. “Life Satisfaction, Mental Well- Gammage, Sarah, and Rekha Mehra. 1999. “Trends, Being, and Workplace Characteristics Evidence Countertrends, and Gaps in Women’s Employ- from Vietnam, Jordan, and Haiti.” Background ment.” World Development 27 (3): 533–50. paper for the WDR 2013. Gershuny, Jonathan. 2000. Changing Times: Work and Demombynes, Gabriel, and Johannes G. Hoogeeven. Leisure in Post Industrial Society. Oxford: Oxford 2007. “Growth, Inequality, and Simulated Poverty University Press. Paths for Tanzania, 1992–2002.” Journal of African Giles, John. 2006. “Is Life More Risky in the Open? Economies 16 (4): 596–628. Household Risk-Coping and the Opening of Dercon, Stefan, and Catherine Porter. 2011. “A Poor China’s Labor Markets.” Journal of Development Life? Chronic Poverty and Downward Mobility in Economics 81 (1): 25–60. Rural Ethiopia, 1994 to 2004.” In Why Poverty Per- Giles, John, Dimitris Mavridis, and Firman Witoelar. sists: Poverty Dynamics in Asia and Africa, ed. Bob 2012. “Subjective Well-Being, Social Cohesion, Baulch, 65–95. Cheltenham, U.K.: Edward Elgar and Labor Market Outcomes in Indonesia.” Back- Publishing. ground paper for the WDR 2013. Jobs and living standards 95 Giles, John, and Irina Murtazashvili. 2010. “A Control Ianchovichina, Elena, and Susanna Lundstrom. 2009. Function Approach to Estimating Dynamic Pro- “What Is Inclusive Growth?” World Bank, Wash- bit Models with Endogenous Regressors, with an ington, DC. Processed. Application to the Study of Poverty Persistence in IFC (International Finance Corporation). Forthcom- China.” Policy Research Working Paper Series ing. Job Study. Washington, DC: IFC. 5400, World Bank, Washington, DC. IFC (International Finance Corporation) and ILO Giles, John, and Kyeongwon Yoo. 2007. “Precaution- (International Labour Organization). 2011. “Base- ary Behavior, Migrant Networks and Household line Data Collection: Better Work.” IFC and ILO, Consumption Decisions: An Empirical Analysis Washington, DC. Processed. Using Household Panel Data from Rural China.” ILO (International Labour Organization). 2005. Facts Review of Economics and Statistics 89 (3): 534–51. on Safety at Work. Geneva: ILO. Gill, Indermit, and Homi Kharas. 2007. An East Asian ———. 2010. Emerging Risks and New Patterns of Renaissance: Ideas for Economic Growth. Washing- Prevention in a Changing World of Work. Geneva: ton, DC: World Bank. ILO. Glewwe, Paul W., Michele Gragnolatti, and Hassan ———. 2011. Growth, Employment and Decent Work Zaman. 2002. “Who Gained from Vietnam’s in the Least Developed Countries. Geneva: ILO. Boom in the 1990s?” Economic Development and Inchauste, Gabriela. 2012. “Jobs and Transitions Out Cultural Change 50 (4): 773–92. of Poverty: A Literature Review.” Background pa- Graham, Carol. 2008. “Measuring Quality of Life in per for the WDR 2013. Latin America: What Happiness Research Can Inchauste, Gabriela, Sergio Olivieri, Jaime Saavedra- (and Cannot) Contribute.” IDB Working Paper Chanduvi, and Hernan Winkler. 2012. “Decom- 549, Inter-American Development Bank, Wash- posing Recent Declines in Poverty: Evidence from ington, DC. Bangladesh, Peru, and Thailand.” Background pa- Hanson, Gordon H. 2010. “Why Isn’t Mexico Rich?” per for the WDR 2013. Journal of Economic Literature 48 (4): 987–1004. ISSP (International Social Survey Programme). 2005. Hatløy, Anne, Tewodros Kebede, Huafeng Zhang, and “Module on Work Orientation.” ISSP, Cologne. Ingunn Bjørkhaug. 2012. “Perception of Good Kakwani, Nanak, and Jacques Silber. 2008. Quantita- Jobs: Sierra Leone.” Background paper for the tive Approaches to Multidimensional Poverty Mea- WDR 2013. surement. Basingstoke, U.K.: Palgrave Macmillan. Helliwell, John, and Robert Putnam. 2004. “The So- Kebede, Tewodros, Anne Hatløy, Huafeng Zhang, cial Context of Well-Being.” Philosophical Transac- and Ingunn Bjørkhaug. 2012. “Perception of tions of the Royal Society B 359: 1435–46. Good Jobs: Egypt.” Background paper for the Himanshu, Ishan Bakshi, and Camille Dufour. 2011. WDR 2013. “Poverty, Inequality and Mobility in Palanpur: Some Preliminary Results.” Asia Research Centre King, Gary, Christopher J. L. Murray, Joshua A. Salo- Working Paper 45, Asia Research Centre, London mon, and Ajay Tandon. 2004. “Enhancing the School of Economics and Political Science, London. Validity and Cross-Cultural Comparability of Himanshu, Peter Lanjouw, Abhiroop Mukhopadhyay, Measurement in Survey Research.” American Po- and Rinku Murgai. 2011. “Non-Farm Diversifica- litical Science Review 98 (1): 191–207. tion and Rural Poverty Decline: A Perspective Krueger, Alan B., Daniel Kahneman, Claude Fischler, from Indian Sample Survey and Village Study David Schkade, Norbert Schwarz, and Arthur A. Data.” Asia Research Centre Working Paper 44, Stone. 2009. “Time Use and Subjective Well-Being Asia Research Centre, London School of Econom- in France and the U.S.” Social Indicators Research ics and Political Science, London. 93 (1): 7–18. Hintermann, Beat, Anna Alberini and Anil Markan- Lanjouw, Jean O., and Peter Lanjouw. 2001. “The Ru- dya. 2010. “Estimating the Value of Safety with La- ral Non-Farm Sector: Issues and Evidence from bour Market Data: Are the Results Trustworthy?” Developing Countries.” Agricultural Economics 26 Applied Economics 42 (9): 1085–100. (1): 1–23. Hongqin, Chang, Fiona MacPhail, and Xiao-yuan Lanjouw, Peter, and Rinku Murgai. 2009. “Poverty Dong. 2011. “The Feminization of Labor and the Decline, Agricultural Wages, and Nonfarm Em- Time-Use Gender Gap in Rural China.” Feminist ployment in Rural India: 1983–2004.” Agricultural Economics 17 (4): 93–124. Economics 40 (2): 243–63. Huff, W. G. 1994. The Economic Growth of Singapore: Lawson, David, Andy McKay, and John Okidi. 2006. Trade and Development in the Twentieth Century. “Poverty Persistence and Transitions in Uganda: A New York: Cambridge University Press. Combined Qualitative and Quantitative Analysis.” ———. 1995. “What Is the Singapore Model of Journal of Development Studies 42 (7): 1225–51. Economic Development?” Cambridge Journal of Loayza, Norman, and Claudio Raddatz. 2010. “The Economics 19 (6): 735–59. Composition of Growth Matters for Poverty Al- 96 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 leviation.” Journal of Development Economics 93 Latin America and the Caribbean. Washington, (1): 137–51. DC: World Bank. Lohano, Hari Ram. 2011. “Poverty Dynamics in Rural Quisumbing, Agnes R. 2011. “Poverty Transitions, Sindh, Pakistan, 1987–88 to 2004–05.” In Why Shocks and Consumption in Rural Bangladesh, Poverty Persists: Poverty Dynamics in Asia and 1996–97 to 2006–07.” In Why Poverty Persists: Africa, ed. Bob Baulch, 145–86. Cheltenham, U.K.: Poverty Dynamics in Asia and Africa, ed. Bob Edward Elgar Publishing. Baulch, 29–64. Cheltenham, U.K.: Edward Elgar Lundin, Andreas, and Tomas Hemmingsson. 2009. Publishing. “Unemployment and Suicide.” The Lancet 374 Ramessur, Taruna Shalini. 2009. “Economic Cost of (9686): 270–1. Occupational Accidents: Evidence from a Small Mansuri, Ghazala, Slesh Shrestha, Hernan Winkler, Island Economy.” Safety Science 47 (7): 973–9. and Monica Yanez-Pagans. 2012a. “A Plot of My Ramey, Valerie A., and Neville Francis. 2009. “A Cen- Own: Land Titling and Economic Mobility in tury of Work and Leisure.” American Economic Rural Uganda.” Background paper for the WDR Journal: Macroeconomics 1 (2): 189–224. 2013. Ravallion, Martin. 2001. “Growth, Inequality and ———. 2012b. “Health or Wealth? Income Earner Poverty: Looking Beyond Averages.” World Devel- Death and Economic Mobility in Rural Pakistan.” opment 29 (11): 1803–15. Background paper for the WDR 2013. ———. 2004. “Pro-Poor Growth: A Primer.” Policy Martins, Pedro. 2012. “Growth, Employment, and Research Working Paper Series 3242, World Bank, Poverty in Africa: Tales of Lions and Cheetahs.” Washington, DC. Background paper for the WDR 2013. ———. 2011. “A Comparative Perspective on Poverty Moosa, Imad A. 2012. “A Cross-Country Comparison Reduction in Brazil, China and India.” World Bank of Okun’s Coefficient.” Journal of Comparative Research Observer 26 (1): 71–104. Economics 24 (3): 335–56. Ravallion, Martin, and Shaohua Chen. 2007. “China’s Murphy, Gregory C., and James A. Athanasou. 1999. (Uneven) Progress against Poverty.” Journal of De- “The Effect of Unemployment on Mental Health.” velopment Economics 82 (1): 1–42. Journal of Occupational and Organizational Psy- Ravallion, Martin, Shaohua Chen, and Prem San- chology 72 (1): 83–99. graula. 2009. “Dollar a Day Revisited.” World Bank Narayan, Deepa, Lant Pritchett, and Soumya Kapoor. Economic Review 23 (2): 163–84. 2009. Success from the Bottom Up. Vol. 2 of Moving Republic of Korea. 2010. National Employment Strat- Out of Poverty. New York: Palgrave Macmillan; egy 2020 for the Balance of Growth, Employment Washington, DC: World Bank. and Welfare. Seoul: Republic of Korea. Ngai, Rachel L., and Christopher A. Pissarides. 2008. Roy, Dutta Sudipta. 2004. “Employment Dynamics in “Trends in Hours and Economic Growth.” Review Indian Industry: Adjustment Lags and the Impact of Economic Dynamics 11 (2): 239–56. of Job Security Regulations.” Journal of Develop- Nordhaus, William D., and James Tobin. 1973. “Is ment Economics 73 (1): 233–53. Growth Obsolete?” In The Measurement of Eco- Sen, Amartya, and Geoffrey Hawthorn. 1987. The nomic and Social Performance, ed. Milton Moss, Standard of Living. Cambridge, U.K.: Cambridge 509–64. Cambridge, MA: National Bureau of Eco- University Press. nomic Research. Steckel, Richard H. 1995. “Stature and the Standard OECD (Organisation for Economic Co-operation of Living.” Journal of Economic Literature 33: and Development). 2011. How’s Life? Measuring 1903–40. Well-Being. Paris: OECD. Stiglitz, Joseph E. 1996. “Some Lessons from the East Origo, Federica, and Laura Pagani. 2009. “Flexicurity Asian Miracle.” World Bank Research Observer 11 and Job Satisfaction in Europe: The Importance (2): 151–77. of Perceived and Actual Job Stability for Well- Streeten, Paul. 1979. “Basic Needs: Premises and Being at Work.” Labour Economics 16 (5): 547–55. Promises.” Journal of Policy Modeling 1: 136–46. Otsuka, Keijiro, Jonna P. Estudillo, and Yasuyuki Stuckler, David, Sanjay Basu, Marc Suhrcke, and Sawada, eds. 2009. Rural Poverty and Income Dy- Adam Coutts. 2009a. “The Public Health Effect of namics in Asia and Africa. New York: Routledge. Economic Crises and Alternative Policy Responses Ouweneel, Piet. 2002. “Social Security and Well-Being in Europe: An Empirical Analysis.” The Lancet 374 of the Unemployed in 42 Nations.” Journal of Hap- (9686): 315–23. piness Studies 3 (2): 167–92. Stuckler, David, Sanjay Basu, Marc Suhrcke, and Mar- Paes de Barros, Ricardo, Francisco H. G. Ferreira, José tin McKee. 2009b. “The Health Implications of R. Molinas Vega, and Jaime Saavedra Chanduvi. Financial Crisis: A Review of the Evidence.” Ulster 2009. Measuring Inequality of Opportunities in Medical Journal 78 (3): 142–5. Jobs and living standards 97 Stutzer, Alois, and Rafael Lalive. 2004. “The Role of Winefield, Anthony H. 2002. “The Psychology of Un- Social Work Norms in Job Searching and Subjec- employment.” In Social, Developmental, and Clini- tive Well-Being.” Journal of the European Economic cal Perspectives, ed. Claes von Hofsten and Lars Association 2 (4): 696–719. Bäckman. Vol. 2 of Psychology at the Turn of the Takahashi, Kazushi, and Keijiro Otsuka. 2009. “The Millennium. New York: Psychology Press. Increasing Importance of Nonfarm Income and Winkelmann, Rainer, and Liliana Winkelmann. 1998. the Changing Use of Labor and Capital in Rice “Why Are the Unemployed So Unhappy? Evi- Farming: The Case of Central Luzon, 1979–2003.” dence from Panel Data.” Economica 65: 1–15. Agricultural Economics 40 (2): 231–42. Woolard, Ingrid, and Stephan Klasen. 2005. “Deter- UNDP (United Nations Development Programme). minants of Income Mobility and Household Pov- 1990. Human Development Report 1990. New erty Dynamics in South Africa.” Journal of Devel- York: UNDP. opment Studies 41 (5): 865–97. WHO (World Health Organization) and World Bank. World Bank. 1993. The East Asian Miracle. Washing- 2011. World Report on Disability. Washington, DC: ton, DC: World Bank. WHO and World Bank. ———. 2010. From Global Collapse to Recovery: Eco- Wietzke, Frank-Borge, and Catriona McLeod. 2012. nomic Adjustment and Growth Prospects in Latin “Jobs, Well-Being, and Social Cohesion: Evidence America and the Caribbean. Washington, DC: from Value and Perception Surveys.” Background World Bank. paper for the WDR 2013. Zhang, Huafeng, Ingunn Bjørkhaug, Anne Hatløy, Wilkinson, Richard, and Michael Marmot. 1998. and Tewodros Kebede. 2012. “Perception of Good Social Determinants of Health: The Solid Facts. Jobs: China.” Background paper for the WDR Geneva: World Health Organization. 2013. CHAPTER 3 Jobs and productivity Reallocation from low- to high-productivity jobs matters more for growth in developing countries, where differences in productivity across sectors and within sectors are wide. But reallocation often amounts to little more than churning. P roductivity growth happens as jobs be- regions, however. In Sub-Saharan Africa, the come more productive, as new high- Green Revolution has not taken place on a large productivity jobs are created, and as low- scale. productivity jobs disappear. In the medium Outside of agriculture, productivity varies term, trends in employment align closely with substantially across enterprises, implying po- trends in the labor force, so there is no such a tentially large productivity gains from job real- thing as jobless growth. But the short-term rela- location. The speed at which productivity grows tionship between employment and growth is also varies. Large firms are more innovative, more complex. Large numbers of jobs are being provided that they are exposed to competition. created and destroyed simultaneously, leading At the other end, microenterprises are a diverse to structural change and spatial labor realloca- group. A vast majority of them, more prone to tion. Underneath these sectoral and spatial churning than to growth, are a means of survival changes are firm dynamics that result in a con- for the poor. Yet some are entrepreneurial, and stant restructuring and reallocation of resources, their success could boost wage employment. including labor. In developing countries, many people work in very small and not so dynamic economic Employment turbulence, units. Family farms, which often predominate not jobless growth in agriculture, average only 1.2 hectares in Asia, and 1.8 hectares in Sub-Saharan Africa. Outside Jobless growth is a popular notion, often be- of agriculture, microenterprises and household lieved to be grounded on data. However, unem- businesses account for a large share of employ- ployment rates neither explode nor vanish over ment in a majority of developing countries. time, so employment trends align closely with These businesses make a significant contribution trends in the size of the labor force. The growth to gross job creation and destruction, although of gross domestic product (GDP) certainly mat- not necessarily to net job creation and produc- ters for employment growth, but in the medium tivity growth. term it matters less than demographics and par- In agriculture, the Green Revolution has ticipation rates. Data from 97 countries over the led to higher cereal yields and to employment past decade confirm that a positive relationship growth because the new technologies are labor exists between the growth of GDP per capita and intensive. The progress has been uneven across the growth of employment per capita (figure Jobs and productivity 99 BOX 3.1 What drives economic growth? At the risk of simplifying, four main forces lie behind increases in an measured as changes in total factor productivity. Technological economy’s per capita output. The first is the use of more capital per progress amounts to combining capital, labor, and skills more effi- unit of labor. The second is an increase in the number of people ciently, while applying new knowledge. working, relative to the total population. This happens when fertility Growth decomposition quantifies the contribution of each of declines and the share of adults in the total population increases; these four forces to economic growth. It can be done for any partic- it is also happens when women shift their work from household ular country given sufficient data on gross domestic product, capi- chores to income-generating activities. The third mechanism tal, employment, and human capital. Some of these variables may through which output can grow is by making people themselves need to be constructed or approximated; for instance, the stock of more productive. The acquisition of skills, also known as human capital in an economy is estimated based on accumulated invest- capital accumulation, allows a person to do more using the same ments, while human capital is approximated by the educational amount of capital. The fourth mechanism is technological progress, attainment of its population, corrected for the quality of education. Source: World Development Report 2013 team. 3.1a).1 The relationship is not very strong, but deed associated with a decline in employment in only in very few cases was growth truly jobless. the same year (figure 3.1b). Only in subsequent On the other hand, the short-term relation- years did this negative employment effect wane. ship between growth and employment is not Productivity growth is a turbulent pro- so straightforward. Growth happens partly cess. Analyses covering economies as different through the disappearance of low-productivity as Ethiopia and the United States in different jobs as well as through the creation of more periods over the past three decades reveal the productive jobs.2 So for the same sample of magnitude of gross job creation and gross job countries over the same decade, surges in total destruction (figure 3.2). In the manufacturing factor productivity (TFP) in one year were in- sector of developing countries, between 7 and F I G U R E 3 .1 Economic growth does not occur at the expense of jobs in the medium term a. Annual growth of GDP per capita b. Annual growth of TFP and the employment rate and the employment rate 4 4 growth of employment per capita, % correlation between TFP growth and growth of employment per capita, % 3 2 0 2 –2 1 –4 0 –6 –1 –8 –2 –10 –3 –12 –4 0 4 8 12 16 in the one year two years three years same year later later later growth of GDP per capita, % Source: World Development Report 2013 team estimates based on average growth decomposition accounting for years 1999–2009. Note: GDP = gross domestic product; TFP = total factor productivity. Data are from 97 countries. Panel a presents the relationship between annual growth of GDP per capita and the growth of the employment-to-population ratio. Each dot represents a country. Panel b depicts the correlation between annual growth in total factor productivity (TFP) and employment rate growth in the same year, and in subsequent years. 100 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 20 percent of jobs are created every year, while FIGUR E 3.2 Simultaneous job creation and destruction a similar proportion disappear.3 Even when characterize all economies aggregate employment was declining, as in the 1990s in Romania and Slovenia and in the manufacturing sector of República Bolivariana net job gross job gross job creation creation destruction de Venezuela, many new jobs were being cre- ECONOMY-WIDE ated. Conversely, when aggregate employment was growing by 6 percent in Mexico, jobs were Latvia disappearing at almost twice that rate. Job flows may be associated with profound Mexico transformations in the sectoral structure of the economy. Technological change often occurs for Argentina specific products and processes, causing pro- ductivity to grow at different paces in different Estonia sectors. However, the relative weight of different sectors in the economy is determined not only Hungary by technological progress, but also by market demand and nonmarket forces. When there is Slovenia an expansion of the most productive sectors, ag- gregate productivity increases. This composition Romania effect, called productivity-enhancing structural change, is well documented in the case of labor industrial economies shifts from agriculture to industry and services. (average) Analysis based on more disaggregated data sug- MANUFACTURING SECTOR ONLY gests that reallocation of labor across sectors has also been an important driver of productivity Ethiopia growth in several fast-growing East Asian coun- tries. In China, it contributed 4.1 percentage Indonesia points of the 7.3 percent annual growth in ag- gregate labor productivity over the past decade; Brazil in Vietnam, it accounted for 2.6 points out of 4.2 (figure 3.3).4 Chile Job flows are also associated with changes in the spatial distribution of employment. Taiwan, China The structural shift from agriculture in rural areas to industry and services in towns and Colombia cities may be the most visible example of spa- tial labor reallocation, but it is not the only Venezuela, RB one.5 Even within sectors, job flows often have a strong spatial dimension. New plants associ- industrial economies (average) ated with more innovative activities tend to start in large, diversified cities—incubators—with –5 0 5 10 15 20 a higher density of suppliers and labor, and share of total employment, % more fluent exchanges of information. As they mature and become more self-sufficient in in- formation, these plants move to smaller cities, Sources: World Development Report 2013 team estimates based on Bartelsman, Haltiwanger, and where land and wage costs are lower. As a result, Scarpetta 2009b and Shiferaw and Bedi 2010. Note: The figure shows annual job flows. Data are from Argentina (1996–2001); Brazil (1997–2000); many medium and small cities tend to be more Canada (1984–97); Chile (1980–98); Colombia (1983–97); Estonia (1996–2000); Ethiopia (1997–2007); specialized.6 Finland (1989–97); France (1989–97); Germany (1977–99); Hungary (1993–2000); Indonesia (1991–94); Italy The extent of spatial relocation varies across (1987–94); Latvia (1983–98); Mexico (1986–2000); the Netherlands (1993–95); Portugal (1983–98); Romania (1993–2000); Slovenia (1991–2000); Taiwan, China (1986–91); the United Kingdom (1982–98); the United sectors and countries. For instance, in the Re- States (1986–91, 1994–96); and República Bolivariana de Venezuela (1996–98). public of Korea, manufacturing dominance in Jobs and productivity 101 FIGUR E 3.3 Labor reallocation across sectors was a driver of productivity growth in East Asia 8 7 annual labor productivity growth, % 6 5 4 3 2 1 0 –1 M ica th no s th Eu s t a Ca ope n ca As uth ca a c a on m In olia T sia SA land an ina a . Pa e n a ilip a s Si Rep er Sou eco ie dl and ast ie ne an Asi in Ko hin di Ph aysi or Su No bea ta na fri So ri ci ne Am nd rial nom m Ch iw h In kis ap pi Af g r Pa Sa th A Ta R, C ,C ng hai et a, al nd rib do ng n Vi re M d tin al a ust eco ra M r ha E e ia d ll a Ko b- st ng Ea as nt in Ho eE id r changes within sectors reallocation across sectors Ce La Source: World Development Report 2013 team estimates based on Kucera and Roncolato 2012. Note: The figure shows the decomposition of labor productivity growth in 81 economies over 1999–2008 into productivity changes due to changes within sectors and reallocation across sectors. Seven sectors are considered: agriculture, hunting, forestry, and fishing; mining and utilities; manufacturing; construction; trade, restaurants, and hotels; transport, storage, and communication; and other services. The regional growth rates are weighted averages, with weights based on an economy’s share in regional GDP. urban centers has continued for a long period main driver of aggregate productivity growth is of time. Enterprises have been sprawling into firms becoming better at what they do (figure the suburbs of urban centers rather than leap- 3.4).9 Entry and exit also contribute, which in- frogging to different locations as in some in- dicates that new firms are more productive than dustrial countries (map 3.1). Similar shifts are those exiting. In general, exiting firms see their happening in Brazil, China, and Vietnam.7 In productivity decline before they close, whereas India, large manufacturing enterprises are mov- new firms tend to attain the average levels of ing away from urban centers into rural loca- productivity of their industry within five years. tions.8 Regardless of the nature of the shift, al- These complex dynamics imply that at any point most inevitably jobs are created in some places in time, firms with very different productiv- and destroyed in others. ity levels coexist, even within narrowly defined Underneath these sectoral and spatial changes industries.10 in the structure of employment are the firm The popular perception that productivity dynamics connecting job flows and productiv- grows through downsizing at the firm level is ity growth. Aggregate productivity grows when partially supported by these analyses. Indeed, existing firms become better at what they do, in many cases, employment tends to shrink in when more productive firms enter the market, firms experiencing rapid productivity growth.11 and when less productive ones exit. It also grows But downsizing is only part of the story. There when more productive firms become bigger and are also many successful upsizing firms, achiev- less productive ones become smaller. Decompo- ing both productivity growth and employment sition analyses show that in most countries the growth.12 For instance, one-fourth of manufac- 102 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 M A P 3 .1 Manufacturing activities are sprawling out of the main urban centers in the Republic of Korea IBRD 39533 1960 DEMOCRATIC PEOPLE'S REPUBLIC OF KOREA Sea of 1985 DEMOCRATIC PEOPLE'S REPUBLIC OF KOREA Sea of 2005 DEMOCRATIC PEOPLE'S REPUBLIC OF KOREA SEPTEMBER 2012 Japan Japan Sea of EMPLOYMENT Japan SHARES OF SEOUL SEOUL SEOUL MANUFACTURING Incheon INDUSTRIES CITIES AND TOWNS 37°N 37°N 37°N 40% PROVINCE CAPITALS 30% NATIONAL CAPITAL Yellow Yellow Yellow Sea Sea Sea 20% Taegu Taegu COUNTY BOUNDARIES 36°N 36°N 36°N 10% PROVINCE BOUNDARIES Pusan Pusan This map was produced by the Map Design Unit of The World Bank. 35° N 35° N 35° N The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. Korea Strait Korea Strait Korea Strait 34°N 34°N 34°N 0 30 60 Kilometers 0 30 60 Kilometers 0 30 60 Kilometers 126°E 127°E 128°E 129°E 126°E 127°E 128°E 129°E 126°E 127°E 128°E 129°E Source: Park et al. 2011. Note: The maps show employment shares of manufacturing industries at the city or county level for 1960, 1985, and 2005. FIGUR E 3.4 Efficiency gains at the firm level are the main driver of productivity growth 14 12 annual labor productivity growth, % 10 8 6 4 2 0 –2 –4 Ge p. Po y l ia a Po e ite gal Ge es y Ki ds m nd RB il Co ile Ar bia a na ia Sl ia Ko enia ga an ni an az in c tv Re tv n do at an n Ch hi la to rtu nt to u m a, rm Br La rm la La St ov t ,C n a, ng el Fr Es lo Es r ge er Fi re zu d an th ne iw Ne d Un ite Ve Ta Un manufacturing services within between cross entry and exit Source: Based on Bartelsman, Haltiwanger, and Scarpetta 2009b. Note: The figure decomposes annual labor productivity growth. Data for industrial countries are from France (1990–95), the Netherlands (1992–2001), the United States (1992,1997), Portugal (1991–1994), the United Kingdom (2000, 2001), and Germany (2000–02). Data for developing economies are from Argentina (1995–2001); Brazil (2001); Chile (1985–99); Colombia (1987–98); Estonia (2000, 2001); the Republic of Korea (1988, 1993); Slovenia (1997–2001); Taiwan, China (1986, 1991, 1996); and República Bolivariana de Venezuela (1999). Within captures the changes at the firm level, between the changes in employment shares across firms, cross the interaction between the former two, and entry and exit the opening and closure of firms. Jobs and productivity 103 FIGUR E 3.5 Efficiency gains and employment growth can go together 100 90 80 70 60 share, % 50 40 30 20 10 0 no. of employment value no. of employment value no. of employment value plants added plants added plants added Chile (2001–06) Ethiopia (2005–08) Romania (2000–05) successful upsizers successful downsizers unsuccessful downsizers unsuccessful upsizers Source: World Development Report 2013 team based on Amadeus Database, Bureau van Dijk, Amsterdam, and Ethiopia Large and Medium Scale Manufacturing and Electricity Industries Survey, Central Statistical Agency, Addis Ababa. Note: no. = number. The figure shows the contribution of each of the four groups to the annual growth rate of the variable of interest. The plants considered employ at least 10 workers and exist throughout the entire period. Successful upsizers are plants that increased both labor productivity and employment, successful downsizers are plants that in- creased productivity but reduced employment, unsuccessful downsizers are plants that reduced employment and productivity, and unsuccessful upsizers are plants that increased employment but reduced productivity. turing plants operating in Chile over 2001–06 be successful upsizers.13 Recent evidence based were successful downsizers, consistent with the on 26,000 manufacturers from 71 countries fur- popular perception. But another one-fourth ther shows that firms that innovated in products were successful upsizers, achieving both pro- or processes were more likely to be successful up- ductivity and employment growth (figure 3.5). sizers; they not only attained higher total factor More important, the successful upsizers con- productivity than noninnovative firms; they also tributed more to production, employment, and exhibited higher employment growth.14 aggregate productivity growth than the success- Transition economies in Europe illustrate ful downsizers. Results were similar in Romania the links between job reallocation and pro- between 2000 and 2005, and in Ethiopia between ductivity growth. Before reforms were imple- 2005 and 2009. While country experiences vary, mented, these economies suffered from large having a critical mass of successful upsizers is not distortions caused by a rigid planning system, uncommon. which prevented resources from flowing to Across countries, successful upsizers in man- more efficient uses. Liberalization led to mas- ufacturing industries tend to be younger, leaner, sive downsizing and job losses. Eventually, it also and more innovative. Among survivors in the strengthened incentives, mobility, and markets, same industry and region, younger firms were opening up space for more productive private more likely to be upsizers in Chile over 2001–06, companies. The entry of these dynamic players and successful upsizers in Romania over 2000– contributed between 20 and 50 percent of total 05. In all three countries, survivors employing labor productivity growth in the late 1990s. The fewer than 20 employees tended to upsize fewer exit of obsolete firms released resources that rather than downsize. In Romania, survivors in- could be used more effectively by new or exist- vesting more in capital per worker also tended to ing firms. Although lack of experience and small 104 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 size often made the new firms less productive census reported 1.33 million manufacturing than the average firms of more advanced coun- firms with annual sales above RMB 5 million.16 tries, these new firms were more efficient than Most of them were private. The entry of these domestic incumbents. They played a strong role new businesses and the closure of nonviable in boosting productivity in medium- and high- state-owned enterprises (SOEs) accounted for technology industries and in exerting competi- two-thirds of TFP growth in manufacturing tive pressure on existing firms.15 sectors over 1998–2006.17 China’s rapid productivity growth was also underpinned by large-scale reallocation. Beginning in 1978, economic reform efforts Most jobs are in very small farms gradually expanded the influence of markets and firms and deepened global integration. All of this created unprecedented opportunities for the Many people in developing countries work formation of private entities, including town- in very small and not very dynamic economic ship and village enterprises, and the entry of units—family farms, microenterprises, and foreign companies. During the first decade of household businesses. Although microenter- reform (1978–88), reallocation from agricul- prises are often defined as firms employing ten ture to nonagriculture activities was the source or fewer workers, many among them are actu- of almost half of all productivity growth. In the ally one-person businesses. Given their contri- following decades, however, the main drivers bution to total employment, these small eco- of productivity growth were labor reallocation nomic units cannot be ignored. Understanding out of the state sector, private sector vibrancy, their dynamics is crucial to deciphering the rela- and state sector restructuring. The scale of tionship between jobs and productivity. business entry was startling: the number of In family farms, hired labor is usually em- industrial firms rose from 377,000 in 1980 to ployed in simple tasks such as weeding and har- nearly 8 million in 1996. The 2004 economic vesting, whereas family labor usually carries out care-intensive activities such as water manage- ment, land preparation, and fertilizer applica- FIGUR E 3.6 Smallholder farming is dominant tion. Limited reliance on hired labor is due to the difficulty to monitor effort, and without outside Latin America machinery, farms cannot be expanded beyond Europe and the size manageable by the family’s labor, which Central Asia is typically 1 to 2 hectares.18 Family farms domi- 100 4.8 ha Asia nate even in high-income countries, and owner 1.2 ha Sub-Saharan Africa cultivation is the most common form of land 1.8 ha tenure, especially in Asia (figure 3.6). 80 Latin America Middle East and 61.5 ha At 1.2 and 1.8 hectares, respectively, average farms owned, % North Africa 3.2 ha farm size is small in both Asia and Sub-Saharan 60 Africa.19 In Asia, farmers typically own land plots, which they supplement through tenancy contracts that facilitate transfers from relatively 40 land-abundant to relatively labor-abundant households. Farms in Sub-Saharan Africa are slightly larger than in Asia, but size and the im- 20 portance of owner farming are becoming similar 0 5 10 15 20 25 30 35 40 in both regions.20 There are some exceptions to farms rented, % this pattern. Colonial governments created large farms in some developing countries, such as es- Source: FAO 2010. Note: ha = hectare. Countries in Asia include: Bangladesh, India, Indonesia, the Lao People’s Democratic tates in southern Africa, haciendas in Latin Republic, Nepal, Pakistan, and Thailand; in Europe and Central Asia: Azerbaijan, Croatia, the Czech Republic, America and the Philippines, and plantations in Georgia, the Kyrgyz Republic, Latvia, Serbia, Slovenia, and Turkey; in Latin America and the Caribbean: Brazil, the Caribbean. In Sub-Saharan Africa, large ar- Guatemala, Nicaragua, St. Lucia, St. Vincent and the Grenadines, Uruguay, República Bolivariana de Venezu- ela, and Virgin Islands (United States); in the Middle East and North Africa: the Arab Republic of Egypt, Jordan, eas are also held as customary land—owned col- Morocco, Qatar, Saudi Arabia, and Tunisia; and in Sub-Saharan Africa: Côte d’Ivoire, Ethiopia, and Madagascar. lectively by extended families, clans, or lineage.21 Jobs and productivity 105 FIGUR E 3.7 The employment share of microenterprises is greater in developing countries Ethiopia Egypt, Arab Rep. India Bolivia Colombia Ghana Mexico Venezuela, RB Argentina Poland Turkey Hungary South Africa Uruguay Czech Republic Slovenia Chile Romania Vietnam industrial countries (average) 0 20 40 60 80 100 share of employment, % manufacturing sector services sector Sources: World Development Report 2013 team estimates based on International Income Distribution Database (I2D2) and EUROSTAT. Note: Microenterprises are firms, formal or informal, with fewer than 10 workers. Data for developing countries are from Argentina (2006–10); Bolivia (2005, 2007); Chile (2006, 2009); Colombia (2009); the Czech Republic (2005–07); the Arab Republic of Egypt (2006); Ethiopia (1999); Ghana (1991); Hungary (2007–08); India (2004, 2009); Mexico (2004–10); Poland (2005–07); Romania (2005–07); Slovenia (2005–07); South Africa (2005–07); Turkey (2006–10); Uruguay (2009); República Bolivariana de Venezuela (2004–06); and Vietnam (2009). Data for industrial countries are from Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, and the United Kingdom over 2005–07. Outside of agriculture, microenterprises It is often claimed that most employment, and and household businesses are dominant. More most job creation, is associated with small and than 80 percent of registered manufacturing medium enterprises, but that is generally not true establishments in Argentina, Bolivia, El Salva- in developing countries. In reality, micro- and dor, and Mexico have fewer than 10 workers.22 small enterprises account for the bulk of employ- About 90 percent of manufacturing establish- ment, even in middle-income countries (figure ments employ 5 to 49 workers in China; India; 3.7). Their share is often underestimated, because Indonesia; Korea; the Philippines; and Taiwan, economic censuses and plant-level surveys rarely China.23 The share of microenterprises is even cover the informal segment of the economy, higher outside manufacturing, reaching 94 where businesses are especially small. But data percent in the services sector of Mexico and 98 from household and labor force surveys that are percent in all modern sectors in Tunisia.24 In representative of the entire population provide several African and Latin American countries, a different picture. These small enterprises play the majority of informal enterprises consist of significant role in employment in manufactur- 1- to 3-person businesses.25 ing. They account for 97 percent of employment 106 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 3.2 Microenterprises account for most job creation and destruction In some household and labor force surveys, employees are asked to The distribution of job flows by firm size that emerges from report the size of the firm they work for, or the size of their own busi- the manufacturing survey can be adjusted based on the distri- ness if they are self-employed. This information can be used to esti- bution of employment by plant size from Chile’s household survey, mate the distribution of employment by plant size. This distribution the National Socioeconomic Characterization Survey (Encuesta de can in turn be used to correct for the omission of informal enter- Caracterización Socioeconómica Nacional, or CASEN). Before this prises in an economic census or plant-level survey. adjustment, larger firms seem to account for most job creation and This approach was applied to Chile’s manufacturing survey, the destruction. But the adjustment shows that microenterprises con- Annual National Industrial Survey (Encuesta Nacional Industrial tribute about 80 percent of gross job flows. This estimate should not Anual), which covers more than 90 percent of employment among be taken literally, because the microenterprises for which informa- establishments with 50 workers or more, but less than half the tion on job creation and destruction is available are not necessarily employment in establishments with 10 to 49 workers. Nearly representative—the Chilean census started to include microenter- 300,000 workers in microenterprises are omitted from the survey; prises only in the late 1990s. But even with a margin of error, the 250,000 of them work in firms with fewer than 5 employees. estimate is so large that it changes the picture of job creation and job destruction. a. Contribution by rm size before correcting, 2000–06 b. Contribution by rm size after correcting, 2000–06 80 80 60 60 percent percent 40 40 20 20 0 0 0–5 6–9 10–49 50–199 > = 200 0–5 6–9 10–49 50–199 > = 200 rm employment size rm employment size shares in job creation, % shares in job destruction, % shares in job creation, % shares in job destruction, % shares in employment, % shares in employment, % Source: World Development Report 2013 team. in the manufacturing sector in Ethiopia and 39 yields per hectare tend to be higher in smaller percent in Chile. In services sectors, their role is farms, because family farms apply more labor often more important. Even in Eastern European per unit of land, even though they apply fewer countries, where private sector entry is only two purchased inputs. This inverse relationship be- decades old, microenterprises account for 10 to tween farm size and productivity was first ob- 20 percent of employment in manufacturing and served in South Asia.27 But it has also emerged for 30 to 50 percent of employment in services. in Sub-Saharan Africa as population pressure Micro- and small enterprises also play a critical on the land has led to agricultural intensifica- role in job creation and destruction (box 3.2).26 tion. In Kenya, Malawi, Tanzania, and Uganda, a 1 percent increase in farm size is associated with a 0.1 to 0.2 percent reduction in yield.28 In farms, uneven technological The use of family labor per hectare is also in- progress versely correlated with farm size.29 The relationship between crop yields and It is generally assumed that large farms are more farm size emerges, because the larger, more productive. In low-income countries, however, mechanized farms have higher productivity. But Jobs and productivity 107 FIGUR E 3.8 Crop yields have diverged vastly across regions 6 China, Republic of Korea, and Japan 5 4 tons per hectare Latin America and the Caribbean 3 2 Southeast Asia and South Asia 1 Sub-Saharan Africa 0 61 64 67 70 73 76 79 82 85 88 91 94 97 00 03 06 09 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 Source: FAOSTAT-Agriculture (database), Food and Agriculture Organization, Rome. Note: Figures are weighted averages of yields for wheat, rice, and coarse crops. constraints in land markets usually slow expan- may not be productive in Sub-Saharan Africa, sion and mechanization.30 and high-yielding varieties in irrigated areas The new technologies of the Green Revolu- may be low-yielding in rain-fed areas.35 tion contributed to job creation because they The agricultural growth associated with were labor intensive. Short-statured, fertilizer- the Green Revolution not only creates jobs in responsive, high-yielding varieties of rice and farming but also facilitates the development of wheat were developed by international agri- the nonfarm sectors.36 The adoption of mod- cultural research centers in the late 1960s. The ern technology stimulates the production and varietal improvement of other cereals such as marketing of fertilizer and other purchased maize followed. These varieties, as well as im- inputs. Increased supply of cereals stimulates proved production practices, were quickly dif- the development of food markets and keeps fused, particularly in tropical Asia. The amount the cost of living low for those who migrate to of inorganic fertilizer applied has steadily in- the cities. In addition to these backward and creased over extended periods.31 Thanks to forward links, the increase in farmers’ incomes continual technological improvements and heightens the demand for goods and services.37 sustained adoption, cereal yields have increased Cross-country analyses show that agricultural dramatically for the past several decades.32 growth has resulted in the expansion of non- Progress has been uneven across regions, farm sectors, particularly where the agricul- however (figure 3.8). In Sub-Saharan Africa, tural sector is large.38 there is no evidence to suggest that small farm- ers were slower than larger farmers in adopting the new technologies. But the Green Revolution Among firms, much churning and has not taken place on a large scale, even though few gazelles farmland has been growing scarce because of population pressure on limited cultivable Outside of agriculture, productivity varies sub- areas.33 Feeding growing populations from a stantially across enterprises, implying that job shrinking amount of farm land requires Sub- reallocation could lead to large gains in aggre- Saharan African countries to increase cereal gate productivity. In India, within a narrowly yields.34 Yet improved agricultural technology defined manufacturing industry, a plant at the is location specific: improved varieties in Asia 90th percentile of the TFP distribution gener- 108 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 FIGUR E 3.9 The dispersion of productivity in manufacturing is greater in developing countries United States China Argentina Ecuador Chile Bolivia Uruguay El Salvador India Mexico 0 5 10 15 20 25 30 productivity ratio between 90th percentile and 10th percentile of TFP distribution Source: Pagés 2010. Note: TFP = total factor productivity. The figure shows the ratio of TFP among plants between the 90th and the 10th percentiles of the TFP distribution within narrowly defined industries. TFP is measured as physical productivity, as defined by Foster, Haltiwanger, and Syverson (2008). The data cover only the manufacturing sector. Data are from Argentina (2002), Bolivia (2001), Chile (2006), China (2005), Ecuador (2005), El Salvador (2005), India (1994), Mexico (2004), United States (1997), and Uruguay (2005). ates 22 times as much output as a plant at the efficiency tends to suffer. Large SOEs without 10th percentile. In comparison, the estimated foreign competitors are less innovative and pro- ratio is only 9 to 1 in the United States.39 The ductive than other large firms.41 dispersion of TFP is also high in a number of For a given size, young firms are also more Latin American countries (figure 3.9). Detailed likely than old firms to engage in innovative ac- data on nonmanufacturing firms are scarcer. tivities. They also have better growth prospects, But the dispersion of TFP in retail businesses in a finding consistent with evidence from indus- Mexico, and in communication and transporta- trial countries (figure 3.11).42 For example, in tion businesses in Uruguay, is also sizable.40 the 1990s, when China was in the early stages The speed at which productivity grows also of reform, human and financial resources were varies across firms. Large firms are typically concentrated in SOEs. However, the incentive more innovative than small firms. They tend to structure in these enterprises hindered innova- invest more in machinery and hire more edu- tion. In contrast, the new township and village cated workers. They are also more likely than enterprises lacked the resources to adopt new small firms to engage in activities such as devel- technology and import new equipment, but oping new product lines, introducing new tech- they were more flexible in their decision mak- nology, opening and closing plants, outsourc- ing. As a result, these younger firms were more ing, and engaging in joint ventures with foreign dynamic than large SOEs, although they were partners (figure 3.10a). Large firms produce less productive than large and medium private more with a given amount of labor, are more companies.43 likely to export, and tend to export more. They In developing countries, the dispersion of also pay substantively higher wages than micro- productivity and growth prospects across firms and small enterprises (figure 3.10b). They pay a is further widened by the large number of wage premium even controlling for age, educa- microenterprises, many of which are barely tion, and other worker characteristics. Not all more than a means of subsistence for the poor. large firms are innovative, however. When size A majority of these microenterprises have lim- is supported through nonmarket mechanisms, ited capital and often even lack a fixed address. Jobs and productivity 109 F I G U R E 3 .10 Large firms tend to perform better and to pay better than small ones a. Large rms are more productive and innovative labor productivity wage b. Larger rms pay higher wages overall being exporter performance 6 export as share of sales added new product line 4 estimates, % incorporated new technology upgraded existing product line opened a new plant 2 probability to discontinued at least one product engage in innovative entered new joint venture with foreign partner activities entered new licensing agreement 0 0 20 50 80 120 closed at least one existing plant wage premium, relative to microenterprises (%) outsourced a major activity brought in-house a previously outsourced activity small large 0 10 20 30 40 50 60 70 di erence, relative to small rms (%) Source: World Development Report 2013 team based on Ayyagari, Demirgüç-Kunt, and Maksimovic 2011a; and Montenegro and Patrinos 2012 for the World Development Report 2013. Note: Panel a uses World Bank enterprise surveys covering more than 54,000 firms across 102 developing countries over 2006–10 for overall performance, and 19,000 firms across 47 developing countries over 2002–05 for innovative activities. The analysis controls for firm characteristics, industry, and country. In this panel, large firms employ 100 or more workers and small firms fewer than 20 workers. Panel b uses 138 household and labor force surveys spanning 33 countries over 1991–2010 and controls for worker characteristics. In this panel, large firms are those employing more than 50 workers and small firms 10 to 50 workers. F I G U R E 3 .11 Young firms are more likely than old ones to engage in innovative activities incorporated new technology added new product line opened a new plant upgraded existing product line brought in-house a previously outsource activity entered new joint venture with foreign partner outsourced a major activity entered new licensing agreement closed at least one existing plant discontinued at least one product –0.15 –0.1 –0.05 0 0.05 0.1 di erence, relative to rms one year younger (%) Source: World Development Report 2013 team based on Ayyagari, Demirgüç-Kunt, and Maksimovic 2011a. Note: The figure uses World Bank enterprise surveys covering 19,000 firms across 47 developing countries over 2002–05, controlling for firm characteristics, industry, and country. Statistically insignificant estimates are reported as zeroes. 110 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 3.3 Most microenterprises are in rural areas and engage in commerce Microenterprises in urban areas, and particularly those in the infor- other manufacturing and food (16 percent) and other services (11.8 mal sector, tend to attract the attention of academics and policy percent). Similarly, the surveys of countries in Africa and in Latin makers. But microenterprises are prominent in rural areas as well. America and the Caribbean suggest that 56 to 74 percent of micro- The surveys of micro- and small enterprises in Africa and in Latin and small firms in urban areas, and 60 to 70 percent in rural areas, America and the Caribbean show that fewer than half are in cities are engaged in commerce. The surveys of household enterprises in and towns with 20,000 inhabitants or more. The urban share reaches Sub-Saharan African countries show similar patterns. These surveys 46 percent in the Dominican Republic but is below 30 percent in all identify three manufacturing activities as the most important across other countries surveyed. Even if rural towns are counted (generally, all countries: textiles and apparel, food and beverages, and wood localities with 2,000 to 20,000 inhabitants), well over half of the and forest products. These three categories account for about 75 enterprises are in strictly rural areas in most countries. percent of manufacturing enterprises in urban areas and nearly 90 The vast majority of microenterprises are engaged in commerce, percent of manufacturing enterprises in rural areas. supporting the conventional view that associates microenterprises Most of the microenterprises operate from home or on the with street vendors and petty traders. But a significant number are street. According to the surveys of household enterprises in Sub- involved in light manufacturing activities. According to the 1-2-3 Saharan Africa, 25 to 45 percent of these microfirms use home as surveys of West African countries, the most important sector in capi- primary point of operation, and 10 to 40 percent of them simply tal cities is petty trading (27.1 percent of all enterprises), followed by work on the street. Sources: Fox and Sohnesen 2012; Grimm, Kruger, and Lay 2011; Liedholm 2002. Many are located in rural areas, absorbing some cumulated human and physical capital while labor slack during the low agricultural season working for a wage or a salary. Operating (box 3.3). Across 18 developing countries, 44 microenterprises is a choice for them. Those percent of the people living on less than US$1 a who achieve higher productivity levels are more day in urban areas, and 24 percent of those in likely to stay in business, grow, and create job rural areas, work in a nonagricultural business. opportunities for others.46 On average, they do not earn much.44 A very small group of microenterprises actu- Nonetheless, these nonfarm activities pro- ally displays a strong performance. This group vide an important channel to diversify income bears similarities with the so-called “gazelles” of for the poor. In nine Sub-Saharan African coun- industrial countries—high-growth companies tries, most nonfarm jobs were generated by whose revenues increase by at least 20 percent households starting businesses, rather than en- annually for four years or more. In industrial tering the rapidly expanding private wage sector. countries, the term “gazelle” is used for com- Despite being modest, earnings from household panies starting from a revenue base of at least enterprises contribute to consumption much US$1 million, which makes them very big the same as earnings from wage employment by developing-country standards. Nonetheless, do. And these small businesses offer an avenue the same dynamism can be found at a much for poor households to engage in gradually smaller scale. Data from seven Sub-Saharan more productive activities.45 African countries show that the median capital While microenterprises have a lackluster per- stock held by urban informal enterprises is less formance as a group, they are also very diverse. than US$80, whereas the capital stock for those In middle-income countries, a significant share in the top quintile averages US$5,000. The aver- of the owners of micro- and small enterprises age monthly profit of those in the top quintile are as entrepreneurial as their peers in indus- is seven times the median monthly profit. The trial countries. Their weak performance may rate of returns to capital is also relatively high in be driven more by contextual factors such as these firms.47 This heterogeneity among micro- limited access to credit and policy-induced bar- enterprises suggests they can be an incubator riers to access technologies and markets, than for large and productive firms. by limited capacity. In several Latin Ameri- The dynamism of microenterprises matters can countries, for example, entrants into self- not only for livelihoods but also for productivity employment tend to be workers who have ac- growth. Large firms innovate more, but they are Jobs and productivity 111 F I G U R E 3 .12 Surviving firms were born larger and grew less in Ghana than in Portugal a. Initial year: All rms versus surviving rms Ghana Portugal 0.4 0.4 0.3 Surviving rms were born 0.3 Surviving rms larger than other rms resembled other rms frequency frequency 0.2 0.2 0.1 0.1 0 0 1 10 100 1,000 1 10 100 1,000 number of employees number of employees all rms, 1988 all rms, 1984 surviving rms, 1988 surviving rms, 1984 b. Surviving rms: Final year versus initial year Ghana Portugal 0.4 0.4 Surviving rms did Surviving rms grew 0.3 not grow 0.3 frequency frequency 0.2 0.2 0.1 0.1 0 0 1 10 100 1,000 1 10 100 1,000 number of employees number of employees surviving rms, 1988 surviving rms, 1984 surviving rms, 2003 surviving rms, 1991 Sources: Cabral and Mata 2003; Sandefur 2010. not all born large. In industrial countries, some a multinational conglomerate comprising 114 of the more resounding successes, from Honda companies and subsidiaries across 8 business to Microsoft, started in garages. And many suc- sectors on several continents.49 Many of China’s cessful companies in developing countries also successful clusters, such as the footwear and grew out of small household businesses. Thai- electric appliance industry in Wenzhou, also land’s Charoen Pokphand Group, founded in started from small family businesses working 1921 as a small seed shop in Bangkok by two close to each other.50 brothers, has grown into one of the world’s larg- A vibrant firm life cycle is often missing, est multinational conglomerates in agribusiness, however. Larger and older firms tend to be operating in 15 countries and encompassing stagnant, while smaller enterprises are prone to close to 100 companies.48 India’s Tata Group churning. In Ghana, for example, many firms transformed from a Mumbai-based, family- are born large and show little growth over 15 owned trading firm in the late 19th century to years (figure 3.12). In Portugal, by contrast, 112 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 F I G U R E 3 .13 The majority of firms grew little in India and Mexico a. Employment over a rm’s life cycle b. Productivity over a rm’s life cycle 11 11 10 10 employment, relative to birth productivity (TFP), relative to birth 9 9 8 8 7 7 6 6 5 5 4 4 3 3 2 2 1 1 0 0 5 9 4 9 4 9 4 35 5 9 4 9 4 9 4 35 5– –1 –1 –2 –2 –3 5– –1 –1 –2 –2 –3 < < ≥ ≥ 10 15 20 25 30 10 15 20 25 30 age o rm, years age of rm, years India Mexico United States Source: Hsieh and Klenow 2011. Note: TFP = total factor productivity. Figures show the average employment (or productivity) of firms in different age groups relative to the average employment (or productivity) of those same firms had at birth. Figures are computed using 1989–90 and 1994–95 data for India, 1998 and 2003 data for Mexico, and 1992 and 1997 data for the United States. many more firms are born as microenterprises 20 to 30 percent of household enterprises leave and grow substantially in 7 years.51 The major- the market over a two-year period, while the ity of firms are born small in India too, but they total number of household enterprises remains tend to stay small, without displaying much about the same.54 In Sub-Saharan Africa, few variation in employment over their life cycle. household enterprises expand into employment A revealing comparison involves the size of 35- beyond the household, as shown by the experi- year old firms relative to their size at birth. In ences of Ethiopia, Tanzania, and Madagascar.55 India, the size declines by a fourth. In Mexico, it In Mexico, individuals starting microenterprises doubles. In the United States, it is 10 times larger are more likely to remain the sole worker than to (figure 3.13a). Productivity growth over a firm’s increase the firm size (table 3.1).56 life cycle follows similar patterns in these coun- The wide dispersion of productivity among tries (figure 3.13b).52 businesses, the large number of unsustainable Churning—entering and exiting at a rela- microenterprises, and the stagnation of larger tively high rate—is much more common than firms all suggest that the process of market se- growth among the micro- and small enterprises lection and creative destruction that has under- of developing countries. In several Sub-Saharan pinned the rapid growth of transition economies African and Latin American countries, about 20 and East Asian countries in the past decades is percent of micro- and small enterprises enter weak in most developing countries. This weak- and leave the market in the same year. A majority ness impedes labor and other resources from of closures occur within three years of starting moving toward their most productive uses and up. Among the survivors, less than 3 percent ex- undermines both job creation and productivity pand by four employees or more.53 In Vietnam, growth. Gains from tackling the difficulties faced Jobs and productivity 113 TA B L E 3 .1 Few small firms grew in Mexico Same firms by size in 2011, % Own account 1–4 workers 5–9 workers 10 or more workers Own account 51.9 12.4 0.5 0.2 Firms by 1–4 workers 22.1 49.2 3.9 1.5 size in 5–9 workers 7.8 35.1 22.6 13.1 1987, % 10 or more workers 4.1 15.2 14.4 44.6 Source: Fajnzylber, Maloney, and Rojas 2006. Note: Rows do not add up to 100 percent because the owners of some of these firms may become salary workers or unemployed. by the start-ups and removing constraints to the are exchanged among people more effectively, growth of incumbents could be sizable, but the making everybody more productive. In clus- task is daunting (question 3).57 ters, similar firms that locate next to each other tend to benefit from a broader pool of qualified workers and common support services. Firms * * * also connect with foreign businesses through trade and investment, and, in integrating with Jobs can have an impact on the productivity of global value chains, they can acquire more ad- others, beyond the jobholder and the economic vanced knowledge, technology, and manage- unit where they belong. Jobs that have these ad- ment know-how. In all these ways, specific jobs ditional impacts do more (or less) for develop- can contribute to productivity gains of others ment. These additional impacts arise because and elsewhere in the economy. But effects can jobs differ in the way they connect with each be negative as well if jobs overuse natural re- other, and some of the connections do not oc- sources or damage the environment, thus re- cur through markets. In functional cities, ideas ducing aggregate productivity. QUESTION 3 Can entrepreneurship be fostered? Self-employment is prevalent in developing ship may be dominant, but entrepreneurship is countries, and micro- and small enterprises unlikely to be missing altogether. are a major source of livelihood for low-skilled workers. Even if only a small fraction of these Who is an entrepreneur? tiny economic units succeeded in building a viable business, with the potential to hire others, Entrepreneurship combines innovative capac- the aggregate effect on living standards would be ity to put new ideas into effect with managerial substantial. Their success would also matter for capacity to increase a firm’s efficiency within the productivity reasons. Quite a few currently large limits of known technology. Specific psychologi- enterprises in industrial countries started out as cal traits are associated with entrepreneurship, micro- and small family businesses. By contrast, such as a personal need for achievement, a belief in developing countries many large enterprises in the effect of personal effort on outcomes, self- are born large, often the result of government confidence, and a positive attitude toward risk. support or privileged access to finance and in- These traits are difficult to observe or measure. formation. Breaking privileges is one more rea- But surveys comparing entrepreneurs with other son why the success of microenterprises is so workers in places as diverse as China and the Rus- important. sian Federation show that observable individual Views differ on whether there is scope to characteristics such as education, experience, help the self-employed succeed. At one time al- gender, location, and age are good predictors most every self-employed person or owner of a of entrepreneurship.61 Among microenterprises, microenterprise was seen as a potential entre- rates of return on capital tend to be higher when preneur, held back only by regulatory zeal and their owners are more educated and experienced. corruption. Substantial rates of return on capital Observable characteristics of the self- for micro- and small enterprises were viewed as employed can thus be used to identify individu- evidence of a potential to thrive.58 But the pen- als who have potential to become successful dulum has swung, and the conventional wisdom entrepreneurs.62 To illustrate the point, a suc- is now rather pessimistic. The large numbers of cessful entrepreneur is defined as someone who unregistered self-employed in developing coun- employs others and is not living in poverty. The tries are viewed as subsistence entrepreneurs share of this group in total employment is small who are trying to make ends meet, not thriv- and relatively stable across countries at differ- ing.59 Evidence on the growth of micro- and ent levels of development.63 The share of self- small enterprises in several countries in Latin employed workers without paid employees, on America and West Africa shows that most micro- the other hand, initially increases and then de- enterprises with at least two years of operations clines with GDP per capita (figure 3.14a). At its remain at their start-up employment levels.60 peak, which corresponds to low-income coun- Embedded in the pessimism of the conventional tries, the share of self-employed workers with- wisdom is the idea that entrepreneurial ability out paid employees reaches almost three-fifths and skills cannot be easily transferred, especially of total employment. Among this group, a ma- not to adults with limited formal education. In jority are individuals with relatively low poten- this view, entrepreneurs are born, not made. If tial to succeed. Their characteristics are closer to this view is correct, attempts to convert survivor- those of wage workers than of employers.64 ship into entrepreneurship are bound to fail. The However, if each of the self-employed work- wide dispersion of productivity across firms, in- ers with high potential were to create a single ad- cluding across microenterprises, suggests, how- ditional job, total employment would increase ever, that reality is somewhere in between the substantially, somewhat more so in low-income optimistic and the pessimistic view: survivor- countries (figure 3.14b). As a share of the work- Jobs and productivity 115 F I G U R E 3 .14 Some among the self-employed have the potential to become successful entrepreneurs a. Shares of high- and low-potential b. Employment e ect of a single additional job self-employed workers in total employment created by high-potential self-employed workers 70 9 60 8 7 employment share, % % of total labor force 50 6 40 5 30 4 3 20 2 10 1 0 0 500 3,000 15,000 500 3,000 15,000 per capita GDP, US$ 2005 PPP per capita GDP, US$ 2005 PPP low-potential self-employed workers employers high-potential self-employed workers Sources: Gindling and Newhouse 2012 for the World Development Report 2013; World Development Report 2013 team estimates based on data from 36 countries. Note: GDP = gross domestic product. PPP = purchasing power parity. In panel b, each dot represents a country. ing age population, such additional job creation Removing obstacles to firm growth is thus a pre- would amount to 8 percent in Kenya, 5 percent requisite to foster entrepreneurship. in the Arab Republic of Egypt and 4 percent in Obstacles notwithstanding, entrepreneurial Costa Rica. capacity varies substantially across microen- While this calculation is hypothetical, several terprises and small firms. A distinction is often studies report that observable characteristics of made between innovative or transformative en- micro- and small informal enterprise owners, trepreneurs and replicative or subsistence entre- such as education and gender, are important preneurs.67 The former correspond to Schumpe- determinants of innovation and employment terian type of entrepreneurs, while the latter, who growth.65 In Mexico, after a business registra- generally manage micro- and small enterprises, tion reform, informal enterprise owners with are followers. Such a distinction, however, does observable traits similar to those found among not capture the broader gradation of managerial formal enterprise owners were more likely to performance that lies between the transformative register their business than those similar to wage and subsistence extremes. A study of the number workers.66 of management practices adopted by the owners of micro- and small enterprises in Sub-Saharan Africa reveals a large variation of management What constrains entrepreneurship? scores (figure 3.15). These scores are closely as- Even potentially skilled entrepreneurs would sociated with business performance.68 A broad have difficulty succeeding without access to dispersion of management scores is also found basic infrastructure and financial resources. In among relatively larger firms in India.69 their absence, managerial capacity alone may An emerging literature confirms the impor- not be enough to realize productivity gains and tance of management practices in explaining employment expansion. The investment cli- firm productivity. Although much of the focus mate matters for business performance as well. is on large firms, recent studies have turned their 116 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 F I G U R E 3 .15 Management scores vary widely across small enterprises in Sub-Saharan Africa 9 8 7 6 % of firms 5 4 3 2 1 0 1 6 11 16 21 26 management score Source: Fafchamps and Woodruff 2012. Note: The management score measures the degree to which firm owners use and master core management and business techniques. Scores are based on an evaluation of 26 techniques (26 is the highest possible score). attention to how innovation in small and me- up an offer of a wage subsidy covering 50 percent dium firms takes place. The most telling studies of the cost of hiring a worker for six months and involve management training provided for free 25 percent of the cost for another two months. to randomly selected firms whose performance Overall, these results suggest that lack of access is then compared to that of a control group of to finance is not the only constraint. firms. Evaluations of these programs find that Entrepreneurial skills, measured by the edu- the training improves the financial literacy and cation of business owners and their partici- basic management skills of business owners. The pation in training, explain a large share of the estimated impact is also positive, but less robust, differences in productivity across firms and re- when it comes to improved business outcomes gions in developing countries.71 Yet markets fail and job creation. Better outcomes are associated to nurture entrepreneurship, because knowl- with business owners who already had an ini- edge spillovers imply that some of the returns to tial understanding of the concepts and relatively acquiring or developing new managerial ideas better access to financial resources. are appropriated by others. More important On the other hand, similarly designed inter- perhaps, entrepreneurs themselves do not rec- ventions to provide financial resources to mi- ognize the relevance of management expertise.72 croenterprises, or to process their registration Only 3 percent of Brazil’s owners of micro- and with authorities, or to pay the salary of an ad- small enterprises, for instance, see management ditional employee, show mixed impacts on busi- as a binding business constraint.73 This may be ness performance.70 In Mexico and Sri Lanka, an area where information and knowledge fail- grants given to microenterprises increase the ures matter, leading to a vicious circle of low income of their owners—and then only if they productivity, low living standards, and insuffi- are male—but do not result in employment cre- cient job creation. ation. In Ghana, similar grants given to female The capacity to acquire skills and to apply business owners do not result in significant them to business seems to be one of the most growth of their microenterprises. In Sri Lanka, important characteristics of successful entrepre- only 22 percent of eligible microenterprises took neurs. Success also depends on having core skills Jobs and productivity 117 such as numeracy and literacy, as well as social from abroad can be found in the case of the gar- skills. A vast literature highlights the importance ment industry in Bangladesh (box 3.4). of entrepreneurs’ schooling as a determinant of firm growth, employment, and efficiency.74 Rus- The case for targeted management sian and Chinese business owners have more training entrepreneurs in their families and among childhood friends than otherwise similar indi- Managerial practices are linked to differences viduals, suggesting that social environment also in productivity, profitability, firm growth, and matters.75 survival.79 The development experience of the Learning can also happen through jobs. garment industry in Bangladesh suggests that Nearly half of entrepreneurs managing the 50 entrepreneurship can be fostered by exposure largest manufacturing firms in Ethiopia be- to advanced management practices and tech- gan their careers in trading companies, thereby nologies. But whether managerial capacity can learning about the market and what it takes to be improved through management training is meet demand.76 A large number of founders more debatable. Creativity, foresight, and risk and leading entrepreneurs in the light manu- taking are key elements of any innovative pro- facturing industries in Asia and Sub-Saharan cess, but the question is whether they can be dif- Africa were initially traders or employees in the fused and nurtured. marketing division of large enterprises.77 A substantial number of experiments have Integration in supply chains with larger, of- been conducted in recent years, providing evi- ten foreign, firms, is receiving much attention dence of both successes and failures of man- as a potential source of knowledge transfers.78 agement training interventions. Some patterns Indian entrepreneurs returning from Silicon emerge from a systematic review of the available Valley made Bangalore a hub of the information evidence. To be successful, management training technology industry. Perhaps the most dramatic must be kept simple, appropriate teaching ma- evidence attesting to the importance of learning terials must be available, and the training must BOX 3.4 What explains the boom in the garment industry in Bangladesh? The garment industry in Bangladesh illustrates how important it is contributed to the proliferation of garment manufacturers by pro- to learn advanced management practices, marketing, and technol- viding a variety of valuable services including international procure- ogies from abroad. When Daewoo Corporation of Korea teamed up ment and marketing, sample making, and design reengineering. with Bangladesh’s Desh Ltd. to produce garments for export in Ban- Observing Desh’s good start in exporting, and subsequently the gladesh in 1979, the South Asian country had no modern industry. success of ex-Desh workers, highly educated people started their Little more than 20 years later, the industry was generating more own garment businesses, and wealthy families actively invested in than US$12.5 billion in export revenue. Women accounted for 80 the industry. As a result, the size of garment firms has been quite percent of its 3.6 million workers large since the beginning; their average size was 300 workers in Arguably, a wide set of factors, from financial innovation to pol- 1983–84 and 700 in 2010–11. As of 2005, owners of garment firms icy support, contributed to this development success. But it began had 15 years of schooling on average, and about 60 percent of them in 1979, when Desh sent 130 newly recruited, educated employees had completed college or university education. to Daewoo’s garment factory in Korea, where they participated in an Learning from abroad continued. Some entrepreneurs partici- eight-month intensive training course covering topics from sewing pated in training programs in Singapore, Japan, and Europe. Beyond skills to factory management, quality control, and international pro- garment enterprises in Korea, other newly industrial countries in curement and marketing—skills that they then applied in the Desh East Asia followed Daewoo into operation in Bangladesh and in- factories in Bangladesh. Within a few years, almost all the trainees vested in training Bangladeshi workers and managers. Thus, many had left Desh to start their own garment businesses. Some of the Bangladeshi traders and manufacturers had work experience in gar- ex-Desh workers joined new garment factories established by afflu- ment trading and production, including the experience of working ent businessmen, while others founded trading houses, which then at joint ventures, before starting their current businesses. Sources: Bangladesh Knitwear Manufacturers and Exporters Association 2012 ; Easterly 2002; Mottaleb and Sonobe 2011; Rhee 1990. 118 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 last for a certain minimum length of time. Com- identify those business owners with the highest plementing classroom teaching with instructors’ potential to benefit from management train- visits to trainees on the job can yield significant ing. Expert panels may be used to identify and positive effects.80 In Mexico, for example, such rank micro- and small enterprises on their po- on-site visits improved sales, profits, and pro- tential to grow, but such methods are expen- ductivity.81 But in Ghana, on-site visits and sup- sive and difficult to apply on a large scale. An port for microenterprises were not successful.82 effective alternative is a survey questionnaire It is also possible that key entrepreneurial skills designed to capture abilities, attitudes, and man- are gained more effectively through work expe- agement scores of potential trainees.87 Manage- rience in large productive firms than through ment training itself can be used as a screening training programs.83 device. Trainees with high potential often under- Entrepreneurship training for women has take new investments and expand employment had mixed results. Nurturing female entrepre- as a result of their training. Financial institutions neurship has the potential to create wider social could view such activity as an indication of po- benefits associated with female employment, tentially high investment returns. Programs that such as changes in the household allocation of combine management training with financial resources that improve family well-being, espe- support yield better firm performance in devel- cially of children. Female entrepreneurship often oping countries.88 provides employment opportunities to women Training programs can be implemented by that allow them to balance work and family private providers and financed by private inves- roles. Yet providing classroom training to female tors with a significant interest in the success of microentrepreneurs in Peru had no effect on key the entrepreneurs in whom they have invested. business outcomes such as sales and profits, even But as long as there are knowledge spillovers when some business practices improved.84 Class- and the importance of management expertise room training complemented with on-site visits, is undervalued, governments have a role to play. though, yielded positive results.85 In Pakistan Given the differing capabilities among business and Tanzania, management training improved owners, proper targeting is crucial to ensure pos- management practices and business outcomes itive returns to publicly funded programs. Ran- for male but not female entrepreneurs.86 These domized experiments in Ghana, Tanzania, and mixed results can also reflect wider constraints Vietnam indicate that the benefit of such pro- facing women in societies, including access to ef- grams generally outweighs the cost, even though fective learning in schools. the costs of implementing training programs A common finding of training evaluations is vary greatly.89 If the overall investment climate is that the potential to absorb management prac- not conducive to private sector growth, however, tices differs greatly among beneficiaries. Readily targeted training programs for better business observable individual characteristics can help skills will most likely return meager results. Jobs and productivity 119 Notes 16. Brandt and Rawski 2008; World Bank and the People’s Republic of China Development Re- 1. Labor force is used instead of employment in search Center of the State Council 2012. figure 3.1. Over a long term (10-year period), 17. Brandt, Hsieh, and Zhu 2008; Brandt and Rawski changes in unemployment rates are small, in gen- 2008; Brandt, van Biesebroeck, and Zhang 2012. eral, and employment in an economy is driven by 18. Hayami and Otsuka 1993. the size of its labor force. 19. South Africa is excluded from this figure because 2. Haltiwanger 2011; Schumpeter 1934. it is an outlier, with an average farm size of 288 3. Gross job creation is the sum of all additions to hectares. total employment. It occurs when expanding 20. In fact, tenancy markets are emerging in Sub- economic units hire workers and when new eco- Saharan Africa. See Holden, Otsuka, and Place nomic units are created. In principle, economic 2009. units can be as small as a one-person microen- 21. Otsuka and Place 2001. terprise, but most quantitative analyses refer to 22. Pagés 2010. establishments employing several workers. Gross 23. ADB 2009. The analysis is based on data from job destruction is the sum of all employment India (2004–05); Indonesia (2006); the Republic losses. It occurs when economic units close or of Korea (2004); the Philippines (2005); and Tai- contract in size. Net job creation is the difference wan, China (2006). between these two gross flows. Job creation and 24. Rijkers and others 2012 for the World Develop- destruction rates measure how many employ- ment Report 2013; Pagés 2010. ment positions emerge or disappear in a specific 25. Grimm, Kruger, and Lay 2011; Liedholm 2002. period (typically one year) relative to the number 26. See also Ayyagari, Demirgüç-Kunt, and Maksi- of existing positions. See Bartelsman, Haltiwan- movic (2011b) for analysis based on World Bank ger, and Scarpetta 2009b; Davis, Haltiwanger, and enterprise surveys; the analysis suggests that Schuh 1996. small firms contribute significantly to employ- 4. Kucera and Roncolato 2012; McMillan and ment and job creation. Rodrik 2011; Pieper 2000; Timmer and de Vries 27. The body of literature on this subject is enor- 2009. mous. See Barrett, Bellemare, and Hou 2010; 5. World Bank 2009. Carletto, Savastano, and Zezza 2011; and Larson 6. Duranton 2007, Duranton 2012 for the World and others 2012 for the World Development Re- Development Report 2013; Duranton and Puga port 2013. 2001; Henderson 2002. 28. Holden, Otsuka, and Place 2009; Larson and 7. Park et al. 2011; World Bank 2011b. others 2012 for the World Development Report 8. Ghani, Goswami, and Kerr 2012. 2013. 9. For a discussion on how to decompose produc- 29. For example, in Kenya in 2007, the family labor tivity growth by firm dynamics, see Foster, Halti- input per hectare in maize production was 418 wanger, and Krizan (2001) and Griliches and Re- hours for the top quartile of farms (measured by gev (1992). size), but that input reached 1,032 hours for the 10. Bartelsman and Doms 2000; Bartelsman, Halti- bottom quartile. wanger, and Scarpetta 2004; Foster, Haltiwanger, 30. The positive relationship is found not only in and Krizan 2001; Roberts 1996; Syverson 2011; such high-wage economies as Japan but also in Tybout 1996, 2000. The dispersion of productiv- India recently. See Foster and Rosenzweig 2011; ity across firms is not, by itself, sufficient to gauge Hayami and Kawagoe 1989. the efficiency of the job creation and reallocation 31. Evenson and Gollin 2003. process. Poor market structure and institutions 32. World Bank 2007. Improvement in agriculture can distort the process. See Haltiwanger 2011; technology can lead to fast growth in produc- Nelson 1981. tivity in the sector and convergence in aggre- 11. Bartelsman, Haltiwanger, and Scarpetta 2004; gate productivity. On the basis of data from 50 Tybout 1996. countries over 1967–92, Martin and Mitra (2001) 12. Baily, Bartelsman, and Haltiwanger 1996. found that productivity growth in agriculture 13. WDR 2013 team estimation based on Amadeus was faster than in manufacturing in these coun- Database, the Annual National Industrial Survey tries over the period. of Chile, and Ethiopia Large and Medium Scale 33. However, TFP has been increasing since the early Manufacturing and Electricity Industries Survey. 1980s, suggesting that the Green Revolution has 14. Dutz and others 2011. taken place in some areas of Sub-Saharan Africa. 15. Bartelsman, Haltiwanger, and Scarpetta 2004; See Block 2012. Rutkowski and others 2005. 34. Hayami and Ruttan 1985. 120 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 35. David and Otsuka 1994. 61. Djankov and others 2005, 2006b. See also Viva- 36. Ravallion 2005; Ravallion and Chen 2007. relli (2012) on the importance of disentangling 37. Haggblade, Hazell, and Reardon 2007. entrepreneurship drivers to craft policies target- 38. Christiaensen, Demery, and Kuhl 2011. ing high potential entrepreneurs. 39. Hsieh and Klenow 2009. 62. Methodological details of this technique to iden- 40. Pagés 2010. Figures are based on physical pro- tify high-potential entrepreneurs can be found ductivity (or TFPQ), as defined by Foster, Halti- in Gindling and Newhouse (2012) for the World wanger, and Syverson (2008). This factor is a Development Report 2013; and Grimm, Knor- measure of real output per unit of input, which ringa, and Lay (2012) for the World Develop- is computed using plant-level price deflators. ment Report 2013. TFPQ is more precise than TFPR—a revenue 63. Gindling and Newhouse 2012 for the World proxy for TFPQ that is computed using industry- Development Report 2013. level price deflators. TFPQ is a preferred measure 64. de Mel, McKenzie, and Woodruff 2008b. because TFPR combines the effects of quantities 65. de Mel, McKenzie, and Woodruff 2009; Sonobe and prices. Quantities and prices are affected and Otsuka 2006; Sonobe and Otsuka 2011. by demand factors, quality differences, mark- 66. Bruhn 2008. ups, and potential distortions. A survey of earlier 67. Baumol 2010; Schoar 2010. studies based on TFPR did not find a higher dis- 68. Fafchamps and Woodruff 2012. persion of productivity in developing countries, 69. Bloom and others 2011. but those studies are not very informative be- 70. de Mel, McKenzie, and Woodruff 2010; Faf- cause they are based on outdated methodologies. champs and others 2011; McKenzie 2010. See Tybout 2000. 71. Gennaioli and others 2011; Kelley, Bosma, and 41. Ayyagari, Demirgüç-Kunt, and Maksimovic 2011a. Amorós 2010; van der Sluis, van Praag, and 42. Ayyagari, Demirgüç-Kunt, and Maksimovic 2011a; Vijverberg 2005. Haltiwanger, Jarmin, and Miranda 2010. 72. Bloom and others 2011; Mano and others 2011. 43. Lin 2012; Wang and Yao 1999. 73. Estimate from Brazil’s ECINF 2003 survey. 44. Banerjee and Duflo 2011; Fox and Sohnesen 74. Fafchamps and Woodruff 2012; Gindling and 2012; Schoar 2010; Sutton and Kellow 2010. Newhouse 2012 for the World Development Re- 45. Fox and Sohnesen 2012. port 2013; Grimm, Kruger, and Lay 2011; Otsuka 46. Perry and others 2007. and Sonobe 2011; Sonobe and Otsuka 2006. 47. Grimm, Kruger, and Lay 2011; McKenzie and 75. Sutton and Kellow 2010. Woodruff 2008. 76. Otsuka and Sonobe 2011; Sonobe and Otsuka 48. Mertens 2011; The Economist 2001; Charoen Pokphand Group, www.cpthailand.com. 2006. 49. Kasbekar 2007; Witze 2010. 77. Djankov and others 2006a, 2006b. 50. Sonobe, Hu, and Otsuka 2004. 78. See the initiative by the Inter-American Develop- 51. Sandefur 2010. ment Bank, “Bringing Market-Based Solutions 52. Hsieh and Klenow 2011. to Latin America and the Caribbean to Promote 53. Liedholm 2002; Mead and Liedholm 1998. Social Change,” http://browndigital.bpc.com/ 54. Results from 1-2-3 Survey. publication/?i=92819. 55. Grimm, Kruger, and Lay 2011; Kinda and Loen- 79. Bennedsen and others 2007; Bloom and others ing 2008; Loening and Imru 2009. 2011; Bloom, Schweiger, and van Reenen 2011; 56. Fajnzylber, Maloney, and Rojas 2006. Bloom and van Reenen 2007, 2010. 57. Bartelsman, Haltiwanger, and Scarpetta 2009a; 80. Drexler, Fischer, and Schoar 2011; Kairiza and Haltiwanger 2011; Hsieh and Klenow 2009; Sonobe 2012 for the World Development Report Syverson 2011. 2013; Mano and others 2011; Valdivia 2011. 58. Banerjee and Duflo 2004; Banerjee and others 81. Karlan, Bruhn, and Schoar 2012. 2009; de Mel, McKenzie, and Woodruff 2008a; 82. Karlan, Knight, and Udry 2012. In Ghana, the in- Göbel, Grimm, and Lay 2011; Grimm, Kruger, tervention included only a 10-hour consultancy and Lay 2011; McKenzie and Woodruff 2008. treatment, in contrast to 700 hours provided in 59. Banerjee and Duflo 2011; Schoar 2010; Sutton a successful Indian program for larger firms that and Kellow 2010; Tokman 2007. See de Soto was implemented by Bloom and others (2011). (1989) and Yunus and Jolis (1999) for a more 83. Bloom and van Reenen 2010; Bruhn, Karlan, positive view. and Schoar 2010; Bruhn and Zia 2011; de Mel, 60. Fajnzylber, Maloney, and Rojas 2006; results McKenzie, and Woodruff 2009. from World Bank’s informal enterprise surveys 84. Karlan and Valdivia 2010. conducted between 2009 and 2010. 85. Valdivia 2011. Jobs and productivity 121 86. Berge, Bjorvatn, and Tungodden 2011; Giné and nal Microdata.” Journal of Economic Literature Mansuri 2011. (38) 3: 569–94. 87. Fafchamps and Woodruff 2012. Alternatively, see Bartelsman, Eric, John Haltiwanger, and Stefano Scar- the work done by the Entrepreneurial Finance petta. 2004. “Microeconomic Evidence of Creative Lab at the Kennedy School (http://www.efinlab Destruction in Industrial and Developing Coun- .com) on psychometrics tools to uncover success- tries.” Discussion Paper Series 1374, Institute for ful entrepreneurs. the Study of Labor, Bonn. 88. Cho and Honorati 2012 for the World Develop- ———. 2009a. “Cross-Country Differences in Pro- ment Report 2013. ductivity: The Role of Allocation and Selection.” 89. Sonobe, Higuchi, and Otsuka 2012 for the World Working Paper 15490. National Bureau of Eco- Development Report 2013. nomic Research, Cambridge, MA. ———. 2009b. “Measuring and Analyzing Cross- References Country Differences in Firm Dynamics.” In Pro- ducer Dynamics: New Evidence from Micro Data, The word processed describes informally reproduced ed. Timothy Dunne, J. Bradford Jensen, and Mark works that may not be commonly available through J. Roberts, 15–82. Cambridge, MA: National Bu- libraries. reau of Economic Research. Baumol, William J. 2010. The Microtheory of Innova- ADB (Asian Development Bank). 2009. Enterprises in tive Entrepreneurship. Princeton, NJ: Princeton Asia: Fostering Dynamism in SMEs. Manila: ADB. University Press. Ayyagari, Meghana, Asli Demirgüç-Kunt, and Vojislav Bennedsen, Morten, Kasper M. Nielsen, Francisco Maksimovic. 2011a. “Firm Innovation in Emerg- Perez-Gonzalez, and Daniel Wolfenzon. 2007. “In- ing Markets: The Role of Finance, Governance, side the Family Firm: The Role of Families in Suc- and Competition.” Journal of Financial and Quan- cession Decisions and Performance.” Quarterly titative Analysis 46(6): 1545–80. Journal of Economics 122 (2): 647–91. ———. 2011b. “Small vs. Young Firms across the Berge, Lars Ivar Oppedal, Kjetil Bjorvatn, and Bertil World: Contribution to Employment, Job Cre- Tungodden. 2011. “Human and Financial Capi- ation, and Growth.” Policy Research Working Pa- tal for Microenterprise Development: Evidence per Series 5631, World Bank, Washington, DC. from a Field and Lab Experiment.” Discussion Baily, Martin Neil, Eric J. Bartelsman, and John Paper 1, Norwegian School of Economics, Ber- Haltiwanger. 1996. “Downsizing and Productiv- gen, Norway. ity Growth: Myth or Reality?” Small Business Eco- Block, Steven. 2012. “The Decline and Rise of Ag- nomics 8 (4): 259–78. ricultural Productivity in Sub-Saharan Africa.” Banerjee, Abhijit V., and Esther Duflo. 2004. “Do Working Paper Series 16841, National Bureau of Firms Want to Borrow More? Testing Credit Con- Economic Research, Cambridge, MA. straints Using a Directed Lending Program.” Dis- Bloom, Nicholas, Benn Eifert, Aprajit Mahajan, cussion Paper Series 4681, Centre for Economic David McKenzie, and John Roberts. 2011. “Does Policy Research, London. Management Matter? Evidence from India.” Pol- ———. 2011. Poor Economics: A Radical Rethinking icy Research Working Paper Series 5573, World of the Way to Fight Global Poverty. New York: Pub- Bank, Washington, DC. lic Affairs. Bloom, Nicholas, Helena Schweiger, and John Van Banerjee, Abhijit V., Esther Duflo, Rachel Glennerster, Reenen. 2011. “The Land That Lean Manufactur- and Cynthia Kinnan. 2009. “The Miracle of Mi- ing Forgot? Management Practices in Transition crofinance? Evidence from a Randomized Evalu- Countries.” Working Paper Series 17231, National ation.” Massachusetts Institute of Technology, Bureau of Economic Research, Cambridge, MA. Cambridge, MA. Processed. Bloom, Nicholas, and John van Reenen. 2007. “Mea- Bangladesh Knitwear Manufacturers and Exporters suring and Explaining Management Practices Association. 2012. “History of Development of across Firms and Countries.” Quarterly Journal of Knitwear of Bangladesh.” Bangladesh Knitwear Economics 122 (4): 1351–408. Manufacturers and Exporters Association, Ban- ———. 2010. “Why Do Management Practices Dif- gladesh. Processed. fer across Firms and Countries?” Journal of Eco- Barrett, Christopher B., Marc F. Bellemare, and Janet nomic Perspectives 24 (1): 203–24. Y. Hou. 2010. “Reconsidering Conventional Ex- Brandt, Loren, Chang-Tai Hsieh, and Xiaodong Zhu. planations of the Inverse Productivity–Size Rela- 2008. “Growth and Structural Transformation in tionship.” World Development 38 (1): 88–97. China.” In China’s Great Economic Transforma- Bartelsman, Eric J., and Mark Doms. 2000. “Under- tion, ed. Loren Brandt and Thomas G. Rawski. standing Productivity: Evidence from Longitudi- Cambridge, U.K.: Cambridge University Press. 122 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Brandt, Loren, and Thomas G Rawski. 2008. China’s de Soto, Hernando. 1989. The Other Path: The In- Great Economic Transformation. Cambridge, U.K.: visible Revolution in the Third World. New York: Cambridge University Press. Harper & Row. Brandt, Loren, Johannes van Biesebroeck, and Yifan Djankov, Simeon, Miguel Edward, Yingyi Qian, Zhang. 2012. “Creative Accounting or Creative Gerard Roland, and Ekaterina Zhuravskaya. 2005. Destruction? Firm-Level Productivity Growth in “Who Are Russia’s Entrepreneurs?” Journal of the Chinese Manufacturing.” Journal of Development European Economic Association 3 (2–3): 1–11. Economics 97 (2): 339–51. Djankov, Simeon, Yingyi Qian, Gerard Roland, and Bruhn, Miriam. 2008. “License to Sell: The Effect of Ekaterina Zhuravskaya. 2006a. “Entrepreneurship Business Registration Reform on Entrepreneur- in China and Russia Compared.” Journal of the ial Activity in Mexico.” Policy Research Working European Economic Association 4 (2–3): 352–65. Paper Series 4538, World Bank. Washington, DC. ———. 2006b. “Who Are China’s Entrepreneurs?” Bruhn, Miriam, Dean Karlan, and Antoinette Schoar. Amercian Economics Review 96 (2): 348–52. 2010. “What Capital Is Missing in Developing Drexler, Alejandro, Greg Fischer, and Antoinette Countries?” American Economic Review 100 (2): Schoar. 2011. “Keeping It Simple: Financial Lit- 629–33. eracy and Rules of Thumb.” MIT Sloan Manage- Bruhn, Miriam, and Bilal Zia. 2011. “Stimulating ment, Cambridge, MA. Processed. Managerial Capital in Emerging Markets: The Im- Duranton, Gilles. 2007. “Urban Evolutions: The Fast, pact of Business and Financial Literacy for Young the Slow, and the Still.” American Economic Review Entrepreneurs.” Policy Research Working Paper 97 (1): 197–221. Series 5642, World Bank, Washington, DC. ———. 2012. “Agglomeration and Jobs in Develop- Cabral, Luis M. B., and José Mata. 2003. “On the ing Countries.” Background paper for the WDR Evolution of the Firm Size Distribution: Facts 2013. and Theory.” American Economic Review 93 (4): Duranton, Gilles, and Diego Puga. 2001. “Nursery 1075–90. Cities: Urban Diversity, Process Innovation, and Carletto, Calogero, Sara Savastano, and Alberto Zezza. the Life Cycle of Products.” American Economic 2011. “Fact or Artefact: The Impact of Measure- Review 91 (5): 1454–77. ment Errors on the Farm Size–Productivity Rela- Dutz, Mark A., Ioannis Kessides, Stephen O’Connell, tionship.” Policy Research Working Paper Series and Robert D. Willig. 2011. “Competition and 5908, World Bank, Washington, DC. Innovation-Driven Inclusive Growth.” Policy Re- Cho, Yoonyoung, and Maddalena Honorati. 2012. “A search Working Paper Series 5852, World Bank, Meta-Analysis of Entrepreneurship Programs in Washington, DC. Developing Countries.” Background paper for the Easterly, William. 2002. The Elusive Quest for Growth WDR 2013. Economists’ Adventures and Misadventures in the Christiaensen, Luc, Lionel Demery, and Jesper Kuhl. 2011. “The (Evolving) Role of Agriculture in Pov- Tropics. Cambridge, MA: MIT Press. erty Reduction—An Empirical Perspective.” Jour- Evenson, Robert E., and Douglas Gollin. 2003. Crop nal of Development Economics 96 (2): 239–54. Variety Improvement and Its Effect on Productivity: David, Christina C., and Keijiro Otsuka, eds. 1994. The Impact of International Agricultural Research. Modern Rice Technology and Income Distribution Wallingford, U.K.: CABI Publishing. in Asia. Boulder, CO: Lynne Rienner. Fafchamps, Marcel, David J. McKenzie, Simon Quinn, Davis, Steven J., John C. Haltiwanger, and Scott and Christopher Woodruff. 2011. “When Is Capi- Schuh. 1996. Job Creation and Destruction. Cam- tal Enough to Get Female Microenterprises Grow- bridge, MA: MIT Press. ing? Evidence from a Randomized Experiment in de Mel, Suresh, David J. McKenzie, and Christopher Ghana.” Working Paper Series 17207, National Woodruff. 2008a. “Returns to Capital in Micro- Bureau of Economic Research, Cambridge, MA. enterprises: Evidence from a Field Experiment.” Fafchamps, Marcel, and Christopher Woodruff. 2012. Quarterly Journal of Economics 123 (4): 1329–72. “Identifying and Relaxing Constraints to Employ- ———. 2008b. “Who Are the Microenterprise Own- ment Generation in Small-Scale African Enter- ers? Evidence from Sri Lanka on Tokman v. de prises.” University of Oxford, Oxford. Processed. Soto.” Discussion Paper Series 3511, Institute for Fajnzylber, Pablo, William Maloney, and Gabriel the Study of Labor, Bonn. Montes Rojas. 2006. “Microenterprise Dynamics ———. 2009. “Innovative Firms or Innovative Own- in Developing Countries: How Similar Are They ers? Determinants of Innovation in Micro, Small, to Those in the Industrialized World? Evidence and Medium Enterprises.” Discussion Paper Se- from Mexico.” World Bank Economic Review 20 ries 3962, Institute for the Study of Labor, Bonn. (3): 389–419. ———. 2010. “Wage Subsidies for Microenterprises.” FAO (Food and Agriculture Organization). 2010. American Economic Review 100 (2): 614–18. 2000 World Census of Agriculture: Main Results Jobs and productivity 123 and Metadata by Country (1996–2005). Rome: Haggblade, Steven, Peter B. R. Hazell, and Thomas FAO. Anthony Reardon, eds. 2007. Transforming the Foster, Andrew D., and Mark R. Rosenzweig. 2011. Rural Nonfarm Economy. Baltimore, MD: Johns “Are Indian Farms Too Small? Mechanization, Hopkins University Press. Agency Costs, and Farm Efficiency.” Brown Uni- Haltiwanger, John. 2011. “Globalization and Eco- versity, Providence, RI. Processed. nomic Volatility.” In Making Globalization Socially Foster, Lucia Smith, John C. Haltiwanger, and Cornell Sustainable, ed. Marc Bacchetta and Marion Jan- J. Krizan. 2001. “Aggregate Productivity Growth: sen, 119–46. Geneva: International Labour Orga- Lessons from Microeconomic Evidence.” In New nization and World Trade Organization. Developments in Productivity Analysis, ed. Charles Haltiwanger, John, Ron S. Jarmin, and Javier Mi- R. Hulten, Edwin R. Dean, and Michael J. Harper, randa. 2010. “Who Creates Jobs? Small vs. Large 303–72. Chicago, IL: University of Chicago vs. Young.” Working Paper Series 16300, National Press. Bureau of Economic Research, Cambridge, MA. Foster, Lucia Smith, John C. Haltiwanger, and Chad Hayami, Yujiro, and Toshihiko Kawagoe. 1989. “Farm Syverson. 2008. “Reallocation, Firm Turnover, and Mechanization, Scale Economies and Polariza- Efficiency: Selection on Productivity or Profitabil- tion: The Japanese Experience.” Journal of Devel- ity?” American Economic Review 98 (1): 394–425. opment Economics 31 (2): 221–39. Fox, Louise, and Thomas Sohnesen. 2012. “House- Hayami, Yujiro, and Keijiro Otsuka. 1993. The Eco- hold Enterprise in Sub-Saharan Africa: Why They nomics of Contract Choice: An Agrarian Perspective. Matter for Growth, Jobs, and Poverty Reduction.” New York: Oxford University Press. Policy Research Working Paper 6184, World Bank, Hayami, Yujiro, and Vernon W. Ruttan. 1985. Agricul- Washington, DC. tural Development: An International Perspective. Gennaioli, Nicola, Rafael La Porta, Florencio Lopez- Baltimore, MD: Johns Hopkins University Press. de-Silanes, and Andrei Hleifer. 2011. “Human Henderson, Vernon. 2002. “Urbanization in Develop- Capital and Regional Development.” Working ing Countries.” World Bank Research Observer 17 Paper Series 17158, National Bureau of Economic (1): 89–112. Research, Cambridge, MA. Holden, Stein T., Keijiro Otsuka, and Frank M. Place. Ghani, Ejaz, Arti Grover Goswami, and William R. 2009. “Land Markets and Development in Africa.” Kerr. 2012. “Is India’s Manufacturing Sector Mov- In The Emergence of Land Markets in Africa: As- ing Away From Cities?” Working Paper Series sessing the Impacts on Poverty, Equity, and Effi- 12-090, Harvard Business School, Harvard Uni- ciency, ed. Stein T. Holden, Keijiro Otsuka, and versity, Cambridge, MA. Frank M. Place, 3–17. Washington, DC: Resources Gindling, T. H., and David Newhouse 2012. “Self- for the Future. Employment in the Developing World.” Back- Hsieh, Chang-Tai, and Peter J. Klenow. 2009. “Misal- ground paper for the WDR 2013. location and Manufacturing TFP in China and Giné, Xavier, and Ghazala Mansuri. 2011. “Together India.” Quarterly Journal of Economics 124 (4): We Will: Evidence from a Field Experiment on 1403–48. Female Voter Turnout in Pakistan.” World Bank, ———. 2011. “The Life Cycle of Plants in India and Washington, DC. Processed. Mexico.” Research Paper 11-33, Booth School of Göbel, Kristin, Michael Grimm, and Jann Lay. 2011. Business, University of Chicago, Chicago, IL. “Capital Returns, Productivity and Accumulation IFC (International Finance Corporation). Forthcom- in Micro and Small Enterprises: Evidence from ing. IFC Job Study: Assessing Private Sector Contri- Peruvian Panel Data.” Processed. butions to Job Creation. Washington, DC: IFC. Griliches, Zvi, and Haim Regev. 1992. “Productiv- Kairiza, Terrence, and Tetsushi Sonobe. 2012. “Are ity and Firm Turnover in Israeli Industry, 1979– Female Entrepreneurs Less Skillful in Manag- 1988.” Journal of Development Economics 65 (1): ment? A Randomized Experiment in the Garment 175–203. Industry in Tanzania.” Discussion Paper 11-24, Grimm, Michael, Peter Knorringa, and Jann Lay. National Graduate Institute for Policy Studies, 2012. “Constrained Gazelles: High Potentials in Tokyo. West Africa’s Informal Economy.” International Karlan, Dean, Miriam Bruhn, and Antoinette Schoar. Institute of Social Studies, Erasmus University– 2012. “The Impact of Consulting Services on Rotterdam, Rotterdam, Netherlands. Processed. Small and Medium Enterprises: Evidence from Grimm, Michael, Jens Kruger, and Jann Lay. 2011. a Randomized Trial in Mexico.” Working Paper “Barriers to Entry and Returns to Capital in In- 100, Economics Department, Yale University, New formal Activities: Evidence from Sub-Saharan Haven, CT. Africa.” Review of Income and Wealth 57 (S1): Karlan, Dean, Ryan Knight, and Christopher Udry. S27–S53. 2012. “Hoping to Win, Expected to Lose: Theory 124 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 and Lessons on Micro Enterprise Development.” Growth.” Working Paper Series 17143, National Innovations for Poverty Action, Cambridge, MA. Bureau of Economic Research, Cambridge, MA. Processed. Mead, Donald C., and Carl Liedholm. 1998. “The Karlan, Dean S., and Martin Valdivia. 2010. “Teaching Dynamics of Micro and Small Enterprises in De- Entrepreneurship: Impact of Business Training on veloping Countries.” World Development 26 (1): Microfinance Clients and Institutions.” Review of 61–74. Economics and Statistics 93 (2): 510–27. Mertens, Brian. 2011. “Forbes Asia’s Businessman of Kasbekar, Kiron. 2007. Only the Fittest Survive. Lon- the Year.” Forbes Asia Magazine, December 5. don: Tata Group. Montenegro, Claudio E., and Harry Anthony Pa- Kelley, Donna, Niels Bosma, and José A. Amorós. trinos. 2012. “Returns to Schooling around the 2010. GEM Global Report. London: Global Entre- World.” Background paper for the WDR 2013. preneurship Monitor. Mottaleb, Khondoker A., and Tetsushi Sonobe. 2011. Kinda, Tidiane, and Josef L. Loening. 2008. “Small “An Inquiry into the Rapid Growth of the Gar- Enterprise Growth and the Rural Investment Cli- ment Industry in Bangladesh.” Economic Develop- mate: Evidence from Tanzania.” Policy Research ment and Cultural Change 60 (1): 67–89. Working Paper Series 4675, World Bank, Wash- Nelson, Richard R. 1981. “Research on Productivity ington, DC. Growth and Productivity Differences: Dead Ends Kucera, David, and Leanne Roncolato. 2012. “Struc- and New Departures.” Journal of Economic Litera- ture Matters: Sectoral Drivers of Development ture 19 (3): 1029–64. and the Labour Productivity–Employment Re- Otsuka, Keijiro, and Frank Place. 2001. Land Tenure lationship.” International Labour Organization, and Natural Resource Management: A Compara- Geneva. Processed. tive Study of Agrarian Communities in Asia and Larson, Donald F., Keijiro Otsuka, Tomoya Matsu- Africa. Baltimore, MD: Johns Hopkins University moto, and Talip Kilic. 2012. “Can Africa’s Agri- Press. culture Depend on Smallholder Farmers?” Back- Otsuka, Keijiro, and Tetsushi Sonobe. 2011. “A ground paper for the WDR 2013. Cluster-Based Industrial Development Policy for Liedholm, Carl. 2002. “Small Firm Dynamics: Evi- Low-Income Countries.” Policy Research Working dence from Africa and Latin America.” Small Busi- Paper Series 5703, World Bank, Washington, DC. ness Economics 18 (1–3): 227–42. Pagés, Carmen, ed. 2010. The Age of Productivity: Lin, Justin Yifu. 2012. Demystifying the Chinese Econ- Transforming Economies from the Bottom Up. New omy. Cambridge, U.K.: Cambridge University York: Palgrave Macmillan. Press. Park, Jaegil, Daejong Kim, Yongseok Ko, Eunnan Loening, Josef, and Mikael Imru. 2009. “Ethiopia: Kim, Keunhyun Park, and Keuntae Kim. 2011. Diversifying the Rural Economy. An Assessment Urbanization and Urban Policies in Korea. Korea of the Investment Climate for Small and Infor- Research Institute for Human Settlements. mal Enterprises.” Paper 23278, Munich Personal Perry, Guillermo E., William F. Maloney, Omar S. RePEc Archive, Munich. Arias, Pablo Fajnzylber, Andrew D. Mason, and Mano, Yukichi, Alhassa Iddrisu, Yutaka Yoshino, and Jaime Saavedra-Chanduvi. 2007. Informality: Exit Tetsushi Sonobe. 2011. “How Can Micro and and Exclusion. Washington, DC: World Bank. Small Enterprises in Sub-Saharan Africa Become Pieper, Ute. 2000. “Deindustrialisation and the Social More Productive? The Impacts of Experimental and Economic Sustainability Nexus in Developing Basic Management Training.” Policy Research Countries: Cross-Country Evidence on Produc- Working Paper Series 5755, World Bank, Wash- tivity and Employment.” Journal of Development ington, DC. Studies 36 (4): 66–99. Martin, Will, and Devashish Mitra. 2001. “Productiv- Ravallion, Martin. 2005. “Externalities in Rural De- ity Growth and Convergence in Agriculture versus velopment: Evidence for China.” In Spatial In- Manufacturing.” Economic Development and Cul- equality and Development, ed. Ravi Kanbur and tural Change 49 (2): 403–22. Anthony J. Venables, 137–62. Oxford: Oxford McKenzie, David. 2010. Impact Assessment in Finance University Press. and Private Sector Development: What Have We Ravallion, Martin, and Shaohua Chen. 2007. “China’s Learned and What Should We Learn? Washington, (Uneven) Progress against Poverty.” Journal of DC: World Bank. Development Economics 82 (1): 1–42. McKenzie, David, and Christopher Woodruff. 2008. Rhee, Yung Whee. 1990. “The Catalyst Model of “Experimental Evidence on Returns to Capital Development: Lessons from Bangladesh’s Success and Access to Finance in Mexico.” World Bank with Garment Exports.” World Development 18 Economic Review 22 (3): 457–482. (2): 333–46. McMillan, Margaret S., and Dani Rodrik. 2011. “Glo- Rijkers, Bob, Hassen Arouri, Caroline Freund, and balization, Structural Change, and Productivity Antonio Nucifora. 2012. “Which Firms Create Jobs and productivity 125 Jobs in Tunisia?” Background paper for the WDR Asia and Latin America: A New Sectoral Data Set.” 2013. Cliometrica 3: 165–90. Roberts, Mark J. 1996. “Employment Flows and Pro- Tokman, Victor. 2007. “Modernizing the Infor- ducer Turnover.” In Industrial Evolution in De- mal Sector.” Working Paper 42, Department of veloping Countries: Micro Patterns of Turnover, Economic and Social Affairs, New York, United Productivity, and Market Structure, ed. Mark J. Nations. Roberts and James R. Tybout. Oxford: Oxford Tybout, James R. 1996. “Heterogeneity and Productiv- University Press. ity Growth: Assessing the Evidence.” In Industrial Rutkowski, Jan, Stefano Scarpetta, Arup Banerji, Evolution in Developing Countries: Micro Patterns Philip O’Keefe, Gaelle Pierre, and Milan Vodop- of Turnover, Productivity, and Market Structure, ed. ivec. 2005. Enhancing Job Opportunities: Eastern Mark J. Roberts and James R. Tybout. Oxford: Ox- Europe and the Soviet Union. Washington, DC: ford University Press. World Bank. ———. 2000. “Manufacturing Firms in Developing Sandefur, Justin. 2010. “On the Evolution of the Firm Countries: How Well Do They Do, and Why?” Size Distribution in an African Economy.” Centre Journal of Economic Literature 38 (1): 11–44. for the Study of African Economies Working Pa- Valdivia, Martin. 2011. “Training or Technical As- per Series 2010-05, Oxford. Processed. sistance for Female Entrepreneurship? Evidence Schoar, Antoinette. 2010. “The Divide between Sub- from a Field Experiment in Peru.” GRADE (Grupo sistence and Transformational Entrepreneur- de Análisis para el Desarrollo), Lima. Processed. ship.” In Innovation Policy and the Economy, Vol- van der Sluis, Justin, Mirjam van Praag, and Wim Vi- ume 10, ed. Josh Lerner and Scott Stern, 57–81. jverberg. 2005. “Entrepreneurship Selection and Cambridge, MA: National Bureau of Economic Performance: A Meta-analysis of the Impact of Research. Education in Developing Economies.” World Bank Schumpeter, Joseph Alois. 1934. The Theory of Eco- Economic Review 19 (2): 225–61. nomic Development: An Inquiry into Profits, Capi- Vivarelli, Marco. 2012. “Entrepreneurship in Ad- vanced and Developing Countries: A Microeco- tal, Credit, Interest, and the Business Cycle. Cam- nomic Perspective,” Discussion Paper Series 6513, bridge, MA: Harvard University Press. IZA, Bonn. Shiferaw, Admasu, and Arjun S. Bedi. 2010. “The Dy- Wang, Yueping, and Yang Yao. 1999. Market Reforms, namics of Job Creation and Job Destruction: Is Technological Capabilities, and the Performance Sub-Saharan Africa Different?” Poverty, Equity of Small Enterprises in China. Washington, DC: and Growth Discussion Paper 22, Courant Re- World Bank. search Centre, Göttingen, Germany. Witze, Morgen. 2010. “Case Study: Tata.” Financial Sonobe, Tetsushi, Yuki Higuchi, and Keijiro Otsuka. Times, December 29. 2012. “Productivity Growth and Job Creation in World Bank. 2007. World Development Report 2008: the Development Process of Industrial Clusters.” Agriculture for Development. Washington, DC: Background paper for the WDR 2013. World Bank. Sonobe, Tetsushi, Dinghuan Hu, and Keijiro Otsuka. ———. 2009. World Development Report 2009: Re- 2004. “From Inferior to Superior Products: An shaping Economic Geography. Washington, DC: Inquiry into the Wenzhou Model of Industrial World Bank. Development in China.” Journal of Comparative ———. 2011a. “Brazil Urbanization Review.” World Economics 32 (3): 542–62. Bank, Washington, DC. Processed. Sonobe, Tetsushi, and Keijiro Otsuka. 2006. Cluster- ———. 2011b. Vietnam Urbanization Review: Tech- Based Industrial Development: An East Asian nical Assistance Report. Washington, DC: World Model. New York: Palgrave Macmillan. Bank. ———. 2011. Cluster-Based Industrial Development: ———. Forthcoming. Planning, Connecting, Financ- A Comparative Study of Asia and Africa. New York: ing Cities—Now. Urbanization Review Flagship Palgrave Macmillan. Report. Washington, DC: World Bank. Sutton, John, and Nebil Kellow. 2010. An Enterprise World Bank, and the People’s Republic of China De- Map of Ethiopia. London: International Growth velopment Research Center of the State Council. Centre. 2012. China 2030: Building a Modern, Harmoni- Syverson, Chad. 2011. “What Determines Productiv- ous, and Creative High-Income Society. Washing- ity?” Journal of Economic Literature 49: (2), 326–65. ton, DC: World Bank and Development Research The Economist. 2001. “Face Value: Radicalism, Center of the State Council, the People’s Republic Asian Style.” The Economist Newspaper Limited, of China. March 22. Yunus, Muhammad, and Alan Jolis. 1999. Banker to Timmer, Marcel P., and Gaaitzen J. de Vries. 2009. the Poor: Micro-Lending and the Battle against “Structural Change and Growth Accelerations in World Poverty. New York: Public Affairs. CHAPTER 4 Jobs and social cohesion Jobs can shape social interactions and the ways societies manage collective decision making. They connect people with others and can provide access to voice. J obs influence who we are and our relations with others. In most societies, jobs are a fundamental source of self-respect and social identity. Historically, family names in cohesion can also influence jobs by shaping the context in which entrepreneurs make in- vestment decisions. Empirical evidence of a connection between some cultures were associated with specific oc- jobs and social cohesion is limited by data con- cupations because people defined themselves straints, the complexity of measuring social by what they did: Miller in English, Hurudza interactions, and the multiple factors that can (master farmer) in Shona, and Suthar (carpen- contribute to social cohesion. However, cross- ters) in Hindi. country analysis of values surveys finds that job Jobs connect people with others through loss or lack of access to jobs is associated with networks. The workplace can be a place to en- lower levels of trust and civic engagement. This counter new ideas and information and to inter- is not only a rich-country phenomenon, as is of- act with people of different ethnicities. The dis- ten suggested. Unemployment can cause depres- tribution of jobs within society and perceptions sion, increase mistrust in others, and lead people about who has access to opportunities and why to drop out of community life. Migrants without can shape people’s expectations and aspirations social ties may be excluded from job opportuni- for the future, their sense of having a stake in ties that would allow them to succeed in their society, and perceptions of fairness. new environments. In extreme cases, if people, These individual influences of jobs may particularly youth, lack jobs and hope for the fu- have collective consequences. Having or not ture, they may turn to violent or criminal activ- having a job may affect key elements of social ity to compensate for the absence of self-esteem cohesion, the capacity of societies to manage and sense of belonging that a job might other- collective decision making peacefully. While wise provide. Similarly, jobs offering limited op- the frustration of unemployed youth during portunities for future growth or lacking access the Arab Spring suggests that the lack of jobs to voice can lead to alienation and frustration. can be a source of social unrest, that does not Some jobs are positively correlated with so- mean that the relationship between jobs and cial cohesion. Jobs that are empowering, build social cohesion is straightforward, immediate, agency, and provide access to voice can increase or direct. Rather, the relationship is contextual trust and people’s willingness to participate in and shaped by individuals, their values, atti- civil society. Jobs can create economic and social tudes, and behaviors, and the institutions that ties and have the potential to build incentives surround them. And it goes both ways: social to work across boundaries and resolve conflict. Jobs and social cohesion 127 And people’s trust in government and their con- intergroup relations, and the effectiveness of fidence in institutions may increase if they be- channels for resolving conflicts. Cross-country lieve that job opportunities are available to them data on political stability, the absence of vio- either now or in the future. Jobs can influence lence, and voice and accountability can be used social cohesion through their effects on social to construct an index of social cohesion at the identity, networks, and fairness. country level.6 The Nordic countries, Swit- zerland, and New Zealand, score high on this index. Although the index is a static measure, Jobs can help manage social the capacity for peaceful decision making can tensions evolve over time as societies change, through urbanization, more female employment, and News reports about the financial crisis and the the growth of a middle class. Arab Spring have broadcast a common senti- The nature of the interactions through jobs ment that unemployment, especially among affects the degree of social cohesion in commu- young people, can ignite unrest and violence.1 nities and societies. Trust and civic engagement In September 2010, a Telegraph headline re- are two measurable indicators of social cohe- ported that the “IMF Fears ‘Social Explosion’ sion at the individual level. These indicators are from World Jobs Crisis” ahead of a summit associated with the country-level index of the of the International Monetary Fund and the capacity for peaceful collective decision making International Labour Organization (ILO).2 In (figure 4.1). 2011, Le Monde linked jobs and social unrest Trust refers to the extent to which individu- in Tunisia to concerns about social justice: als have confidence in people whom they know “protesters aren’t asking the Government to personally, including family and neighbors.7 It find them a job, but denouncing the lack of can also refer to trust in people met for the first transparency and justice in the labor market.”3 time and in people of different religions and The revolution in Tunisia was sparked by the nationalities. Civic engagement captures the protests of a fruit vendor frustrated by his in- extent to which people participate voluntarily ability to get a permit to do his job. High lev- in civil society by joining community organiza- els of youth unemployment were a significant tions, unions, political parties, or religious or- contributing factor to the riots in the United ganizations, and by engaging in civic life. These Kingdom in the summer of 2011.4 forms of involvement and activism include These events suggest that jobs can contrib- nonviolent activity, such as participating in pro- ute to social cohesion, including how societies tests, that can be constructive for social cohe- handle differences and manage tensions among sion. Civic engagement relates to social capital, different groups, and how they avoid and resolve participation, and the agency that motivates in- conflicts. There are many possible ways to de- dividuals to be part of collective action. fine social cohesion (box 4.1). But overall, social cohesion refers to the capacity of societies to . . . and they are influenced by jobs peacefully manage collective decision making.5 Social cohesion thus relates to the processes and Trust and civic engagement can be linked to institutions that shape how groups interact. It jobs. Having—or not having—a job may af- does not follow that collective decision making fect the way people view the world by influenc- should be imposed from above, but rather that ing their values and attitudes, including trust in channels for voice, accountability, and inclusive others and in institutions. Jobs can also provide participation of diverse groups can contribute channels for people to interact across diverse to a cohesive society. groups. Jobs with certain characteristics may contribute more to trust and civic engagement than others. Trust and civic engagement matter . . . Not having a job is associated with less self- The capacity of a country to support peaceful reported trust in high-income countries (figure collective decision making involves multiple 4.2a). The relationship is stronger with civic factors including the quality of institutions, engagement, where unemployment is linked to 128 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 4.1 What is social cohesion? The concept can be traced as far back as the writings of Ibn Khaldun, nomic divisions within society (income, ethnicity, political party, a Muslim scholar born in Tunis in the 15th century, whose idea of caste, language).”d asabiyah is generally translated as “social cohesion.” Living during Although social cohesion has multiple definitions with differ- times of manifold conflicts, Khaldun regarded asabiyah as the soli- ences in focus and emphasis, some common threads emerge: darity of small groups (tribes) that has the power to promote • Social cohesion is generally viewed as a positive concept. It can be broader social integration.a an end in itself, as well as a means. The Organisation for Economic Four centuries later, Emile Durkheim considered cohesion in Co-operation and Development describes a cohesive society as the context of societal transformation.b He was particularly con- one that “works towards the well-being of all its members.”e The cerned with two different types of solidarity that he observed French Commissariat General du Plan defines social cohesion as “a emerging through industrialization in Europe. Primitive societies, set of social processes that help instill in individuals the sense of he found, were marked by mechanical solidarity and a strong col- belonging to the same community and the feeling that they are lective ethos based on relatively homogeneous patterns of life recognized as members of the community.”f and work. Advanced capitalist society, in contrast, with its complex division of labor, was marked by organic solidarity based on merit, • Social cohesion relates to the interactions among individuals, respect for different roles within the labor force, and the need for groups, and societies. These interactions are seen as “the forces moral regulation. holding the individuals within the groupings in which they are” More recently, social cohesion has been related to social capital. and as linking diverse groups together.g In the 1990s, Pierre Bourdieu and others focused on the benefits • Social cohesion contributes to sustainable social development. that accrue to individuals through their participation in groups and According to the Club de Madrid, “shared societies are stable, safe the need for individuals to invest in these relations. Robert Putnam’s and just and based on the promotion and protection of all human analysis of the conditions for creating responsive, effective, and rep- rights . . . , including disadvantaged and vulnerable groups and resentative institutions builds on this theme. Famously, northern persons.”h Italy had more of these institutions than southern Italy, and Putnam concluded that the central enabling condition was the existence • Last, some definitions of social cohesion relate the concept to pro- of more social capital, measured through the density of local cesses and institutional characteristics. For example, social cohesion associations.c Social cohesion can be understood as a broader con- can refer to “the capacity of societies (not just groups, networks) cept than social capital in that it considers intergroup relations in to peacefully manage collective action problems.”i This definition a wider context. Easterly, Ritzen, and Woolcock define social cohe- links social cohesion to participation and civic engagement. sion (or lack thereof) as “the nature and extent of social and eco- Sources: World Development Report 2013 team based on Norton and de Haan 2012 for the World Development Report 2013; OECD 2011. a. Weiss 1995. b. Durkheim 1893. c. Putnam, Leonardi, and Nanetti 1993. d. Easterly, Ritzen, and Woolcock 2006, 105. e. OECD 2011, 17. f. Jenson 1998, 4. g. Moreno and Jennings 1937, 371. h. OECD 2011, 53. i. Woolcock 2011. lower participation in associations and dem- In developing countries, the type of job, the op- onstrations, and signing petitions (figures 4.2b, portunities the job provides, and the way jobs c, and d). With the exception of low-income connect people may be more relevant for social countries, the relationship between unemploy- cohesion. ment and active membership in an association Further indications of a connection between is significant and negative. The mixed findings jobs and social cohesion comes from looking on trust and unemployment underscore that at job characteristics. The 2005 wave of the unemployment may not always be a meaningful World Values Survey asks people whether their concept in low-income countries. Open unem- jobs involve manual or cognitive, routine or cre- ployment is frequently low in developing coun- ative tasks, and how much independence they tries and is not always concentrated among the have at work. An index of these self-reported worse-off, because most people work to make characteristics captures how motivating a job ends meet in the absence of social safety nets. is. The index is positively associated with trust Jobs and social cohesion 129 F I G U R E 4 .1 Trust and civic engagement go together with peaceful collective decision making a. Trust b. Civic engagement 0.8 0.9 0.7 0.8 share reporting trust in people 0.7 0.6 index of civic engagement 0.6 0.5 0.5 0.4 0.4 0.3 0.3 0.2 0.2 0.1 0.1 0 0 –2.0 –1.5 –1.0 –0.5 0 0.5 1.0 1.5 2.0 –1.5 –1.0 –0.5 0 0.5 1.0 1.5 2.0 index of peaceful collective decision making index of peaceful collective decision making Sources: World Development Report 2013 team, based on World Values Survey 2005 (database), World Values Survey Association, Stockholm; Worldwide Governance Indicators 2005. Note: The analysis includes 56 countries (panel a) and 49 countries (panel b). “Index of peaceful collective decision making” is an average of indicators of “voice and accountability” and “political stability and the absence of violence” from the Worldwide Governance Indicators. “Index of civic engagement” is the average of responses to questions from the World Values Survey on (a) active membership in associations; (b) whether the respondent participated or would participate in a demonstration; and (c) whether the respondent would sign a petition. in high- and upper-middle-income countries ciety. Moreover, trust and civic participation are (figure 4.3a). This relationship is not significant influenced by peer and social interaction effects in lower-middle- and low-income countries. (such as the trust or participation of others), Holding a job with perceived cognitive, creative, which can make it difficult to draw conclusions. and autonomous attributes is positively linked While the primary focus is on how jobs can with civic engagement indicators in all but contribute to trust and civic engagement, this re- low-income countries (figures 4.3b, 4.3c, and lationship goes in both directions. There are ways 4.3d).9 Similarly, in surveys conducted in 2012 in which social cohesion can affect jobs. Trust and in China, Colombia, and the Arab Republic of social capital (an element of civic engagement) Egypt, workers who perceived that their jobs may create an economic and political environ- involved more autonomy and greater creative ment that is conducive to economic growth.11 and cognitive content were more likely to report Trust can reduce transaction costs and overcome helping other people.10 market failures that arise because of uncertainty; it can reduce costs related to search and informa- tion, policing and enforcement, and bargaining More than correlations? and decision making; and it can be the basis for As suggestive as they are, these relationships be- the transmission and exchange of knowledge tween jobs and social cohesion do not establish and allow for innovation, coordination, and co- causality. While unemployed people may be less operation among firms.12 Meanwhile, factors likely to trust others or join associations, people such as mistrust, discrimination, fragmentation with less trust in others may also be more likely along ethnic lines, or inequality can also influ- to be unemployed or not participate in civil so- ence whether jobs are created, and what kind. 130 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 FIGURE 4.2 People who are unemployed trust and participate less a. Trust and unemployment b. Active membership and unemployment 0.1 0.04 0 N marginal probability marginal probability N –0.1 N 0 N N –0.2 N –0.04 –0.3 N –0.4 –0.08 N –0.5 –0.12 –0.6 high upper lower low high upper lower low income middle middle income income middle middle income income income income income c. Demonstration and unemployment d. Petition and unemployment 0.02 0.02 0 0 marginal probability marginal probability –0.02 –0.02 N N N N N –0.04 –0.04 N N –0.06 –0.06 N –0.08 –0.08 –0.1 –0.1 high upper lower low high upper lower low income middle middle income income middle middle income income income income income Source: Wietzke and McLeod 2012 for the World Development Report 2013. Note: The analysis includes 54 countries. The vertical axis shows the marginal probability (d-probit coefficient) of individuals’ self-reported trust or civic engagement on being unemployed. The estimates control for the income, education, and demographic characteristics of respondents. Trust is based on the question, “Generally speaking, would you say that most people can be trusted or that you need to be very careful in dealing with people?” Civic engagement variables are (a) whether the respondent is an active member of one or more of nine different associations; (b) whether the respondent attended or would attend a demonstration; or (c) whether the respondent signed or would sign a petition. The line indicates the 95 percent confidence interval of each coefficient. If the line crosses the horizontal axis, the corresponding coefficient is not statistically significant. Evidence of a directional link between em- Controlling for other factors, men and ployment status and civic engagement comes women who were working in 2000 but not in from a survey in Indonesia that tracked partici- 2007 were less likely to be participating in com- pation in community meetings and volunteer munity activities than others. Conversely, men activities and interviewed the same respondents and women who were not working in 2000 but in 2000 and 2007.13 On average, participation were working in 2007 were significantly more in community activities increased 8 percent likely to be involved in community activities during the period, but it increased at different than those who were not working in 2007.15 rates among people with different work histo- Reasons not controlled for in the analysis could ries (figure 4.4).14 explain these findings; for example, people who Jobs and social cohesion 131 FIGURE 4.3 People with motivating jobs trust and participate more a. Trust and motivating job b. Active membership and motivating job 0.03 –0.02 N N N 0.02 0.01 marginal probability marginal probability N 0 0.01 N N N –0.01 0 N –0.02 –0.01 high upper lower low high upper lower low income middle middle income income middle middle income income income income income c. Demonstration and motivating job d. Petition and motivating job 0.1 0.02 0.08 N marginal probability marginal probability N 0.06 N N 0.01 N N 0.04 0 N 0.02 N –0.01 0 –0.02 –0.02 high upper lower low high upper lower low income middle middle income income middle middle income income income income income Source: Wietzke and McLeod 2012 for the World Development Report 2013. Note: The analysis includes 54 countries. The vertical axis shows the marginal probability (d-probit coefficient) of individuals’ self-reported trust or civic engagement on an index assessing whether respondents think their job is cognitive, creative, or independent. The estimates control for the income, education, and demographic characteristics of the respondents. Trust is based on responses to the question “Generally speaking, would you say that most people can be trusted or that you need to be very careful in dealing with people?” Civic engagement variables are whether the respondent is an active member of one or more of nine different associations and whether the respondent attended or would attend a demonstration, or signed or would sign a petition. The line indicates the 95 percent confidence interval of each coefficient. If the line crosses the horizontal axis, the corresponding coefficient is not statistically significant. get sick lose their jobs and their ability to partici- employment can break economic and social pate in the community. New cross-country anal- ties, breed mistrust, and damage people’s sense ysis from Europe and Latin America suggests a of community and hope for the future. Not hav- casual relationship between employment status ing a job can mean losing social status as well and trust in others and institutions (box 4.2).16 as not being able to provide income for one’s The empirical results relating unemploy- family. A man laid off after 24 years of work in a ment, trust, and civic engagement imply that factory in Serbia explained, “I automatically lost losing a job means more than losing income. everything. I lost any freedom and power I had. Job loss can undermine feelings of self-worth Everything was lost.”17 Ethnographies of com- and strain family and social relationships. Un- munities in Argentina, Bulgaria, and Guyana 132 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 that experienced widespread job losses in con- FIGURE 4.4 Having a job means more community texts of limited new job creation are remarkably consistent in their accounts of the social impli- participation in Indonesia cations of long-term unemployment (box 4.3). employment status For communities, job loss appears to foster mistrust not only toward former employers or not working in 2000, government authorities suspected of being in- working in 2007 different or responsible for the lack of employ- ment opportunities but also among neighbors, former colleagues, and friends. This frustration working in 2000 may contribute to general dissatisfaction with and 2007 the political environment. An empirical study using the World Values Survey in 69 countries finds that joblessness can be linked with nega- not working in tive views about the effectiveness of democracy 2000 or 2007 and preferences for a rogue leader.18 Insecure jobs or jobs that people find demoralizing can have effects similar to those of unemployment. working in 2000, The lack of status, job security, or voice at work not working in 2007 can lead people to feel disempowered and hope- less about the future and to stop participating in 0 1 2 3 4 5 6 7 8 social networks.19 % change in community participation, 2000–07 In extreme cases, unemployment can con- tribute to violence or social unrest. Youth in particular may turn to gangs or other violent Source: Indonesia Family Life Survey (database), Rand Corporation, Santa Monica, CA. Note: Community participation includes joining in a community meeting; cooperative, voluntary labor; groups to compensate for the lack of ties in eco- neighborhood improvement; neighborhood watch (men); or women’s association. nomic and social life.20 A longitudinal study of youth in Ecuador found that members of gangs BOX 4.2 Do jobs cause trust? Analysis of Eurobarometer and Latinobarómetro Surveys An analysis using the Latinobarómetro and Eurobarometer values institutions over time. The estimated effects measure how a per- surveys during the 2000s makes it possible to study the evolution of centage change in, say, the unemployment rate for a cohort in a trust and jobs and links in both directions. The surveys include ques- given year predicts changes in the percentage of individuals of that tions on interpersonal trust and trust in institutions. Cohorts are same cohort reporting to trust in the subsequent year. defined and examined in the different survey years. The analysis This analysis finds that increases in unemployment are fol- looks at how social cohesion and employment conditions for the lowed by increases in trust among Europeans, but the opposite is cohorts evolve over time, controlling for certain country characteris- true among Latin Americans. At the same time, increases in self- tics that could be correlated with both trust and employment employment lead to higher trust in Europe while the opposite is status. true in Latin America. These results hold in Latin America for trust The dataset captures important features of the formation of both in government and in others. Conversely, the analysis finds social cohesion, because perceptions of trust and civic participation little evidence of a causal link from trust to jobs, except for a small are highly influenced by peer and social interaction effects. For negative impact of self-employment on trust in government in instance, an individual’s propensity to trust other people or the Latin America. These results may reflect the higher coverage of state depends on the perceived or actual trust of others belonging social protection in Europe and the lower importance of open to similar sociodemographic groups. unemployment in Latin America than in Europe. They are consis- The model simultaneously allows group level job conditions, tent with evidence that in Latin America self-employment, while a including unemployment and self-employment, to influence trust last resort for many unable to find wage employment, is valued by and vice versa. The empirics quantify how earlier changes in group- some for the independence it provides.a level employment conditions predict their trust in society and its Source: Arias and Sosa 2012 for the World Development Report 2013. a. Perry and others 2007. Jobs and social cohesion 133 BOX 4.3 Displacement and unemployment can lead to the erosion of trust and ties Downsizing of bauxite mines in Guyana state jobs entailed the loss of numerous benefits, including health The downsizing of bauxite mines in the absence of new opportuni- care and job security. In focus groups, people linked job loss to poor ties has contributed to a deterioration in family and community health, social isolation, and crime. Older men, in particular, lost face relationships in Linden, Guyana.a Between the early 1970s and the when they had to ask young relatives or employers for work. mid-1980s, bauxite mining near Linden was cut by half, and layoffs Unemployment did more than simply weaken social ties; it continued throughout the 1990s. By 1999, formal unemployment in created distrust and mutual suspicion. The restructuring created Linden stood at about 40 percent, and residents complained of ris- winners as well, and they also suffered from the mutual distrust. ing crime. People who had lost their jobs began to avoid traditional social Once among the best-paid workers, miners were respected for gatherings because they were unable to afford gifts that they were their work and seen as drivers of the economy. People felt particu- expected to provide. People felt that security—once linked to larly demeaned by the downsizing process: “The people off the good health, the opportunity to pursue personal and professional job don’t get any information. They treat us like we don’t exist. fulfillment, good personal relations, respect in the community, and Yet . . . before we came off, there used to be meetings with us, social cohesion—had moved out of reach. In communities that [about] what was happening.”b were once relatively equal, people identified five or six levels of Material hardship and insecurity took a harsh toll on identity well-being. and the relations between men and women. Women directly linked men’s inability to retain their authority as breadwinners to domes- Economic reforms in Argentina tic violence. “Especially in cases of abuse, you would be surprised La Matanza is a city of 1.2 million outside Buenos Aires that was that after counseling them, the problem comes right back to the once a manufacturing center of textiles, diesel engines, household economic situation. The man can’t provide adequately for the appliances, and steel. Economic transformations in the 1990s led to home.”c Indigence was linked to shocking forms of child neglect increased reliance on technology and skilled workers. Factories in La and abuse. Some parents were said to be prostituting their chil- Matanza closed, and job opportunities became scarce. With mobil- dren. The cultivation of cannabis, the use of cocaine, and involve- ity low, people had to take up temporary or casual jobs without ment in the international transshipment of drugs were said to be unemployment or health insurance. Those who managed to find rapidly increasing among young men. jobs complained of exploitative pay, abusive treatment, and assaults Downsizing also diminished the economic resources available to their dignity. to community organizations such as churches: “The churches are in As elsewhere, job loss affected men and women’s relationships. crisis also. As individuals, we are part of the crisis, so we carry it into While some men adapted to a more egalitarian role, many re - church and it in turn goes into society,” one person said.d sponded to the blow to their self-esteem as breadwinners with depression or anger; women complained that violence in the Regime change and unemployment in Bulgaria household increased. Men felt joblessness undermined their roles Bulgaria massively downsized its unsustainable state enterprises in the family. following the end of the Communist regime. The disappearance of Source: Dudwick 2012 for the World Development Report 2013. a. World Bank 2004a. b. World Bank 2004a, 26. c. World Bank 2004a, 29. d. World Bank 2004a, 53. involved with drugs and guns had joined “be- placed persons, can be particularly disorient- cause they were searching for the support, trust, ing. It can influence status and identity, for and cohesion—social capital—that they main- example, for migrants who had better jobs in tained their families did not provide, as well as their places of origin. The social effects of un- because of the lack of opportunities in the lo- employment among dislocated populations cal context.”21 Similarly, analysis in the United may be especially isolating for people lacking States has found that gangs provide youth with family or other ties in their new communities. the income, respect, and social ties that they It can have implications for psychological well- were unable to find in jobs, particularly given being, as well as the ability to participate in civil the limited opportunities available in cities such society. Even migrants who find work may be as Chicago and New York that had lost stable, vulnerable if their jobs do not provide adequate unionized manufacturing jobs.22 channels to integrate within the new society or The lack of jobs among dislocated popula- if the migrants lack voice or information about tions, including migrants, refugees, and dis- their rights. 134 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Jobs (or the lack of jobs) can shape child care, education, biotechnology, and manu- social interactions facturing define job competencies and give em- ployees the chance to develop skills, participate The link between social cohesion and jobs is not in training, and increase their responsibility. necessarily direct or linear. Interactions between Results from a program implemented in nurs- jobs and societies are contextual and multidi- ing homes in Massachusetts in the United States mensional; effects can be positive as well as nega- found that having opportunities for growth im- tive. Having, or not having, a job can influence proved communication and teamwork, reduced how people view themselves in relation to others, turnover, and built self-respect and confidence with implications for values, attitudes, and be- among staff.25 haviors. Jobs can connect people with informa- Jobs can have similar effects for low-wage tion, economic activities, and other people. And workers in developing countries, and these ef- how jobs are allocated can affect whether people fects can have implications for social cohesion. think their society is fair and merit-based, believe The growth of the garment sector in Bangla- they have a stake in society, and have expecta- desh brought more than 3 million women into tions and aspirations for the future (Question 4). the workplace. Although the factory jobs were physically demanding and poorly paid, they ex- panded women’s autonomy and increased their Jobs provide social identity opportunities to participate in public life.26 “I Some jobs can contribute positively to how peo- am braver now,” a 26-year-old worker explained, ple view themselves and their relations with oth- “I understand more things which I did not be- ers. The identity conveyed by a job can influence fore.”27 Observers noted that the sight of women the social categories that individuals associate walking back and forth to work changed popu- with, their behaviors, and the norms that shape lar notions about the acceptability of women in this behavior.23 In industrial countries, jobs that the public space and their right to access public give people opportunities to learn and develop institutions.28 Coworkers travel together, share careers can be motivating and strengthen iden- information about work opportunities, and tity. In the United States, programs that provide form savings groups.29 skill development and growth opportunities to The effect of jobs on identity also holds low-wage workers aim to strengthen self-esteem for self-employed workers, including farmers and motivation.24 Public and private sector ini- (box 4.4). Jobs that provide access to voice can tiatives to establish career ladders in health care, be empowering and give workers a stake and shared interest in their work.30 Informal workers lack access to representation on the job and are BOX 4.4 Jobs, motivation, and identity in Risaralda, similarly excluded from local government and Colombia economic associations. Associations of self-em- ployed workers and farmers help fill these gaps.31 David is the owner of a small shop in one of the rural areas of Risaralda. He was A core strategy of the Self Employed Women’s born in another part of Colombia but has lived in the region of Risaralda for Association (SEWA) in India has been to em- some years now. He loves living in this area for the safety and peace that exists. power its members and partners by increasing He has had his shop, located next to the main street of his village, for around their say in communities (box 4.5). 15 years. One of the things he loves the most about his job is the deep sense of belonging to the community that it offers. When necessary, people come to his Jobs connect people shop and ask for credit for the goods they need. Despite a few unpaid bills some of his customers have left him, he does his best to help the villagers. The Some jobs bring people into contact with others income from the shop provides only enough to subsist, and it is necessary for whom they might not otherwise encounter, in- him to engage in other businesses so that he can have an additional income. He cluding people of different ethnicities and social feels that his shop is a way of giving back to the community and that by being backgrounds (box 4.6). This connecting aspect there, he is able to provide for the needs of his neighbors. of jobs can contribute to social cohesion. Jobs can create opportunities for repeated interac- tions focused on tasks leading to interdepen- Source: Bjørkhaug and others 2012 for the World Development Report 2013. dent relationships.32 A study of political views Jobs and social cohesion 135 BOX 4.5 Voice can be extended to the self-employed: The case of SEWA The Self Employed Women’s Association (SEWA) began in 1972 with loans, and insurance), social services, infrastructure, and training a small group of migrant women cart pullers in the wholesale cloth and capacity building. market of Ahmedabad City in Gujarat, India. These women worked Of particular concern to SEWA is the fact that the working poor, as head loaders, carrying clothes to and from the wholesale market. especially women, do not have a voice in institutions that set the They were paid on a per-trip basis, regardless of the distance they rules that affect them. The association seeks to expand the voice of traveled or the weight they carried. Often, they were not paid the its members at the local level through representation and by build- full amount they were owed because no records were kept. Ela ing capacity to participate in local councils; municipal, state, and Bhatt, head of the Women’s Wing of the Textile Labor Association, national planning bodies; tripartite boards; minimum wage and helped organize the group and negotiate with the cloth merchants other advisory boards; sector-specific business associations; and to gain fair treatment. local, state, and national labor federations. SEWA is now a member of the International Confederation of Over the past decade, SEWA has also inspired or cofounded Trade Unions and has become a model for associations of informal national and regional networks of home-workers in other parts of workers internationally. In 2011, SEWA had more than 1.3 million South and Southeast Asia, national networks of street vendors in members across India, of which over 820,000 were in Gujarat, while India and Kenya, and international networks of domestic workers the rest were in eight other states. The members are drawn from and waste pickers. While some of these networks and organizations multiple trades and occupations and from all religious and caste remain weak, most have been able to collaborate, leverage re - groups. sources, and influence policies. The regional and international net- SEWA stresses self-reliance and promotes organizing around the works of domestic workers, home-based workers, street vendors, central strategies of work security, income security, food security, and waste pickers have secured two international conventions (for and social security. Primarily a trade union, SEWA now engages in home-workers and domestic workers) and policies, laws, or legal a wide range of other areas, including leadership development, judgments in several countries. collective bargaining, policy advocacy, financial services (savings, Source: Chen and others 2012 for the World Development Report 2013. and the workplace in the United States finds that likely to witness ethnic violence, while riots were cross-cutting interactions at work lead to greater more frequent in cities with fewer economic ties. awareness of the rationales for views other than The existence of civil society organizations, such one’s own and for “exposing people to political as clubs, political parties, labor unions, and busi- dialogue across lines of political difference.”33 In ness associations, contributed to reducing vio- a survey of 200 managers, owners, and sales rep- lence. But economic interests provided a com- resentatives in Trinidad and Tobago, 81 percent mon motivation for community members of of the interviewees reported that their working both groups to participate in these associations.37 lives brought them into contact with people of a Jobs can also play a connecting role out- wider range of races than did their social lives.34 side of urban environments. Studies in Ghana Interactions through jobs can contribute to and Uganda illustrate how farmers connected greater trust and positive interdependence be- through networks can access information and tween groups. In the 18th century, Montesquieu increase productivity. In Ghana, pineapple farm- wrote that “the natural effect of commerce is to ers adjusted their use of fertilizer in response bring peace. Two nations that negotiate between to the successful or unsuccessful experiences of themselves become reciprocally dependent, if their neighbors. Farmers who were starting to one has an interest in buying and the other in cultivate pineapples were more likely to make selling.”35 Relations through jobs, whether built changes based on information they had received through trade or other transactions, can influ- from other farmers, showing the potential that ence social relations. on-the-job interactions and learning from oth- A 2001 study of multiethnic cities in India ers can have.38 In a qualitative survey, youth in suggests that economic interdependence, in- Ghana who were asked about the characteristics cluding through jobs, can reduce the incentives that would make a job attractive emphasized for violence between communities.36 Cities with the importance of jobs as opportunities to meet more interlinked economic relations were less new people and build social networks.39 136 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 4.6 Some jobs connect people across ethnic boundaries Surveys carried out across the world illustrate the ways jobs can connect native. It is, in the strictest sense, a medley, for they mix but do not people from different backgrounds. combine. Each group holds to its own religion, its own culture and language, its own ideas and ways. As individuals they meet . . . in the “In Sadakhlo market in Georgia, next to the borders with Armenia market place, in buying and selling.”d and Azerbaijan, one does not hear the virulent expressions of In ancient Cordoba, Spain, the marketplace represented “the mutual hatred one can hear a few miles away across the border. place of encounter over and above the gender, tribal, and faith ‘They fight, we don’t,’ says Mukhta, a trader from Azerbaijan, while divides that constituted Islamic urbanization.”e putting his arm round his Armenian colleague Ashot.”a “You don’t reconcile in a vacuum. There must be a practical pro- “According to one of the stallholders at Ergneti market, on the gramme; there must be something that brings people together. As disputed border between South Ossetia and mainland Georgia, they work together, cleaning the coffee, they talk together so they ‘There are no political questions here. The market has one language: start talking business but later they start talking family affairs. It fos- economic. That is it.’”b ters relationships and reconciliation.” f “In Guinea, members of the Malinke ethnic group are wholesal- “If I wasn’t in this job, I might have only Indian friends or African ers in the groundnut market chain, while the primary producers of friends,” said a sales manager for a processed food manufacturer in groundnuts tend to be Guerse. Malinke wholesalers and Guerse Trinidad and Tobago. “But now I have plenty, plenty friends. White farmers are willing to trade with each other. This is helping over- friends in Mayaro. Chinese friends in Port-of-Spain. And real close. come ethnic and religious tensions. . . . This willingness to trade is Closer than if you born with someone, your next-door neighbor. due to the mutually recognized possibility of profit.”c And that’s why I wouldn’t swap this job for anything else.”g “In Burma, as in Java, probably the first thing that strikes the visitor is the medley of peoples—European, Chinese, Indians, and Source: Kilroy 2012 for the World Development Report 2013. a. The Economist 2000. b. Voice of America 2002. c. Spilsbury and Byrne 2007. d. Furnivall 1948, 304–12. e. Vicente-Mazariegos-Eiriz 1985, 763, cited in Briggs 2004, 326. f. Fatuma Ngangiza, Unity and Reconciliation Commission of Rwanda, quoted in BBC News 2006. g. Kilroy 2011. An experiment among farmers in rural be sufficient to build trust or change behaviors Uganda found that subsistence cotton farmers and contribute to social cohesion. The literature using social networks can change existing social on prejudice suggests that contact across groups interactions with beneficial results. The ran- can alter people’s perceptions of others.41 There domized intervention compared the impact of may also be risks. If cooperation through jobs training on agricultural productivity with the fails, tensions between groups may flare, par- impact of being paired with another farmer. ticularly if the groups have previously been in The pairs were encouraged to discuss farming conflict and blame each other.42 activities, problems, and solutions and to set a While networks connect people in positive target for increases in cultivation. The interven- ways, they can also exclude. Surveys in indus- tion encouraged exchanges of information and trial and developing countries consistently find learning by expanding farmer networks. Farm- that people obtain jobs through acquaintances. ers who participated in the project, especially Yet, reliance on networks may have negative women, significantly increased their produc- social consequences if people and groups who tivity. Connecting farmers with people outside lack such connections are left out. In Morocco, their established social circles helped spread in- after controlling for education, social status, and formation that would not otherwise have been other factors, people whose fathers did not have shared.40 formal sector jobs were significantly less likely to Jobs may not always help overcome differ- obtain formal sector jobs themselves.43 In addi- ences and tensions between groups. While in- tion to unfairness in access to jobs, family con- centives inherent in jobs can provide people nections can also influence labor earnings. For with motives to interact across gender, caste, example, in Brazil, sons’ wages are influenced by and ethnic boundaries, these incentives may not those of their parents.44 Jobs and social cohesion 137 The exclusionary nature of networks is high- Respondents at a focus group explained that, lighted by the experience of migrants moving “to get jobs, one needs someone to speak for from rural areas to cities. Migrants often choose him, particularly from Sana’a.” Young people re- destinations where they have connections. But ported that inheriting a civil service post from if they do not, they can be uprooted from fam- one’s father was not viewed as wrong under the ily and community ties that provide economic country’s civil service rules.47 and social support, including access to jobs. Jobs that are allocated based on connections They may also lack the information needed to and other circumstances beyond the control integrate into their new destinations. Migrants of an individual can influence whether people moving across borders or regions, internally dis- view society as fair. Recent work on the mea- placed persons or refugees fleeing from conflict surement of inequality of opportunities exam- or returning after a peace agreement, and sol- ines the extent to which access to basic services diers demobilized after conflict may be particu- that are essential for human development, such larly vulnerable to exclusion from job opportu- as education, health, nutrition, and sanitation, nities. This is a concern in conflict situations as is based on circumstances of birth or arises be- well as in contexts of structural transformation, cause of inequality within society (box 4.7).48 when massive numbers of people move from Application of this approach to access to jobs rural to urban areas.45 Networks also do not considers the extent to which opportunities are reach many among the self-employed, especially related to circumstances at birth, including gen- home-based workers who work in isolation and der, ethnicity, and parental educational attain- domestic workers who lack opportunities to in- ment and political affiliation, or to attributes, teract with others. including educational attainment and age.49 Re- sults from 29 countries in Europe and Central Asia indicate that inequality across groups based Jobs influence aspirations and on circumstances and attributes varies between expectations 3 and 20 percent. The share of inequality attrib- The various ways in which jobs are distributed utable to circumstances is substantial in most can affect expectations and aspirations and in- cases, contributing to more than half of the fluence whether people believe that they have a overall inequality (figure 4.5). stake in society. The jobs that other people have Circumstances at birth contribute the most can contribute to an individual’s values, atti- to inequality in Azerbaijan, followed by Uz- tudes, and behaviors. Children’s goals for the fu- bekistan, Georgia, Turkey and Albania. In these ture may be influenced by whether their parents countries, such factors contribute the most to have jobs or not, as well as by the types of jobs inequality in access to jobs. Education plays an their parents have. Frustration and even social outsized role in inequality in some countries— unrest may develop when education and effort Armenia stands out in particular, along with Al- are not rewarded or when people perceive the bania, Bulgaria, and Romania. distribution of jobs to be unfair. Similar analysis for 18 countries in Latin The Arab Spring was as much or more America using the 1990 Latinobarómetro sur- about political voice as it was about jobs. Yet vey confirms these findings. On the whole, the widespread disappointment, especially among education of the worker and the circumstances youth, about the lack of job opportunities and he or she was born into play important roles frustration with the allocation of jobs based on in explaining inequalities in access to jobs, and connections rather than merit echoed across the role of education is especially important for countries. A young person in Egypt commented, regular employment in the formal sector.50 “To work in a big company, you’ve got to have wasta [connections; literally, a middleman]. Re- * * * gardless of your qualifications, you must search for someone to secure the job for you. In some The interaction of jobs and social cohesion is not cases, you have to pay money.”46 Social assess- linear or simple to disentangle. This is an emerg- ments in the Republic of Yemen documented ing area for further research across disciplines. frustration with the allocation of jobs based on The effect of jobs on trust and civic engagement tribal, family background, or party affiliation. at the individual level suggests that exchanges 138 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 4.7 Measuring inequality of opportunities in access to jobs The approach butes), and which circumstances contribute the most. Circumstances The concept of equality of opportunity, which can be traced back to can affect access to a job involving more than 20 hours of work a John Rawls and Robert Nozick,a stems from the idea that an individ- week through direct and indirect channels. An example of a direct ual’s chances of success in life should not be caused by circum- channel is when belonging to a minority group can affect the chance stances that are beyond the individual’s control, such as gender, of getting a job. As for indirect channels, circumstances can influ- ethnicity, location of birth, or family background. John Roemer’s ence the education of a person, which, in turn, influence the chance 1998 work formalized the principle of equality of opportunity and of getting a job. The decomposition of D is intended to measure argued that policy should seek to equalize opportunities indepen- the direct channel, which is to say the inequality attributable to the dent of circumstances.b Empirical applications of this concept use predetermined circumstances, net of the effect attributed to differ- different measures of opportunity and estimate the extent to which ences in education and experience among workers.f inequality arises because of circumstances at birth, rather than indi- vidual attributes such as effort or talent.c Caveats The Human Opportunity Index (HOI) is one approach that is A number of questions complicate the exercise and act as caveats to being used across countries and regions to analyze the opportuni- the analysis. First, how should opportunity be defined in terms of ties available to children in terms of access to basic goods and ser- access to jobs? People have different preferences about jobs, so vices such as sanitation, clean water, electricity, and basic education.d part of the measured inequality may reflect voluntary choices The HOI captures both the extent to which societies provide these rather than a lack of access. And people with certain circumstances goods and services and how equitably access to them is distributed and attributes may be more (or less) likely to be in the labor force in among groups with different circumstances in a society. the first place. Second, which circumstances should be considered? Recent work has tested the application of the HOI methodology The data only report a limited range of them, and some may simply to jobs in Europe and Central Asia and Latin America using data not be observable. Gender, minority status, and parental education from the 2006 Life in Transition Survey and the Latinobarómetro are commonly considered in the literature; and whether parents Survey.e In this case, opportunity is defined as having a job involving were affiliated with the Communist Party can be a proxy for social more than 20 hours of work a week; circumstances are the gender of status in the European and Central Asian countries, even many the individual, the educational attainment of the father, parents’ years later. However, parental education may be correlated with past affiliation in the Communist Party (in Europe and Central Asia), unobserved abilities of an individual. Controlling for the individual’s and self-reported minority status; and attributes are educational education level partially resolves this problem but does not address attainment and age. Those lacking opportunity are people working the possibility that among children who receive the same educa- fewer than 20 hours a week, the unemployed, and those who want tion, children with educated parents may acquire better skills stem- to work more. ming from unobservable inputs. The methodology makes no The HOI is the coverage rate of the opportunity, adjusted for assumptions about missing circumstances, which are likely to exist inequality between groups defined by circumstances and attributes. since information on all circumstances is not typically available Inequality is measured by a “dissimilarity index” (henceforth, D), from the same survey. The inequality or dissimilarity index has the which reflects the share of available opportunities that would have property that the index will always increase with the addition of to be reallocated to achieve the same coverage rate of opportunity more circumstances or attributes. Despite these caveats, this across all groups. A decomposition of D indicates how much circum- approach is a first step in applying the inequality of opportunity stances contribute to inequality between groups (relative to attri- analysis to access to jobs. Source: Abras and others 2012 for the World Development Report 2013. a. Nozick 1974; Rawls 1971. b. Roemer 1998. c. Roemer and others 2003. d. Paes de Barros and others 2009. e. Life in Transition Survey I (database), European Bank for Reconstruction and Development, London. f. Estimating the indirect channel—the effect of circumstances through education—would be difficult because education depends on a host of factors other than the circum- stances on which information is available. Moreover, excluding the impact of circumstances through education is justified because we are interested in measuring the extent to which inequality in access to jobs is attributable to circumstances. While circumstances may have influenced educational attainment as well, these effects would have occurred at a much earlier stage of life (primarily in childhood) and therefore do not reflect inequality of opportunities specific to jobs. and relationships established through jobs can contribute more to social cohesion than others. have broader effects on societies, including how What matters is not necessarily whether people they manage tensions between groups and col- have a job but whether the job and its charac- lective decision making. But some jobs may teristics can contribute to social cohesion. In Jobs and social cohesion 139 FIGURE 4.5 Inequality of job opportunities varies across countries 20 16 12 D-index 8 4 0 Se n ec Es ia pu a Be lic kh s an ov C ia Re tia Uk blic Hu ine Po ary d Sl nd eg ia on a hu ia M jiki a ac en n rg ni ro pu R Bu lic Tu ia M key Ge va Ro rgia kis a Al an er nia Ar jian ia za ru Re ni M vin Ta ani be ni Re FY tio M ont sta rb tv rz en Lit gol ar en Ky edo eg b b do st t ak roa la h to Uz a Az ba Ka la ng ra r pu ba lg La o ra o m He ov m yz a, ol de Fe n ia Cz Sl ss an Ru ia sn Bo circumstances age education Sources: Abras and others 2012 for the World Development Report 2013; based on the data from the Life in Transition Survey I (database); European Bank for Reconstruction and Development, London. Note: Opportunity is defined as having a job with 20 or more hours a week. Circumstances include gender, ethnicity, and parental education and political affiliation. The D Index is the share of available opportunities that would have to be reallocated to achieve the same coverage rate of opportunity across all groups. certain contexts, jobs can transform societ- influence identity, connect people through ies if they influence social identity and social networks, and increase a sense of fairness and norms; if they shift bargaining power within meritocracy in access to jobs have the potential households, communities, or society; or if they to contribute to social cohesion. alter power relations between groups. Jobs that 4 140 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 QUESTION Can policies contribute to social cohesion? In Rabat, Morocco, unemployed college gradu- programs themselves are subject to corruption ates gather daily in front of government build- and governance risks. These negative experi- ings to protest the lack of jobs.51 In Juba, South ences may reveal poor program design, however, Sudan, the fledgling government faces the chal- rather than prove the impossibility for jobs poli- lenge of demobilizing 150,000 combatants and cies to contribute to social cohesion. reintegrating large numbers of internally dis- placed persons after conflict.52 For policy mak- Access to information, rights, and voice ers in countries with high youth unemployment and in countries affected by conflict, expanding Policies can take social cohesion into account by job opportunities has urgency for social and po- expanding opportunities for groups who face litical reasons, as well as for economic reasons. barriers to getting jobs and increasing access In industrial and developing countries alike, to voice and rights. People may feel frustrated the conventional wisdom is that having a job is if they perceive that jobs are allocated on the what matters for social cohesion—how societies basis of privilege and connections rather than peacefully manage collective decision making. merit and achievement. Increasing fairness and The idea that jobs can build identity, or might equality of opportunity for jobs involves in- be associated with trust or more participation forming the public about jobs and how to get in society, is often seen as relevant only for a them, and about the existence of legal mecha- narrow set of occupations in rich countries. nisms, such as antidiscrimination laws and af- Those jobs are perceived as a luxury that devel- firmative action programs to reduce discrimina- oping countries cannot afford. Even those who tion and support the inclusion of groups who concede that some jobs can do more for social lack access. But having laws on the books is cohesion in developing countries are skeptical not enough. Increasing fairness involves institu- that policies can do much beyond supporting tions for enforcement, and redress mechanisms job creation. Given that most employment is in for accountability. Although such measures can the private sector, it is unclear how or whether be motivated by multiple objectives, including the government could influence the nature of poverty reduction, they can also be considered the jobs. Some even doubt that jobs on their from a social cohesion perspective. own lead to greater social cohesion. They view Transparency and access to information jobs as only one element that can contribute to about jobs can increase fairness and equality changing values, attitudes, and behaviors within of opportunity by ensuring that vacancies are a complex web of institutional, historical, politi- widely publicized, together with information cal, and social factors. Given this multiplicity of about accessing public employment programs. influences, engineering social cohesion through Access to information about rights is similarly jobs is not an option. important for ensuring that labor practices are Negative experiences with publicly funded fair. Farmers, self-employed workers, and work- employment programs give some justification ers without formal labor contracts are often not to this skepticism. Temporary employment pro- knowledgeable about their rights in relation to grams that place people into dead-end jobs with land owners, traders, local authorities, and em- no hope for future employment may do more ployers, or about their options for appeals. Civil harm than good.53 Similarly, demobilization society organizations such as cooperatives, asso- programs in post-conflict environments risk ex- ciations of informal workers, and trade unions acerbating tensions between former opponents can disseminate information about rights and through divisive targeting.54 Social cohesion the channels to voice grievances.55 is actually undermined when jobs in publicly A related challenge is the extension of effec- funded programs are allocated to friends and tive legal protection to those who work outside relatives of government officials, or when the of legal frameworks. At the international level, Jobs and social cohesion 141 the passage of ILO conventions on domestic and home workers has extended coverage for these BOX 4.8 Domestic workers: The journey to an ILO groups (box 4.8). At the national level, countries such as Zambia and the Philippines include le- convention gal protections of informal workers in domestic Domestic work includes cleaning, cooking, gardening, child care, and elder legislation. Brazil recognizes domestic workers care. The International Labour Organization (ILO) estimates that there are 52.6 within its constitution and has extended social million domestic workers worldwide; other estimates are nearly twice as high. protection, including leave and maternity ben- Women, generally from the poorest sections of society, make up over 80 per- efits to them. The country’s National Social Se- cent of domestic workers.a Many are migrants, and child labor is common, curity Institute provides incentives for employ- especially for girls. Domestic workers, and especially migrants, are excluded from labor and social protection laws in most countries. ers who register domestic workers. Although Domestic workers have long tried to be recognized and included in the difficult to enforce in practice, Brazil, the Czech labor laws of their respective countries. In 2006, domestic worker organizations Republic, the Philippines, and South Africa began to organize internationally with the support of international trade have established minimum wages for domestic unions and nongovernmental organizations representing informal workers. workers.56 Their main demand was recognition and access to rights, including a campaign Similarly, migrant workers tend to fall out- for an ILO convention on labor rights for domestic workers. side legal frameworks. Both sending and receiv- The campaign involved extensive coordination at the country level to mobilize workers and gain support from labor ministries, trade unions, and ing countries can adopt measures to extend legal employers’ associations. As a result of this campaign, the minimum wage for protection. The government of the Philippines domestic workers was raised by 10 percent in Jamaica, and a memorandum of has a mechanism to protect its overseas work- understanding was signed to improve the conditions of Indonesian domestic ers. The government provides them with pre- workers in Malaysia. departure information and support services; it In 2011, the ILO adopted the Domestic Workers Convention and the Domes- has also signed bilateral agreements and memo- tic Workers Recommendation. The convention states that domestic workers are randa of understanding recognizing migrant to be covered under national labor laws and regulations, including those related to social protection programs. workers’ rights with receiving countries. The The process of securing an ILO convention contributed to building the government has also promoted voluntary social capacity of organizations and individual leaders and gained domestic workers security schemes for overseas workers.57 associations status with trade unions. It also created better conditions for rec- The existence and quality of institutions for ognition and enforcement of rights. In March 2012, the government of Singa- accountability can influence the extent to which pore announced that it would require employers to give one day a week off to rights are enforced in practice.58 Legal frame- the country’s 206,000 domestic workers, most of whom come from Indonesia, works rely on the ability of labor ministries, in- the Philippines, Sri Lanka, and India.b spectorates, and courts to handle disputes and hold the parties accountable. Most countries al- Source: Chen and others 2012 for the World Development Report 2013. low labor disputes to be heard in special labor a. ILO 2011a. courts or civil courts. But court proceedings b. Kennedy 2012. can be lengthy, costly, and cumbersome. In re- sponse, some countries have established alterna- tive procedures for dispute resolution, including the obligations of the state. Guarantees are of- conciliation, mediation, and arbitration before ten complemented by laws addressing job seg- court hearings.59 Cambodia introduced an Ar- regation, unequal pay, prejudice in recruitment, bitration Council in 2003 to help manage labor harassment at work, and lack of education and grievances and improve industrial relations in training.60 Affirmative action programs involve the growing garment sector (box 4.9). proactive measures for hiring women, minori- ties, and other groups subject to exclusion.61 Such programs can be mandatory or voluntary Antidiscrimination policies and apply to the public or private sectors. Legal mechanisms such as antidiscrimina- Affirmative action programs can work, but tion laws and provisions for affirmative action pitfalls are many. Evaluations yield mixed re- can facilitate access to jobs for groups who sults.62 The most extensive research is from the are excluded from opportunities or suffer from United States; it finds that programs are most stigma. Most countries have equality guarantees effective when they are temporary and com- within their constitutions, generally covering bined with improvements in recruitment, train- 142 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 gram might have assisted individuals who were already higher up on the skills ladder but not the BOX 4.9 From laws on the books to laws in action in average previously disadvantaged individual.64 Cambodia’s garment sector Hiring quotas for underrepresented groups The garment industry is Cambodia’s largest formal sector employer. By mid- can be enshrined in constitutions, as is the case 2008, the sector had more than 300 factories, with nearly 340,000 workers, 90 for Scheduled Castes and Tribes in India and for percent of whom were women. Labor conditions including low wages, exces- Bumiputras in Malaysia. Both countries have sive overtime, poor occupational health and safety, child labor, and antiunion shown that quotas work well but can become practices emerged as a major issue as the sector expanded. The initial response politicized.65 Quotas supported through specific was passage of a new labor law in 1997. Enforcement was poor, however. The programs have been successful. In Bangladesh, Labor Inspectorate lacked credibility; inspectors were underpaid and underre- for instance, where women’s employment rates sourced, and were seen as subject to influence. The courts were perceived as corrupt and unresponsive to the needs of workers or employers. As a result, were extremely low, the Employment Gen- strikes and demonstrations increased, and major international brands raised eration Program for the Poorest put in place concerns about the viability of operating in Cambodia. a 30 percent quota for women. This doubled In this context, Cambodia concluded a 1999 bilateral trade agreement with women’s participation in the program within a the United States. Building on a similar clause in other trade deals, the United year, with participants reporting a high level of States agreed to increase Cambodia’s import quota for garments if a semian- satisfaction.66 nual review showed that progress had been achieved in adherence to core international labor standards and standards set in Cambodian law. Following the agreement, the United States funded two International Labour Organiza- Jobs policies can shape social identity and tion (ILO) projects to support the implementation of this clause. The first, which connect people became known as Better Factories Cambodia, involved monitoring working conditions in garment factories. Access to jobs can bolster self-esteem and pro- The second program established an Arbitration Council to prevent and duce benefits for societies beyond incomes. resolve labor disputes. The council’s 30 part-time members were nominated Programs that support employment for at-risk through a process facilitated by the ILO and endorsed by unions, employers’ populations, including youth, can take into ac- organizations, and government. The council conducts mandatory but (gener- ally) nonbinding arbitration of collective labor disputes that cannot be resolved count the ways in which jobs affect peoples’ at- through mediation by the Ministry of Labor. Most disputes handled by the titudes, values, and behaviors and contribute to council involve compliance with labor law related to wages, bonuses, benefits, improved relations between groups. Arguably, and working conditions. Some cases also relate to rights, including antiunion in countries with high youth unemployment, practices, gender equality, freedom of association, and collective bargaining. targeted training programs have the potential Since its establishment in 2003, the council has heard more than 1,200 dis- to be designed to strengthen self-esteem, which putes, 70 percent of which are reported as successfully resolved. Opinion sur- can lead to greater community involvement veys indicate a high level of confidence in the council’s independence and effectiveness. In 2010, the Garment Manufacturers Association of Cambodia and reduced crime and violence. The evidence and major union federations agreed to switch to the council’s arbitration pro- remains limited and tentative, but emerging cedures for disputes over existing labor rights. The result has been an upsurge findings from some training programs targeted in the rate of awards issued by the council and a decrease in the rate at which to youth, including those in post-conflict set- parties are filing objections. Strikes per factory have fallen to their lowest level tings are somewhat encouraging. in 10 years. The Northern Uganda Social Action Fund suggests that combining vocational training, Source: Adler and Hwang 2012 for the World Development Report 2013. life skills, and counseling can increase commu- nity involvement and reduce aggression among youth in a post-conflict setting (box 4.10).67 A ing, and on-the-job training.63 Evidence from reintegration and agricultural livelihoods pro- developing countries is more limited. In South gram for high-risk Liberian youth led to a mod- Africa, affirmative action supporting blacks, est increase in social engagement and a reduc- women, and people with disabilities was com- tion in illegal activities. Participants were also plemented with incentives for firms, including less interested in recruitment into violent activi- access to licenses and contracts. An evaluation ties in neighboring Côte d’Ivoire. The program found that programs had limited impact on had no clear impact on reducing aggression reducing gaps in employment and wages but and violence, however.68 An evaluation of the narrowed differentials at the top of the wage Juventud y Empleo program in the Dominican distribution. This finding suggests that the pro- Republic found that a combination of voca- Jobs and social cohesion 143 tional and life-skills training for unemployed youth can reduce involvement in gangs and de- BOX 4.10 In post-conflict settings, well-designed programs lay teen pregnancy.69 This is an area for further research; evidence is thin, and few evaluations of reduce social tensions employment and training programs incorporate Opportunities for youth in Northern Uganda social cohesion outcome measures such as com- Two decades of insurgency, instability, and conflict led to high rates of poverty munity participation and conflict resolution. in northern Uganda. By 2005, a measure of peace and stability had returned to Temporary employment programs can pro- the region, allowing for the demobilization and reintegration of former com- vide skills training and access to employment batants and other war-affected populations. In 2006, the government launched for youth at risk and vulnerable populations, the Youth Opportunities Program to stimulate income generation and employ- ment growth among young adults ages 16 to 35. The program provided cash particularly during crises and after conflicts.70 grants for vocational training and business materials to groups of participants These programs have a mixed record in support- with successful grant proposals. Groups had an average of 22 members, and ing employability, because they generally involve most expressed interest in tailoring, carpentry, metal works, mechanics, or jobs with low status that rarely lead to future hairdressing. earnings opportunities. But there are indications An evaluation two years after the intervention found increased investments that programs can be designed to invest in skills in skills, participation in skilled work, greater incomes, and higher savings. with benefits for social cohesion. El Salvador’s Grantees were 4 percent more likely to attend community meetings and 9 percent more likely to be community mobilizers. Participants also reported Temporary Income Assistance Program targets receiving more social support from their family and the community. Further- women and youth in areas with high rates of more, men who received grants reported a 31 percent decline in aggressive violence. Early results suggest that the program behavior relative to the control group. This finding is consistent with theories has increased the self-esteem of beneficiaries and that link aggression to stress levels, low social standing, and perceived injus- reduced the recurrence of violence. 71 tice—all potentially alleviated by higher employment and incomes. Public works programs frequently rely on community participation to identify local proj- Public works in Sri Lanka’s Northern Province ects, providing forums for collective decision In Sri Lanka, a cash-for-work program initially established to resettle 100,000 returnees following internal conflict actually assisted more than 250,000 making. Community meetings can bring to- returnees and quickly evolved into one of the largest sources of employment in gether people affected by conflict and crisis (box the Northern Province. 4.10). In Rwanda, meetings for the country’s Participants noted that in many cases the program meetings were the first public works program discussed peace building, community-level gathering that they had attended after having arrived from security, community development, and recon- camps for internally displaced populations. By many accounts, community ciliation, in addition to project-related issues. In meetings, shared meals, team work, and the involvement of elders and chil- the Republic of Yemen, fuel shortages and price dren as indirect beneficiaries of the program promoted a sense of belonging among the newly resettled families. increases in building materials stalled public Sachchithananthan Subodhini, 36 years old, from Thervipuram in the works activities in 2011. However, communi- Puthukkudiyiruppu Division of the Northern Province said that she was “very ties worked together to find creative solutions to happy. As a result of cash for work, the whole village is working as one; for our these obstacles, including using local materials own community and village.” Reflecting on her life journey since being dis- and finding alternative modes of transport.72 placed in 1995, she said that the program “had helped to bring the community Participatory aspects of programs can pro- together. . . . [T]he village seemed abandoned but the shramadana [volunteer vide a channel for voice of excluded groups. In work] helped to get the community back to its original state.” a survey of participants in Ethiopia’s Produc- tive Safety Net Program—which at 7.6 million Sources: Blattman, Fiala, and Martinez 2011 (Northern Uganda); Andrews and Kryeziu 2012 for the World beneficiaries is one of the largest public works Development Report 2013 (Sri Lanka). programs in the world—two-thirds of respon- dents said that the project had given them the first opportunity ever to be involved in a local entrepreneurial skills. Students are mentored by meeting. Many participants had not interacted professors and private sector coaches to develop with local government officials prior to the business plans. The initial results of the program program.73 show that the program motivated students and Employment programs partnering with the gave them confidence to take risks. A male par- private sector can connect people through jobs. ticipant from Tunis explained, “I have become A program in Tunisia uses the process of writing more independent. My behavior has changed. I an undergraduate thesis to teach students basic use my new skills, I am more disciplined.” Stu- 144 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 dents also explained that the program expanded ability in the labor market can improve equity. their professional networks by giving them op- They can also increase the extent to which portunities to interact with mentors. “I now people perceive that they have a stake in society. have a social network. I know whom to consult,” This perception can be especially critical when explained a female participant.74 risks of social unrest from youth unemployment While not all jobs affect social cohesion, and conflict are high. While policies with weak those that shape social identity, build networks, governance or divisive targeting can undermine and increase fairness, particularly for excluded social cohesion, well-designed programs may groups, can defuse tensions. Increasing fairness have positive effects. Jobs policies for youth at in the allocation of jobs and at work can also be risk can incorporate counseling and training in important for social cohesion. Measures that conflict resolution. Public works programs can support inclusion, extend access to voice and facilitate community participation and engage- rights, and improve transparency and account- ment between citizens and local governments. Jobs and social cohesion 145 © Ayemoba Godswill / World Bank Shopkeeper and a friend at a foodstuff shop in Mpape, Nigeria © Curt Carnemark / World Bank Rural migrants working in construction in China 146 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Notes provement; neighborhood watch (men); or wom- en’s association. These trends were likely driven 1. The International Labour Organization (2011b) by a set of factors, including political changes after estimates the impact of the unemployment rate 1998 that created more space for community dia- on social unrest to be positive and significant. logue and the decentralization of public services 2. Evans-Pritchard 2010. starting in 1999; the introduction of multistake- 3. Solletty 2011. “[L]es manifestants ne demandent holder forums for consultation on budgeting pas à l’Etat de leur trouver du travail mais dé- (the Musrenbang) in 2004, which included village noncent le fait que, sur le marché de l’emploi, les meetings; school based–management initiatives choses ne se font jamais dans la transparence et that require parental involvement; and the scaling avec justice.” up of development programs that explicitly pro- 4. Hudson and others 2011. mote community participation. 5. This definition is based on Woolcock 2011. 14. Giles, Mavridis, and Witoelar 2012 for the 6. Based on indicators from the Worldwide Gov- World Development Report 2013. Development ernance Indicators, http://info.worldbank.org/ and antipoverty programs such as the KDP governance/, and documented in Kaufmann, (Kecamatan Development Project) and its urban Kraay, and Mastruzzi 2010. counterpart, the UPP (Urban Poverty Program), 7. Fukuyama 1995; North 1990; Putnam 2000. explicitly promoted community participation 8. Delhey, Newton, and Welzel 2011. from their inception and continue to do so under 9. These aspects of jobs are also correlated with val- the new and expanded umbrella of the PNPM ues that include tolerance for others, preferences (National Program for Community Empower- for gender equality, individual choice, and voice ment). Other poverty programs (including the (though not controlling for other factors). See conditional cash transfer program, Program Welzel 2012 for the World Development Report Keluarga Harapan) usually have some commu- 2013. nity participation component. 10. Based on data from the FAFO (Forskningsstif- 15. These results are similar to findings from the Wis- telsen Fafo [Fafo Research Foundation]) Good consin Longitudinal Study, which tracked nearly Jobs Survey for the World Development Report 5,000 people who had graduated high school in 2013. Probit regressions controlling for income, 1957 over 45 years and indicated that the loss of age, education, and household characteristics of a job can lead to withdrawal from associational an index of job attributes on the question, “Not life. Getting laid off even once, especially if it oc- counting anything you do for your household, curred during a person’s prime working years, re- in your work, or within voluntary organizations, sulted in “enduring, substantively and statistically how often in the past 12 months did you actively significant lower probabilities of social involve- provide help for other people?” ment over the life course,” particularly in church, 11. Easterly, Ritzen, and Woolcock 2006; Knack and youth, and community groups. See Brand and Keefer 1997. Fukuyama (1995) notes that trust in society shapes the nature of economic trans- Burgard 2008. actions and institutions. Similarly, Arrow (1972, 16. Arias and Sosa 2012 for the World Development 357) writes that “virtually every commercial Report 2013. transaction has within itself an element of trust, 17. Petesch 2012 for the World Development Report certainly any transaction conducted over a pe- 2013. riod of time. It can plausibly be argued that much 18. Altindag and Mocan 2010. of the economic backwardness in the world can 19. Helliwell and Putnam 2004. be explained by the lack of mutual confidence.” 20. Bell and Blanchflower 2010; Cramer 2010 for the North (1990) discusses the role of trust and World Development Report 2011. informal institutions as the basis for market 21. Moser 2009, 240. economies. 22. Cramer 2010 for the World Development Report 12. Noteboom 1999; Ostrom 1990; World Bank 2004b. 2011; Padilla 1992. See Boschma (2005, 51–52) for an overview. 23. Akerlof and Kranton 2010. 13. Giles, Mavridis, and Witoelar 2012 for the World 24. Fitzgerald 2006; Holzer and Lerman 2009; Oster- Development Report 2013. Indonesia Faily Life man 2005. Survey (database), Rand Corporation, Santa Mon- 25. Wilson, Eaton, and Kamanu, 2002. ica, California, http://www.rand.org/labor/FLS/ 26. Dudwick 2012 for the World Development Re- IFLS.html. The community activities recorded port 2013; Hossain 2011 for the World Develop- covered participation in a community meeting; ment Report 2012. cooperative, voluntary labor; neighborhood im- 27. Amin and others 1998, 191. Jobs and social cohesion 147 28. Feldman 2009, cited in Dudwick 2012 for the Datta 1999; Deshpande 2008; Funston 2001; World Development Report 2013; Hossain 2011 Gudavarthy 2012; Montlake 2010; Teoh 2008; for the World Development Report 2012. Weisskopf 2004; Yadav 2010. 29. Amin and others 1998. 66. Das 2012 for the World Development Report 30. Marsden 2000. 2013. 31. Chen and others 2012 for the World Develop- 67. Blattman, Fiala, and Martinez 2011. ment Report 2013. 68. Blattman and Annan 2011. 32. Kilroy 2012 for the World Development Report 69. Ibarraran and others 2012. 2013; Pickering 2006. 70. Public works programs can be scaled up quickly 33. Mutz and Mondak 2006, 153. and reach large numbers of people. In Argen- 34. Kilroy 2011; Kilroy 2012 for the World Develop- tina, a program, Jefes y Jefas de Hogar, intro- ment Report 2013. duced after the 2002 crisis was scaled up quickly 35. Montesquieu 1951. and reached more than 2 million people every 36. Varshney 2002. month. Programs have been launched and scaled 37. Chandra 2001. up after conflicts in countries including Guinea 38. Udry and Conley 2004. and Guinea Bissau, Liberia, Nepal, Sierra Leone, 39. Anarfi, Anyidoho, and Verschoor 2008. Sudan, and the Republic of Yemen. 40. Vasilaky 2010. 71. Programs in Kenya, Sierra Leone, and South 41. Allport 1954. Pettigrew and Tropp (2011) pro- Africa also provide vocational training and sup- vide a meta-analysis of intergroup studies. port for entrepreneurship for youth. 42. Austin and Worchel 1979. 72. Andrews and Kryeziu 2012 for the World Devel- 43. Gatti and others 2012. opment Report 2013. 44. Arias, Yamada, and Tejerina 2004. See also Wang 73. Andrews and Kryeziu 2012 for the World Devel- 2011. opment Report 2013. 45. Willman and Makisaka 2010 for the World De- 74. Brodmann, Grun, and Premand 2011, 3. velopment Report 2011. 46. Singerman 2007, 33. 47. Marc and others 2012, 50. References 48. World Bank 2005. 49. Abras and others 2012 for the World Develop- The word processed describes informally reproduced ment Report 2013. works that may not be commonly available through 50. Abras and others 2012 for the World Develop- libraries. ment Report 2013. 51. Amos 2012. Abras, Ana, Alejandro Hoyos, Ambar Narayan, and 52. IOM 2012. Sailesh Tiwari. 2012. “Inequality of Opportunities 53. Assessments of experience with public works in the Labor Market: Evidence from Life in Tran- programs can be found in Betcherman, Olivas, sition Surveys in Europe and Central Asia.” Back- and Dar 2004; Harvey 2011; Martin and Grubb ground paper for the WDR 2013. 2001; and McCord and Slater 2011. 54. Dudwick and Srinivasan, forthcoming; USAID Adler, Daniel, and Hans Hwang. 2012. “From Law on 2009. the Books to Law in Action: A Note on the Role 55. Chen and others 2007. of Regulation in the Production of Good Jobs in 56. Fredman 2012 for the World Development Re- Cambodia’s Garment Sector.” Background paper port 2013. for the WDR 2013. 57. Fredman 2012 for the World Development Re- Akerlof, George A., and Rachel E. Kranton. 2010. port 2013; McKenzie, Theoharides, and Yang Identity Economics: How Our Identities Shape 2012. Our Work, Wages, and Well-Being. Princeton, NJ: 58. Locke, Amengual, and Mangla 2009. Princeton University Press. 59. Purcell 2010. Allport, Gordon. 1954. The Nature of Prejudice. Read- 60. Fredman 2012 for the World Development Re- ing, MA: Addison-Wesley. port 2013. Altindag, Duha Tore, and Naci H. Mocan. 2010. “Job- 61. Holzer and Neumark 2000. lessness and Perceptions about the Effectiveness 62. World Bank 2011. of Democracy.” Working Paper Series 15994, Na- 63. Holzer and Neumark 2000. tional Bureau of Economic Research, Cambridge, 64. Burger and Jafta 2010. MA. 65. Bardhan, Mookherjee, and Parra 2012; Das Amin, Sajeda, Ian Diamond, Rushira T. Naved, and 2012 for the World Development Report 2013; Margaret Newby. 1998. “Transition to Adulthood 148 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 of Female Garment-Factory Workers in Bangla- Program in Northern Uganda.” Yale University, desh.” Studies in Family Planning 29 (2): 185–200. Innovations for Poverty Action, New Haven, CT. Amos, Deborah. 2012. “In Morocco, Unemployment Boschma, Ron. 2005. “Social Capital and Regional Can Be a Full-Time Job.” National Public Radio, Development: An Empirical Analysis of the Third January 27. Italy.” In Learning from Clusters, ed. Ron Boschma Anarfi, John Kwasi, Nana Akua Anyidoho, and Arjan and Robert Kloosterman, 139–68. Dordrecht: Verschoor. 2008. “The Economic Empowerment Springer Verlag. of Young People in Ghana.” World Bank, Wash- Brand, Jennie, and Sarah Burgard. 2008. “Job Dis- ington, DC. Processed. placement and Social Participation: Findings Andrews, Colin, and Adea Kryeziu. 2012. “Public across the Life Course of a Cohort of Joiners.” Works and the Jobs Agenda: Pathways for Social Social Forces 87 (1): 211–42. Cohesion.” Background paper for the WDR 2013. Briggs, Xavier de Souza. 2004. “Civilization in Color: Arias, Omar, and Walter Sosa. 2012. “Do Jobs Cause The Multicultural City in Three Millennia.” City & Trust? Results from Pseudo-Panel Analysis of Community 3 (4): 311–42. Euro and Latino Barometer Surveys.” Background Brodmann, Stefanie, Rebekka Grun, and Patrick paper for the WDR 2013. Premand. 2011. “Can Unemployed Youth Create Arias, Omar, Gustavo Yamada, and Luis Tejerina. Their Own Jobs? The Tunisia Business Plan The- 2004. “Education, Family Background and Racial sis Competition.” Fast Brief 83 (March), MNA Earnings Inequality in Brazil.” International Jour- Knowledge and Learning, World Bank, Washing- nal of Manpower 25 (314): 355–74. ton, DC. Arrow, Kenneth. 1972. “Gifts and Exchanges.” Phi- Burger, Rulof, and Rachel Jafta. 2010. “Affirmative Ac- losophy and Public Affairs 1 (4): 343–62. tion in South Africa: An Empirical Assessment of Austin, William G., and Stephen Worchel. 1979. The the Impact on Labour Market Outcomes.” Work- Social Psychology of Intergroup Relations. Mon- ing Paper Series 76, Centre for Research on Equal- terey, CA: Brooks/Cole Publishing Company. ity, Human Security and Ethnicity, University of Bardhan, Pranab K., Dilip Mookherjee, and Monica Oxford, Oxford. L. Parra. 2012. “The Impact of Political Reserva- Chandra, Kanchan. 2001. “Civic Life or Economic tions in West Bengal Local Governments on Anti- Interdependence?” Commonwealth and Compara- Poverty Targeting.” Journal of Globalization and tive Politics 39 (1): 110–18. Development 1 (1): 1948–837. Chen, Martha, Chris Bonner, Mahendra Chetty, Lu- BBC News. 2006. “Coffee Key to Reconciling Rwan- cia Fernandez, Karin Pape, Federico Parra, Arbind dans.” BBC World News, August 30. Singh, and Caroline Skinner. 2012. “Urban Infor- Bell, David N. F., and David Blanchflower. 2010. mal Workers: Representative Voice and Economic “Youth Unemployment: Déjà Vu?” Discussion Pa- Rights.” Background paper for the WDR 2013. per Series 4705, Institute for the Study of Labor, Chen, Martha, Renana Jhabvala, Ravi Kanbur, and Bonn. Carol Richards. 2007. Membership-Based Organi- Betcherman, Gordon, Karina Olivas, and Amit Dar. zations of the Poor. London: Routledge. 2004. “Impacts of Active Labor Market Programs: Cramer, Christopher. 2010. “Unemployment and New Evidence from Evaluations with Particular Participation in Violence.” Background paper for Attention to Developing and Transition Coun- the WDR 2011. tries.” Social Protection Discussion Paper Series Das, Maitreyi Bordia. 2012. “Stubborn Inequalities, 0402, World Bank, Washington, DC. Subtle Processes: Exclusion and Discrimination Bjørkhaug, Ingunn, Anne Hatløy, Tewodros Kebede, in the Labor Market.” Background paper for the and Huafeng Zhang. 2012. “Perception of Good WDR 2013. Jobs: Colombia.” Background paper for the WDR Datta, Nonica. 1999. “Backward Caste Movement 2013. Gains Ground.” Economic and Political Weekly 34 Blattman, Christopher, and Jeannie Annan. 2011. (39): 2630–31. “Reintegrating and Employing High Risk Youth in Delhey, Jan, Kenneth Newton, and Christian Welzel. Liberia: Lessons from a Randomized Evaluation 2011. “How General Is Trust in ‘Most People’? of a Landmine Action an Agriculturual Train- Solving the Radius of Trust Problem.” American ing Program for Ex-Combatants.” Policy report Sociological Review 76 (5): 786–807. 2011.1, Yale University, Innovations for Poverty Deshpande, Satish. 2008. “Changing Social Composi- Action, New Haven, CT. tion.” Seminar 587 (July): 23–26. Blattman, Christopher, Nathan Fiala, and Sebastian Dudwick, Nora. 2012. “The Relationship between Martinez. 2011. “Employment Generation in Jobs and Social Cohesion: Some Examples from Rural Africa, Mid-Term Results from an Experi- Ethnography.” Background paper for the WDR mental Evaluation of the Youth Opportunities 2013. Jobs and social cohesion 149 Dudwick, Nora, and Radhika Srinivasan, with Jose Holzer, Harry, and Robert Lerman. 2009. The Future Cueva and Dorsati Madani. Forthcoming. Creat- of Middle-Skill Jobs. Washington, DC: Center on ing Jobs in Africa’s Fragile States: Are Value Chains Children and Families, Brookings Institute. an Answer? Directions in Development. Washing- Holzer, Harry J., and David Neumark. 2000. “Assess- ton, DC: World Bank. ing Affirmative Action.” Journal of Economic Lit- Durkheim, Emile. 1893. The Division of Labor in Soci- erature 38 (3): 483–568. ety. New York: Free Press. Hossain, Naomi. 2011. “Exports, Equity, and Empow- Easterly, William, Jozef Ritzen, and Michael Wool- erment: The Effects of Readymade Garments cock. 2006. “Social Cohesion, Institutions, and Manufacturing Employment on Gender Equality Growth.” Economics and Politics 18 (2): 103–20. in Bangladesh.” Background paper for the WDR Eaton, Charles, and Andrew W. Shepherd. 2001. Con- 2012. tract Farming: Partnerships for Growth. Rome: Hudson, Maria, Rosemary Davidson, Lucia Durante, Food and Agriculture Organization. Jemma Grieve, and Arjumand Kazmi. 2011. Reces- Evans-Pritchard, Ambrose. 2010. “IMF Fears ‘Social sion and Cohesion in Bradford. York, U.K.: Joseph Explosion’ from World Jobs Crisis.” Telegraph, Rowntree Foundation. September 13. Ibarraran, Pablo, Laura Ripani, Bibiana Taboada, FAFO (Forskningsstiftelsen Fafo [Fafo Research Juan Miguel Villa, and Brigida Garcia. 2012. “Life Foundation]). 2012. “Good Jobs Survey.” FAFO Skills, Employability and Training for Disadvan- Institute for Applied International Studies, Oslo. taged Youth: Evidence from a Randomized Evalu- Fitzgerald, Joan. 2006. Moving Up in the New Econ- ation Design.” IZA Conference Paper, Institute for omy: Career Ladders for U.S. Workers. Ithaca, NY: the Study of Labor, Bonn, May 12. Cornell University Press. ILO (International Labour Organization). 2011a. Feldman, Shelley. 2009. “Historicising Garment Man- Global and Regional Estimates on Domestic Work- ufacturing in Bangladesh: Gender, Generation, ers. Geneva: ILO. and New Regulatory Regimes.” Journal of Interna- ———. 2011b. World of Work Report: Making Mar- tional Women’s Studies 11(1): 268–82. kets Work for Jobs. Geneva: ILO. Fredman, Sandra. 2012. “Anti-Discrimination Laws IOM (International Organization for Migration). and Work in the Developing World: A Thematic 2012. “IOM Tracking of Spontaneous Returns Overview.” Background paper for the WDR 2013. Project: Total Returns to South Sudan Post CPA to Fukuyama, Francis. 1995. Trust: The Social Virtues and June 2009.” Geneva, IOM. the Creation of Prosperity. New York: Free Press. Jenson, Jane. 1998. “Mapping Social Cohesion: The Funston, John. 2001. “Malaysia: Developmental State State of the Canadian Research.” Discussion Paper Challenged.” In Government and Politics in South- 3, Canadian Policy Research Networks, Ottawa. east Asia, ed. John Funston, 160–202. Singapore: Kaufmann, Daniel, Aart Kraay, and Massimo Mas- Institute of Southeast Asian Studies. Furnivall, John S. 1948. Colonial Policy and Practice: truzzi. 2010. “The Worldwide Governance Indica- A Comparative Study of Burma and Netherlands tors: Methodology and Analytical Issues.” Policy India. Cambridge, U.K.: Cambridge University Research Working Paper Series 5430, World Bank, Press. Washington, DC. Gatti, Roberta, Diego Angel-Urdinola, Joana Silva, Kennedy, Alex. 2012. “Singapore to Require One Day and Andras Bodor. 2012. Striving for Better Jobs: Off a Week for Maids.” Associated Press, March 5. The Challenge of Informality in the Middle East and Kilroy, Austin. 2011. “Business Bridging Ethnicity.” North Africa. Washington, DC: World Bank. PhD thesis, Massachusetts Institute of Technol- Giles, John, Dimitris Mavridis, and Firman Witoelar. ogy, Cambridge, MA. 2012. “Subjective Well-Being, Social Cohesion, ———. 2012. “Jobs to Social Cohesion: Via Interests, and Labor Market Outcomes in Indonesia.” Back- Attitudes, and Identities.” Background paper for ground paper for the WDR 2013. the WDR 2013. Gudavarthy, Ajay. 2012. “Can We De-Stigmatize Res- Knack, Stephen, and Philip Keefer. 1997. “Does ervations in India?” Economic and Political Weekly Social Capital Have an Economic Payoff? A Cross- 47 (6): 55–62. Country Investigation.” Quarterly Journal of Eco- Harvey, Philip. 2011. “A Job-Led Recovery Strategy nomics 112 (4): 1251–88. Achieving Economic Recovery through Direct Locke, Richard, Matthew Amengual, and Ashkay Public Job Creation.” Dēmos, NY. Mangla. 2009. “Virtue out of Necessity? Compli- Helliwell, John, and Robert Putnam. 2004. “The So- ance, Commitment and the Improvement of La- cial Context of Well-Being.” Philosophical Transac- bor Conditions in Global Supply Chains.” Politics tions of the Royal Society B 359: 1435–46. & Society 37 (3): 319–51. 150 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Marc, Alexandre, Alys Willman, Ghazia Aslam, Mi- Lucifora, and Wiemer Salverda. 237–252. London: chelle Rebosio, with Kanishka Balisuriya. 2012. Palgrave Macmillan. Societal Dynamics and Fragility: Engaging Societies Ostrom, Elinor. 1990. Governing the Commons: The in Responding to Fragile Situations. Washington, Evolution of Institutions for Collective Action. Cam- DC: World Bank. bridge, U.K.: Cambridge University Press. Marsden, David. 2000. “A Theory of Job Regulation, Padilla, Felix M. 1992. The Gang as an American En- the Employment Relationship, and the Organisa- terprise. Piscataway, NJ: Rutgers University Press. tion of Labour Institutions.” Industrielle Beziehu- Paes de Barros, Ricardo, Francisco H. G. Ferreira, Jose ngen 7 (4): 320–47. R. Molinas Vega, Jaime Saavedra Chanduvi. 2009. Martin, John P., and David Grubb. 2001. “What Measuring Inequality of Opportunities in Latin Works and for Whom? A Review of OECD Coun- America and the Caribbean. Washington, DC: tries’ Experiences with Active Labour Market Poli- World Bank. cies.” Swedish Economic Policy Review 8 (2): 9–60. Perry, Guillermo E., William F. Maloney, Omar S. McCord, Anna, and Rachel Slater. 2011. Overview Arias, Pablo Fajnzylber, Andrew D. Mason, and of Public Works in Sub-Saharan Africa. London: Jaime Saavedra-Chanduvi. 2007. Informality: Exit Overseas Development Institute. and Exclusion. Washington, DC: World Bank. McKenzie, David, Caroline Theoharides, and Dean Petesch, Patti. 2012. “The Exponential Clash of Con- Yang. 2012. “Distortions in the International Mi- flict, Good Jobs, and Changing Gender Norms grant Labor Market: Evidence from Filipino Mi- in Four Economies.” Background paper for the gration and Wage Responses to Destination Coun- WDR 2013. try Economic Shocks.” Policy Research Working Pettigrew, Thomas F., and Linda R. Tropp. 2011. Paper Series 6041, World Bank, Washington, DC. When Groups Meet: The Dynamics of Intergroup Montesquieu, Baron de. 1951. 2 Oeuvres Completes: Contact. New York: Psychology Press. De l’Esprit des Lois (2 Complete Works: Spirit of Pickering, Paula. 2006. “Generating Social Capital for the Laws). Paris: Gallimard/Pleiade. Bridging Ethnic Divisions in the Balkans: Case Montlake, Simon. 2010. “Malaysia Cautiously Chal- Studies of Two Bosniak Cities.” Ethnic and Racial lenges Longtime Affirmative Action Policies.” Studies 29 (1): 79–103. Christian Science Monitor, March 30. Purcell, Julius. 2010. Individual Disputes at the Work- Moreno, Jacob L., and Helen H. Jennings. 1937. “Sta- place: Alternative Disputes Resolution. Dublin: tistics of Social Configurations.” Sociometry 1: European Foundation for the Improvement of 342–74. Living and Working Conditions. Moser, Caroline O. N. 2009. Ordinary Families, Ex- Putnam, Robert. 2000. Bowling Alone: The Collapse traordinary Lives: Assets and Poverty Reduction in and Revival of American Community. New York: Guayaquil, 1978–2004. Washington, DC: Brook- Simon and Schuster. ings Institution. Putnam, Robert, Robert Leonardi, and Rafaella Na- Mutz, Diane, and Jeffery Mondak. 2006. “The Work- netti. 1993. Making Democracy Work: Civic Tra- place as a Context for Cross-Cutting Political Dis- ditions in Modern Italy. Princeton, NJ: Princeton course.” Journal of Politics 68 (1): 140–55. University Press. North, Douglass C. 1990. Institutions, Institutional Rawls, John. 1971. A Theory of Justice. Cambridge, Change and Economic Performance. New York: MA: Belknap Press. Cambridge University Press. Roemer, John E. 1998. Equality of Opportunity. Cam- Norton, Andrew, and Arjan de Haan. 2012. “Social bridge, MA: Harvard University Press. Cohesion: Theoretical Debates and Practical Ap- Roemer, John E., Rolf Aaberge, Ugo Colombino, plications with Respect to Jobs.” Background pa- Johan Fritzell, Stephen Jenkins, Arnaud Lefranc, per for the WDR 2013. Ive Marx, Marianne Page, Evert Pommer, and Noteboom, Bart. 1999. Inter-Firm Alliances: Analysis Javier Ruiz-Castillo. 2003. “To What Extent Do and Design. London: Routledge. Fiscal Regimes Equalize Opportunities for In- Nozick, Robert. 1974. Anarchy, State, and Utopia. New come Acquisition among Citizens.” Journal of York: Basic Books. Public Economics 87: 539–65. OECD (Organisation for Economic Co-operation Singerman, Diane. 2007. “The Economic Imperatives and Development). 2011. Perspectives on Global of Marriage: Emerging Practices and Identities Development 2012: Social Cohesion in a Shifting among Youth in the Middle East.” Middle East World. Paris: OECD. Youth Initiative Working Paper 6, Wolfensohn Osterman, Paul. 2005. “Making Bad Jobs Good: Strat- Center for Development, Dubai School of Gov- egies for the Service Section.” In Job Quality and ernment at Brookings Institution, Washington, Employer Behaviour, ed. Stephen Bazen, Claudio DC. Jobs and social cohesion 151 Solletty, Marion. 2011. “Le Chômage des Diplômés, Weisskopf, Thomas. 2004. “Impact of Reservation on Moteur de la Révolte Tunisienne.” Le Monde, Jan- Admissions to Higher Education in India.” Eco- uary 10. nomic and Political Weekly 39 (39): 4339–49. Spilsbury, John, and Karri Goeldner Byrne. 2007. Welzel, Christian. 2012. “The Contribution of ‘Good’ “Value Chain Activities for Conflict-Affected Jobs to Development and Cohesion: The Human Populations in Guinea.” Micro Report, U.S. Empowerment Perspective.” Background paper Agency for International Development, Washing- for the WDR 2013. ton, DC. Wietzke, Frank-Borge, and Catriona McLeod. 2012. Teoh, Shannon. 2008. “Poll Shows Most Malaysians “Jobs, Well-Being, and Social Cohesion: Evidence Want NEP to End.” Malaysian Insider, October 9. from Value and Perception Surveys.” Background The Economist. 2000. “An Uncommon Market in the paper for the WDR 2013. Caucasus.” The Economist, June 1. Willman, Alys, and Megumi Makisaka. 2010. “Inter- Udry, Christopher, and Timothy G. Conley. 2004. personal Violence Prevention: A Review of the “Social Networks in Ghana.” Discussion Paper Evidence and Emerging Lessons.” Background 888, Economic Growth Center, Yale University, paper for the WDR 2011. New Haven, CT. Wilson, Randall, Susan Eaton, and Amara Kamanu. USAID (U.S. Agency for International Development). 2002. “Extended Care Career Ladder Initiative 2009. A Guide to Economic Growth in Post-Conflict (ECCLI) Round 2: Evaluation Report.” Faculty Countries. Washington, DC: USAID, Bureau for Research Working Paper Series RWP03-006, Har- Economic Growth, Agriculture and Trade. vard University, Cambridge, MA. Varshney, Ashutosh. 2002. Ethnic Conflict and Civic Woolcock, Michael. 2011. “What Distinctive Con- Life: Hindus and Muslims in India. New Haven, tribution Can Social Cohesion Make to Devel- CT: Yale University Press. opment Theory, Research, and Policy?” Paper Vasilaky, Kathryn. 2010. “As Good as the Networks presented at the Organisation for Economic Co- They Keep? Expanding Farmer’s Social Net- operation and Development International Con- works Using Randomized Encouragement in ference on Social Cohesion and Development, Rural Uganda.” Yale University, New Haven, CT. Paris, January 20. Processed. World Bank. 2004a. Guyana: A Poverty and Social Vicente-Mazariegos-Eiríz, José Ignacio. 1985. “La Impact Analysis of Bauxite Mining Reforms in Guy- ciudad hispanomusulmana: Organizacíon social aya. Washington, DC: World Bank. y formalizacíon urbana.” In Urbanismo e Historia ———. 2004b. World Development Report 2005: A en el Mundo Hispano, ed. Antonio Bonet Correa, Better Investment Climate for Everyone. New York: 2: 749–64. Madrid: Universidad Complutense de Oxford University Press. Madrid. ———. 2005. World Development Report 2006: Eq- Voice of America. 2002. “South Ossetia Market Im- uity and Development. New York: Oxford Univer- portant for Local Economy.” Voice of America, sity Press. Washington, DC. ———. 2011. World Development Report 2012: Gen- Wang, Shing-Yi. 2011. “Marriage Networks, Nepo- der Equality and Development. Washington, DC: tism and Labor Market Outcomes in China.” New World Bank. York University, New York. Processed. Yadav, Yogendra. 2010. “Why Caste Should Be Weiss, Dieter. 1995. “Ibn Khaldun on Economic Counted In.” The Hindu, May 14. Transformation.” International Journal of Middle East Studies 27 (1): 29–37. PART 2 What are good jobs for development? Introduction to Part 2 E arnings, benefits (if any), and overall job nation, and the suppression of voice among satisfaction are what matter to individual workers. These forms of work should not be jobholders. Those earnings and bene- considered jobs. fits—tangible or otherwise—are the first and How jobs contribute to living standards, most direct measure of the value a job has to so- productivity, and social cohesion varies with ciety. But jobs may also affect others, positively a country’s level of development, its demogra- or negatively. Jobs for women may influence re- phy, its endowments, and its institutions. Jobs source allocations at the household level and agendas are thus inherently country specific. benefit their children. Jobs connected to world By combining the various features of an econ- markets may lead to knowledge spillovers and omy, however, it is possible to build a typology make other workers more productive. Jobs that of jobs challenges. It includes agrarian econo- provide opportunities may convey a sense of mies, conflict-affected countries, urbanizing fairness to others and help them remain en- countries, resource-rich countries, small island gaged. Spillovers like these have been the focus nations, countries with high youth unemploy- of recent thinking on development. The analysis ment, formalizing economies, and aging societ- may be organized around concepts such as gen- ies. Because the nature of the challenges varies, der, urbanization, or conflict; but much of the what makes a job good for development in one action happens through jobs. context may not be so relevant in another. And Quite often individual and social perspectives in some circumstances, tradeoffs emerge. The on jobs coincide; but not always. For instance, jobs that do the most to defuse tension in the jobs with perks and benefits may be highly short term may not do much for productivity, coveted by individuals, but they may be less or those with the highest productivity impact valuable to society if their privileges are sup- may not lead to a broad-based improvement in ported through government transfers or restric- living standards. Identifying good jobs for de- tive regulations, undermining the earnings or velopment helps visualize these tradeoffs. job opportunities of others. Because of gaps Different countries face different jobs chal- like these, jobs that look equivalent from an indi- lenges, but two forces—the migration of people vidual perspective may be different from a social and the migration of jobs—connect their jobs perspective. The contributions jobs make to so- agendas. These two flows have an impact on ciety should be assessed by taking into account countries at the sending and the receiving ends. the value they have to the people who hold them, The arrival of migrants or the outsourcing of but also the potential spillovers on others— jobs affects the living standards of both migrants positive or negative. Good jobs for development and locals. The availability of foreign workers, are those with the highest value to society. the development of migrant networks channel- Conversely, some forms of work are un- ing savings and ideas, and the arrival of multi- equivocally bad. A set of universal rights en- national firms bringing in more advanced dorsed by governments, international organi- techniques, are all bound to increase productiv- zations, and others seeks to eliminate forced ity. Family structures and community life are also labor, harmful forms of child labor, discrimi- affected by the movement of people and jobs. 153 CHAPTER 5 Valuing jobs Jobs are often assessed from an individual perspective. But they can also affect the earnings, productivity, and well-being of others—positively or negatively. These spillovers should be assessed too. T he most important impact of jobs is on services, and are obstacles to economic growth the people who hold them. Jobs provide and poverty reduction. Such jobs may look ap- earnings, can give access to benefits and pealing from an individual perspective—but insurance, and are often a source of broader life less so from a social perspective. Good jobs for satisfaction. Development, in large part, consists development are those that make the greatest of increasing these direct effects of jobs on contribution to society, taking into account the individuals. value they have to the people who hold them, Beyond the importance of jobs for those but also their potential spillovers on others— who have them, jobs matter for societies be- positive or negative. cause they can affect the earnings, employment Recognizing the multiple effects of jobs opportunities, and the productivity of others, is important for understanding the possible as well as the collective capacity to manage ten- tradeoffs they entail. Some jobs greatly con- sions. Jobs can also contribute to shared social tribute to productivity growth but do not lead objectives, such as poverty reduction, environ- to poverty reduction in the short run. In other mental protection, and fairness. Often, the cases, jobs are urgently needed to avoid an un- individual and social values of jobs are similar; raveling of social cohesion, but the job creation but these two perspectives may differ. For in- that can be immediately supported using pub- stance, Vietnam’s poverty rate declined with lic funds is unlikely to result in rapid produc- unprecedented speed in the 1990s when land tivity growth. An understanding of the various was redistributed to farmers and agricultural effects of jobs on aggregate well-being, both commercialization was liberalized.1 Albeit in- direct and indirect, may help identify when a creasing individual incomes, farming jobs in- virtuous circle of jobs along all three transfor- volved difficult working conditions, substantial mations may arise, and when a vicious circle variability in earnings, and no formal social looms. protection. But they made a major contribu- The value of a job for the person who holds it tion to the development of Vietnam. Bloated is a primary indication of its development pay- public utilities, on the other hand, often offer a off. But assessing the broader value the job has range of privileges to their employees even to society also requires information on the spill- when the utilities themselves provide only lim- overs the job may have on the living standards ited coverage of the population and unreliable of others, on aggregate productivity, or on social Valuing jobs 155 cohesion. Data from household, plant-level, and Rights as the foundation values surveys, as well as qualitative assessments, can be used to determine the existence of rel- While jobs can be transformational, some evant spillovers. Although quantifying all the forms of work are harmful. Those that exploit gaps between the individual and social values workers, expose them to dangerous environ- of jobs may not be possible, identifying where ments, or threaten their physical and mental these gaps lie can help make policy tradeoffs well-being are bad for individuals and societ- transparent. The analytical tools to do so can be ies. Their negative effects can be surprisingly borrowed from several disciplines in economics long-lasting. An extreme example is the impact and the social sciences. These disciplines often of the Atlantic slave trade on West Africa. A focus on spillovers from jobs, without necessar- study found that individuals whose ancestors ily calling them that. had been threatened by slavery were less likely While some jobs may contribute more to to trust relatives, neighbors, and local govern- development than their individual values sug- ments even more than 100 years after the end gest, some forms of work are likely bad from any of the slave trade.2 Today, international norms point of view. All countries have subscribed to of human rights and labor standards reject a set of universal rights. Most governments, as forced labor, harmful forms of child labor, well as international organizations and others, discrimination, and the suppression of voice have ratified or endorsed standards seeking to among workers. Yet close to 21 million people eliminate forced labor, harmful forms of child globally are estimated to be victims of bonded labor, discrimination, and the suppression of labor, slavery, forced prostitution, and other voice among workers. Thus, some work ac- forms of involuntary work.3 In 2008, 115 mil- tivities are widely viewed as unacceptable and lion children between the ages of 5 and 17 were should not be treated as jobs. involved in hazardous work (box 5.1).4 BOX 5.1 Children do perilous work in artisanal gold mines in Mali Much artisanal gold mining in Mali is village based and focused on “It’s my stepmother who makes me work there. I don’t want to. alluvial deposits that require panning for separation. Although child My real mother left. My stepmother takes all the money they pay labor tends to be relatively controlled in Mali, an estimated 20,000 me. . . . I don’t get any money from the work. . . . Our work starts at to 40,000 children, some as young as age 6, work in artisanal gold 8 a.m. and continues the whole day. . . . I take the minerals [ore] and mining.a Human Rights Watch has documented the perilous nature pan them. I work with mercury, and touch it. . . . He said mercury was of this work: a poison and we shouldn’t swallow it, but he didn’t say anything “They dig shafts and work underground, pull up, carry and crush else about the mercury. . . . I don’t want to work in the mines. I want the ore, and pan it for gold. Many children suffer serious pain in their to stay in school. I got malaria, and I am very tired when I work there heads, necks, arms, or backs, and risk long-term spinal injury from [at the mine].” carrying heavy weights and from enduring repetitive motion. Chil- —Mariam D., estimated age 11, Worognan, Sikasso Region, dren have sustained injuries from falling rocks and sharp tools, and April 8, 2011c have fallen into shafts. In addition, they risk grave injury when work- ing in unstable shafts, which sometimes collapse.”b “It’s dangerous—there are often collapses. People are injured. The work is toxic because miners use mercury to separate the Three died in a cave-in. The little children don’t come down into the gold from the rock. Mercury poisoning can cause serious neurologi- hole. . . . I have had problems since working there—my back hurts cal disorders, vision impairment, headaches, memory loss, and and I have problems urinating. No one says anything to me about problems with concentration. Often, the children themselves are safety.” aware of the dangers: —Ibrahim K., age 15d Source: World Development Report 2013 team based on Human Rights Watch 2011. a. The Government of Mali has taken steps to protect children’s rights, including banning hazardous child labor in artisanal mines and adopting a National Action Plan for the Elimination of Child Labor in Mali in June 2011. b. Human Rights Watch 2011, 6. c. Human Rights Watch 2011, 29. d. Human Rights Watch 2011, 31. 156 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 At the international level, the United Na- • Many labor laws and regulations cover only tion’s Universal Declaration of Human Rights workers in formal employment relation- of 1948 establishes that “everyone has the right ships, limiting the extent to which workers to work, to free choice of employment, to just can appeal to legal mechanisms. The grow- and favorable conditions of work and to protec- ing involvement of agencies in hiring work- tion against unemployment.” These rights are ers complicates legal accountability because further elaborated in international conventions temporary workers often have contracts with and regional frameworks and are translated into employment agencies, which, in turn, enter domestic laws.5 The global agenda for workers’ into the contracts with the actual employers. rights became focused on four fundamental principles and rights in the workplace in 1998. Often, such workers would not count against Back then, a vast majority of members of the In- legal minimum employment levels at which ternational Labour Organization (ILO) signed labor rights become binding. 11 a declaration covering a core set of labor stan- dards on the elimination of forced and com- • Some labor laws deliberately exclude domes- tic workers, family workers, or workers in pulsory labor, the abolition of child labor, the elimination of discrimination in employment small enterprises.12 Exclusions can also ap- and occupation, and freedom of association and ply in export zones and other areas where collective bargaining.6 Other ILO conventions regulation is suspended to attract investment. cover a range of related subjects including work- Unpaid family workers in agriculture and en- ing time, social security, occupational safety and terprises, including children on family farms, health, and labor inspections.7 may also be excluded. Many women perform International law requires that countries non-remunerated work of this sort.13 bring their domestic laws into compliance with the international legal instruments the countries • Tensions may also exist between labor rights have ratified. The core labor standards have a defined in national and international contexts special status among ILO conventions because and customary, religious, and indigenous laws. the 1998 declaration requires all ILO member Many countries are characterized by legal states to “respect, promote, and realize” the stan- pluralism, whereby multiple legal systems ex- dards, regardless of whether they ratify specific ist side by side. Overlapping jurisdictions are conventions.8 The standards influence other in- most common in the case of family law relat- struments for protecting workers’ rights through ing to marriage, divorce, and inheritance.14 references in national and regional legislation, the texts of many bilateral free trade agreements, Gaps between rights on paper and those the procedures of international organizations, in practice underscore a substantial agenda to and corporate codes of conduct.9 International eliminate unacceptable forms of work. Nonstate legal frameworks arguably do not cover some actors, including private employers and civil fundamental rights. The core labor standards, society organizations, are increasingly involved for example, do not directly address working in efforts to improve compliance with labor conditions including safety and health.10 rights and standards. Multinational corporations Gaps remain between rights on paper and and industry associations often adopt codes implementation in practice (box 5.2). Even in of conduct, voluntary standards, and monitor- countries that have ratified the core labor stan- ing and auditing strategies.15 Nongovernmental dards and have laws on the books, children work organizations monitor factories and firms, pro- in harmful conditions, discrimination happens in access to jobs and in pay, forced labor persists, vide training and education to workers, and co- and freedom of association is limited. Commit- ordinate domestic and global campaigns. While ments in treaties, conventions, and laws may not this heightened involvement in rights and stan- change the institutions, practices, and behaviors dards does not guarantee that implementation that affect workers’ rights on their own. A key will improve, it provides potential channels and factor driving these gaps is the fact that many partnerships for increasing accountability for workers are not covered by laws. For example: rights at work. Valuing jobs 157 BOX 5.2 Compliance with core labor standards is partial The number of countries that have adopted the eight core labor deprived women of equal access to jobs. Inequality in laws relating standards included in the International Labour Organization’s 1998 to marriage, inheritance, and property ownership, as well as tradi- Declaration of the Fundamental Principles and Rights at Work is tional and customary laws, also affect the access of women to pro- steadily increasing. But compliance gaps with the four principles— ductive assets and business opportunities. child labor, forced labor, discrimination, and freedom of association Discrimination in employment may be the outcome of policies and collective bargaining—are still apparent.a not dealing directly with labor issues. For example, in some coun- tries of Central and Eastern Europe, Roma children are often tracked Child labor. ILO conventions 138 and 182 require countries to develop into schools intended for children with special needs, which provide and monitor action plans regulating work by children under age 18. limited opportunities for further advancement in education and Convention 182, covering the most harmful forms of child labor, subsequent employment. Roma graduates of special schools in the has been ratified by 175 countries. The largest numbers of children Czech Republic were twice as likely as non-Roma graduates to be in hazardous work are in East Asia and the Pacific, but across regions out of the labor force.i A study of Roma in the Czech Republic found there is evidence that progress is being made.b Brazil and India are that 19 percent of Roma ages 10–19 had attended a special needs among the countries showing improvements. In Brazil, between school, while the share in the non-Roma population was 7 percent. 1992 and 2008, employment among 7–15 year olds fell over 10 per- The figures in the Slovak Republic were 12 and 8 percent centage points, from 18 percent to 7 percent. At the same time, respectively.j A 2007 court case involving Roma students in the school attendance rose from 85 percent to 97 percent. In India, Czech Republic noted that they were more likely to be placed in children’s employment fell from 8 percent to nearly 4 percent, and schools for the mentally challenged than non-Roma children. The school attendance rose 14 percentage points (from 72 percent to European Court of Human Rights ruled that this overrepresentation 86 percent).c violated nondiscrimination protections in the European Convention on Human Rights.k Forced labor. More countries have ratified conventions 29 and 105, the core standards on forced labor, than the other core standards. Freedom of association and collective bargaining (FACB). Although An estimated two-thirds of forced labor takes the form of economic conventions 87 and 98 are among the oldest of the core standards, exploitation; one-fifth is linked to forced labor imposed by the state they have been ratified by fewer countries than the others. These or the military; and the remainder involves commercial sexual conventions cover the right to establish and join organizations and exploitation. This last form disproportionately affects women and call for mechanisms for negotiations between employers and girls.d The long-term effects on individuals, families, and communi- worker organizations. FACB are “enabling rights” in that they give ties can be severe. Nongovernmental organizations that rescue vic- workers voice to advocate for other aspects of working conditions, tims of forced labor, particularly forced commercial prostitution, including safety and health.l find that post-traumatic stress, social stigma, and disease can crip- FACB is curtailed in countries where unions and other associa- ple reentry into society.e tions are banned, where associations face restrictions on their activ- ity, or where members are threatened by violence or repression. Discrimination. Conventions 100 and 111 refer to discrimination by FACB rights of both workers and employers are monitored by the gender, ethnicity, disability, or other status as a source of disparities ILO Governing Body’s Committee on Freedom of Association (CFA), in access to jobs, segregation within the labor market, pay gaps, and a universal monitoring mechanism that functions in addition to harassment or violence at work. From a legal perspective, discrimi- the ILO’s regular supervisory mechanisms for monitoring ratified nation can be understood as inequality before the law within either conventions. The CFA handles complaints related to civil liberties, the formal legal system or customary law. It results from unequal including murder, abductions, disappearances, threats, arrests, and treatment on the grounds of race, gender, religion, political opinion, detentions of trade union leaders and members, as well as other national extraction, or social origin; or the unequal impact of poli- acts of antiunion harassment and intimidation and violations of cies, practices, or rules. Employment outcomes are affected by each freedom of assembly and freedom of expression.m Convention 87 of these layers of discrimination.f Although progress has been made protects the rights of all workers, including the self-employed. In in removing legal obstacles that affect women’s access to jobs, bar- practice, however, implementation of FACB is limited because many riers remain.g Labor laws in 44 countries restrict the hours that workers are employed outside traditional employer-employee rela- women may work,h and 71 countries impose legal limits on the tionships or do not work in occupations or sectors that are covered industries in which women may work. Such restrictions have often by formal unions. Source: World Development Report 2013 team. a. ILO 1998; ILO 2012a. h. World Bank and IFC 2011. b. Diallo and others 2010. i. World Bank 2008a. c. UCW 2010. j. World Bank 2012b. d. ILO 2009. k. European Court of Human Rights 2007. e. Farley 2003. l. Levi and others 2012 for the World Development Report 2013. f. Fredman 2011. m. ITUC 2011. g. World Bank 2011d. 158 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 The value of jobs to individuals A job may also matter for others, beyond its and society holder. When asked about their most preferred jobs, survey respondents from four diverse The most obvious outcome of a job is the earn- countries provide different answers from those ings it provides to the worker. These earnings they offer when asked about the most impor- can be in cash or in kind and may include a range tant jobs to society (figure 5.1). They frequently of associated benefits. The earnings the job pro- mention working in the civil service or as a shop vides, as well as the output it generates, typically owner as the jobs they would prefer for them- increase with the skills of the worker. Improv- selves, while identifying teachers and doctors ing skills is thus one of the most direct channels as the most important jobs for societies. China to enhance the value jobs have to individuals is the only country where a job in civil service and society (question 5). Other characteristics is seen as more important for society than for of the job may also matter from the point of the individual. In the Arab Republic of Egypt, a view of individual well-being. Stability, voice, job as a teacher is more valued individually than and fulfillment at work all play a role in overall socially. And in Sierra Leone, being a farmer is job satisfaction, as do any detrimental impacts appreciated both individually and socially, while of jobs on mental and physical health through in the other countries it is recognized as socially stress and anxiety.16 valuable but is not a preferred job. Several of these dimensions of jobs have been This intuition can be developed into a more combined into the concept of decent work intro- structured analysis of the reasons why some jobs duced by the ILO in 1999 (box 5.3). Since then, may be more or less valuable to society than they many governments have used it to articulate are to those who hold them. Those reasons can their policy agendas on jobs. The concept of de- be grouped under three main headings, each cent work has also been embraced by the United corresponding to one of the three development Nations and several international organizations transformations. Individual jobs can improve and endorsed by numerous global forums. the living standards of others in society, or they BOX 5.3 The concept of Decent Work and the Decent Work Agenda Decent Work is defined as “opportunities for women and men to used to help countries measure progress and establish priorities. A obtain decent and productive work in conditions of freedom, limited set are used to monitor progress toward the MDG target.e equity, security and human dignity.”a This definition is based on a The ILO’s Decent Work Agenda includes a threshold below broad concept of work as encompassing all forms of economic which no job should fall. The threshold has four components: pro- activity.b The International Labour Organization has made Decent ductive employment (not simply any job), basic social protection Work for all the organizing principle for its activities and has set according to national conditions, opportunity for voice and organi- an agenda for incorporating the goal of Decent Work for all into zation, and rights at work. As an incremental agenda, Decent Work national strategic planning objectives.c The ILO’s Decent Work indicators can change, depending on the economic, social, and Agenda is a policy approach based on four strategic objectives: fun- institutional progress of countries. damental principles and rights at work and international labor stan- This ILO agenda has gained considerable traction and interna- dards, productive and freely chosen employment, social protection, tional political buy-in over the past decade. First formulated at the and social dialogue. International Labour Conference in 1999, it is now part of the ILO At the global level, the ILO has defined Decent Work indicators constitution and has been endorsed by heads of state at the UN Gen- to measure the different dimensions of the concept and to track eral Assembly, the Group of 20, and regional authorities such as the progress over time. In 2010, the United Nations (UN) Summit on the European Union, the African Union, the Organization of American Millennium Development Goals (MDGs) included a new target States, the Association of South East Asian Nations, and the Southern under Goal 1 (eradicate extreme poverty and hunger): “achieve full Cone Common Market (Mercosur). Many countries use the Decent and productive employment and Decent Work for all, including Work concept to define development targets, identify policy priori- women and young people.”d The Decent Work indicators are being ties, and measure progress toward meeting specified goals. Source: World Development Report 2013 team. a. ILO 2002. b. Anker 2003; Ghai 2003; UNECE 2010. c. “Decent Work Agenda,” ILO, Geneva, http://www.ilo.org/global/about-the-ilo/decent-work-agenda/lang--en/index.htm. d. UN 2011. e. “Measuring Decent Work,” ILO, Geneva, http://www.ilo.org/integration/themes/mdw/lang--en/index.htm. Valuing jobs 159 F I G U R E 5 .1 Views on preferred jobs and most important jobs differ a. China b. Egypt, Arab Rep. 50 50 D 40 40 social value social value 30 T C 30 F T 20 20 F D 10 10 C S S 0 0 0 10 20 30 40 50 0 10 20 30 40 50 individual value individual value c. Colombia d. Sierra Leone 50 50 D 40 40 D D social value social value 30 30 20 T 20 F F T C 10 10 CS S 0 0 0 10 20 30 40 50 0 10 20 30 40 50 individual value individual value C D F S T civil doctor farmer shop teacher servant owner Source: Bjørkhaug and others 2012; Hatløy and others 2012; Kebede and others 2012; and Zhang and others 2012; all for the World Development Report 2013. Note: The figure shows the share of respondents who would want the job for themselves (individual value) and those who think the job is good for society (social value). can adversely affect their earnings and employ- holds it provides a good measure of the value of ment opportunities. They can help raise the the job to society. But some jobs also have spill- productivity of others, or they can harm them overs on the living standards of others, on aggre- through their environmental impacts. And they gate productivity, or on social cohesion. When can support more peaceful collective decision spillovers are positive, the job has a greater value making, or, alternatively, increase social tensions to society than it has to the person who holds when they are based on privilege. it, and the opposite is true when the spillovers are negative. In principle, the spillovers can also be negligible, in which case there is no real dis- Spillovers from jobs tinction between the individual and the social perspective. Nonetheless, the idea that jobs can Good jobs for development are those with the have sizable spillovers is at the core of several dis- highest payoff to society. As a first approxima- ciplines in the social sciences and has greatly in- tion, the value of the job for the person who fluenced recent development thinking (box 5.4). 160 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 5.4 Economics and the social sciences deal with spillovers from jobs, under different names Several disciplines in economics and in the social sciences focus on the degree to which job outcomes are shaped by the circumstances the channels through which spillovers from jobs occur, even if they in which individuals are born, as opposed to their ability or effort. may not articulate it that way. One core focus of labor economics is to Finally, conflict studies aim to identify the societal conditions that assess earnings differentials and their causes, including discrimina- underlie tension not being managed constructively and peacefully, tion, uneven bargaining power, regulation, and taxation. The public including access to jobs and fairness in their allocation. finance literature also evaluates the impact on employment, capital These disciplines bring analytical rigor to the assessment of the intensity, and earnings of taxes and subsidies, including those used gaps between the individual and social values of jobs, hence to the to finance social insurance contributions. Gender studies examine identification of good jobs for development.a the economic, social, and cultural determinants of gender discrimi- Although they may not be explicitly articulated around jobs, nation and their relationships to employment. Poverty analyses these disciplines have shaped recent development thinking. The study the poverty and inequality impact of job distributions and World Development Report 2007: Development and the Next Genera- different growth patterns. Economic geography uncovers the pro- tiona shows that opening job opportunities for young people is ductivity impact of spatial concentration of jobs. International eco- catalytic for future economic and social development. The World nomics analyzes the resource allocation and innovation impetus Development Report 2009: Reshaping Economic Geography discusses provided by employment in export sectors and foreign-owned reaping the benefits of agglomeration, which happens through companies. Environmental economics measures and values the neg- jobs, as a source of economic growth. The World Development Report ative (and positive) impacts of employment in different sectors, or 2011: Conflict, Security, and Development makes the point that jobs using different techniques, on the natural resource base. Identity are a key element for stabilization in post-conflict societies. And the economics researches how behaviors and norms are influenced by World Development Report 2012: Gender Equality and Development the relationship between people and their peer groups, including provides evidence that jobs are a medium to promote gender through their jobs. The field of equity analysis has started to examine equity and transform it into social and economic progress. Source: World Development Report 2013 team. a. As an example, recent World Development Reports on youth (World Bank 2006); geography (World Bank 2009c); conflict (World Bank 2011c); and gender (World Bank 2011d) look at spillovers from jobs in different contexts. • Earnings of others. Uneven bargaining power FIGUR E 5.2 Some jobs do more for development or inadequate regulation may result in labor earnings that are either too low or too high Jobs relative to the output generated by jobs. This connected to Jobs in global markets Jobs that are distortion affects the earnings of the employer functional environmentally cities benign and the job opportunities of other workers. Taxpayers may also be affected when jobs are supported through transfers. Jobs that do not DEVELOPMENT tax others, literally or figuratively, do more for Jobs for Jobs that give development. the poor a sense of fairness LIVING STANDARDS PRODUCTIVITY SOCIAL COHESION • Household allocations. Having a job and con- Jobs that Jobs that tributing resources to a household’s budget empower link to can change the status of the jobholder and women networks increase his or her say on how the budget is Jobs that do not Jobs that allocated. If the jobholder is a woman, spend- shift burden JOBS shape social ing on food and on children may increase, to others identity which may result in greater well-being for the children. Jobs that empower women have the Source: World Development Report 2013 team. potential to generate such positive spillovers. Fully valuing the contribution jobs make • Poverty reduction. The well-being of oth- to development requires identifying the chan- ers may be affected if they are altruistic and nels through which the spillovers may occur. value poverty reduction in general, even when Nine of them have received attention as critical their own earnings do not change. Since jobs for development (figure 5.2): are the main avenue out of poverty, there is Valuing jobs 161 social value in the availability of jobs that take • Sense of fairness. A perceived absence of fair- others out of poverty. Employment opportu- ness in the overall access to job opportuni- nities tilted in favor of the poor do more for ties, beyond one’s own job, can undermine development. the sense of belonging. Job allocations at odds with the idea of equality of opportu- • Agglomeration effects. Productivity depends nity may lead to disengagement from collec- not only on the internal efficiency of eco- tive decision-making processes. Jobs that live nomic units but also on their environment. Learning and imitation through labor turn- up to standards of transparency and merit over and interaction with suppliers, as well contribute to the sense of fairness in society. as a better matching of skills across a bigger Because a job can affect the well-being of pool of workers, can increase productiv- others and not only the well-being of the job- ity. Hence, jobs in functional cities tend to holder, two jobs that may appear identical from be good jobs for development. Conversely, an individual perspective could still be different negative effects can arise in overcrowded and from a social perspective. In a society that values congested cities. poverty reduction, an informal job that takes a • Global integration. Knowledge spillovers also household out of poverty should be seen as more occur through international trade and parti- valuable to society. A job in a protected industry cipation in global value chains. Firms that en- that needs support through transfers (either gage in export markets tend to become more by taxpayers or by consumers) is less valuable productive and, in doing so, they push other, to society, and even less valuable if the need for less productive firms out of business. Know- protection is associated with the use of outdated ledge spillovers from foreign direct invest- technology that results in high environmental ment (FDI) increase aggregate productivity. costs. The opposite holds for a job in an export Jobs that connect to global markets are thus industry that contributes to the acquisition of good jobs for development. new technical and managerial knowledge from abroad and spreads it through interactions with • Environmental effects. Jobs have negative im- suppliers; this job is even more valuable to so- pacts on aggregate productivity when they ciety when the jobholder is a woman and her damage the environment or lead to an over- work status empowers her. And the same is true use of scarce resources. But they can also have for a job that gives a young person a sense of be- positive effects on the environment, as in the longing in society and conveys to others a sense case of jobs to manage forests and other com- of opportunity (figure 5.3). mon resources. The social value of a job can- not be assessed without taking into account The contribution jobs make to develop- its environmental impact. ment varies, depending on the circumstances. In low- and middle-income countries, poverty • Social identity. Jobs can impact the well-being reduction carries significant weight. Productiv- of others by influencing the values and behav- ity effects vary: heavily urbanized and highly ior of those who hold them in ways that affect connected countries such as Singapore have society at large. Jobs can shape the norms that internalized a large part of these effects already, influence how the jobholder interacts with while urbanizing countries such as Bangladesh others, starting with basics such as reliability, and Guatemala are still able to reap significant punctuality, and courtesy. Depending on their benefits. Jobs in illegal mining can cause envi- characteristics, jobs can foster civic engage- ronmental damage, and their net contribution ment and result in greater trust. to productivity growth is limited as a result. Jobs • Networks. Jobs connect people to each other. in Turkey’s wind energy parks, in contrast, likely They convey information among coworkers contribute to all three transformations in a posi- and society more broadly. They impact the tive way: they offer earnings and job satisfaction integration of rural migrants in new urban to workers; they position Turkey at the forefront settings. Jobs may also contribute to tolerance of technological developments in new energy; when they increase interactions with people and they often contribute to social cohesion by from different social and ethnic backgrounds. creating new livelihood opportunities for villages. 162 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 FIGUR E 5.3 The individual and social values of jobs can differ urban job connected to a global value chain for a woman job offering an opportunity to a agglomeration young person effects informal job giving a chance to social global spillover a poor person identity integration job in a protected sector using outdated social value poverty sense gender technology of fairness equality reduction individual burden value shifted individual environmental value cost Source: World Development Report 2013 team. More often than not, however, jobs entail Can the development payoffs from tradeoffs. A specific job can entail positive and jobs be quantified? negative spillovers simultaneously. Take, for ex- ample, a job that requires relatively low-skills Earnings from labor provide the first and most but that uses outdated technology and hence direct measure of the contribution jobs make causes environmental damage. From a social to development. But transformations in liv- point of view, such a job has a positive spillover ing standards, productivity, and social cohe- because it leads to poverty reduction, but it also sion happen at a faster pace when jobs lead to exhibits a negative spillover through its environ- investments in children, give people the possi- mental effect. Similar tradeoffs can exist for a bility to acquire new skills through their work, job that connects the domestic economy glob- or engage them more in society. Because these ally but that has been obtained through connec- transformational aspects are seldom reflected in tions, thereby decreasing the sense that the job labor earnings, good jobs for development may market is fair. not be as attractive to individuals as they are im- Such tradeoffs can take strategic dimen- portant to society. This is why, even in a context sions: in China, the nature and location of in- of full employment, there may not be enough vestments in roads have different implications jobs for women in many developing countries, for jobs. The investments yield their highest or enough jobs connected to world markets, or growth returns in the eastern and central re- enough jobs for idle young men. Spillovers are gions of China, where the most productive jobs thus especially relevant in countries where gen- are. But their contribution to poverty reduction der equality is far from assured, urbanization is greatest in the western regions, where living and global integration are incipient, and conflict standards are lower.17 In such situations, soci- is still a possibility. etal choices are necessary. Assessing and map- Fully valuing the development payoffs from ping spillovers is an important first step toward jobs entails assessing the earnings they provide, informed decision making. as well as their possible spillovers. In practice, Valuing jobs 163 BOX 5.5 Several data sources can be used to quantify the development payoffs from jobs Household surveys such as those used for poverty analysis are detailed on inputs and therefore has limited potential in the estima- a critically important input for assessing the contribution jobs tion of changes in productivity, but it gives a more comprehensive make to society. Regular up-to-date, high-quality data on activity, picture of how firms are born, grow, decline and die and how employment, and earnings can be used to understand employment employment evolves as a result. Unfortunately, only a few countries dynamics. Many countries around the world collect household data collect information on the myriad microenterprises in the informal through living standards surveys and labor force surveys. Social sector. This information is vital to understanding where job creation security administrations in countries with a high coverage rate of occurs in the economy and where it contributes most to aggregate social programs record information about their contributors. Unfor- productivity. tunately, few countries trace employment histories. Such histories Special household surveys inquiring about values and attitudes, (including employment transitions) are vital to achieving an under- together with qualitative assessments, are important instruments for standing of how long young jobseekers are unemployed, whether assessing links between jobs on the one hand and beliefs and behav- unemployment scars the middle-aged, or how internal migration iors on the other. These surveys often provide information on trust in supports rural families. others and civic participation, and on the characteristics of respon- Plant-level surveys are another standard input to understand dents and their jobs. Information from these surveys can be com- the dynamics of job creation and destruction and their implications bined with living standards and labor force surveys to identify popu- for aggregate productivity. Many countries conduct such surveys lation groups at risk, and analyze how jobs are associated with out of a sampling frame supposed to capture all units in manufac- peaceful collective decision making. Observing individual or cohort turing; in some cases, the coverage extends to units in other sectors, groups over time allows for an exploration of possible causal links such as trade. Other countries collect data on production and among jobs, trust, behaviors, and attitudes. employment through administrative records; the information is less Source: World Development Report 2013 team. this amounts to identifying the gaps between ing standards: jobs can impact the earnings of the individual and the social values of jobs (if others, they can alter the allocation of resources any) that are relevant in a particular country within households in a substantial way, and they context. Such an evaluation requires data, some can contribute to shared social goals such as of which many countries are now collecting poverty reduction. on a more or less regular basis (box 5.5). Using data to measure the full social value of a job Earnings of others. Jobs in subsidized firms and calls for rigorous analysis too. Patterns in the in bloated public sector agencies have an im- data may result from spurious correlations, and pact on the earnings of others, as they lead to an the related conclusions may be tainted if indi- excessive tax burden and a reduction of earn- viduals and firms with fundamentally different ings (or the disappearance of jobs) elsewhere characteristics selected themselves into specific in the economy. Jobs characterized by uneven jobs or activities. Labor economics, productiv- bargaining power between employers and em- ity studies, and other social sciences have devel- ployees, or discrimination against women or oped analytical tools for the analyses required. ethnic minority groups, have earnings that are Sociological and anthropological methods can too high or too low relative to the output gener- provide texture and context missing in quanti- ated by the job. tative data. In some cases, randomized trials or The tools of public finance can be used to natural experiments can shed light on the assess gaps between the individual and the so- mechanisms at play. But methodological pitfalls cial values of jobs in the case of jobs supported abound, so the safest approach is to triangulate through transfers. Taxation and government the available evidence. spending affect earnings and modify incentives and thus have an impact on resource allocations, including employment. Analyses of the tax bur- Living standards den applying to capital and labor, assessments Three types of spillovers can enhance or under- of cross-subsidization between individuals or mine the direct contribution jobs make to liv- firms, or evaluations of the impacts of payroll 164 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 taxation can identify a gap between the individ- ferences between the workers who migrated ual value and the social value of a job. to the cities and those who stayed behind. So, A tax wedge does not necessarily imply that even when the gaps are rigorously measured, the individual and the social value of a job dif- disentangling the reasons behind them is an fer, or that employment effects are large. The important step before policy conclusions can be methodological pitfall to avoid in this case is to drawn. assume that individuals attach no value to the taxes or contributions they pay. If workers value Household allocations. Who holds a job can social security contributions as an entitlement matter for how household earnings evolve and to deferred benefits, their net burden is lower are spent. Job opportunities for youth are par- than the contribution rate suggests. If they value ticularly important. A difficult transition from the contribution in full, there would be no mis- school to work can lead to scarring—a negative allocation of resources. In some systems, con- impact on long-term earnings prospects, hence tributions and benefits are closely linked; in of future household expenditures. The risk of others, the link is looser and redistribution unemployment later in life is higher for those stronger. But even when benefits are low com- with difficult school-to-work transitions.20 pared to taxes, the effects on employment de- Jobs that go to women might also benefit other pend on how much of the taxes employers can members of society as well as the woman hold- pass on to employees through lower wages. In ing the job. Women generally have lower labor the extreme case, when the number of workers force participation rates than men and typi- seeking wage employment is fixed, the entire tax cally earn less than their male counterparts, but is paid by workers, and employment is the same employment outside the household often em- then as without a tax.18 In Turkey, a reduction in powers them.21 A body of evidence has found social security taxes would result in higher net that spending decisions depend on the share wages and lower total labor cost only partially, of household income contributed by different thereby moderating the change in employment. members of the household. Women’s control The effect is somewhat higher, though, for lower- over household resources leads to more spend- skilled workers earning around the minimum ing on food and children’s schooling. wage.19 The impact womens’ employment has on The tools of labor economics can be used to household allocations can be quantified using measure the gaps between the actual earnings of standard tools in poverty and gender analyses. specific groups of workers and the earnings they In Mexico, for example, higher women’s income would have in the absence of uneven bargaining shares were associated with more food and chil- power or discrimination. Earnings functions (a dren’s clothing and less alcohol.22 Similar results standard tool of labor economics) can provide were observed in Bangladesh, Côte d’Ivoire, an estimate of the magnitude of those gaps. and South Africa.23 In the Republic of Congo, a Actual earnings are lower than they otherwise higher female share in total household income would be in the case of women, ethnic minori- was associated with significantly higher expen- ties, and people working in the agricultural sec- ditures on food and significantly lower expen- tor; they tend to be higher in the case of union diture on clothing for adults and entertainment members. Some gaps diminish with economic (figure 5.5).24 However, it should not be assumed development, others persist (figure 5.4). On the that impacts are the same everywhere. Providing surface at least, the gender and occupational cash transfers in Burkina Faso boosted routine gaps show no sign of disappearing. preventive care for children, regardless of which While these exercises are informative, earn- parent received the money.25 And evaluations in ings gaps may result from differences in the Ghana and Sri Lanka show that microcredit was characteristics of jobs or workers not accounted invested to a larger extent into a business by men for in the analysis. Gender gaps can stem from than by women.26 discrimination but also from choices about the Another approach looks directly at the im- work-life balance. Union gaps may signal strong pacts of women’s employment on human de- bargaining power but could also reflect higher velopment outcomes, such as children’s educa- productivity of organized workers. Rural pay tional attainment and health. In a rural setting in deficits may be affected by unobservable dif- southern India, an increase in annual female in- Valuing jobs 165 FIGUR E 5.4 Some earnings gaps decrease with the level of development; some do not a. Rural versus urban jobs b. Elementary occupations versus others 0.2 0.2 0.1 0.1 0 0 –0.1 gap, % –0.1 gap, % –0.2 –0.2 –0.3 –0.3 –0.4 –0.4 –0.5 –0.5 –0.6 500 5,000 50,000 500 5,000 50,000 GDP per capita, 2005 PPP US$ GDP per capita, 2005 PPP US$ c. Women versus men d. Agriculture versus manufacturing jobs 0 0.3 0.1 –0.1 0.1 –0.2 0 –0.1 gap, % gap, % –0.3 –0.2 –0.4 –0.3 –0.4 –0.5 –0.5 –0.6 –0.6 500 5,000 50,000 500 5,000 50,000 GDP per capita, 2005 PPP US$ GDP per capita, 2005 PPP US$ Source: World Development Report 2013 team estimates based on Montenegro and Patrinos 2012 for the World Development Report 2013. Note: GDP = gross domestic product; PPP = purchasing power parity. Elementary occupations involve simple and routine tasks often requiring considerable physical effort. The vertical axis indicates the difference in earnings between the two groups depicted in each quadrant, controlling for the characteristics of people in the two groups. The gap mea- sure is based on country-specific regressions of the logarithms of monthly earnings on years of education, potential years of experience (and its square), and controls for industry, occupation, urban/rural sector, ethnicity, and gender. Each dot represents a country. come of US$90 increased schooling by 1.6 years Poverty reduction. Job opportunities and em- for disadvantaged castes.27 In Mexico, a 10 per- ployment transitions are major determinants of cent increase in labor demand for adult women changes in both individual living standards and raised the chance of having a daughter in good overall poverty in a country. If societies value health by 10 percent.28 In addition, the children poverty reduction, a job lifting an individual or of women who found work in export manufac- a household out of poverty increases the well- turing thanks to the opening of new factories being of others. A spillover exists then, as ag- closer to home were significantly taller.29 gregate welfare increases beyond the increase in 166 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 FIGUR E 5.5 A higher women’s share of household income raises food expenditures in the Republic of Congo 0.3 impact of a 10 percent redistribution of wage income from husband to wife, 0.2 percentage points 0.1 0 –0.1 –0.2 –0.3 od n l th rt n o g t lts rs ho en cc io re in po he al du fo at co us ld m ba he ns ot ra uc hi in ho al to tra rc rta fo ed fo te g in en g th in th clo clo household expenditure items Source: Backiny-Yetna and Wodon 2011. the well-being of the individual or household FIGUR E 5.6 Who gets the jobs matters escaping poverty. for poverty reduction in The way new job opportunities are distrib- Bulgaria and Latvia uted is of major importance for poverty re- duction. Poverty profiles, revealing the charac- teristics of the poor, help identify which types change in poverty, percentage points 0 jobs—and in which locations—would make the –1 biggest difference to them. Microsimulations us- ing household survey data allow estimating the –2 impact of changes in employment on poverty rates. For instance, increasing the employment –3 rate is of highest priority in Bulgaria and Latvia, two aging countries. Consider the poverty alle- –4 viation effects of raising the employment rate by –5 3 percentage points depending on who, among Bulgaria Latvia those currently not working, gets the additional jobs for most jobs for most jobs. If the jobs went to the people whose indi- employable employable vidual characteristics make them more easily people people among employable, poverty would fall by 1.1 percent- the poor age points in Bulgaria and by 1.2 percentage Source: World Development Report 2013 team. points in Latvia. If new employment opportuni- Note: Figure is based on microsimulations using data from household surveys. In each country, the ties instead went to the most employable among employment rate was exogenously increased by 3 percentage points. The baseline scenario allocated the poor, poverty would fall by 4.7 percentage the new jobs to those who had the highest likelihood of being employed. Earnings were imputed on the basis of individual characteristics. The alternative scenario brought into jobs all those who had the highest points in Bulgaria and by 4.1 percentage points employment likelihood among the poor. in Latvia (figure 5.6). Valuing jobs 167 Productivity Spillovers from jobs on the productivity of other FIGUR E 5.7 Agglomeration effects vary across jobs can happen through three main channels. industrial sectors in Taiwan, China Jobs in functional cities lead to greater special- ization and mutual learning. Jobs connected to global markets allow for the acquisition of more apparel advanced technological and managerial knowl- edge. And through the production process in plastic products which they are embedded, jobs can have nega- tive—or positive—effects on the environment. machinery Agglomeration effects. The spatial concentra- tion of activity is a strong driver of productivity electric appliances growth in developing countries. Effects can ma- terialize within sectors (localization economies) computers or between sectors (urbanization economies). The sharing of inputs, better labor matching, 0 2 4 6 8 and knowledge spillovers are the main forces employment growth in response to a 10 percent behind the geographical concentration of in- increase in manufacturing employment, % dustries and economic activity in urban envi- 1986–96 1976–86 ronments. The sharing of inputs facilitates the emergence of specialized producers of interme- diate goods and services. Proximity allows firms Source: Sonobe and Otsuka 2006b. Note: The figure shows the increase in the employment of a specific sector in a specific locality when to more easily find workers to fill positions. total employment in manufacturing in that locality increases by 10 percent, controlling for other relevant Knowledge spillovers allow firms to learn about factors. new technologies, products, and practices from other firms operating in the vicinity. These ag- glomeration effects signal a difference between the private and social values of jobs. causes employment in specific industrial sectors The tools of urban economics can be used to increase between 3.0 and 7.5 percent (figure to assess the potential gains from agglomera- 5.7).35 Enterprise surveys also show that firms tion. In industrial countries, as city employ- grow faster in large cities.36 In many develop- ment increases by 10 percent, wages and firm ing countries, however, the poor functionality productivity in the city grow by 0.2 to 1.0 of cities undermines the potential gains from percent.30 To give a sense of the magnitudes proximity. Inefficiencies in labor, land, and implied, if wages and productivity were to in- housing markets may cause poor functionality crease by 0.3 percent, workers moving from in cities. Poor functionality may also result from a city with 5,000 inhabitants to a metropolis of deficits in transportation and communication 5 million would see their earnings increase by infrastructure, especially for smaller cities where 23 percent.31 Nonetheless, not all workers bene- market access is critical.37 fit equally from living and working together in But agglomeration can also come with higher cities, nor do they contribute equally to produc- costs, from more expensive land to worse con- tivity growth. Workers with better cognitive and gestion and pollution in cities with 1 million to social skills tend to benefit more.32 Workers also 3 million people. In the United States, between enjoy higher wages when they are surrounded 1980 and 2000, the number of annual hours per by a more educated labor force.33 person lost to traffic delays increased from 4 to The association between urban scale and 22.38 Traffic in central London moves at only productivity has also been documented in many 11 miles an hour.39 In Mexico City, the annual developing economies, including Brazil, China, cost of traffic delays amounts to US$580 a per- India, Indonesia, the Republic of Korea, and son, or 3 percent of annual per capita income.40 Turkey.34 In Taiwan, China, a 10 percent increase Congestion and pollution limit agglomeration in total manufacturing employment in a locality effects.41 In California, a reduction in ozone 168 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 concentrations of 10 parts per billion would in- through arms-length trade or through intrafirm crease worker productivity by 4.2 percent. 42 transactions. Global integration improves do- Analytical tools from the management litera- mestic resource allocation because it puts greater ture can be used to assess the impact of industrial pressure on firms to be competitive. Exporting clusters on productivity.43 In many low-income allows the most productive firms to grow. But countries, industrial clusters account for a large in doing so, they also exert pressure on the least share of manufacturing employment, includ- productive ones to contract or exit. Global in- ing self-employment.44 Clustering is more com- tegration also generates knowledge spillovers. mon in light manufacturing industries intensive These arise through exposure to new tech- in unskilled labor, such as garments, footwear, nologies embodied in traded goods or through furniture, and metalworking. The formation of new management practices in companies re- a cluster often starts with a pioneer, typically a ceiving FDI. Knowledge spillovers take place former trader or engineer who is able to iden- horizontally, between competitors, and verti- tify a new, profitable business. Success leads to cally, through buyer-supplier relationships. imitation, and a large number of relatively small International economics has devoted con- and similar enterprises emerges in the vicin- siderable efforts to quantifying the productiv- ity. The management literature can help iden- ity impacts of global integration. In Colombia, tify dynamic clusters, where jobs have positive productivity increased faster at the plant level spillovers. during the trade liberalization period than dur- ing the import substitution period.46 In India, Global integration. The fragmentation of pro- industry restructuring immediately following duction across borders is one of the most notable the trade reforms of 1991, including the entry features of the global economy.45 Value chains and exit of firms, contributed significantly to connect firms and jobs across borders, be it productivity increases.47 In Brazil, Côte d’Ivoire, and Turkey, the lowering of trade barriers led to a reduction of markups—a sign of intensified competition.48 Productivity-enhancing effects FIGUR E 5.8 Knowledge spillovers from foreign direct of exports have been found in China; Indonesia; investment increase domestic productivity Korea; Slovenia; and Taiwan, China, as well as at the regional level in East Asia and Sub-Saharan 2.5 Africa.49 A specialized literature focuses on the knowl- total factor productivity growth, % edge spillovers and productivity impacts of mul- 2.0 tinationals and FDI. In Indonesia, when a plant switched from domestic to foreign ownership, 1.5 its total factor productivity increased by 13.5 percent within three years. In Brazil, wages of 1.0 incumbent workers in domestic firms were pos- itively affected by the share of workers who pre- viously worked with multinationals. In Ghana, 0.5 firms whose owners worked for multinationals in the same industry were more productive than 0 other domestic firms.50 In developing countries, all industrial developing countries countries countries the knowledge spillovers from FDI may be more important than their impact on resource alloca- domestic productivity gains due to knowledge tion (figure 5.8).51 spillovers from FDI Research can help assess whether the knowl- domestic productivity gains due to reallocation edge spillovers from global integration trickle driven by FDI down to small informal enterprises through value chains. Larger enterprises are more likely Source: Alfaro and Chen 2011. to become suppliers to foreign companies or Note: FDI = foreign direct investment. The figure shows the increase in domestic productivity for different country groups when the probability of entry by new multinational firms doubles. The estimates are based to be directly acquired by multinationals. But on data from 60 countries. they tend to contract out noncore businesses Valuing jobs 169 for cost efficiency, bringing smaller local com- panies into the value chain. Contracting out High emissions per worker can go hand in FIGUR E 5.9 provides opportunities for small and microen- hand with low emissions per unit of output terprises to also reap the benefits of knowledge spillovers.52 30 CO2 emissions per manufacturing worker, Research can also shed light on the obstacles preventing the productivity spillovers from glob- 25 ally integrated jobs from materializing. Cross- metric tons per year country analysis shows that the degree of labor 20 market flexibility, barriers to firm entry, and in- frastructure development substantially influence 15 the impact of openness on growth.53 Knowledge spillovers hinge on the ability of the local econ- 10 omy to absorb them—human capital and re- search and development capacity are important. 5 Local firms need a certain level of production and technological capabilities to be selected as suppliers by foreign companies. When technol- 0 0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 ogy gaps between local firms and foreign com- panies are large, productivity spillovers are less CO2 emissions per thousand US$ of manufacturing GDP, likely to occur.54 2000 prices, metric tons per year Sources: World Development Report 2013 team estimates based on IEA 2011, International Income Distri- Environmental impacts. Jobs that overuse natu- bution Database (I2D2), and the ILO’s Labor Statistics. ral resources or damage the environment are Note: CO2 = carbon dioxide; GDP = gross domestic product. Estimates are based on data from the Interna- less productive than their direct output might tional Energy Agency and methods and emission factors from the revised 1996 Intergovernmental Panel on Climate Change guidelines for National Greenhouse Gas Inventories. The figure considers only CO2 suggest. The environmental damage they create emissions from fuel combustion associated with productive activities in the manufacturing and con- imposes a negative spillover on others, resulting struction sectors. Bubbles represent countries. The size of the bubbles represents the comparable size of in a lower net contribution to aggregate output. manufacturing GDP in constant prices. Natural resources such as the atmosphere, wa- ter, forests, and soil provide services useful for economic activities and necessary for human Policies to contain carbon emissions and re- life, but they are often overused because their duce environmental damage rely on price and cost from a private point of view falls short of quantity instruments aimed at transferring the their true social cost.55 The emission of green- cost to producers. These policies should increase house gases is an example of a negative spillover. net output per job, accounted for in green terms. The tools of environmental economics can However, in the short term, they could result in be used to quantify the cost of emissions associ- fewer jobs if natural resources and labor are ated with jobs. Worldwide, industry is respon- complements in production. sible for over one-fifth of carbon emission.56 Policies also try to promote job creation in Globally, the average cost from fuel combustion more environmentally friendly industries. Jobs in manufacturing is in the order of US$82 per in enterprises that produce wind mills for elec- job per year.57 However, this average hides an tricity generation, construct water and soil con- enormous diversity in the emission cost of pro- servation systems, and plant and manage trees duction across countries, industries, and tech- fall in this category. These are often called green nologies. Across countries, a negative relation jobs, with different definitions attached to the can be observed between the annual emission term. Industries matching the most common cost per job and the emission efficiency of pro- definitions of green jobs tend to be relatively duction. Richer countries tend to have higher small in many developing countries, with Brazil environmental costs associated with one job, and China notable exceptions (box 5.6).58 but, in parallel, these jobs have a high produc- Pending a precise quantification of environ- tivity so that the emission intensity per unit of mental spillovers from jobs, it is likely that the manufacturing output tends to be relatively low activities with the greatest potential to mitigate (figure 5.9). adverse environmental damage in develop- 170 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 5.6 International definitions of green jobs can be too narrow for developing countries While the concept of green growth is well developed, there is less But these definitions can be too narrow. In developing countries, consensus on the concept of green jobs.a The Organisation for Eco- some jobs associated with green growth that have prospects for nomic Co-operation and Development (OECD) uses this label for substantial expansion, such as biofuel and biomass production, may jobs linked to environmental industries.b The European Commis- not qualify as Decent Work.e Moreover, the focus on renewable sion focuses on employment in industries whose products are energy and low-carbon manufacturing may shift attention away deemed beneficial to the environment.c Examples include jobs in from activities with positive environmental impacts that also pro- renewable energy sectors and low-carbon manufacturing. Several vide higher earnings to the poor. national governments are developing their own definitions of Consider efforts toward reduced forest degradation and sustain- green jobs, both for statistical purposes as well as to inform policy able management of trees.f Tree resources outside of closed forests making. are becoming increasingly important to satisfy the demand for The United Nations Environment Programme defines green charcoal, firewood, timber, and nonwood forest products. Locally jobs as “positions in agriculture, manufacturing, construction, managed reforestation and regeneration of degraded landscapes installation, and maintenance, as well as scientific and technical, may generate income opportunities for poor people as well as posi- administrative, and service-related activities that contribute tive environmental impacts. Trees with the capacity to fix nitrogen substantially to preserving or restoring environmental quality.”d have been used to improve soil fertility and provide fodder, wood, For the United Nations Environment Programme and the Interna- and fuel. Such enhanced tree management has helped increase sor- tional Labour Organization, these jobs must also qualify as Decent ghum yields by as much as 85 percent in some areas and millet Work. yields by as much as 50 percent. Source: World Development Report 2013 team. a. For a detailed discussion, see Bowen 2012. b. OECD 1999. c. UNEP and others 2008. d. UNEP and others 2008, 35–36. e. Upadhyay and Pahuja 2010. f. Sander and Dewees 2012 for the World Bank Development Report 2013. ing countries lie outside the modern sector, in portant for youth. Jobs can contribute to social- areas such as agriculture and forestry manage- ization and the process of acquiring values and ment. Agriculture and deforestation account for behaviors for the workplace and society.62 nearly 30 percent of the greenhouse gas emis- sions in the world.59 Low-productivity agricul- Social identity. A job can influence the social ture leads to deforestation as cultivated areas groups that individuals associate with, their are expanded.60 As such, efforts to reduce the behaviors, and the norms that shape those be- environmental spillovers from jobs in develop- haviors.63 The degree to which a job, or its char- ing countries are bound to concern rural areas, acteristics, shapes the way individuals perceive affecting farming and rural livelihoods.61 For themselves in their community and society example, they may involve community partici- varies with traditions, culture, and the level of pation in the management of commons such as economic development. But when the relation- forests and natural habitats. ship is significant, a spillover from jobs to social cohesion exists. Quantifying spillovers from jobs on social co- Social cohesion hesion is bound to be more difficult than for liv- If jobs change values, behaviors, and attitudes of ing standards or productivity. However, a rough people, they can influence how societies func- assessment is possible using household surveys tion, specifically, how groups in society are able as well as qualitative studies. For instance, about to resolve tensions and engage in peaceful col- half of respondents in China judge their jobs to lective decision making. Three such spillovers be somewhat or absolutely meaningful, but in from jobs to social cohesion are social identity, Sierra Leone the share is 90 percent, potentially networks, and a sense of fairness. The effect of signaling the social importance of jobs in a low- jobs on social identity can be particularly im- income and post-conflict setting. Valuing jobs 171 F I G U R E 5 .10 Proximity of garment factories stimulates schooling among young girls in Bangladesh a. Boys b. Girls 70 40 60 30 boys enrolled, % girls enrolled, % 50 40 20 30 20 10 10 0 0 1980 1985 1990 1995 1980 1985 1990 1995 villages with garment factory in their vicinity villages without garment factory in their vicinity Source: Heath and Mobarak 2011. Behaviors and norms can also be changed firms.65 The program has led to a decrease in by perceptions about access to jobs—by rais- involvement in gangs, violence, and other risky ing peoples’ expectations and aspirations for behavior, including drug use and unprotected the future—and in some cases these changes in sex. Participants described the positive impact perceptions can be gauged as well. For instance, on their self-esteem and behaviors. school enrollments in Bangladesh increased among girls after garment factories opened Networks. Jobs can create new contacts and be a within commuting distance of their villages.64 vehicle to transmit information. On the negative No such effect was observed among boys, while side, they can also have an exclusionary effect, some older girls dropped out of school to take moving the individual further from the wider up the new job opportunity (figure 5.10). As society. Positive network effects can give people jobs in the factories became available to women, a stake in their community or society; negative it is likely that parents saw more employment effects can increase social distance. opportunities for their daughters and realized Again, surveys can inquire about these dy- the importance of education. The women work- namics as a first entry to gauge whether a spill- ing in these garment factories thus set an exam- over exists. In four countries, participants in a ple for other women and girls. survey were asked whether their job was useful Program evaluations are another source of or not in establishing contacts with other people, information on the spillovers from jobs on social providing information about societal matters or cohesion. For instance, the Programa Juventud other jobs, or helping with news about good y Empleo (Youth and Employment Program) in deals (on food, for example). Only a quarter of the Dominican Republic reaches young people respondents in China, but fully three-quarters of who have not finished secondary school, are those in Sierra Leone judged these network ef- unemployed, and are living in poor households. fects to be at least somewhat important (figure Participants receive a combination of voca- 5.11). While comparisons across countries need tional training and training in life skills, includ- to be interpreted with caution, comparisons ing self-esteem, teamwork, and communication across individuals in the same country may be skills, followed by internships at private sector informative. 172 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 F I G U R E 5 .11 Not all jobs provide social identity, networks, or a sense of fairness 100 agree with the statement, % of respondents 90 80 70 60 50 40 30 20 10 0 China Egypt, Arab Rep. Colombia Sierra Leone My job is meaningful My job establishes networks The most qualil ed people get the jobs Source: World Development Report 2013 team estimates based on Bjørkhaug and others 2012; Hatløy and others 2012; Kebede and others 2012; and Zhang and others 2012; all for the World Development Report 2013. Quantitative methods are necessary to con- atively few people judge jobs to be distributed on textualize network effects. Surveys in Bosnia and the basis of merit. In Colombia as well as Sierra Herzegovina and the former Yugoslav Repub- Leone, the percentages were significantly higher. lic of Macedonia have found that the number Beyond these subjective assessments, fairness of people willing to work or do business with in access to jobs can actually be measured rigor- someone of a different ethnicity was greater ously, building on the emerging literature on in- than the number of people in favor of intereth- equality of opportunity. This literature explores nic cooperation in schools or neighborhoods.66 to what degree factors beyond talent and effort Focus groups in Bosnia and Herzegovina in the matter in accessing jobs. These factors include late 1990s found that the workplace was “the the circumstances in which a person is born: area in which there is the greatest support for location, family background, gender, ethnic- ethnic cooperation.”67 Business people work- ity, and language.69 A society that offers equal ing in print and packaging, food and beverages, opportunities would record little influence of construction, and retail in Trinidad and Tobago these circumstances on job trajectories much have reported that interactions through work later in the life. In some countries, however, the with others of different ethnicities have posi- share of inequality that arises from such birth tively influenced their social life.68 circumstances is large. In this case, the existence of deeply rooted inequities determines the life Sense of fairness. Whether access to jobs is fair chances from early on and becomes apparent naturally depends on a subjective evaluation. later on through the access to jobs and the re- Opinion surveys can provide an assessment lated rewards.70 The approach can also be used of how fair the job market is judged to be, and to assess the importance of different factors that tracking such evaluations over time can be of contribute to inequality in employment oppor- guidance to policy makers. About 30 percent tunities. Among several countries in Eastern and of Chinese respondents feel that the most- Central Europe, father’s education is a driver for qualified people get jobs—an indication that rel- inequity in access to jobs, especially in the Rus- Valuing jobs 173 F I G U R E 5 .12 Gender and father’s education account for a large share of inequality of opportunity in access to jobs Russian Federation Lithuania Kyrgyz Republic Slovenia Croatia Latvia Kazakhstan 0 10 20 30 40 50 60 70 80 90 100 percent gender parents’ connections father’s education minority Source: Abras and others 2012 for the World Development Report 2013. Notes: The figure shows the contribution of each circumstance to an inequity measure, the D-index. The D-index is the share of available opportunities that would have to be reallocated to achieve the same coverage rate of opportunity across all groups. Opportunity is defined as having a job with 20 or more hours per week. Parents’ connections refers to parents who were affiliated with the Communist Party. Father’s education is measured in years of completed schooling. sian Federation and Slovenia, while gender is with a variety of means. Some of them allow predominant in Latvia, Kazakhstan, and Croatia for an actual quantification, some others for a (figure 5.12). qualitative treatment of the difference between the individual value and the social value of jobs. Assessing the social value of different types of * * * jobs can inform policy discussions about trade- offs and priorities for developmental policies. The assessment of the social value of jobs is The relevant spillovers are bound to be different important for the identification of what good in countries at different levels of development jobs for development are in a particular coun- and with different characteristics, thus leading try context. Such assessments can be pursued to diverse jobs agendas. 5 174 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 QUESTION Skills or jobs—which comes first? Since human capital theory first established a fill job vacancies through external candidates link between skills and economic performance, than other firms—a sign of skill-related con- it generally has been held that education and straints being more binding.80 On the other training are wise investments for increasing em- hand, farmers and entrepreneurs of unregistered ployment and earnings—and are hence neces- firms in both rural and urban environments sary ingredients for growth and job creation. tend to rate skills bottlenecks as less severe.81 The risk of living in poverty declines with the The straightforward response to such mis- acquisition of basic cognitive skills, especially matches would be for private firms or individu- numeracy and literacy, and the associated en- als to upgrade skills through further education hancement in earning opportunities. Skills, es- or training—but several well-known reasons pecially cognitive abilities, are strongly related prevent this from occurring. Firms and farms— to productivity growth, more so than school at- especially smaller ones—and workers seldom tendance rates.71 They also are closely associated have the necessary funds nor can they borrow with structural transformation, especially for for this purpose.82 Firms are also reluctant to in- low- and lower-middle-income countries where vest in training employees for fear that workers they create opportunities for people outside of will leave after being trained.83 And both firms agriculture.72 Across 1,500 subnational regions and workers may lack the information needed in 110 countries, education emerges as the criti- to identify skills gaps. cal determinant of knowledge spillovers and Because of such market failures, policy mak- entrepreneurship.73 And skills can shape how ers often turn to education and training systems jobs link people to neighbors, communities, and to deal with high unemployment or stifled pro- societies.74 ductivity growth. Many countries are currently But around the world, available skills are not making a big push to hone the skills of the fitting well with the demands of the economy. current and soon-to-be workforce through in- Skills mismatches are arguably growing rather creased emphasis on on-the-job training and on than shrinking. Albeit not easy to pinpoint, up pre-employment (vocational) education. Tur- to one-third of the employed in countries as di- key’s Public Employment Agency has expanded verse as Brazil, Costa Rica, Pakistan, Sri Lanka, vocational training enrollment almost tenfold and Tanzania are either under- or over-qualified since 2007, delivering close to 250,000 courses for the work they do.75 Managers of registered, in 2011. India has launched the National Skills formal firms around the world judge workforce Mission with a stated goal of training 500 mil- skills as an obstacle of above-average impor- lion people by 2022. tance in the production process.76 In countries at all development levels, skills obstacles are also The pitfalls of skills building judged to be more acute now than in the first half of the 2000s (figure 5.13). The importance of skills cannot be over- Skills shortages are an especially serious con- stated (box 5.7). But caution is needed before straint for the most dynamic entrepreneurs.77 jumping from this recognition to the launch- Larger as well as younger and growing firms ing of large skills-building programs. The root tend to identify skills as a constraint more than cause of skill shortages or mismatches might medium-sized and smaller firms.78 Export- not lie with the education and training system. oriented firms in Indonesia and the Philippines Shortages and mismatches may instead result report skills bottlenecks more than firms pro- from wrong signals generated by market distor- ducing for the domestic market in those coun- tions and institutional failures elsewhere in the tries.79 Across 106 developing countries, firms economy. If a civil service career pays overly well, that adopt technology more rapidly and those young people may study to obtain such jobs, that are more globally integrated take longer to even if they need to queue for them. This can Valuing jobs 175 F I G U R E 5 .13 Relative to other obstacles, skills have become a more severe constraint to business 2.5 change in severity of skills constraint, 2.0 relative to other constraints 1.5 1.0 0.5 0 low income high income countries ordered by income per capita Source: World Development Report 2013 team based on enterprise surveys. Note: The figure shows the changes in the relative importance of skills obstacles between beginning and end of the 2000s. The relative skill obstacle is defined as the ratio between (a) the share of firm managers saying that lack of skills is a major or severe obstacle and (b) the share of firm managers rating other constraints as major or severe. A positive score indicates that the skills constraint became more severe relative to others. BOX 5.7 How skills are formed, and how they can be measured Skills are acquired throughout life. People learn, adapt, and form esteem, self-efficacy, and aspirations, increasing scores on school- their skills through a multitude of interactions and mechanisms leaving examinations and initial labor market outcomes.c But while within the household and neighborhood, during the formative foundations are laid early on, skills are also shaped after childhood years of schooling, at work, and in training. Cognitive skills include and in working life. verbal ability, working memory, numeracy, and problem-solving Attention to the measurement of skills has gained prominence abilities. Social skills are based on personality traits that underlie worldwide. Achievement tests provide information for parents, behaviors such as teamwork, reliability, discipline, or work effort.a instructors, and administrators, and enable a better understanding Technical skills enable the performance of specific tasks. Because all of systemwide performance and achievements. While the skills jobs require a combination of skills that are formed in multiple ways measured on these tests appear to be purely academic in nature, and in diverse circumstances, policy makers face complex chal- test scores reflect more than individuals’ cognitive skills. A good lenges in forging the best path for skills development. part of the variation in achievement tests can be attributed to per- The first months and years of life are the most crucial for skill for- sonality traits or social skills as well as to incentive systems. These mation. This is when intelligence and learning abilities, the founda- personality traits and social skills are critical in predicting individu- tions for the development of core cognitive and social skills, are als’ life outcomes, including educational attainment and earnings. cemented.b Brain maturation occurs in steps, with new skills build- More recently, efforts have gone in the direction of assessing ing on earlier ones. If the foundation is strong, higher-order cogni- adult competencies, by measuring the variety, intensity, and fre- tive and social skills can be added later on. This leads to higher quency of skills used in the workplace. These measures range from adaptability in rapidly changing job environments and the acquisi- assessing different types of manual and workplace skills of a more tion of job-specific techniques. In the slums of Mumbai, a special routine manner to complex capabilities, such as problem solving program run in parallel to primary schooling raised children’s self- abilities.d Source: World Development Report 2013 team. a. Barrick and Mount 1991. b. Grantham-McGregor and others 2007; Knudsen and others 2006. c. Krishnan and Krutikova 2010. d. OECD 2012; Skills toward Employment and Productivity Measurement Study based on World Bank 2010. 176 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 lead to the acquisition of skills that are irrelevant plague training programs and pre-employment in the private sector and to unrealistic expecta- education around the world. tions, as was observed, for example, in the Arab What is being taught matters as well. Social Republic of Egypt.84 Similarly, compressed pay skills are often the ones missing, but they can scales reduce the incentives to invest more in rarely be acquired in schools or training centers. education and training.85 Lack of information In India, employers of engineers stress reliabil- about employment opportunities, transporta- ity, willingness to learn, and entrepreneurship tion costs, or housing market failures may be the as more important than specific technical skills, real reasons why workers do not take available or the command of mathematics, science, or jobs. In all of these cases, constraints that seem to English.91 In Botswana, theoretical and practi- be skills related actually reside outside the edu- cal knowledge of the job, as well as other job- cation and training system. specific skills, are generally considered to be Besides, the successful delivery of skills-build- less important than skills such as commitment, ing services is difficult. Pre-employment and communication, and basic problem-solving.92 on-the-job training show varying success in the In Peru, 40 percent of employers complain about developing world. On-the-job training is con- the lack of dependable work ethics and personal sistently found to go hand-in-hand with higher qualities such as team work, persistency, ability labor earnings and productivity increases, even to reach consensus, or initiative among their more so in developing than in industrial coun- employees. This subjective assessment is con- tries.86 But only a fraction of workers have access firmed by harder evidence showing that returns to it; those with less education and those work- to the socioemotional trait of perseverance are ing in smaller and informal enterprises seldom as high as returns to average cognitive ability.93 have the opportunity to benefit from training. Technical and vocational education (TVE) has Learning through jobs a mixed record: compared with general educa- tion, TVE led to higher earnings in Rwanda, Sri Just as skills are important for jobs, the reverse is Lanka, and Thailand, more or less equal earn- true as well. Many technical and social skills can ings in Indonesia and India, and lower earnings be built through experience in the workplace— in Pakistan.87 The reach of TVE in rural areas is shaping skills on the job carries sizable returns. often very limited.88 In some countries, TVE has On average across countries, the return to one actually reinforced socioeconomic inequalities additional year of work experience in nonagri- rather than fostered social mobility.89 Poor qual- cultural activities is roughly one-half the return ity and inequitable access are key constraints in to one additional year of education at the be- many countries. ginning of work life.94 And managers put a pre- Accountability and governance arrange- mium on experience. In five African countries, ments are often the weak link of skills-building managers identified work experience as more initiatives, with institutional failures often re- important for hiring decisions than technical placing market failures. On the positive side, skills and education.95 modern and flexible skills-development strate- Apprenticeship programs, fostering the in- gies have generally replaced old-fashioned and tegration of education and learning through mechanical manpower planning (box 5.8). jobs, exist in various shapes around the world. Many countries have also created oversight en- They range from the informal model of Sub- tities, such as the Pakistan Sindh Technical and Saharan Africa to the dual model of Central Vocational Training Authority, to separate qual- Europe. Informal apprenticeship, often the ity control and management of providers from primary mechanism for technical skills to be financing. In India, the National Skills Develop- passed through generations, can be strength- ment Strategy is based on the principle that the ened through its gradual integration into na- institutions in charge of training, certification, tional training systems.96 and accreditation should be strictly separated.90 The dual model, deeply rooted in Germany, On the negative side, scattered responsibilities combines classroom-based schooling—geared across many ministries, distance from the pri- to building general and transferable skills—with vate sector, slow response to rapidly changing learning on the job in the training company.97 skill needs, and capture by providers continue to In France, Germany, and the Netherlands, the Valuing jobs 177 BOX 5.8 Manpower planning has given way to dynamic skills development Manpower planning, a technique that used macroeconomic and Association of Software and Service Companies (NASSCOM) devel- sector forecasts to derive how many workers with specific technical oped standardized skills assessments and certification arrange- skills would be needed was popular in the 1960s and 1970s. It was ments in 2006. The Korea University of Technology and Education successful in a few cases in which it was closely integrated with the (KUT) established the Bridge Model, a three-way partnership also overall economic development strategy of the country and bene- involving a single major enterprise and clusters of small and medium fited from a universal basic education system, as it did in the Repub- enterprises (SMEs) that serve as its main subcontractors. The major lic of Korea.a But its rigidity soon became stifling. Manpower plan- enterprise contributes technical knowledge, the SMEs bring in the ning generally assumed a fixed relationship between labor and employees to be trained, and KUT supplies the teaching facilities outputs, implicitly ruling out technological change. It also empha- and content.d Samsung was the first “bridge’” in 2006; five other sized technical skills to the detriment of cognitive and social skills. major companies have become bridges since then. And it was slow to adapt to rapid changes in the world of work Much can be learned from comprehensive skill-building sys- brought by globalization.b tems, especially from those of East Asia. But these systems require Gradually the focus shifted from merely ensuring an adequate sophisticated institutional mechanisms that may be out of reach in supply of skills to delivering demand-responsive, quality-skills lower-capacity contexts.e Over 100 countries have embarked on development programs. The Republic of Korea stopped developing comprehensive National Qualification Frameworks, built around long-term macroeconomic plans with explicit industrial policies by the mid-1990s. Industrial projections of manpower supply took a the definition of competencies, certification, and accreditation. But backseat to the country’s new initiatives emphasizing quality and with exceptions, results and impact are sobering.f Often, the relevance of education and skills development.c The scope became administrative capacity available in low- and middle-income coun- broader and more integrated, replacing mechanistic forecasting. In tries is overwhelmed, and progress is held back by the lack of the 1980s and 1990s, Singapore developed an integrated strategy strong buy-in from the most important players: parents, teachers, to upgrade, retrain, and provide lifelong learning for its labor force, training institutes, and firms. Perhaps the most valuable lesson especially for those with lower levels of education and skills. from East Asian countries is that skills-development systems need The rapid pace of globalization increasingly requires the private to grow organically from below while being coordinated and fos- sector to be a driving force in skills development. India’s National tered from above. Source: World Development Report 2013 team. a. Kim 2002. b. Richards 1994. c. Kim 2002. d. Lee and others 2008. e. Nam 2011. f. ILO 2010b. See also DFID 2010; Gill, Fluitman, and Dar 2000. dual system is credited with fast and structured experiences—can also shape behaviors and at- employment integration.98 But the dual system titudes, including the willingness to contribute requires more than the right economic incen- to society at large. tives—it is based on a social contract between Importantly, jobs also support the transmis- employers (to offer places and invest in the fu- sion of knowledge through interactions with ture career of apprentice as a common good), other people. Knowledge spillovers underlie the trade unions (to accept below minimum wage agglomeration effects observed in cities and in payment for trainees), and government (to fund production clusters.101 But knowledge spillovers vocational schools and provide quality con- from jobs also occur in rural areas. During the trol).99 Private sector commitment, including Green Revolution in India, farmers with experi- financing of training and continuation even in enced neighbors made larger profits than those times of economic downturns, is fundamental. with inexperienced ones.102 Benefits from social Given such high institutional requirements, at- learning at the village level were substantial.103 tempts to transplant the dual model in its en- Jobs can also ignite skills building by put- tirety have seen little success. ting people in contact with the outside world. Building skills on the job is promising, be- Working in foreign-owned companies, or in cause skills continue to develop and accumulate firms integrated in international value chains, after formal schooling ends, in teenage years and allows the acquisition of new technical and during working life.100 Jobs—especially early managerial skills. This learning then spurs imi- 178 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 tation and can have cascading ripple effects.104 to meet. The role of policy here is to ensure that In Singapore, India’s Tata group was the first signals are adequately transmitted, providing international company to partner with the Eco- incentives to continue skill accumulation by the nomic Development Board in 1972 to establish young and those of working age alike. In the a company-owned training center for precision Dominican Republic, providing students with engineers. This partnership model was success- information about the actual returns to second- fully replicated in subsequent years with other ary school education led to substantially higher foreign companies, eventually leading to the school attendance.108 In India, informing rural consolidation of various institutions in 1993 to women about job opportunities led to increased form Singapore’s Nanyang Polytechnic. Today, schooling for girls and delayed marriage and the polytechnic has become a source of inter- childbearing for women.109 On the other hand, national expertise on industry-led training.105 privilege in access to jobs distorts the signals. It Intel’s decision to establish its semiconductor hurts and discourages, rather than encourages, assembly and test plant in Costa Rica has equally the building of skills. contributed significantly to that country’s pros- Jobs themselves can build skills, especially at pects and skill building system.106 entry into the labor market. Given the negative long-term effects of troubled school-to-work transitions, placing emphasis on supporting Jobs need skills, pull skills, and build skills first-time job-seekers should have significant Some skills are necessary for productive employ- payoffs. ment to emerge in the first place. And they cannot But jobs may neither pull nor build skills be acquired on the job. Without numeracy and to a significant degree, even if the founda- literacy skills, the prospects of improving employ- tional cognitive skills are in place. This occurs ment opportunities and earnings, whether in situations where the benefits from agglom- in agriculture or in urban settings, are thin. To- eration and global integration are present but day, more than one-tenth of 15-to-24-year-olds not adequately exploited. Countries undergoing worldwide are functionally illiterate, and that rapid urbanization often have sizable knowledge does not bode well for their future.107 Also, social spillovers to reap but may fail to move up the skills assume an ever more important role as value-added ladder. If so, they can be caught in complements to basic cognitive skills. Given that traps of low productivity and low skills.110 Such skill building is cumulative, securing the founda- traps arise when skills are insufficient to spur in- tion on which much of the later path of skill ac- novation and the demand for skills is too low quisition follows remains an absolute priority. to encourage their acquisition. In those cases, Many countries are not there yet. more relevant schooling and skill building at the With this foundation in place, jobs can pull secondary, technical, and likely higher levels are skills. Employment opportunities increase the needed as a prerequisite for the creation of good demand for education, which systems then have jobs for development. Valuing jobs 179 Notes 9. Hassel 2008. For example, the safeguard policies of the International Finance Corporation (IFC) 1. Glewwe 2004; World Bank 2008b. are aligned with the core labor standards. See 2. Nunn and Wantchekon 2011. IFC 2012. 3. ILO 2012b. 10. In theory, freedom of association provides a 4. ILO 2010a. channel for workers to demand better work- 5. United Nations, 1948, The Universal Declara- ing conditions. Safety and health are covered by tion of Human Rights, United Nations, New ILO conventions, national laws, and regulations York, http://www.un.org/en/documents/udhr/, and an increasing number of voluntary private article 23 (1). Complementing the declara- sector codes of conduct. tion, international conventions aim to protect 11. Fredman 2012 for the World Development Re- the rights of women, children, the disabled, port 2013. migrants, and others—among these the Con- 12. Family workers hold self-employment posi- vention on the Elimination of All Forms of tions in market-oriented establishments oper- Discrimination against Women (1979), the ated by relatives living in the same households. Convention on the Rights of the Child (1989), See ILO 2011a. the International Convention on the Protection 13. Sankaran 2007. of the Rights of All Migrant Workers and Mem- 14. Fredman 2012 for the World Development Re- bers of Their Families (1990), and the Conven- port 2013. tion on the Rights of Persons with Disabilities 15. Levi and others 2012 for the World Develop- (2006). Regional mechanisms that protect labor ment Report 2013; Newitt 2012 for the World rights include the European Convention on Development Report 2013. These initiatives Human Rights, the European Social Charter, are supported by international standards and and the Inter-American Convention on Hu- guidelines such as the Performance Standard 2 man Rights. Each of these provides explicit of the IFC, the Equator Principles for Financial protections for a range of labor rights. At the Institutions, and the United Nations Guiding national level, countries include workers’ rights Principles on Business and Human Rights. in constitutions, national laws, and regulations. 16. Clark 2005; Helliwell and Putnam 2004. National laws clarify details on specific interpre- 17. Fan and Chan-Kang 2008. tations and applications of international rights 18. Summers 1989. and standards. 19. World Bank 2009a. 6. The core international labor standards are the 20. Bell and Blanchflower 2010; Bell and Blanch- subject of eight conventions covering the four flower 2011. areas: Convention 87 (1948), the Freedom of 21. Beegle, Goldstein, and Rosas 2011. Association and Protection of the Right to Or- 22. Attanasio and Lechene 2002. ganize Convention; Convention 98 (1949), the 23. Hoddinott and Haddad 1995; Quisumbing and Right to Organize and Collective Bargaining Maluccio 2003. Convention; Convention 29 (1930), the Forced 24. Backiny-Yetna and Wodon 2011. Labor Convention; Convention 105 (1957), 25. Akresh, de Walque, and Kazianga 2012. the Abolition of Forced Labor Convention; 26. de Mel, McKenzie, and Woodruff 2009; Faf- Convention 100 (1951), the Equal Remunera- champs and others 2011. tion Convention; Convention 111 (1958), the 27. Luke and Munshi 2011. Discrimination (Employment and Occupa- 28. Kaveh 2012. tion) Convention; Convention 138 (1973), the 29. Atkin 2009. Minimum Age Convention; and Convention 30. Duranton 2012 for the World Development Re- 182 (1999), the Worst Forms of Child Labor port 2013. Convention. See “Conventions,” NORMLEX 31. This example is an illustration of the magni- (Information System on International Labour tudes at stake, not a welfare pronouncement. Standards) database, International Labour Cities have pecuniary costs, such as higher Organization, Geneva, http://www.ilo.org/dyn/ prices for housing, and nonpecuniary costs, normlex/en/. such as worse pollution and more crime. Costs 7. For example, Convention 122 covers employ- of living also increase with city size. Emerging ment policy, Conventions 81 and 129 address la- evidence from industrial countries also shows bour inspections (129 for agriculture), and Con- a wage growth effect, and not only a level effect, vention 144 involves tripartite consultations. in larger cities. See Freedman 2008; Holmlund 8. ILO 1998. and Storrie 2002; Wheeler 2006. 180 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 32. Bacolod, Blum, and Strange 2009; Glaeser and 1994), converted to 2009 prices using the U.S. Resseger 2010; Wheeler 2001. GDP deflator. For sources on estimation meth- 33. Duranton 2006; Moretti 2004a. Early findings odology, see the note for figure 5.9. in the literature were generated from U.S. data, 58. In contrast, in Europe, the discussion on green but they have been confirmed for most large, growth often focuses on the use of renewable developed economies. For transition and de- energy and low-carbon manufacturing (GHK veloping countries, these findings have been 2009; Oral, Santos, and Zhang 2011). replicated for Chile (Saito and Gopinath 2011), 59. IPCC 2007. China (Liu 2007), Malaysia (Conley, Flyer, 60. Stevenson and others 2011. and Tsiang 2003), and the Russian Federation 61. Otsuka and Place 2001; Pingali, Bigot, and (Muravyev 2008). Binswanger and Mkhize 1987; Yamano, Otsuka, 34. Duranton 2008; Henderson 2005; Overman and Place 2011. and Venables 2005. 62. Norton and de Haan 2012 for the World Devel- 35. Sonobe and Otsuka 2006b. opment Report 2013. 36. IFC, forthcoming. 63. Akerlof and Kranton 2010. 37. Duranton 2008; Henderson 2005; Overman 64. Heath and Mobarak 2011. and Venables 2005; World Bank 2009c. 65. Ibarraran and others 2012. 38. Glaeser and Kohlhase 2004. 66. UNDP 2003a; UNDP 2003b. 39. Santos and Shaffer 2004. 67. Dani and others 1999, 3. 40. Parry and Timilsina 2010. 68. Kilroy 2011. 41. Rappaport 2008. For evidence from the Nether- 69. The circumstances are assumed to be indepen- lands, see Broersma and Oosterhaven (2009). dent of abilities of children at birth. 42. Zivin and Neidell 2011. 70. Abras and others 2012 for the World Develop- 43. Henderson, Kuncoro, and Turner 1995; Hen- ment Report 2013. derson, Lee, and Lee 2001. 71. Hanushek and Woessmann 2008. Lee and New- 44. Long and Zhang 2011; Mano and others, forth- house (2012, for the World Development Re- coming; McCormick 1999; Schmitz and Nadvi port 2013) extend the analysis by Hanushek 1999; Sonobe and Otsuka 2006a. and Woessmann (2008) by conducting a cohort 45. Feenstra 1998; Hummels, Ishii, and Yi 2001; analysis, matching achievement test scores to Yeats 2001; Yi 2003. employment outcomes. 46. Fernandes 2007. 72. Lee and Newhouse 2012 for the World Devel- 47. Harrison, Martin, and Nataraj 2011. opment Report 2013. 48. Harrison 1994; Levinsohn 1993; Muendler 73. Gennaioli and others 2011. 2004. 74. Welzel 2012 for the World Development Report 49. Aw, Chung, and Roberts 2000; Aw, Roberts, and 2013. Winston 2007; Blalock and Gertler 2004; De 75. World Development Report 2013 team calcu- Loecker 2007; Fernandes and Isgut 2007; Ha- lations based on national household surveys. llward-Driemeier, Larossi, and Sokoloff 2002; Employed are considered overqualified if their Lileeva 2004; Matthias Arnold and Javorcik education (years of schooling) is one standard 2009; Park and others 2010; Van Biesebroeck deviation above the mean observed for the re- 2005. spective occupation; they are considered under- 50. Aitken, Hanson, and Harrison 1997; Görg qualified if their education is one standard devia- and Strobl 2005; Javorcik 2012 for the World tion below the mean observed per occupation. Development Report 2013; Kee 2010; Poole, The two-digit ILO definition of occupations is forthcoming. used. 51. Alfaro and Chen 2011. 76. This is a comparison of relative constraints. For 52. Unni and Rani 2008. each country, the percentage of firms that rate 53. Bolaky and Freund 2004; Chang, Kaltani, and skills to be a severe or very severe constraint Loayza 2009; DeJong and Ripoll 2006. is divided by the average of such rating for all 54. Blalock and Gertler 2005; Borensztein, De other obstacles. This allows for a cross-country Gregorio, and Lee 1998; Glass and Saggi 2002; comparison independent of the level of the sub- Kinoshita 2000; Kokko, Tansini, and Zejan 1996; jective answers. Javorcik 2012 for the World Development Re- 77. Estimating the conditional correlation between port 2013. the relative skill constraint and a number of 55. Hallegatte and others 2011. variables using the World Bank’s enterprise sur- 56. UNEP 2011. veys for 105 countries, one finds a significant 57. This estimate is based on a social cost of a met- correlation with firm size (positive), age (nega- ric ton of carbon of US$20 in 1995 (Fankhauser tive), exporting activity (positive), innovative Valuing jobs 181 activity (positive), and manufacturing sector skills, have between 40 and 50 percent of their (positive). students in the vocational track. In the develop- 78. For country examples in Georgia, the former ing world, the average is about 33 percent based Yugoslav Republic of Macedonia, Poland, and on UNESCO statistics (http://www.uis.unesco Ukraine, see Rutkowski (2008); Rutkowski .org/Pages/default.aspx). (2010); World Bank (2009b); and World Bank 89. See Tan and Nam (2012). For advanced coun- (2011a). tries, on average, the employability of students 79. Di Gropello, Kruse, and Tandon 2011; Di Gro- graduating from TVE is similar to that of stu- pello, Tan, and Tandon 2010. dents’ graduating from general tracks, but they 80. Almeida and Filho 2012. earn somewhat lower incomes. 81. Specialized investment climate surveys of un- 90. Indian Planning Commission 2008. registered firms, conducted by the IFC in Af- 91. Blom and Saeki 2011. ghanistan, Angola, Botswana, Burkina Faso, 92. World Bank 2012a. Cameroon, Cape Verde, the Democratic Repub- 93. World Bank 2011b. lic of Congo, the Arab Republic of Egypt, Mali, 94. WDR 2013 team estimates based on Mincer and Nepal. Firm owners are asked to single out regressions for 545 household surveys, which the most important obstacle to operating their include years of education as well as potential business, with the number of obstacles varying work experience (Montenegro and Patrinos by survey. The highest percentage is recorded 2012, for the World Development Report 2013). in Egypt, where 6 percent of firm owners chose 95. McKinsey & Company 2012. Managers were skills as the most important obstacle of a total of given four choices from which to choose the 21 choices; the lowest was in Afghanistan, where biggest bottleneck to hiring: education (a 5 percent of firm owners named skills among 12 school-leaving certificate or degree); technical obstacles. Rural investment climate assessments skills (for instance, welding or accounting) not were made in Benin, Burkina Faso, Ethiopia, necessarily taught at school; social skills (for Indonesia, Mozambique, Nigeria, Tanzania, Sri instance, attitude, workplace behavior, arriving Lanka, and the Republic of Yemen and returned on time, trustworthiness); or work experience. similar results as to the importance of skills 96. ILO 2011b; Nübler 2008. The ILO has also con- ducted a significant number of school-to-work (Sawada 2011). transition surveys that provide insights into the 82. Training funds, set up in many countries and constraints and options for young people enter- often financed through payroll taxation, as in ing the labor market. See, for instance, Matsu- Brazil, Chile, Mexico, or Singapore, provide fi- moto and Elder (2010). nancing for training. Almeida, Behrman, and 97. Biavaschi and others 2012 for the World De- Robalino, 2012. velopment Report 2013. Interestingly, for Ger- 83. In Latin America, 10 percent of small firms many, the initial transition does not hinge on report that this is their major reason for not finding employment in the training firm. Even intensifying in-house training. World Develop- though training and on-the-job learning takes ment Report 2013 team calculations based on place in a specific firm, skills learned appear to enterprise surveys of Latin American countries be transferable (Winkelmann 1996). (excluding Brazil). 98. For a literature review, see Biavaschi and oth- 84. Assaad 1997. ers (2012 for the World Development Report 85. See examples for Mediterranean countries in 2013). Biavaschi and others (2012 for the World De- 99. See Biavaschi and others 2012, for the World velopment Report 2013). Development Report 2013. 86. Almeida, Behrman, and Robalino 2012. 100. Cunha, Heckman, and Schennach 2010; Hei- 87. Estimates from studies for specific years. In- neck and Anger 2010. In the Dominican Re- dia (2004 data), Pakistan (2004 data), and Sri public, early results from a life skills training for Lanka (2002 data): Riboud, Savchenko, and poor youths (16 and 29 years of age who had Tan (2007); Indonesia (1993, 1997, 2000, 2007 not completed secondary school) show sig- data): Newhouse and Suryadarma (2011); nificant results. For young female participants, Rwanda (1999–2001 data): Lassibille and Tan pregnancy rates are down and employment (2005); and Thailand (1989–95 data): Moen- chances up. For both women and men, job sat- jak and Worswick (2012). isfaction and aspirations improved markedly 88. No golden rule exists about how many second- (Ibarraran and others 2012). ary students should be in the vocational branch. 101. Glaeser and Mare 2001; Kimura 2011; Mas and Most advanced countries, with stronger de- Moretti 2009; Peri 2002. Iranzo and Peri (2009) mands—and rewards—for specific technical find that in the United States, sizable spill- 182 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 overs exist through jobs whose holders have a ery Mechanisms: Impacts on Routine Preventa- higher education degree (which is a proxy for tive Health Clinic Visits in Burkina Faso.” Policy advanced skills). One additional year of college Research Working Paper Series 5958, World education per worker is associated with a spill- Bank, Washington, DC. over—in addition to the effect on the student’s Alfaro, Laura, and Maggie Xiaoyang Chen. 2011. “Se- income and employment chances—of increas- lection, Reallocation, and Knowledge Spillovers: ing the respective state’s productivity growth by Identifying the Impact of Multinational Activity 6 to 9 percent. See also Ciccone and Peri 2006; on Aggregate Productivity.” Paper presented at Moretti 2004a; Moretti 2004b; Moretti 2004c; the World Bank Conference on Structural Trans- and Rosenthal and Strange 2008. formation and Economic Growth, Washington, 102. Foster and Rosenzweig 1996. DC, October 6. 103. Yamauchi 2007. See also for Ghana, Conley and Almeida, Rita, Jere R. Behrman, and David A. Ro- Udry 2010. balino, eds. 2012. The Right Skill for the Job? Re- 104. Almeida, Behrman, and Robalino 2012. thinking Effective Training Policies for Workers. 105. Lin and Lim 2011; Tan and Nam 2012. Washington, DC: World Bank. 106. World Bank and MIGA 2006. Almeida, Rita, and Jaime Filho. 2012. “Technology 107. World Development Indicators (database), Adoption and the Demand for Skills: Learning World Bank, Washington, DC. http://data.world from the Time to Fill Job Vacancies in LAC.” bank.org/data-catalog/world-development- World Bank, Washington, DC. Processed. indicators. Amjad, Rashid. 2005. “Skills and Competitiveness: 108. Jensen 2010. Can Pakistan Break Out of the Low-Level Skills 109. Jensen, forthcoming. Trap?” Pakistan Development Review 44 (4): 110. For a discussion on low-skill, low-productivity 387–409. traps, see Acemoglu (1997); Almeida, Behrman, Anker, Richard. 2003. “Measuring Decent Work with and Robalino (2012); Amjad (2005); Atal and Statistical Indicators.” International Labour Re- others (2010); Munshi (2011); and Snower view 142 (2): 147–77. (1994). See also, on the relationship between Assaad, Ragui. 1997. “The Effects of Public Sector human capital accumulation, product diversifi- Hiring and Compensation Policies on the Egyp- cation, and attraction of FDI in Central Amer- tian Labor Market.” World Bank Economic Review ica, Bashir, Gindling, and Oviedo (2012 for the 11 (1): 85–118. World Development Report 2013). Atal, Vidya, Kaushik Basu, John Gray, and Travis Lee. 2010. “Literacy Traps: Society-Wide Education and Individual Skill Premia.” International Jour- References nal of Economic Theory 6 (1): 137–48. Atkin, David. 2009. “Working for the Future: Female The word processed describes informally reproduced Factory Work and Child Health in Mexico.” works that may not be commonly available through Princeton University, Princeton, NJ. Processed. libraries. Attanasio, Orazio, and Valerie Lechene. 2002. “Tests Abras, Ana, Alejandro Hoyos, Ambar Narayan, and of Income Pooling in Household Decisions.” Re- Sailesh Tiwari. 2012. “Inequality of Opportuni- view of Economic Dynamics 5 (4): 720–48. ties in the Labor Market: Evidence from Life in Aw, Bee Yan, Sukkyun Chung, and Mark J. Roberts. Transition Surveys in Europe and Central Asia.” 2000. “Productivity and Turnover in the Export Background paper for the WDR 2013. Market: Micro-Level Evidence from the Republic Acemoglu, Daron. 1997. “Technology, Unemploy- of Korea and Taiwan (China).” World Bank Eco- ment and Efficiency.” European Economic Review nomic Review 14 (1): 65–90. 41 (3–5): 525–33. Aw, Bee Yan, Mark J. Roberts, and Tor Winston. 2007. Aitken, Brian, Gordon H. Hanson, and Ann E. Har- “Export Market Participation, Investments in rison. 1997. “Spillovers, Foreign Investment, and R&D and Worker Training, and the Evolution Export Behavior.” Journal of International Eco- of Firm Productivity.” World Economy 30 (1): nomics 43 (1–2): 103–32. 83–104. Akerlof, George A., and Rachel E. Kranton. 2010. Backiny-Yetna, Prospere, and Quentin Wodon. 2011. Identity Economics: How Our Identities Shape “Gender Labor Income Shares and Human Capi- Our Work, Wages, and Well-Being. Princeton, NJ: tal Investment in the Republic of Congo.” In Gen- Princeton University Press. der Disparities in Africa’s Labor Market, ed. Jorge Akresh, Richard, Damien de Walque, and Harounan Saba-Arbache, Alexandre Kolev, and Ewa Filip- Kazianga. 2012. “Alternative Cash Transfer Deliv- iak, 359–80. Washington, DC: World Bank. Valuing jobs 183 Bacolod, Marigee, Bernardo S. Blum, and William Bowen, Alex. 2012. “ ‘Green’ Growth, ‘Green’ Jobs and C. Strange. 2009. “Skills in the City.” Journal of Labour Markets.” Policy Research Working Paper Urban Economics 65 (2): 136–53. Series 5990, World Bank, Washington, DC. Barrick, Murray R., and Michael K. Mount. 1991. Broersma, Lourens, and Jan Oosterhaven. 2009. “Re- “The Big Five Personality Dimensions and Job gional Labor Productivity in the Netherlands: Performance: A Meta Analysis.” Personnel Psy- Evidence of Agglomeration and Congestion Ef- chology 44 (1): 1–26. fects.” Journal of Regional Science 49 (3): 483–511. Bashir, Sajitha, T. H. Gindling, and Ana Maria Oviedo. Chang, Roberto, Linda Kaltani, and Norman V. 2012. “Better Jobs in Central America: The Role Loayza. 2009. “Openness Can Be Good for of Human Capital.” Background paper for the Growth: The Role of Policy Complementarities.” WDR 2013. Journal of Development Economics 90 (1): 33–49. Beegle, Kathleen, Markus Goldstein, and Nina Rosas. Ciccone, Antonio, and Giovanni Peri. 2006. “Identi- 2011. “A Review of Gender and the Distribution fying Human-Capital Externalities: Theory with of Household Assets.” Background Paper for Applications.” Review of Economic Studies 73 (2): the WDR 2012, World Bank, Washington, DC. 381–412. Processed. Clark, Andrew. 2005. “What Makes a Good Job? Evi- Bell, David N. F., and David G. Blanchflower. 2010. dence from OECD Countries.” In Job Quality and “Youth Unemployment: Déjà Vu?” Discussion Employer Behavior, ed. Stephen Bazen, Claudio Paper Series 4705, Institute for the Study of Lucifora, and Wiemer Salverda, 11–30. London: Labor, Bonn. Palgrave Macmillan. ———. 2011. “The Crisis, Policy Reactions and Conley, Timothy G., Fredrick Flyer, and Grace R. Attitudes to Globalization and Jobs.” Discus- Tsiang. 2003. “Spillovers from Local Market sion Paper Series 5680, Institute for the Study of Human Capital and the Spatial Distribution of Labor, Bonn. Productivity in Malaysia.” Advances in Economic Biavaschi, Costanza, Werner Eichhorst, Corrado Gi- Analysis and Policy 3 (1): 1–45. ulietti, Michael J. Kendzia, Alexander Muravyev, Conley, Timothy G., and Christopher Udry. 2010. Janneke Pieters, Nuría Rodríguez-Planas, Ri- “Learning about a New Technology: Pineapple carda Schmidl, and Klaus F. Zimmermann. 2012. in Ghana.” American Economic Review 100 (1): “Youth Unemployment and Vocational Train- 35–69. ing.” Background paper for the WDR 2013. Cunha, Flavio, James J. Heckman, and Susanne Bjørkhaug, Ingunn, Anne Hatløy, Tewodros Kebede, Schennach. 2010. “Estimating the Technology and Huafeng Zhang. 2012. “Perception of Good of Cognitive and Noncognitive Skill Formation.” Jobs: Colombia.” Background paper for the WDR Econometrica 78 (3): 883–931. 2013. Dani, Anis, Sarah Forster, Mirsada Muzur, Dino Blalock, Garrick, and Paul J. Gertler. 2004. “Learning Djipa, Paula Lytle, and Patrizia Poggi. 1999. A So- from Exporting Revisited in a Less Developed Setting.” Journal of Development Economics 75 cial Assessment of Bosnia and Herzegovina. Wash- (2): 397–16. ington, DC: World Bank. ———. 2005. “Foreign Direct Investment and Ex- De Loecker, Jan. 2007. “Do Exports Generate Higher ternalities: The Case for Public Intervention.” In Productivity? Evidence from Slovenia.” Journal of Does Foreign Direct Investment Promote Develop- International Economics 73 (1): 69–98. ment?, ed. Theodore H. Moran, Edward M. Gra- de Mel, Suresh, David J. McKenzie, and Christopher ham, and Magnus Blomstrom, 73–106. Wash- Woodruff. 2009. “Are Women More Credit Con- ington, DC: Peterson Institute for International strained? Experimental Evidence on Gender and Economics. Microenterprise Returns.” Applied Economics 1 Blom, Andreas, and Hiroshi Saeki. 2011. “Employabil- (3): 1–32. ity and Skill Set of Newly Graduated Engineers in DeJong, David N., and Marla Ripoll. 2006. “Tariffs India.” Working Paper Series 5640, World Bank, and Growth: An Empirical Exploration of Con- Washington, DC. tingent Relationships.” Review of Economics and Bolaky, Bineswaree, and Caroline Freund. 2004. Statistics 88 (4): 625–40. “Trade, Regulations, and Growth.” Policy Re- DFID (Department for International Development, search Working Paper Series 3255, World Bank, United Kingdom). 2010. Engaging the Private Washington, DC. Sector in Skills Development. London: DFID. Borensztein, Eduardo, José De Gregorio, and Jong- Di Gropello, Emanuela, Aurelien Kruse, and Prateek Wha Lee. 1998. “How Does Foreign Direct In- Tandon. 2011. Skills for the Labor Market in In- vestment Affect Economic Growth?” Journal of donesia: Trends in Demand, Gaps, and Supply. International Economics 45 (1): 115–35. Washington, DC: World Bank. 184 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Di Gropello, Emanuela, Hong Tan, and Prateek Tan- Fredman, Sandra. 2011. Discrimination Law. Oxford: don. 2010. Skills for the Labor Market in the Phil- Oxford University Press. ippines. Washington, DC: World Bank. ———. 2012. “Anti-Discrimination Laws and Work Diallo, Yacouba, Frank Hagemann, Alex Etienne, in the Developing World: A Thematic Overview.” Yonca Gurbuzer, and Farhad Mehran. 2010. Background paper for the WDR 2013. Global Child Labour Developments: Measuring Freedman, Matthew L. 2008. “Job Hopping, Earnings Trends from 2004 to 2008. Geneva: International Dynamics, and Industrial Agglomeration in the Labour Organization. Software Publishing Industry.” Journal of Urban Duranton, Gilles. 2006. “Human Capital Externali- Economics 64 (3): 590–600. ties in Cities: Identification and Policy Issues.” In Gennaioli, Nicola, Rafael La Porta, Florencio Lopez- A Companion to Urban Economics, ed. Richard J. de-Silanes, and Andrei Shleifer. 2011. “Human Arnott and Daniel P. McMillen, 24–39. Oxford: Capital and Regional Development.” Working Blackwell. Paper Series 17158, National Bureau of Eco- ———. 2008. “Viewpoint: From Cities to Produc- nomic Research, Cambridge, MA. tivity and Growth in Developing Countries.” Ghai, Dharam. 2003. “Decent Work: Concept and Canadian Journal of Economics 41 (3): 689–736. Indicators.” International Labour Review 142 (2): ———. 2012. “Agglomeration and Jobs in Develop- 113–45. ing Countries.” Background paper for the WDR GHK. 2009. “The Impacts of Climate Change on Eu- 2013. ropean Employment and Skills in the Short to European Court of Human Rights. 2007. D.H. Medium-Term: A Review of the Literature, Final and Others v. The Czech Republic [GC], No. Report to the European Commission Directorate 57325/00. European Court of Human Rights, for Employment.” Social Affairs and Inclusion Strasbourg. Restructuring Forum No. 2, London. Fafchamps, Marcel, David J. McKenzie, Simon Gill, Indermit, Fred Fluitman, and Amit Dar. 2000. Quinn, and Christopher Woodruff. 2011. “When Vocational Education and Training Reform: Is Capital Enough to Get Female Microenter- Matching Skills to Markets and Budgets. Oxford: prises Growing? Evidence from a Randomized Oxford University Press. Experiment in Ghana.” Working Paper Series Glaeser, Edward, and Janet Kohlhase. 2004. “Cities, 17207, National Bureau of Economic Research, Regions and the Decline of Transport Costs.” Cambridge, MA. Papers in Regional Science 83 (1): 197–228. Fan, Shenggen, and Connie Chan-Kang. 2008. “Re- Glaeser, Edward L., and David C. Mare. 2001. “Cit- gional Road Development, Rural and Urban ies and Skills.” Journal of Labor Economics 19 (2): Poverty: Evidence from China.” Transport Policy 316–42. 15 (5): 305–48. Glaeser, Edward L., and Matthew G. Resseger. 2010. Fankhauser, Samuel. 1994. “The Economic Costs of “The Complementarity between Cities and Global Warming Damage: A Survey.” Global En- vironmental Change 4 (4): 301–9. Skills.” Journal of Regional Science 50 (1): 221–44. Farley, Melissa. 2003. Prostitution, Trafficking and Glass, Amy Jocelyn, and Kamal Saggi. 2002. “Intellec- Traumatic Stress. Binghamton, NY: Haworth tual Property Rights and Foreign Direct Invest- Maltreatment & Trauma Press. ment.” Journal of International Economics 56 (2): Feenstra, Robert C. 1998. “Integration of Trade and 387–410. Disintegration of Production in the Global Glewwe, Paul W. 2004. “An Overview of Economic Economy.” Journal of Economic Perspectives 12 Growth and Household Welfare in Vietnam in (4): 31–50. the 1990s.” In Economic Growth, Poverty, and Fernandes, Ana M. 2007. “Trade Policy, Trade Vol- Household Welfare in Vietnam, ed. Paul Glewwe, umes and Plant-Level Productivity in Colom- Bina Agarwal, and David Dollar, 1–26. Washing- bian Manufacturing Industries.” Journal of In- ton, DC: World Bank. ternational Economics 71 (1): 52–71. Görg, Holger, and Eric Strobl. 2005. “Spillovers from Fernandes, Ana M., and Alberto Isgut. 2007. “Learn- Foreign Firms through Worker Mobility: An Em- ing-by-Exporting Effects: Are They for Real?” pirical Investigation.” Scandinavian Journal of MPRA Paper 3121, Munich Personal RePEc Economics 107 (4): 693–709. Archive, University Library of Munich, Munich. Grantham-McGregor, Sally, Yin Bun Cheung, San- Foster, Andrew D., and Mark R. Rosenzweig. 1996. tiago Cueto, Paul Glewwe, Linda Richter, Barbara “Technical Change and Human-Capital Returns Strupp, and International Child Development and Investments: Evidence from the Green Steering Group. 2007. “Development Potential Revolution.” American Economic Review 86 (4): in the First 5 Years for Children in Developing 931–53. Countries.” Lancet 369 (9555): 60–70. Valuing jobs 185 Hallegatte, Stephane, Geoffrey Heal, Marianne Fay, penditures? Evidence from Côte d’Ivoire.” Oxford and David Treguer. 2011. “From Growth to Green Bulletin of Economics and Statistics 57 (1): 77–96. Growth: A Framework.” Policy Research Working Holmlund, Bertil, and Donald Storrie. 2002. “Tem- Paper Series 5872, World Bank, Washington, DC. porary Work in Turbulent Times: The Swedish Hallward-Driemeier, Mary, Giuseppe Larossi, and Experience.” Economic Journal 112: 245–69. Kenneth L. Sokoloff. 2002. “Exports and Manu- Human Rights Watch. 2011. A Poisonous Mix: Child facturing Productivity in East Asia: A Compara- Labor, Mercury, and Artisanal Gold Mining in tive Analysis with Firm-Level Data.” Working Mali. New York: Human Rights Watch. Paper Series 8894, National Bureau of Economic Hummels, David, Jun Ishii, and Kei Mu Yi. 2001. “The Research, Cambridge, MA. Nature and Growth of Vertical Specialization in Hanushek, Eric A., and Ludger Woessmann. 2008. World Trade.” Journal of International Economics “The Role of Cognitive Skills in Economic De- 54 (1): 75–96. velopment.” Journal of Economic Literature 46 (3): Ibarrarán, Pablo, Laura Ripani, Bibiana Taboada, 607–88. Juan Miguel Villa, and Brigida Garcia. 2012. “Life Harrison, Ann E. 1994. “Productivity, Imperfect Skills, Employability and Training for Disadvan- Competition and Trade Reform: Theory and taged Youth: Evidence from a Randomized Eval- Evidence.” Journal of International Economics 36 uation Design.” Discussion Paper Series 6617, (1–2): 53–73. Institute for the Study of Labor, Bonn. Harrison, Ann E., Leslie A. Martin, and Shanthi Nata- IEA (International Energy Agency) 2011. CO2 Emis- raj. 2011. “Learning Versus Stealing: How Impor- sions from Fuel Combustion—Highlights. Or- tant Are Market-Share Reallocations to India’s ganization for Economic Co-operation and Productivity Growth?” Working Paper Series Development/IEA: Paris. 16733, National Bureau of Economic Research, IFC (International Finance Corporation). 2012. IFC’s Cambridge, MA. Performance Standard 2. Washington, DC: IFC. Hassel, Anke. 2008. “The Evolution of a Global Labor ———. Forthcoming. “Assessing Private Sector Con- Governance Regime.” Governance: An Interna- tributions to Job Creation.” Jobs Study, IFC, tional Journal of Policy, Administration and Insti- Washington, DC. tutions 21 (2): 231–51. ILO (International Labour Organization). 1998. Dec- Hatløy, Anne, Tewodros Kebede, Huafeng Zhang, laration on Fundamental Principles and Rights at and Ingunn Bjørkhaug. 2012. “Perception of Work. Adopted by the International Labour Con- Good Jobs: Sierra Leone.” Background paper for ference at its 86th session, ILO, Geneva, June 18. the WDR 2013. ———. 2002. Decent Work and the Informal Econ- Heath, Rachel, and Mushfiq Mobarak. 2011. “Supply omy. Geneva: ILO. and Demand Side Constraints on Educational Investment: Evidence from Garment Sector ———. 2003. Safety in Numbers: Pointers for a Global Jobs and a Girls’ Schooling Subsidy Program in Safety Culture at Work. Geneva: ILO. Bangladesh.” Yale University, New Haven, CT. ———. 2009. The Cost of Coercion. Geneva: ILO. Processed. ———. 2010a. Accelerating Action against Child La- Heineck, Guido, and Silke Anger. 2010. “The Returns bour. Geneva: ILO. to Cognitive Abilities and Personality Traits in ———. 2010b. The Implementation and Impact of Germany.” Labour Economics 17 (3): 535–46. National Qualification Frameworks: Report of Helliwell, John, and Robert Putnam. 2004. “The So- a Study in 16 Countries. Geneva: ILO. cial Context of Well-Being.” Philosophical Trans- ———. 2011a. Coverage of Domestic Workers by Key actions of the Royal Society B 359: 1435–46. Working Conditions Laws. Geneva: ILO. Henderson, J. Vernon. 2005. “Urbanization and ———. 2011b. Skills for Employment Policy Brief: Up- Growth.” In Handbook of Economic Growth, Vol. grading Informal Apprenticeship Systems. Geneva: 1B, ed. Philippe Aghion and Steven Durlauf, ILO. 1543–91. Amsterdam: Elsevier. ———. 2012a. General Survey on the Fundamental Henderson, Vernon, Ari Kuncoro, and Matt Turner. Conventions Concerning Rights at Work in Light 1995. “Industrial Development in Cities.” Journal of the ILO Declaration on Social Justice for a Fair of Political Economy 103 (5): 1067–90. Globalization, 2008. Geneva: ILO. Henderson, Vernon, Todd Lee, and Yung Joon Lee. ———. 2012b. ILO Global Estimate of Forced Labour: 2001. “Scale Externalities in Korea.” Journal of Results and Methodology. Geneva: ILO. Urban Economics 49 (3): 479–504. Indian Planning Commission. 2008. Eleventh Five Hoddinott, John, and Lawrence Haddad. 1995. “Does Year Plan, 2007–2012. New Delhi: Oxford Uni- Female Income Share Influence Household Ex- versity Press and Government of India. 186 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 IPCC (Intergovernmental Panel on Climate Change). Krishnan, Pramila, and Sofya Krutikova. 2010. “Skill 2007. IPCC Fourth Assessment Report: Climate Formation in Bombay’s Slums.” Cambridge Change 2007 (AR4). Geneva: IPCC. Working Papers in Economics 1010, University Iranzo, Susana, and Giovanni Peri. 2009. “School- of Cambridge, Cambridge, U.K. ing Externalities, Technology and Productivity: Lassibille, Gerard, and Jee-Peng Tan. 2005. “The Re- Theory and Evidence from U.S. States.” Review of turns to Education in Rwanda.” Journal of African Economics and Statistics 91 (2): 420–31. Economies 14 (1): 92–116. ITUC (International Trade Union Confederation). Lee, Jean, and David Newhouse. 2012. “Cognitive 2011. Annual Survey of Violations of Trade Union Skills and Labor Market Outcomes.” Background Rights, Foreword: 2011 Survey. Brussels: ITUC. paper for the WDR 2013. Javorcik, Beata Smarzynska. 2012. “Does FDI Bring Lee, Sing Kong, Chor Boon Goh, Birger Fredriksen, Good Jobs to Host Countries?” Background pa- and Jee-Peng Tan. 2008. Toward a Better Future: per for the WDR 2013 Education and Training for Economic Develop- Jensen, Robert. 2010. “The (Perceived) Returns to Ed- ment in Singapore since 1965. Washington, DC: ucation and the Demand for Schooling.” Quar- World Bank; Singapore: National Institute of terly Journal of Economics 125 (2): 515–48. Education. ———. Forthcoming. “Do Labor Market Opportu- Levi, Margaret, Christopher Adolph, Aaron Erlich, nities Affect Young Women’s Work and Family Anne Greenleaf, Milli Lake, and Jennifer Noveck. Decisions? Experimental Evidence From India.” 2012. “Aligning Rights and Interests: Why, When, Quarterly Journal of Economics. and How to Uphold Labor Standards.” Back- Kaveh, Majlesi. 2012. “Labor Market Opportunities ground paper for the WDR 2013. and Sex-Specific Investment in Children’s Hu- Levinsohn, James. 1993. “Testing the Imports-as- man Capital: Evidence from Mexico.” University Market-Discipline Hypothesis.” Journal of Inter- of Texas at Austin, Austin, TX. Processed. national Economics 35 (1–2): 1–22. Kebede, Tewodros, Anne Hatløy, Huafeng Zhang, Lileeva, Alla. 2004. “Import Competition and Selec- and Ingunn Bjørkhaug. 2012. “Perception of tion.” York University, Toronto. Processed. Good Jobs: Egypt.” Background paper for the Lin, Cheng Ton, and David Lim. 2011. “Foreign Aid to WDR 2013. Expertise Export.” In Heart Work 2: EDB & Part- Kee, Hiau Looi. 2010. “Uncovering Horizontal Spill- ners: New Frontiers for the Singapore Economy, overs: When Foreign and Domestic Firms Share ed. Chan Chin Bock, 124–29. Singapore: Straits Common Local Input Suppliers.” World Bank, Times Press. Washington DC. Processed. Liu, Zhiqiang. 2007. “The External Returns to Edu- Kilroy, Austin. 2011. “Business Bridging Ethnicity.” cation: Evidence from Chinese Cities.” Journal of PhD thesis, Massachusetts Institute of Technol- Urban Economics 61 (3): 542–64. ogy, Cambridge, MA. Long, Cheryl, and Xiaobo Zhang. 2011. “Cluster- Kim, Gwang-Jo. 2002. “Education Policies and Re- Based Industrialization in China: Financing and form in South Korea.” In Secondary Education in Performance.” Journal of International Economics Africa: Strategies for Renewal, 29–40. Washington, 84 (1): 112–23. DC: World Bank. Luke, Nancy, and Kaivan Munshi. 2011. “Women as Kimura, Yuichi. 2011. “Knowledge Diffusion and Agents of Change: Female Income and Mobility Modernization of Rural Industrial Clusters: A in India.” Journal of Development Economics 94 Paper-Manufacturing Village in Northern Viet- (1): 1–17. nam.” World Development 39 (12): 2105–18. Mano, Yukichi, Alhassa Iddrisu, Yutaka Yoshino, and Kinoshita, Yuko. 2000. “R&D and Technology Spill- Tetsushi Sonobe. Forthcoming. “How Can Mi- overs via FDI: Innovation and Absorptive Capac- cro and Small Enterprises in Sub-Saharan Africa ity.” Working Paper Series 349, William Davidson Become More Productive? The Impacts of Ex- Institute, Ann Arbor, MI. perimental Basic Management Training.” World Knudsen, Eric, James Heckman, Judy Cameron, and Development. Jack Shonkoff. 2006. “Economic, Neurobio- Mas, Alexandre, and Enrico Moretti. 2009. “Peers logical, and Behavioral Perspectives on Building at Work.” American Economic Review 99 (1): America’s Future Workforce.” Proceedings of the 112–45. National Academy of Sciences 103 (27): 10155–62. Matsumoto, Makiko, and Sara Elder. 2010. “Char- Kokko, Ari, Ruben Tansini, and Mario C. Zejan. 1996. acterizing the School-to-Work Transition of “Local Technological Capability and Productivity Young Men and Women: Evidence from the ILO Spillovers from FDI in the Uruguayan Manufac- School-to-Work Transition Surveys.” Employ- turing Sector.” Journal of Development Studies 32 ment Working Paper 51, International Labour (4): 602–11. Organization, Geneva. Valuing jobs 187 Matthias Arnold, Jens, and Beata S. Javorcik. 2009. tivating Justice in the Developing World, ed. Janine “Gifted Kids or Pushy Parents? Foreign Direct Berg and David Kucera, 64–79. New York: Pal- Investment and Plant Productivity in Indonesia.” grave Macmillan; Geneva: International Labour Journal of International Economics 79 (1): 42–53. Organization. McCormick, Dorothy. 1999. “African Enterprise Nunn, Nathan, and Leonard Wantchekon. 2011. Clusters and Industrialization: Theory and Real- “The Slave Trade and the Origins of Mistrust ity.” World Development 27 (9): 1531–51. in Africa.” American Economic Review 101 (7): McKinsey & Company. 2012. “Survey on African Em- 3221–52. ployment.” McKinsey & Company, New York. OECD (Organisation for Economic Co-operation Processed. and Development). 1999. The Environmental Moenjak, Thammarak, and Christopher Worswick. Goods and Services Industry: Manual for Data 2012. “Vocational Education in Thailand: A Collection and Analysis. Paris: OECD. Study of Choice and Returns.” Economics of Edu- ———. 2012. Literacy, Numeracy and Problem Solv- cation Review 22: 99–107. ing in Technology-Rich Environments: Framework Montenegro, Claudio E., and Harry Anthony Pa- for the OECD Survey of Adult Skills. Paris: OECD. trinos. 2012. “Returns to Schooling around the Oral, Isil, Indhira Santos, and Fan Zhang. 2011. World.” Background paper for the WDR 2013. “Climate Change Policies and Employment in Moretti, Enrico. 2004a. “Estimating the Social Return Eastern Europe and Central Asia.” World Bank, to Higher Education: Evidence from Longitudi- Washington, DC. Processed. nal and Repeated Cross-Sectional Data.” Journal Otsuka, Keijiro, and Frank Place. 2001. Land Tenure of Econometrics 121 (1–2): 175–212. and Natural Resource Management: A Compara- ———. 2004b. “Human Capital Externalities in Cit- tive Study of Agrarian Communities in Asia and ies.” In Handbook of Regional and Urban Econom- Africa. Baltimore: Johns Hopkins University ics, Vol. 4, ed. J. V. Henderson and Jacques Fran- Press. cois Thisse, 2243–92. Amsterdam: Elsevier. Overman, Henry G., and Anthony J. Venables. 2005. ———. 2004c. “Workers’ Education, Spillovers, and “Cities in the Developing World.” Discussion Productivity: Evidence from Plant-Level Produc- Paper 695, Centre for Economic Performance, tion Functions.” American Economic Review 94 London. (3): 656–90. Park, Albert, Dean Yang, Xinzheng Shi, and Yuan Ji- Muendler, Marc Andreas. 2004. “Trade, Technology, ang. 2010. “Exporting and Firm Performance: and Productivity: A Study of Brazilian Manufac- Chinese Exporters and the Asian Financial Cri- turers, 1986–1998.” Working Paper Series 1148, sis.” Review of Economics and Statistics 92 (4): CESifo, Munich. 822–42. Munshi, Kaivan. 2011. “Strength in Numbers: Net- Parry, Ian W. H., and Govinda Timilsina. 2010. works as a Solution to Occupational Traps.” Re- “How Should Passenger Travel in Mexico City view of Economic Studies 78 (3): 1069–101. Be Priced?” Journal of Urban Economics 68 (2): Muravyev, Alexander. 2008. “Human Capital Exter- 167–82. nalities: Evidence from the Transition Economy Peri, Giovanni. 2002. “Young Workers, Learning, and of Russia.” Economics of Transition 16 (3): 415–43. Agglomerations.” Journal of Urban Economics 52 Nam, Chang Chin. 2011. “Equipping the Dream (3): 582–607. Catchers.” In Heart Work 2: EDB & Partners: New Pingali, Prabhu L., Yves Bigot, and Hans P. Binswan- Frontiers for the Singapore Economy, ed. Chan ger. 1987. Agricultural Mechanization and the Chin Bock, 46–54. Singapore: Straits Times Press. Evolution of Farming Systems in Sub-Saharan Af- Newhouse, David, and Daniel Suryadarma. 2011. rica. Baltimore: Johns Hopkins University Press “The Value of Vocational Education: High School for the World Bank. Type and Labor Market Outcomes in Indonesia.” Poole, Jennifer P. Forthcoming. “Knowledge Transfers World Bank Economic Review 25 (2): 296–322. from Multinational to Domestic Firms: Evidence Newitt, Kirsten. 2012. “Private Sector Voluntary Ini- from Worker Mobility.” Review of Economics and tiatives on Labour Standards.” Background paper Statistics. for the WDR 2013. Quisumbing, Agnes R., and John A. Maluccio. 2003. Norton, Andrew, and Arjan de Haan. 2012. “Social “Resources at Marriage and Intrahousehold Al- Cohesion: Theoretical Debates and Practical location: Evidence from Bangladesh, Ethiopia, Applications with Respect to Jobs.” Background Indonesia, and South Africa.” Oxford Bulletin of paper for the WDR 2013. Economics and Statistics 65 (3): 283–327. Nübler, Irmgard. 2008. “Institutions and the Finance Rappaport, Jordan. 2008. “A Productivity Model of of General Skills Training: Evidence from Africa.” City Crowdedness.” Journal of Urban Economics In In Defence of Labour Market Institutions: Cul- 63 (2): 715–22. 188 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Riboud, Michelle, Yevgeniya Savchenko, and Hong Tan, Jee-Peng, and Yoo-Jeung Nam. 2012. “Pre- Tan. 2007. The Knowledge Economy and Educa- Employment Technical and Vocational Educa- tion and Training in South Asia. Washington, DC: tion and Training: Fostering Relevance, Effective- World Bank. ness, and Efficiency.” In Right Skills for the Job? Richards, Peter. 1994. “Issues in Manpower Analy- Rethinking Training Policies for Workers, ed. Rita sis.” In New Approaches to Manpower Planning Almeida, Jere R. Behrman, and David Robalino, and Analysis, ed. Peter Richards and Rashid 67–104. Washington, DC: World Bank. Amjad, 1–14. Geneva: International Labour UCW (Understanding Child Work). 2010. Child Organization. Labor: Trends, Challenges and Policy Responses. Rosenthal, Stuart S., and William C. Strange. 2008. Rome: UCW. “The Attenuation of Human Capital Spillovers.” UN (United Nations). 2011. The Millennium Devel- Journal of Urban Economics 64 (2): 373–89. opment Goals Report 2011. New York: UN. Rutkowski, Jan. 2008. “Labor Market in Georgia: Lack UNDP (United Nations Development Programme). of Jobs or Structural Mismatch?” World Bank, 2003a. Early Warning Report: FYR Macedonia. Washington, DC. Processed. New York: UNDP. ———. 2010. “Demand for Skills in Former Yugoslav ———. 2003b. Early Warning System: Bosnia and Republic of Macedonia.” World Bank, Washing- Herzegovina. New York: UNDP. ton, DC. Processed. UNECE (United Nations Economic Commission for Saito, Hisamitsu, and Munisamy Gopinath. 2011. Europe). 2010. Measuring Quality of Employment: “Knowledge Spillovers, Absorptive Capacity, and Country Pilot Reports. Geneva: United Nations. Skill Intensity of Chilean Manufacturing Plants.” UNEP (United Nations Environment Programme). Journal of Regional Science 51 (1): 83–101. 2011. Towards a Green Economy: Pathways to Sander, Klas, and Peter A. Dewees. 2012. “Sustainable Sustainable Development and Poverty Eradication. Management of Trees, Reduction in Forest Deg- St-Martin-Bellevue: UNEP. radation, and Job Creation for the Poor.” Back- UNEP (United Nations Environment Programme), ground paper for the WDR 2013. ILO (International Labour Organization), IOE Sankaran, Kamala. 2007. Labour Laws in South Asia: (International Organisation of Employers), and The Need for an Inclusive Approach. Geneva: In- ITUC (International Trade Union Confedera- ternational Labour Organization. tion). 2008. Green Jobs: Towards Decent Work in Santos, Georgina, and Blake Shaffer. 2004. “Prelimi- a Sustainable, Low-Carbon World. Geneva: UNEP. nary Results of the London Congestion Charg- Unni, Jeemol, and Uma Rani. 2008. “Sub-Contracting ing Scheme.” Public Works Management & Policy Relationships in the Autocomponents Sector: Do 9 (2): 164–81. Small Firms and Informal Enterprises Benefit?” Sawada, Naotaka. 2011. “Improving Rural Invest- In Flexibility of Labour in Globalizing India, ed. ment Climate for Business, Key To Rural Income Jeemol Unni and Uma Rani, 88–126. New Delhi: Generation.” World Bank, Washington, DC. Tulika Books. Processed. Upadhyay, Himani, and Neha Pahuja. 2010. “Low- Schmitz, Hubert, and Khalid Nadvi. 1999. “Cluster- Carbon Employment Potential in India: A ing and Industrialization.” World Development 27 Climate of Opportunities.” Discussion Paper (9): 1503–14. TERI/GCN-2010:1, Centre for Global Climate Snower, Dennis J. 1994. “The Low-Skill, Bad-Job Research TERI and Global Climate Framework, Trap.” Working Paper Series 94, International New Delhi. Monetary Fund, Washington, DC. Van Biesebroeck, Johannes. 2005. “Exporting Raises Sonobe, Tetsushi, and Keijiro Otsuka. 2006a. Cluster- Productivity in Sub-Saharan African Manufac- Based Industrial Development: An East Asian turing Firms.” Journal of International Economics Model. New York: Palgrave Macmillan. 67 (2): 373–91. ———. 2006b. “The Division of Labor and the For- Welzel, Christian. 2012. “The Contribution of ‘Good’ mation of Industrial Clusters in Taiwan.” Review Jobs to Development and Cohesion: The Human of Development Economics 10 (1): 71–86. Empowerment Perspective.” Background paper Stevenson, James, Derek Byerlee, Nelson Villoria, Tim for the WDR 2013. Kelley, and Mywish Maredia. 2011. “Agricultural Wheeler, Christopher H. 2001. “Search, Sorting, and Technology, Global Land Use, and Deforestation: Urban Agglomeration.” Journal of Labor Econom- A Review.” Consultative Group on International ics 19 (4): 879–99. Agricultural Research Standing Panel on Impact ———. 2006. “Cities and the Growth of Wages Assessment, Washington, DC. Processed. among Young Workers: Evidence from the NLSY.” Summers, Lawrence H. 1989. “Some Simple Econom- Journal of Urban Economics 60 (2): 162–84. ics of Mandated Benefits.” American Economic Winkelmann, Rainer. 1996. “Employment Prospects Review 79 (2): 177–83. and Skill Acquisition of Apprenticeship-Trained Valuing jobs 189 Workers in Germany.” Industrial and Labour Re- ———. 2012b. Promoting Access to Quality Early lations Review 49 (4): 658–72. Childhood Development for Roma Children in World Bank. 2006. World Development Report 2007: Eastern Europe. Washington, DC: World Bank. Development and the Next Generation. Washing- World Bank and IFC (International Finance Corpo- ton, DC: World Bank. ration). 2011. Removing Barriers to Economic In- ———. 2008a. Czech Republic: Improving Employ- clusion. Washington, DC: World Bank. ment Chances of the Roma. Washington, DC: World Bank and MIGA (Multilateral Investment World Bank. Guarantee Agency). 2006. The Impact of Intel in ———. 2008b. Social Protection: Vietnam Develop- Costa Rica: Nine Years after the Decision to Invest. ment Report. Hanoi: World Bank. Washington, DC: World Bank and MIGA. ———. 2009a. Estimating the Impact of Labor Taxes Yamano, Takashi, Keijiro Otsuka, and Frank Place. on Employment and the Balances of the Social In- 2011. Emerging Development of Agriculture in surance Funds in Turkey: Synthesis Report. Wash- East Africa: Markets, Soil, and Innovations. Dor- ington, DC: World Bank. drecht: Springer. ———. 2009b. Ukraine Labor Demand Study. Wash- Yamauchi, Futoshi. 2007. “Social Learning, Neighbor- ington, DC: World Bank. hood Effects, and Investment in Human Capital: ———. 2009c. World Development Report 2009: Re- Evidence from Green-Revolution India.” Journal shaping Economic Geography. Washington, DC: of Development Economics 83: 37–62. World Bank. Yeats, Alexander J. 2001. “Just How Big Is Global ———. 2010. Stepping Up Skills for More Jobs and Production Sharing?” In Fragmentation: New Higher Productivity. Washington, DC: World Production Patterns in the World Economy, ed. Bank. Sven W. Arndt and Henryk Kierzkowski, 108–43. ———. 2011a. Europe 2020: Fueling Growth and Oxford and New York: Oxford University Press. Competitiveness in Poland. Washington, DC: Yi, Kei Mu. 2003. “Can Vertical Specialization Explain World Bank. the Growth of World Trade?” Journal of Political ———. 2011b. Strengthening Skills and Employability Economy 111 (1): 52–102. in Peru. Washington, DC: World Bank. Zhang, Huafeng, Ingunn Bjørkhaug, Anne Hatløy, ———. 2011c. World Development Report 2011: Con- and Tewodros Kebede. 2012. “Perception of flict, Security, and Development. Washington, DC: Good Jobs: China.” Background paper for the World Bank. WDR 2013. ———. 2011d. World Development Report 2012: Zivin, Joshua S., and Matthew J. Neidell. 2011. “The Gender Equality and Development. Washington, Impact of Pollution on Worker Productivity.” DC: World Bank. Working Paper Series 17004, National Bureau of ———. 2012a. Botswana: Skills for Economic Diversi- Economic Research, Cambridge, MA. fication. Washington, DC: World Bank. CHAPTER 6 Diverse jobs agendas Countries differ in where the development payoffs from jobs are greatest. These payoffs depend on the country’s level of development, demography, endowments, and institutions. C ountries face different jobs challenges as Finally, the strength of institutions can define they move along the development path. a country’s jobs challenge. In conflict-affected In agrarian economies, most people are countries, institutions are fragile, private invest- still engaged in agriculture and urbanization has ment is largely out of reach for the time being, not yet picked up. In urbanizing countries, pro- and restoring social cohesion through jobs takes ductivity growth in agriculture has risen enough on particular importance. to free up large numbers of people to work in cit- These criteria are not mutually exclusive. A ies. Formalizing countries generally have more de- country may be both resource rich and conflict veloped economies, where the coverage of social affected, or it may belong to the formalizing protection systems is large enough to envision group and be characterized by high youth un- extending it to the entire workforce. employment. Still, focusing on the key features In some countries, the jobs challenge is associated with each type of country situation shaped by demography with special circum- helps to clarify which jobs would make the stances affecting particular groups. In coun- greatest contribution to development in a par- tries with high youth unemployment, prolonged ticular context. This allows for a richer analysis joblessness and idleness affect large numbers of the potential tradeoffs among living stan- of young people, with many seeing limited op- dards, productivity, and social cohesion in a portunities for the future. Aging societies also specific country situation. And it provides clues face generational issues, but these stem from a about the nature of the obstacles to job creation decreasing share of the working age population and how they can be removed (question 6). and increasing costs related to providing and caring for a growing number of old people. Natural endowments, including geography, Agrarian economies can create unique jobs challenges. Resource- rich countries may have substantial foreign ex- In countries where a majority of the popula- change earnings, but this wealth often does not tion lives in rural areas, wage employment is not translate into employment creation beyond the prevalent form of work. For instance, about the exploitation of the natural resources. Small half of the employed population in Kenya is en- island nations cannot reap the benefits from gaged in farming, whereas self-employment in agglomeration and global integration because nonagricultural household businesses and wage of the size of the population and geographic employment in informal enterprises account for remoteness. slightly more than one-third.1 Diverse jobs agendas 191 Formal employment, including wage labor- the civil war, the poverty rate remained basically ers in registered private enterprises and the unchanged between 2003 and 2008, at around entire public sector, typically accounts for less 55 percent of the total population.6 than 10 percent of total employment in agrarian Agriculture is the locus of much of Mozam- economies. The share of wage employment in bique’s poverty. Over 80 percent of employment manufacturing is much smaller. A comparison is in agriculture, yet the sector accounts for only across several French-speaking Sub-Saharan 30 percent of gross domestic product (GDP).7 African countries puts the fraction at less than 5 Value added per hour worked in agriculture is percent of total employment even in the capital one-seventh that of services and one-twelfth cities—less than 3 percent in Cotonou and Lomé that of manufacturing. Yields have been stag- to 8 percent in Yaoundé; only Antananarivo has nant over the past decade. About 95 percent of more than 10 percent.2 Across Sub-Saharan Af- agricultural workers work on small plots, the rica, one-quarter or less of formal sector work- use of modern technology is low, and access to ers are women; only in Senegal does the fraction extension services is minimal. exceed one-third.3 If anything, employment in Evidence suggests that growth in agriculture the formal sector has trended downward over delivers more poverty reduction than other sec- the past two decades as state-owned enterprises tors in lower-income countries, because poor have been privatized and foreign trade has been people are concentrated in the sector and be- liberalized. cause they participate more in the growth in In this context, the notion of unemployment agriculture than in the growth in other sectors.8 needs to be interpreted with caution. Unem- Since 1700, virtually every example of mass ployment rates can technically be computed, poverty reduction has actually begun with an but given the prevalence of poverty in agrarian increase in agricultural productivity.9 economies, a substantive share of the labor force Constraints on agricultural growth vary is unlikely to remain idle for long. Underem- depending on the availability of land relative ployment and low earnings, rather than open to the availability of farm labor. Compared unemployment, are the challenges most people with other areas of the developing world, Sub- face in agrarian economies. Household survey Saharan Africa was traditionally seen as a conti- data from Mozambique show that an astound- nent of ample land and scarce labor. While that ing 81 percent of those at work were living on may still be true in some areas, it no longer ap- less than US$1.25 a day in 2003, and 95 percent plies to countries in the south and east of the were living on less than US$2.00 a day.4 continent. In Mozambique, the average farm In agrarian economies, the main avenues to size is less than 1.5 hectares. As the area under improving living standards involve increasing cultivation declines relative to the size of the productivity in farming, creating a dynamic population, producing sufficient food becomes economic environment in cities, and promot- a major issue unless yield-enhancing technolog- ing labor reallocation from rural to urban areas, ical changes take place. In many agrarian econo- thereby sparking a positive spiral of produc- mies in Sub-Saharan Africa, these changes have tivity growth and improvement in living stan- yet to occur. Unlike many parts of Asia, where dards. Together, these approaches should lead to the Green Revolution has increased cereal yield the expansion of off-farm employment oppor- and the poverty incidence has declined, cereal tunities, which are in turn an important driver yield has remained low and poverty incidence of poverty reduction. high in these Sub-Saharan countries (figure Mozambique illustrates the jobs challenges 6.1). Some Asian economies, such as Cambo- faced by agrarian economies.5 Thanks to im- dia, the Lao People’s Democratic Republic, and portant mining discoveries and a commodities Myanmar, face similar challenges. boom, as well as Maputo’s privileged position as Public sector investments are important driv- one of the ports closest to Johannesburg, Mo- ers of productivity growth and intensification zambique has had one of the best growth per- of smallholder agriculture. Technology is often formances in Sub-Saharan Africa over the past a public good. Because farmers can reproduce decade. Yet, after falling substantially during the improved varieties of rice and wheat, private 1990s, probably as a consequence of the end of seed companies cannot reap the benefit of in- 192 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 F I G U R E 6 .1 In the absence of a Green Revolution, poverty remains high in agrarian economies cereal yields South Asia improve 1981 1.48 metric tons per hectare 2001 2.49 metric tons per hectare East Asia 150 1981 2.84 metric tons per hectare cereal 2001 4.24 metric tons per hectare yields poverty 120 headcount Index yields and poverty 1981 = 100 Asia 100 Sub-Saharan Africa stagnate in Sub-Saharan Africa 80 poverty cereal yields headcount South Asia 1981 1.25 metric tons per hectare 50 2001 1.07 metric tons per hectare poverty declines East Asia 1981 2001 1981 2001 Source: Christiaensen and Demery 2007. troducing new varieties and so tend not to make and Mozambique in particular are compara- the effort. Hybrid seeds of maize, sorghum, and ble with yields in Asia.12 In such areas, im- millet cannot be reproduced by farmers, and, proved varieties developed in Asia or crossbred hence, the private sector supplies seeds. But even with local varieties have been adopted. This in these cases, basic research is carried out by observation suggests that, as far as lowland rice the public sector. As a result, public support is is concerned, Asian technology could be di- necessary to develop biological and chemical rectly transferred to the irrigated areas of Sub- technologies. Saharan Africa. These are enduring collaborations between While the intensification of crop-based ag- advanced agricultural research centers and na- riculture has been associated with a significant tional programs in Sub-Saharan Africa. They increase in the use of inorganic fertilizer, the have developed improved varieties of cotton application of fertilizer per hectare is far lower and cassava in ways that are reminiscent of in Sub-Saharan Africa than in any other re- the long-term collaboration in rice and wheat gion of the world. One of the major reasons is research between international agricultural re- the high fertilizer prices relative to grain prices. search centers and national programs in Asia.10 Fertilizer prices are usually two to three times The recent surge in the production of high-value higher in Sub-Saharan Africa than in Asia and crops for export, including in Mozambique, is Latin America because of poor infrastructure also encouraging.11 Aside from these examples, and trade logistics.13 Another major constraint however, few improved crops appropriate to the on fertilizer application is the lack of credit for African climate have been developed. smallholders, given that land ownership titles Gravity irrigation systems are a local pub- are seldom secured and hence cannot be used lic good as well. Irrigated land accounts for as collateral.14 Therefore, productivity growth in only 5 percent of the total cultivated area in agriculture also requires a favorable investment Sub-Saharan Africa. Lowland rice yields in ir- climate including improved access to infrastruc- rigated areas in Sub-Saharan Africa in general ture and credit.15 Diverse jobs agendas 193 The job structure in the cities is dominated to take off. This approach focuses on identify- by self-employment, with petty commerce ing activities that may hold latent comparative growing quickly. If agriculture matters most for advantage and on removing the constraints poverty reduction, successful urbanization may that dissuade private firms from taking up these hold the key to more rapid productivity and in- activities. In fact, there are many informal in- come growth as well as social cohesion. In most dustrial clusters in urban areas in Sub-Saharan of Sub-Saharan Africa, however, urbanization Africa. They produce garments, leather shoes, has failed to create the dynamism observed else- simple metal products, and furniture, among where in the developing world. Migration from other things, though seldom for export.17 These rural to urban areas continues, but migrants are clusters have spontaneously developed, suggest- simply swelling the ranks of the self-employed ing a potential comparative advantage in these earning subsistence wages. In the absence of dy- industries. Reducing logistics costs, removing namic cities, migration is driven by despair, and red tape, and addressing coordination issues not hope. In Mozambique, for example, young could create the necessary conditions to attract people are moving to urban areas, but few are foreign investors to these clusters, especially at a moving into regular wage employment. Mean- time when wage increases in coastal China are while, levels of trust are falling and are lowest encouraging the relocation of some industries among young workers.16 where low labor costs are a key competitive fac- Some have argued that the jobs challenge tor (box 6.1).18 in these urban areas can be addressed through Jobs, which start to trigger agglomeration the creation of greater opportunities for self- effects and make connections to the global employment. For example, building space for economy, are good jobs for development in informal markets around bus stops would allow agrarian countries. To create more of these jobs more rural migrants to make a living. But self- and become centers of economic dynamism, employment of this sort is unlikely to support cities need to be more functional. But even in the agglomeration effects and knowledge spill- the most optimistic scenario, it will take time to overs that make cities thrive elsewhere. complete the urbanization process, so increas- An alternative approach is to create condi- ing productivity in agriculture is a priority for tions for labor-intensive light manufacturing reducing the high poverty levels. JOBS LENS More productive smallholder farming Agrarian Urban jobs connected to global markets economies Conflict-affected countries are central to breaking cycles of violence, restor- ing confidence in institutions, and giving people Jobs are among the most pressing issues in coun- a stake in society.20 tries in conflict or emerging from it.19 They are Yet the obstacles to creating jobs in conflict- critical for restoring the livelihoods of individu- affected countries are staggering and confront als and families affected by war and violence, policy makers with overwhelming questions. reintegrating ex-combatants, and rebuilding ev- How can jobs be generated quickly for demo- erybody’s sense of belonging in society. They are bilized soldiers, displaced persons, and vulner- also key to jump-start economic activity, recon- able groups affected by violence or war? What nect people, and reconstruct networks and the kinds of government programs can have a quick social fabric. Alongside security and justice, jobs impact? How can the private sector become an 194 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 civil wars and other forms of internal conflict. BOX 6.1 Can agrarian Ethiopia compete in manufacturing? Less frequently, they involve hostilities between states. When entire countries are affected by in- The labor productivity of workers in well-managed firms in Ethiopia is compa- ternal or external conflict, the jobs challenge is rable with that in China and Vietnam, although wages are only a quarter of particularly daunting because of institutional those in China and half those in Vietnam. Ethiopia thus has the potential to breakdown and fractured connectivity with the compete globally in apparel thanks to a significant and growing labor cost outside world. If conflict is localized, constraints advantage. It is also close to a state-of-the-art and well-located container port in Djibouti and has duty-free access to the markets of the European Union and are less severe where functioning infrastructure, the United States. The binding constraint on Ethiopia’s competitiveness in services, and institutions can be extended to apparel is poor trade logistics, which wipe out its labor cost advantage and cut conflict-affected regions once hostilities become the country off from the higher-value time-sensitive segments of the market. manageable. Conflict situations are generally Establishing a fast-track channel for moving apparel through customs, provid- further complicated by large numbers of dis- ing free and immediate access to foreign exchange, reducing the cost of letters placed people. At the end of 2010, an estimated of credit, and setting up an industrial zone closer to Djibouti would alleviate the 15.4 million people sought refuge from conflict most important trade logistics bottlenecks. These steps would also put Ethio- pia in a position to attract investors to lead the industry in the same way that outside their home countries, and another 27.5 China and Vietnam have done. million were displaced internally.21 Ethiopia also benefits from an abundance of natural resources. Raw materi- Conflict can fundamentally disrupt jobs by als such as skins for the footwear industry and hard and soft timber for the fur- destroying or damaging infrastructure and ac- niture industry are available. But they are expensive. A cubic meter of timber cess to markets, as well as through altering in- costs US$667, compared to US$344 in China and US$246 at most in Vietnam. So centives. In Sri Lanka, conflict in the north dis- urban consumers in Ethiopia buy imported modern furniture, which is cheaper rupted economic activity and created favorable and of better quality. Yet Ethiopia has enormous unexploited potential in tim- ber, particularly bamboo. Reforms could make the country’s furniture industry conditions for the insurgency to recruit among competitive in the domestic market, create more productive jobs, and save the newly unemployed.22 foreign exchange. Even during war, however, people work. Jobs disproportionately involve low-pay or unpaid work, such as subsistence agriculture or petty Source: Dinh and others 2012. trading. Youth in rural areas in post-conflict Liberia reported working two to four jobs at a time.23 Across countries, conflict increases fe- male labor force participation, as women work to BOX 6.2 Conflict can increase labor force participation help their households cope with income shocks among women and to compensate for the absence of men who are fighting (box 6.2).24 In Afghanistan, female Out of necessity, women often intensify their economic activity during periods employment rates were higher in high-conflict of conflict. Post-conflict programs that target women can help them take advantage of the window of opportunity presented by conflict and assume than in low-conflict areas; in Nepal, they in- new roles that contribute meaningfully to local economic recovery. Women in creased more than in high-conflict areas.25 North Maluku, Indonesia, were active participants in the rapid recovery and Some jobs in conflict-affected countries may poverty reduction that occurred in the wake of nearly a year of intensely violent involve illegal activities that persist in the after- civil strife. “Since 2002, when the conflict ended, I have run a retail shop for math of conflict because of weak governance extra income to fulfill our family needs. . . . I received support money that I used and lack of legal alternatives. Even if these ac- for my business capital from the Ternate city government. . . . Ten years ago, I tivities are limited in scope, they may under- was only a housewife because I didn’t have the capital to run the business as I do now,” a 38-year-old married woman reported. mine the creation of good jobs for development by distorting incentives and generating rents. In Afghanistan, poppy cultivation is an impor- Source: Petesch 2011. tant source of income for rural households.26 In Somalia, piracy creates jobs for some through engine for employment creation? Moreover, the employment of speed boat crews and re- countries affected by conflict are often poor to lated land-based operations.27 In Liberia, young begin with. Their opportunities, resources, and people in rural areas have supplemented their capacity are scarce; data for planning may sim- income by working in illegal mining, rubber ply not exist. tapping, and logging.28 Conflict environments range from situa- Jobs are central to recovery in countries tions with high levels of criminal violence to emerging from conflict, but the barriers to job Diverse jobs agendas 195 creation can be especially steep (box 6.3). Firms in conflict-affected countries report that po- BOX 6.3 Solving jobs challenges is urgent in South Sudan litical instability is the most severe bottleneck to business followed by the lack of electricity The Republic of South Sudan, the world’s newest country, exemplifies the (figure 6.2). Simply getting basic services up challenges countries face emerging from conflict. South Sudan has natural and running can be a major issue. Corruption resources, including oil, yet more than four-fifths of the population lives in rural areas, and most depend on subsistence farming and cattle raising. Half of the and the lack of finance are also among the top population lives in poverty, which is especially deep in rural areas, according to constraints. Security risks because of high crime the 2009 household survey. Only slightly more than one-fourth of the adult rates or armed conflict reduce returns to in- population is literate, and prospects for future human capital development are vestment and can persist even after the armed dim: almost half of 10- to 14-year-olds are working, with only slightly more than conflict has officially ended. Firms may need ad- one-third in school.a ditional funds to hire private security or to pay The International Organization for Migration estimates that 4 million peo- bribes. The loss of skills because of migration ple were displaced during the Sudanese civil war, and that nearly 1.9 million have returned since the signing of the Comprehensive Peace Agreement in and disruptions in schooling can also create ob- 2005.b The return of internally displaced persons creates substantial pressures stacles for firms. on already poor communities. The new government of South Sudan is aiming Demobilization and reintegration of former to demobilize 150,000 soldiers over the next six to eight years.c Access to land combatants are major challenges for countries rights and conflict among nomadic groups are also notable challenges for jobs, emerging from conflict. Although ex-combatants as is the legacy of overemployment in the public sector, which is not sustain- make up a relatively small share of the total able given severe fiscal pressures. population, unemployment and idleness, par- Creating jobs is one of the most immediate concerns facing the new gov- ernment—jobs that can contribute to peace and stability, provide sustainable ticularly of young men, are stress factors that living standards through legal and nonviolent activity, and foster economic can strain and potentially undermine fragile recovery. Generating these jobs involves building an enabling environment for post-conflict environments.29 Jobs can compen- private sector investment. That will take time, however, and alternatives are sate for the loss of identity and status associated urgently needed for groups whose lack of jobs can threaten stability, including with the dissolution of armed forces and militias internally displaced persons, ex-combatants, and youth. and the income lost from theft and looting. Jobs can also help deter further involvement in gangs Source: World Development Report 2013 team. and violence. Yet not all jobs are alternatives to a. Guarcello, Rosati, and Lyon 2011. violence, especially if they provide little income b. IOM 2009. c. Republic of South Sudan Disarmament, Demobilisation and Reintegration Commission 2012. and the work is drudgery. Most disarmament, demobilization, and reintegration programs include some form of employment support such as emergency tem- also help manage disputes.30 Programs can be porary jobs, cash for work, public employment tailored to facilitate the reintegration of youth, services, small grants, or vocational training. particularly young men, who have been involved Temporary employment programs can play in conflict. In some cases, such as the Demo- an important bridging role by providing jobs cratic Republic of Congo, Liberia, and Sierra quickly to ex-combatants and other vulnerable Leone, young ex-combatants have no memory populations in the absence of other options. Ev- of peaceful times or normal civilian life. idence on whether temporary programs reduce Ultimately, conflict-affected countries need conflict and contribute to rebuilding communi- to attract private investment. The state can play ties is less clear. Cash-for-work programs can be an enabling role by strengthening regulations costly and may strain stretched public budgets, and institutions, rebuilding basic infrastruc- may create poor quality and unsustainable as- ture, and providing security.31 Partnerships sets, and can be divisive and lead to tensions if between the public and private sectors, donors, they are targeted only at certain groups. and civil society can help to rebuild markets Broadly targeted community-based pro- and investor confidence. Connecting farmers grams may be more conducive to stability. In and entrepreneurs through value chains has the Democratic Republic of Congo, where many the potential to spark innovation and employ- ex-combatants have had a difficult time finding ment growth.32 Business associations can sup- jobs, associations of ex-combatants and com- port entrepreneurship and help solve collective munity members share information about em- action problems by restoring law and order, ployment opportunities and social support and roads, and electricity.33 As security is restored, 196 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 FIGURE 6.2 Instability and poor infrastructure are severe constraints on business in conflict-affected countries political instability* electricity* nance corruption transport* tax rates* competition* crime/disorder* tax administration* skills* access to land* customs telecoms* courts* labor regulation* licensing* 0 1 2 3 constraint score relative to the average score of other constraints con ict-a ected countries other countries Source: Investment Climate Survey (database), World Bank, Washington, DC. Note: In this figure, conflict countries include Afghanistan (2008), Bosnia and Herzegovina (2009), Burundi (2006), Chad (2009), the Democratic Republic of Congo (2006 and 2010), Côte d’Ivoire (2009), Georgia (2008), Guinea-Bissau (2006), Kosovo (2009), Liberia (2009), Nepal (2009), Sierra Leone (2009), and Timor-Leste (2009). The horizontal axis measures the ratio of the average score of a constraint to the average score of all other constraints. Asterisks denote statistically significant differences between conflict countries and others at the 1 percent level. however, the jobs focus can shift from targeted economic activity and violence, and that start public programs to employment creation in the the long process of economic recovery. In private sector. But it would be naïve to expect conflict settings, jobs can also have develop- conflict-affected countries to become dynamic ment payoffs for social cohesion by involving economies overnight. people in productive activities that strengthen Tackling the jobs challenge faced by con- self-esteem and give them a sense of identity flict-affected countries is a formidable task: it and status, by rebuilding networks, and by giv- requires creating jobs that contribute to peace ing people a sense that opportunities are fairly and stability, that are an alternative to illegal distributed. JOBS LENS Jobs demobilizing combatants Conflict-affected countries Jobs reintegrating displaced populations Jobs providing alternatives to confrontation Diverse jobs agendas 197 Urbanizing countries maturity, high-yield rice. There has also been a pronounced shift away from sharecropping Urbanizing countries endowed with abundant into fixed-rent leasehold tenancy. Landless and unskilled labor have the potential to enter a vir- marginal farmers have been the major ben- tuous jobs circle. The integration of these coun- eficiaries of this change. Simultaneously, credit tries into the world economy can lead to the cre- constraints have been relaxed thanks to the ation of extensive employment opportunities, country’s well-known microfinance institutions. especially in light manufacturing. These jobs Access to finance has facilitated human capital may involve hard work, relatively low pay, and accumulation, especially in women’s educa- limited or negligible benefits, but in general they tion and health, and promoted investments in are preferable to jobs in agriculture. They can microenterprises. also be the entry point to a process of economic Despite the still considerable labor surplus and technological upgrading that leads to better in rural areas, real wages in agriculture have jobs in the future.34 Employment opportuni- increased from the monetary equivalent of less ties for the unskilled thus provide avenues out than 2.5 kilograms of rice a day in 1983 to more of poverty for large numbers of households. In than 6.0 kilograms today. The seasonal hunger countries in which women’s jobs choices have associated with the monga period—between been restricted, new employment opportuni- transplanting and harvesting paddy—is reced- ties in urbanizing economies can bring about ing. Remittances from women working in fac- important changes at the household and society tories and from men working in construction levels. have also helped reduce rural poverty. This has been the story of several East Asian The movement of labor out of agriculture has countries over the past half century. In many re- been facilitated by close urban proximity, result- spects, it has also been the recent story of Ban- ing from Bangladesh’s high population density. gladesh, where industrialization is growing in Special links allowed by proximity also may have large cities such as Chittagong and Dhaka. The supported productivity growth among laborers industrial sector now accounts for nearly 30 engaged in rural nonfarm sectors. The ready- percent of value added, up from 20 percent in 1990, and the urbanization rate is approaching 30 percent, double what is was in 1980.35 Exports as a percentage of GDP tripled between 1990 BOX 6.4 Development pessimism about Bangladesh was and 2010, with much of the increase in a thriv- understandable, but has been proven wrong ing ready-made garment industry that is highly intensive in female labor. This structural trans- In 1975, the first book on the economy of Bangladesh commented: “If the prob- formation, along with improvements in agricul- lem of Bangladesh can be solved, there can be reasonable confidence that less tural productivity, has had a major impact on difficult problems of development can also be solved. It is in this sense that Bangladesh is to be regarded as the test case of development.”a In the same living standards. GDP per capita has doubled in spirit, a well-known study on famines concluded that Bangladesh was “below the past two decades and the share of the popula- poverty equilibrium.”b tion living below US$1.25 a day fell from 70 per- Such a negative perception of the viability of the Bangladesh economy cent in 1992 to 43 percent in 2010.36 Productivity was conditioned by the adverse initial conditions facing the country after and earnings growth still lag behind some of its independence—high population density, a limited natural-resource base, neighbors, but Bangladesh’s story is remarkable underdeveloped infrastructure, frequent natural disasters, and political because the country was often held out in the de- uncertainty. This negative perception has given way to optimism in global development velopment literature as a hopeless case (box 6.4). circles because of Bangladesh’s positive record of socioeconomic development These successes have been built on modern- in recent decades. Some countries have done well in human development indi- ization in the agricultural sector, an industrial cators, and others have done well in economic growth, but Bangladesh belongs sector able to absorb low-skilled surplus farm to a rather small group of countries that have done well on both fronts, the ini- labor, and supportive social policies. tial pessimism notwithstanding. This is the crux of the surprise. Faster technology adoption has led to pro- ductivity increases in agriculture. Farmers have Source: Bangladesh country case study for the World Development Report 2013. shifted from growing low-yield, single-crop, a. Faaland and Parkinson 1976, 5. deep-water rice to double cropping of short- b. Alamgir 1978. 198 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 made garment industry has been an important On the social policy front, both governmen- part of the jobs story in urbanizing Bangladesh. tal and nongovernmental organizations have es- About 3 million women are working in this tablished pro-poor, pro-youth, and pro-women sector, which has a strong export orientation. programs. These have been instrumental in Construction has been an important employer reducing population growth and encouraging for men moving out of rural agriculture. Many more effective public and private investments in low-skilled workers go abroad as well, especially education and health. to the Gulf countries. Remittances are growing Agricultural modernization, labor migra- by about 10 percent every year.37 tion, and social policies have altered the jobs Light manufacturing opens up opportunities landscape of Bangladesh, but these trans- for large numbers of workers in urbanizing econ- formations have not involved a substantial omies because skill requirements are modest. formalization of the economy. The share of Firms demand some education but it is generally jobs benefitting from legal protection or so- limited. In Bangladesh, for instance, 87 percent cial insurance has not increased much over the of regular urban wage workers in 2005 had some past decade. The booming construction sector education but only 28 percent had secondary remains largely informal. Corporate social re- schooling or more.38 These education levels are sponsibility among export-oriented corpora- considerably higher, though, than the educa- tions in Bangladesh is making some difference tional attainment of workers in agriculture, so in the ready-made garment sector, but worker opportunities in the garment industry stimulate unrest has been recurrent. But corporate social schooling, especially for girls. Urbanization has responsibility is mainly associated with exports other beneficial effects on women, as well. Grow- to industrial countries and may become less ing labor earnings increase the opportunity cost relevant if the sector diversifies its exports to of raising children, which, in turn, may raise the other developing countries. Corporate social age of marriage and reduce the birth rate. To responsibility is unlikely to be a workable op- the extent that women’s educational attainment tion in construction. But while formalization and labor market participation rise, the status of has not advanced, the development of entre- women in society is enhanced. preneurship has been remarkable, leading to the creation of thousands of nationally owned medium and large firms within a mere two de- cades (box 6.5). BOX 6.5 The entrepreneurs of Bangladesh are local Bangladesh stands out as an intriguing case that is important to understand, especially given The ready-made garment industry in Bangladesh has grown rapidly over the its starting point. The government has provided past three decades, and the country now ranks among the largest garment some support, with export processing zones, exporters in the world. While the early successes have been attributed to an initial technology transfer from the Republic of Korea, such a one-time infusion bonded warehouses, and special treatment of of knowledge alone is insufficient to explain the sustained growth. In this garments at ports. Large infrastructure projects, respect, the pattern of development in Bangladesh is similar to that in East Asia, such as the Jamuna Bridge linking the prosper- where investment in human capital and the importation and assimilation of ous eastern and lagging western regions, have technological and managerial knowledge from advanced countries played a made it easier to move around the country. But critical role in promoting industrialization. government has not played the leading role in Primary data collected from knitwear manufacturers and garment traders the transformation. Corruption is a problem can be used to explore the process of the continuous learning of advanced skills and expertise. The data show that the initial infusion of specific human and the cost of doing business is high. Power fail- capital attracted highly educated entrepreneurs to the industry, that the divi- ures are frequent, many roads are unpaved, and sion of labor between manufacturers and traders facilitated the expansion of those that are paved are highly congested. De- the industry, and that enterprise growth has endured because of the continu- spite these obstacles, agricultural modernization ous learning from abroad by the highly educated entrepreneurs. These factors, has occurred thanks to the Green Revolution taken together, account for the high profitability of garment manufacturing in associated with the development and diffusion Bangladesh. of high-yielding varieties of rice and access to finance. Labor has moved out of agriculture Sources: Mottaleb and Sonobe 2011; Sonobe and Otsuka 2006. through industrialization, and social policies Diverse jobs agendas 199 have been supportive through family planning Bangladesh.39 The pharmaceutical industry and social protection. has developed, and the different pattern of de- Urbanizing countries like Bangladesh have velopment there relative to that of the garment the potential to exploit several spillovers. But a industry is intriguing. But the high skill levels key challenge for them is to find a way to move required by the pharmaceutical sector and other up the value-added chain and diversify manu- higher value-added export sectors are unlikely facturing exports. Apart from ready-made gar- to make them a source of jobs for the masses of ments, few sectors have grown substantially in youth with only primary education. JOBS LENS Jobs providing opportunities for women Jobs moving the country up the export ladder Urbanizing Jobs not leading to excessive congestion countries Jobs integrating rural migrants Resource-rich countries 2 percent of total employment in resource-rich developing countries. Investments in extractive industries can repre- In addition, extractive industries can have sent a sizable fraction of a developing country’s important negative impacts on jobs elsewhere in GDP and lead to spectacular increases in export the economy. These effects are often considered revenue, but they do not create many jobs. The manifestations of Dutch disease, a reference to number of people at work during the construc- the experience of the Netherlands after large tion phase may be sufficient to generate dyna- natural gas fields were discovered in the prov- mism at the local level, but once the mines and ince of Groningen in the late 1950s. The ensuing fields are in operation, employment goes down export revenue led to strong real exchange rate dramatically. Perhaps the most extreme example appreciation, deterioration in competitiveness is the liquid natural gas project in Papua New in sectors exposed to international competition, Guinea. The investment cost of the project ex- and a loss of jobs in these tradable sectors. ceeded twice the country’s GDP at project start- Some industrial countries confronted with up, and the project may lead to double-digit resource booms have successfully protected growth rates for many years. But it is unlikely or fostered the diversification of their econo- to generate more than 1,000 direct jobs in the mies. Norway offers what may be the most longer term (table 6.1). striking example. With strong backing from Links to the rest of the economy tend to be the labor movement, centralized collective- weak as well. Port facilities, transport corridors, bargaining agreements ensure that real wages do and logistical, financial, and accounting services not grow more rapidly than the productivity of are needed. In some cases, oil refining and ore the tradable sectors, excluding oil. Wage mod- processing can also be carried out within the eration supports employment opportunities for country. All these services are bound to generate everybody, to the point that the unemployment high-value-added jobs in major cities and hubs. rate remained close to 3 percent during the re- But even after including all backward and for- cent global financial crisis. Oil revenue is used ward links, the ratio between the total number for long-term investments but is not immedi- of jobs generated and the number of direct jobs ately converted into higher labor earnings. is likely to remain in the single digits. Taking into Among oil-rich countries elsewhere, the account direct and indirect job effects, extractive United Arab Emirates has also managed to di- industries may not account for more than 1 or versify its economy through financial and logis- 200 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 TA B L E 6 .1 Projects in extractive industries are capital intensive and create few jobs Project Investment, % Direct employment, Country (sector or resource) of 2010 GDP number LNG Project 9,300 during construction; Papua New Guinea 237.0 (natural gas) 1,000 afterward Oyu Tolgoi 14,800 during construction; Mongolia 74.2 (copper, gold) 3,000 to 4,000 afterward Jwaneng Cut 8 Project Botswana 20.2 1,000 (diamonds) Ramu Mine 5,000 during construction; Papua New Guinea 19.0 (nickel) 2,000 afterward Benga Mining currently 150; Mozambique 13.6 (coal) 4,500 afterward Mchuchuma Tanzania 12.2 5,000 (coal) Husab Mine 5,200 during construction; Namibia 11.9 (uranium) 1,200 afterward Lumwana Mine Zambia 9.3 4,700 during construction (copper) Reko Diq Mining 2,500 during construction; Pakistan 4.0 (copper, gold) 200 afterward Conga Mine 6,000 during construction; Peru 2.6 (gold) 1,700 afterward Source: World Bank Development Report 2013 team based on project information. Note: GDP = gross domestic product; LNG = liquid natural gas. tics services. But overall, in the Gulf states, na- resource-rich developing countries find it diffi- tional citizens have become direct beneficiaries cult to reap the benefits of agglomeration. Spe- of the oil bonanza through well-paid jobs in the cialization in the production of commodities public sector. In the larger countries, these jobs (including agricultural products such as cocoa) are rationed, with some groups, such as women may be an important reason why urbaniza- and youth, having less access than those with tion has failed to deliver growth in countries in good connections. Menial jobs are performed Sub-Saharan Africa.40 These wealthy consump- by immigrants on temporary contracts who re- tion agglomerations are nonetheless attracting ceive modest pay and benefits. Jobs are a win- rural migrants, thereby fueling local inequal- dow to rent sharing for some but do not give a ity, discontent, and crime. None of the cities in stake in society to others. resource-rich developing countries among the This tension between jobs for productiv- top 50 in the world according to cost of living ity and jobs for social cohesion may be even is among the top 50 according to quality of life. more difficult to avoid in developing countries, While extractive industries fail to create because they lack the institutional strength of many jobs, they do contribute to the local econ- Norway or the implementation capacity of the omy through other channels. A recent survey United Arab Emirates. In resource-rich develop- of employees of large-scale mining projects in ing countries, the concern is not only about los- Papua New Guinea shows that they make re- ing competitiveness in tradable sectors but also mittances both in kind and in cash to their about missing out on the benefits of urbaniza- households. Most remittances in kind were for tion. Indeed, the price of land in major agglom- construction and building materials (41 per- erations becomes prohibitively high in resource- cent), followed by transport-related items (28 rich developing countries. By one measure, the percent).41 Cash contributions were used most most expensive city in the world is Luanda (ta- often for school fees (29 percent) and transpor- ble 6.2). According to this measure, 3 of the top tation-related items (12 percent). Employees 5, and 9 of the top 50 most expensive cities in the also reported accommodating relatives visiting world are in resource-rich developing countries. from rural areas. Some of their guests helped Because they do not have the economic den- with housework, and some obtained education sity of London, New York, or Tokyo, cities in at the host’s expense.42 Diverse jobs agendas 201 Cities in resource-rich developing countries are among the most expensive TA B L E 6 . 2 in the world Rank in 2011 City Country 1 Luanda Angola 2 Tokyo Japan 3 N’Djamena Chad 4 Moscow Russian Federation 5 Geneva Switzerland 12 Libreville Gabon 14 Sydney Australia 18 London United Kingdom 23 Niamey Niger 27 Paris France 29 St. Petersburg Russian Federation 32 New York United States 41 Lagos Nigeria 44 Khartoum Sudan 48 Baku Azerbaijan 50 Amsterdam Netherlands Source: Mercer 2011. Note: Cities are ranked from most to least expensive based on the cost of a consumption basket for expatriates. Cities from developing countries are highlighted. Artisanal mining can flourish in parallel with for some: each hard rock miner could earn major investments and raise the living standards the equivalent of US$50,000–$75,000 a year, of local communities. In Papua New Guinea, the and each alluvial miner could make around number of grassroots alluvial miners is two to US$10,000 a year. This income became the three times greater than the number of people main contribution to the local economy, to- working in the formal extractive industries sec- gether with remittances sent by those ex-Mis- tor, even if contractors and temporary workers ima Mines Limited employees who found work are counted among the latter. Some of the large in large mines elsewhere.44 extractive projects, such as Ok Tedi Mine, hap- And even in mining areas, social impacts are pen to be in poor areas. Thus, the artisanal min- more mixed than the positive effect on living ing taking place around them helps spread the standards suggests. The influx of money from wealth. mining enclaves has enabled men to pay high But poverty maps show a significant level of prices for brides and marry multiple wives on spatial dispersion in living standards and a per- an unprecedented scale, which might have sistence of poverty over the past three decades.43 contributed to a decline in women’s status. The deepest and most persistent rural poverty Around Porgera Mine, the abandonment of in Papua New Guinea occurs in areas with no older wives and the increasing number of known mineral resources. women taken from other tribal groups are con- When large extractive projects close, arti- sidered factors in the increased incidence of sanal and small-scale mining can also contrib- domestic violence and tension with neighbor- ute to the local economy by cushioning the ing groups. In Lihir, when groups of landown- decline in earnings. For example, in Misima in ers received compensation and royalty pay- Papua New Guinea, local people had become ments, no women were given authority to used to making a living around the only large control the accounts.45 In addition, children mine project, Misima Mines Limited. When the normally help out in artisanal and small-scale project closed in 2004, the economy of Misima mines. In Misima, because of clear restrictions ground to a halt, and local residents found it and training by the Wau Small-Scale Mining hard to make ends meet. Artisanal and small- Center, children are less involved in mining scale mining provided an avenue for income than before, but child labor remains a con- 202 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 cern.46 Finally, land disputes often take place The challenge of resource-rich economies is among artisanal miners as people tend to tres- often framed in terms of transparency, which is pass on other’s land to find minerals.47 certainly important for social cohesion. How- Beyond local communities, the boom in ex- ever, accounting for the money involved in ex- tractive industries is affecting jobs in the main tractive industries is only part of the solution. agricultural sector of Papua New Guinea. Palm Equally important is ensuring that resources oil exports have been growing steadily in recent flow from booming enclaves and hubs to the years and now exceed the exports of all other ag- poorer parts of the country, especially in the ricultural crops combined. Remarkably, the pro- form of basic infrastructure and service deliv- duction of palm oil fruit involves 18,000 small- ery. Focusing the flow of resources on the de- holder blocks around the main plantations.48 mand side rather than on the supply side (for While this sector makes a significant contribu- example, on health insurance rather than pub- tion to the economy, improving rural livelihoods lic hospitals) may contribute to productivity and generating employment, the extractive in- rather than to the creation of new windows for dustries boom is undermining the competitive- rent sharing. ness of palm oil exports through higher wages Beyond public finance, the concentration for skilled employees and higher logistics costs. of wealth in mining enclaves and urban hubs The higher wages paid to skilled workers are requires attention to spatial pricing issues. The also eroding the effectiveness of the public sec- benefits of agglomeration cannot be reaped if tor. Entire departments in government and in urban land becomes prohibitively expensive. education and training institutions have been Active efforts are needed to increase the avail- depleted because their staff leaves for more at- ability of urban land and keep urban housing tractive opportunities in the extractive industries affordable. Despite such efforts, the cost of la- sector. Mining companies complain about the bor is bound to be much higher in mining en- shortage of skills at the same time as they poach claves and urban hubs. Labor policies need to people away from the education and training take these disparities into account and avoid system, where they could help build skills. For making workers too expensive in poorer and instance, among 181 interviewees in a recent more remote areas through minimum wages survey on large-scale mining projects, 58 work- or mandated benefits that mimic the wages and ers (or 32 percent) had at least a university de- benefits available in the booming parts of the gree.49 Raising salaries in the public sector may country. be needed, but that would create other problems. The main challenge facing resource-rich Absenteeism is rife and service delivery is poor. countries is to spread the wealth in ways that do Without strengthened accountability, higher sal- not undermine productivity growth and social aries would only transform many public sector cohesion spillovers. Good jobs for development jobs into a window for rent sharing. in this context are those that generate output (as An encouraging development has been the opposed to just absorbing it) outside the extrac- success of some landowner companies around tive industries sector. Incentives for firms to cre- mining enclaves. These companies may have ate jobs and for people to work are important built up a good work ethic and developed ef- if the economy is going to diversify its export fective business practices in places that were far base. The abundance of foreign currency can removed from the modern economy only a few be a constraint because of exchange rate appre- years ago. Not all landowner companies have ciation. The experience of some countries, most been successful, however, and this model may notably Norway, shows how sovereign funds fail to spread the wealth from extractive indus- that are used for long-run investments can man- tries beyond the surrounding areas (box 6.6). age this foreign currency problem. Diverse jobs agendas 203 BOX 6.6 Landowner companies can build capacity while spreading the wealth Firms linked to local landowner groups in Papua New Guinea are The key to the successes of these companies may be the clear developing increasingly diversified businesses and are able to separation between their social roles and their business model, compete regionally, even nationally, thereby generating jobs with which builds on solid corporate governance. The landowner origins a range of skill levels. The origin of these firms is the communal and commercial focus allow them to partner with landowner groups ownership of land in Papua New Guinea, which has meant that in other resource project areas, which helps them to build scale and mining companies have had to pay compensation for land to com- management depth. Expatriates with a genuine interest in develop- munities rather than to individuals. As a result, some of the land- ment seem to have played an important part in achieving the owner companies have up to 300,000 shareholders. National proper balance. agencies negotiate with individual resources projects for local Not all landowner companies have been equally successful. Most landowning groups to have privileged rights to supply selected exist purely to distribute rents from mines to communities and have services to the project. no ambitions of building sustainable economic opportunities for The most successful landowner companies, including Trans their members. Two of four companies established in Central Prov- Wonderland, Anitua, the iPi Group, National Catering, and Star ince never gained a foothold because the funds that were supposed Mountain, are locally managed. Their business activities extend to serve as equity vanished. Even the successful landowner compa- beyond the core job streams of the extractive industries sector in nies may be unsustainable beyond the construction phase of extrac- exploration, construction, and extraction. For example, they pro- tive industries, during which the demand for support services is vide logistical services through a franchise truck-ownership struc- exceptionally high. Skeptics wonder whether building work skills ture and catering services that reach out to all Papua New Guinea through the development of these businesses is really more valu- including to customers outside the natural resource sectors. able than investing in service delivery through local infrastructure. Source: Blacklock and Bulman 2012. JOBS LENS Jobs supporting export diversification Resource-rich countries Jobs not subsidized through transfers Small island nations problems of scale. Exporting to larger foreign markets is difficult, however, as the disadvan- The jobs agendas of small island nations are tage of smallness manifests itself in the form shaped by their market size and their geography. of higher production costs. Given that small Because of their size, these countries cannot countries are price-takers in world markets, exploit economies of scale or reap the benefits these cost premiums are hard to pass on to of agglomeration or specialization. As islands, customers. The only way these economies can many of them are characterized by fragmen- export is by accepting lower profits and labor tation—an already-small population spread earnings. But in industries such as electronic as- thinly over large areas. For example, Fiji has a sembly and clothing, even if capital earns nega- population of around 860,000 people and a tive returns and wages are zero, the unit cost of total territory of 18,274 square miles, but this production in a tiny economy would still exceed land is fragmented across a total 332 islands. Yet prevailing world prices. 50 jobs in cities and clusters rely on scale and den- A number of small island nations, especially sity to create positive spillovers. those located in the Pacific Ocean, are also con- With limited domestic markets, small is- fronted with the challenge of remoteness. When land nations need to look outward to overcome small islands are located far away from economic 204 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 centers, the cost of trading with them may be- with higher income levels among small island come prohibitive. In the case of Pacific island nations.53 nations, the average GDP-weighted distance Migration is one of the key channels for eco- to trading partners is about 11,000 kilometers, nomic integration. As workers move to larger compared with about 8,000 kilometers for small economic centers, they gain access to larger countries in the Caribbean (figure 6.3).51 Not markets, cheaper inputs, and more investment. surprisingly, these Pacific island nations also Thus, the labor force is put to more productive trade less relative to other small countries. use and can earn higher incomes. In turn, re- Smallness and fragmentation further raise mittances from migrants improve living stan- the costs of public services and infrastructure. A dards at home. Moving labor to larger markets road, an energy network, or a government min- also allows workers and entrepreneurs to inter- istry that serves 100,000 people is likely to have act with more dynamic firms, thus acquiring a higher cost per user than one serving 10 mil- better and more diversified skills and gaining lion people. High fixed costs have to be spread exposure to new ideas. across a smaller number of people, and often Emigrants account for over 20 percent of the across a larger number of locations, which im- total population in a majority of these countries. plies higher costs of doing business. On average, remittances are responsible for over These geographic challenges are fundamen- 8 percent of GDP in Pacific island countries tal to the economic experience of these small is- and for 5 percent in other small island nations land nations. Unfortunately, policies cannot al- (figure 6.4). In fact, migration is behind several ter these disadvantages, but they can be partially success stories. Samoa has a long history of mi- offset through integration with bigger econo- gration into New Zealand, through a treaty of mies. Canada’s seasonal agricultural worker friendship in existence for more than 30 years, program with Caribbean and Latin American and the Cook Islands are in a free association countries is an example. Several other similar with New Zealand. Both have been able to reg- bilateral agreements have been introduced.52 ister sustained growth in contrast to the experi- In fact, tighter political relationships with large ences of other Pacific island nations.54 economic centers are found to be associated It may take time for the benefits from migra- tion to materialize, as a comparison of Tonga and Fiji illustrates. Tonga has more than 40 years of substantial migration and receives large per capita remittance flows. In Fiji, international FIGURE 6.3 Small island nations are located migration is a much more recent phenomenon. far away from economic centers Household surveys show that more than 90 percent of households receive remittances in 14,000 Tonga, compared with 43 percent of households in Fiji.55 12,000 The different historical paths influence the GDP-weighted distance (km) impact of migration on the domestic economy. 10,000 In countries with a more mature migration, household behavior at home is more tilted to- 8,000 ward business activities. In both Tonga and 6,000 Fiji, migration and remittances lead to higher savings, but they have a different impact on 4,000 household income generation. In Tonga, both the number of emigrants and the level of remit- 2,000 tances received are associated with increasing income from business activities. In Fiji, by con- 0 Paci c islands Caribbean islands trast, remittances do not seem to affect business income and have a negative relationship with wage earnings—as if migration just served as a Source: Gibson 2006. Note: GDP = gross domestic product; km = kilometer. The figure shows the weighted average distance substitute for wage employment in the domestic from the islands to 218 other countries, weighted by the GDP of those countries. economy. 56 Diverse jobs agendas 205 FIGURE 6.4 Migration matters for small island nations, even more so in the Pacific a. Migrants are a large share of the population b. Remittances are a large share of income 100 14 90 small island nations, cumulative % share of remittances in GDP, % 80 12 70 10 60 8 50 40 6 30 4 20 10 2 0 0 less than less than less than less than all 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 10 20 30 40 islands emigrants as a share of population, % East Asia and Paci c Latin America and the Caribbean Sub-Saharan Africa Source: World Development Report 2013 team calculations based on World Bank migration database and remittances database. Note: GDP = gross domestic product. Nineteen small island nations are included in panel a on migration and 15 small island nations in panel b on remittances. The variation of remittances in Pacific Island countries over time is driven by missing data from Samoa. Migration does not always lead to a win-win capital stock once the migrants return.59 Evi- situation, however. For example, large remit- dence from Fiji suggests that migration oppor- tance flows raise the prospect of Dutch dis- tunities increase the probability that household ease—the appreciation of the real exchange rate members will acquire tertiary education.60 Re- due to the abundance of foreign currency. Brain sults from qualitative surveys in Fiji also indicate drain is also a salient feature in these countries, that workers are prompted to acquire special at least in the short term. Their migrants are skills for migration.61 more educated than their general population. In Viable jobs in small islands are traditionally 12 of 19 small island nations, more than 30 per- associated with the exploitation of natural re- cent of total emigrants are skilled workers; in 14 sources including fisheries, forestry, mining, and of them, skilled emigrants represent more than tourism. When niche opportunities exist, low 40 percent of the domestic skilled population.57 business costs become less critical for attract- While these migrants experience large income ing investment. In Fiji, sugar production and gains, send substantial remittances back, and do tourism are the largest sources of employment. transfer knowledge, they do not appear to trade As the most important agribusiness, sugar pro- with their home countries or invest in them to duction contributes about 8 percent of exports any large degree.58 In Caribbean countries, the and employs over 10 percent of total popula- outmigration of health personnel has raised tion. Annually, half a million visitors come to particular concerns because of its negative im- Fiji, while the local population is less than one pact on health systems. million. Tourism has become a main source of On the other hand, migration and remit- employment growth in the formal sector.62 tances can promote human capital accumula- The reliance on natural resources, however, tion. The possibility to migrate may motivate raises the vulnerability of these countries. These greater investments in education, and remit- sectors tend to be more susceptible to natu- tances may finance them. Short-term migration ral shocks—both natural disasters and volatile can offer workers better training and education rainfall patterns. As with geographical disadvan- opportunities, which adds to domestic human tages, policies cannot eradicate the vulnerability. 206 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 But jobs exploiting natural resources should not intensive services in tourism, finance, and in- undermine the fragile ecosystem of the islands. formation communication technologies.64 When conducted in a sustainable manner, tour- Many explanations have been offered for the ism and fisheries have positive environmental Mauritius miracle. There is no doubt that the impacts. focus on trade and foreign direct investment, Ensuring a broad distribution of the rents and on using export processing zones to target from jobs in the natural resource sectors is light manufacturing industries, has been a criti- challenging. For example, Vanuatu’s impres- cal element of Mauritius’ success. The country sive growth has not had an impact on the lives also boasts low corruption levels and a favorable of most residents. The country’s development regulatory environment, coupled with strong has been driven by foreign investment in tour- public-private sector cooperation and flexible ism, financial services, and land development, institutions.65 But the circumstances that al- and only a relatively small proportion of the lowed Mauritius to embark on this remark- urban population is reaping the gains. This has able development path were exceptional. They increased inequality and may lead to disruptive included the quota system that used to govern social trends.63 garment exports. Other small island nations A closer look at the Mauritius miracle may not enjoy such opportunities these days. shows how small island nations might be able Small island nations face unique difficul- to diversify into activities not based on the ex- ties because they cannot benefit from the gains ploitation of natural resources. Between 1977 of scale or specialization. These difficulties are and 2009, real GDP grew at 5.1 percent a year intensified in places such as the Pacific island in Mauritius, compared with 3.2 percent for countries, which are far from major centers of Sub-Saharan Africa overall. The World Eco- economic activity. The experience of Mauritius nomic Forum ranks Mauritius as the second- shows what might be possible with strategic pol- most-competitive country in the region. This icies, strong institution building, and a dose of sustained growth has been accompanied by a luck. But for many small island states, establish- profound structural transformation over time. ing links with nearby economic centers, maxi- Poor at independence in 1968, Mauritius has mizing the benefits of migration, and exploiting transitioned from a sugar economy to manu- niche markets while preserving their fragile eco- facturing textiles and apparel to knowledge- system point the way forward. JOBS LENS Jobs connected to global markets Small island nations Jobs not undermining fragile ecosystems Countries with high youth their transition from school to work. In agrarian unemployment countries, for example, open unemployment is low and youth employment difficulties are likely Young people are much more likely to be un- to manifest themselves in poor job quality and employed than older adults. In most countries, low earnings. In countries with high youth un- unemployment rates for youth, defined as 15– employment, job quality may be a problem for 24 years old, are usually between two and three those young people who do find work. In the times the overall unemployment rate (figure Arab Republic of Egypt, informality is two times 6.5). And the unemployment rate captures only more common among 15- to 24-year-old work- one aspect of the problems young people face in ers than among 35- to 54-year-olds.66 Highly Diverse jobs agendas 207 segmented labor markets offer limited scope to make the transition from informal to formal FIGURE 6.5 Youth unemployment rates are extremely high jobs. In Tunisia, even in those sectors that largely in some countries employ youth labor, employment is often tem- porary and informal.67 60 The stakes in youth unemployment are Armenia high. Recent events in the Arab world and in 50 South Africa southern Europe have highlighted the discon- youth unemployment, % tent of educated youth whose employment op- Algeria 40 portunities are falling short of expectations. 45° line The Arab Spring may boost transparency and Egypt, Arab Rep. Tunisia accountability in the region, but if jobs do not 30 Jordan follow, greater instability may result.68 Youth employment problems have economic costs, 20 not only in the short run but also in the lon- ger term. Unemployment among young people 10 can lead to permanent scarring effects in the form of lower future earnings.69 The lack of 0 job opportunities may also lead to discourage- 0 5 10 15 20 25 30 35 ment. Some of the decline in youth unemploy- overall unemployment, % ment in the aftermath of the global crisis is ac- tually driven by young people dropping out of Source: World Development Indicators, World Bank, Washington, DC. the labor force.70 Note: Unemployment rates are averages for 2000–10. Many countries with youth unemployment problems have very large youth cohorts. In Zimbabwe, where 43 percent of the working- age population is between 15 and 24, the youth ing people and jobs. A majority of workers in unemployment rate is three times higher than most Middle Eastern and North African coun- the overall unemployment rate. The Middle tries have found their jobs through family and East and North Africa, which has especially high friends.72 Adults tend to have better networks youth unemployment, is an overwhelmingly than young people going through the transi- young region. More than 100 million people are tion from education to employment. If a large between the ages of 15 and 29, making up 30 percentage of a person’s network is unemployed, percent of the region’s population and about 47 the chances of that person finding a job are low. percent of the working-age population. Youth A skills mismatch is the other common cohorts this large are not only likely to face explanation. Close to 40 percent of the firms higher unemployment rates but also tend to ex- surveyed through investment climate assess- ert downward pressure on labor earnings.71 ments in the Middle East and North Africa But demography is far from the whole story. report that the limited availability of skilled Not all countries with pressing youth employ- labor is a major constraint on business. Lack ment problems have “youth bulges.” In Sri of formal schooling, which has increased sub- Lanka, less than one-quarter of the working age stantially in the region, is not the cause. In fact, population is between 15 and 24, but the youth youth unemployment rates tend to rise with unemployment rate is more than three times the educational attainment in many countries. In overall rate. And even where youth cohorts are Morocco, young people with a university edu- large, young people may encounter other bar- cation had an unemployment rate in 2009 of riers to employment. Poor information on job 17 percent, 3.7 times the rate for those with seekers and on employment opportunities is primary education or less. In Tunisia, 23 per- one reason why young people face more diffi- cent of university-educated youth were unem- culties than adults in finding jobs. Where private ployed in 2010, compared with 11 percent for and public agencies and other sources of labor nongraduates.73 In Tunisia, it takes graduates 28 market information are not well developed, months on average to find a job, compared with personal networks are important for match- 19 months for nongraduates.74 Not only has un- 208 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 FIGURE 6.6 Having higher education does not bring better employment chances in Tunisia a. Unemployment rates among b. Expected employment de cit per year, university graduates 2010–14 35 30 30 25 25 20 percent percent 20 15 15 10 10 5 5 0 0 –5 2005 2006 2007 2008 2009 2010 2011 primary basic secondary tertiary and vocational Sources: Angel-Urdinola, Brodmann, and Hilger 2010; Government of Tunisia, L’Institut National de la Statistique. Note: The employment deficit indicates the difference between predicted annual labor force increase and predicted annual employment increase for the 2010–14 period. employment been increasing, but the employ- ployment usually build on these two explana- ment deficit is expected to grow more among tions. The poor flow of information between university graduates than among people with employers and jobseekers is seen as a justifica- less education (figure 6.6). tion for active labor market policies that focus The paradox of high unemployment among on improving the match between labor supply the highly educated is related to the growth and demand. Counseling can help jobseekers path of countries in the Middle East and North understand what they have to offer and where Africa, where the civil service and state-owned the opportunities are. Temporary employment enterprises have long been the employers of programs may provide a first job and make em- choice and education systems were built to ployers realize the value of a young worker. As feed them with staff. Students aspire to public for skills, the contrast between high educational sector jobs, where benefits are generous and attainment and high unemployment rates is employment is stable, and focus on obtaining seen as an indication of a disconnect between academic credentials rather than skills that en- the quality and relevance of schooling and the hance employability.75 There is a striking dif- actual needs of the labor market. Improving ference between the preferred educational path youth employment prospects, it is argued, will of youth in the region and that of youth in the critically depend on restructuring education high-performing East Asian countries. In 2009, and training systems to produce marketable one-quarter or less of the university students in skills rather than credentials.78 In the short term, Algeria, Lebanon, and Saudi Arabia were major- training programs are indeed the most obvious ing in science, technology, or engineering.76 In response to provide unemployed youth with the some East Asian countries, such as China, the practical skills employers need. Republic of Korea, and Malaysia, that share was The potential impact of these prescriptions more than two-fifths.77 is limited, however. Better information, coun- Prescriptions on how to address the jobs seling, and temporary employment programs challenge in countries with high youth unem- can certainly help some jobseekers, but whether Diverse jobs agendas 209 they would make a major dent in the aggregate ployment rate remained at 14 percent or above, unemployment rate is unclear. Better matches and the rate for university graduates exceeded between jobseekers and employment oppor- 30 percent. tunities would result in large increases in total The key questions are why growth in Tunisia employment only if there were many unfilled and other countries with high youth unemploy- vacancies. But that is not the case in the Middle ment has not been more labor intensive and East and North Africa. Part of the high unem- why the sectors that have expanded the most ployment rate among graduates stems from rely on unskilled workers. The answers may be the fact that the demand for skilled labor de- in the product market more than in the labor rives mainly from public administration, where market. Although many countries in the region growth is constrained by budgetary issues, and have implemented reforms to reduce red tape by increasing privatization and deregulation.79 and improve the overall business climate, dis- Meanwhile, the main sources of private sector cretion, arbitrariness, and unequal treatment growth (such as construction and low-value- still hinder competition and private sector de- added services) demand unskilled workers, for velopment, especially in skills-intensive sectors the most part.80 such as telecommunications. In many countries The problem is similar with training pro- in the Middle East and North Africa, connec- grams. Educated youth have the capacity to tions with political power may matter more learn quickly. If employers wanted it, they could for success than entrepreneurial capacity.82 The even provide on-the-job training as needed. But perks often extend to the workers in these cos- training may not change aspirations. seted businesses, under the form of job security Despite its diminishing absorption capacity, and other benefits, adding to the frustration of the public sector in the Middle East and North those left out. Africa region remains the main client of the Firm dynamics provide some evidence of higher education system and thus shapes stu- the difficulties associated with job creation and dent expectations and choices. The public sector employment growth in these countries. Rates still accounts for about one-third of overall em- of new firm registration are low in most coun- ployment in countries such as the Arab Republic tries in the region.83 And even when they do get of Egypt, Iraq, Jordan, and the Republic of Ye- started, small firms face barriers in growing into men.81 In some of these countries, public sector sizable companies. The vast majority of Tuni- employment has recorded modest growth in sian formal firms are small: 86 percent of them recent years, but budgetary pressures will inevi- are one-person entities, and only 0.4 percent tably result in a severe contraction in the future. have 100 workers or more. But these large firms Aspirations remain, however, and, for many of account for more than one-third of all jobs, the unemployed youth who have pursued uni- more than all the one-person firms combined. versity education in the expectation of getting A study of their dynamics over a decade shows a public sector job, there is a sense of a broken that micro- and small firms hardly ever become promise. large firms. Moreover, one-person firms only Information, counseling, and training are very rarely graduate into the small size category, unlikely to overcome this frustration. Addressing and many are likely to shut down.84 the jobs challenge of countries with high youth While countries with high youth unemploy- unemployment rates requires a dynamic private ment may face a large youth bulge or education sector that can create employment opportuni- quality issues, problems are often on the de- ties commensurate with the education and aspi- mand side, with limited competition reducing rations of new entrants to the labor market. employment opportunities, especially for highly Growth alone may not be enough. After all, skilled youth. Many countries in the Middle East few countries have had a better economic per- and North Africa would have greater scope to formance than Tunisia, the first country in the generate more jobs for young people if the bar- Arab world in which jobs discontent erupted riers to firm entry and growth were eased. This into political turmoil. Between 2000 and 2010, prospect is unlikely to materialize, however, as its GDP expanded at an average annual rate of long as political connections remain more im- almost 5 percent; meanwhile, the overall unem- portant than entrepreneurial capacity to enter 210 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 into the modern sector. Ending privilege, more would result in higher living standards by re- than improving labor market matching or up- ducing the burden protected activities put on grading skills, is thus the priority for countries others. And it would reinforce a sense of fair- with high youth unemployment. Dynamism in ness in society—a sense that young people can more skills-intensive sectors would lead to faster get ahead by what they know rather than who growth by putting educated youth to work. It they know. JOBS LENS Jobs not supported through rents Countries with high youth unemployment Jobs not allocated on the basis of connections Formalizing economies as a sign that the state is unable to enforce regu- lations and citizens are unwilling to comply with The challenge of formalization is present in them.87 economies where a large share of the labor force The prevalence of informal employment in is already covered by labor legislation and social these relatively advanced economies can nur- protection programs, and reaching universal ture poverty and social exclusion.88 Almost by coverage seems attainable. But going in that di- definition, informal workers lack legal job pro- rection raises serious tradeoffs. Formalization tections and social insurance coverage, making is often seen as necessary to strengthen social them more vulnerable to workplace abuses, cohesion. It is also bound to increase the living health risks, and the vagaries of the business standards of those who get under the purview cycle. Informal workers face a higher probabil- of labor law and gain access to social protection. ity of poverty and often perceive themselves as But formalization may reduce productivity if it poor.89 Men represent a majority of informal distorts incentives or puts a burden on firms. workers, but the probability for them to work Formalizing economies are characterized in the informal sector is generally lower than by already large or growing urban populations for women, making informality another source where many residents have incomes well above of gender inequality. In Peru, informality rates poverty levels, yet where many still work in are 76 and 66 percent for women and men, re- informal employment. The emerging middle spectively. In South Africa, the corresponding classes in these economies demand advanced rates are 37 and 30 percent. The Arab Republic public services, including tertiary education, of Egypt is a notable exception, with rates of 23 health care, and pensions. They are often frus- and 54 percent, respectively.90 trated by poor governance. They may perceive Informality is also associated with low pro- taxes and public sector benefits as useless or ductivity. Most informal workers are either unfair and resent the weak physical and in- self-employed or work for small unregistered stitutional infrastructure, as well as the exces- firms, with low capital per worker, limited tech- sive regulatory load. These frustrations beget nology, and no scale economies. In Turkey, the avoidance and evasion of regulations, and, in differential in total factor productivity between such a climate, informal jobs not only persist formal and informal firms is 19 percent in man- but can even proliferate.85 ufacturing and 62 percent in services.91 A study This state of affairs, sometimes described as in six Latin American countries finds that labor an informality trap, reflects a weak social con- productivity is 30 percent higher in formal firms tract.86 That a large share of a country’s urban than in informal firms.92 The use of public ser- labor force is informal is sometimes interpreted vices by the informal sector, without proper tax Diverse jobs agendas 211 contributions, puts a burden on formal firms and lowers their productivity as well.93 FIGUR E 6.7 Labor regulation may not be the biggest It does not follow that formalization alone obstacle to formalization would increase productivity. Evidence shows that firms do not become more profitable simply by tax rates* formalizing.94 Low productivity may reflect self- corruption* selection by workers and firms, who choose political instability* whether to formalize depending on the balance skills* between the associated benefits and costs. For tax administration* many workers, the poor quality of social protec- tion and the possibility of relying on others in crime/disorder* case of adverse shocks may make informal sector competition* employment a preferred alternative. An analysis nance* of labor market dynamics in Brazil and Mexico electricity* confirms that a substantial part of the informal licensing* sector workforce, particularly the self-employed, telecoms* appears to voluntarily exit from the formal sec- courts* tor.95 Self-selection also occurs in the case of labor regulation* firms. A business tax reduction and simplifica- transport* tion adopted in Brazil in 1996 led to a significant access to land* increase in formality among microenterprises.96 customs In other cases, workers with limited access to asset accumulation find themselves trapped in 0 1 2 low-productivity informal jobs or use this sec- constraint score relative to the average tor as a last resort to escape unemployment. In score of other constraints Colombia and Argentina, evidence shows that formalizing countries other countries a large share of workers, particularly low-skill workers, are systematically less likely to work in Source: Investment Climate Survey (database), World Bank, Washington, DC. the formal sector despite being willing to work in Note: Formalizing countries in the sample include Albania, Argentina, Armenia, Azerbaijan, Brazil, Cape it.97 In any case, informality is clearly a multilay- Verde, Chile, Colombia, Costa Rica, Ecuador, Georgia, Guyana, Kazakhstan, the Kyrgyz Republic, the former ered phenomenon with some workers trapped Yugoslav Republic of Macedonia, Mauritius, Mexico, Moldova, Mongolia, Panama, Peru, the Philippines, Romania, the Russian Federation, Serbia, Turkey, Ukraine, Uruguay, Vanuatu, and República Bolivariana de in this sector and others self-selecting into it.98 Venezuela. The horizontal axis measures the ratio of the average score of a constraint to the average score Personal views about informality are actu- of all other constraints. The asterisk denotes statistical significance of the difference between formalizing ally very diverse.99 For example, some partici- economies and others at the 1 percent level. pants in a focus group of young women from a better-off neighborhood in Durban, South Africa, associated good jobs with formal occu- you have to go around asking people if you can pations such as doctor, lawyer, teacher, nurse, or cut their yard . . . and you work in the sun”). police woman: “Being a police-woman is a good In the long run, the informal sector tends to way to make a living because they get benefits be larger in countries where labor productivity and they help protect the community.” Other is lower, government services are weaker, and participants, from a poorer neighborhood, iden- the business environment is less flexible.100 A tified good jobs as those in farming (“because controversial question is how much labor mar- you can sell the veggies”) or sewing (“because ket and business regulations actually contribute you can make a lot of money”). But other infor- to informality.101 Responses by firms surveyed mal sector jobs were seen as bad because they in- in investment climate assessments suggest that volved financial precariousness and hard work- labor legislation is not necessarily the main ing conditions. Among them were working as a cause of informality, not because the laws and domestic worker (“because you have to go door regulations are irrelevant, but because they are to door asking people if they have a job for you. regarded with irreverence. Corruption and taxa- . . . [They] would pay you R30 and say because tions are seen as the most vexing obstacles firms you are just helping”) or cutting grass (“because face (figure 6.7). Recent research also indicates 212 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 6.7 The debate on how to reduce informality is intense in Mexico Having at least one member working in the formal sector allows Seguro Popular. Oportunidades covers nearly one-fifth of the total Mexican families to have a regular source of income, health cover- population and nearly all the rural poor, making it one of the best- age for all, and, through these, access to the support of social net- targeted poverty reduction programs in the country. Seguro Popu- works. A case study, based on both ethnographic and statistical lar is the most rapidly growing program, claiming a coverage of evidence, makes the case that households whose members fail to more than 50 million by April 2012.e But some preliminary research secure formal jobs are more likely to fall into poverty because of the finds that non-contributory programs in general, and Seguro Popu- risk of catastrophic health expenses. They are also less likely to lar, in particular, may induce informality or, at least, discourage for- secure social support from relatives and neighbors.a Formal employ- mal employment.f ment is thus critical for living standards in Mexico. Meanwhile, the debate about the universalization of health Despite a GDP per capita around US$14,000 in purchasing insurance is very much alive in Mexico. Academics and policy mak- power parity terms, Mexico’s informal employment has ranged ers argue over it, and it is also a topic of political controversy. Much from 50 to 62 percent of total employment depending on the defi- pivots on how much universalization will cost. Estimates vary widely nition used. This rate is considered high given the country’s devel- from no incremental costs because of efficiency and tax collection opment level and has not shown consistent signs of decline in gains to relatively large costs when accounting for long-term demo- nearly two decades. Several studies argue that restrictive labor leg- graphic changes. These differences originate from different meth- islation is a factor explaining Mexico’s large informal economy.b The odologies, which indicate the complexity of the topic and the diffi- country has tried unsuccessfully to reform its main labor law, which culty in gauging the full implications of the reform.g was enacted in 1973 and which is tied to rights enshrined in the Mexico’s debate on formalization needs to be cast in a broader 1917 constitution. context. In recent years, poverty and unemployment have increased Weak enforcement is another factor behind informality in Mex- while real wages have been stagnant. But other measures of well- ico. The government announced a doubling of inspectors at the being, such as access to education, health, and social security, have Ministry of Labor in 2012, from 300 to 600. This number still com- continued to improve.h Average productivity has been growing, but pares unfavorably with other countries.c Labor courts are also over- slowly, which can be due to an excessive churning of jobs and firms.i stretched: cases may take between three and six years to reach a Demographic trends still show high fertility rates for a large share of conclusion.d the population, which leads to a social reproduction of poverty and This stagnation in the reform of legislation and enforcement informality.j Whether sweeping changes in labor and tax legislation contrasts with the expansion of a successful cash transfer program, as well as in the organization of social protection would substan- Oportunidades, and a noncontributory social insurance program, tially reduce informality is still an open question. Source: World Development Report 2013 team. a. Gonzalez de la Rocha 2012. b. Botero and others 2004; Heckman and Pagés 2004; Levy 2008; Venn 2009. c. Brazil has 3,000 inspectors, according to Pires (2011); France has 2,100, according to Piore and Schrank (2008). Piore and Schrank (2007) estimate that while Mexico has 1.72 inspectors per 100,000 workers, Brazil has 2.45, Argentina 3.05, and Chile 19.25. d. Kaplan, Sadka, and Silva-Mendez 2008. e. http://www.seguro-popular.gob.mx. f. Aterido, Hallward-Driemeier, and Pagés 2011. g. Anton, Hernandez, and Levy 2012, Perry and others 2007; Villarreal 2012. h. Villarreal and Rodriguez-Oreggia 2012. i. Calderon 2012. j. Martinez and Aguilera 2012. that it is business regulations, more than labor Efforts to reduce informality have taken a new regulations, that help explain changes in infor- twist in recent years. In several Latin American mality and unemployment.102 countries, sweeping changes in the organization Addressing the jobs challenge faced by for- of social protection are being implemented or malizing economies requires extending social proposed. First, transfer programs have esca- protection and the purview of labor laws with- lated. Brazil and Mexico introduced cash trans- out choking off economic dynamism. Previous fer programs in the late 1990s that now cover attempts by Latin American countries to for- nearly one-fifth of their populations.103 Brazil, malize through heavy-handed regulation, man- Chile, and Mexico have also introduced non- dated benefits, and ill-designed social insurance contributory programs for senior citizens, and programs led to populist enthusiasm but also to other countries are following suit. More radi- lower productivity and eventually to economic cally, policy makers are debating whether to stagnation and poor quality of social protection. make the coverage of social insurance universal, Diverse jobs agendas 213 moving away from the current contributory lation, a three-pronged strategy may be war- systems toward the funding of benefits from ranted.107 For those who clearly work outside general tax revenue.104 This reform would cer- the purview of regulations, the reach of human tainly expand the number of beneficiaries, but development and social protection services and whether it would encourage firms to formalize activation policies should be expanded. For is a matter of intense debate, especially in Mex- those who work in stunted firms that legally ico (box 6.7).105 avoid becoming formal, regulations should be So far, few countries have managed to sub- simplified and their burden eased. Finally, for stantially reduce informality. Rapid growth and those in firms that evade regulations, enforce- strengthening institutions in Brazil and Chile ment should be strengthened. For this three- have made them recent exceptions. In both pronged strategy to have a chance of success, cases, changes in labor market regulation have workers and employers need to perceive the had limited effect. Patient accumulation of hu- state as a reliable and fair partner. If the state man capital and sustained growth have paid off. is not able to generate a sense of trust through But strengthened rule of law, effective policies, the provision of efficient and good-quality ser- and a better perception of the role of the state vices, neither regulatory reform nor increased have also helped. enforcement will succeed in increasing formal- Those who see informality as the outcome of ization substantially. a weak social compact argue that the way for- The key is to build formal institutions and ward involves a combination of enhanced en- programs that are not too costly and that are forcement of regulations, improved quality of valued by workers. The jobs agenda of formal- public services, and greater policy coherence.106 izing economies is closely linked, then, to the If informality is associated with production development of effective regulation and social units that evade, elude, or stay outside regu- protection systems. JOBS LENS Jobs with affordable social benefits Formalizing countries Jobs not creating gaps in social protection coverage Aging societies to generate income to meet the needs of the el- derly generation. The old-age dependency ratio Declining fertility rates and, in many countries, in the Islamic Republic of Iran and in Singa- rising life expectancy have led to rapidly aging pore will rise almost fivefold between now and populations in several regions of the world. To- 2050. These two countries will have four and six day’s aging societies are concentrated in indus- elderly people, respectively, for every ten 15- to trial countries, in Eastern Europe, and in the 64-year-olds. China’s old-age dependency ratio Southern Cone of Latin America. China entered will rise by a factor of almost four. Many already the aging phase in 2010; and India, the Islamic aging societies in Eastern Europe as well as in Republic of Iran, Singapore, and Thailand will Argentina, Chile, and Uruguay, will experience experience significant aging in the relatively a rise in the ratio—a doubling or even more in near future.108 most cases—between now and 2050. The old-age dependency ratio measures the The reasons for these surges in dependency number of people 65 years or older in relation ratios vary across countries. In most, the elderly to the number of people in the working-age live longer; in some, there are fewer people of population (15 to 64 years). When this ratio is working age. Low fertility rates in Bulgaria con- high, the working-age population faces pressure tributed to a population decline of 15 percent 214 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 FIGURE 6.8 The labor force will shrink if age-specific participation rates remain constant 0 change in labor force, % –10 –20 –30 –40 ia a e va ia ba nd tia ia ic n ia ic a ia a nd in in ni in tio bl bl ar an tv rb en do oa Cu la la ov Ch ba ra pu pu lg La Se ra m m Po ai ol Cr Uk eg Bu Al de Th Ro Re Re Ar M rz Fe ak h He ec n ov ia Cz d Sl ss an Ru ia sn Bo Source: World Development Report 2013 team based on United Nations population statistics. Note: The simulation assesses the decrease in the total labor force based on the assumption that age-specific labor force participation rates remain constant between 2011 and 2050. between 1990 and 2010—and by 2050, the its workforce, Poland 28 percent, and China 17 country is projected to have lost almost 40 per- percent (figure 6.8).109 cent of its population compared with its peak in Aging affects jobs through several chan- the mid-1980s. Other Eastern European coun- nels.110 Lower fertility may imply higher num- tries, such as Bosnia and Herzegovina, Moldova, bers of women ready to seek and take up jobs, Romania, and Ukraine, are expected to follow although little evidence of this has been observed the same pattern; China’s population will be 50 in Eastern Europe over the past 20 years. Smaller million less in 2050 than it is now. In India and cohorts of young people could reduce innova- Singapore and in the Southern Cone countries tive capacity. Disability rates increase in older of Latin America, population growth is slowing age groups and thus further affect the labor down and will start to decline by the middle of supply in aging populations.111 Understanding the century. how aggregate savings will be affected is also If the labor force participation rates of older important, given that savings drive investment, workers are significant today and if these lev- growth, and job creation. Savings typically de- els can be maintained, the impact of aging on cline among older age groups. This decline average income can be cushioned considerably. could be offset if young people were to build up But that may not be enough. If age-specific par- additional buffers to support their longer life ticipation rates remain constant, some coun- spans, especially if public retirement schemes tries, such as Thailand, would be able to limit prove unsustainable or are absent. Expenditure the absolute decline in its labor force, but many patterns also vary with age. The rapid rise in the others would not. The impact in many Eastern long-term care industry in high-income coun- European countries, Cuba, and China would be tries is an example. In the United States, the in- stark because of the decline in the size of the dustry now counts more than 3 million formal working age population. Between 2011 and jobs, and an estimated 10 million Americans 2050, Bulgaria would face a 40 percent drop in 50 years or older (roughly one-quarter of this Diverse jobs agendas 215 age group) provide care to one or both of their parents.112 FIGURE 6.9 Labor productivity has to increase to avoid Raising productivity is ultimately essential declines in living standards for maintaining living standards in aging soci- eties where fewer people are working. In many 30 Eastern European countries, the productivity change in labor productivity, % gains required would be substantial (figure 6.9). If they do not materialize, falling living stan- 20 dards will threaten those population groups that are vulnerable to poverty.113 Through jobs, aging also impacts intergen- erational relations and social cohesion. Migra- 10 tion and aging have put stress on the traditional family-based support systems for China’s ru- ral elderly, raising the possibility that they will 0 have to continue working at later ages and will ia ic a ic ia n ia e a nd in ni in tio bl bl en ar an la ov to ra not have assistance, financial or otherwise, from pu pu lg ra hu ov ai Uk Es eg Bu de Th Re Re Sl Lit rz their children.114 The older generation can feel Fe ak h He ec n ov ia Cz d not only neglected, but also excluded. In Poland, Sl ss an Ru ia a 55-year old man felt that “age is a great barrier. sn Bo I’ve submitted my CV and they tell me I am too old, they tell me if you were 35 years old we could Source: World Development Report 2013 team based on United Nations population statistics and national hire you. I have 20 years of experience and they household surveys. Note: The simulation assesses the labor productivity increase necessary between 2011 and 2050 to main- expect me to be 35 years old?”115 tain constant gross domestic product per capita given the expected decline in employment rates. Social security and health systems in many aging middle- and higher-income countries are barely sustainable as currently designed. rial hardship for elderly people. The adjustment Systems inspired by the Bismarckian model, process itself is likely to be painful economically, where social welfare and insurance are financed socially, and politically. The experience of sev- through labor taxes on a pay-as-you-go basis, eral high-income countries shows that imple- are particularly vulnerable. A decline in the con- menting the necessary reforms can stretch social tribution base shrinks the resources available cohesion to the limit. for pensions and health care at the same time Aging also can make a society less mobile, that an increasing elderly population makes which can have economic consequences. In more claims on both systems. The health care Ukraine, for example, aging is taking place cost for people age 70 years and above, with against a relatively high pre-crisis level of higher disability prevalence rates, is two to three growth with very little creation of jobs. Some times higher than the cost for people of prime firms, though, are desperately looking for work- working age.116 While education expenditures ers, both highly skilled and manual. The elderly may fall in many aging countries in the medium are usually less mobile than the young, and the term, that in itself will bring about further— housing market makes changing residence dif- and often painful—adjustments as schools close ficult. Low internal mobility represents a sig- and teachers lose their jobs. nificant bottleneck to increasing activity and The magnitude of adjustments needed in raising productivity (box 6.8). social welfare systems is daunting. In a repre- In aging societies like Ukraine, good jobs for sentative Eastern European country, the public development are those that keep labor force par- pension system alone could reach a deficit of al- ticipation rates high, especially for the elderly. most 7 percent of GDP in 2050 compared with These jobs can contain the decline in average 2 percent today.117 To balance the accounts, the income while at the same time protecting the vi- retirement age would need to increase or the ability of the social insurance system, which, in ratio of pension benefits to earnings at retire- many countries, is under significant fiscal stress. ment would have to be cut, or some combina- Through these two channels, such jobs would tion of the two. Such changes could cause mate- also contribute to supporting social cohesion. 216 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 6.8 In Ukraine, the impact of aging is compounded by migration and declining fertility Ukraine’s population is shrinking. This country, which stretches from show little integration, as reflected by the high dispersion of unem- the heavily industrialized Russian-speaking east to the more agricul- ployment rates. In some parts of the country, employers complain tural and predominantly Ukrainian-speaking west, was home to 52 bitterly about the lack of workers with adequate skills, and at the million people when the Soviet Union broke apart. Today, there are same time they cannot fill available unskilled jobs. Yet, internal 6 million fewer people; by 2050, the population will have fallen to 35 mobility is low in Ukraine by international standards and has million. Fertility rates are sharply down, from about 2.0 at the end of declined in recent years. The lack of affordable housing has emerged the 1990s to below 1.5 today, albeit with an upward tick in recent as major barrier to mobility, also hindering registration for benefits years. The elderly dependency ratio is 22 percent and will reach in new locations. Rental property is scarce, often expensive, and can more than 40 percent over the next 30 years. absorb up to 50 percent of household incomes in the big cities.d The effect of this population aging on jobs is amplified by inter- Eventually, Ukraine may face a vicious jobs circle. A declining national migration. Between the turbulent transition years and the labor force and a lackluster productivity performance put the social middle of the last decade, about 2.5 million Ukrainians emigrated, insurance and welfare systems at risk of becoming unsustainable. mainly to the Russian Federation and Western Europe. Every year, The inability to provide benefits to an aging population, and the around 80,000 people leave the country,a and recent studies have stress that reforming the system could bring about, could become a shown that the possible positive impacts of migration through source of social tension. As participants in focus group discussions remittances, return migration, and diaspora involvement have not mentioned, this tension would be amplified by the perception that (yet) shown their desired impacts.b People ages 25–29 years, espe- the distribution of jobs is unfair and that jobs in the public sector cially women, are withdrawing in large numbers from the labor mar- require bribes.e The decline in employment rates could also under- ket: the female participation rate dropped from 78.1 percent to 70.9 mine civic engagement. Although low, the level of political and percent between 2001 and 2010.c community participation among the employed is about twice as Achieving high degrees of efficiency in the labor market is key to high as among the unemployed and 25 percent higher than among counterbalancing the impact of aging. But regional labor markets the inactive population.f Source: World Development Report 2013 team. a. World Population Prospects online database, United Nations, Geneva. b. Ukraine country case study for the World Development Report 2013. c. Statistical Service of Ukraine. d. Komarov 2011. e. Ukraine country case study for the World Development Report 2013. f. Ukraine country case study for the World Development Report 2013. The development of home-care models for the financing of the welfare system, but not all elderly can also support the twin objectives of groups have the same life expectancy. Typically, keeping a high employment rate and containing professional, technical, and skilled workers social insurance costs. Proactively attracting— can expect to live longer than manual work- and integrating—migrants and managing to ers, especially those in hazardous occupations. create virtuous circles with the diaspora prom- Keeping the skilled at work longer is a way to ises equally large returns. increase average labor productivity and offset Measures such as raising the retirement age the decline in employment rates. can contribute to labor force participation and JOBS LENS Jobs keeping the skilled active for longer Aging Jobs reducing the cost of services to the elderly societies QUESTION 6 A targeted investment climate? Creating an investment climate conducive to job range of policy levers: ensuring stability and se- creation in the private sector is a top policy pri- curity, enhancing financial markets, providing ority. The question is whether the government infrastructure services, reducing regulatory and should aim for a level playing field or focus its tax burdens, and improving the quality of the efforts on the specific areas, types of activities, workforce. The natural inclination is to equate firm sizes, and sectors with the greatest poten- a targeted investment climate with industrial tial to create good jobs for development. Jobs policy. If some activities result in large produc- challenges vary depending on a country’s level tivity spillovers (because of learning-by-doing, of development, its endowments, its demogra- for instance, or because of greater specialization phy, and its institutions. Ensuring free entry and and integration), targeting can imply support- competition across all sectors is a fundamental ing such activities. In recent years, productivity requisite for growth. But given the often lim- spillovers associated with various activities have ited fiscal space and administrative capacity of been reexamined from different viewpoints, developing countries, creating an enabling busi- with both academics and practitioners propos- ness environment across the entire economy can ing practical approaches for their identification be challenging, and the relevant question is how (box 6.9). policy priorities should be set. The targeting of the investment climate The conventional wisdom views targeting may not necessarily be aimed at industrial sec- with a skepticism that stems from often disas- tors, however. Targeting can focus on gender, as trous experiences with industrial policy. While when policies aim to increase labor market par- targeting was common in Latin America during ticipation by women, or on spatial concerns, as its import substitution phase, by the 1980s the in urbanization policies or policies for regional consensus was that interventions favoring spe- development. Or it can focus on firm size, as cific sectors led to rent seeking, economic stag- when policies support the development of small nation, and external vulnerability. Slow growth and medium enterprises. Good jobs for devel- in India until the 1990s was also attributed to opment differ across countries. The jobs agenda policies that favored local industrial groups and may involve making smallholder farming more undermined competition. The success of several productive in an agrarian economy, preserving East Asian countries in industrializing has reig- international competitiveness in a resource-rich nited the debate on the merits of targeting and country, or fostering competition in activities the role of the state, but the potential for institu- employing skilled labor in a country with high tional failures remains the main concern.118 The youth unemployment. In each case, the logic for dominant view holds that policy makers lack targeting lies in tackling market imperfections both the information and the capacity to “pick or government failures that are preventing jobs winners” when they select activities to target. In from contributing more to development. the absence of a solid information base, and tak- An example is targeting in the agricultural ing into account the institutional failures com- sector. The underlying logic is based on the mon in developing countries, a risk exists that notion of public goods. The biggest obstacles potential beneficiaries from targeted support to agricultural development are the lack of could unduly influence the decision process. appropriate technologies and adequate infra- structures. As arable land becomes scarce, the development of yield-enhancing technologies is Targeting is not necessarily industrial indispensable.120 But incentives to generate these policy technologies are undermined because they can The investment climate is the set of public goods be replicated freely.121 Thus, public policy plays and public policies that shape the opportunities a role by supporting the development and dis- and incentives for firms to invest productively, semination of such technologies. Because yield- create jobs, and expand.119 It encompasses a wide enhancing technologies are fertilizer intensive 218 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 6.9 Once again, the debate rages over industrial policy Industrial policy is an approach to state economic stewardship in A second approach emphasizes the policy process and espe- which direct support is given to particular sectors in pursuit of cially public-private partnerships. In this view, the dialogue between national goals. Industrial policy fell out of favor in the 1980s, but the government and businesses can help to overcome coordination today it is getting recognition again. The emerging views, however, failures and elicit information from the private sector on the most draw criticism and have led to a new round of debate. relevant productivity spillovers.b Arguments for industrial policy rest on three types of market For a third school of thought, what matters is not just any coordi- failures: knowledge spillovers and dynamic scale economies, coor- nation failure or externality, but spillovers of productive knowl- dination failures, and information externalities. In the first, industrial edge—mastering ways of doing things. Such knowledge is different policy is derived from the observation that knowledge spillovers from codified, public knowledge and is acquired and accumulated and dynamic scale economies differ across industries. Coordination through experience. This approach claims that spillovers of produc- failures arise when markets fail to correctly signal the future payoffs tive knowledge associated with different industries can be sizable. of investment projects, such as large-scale infrastructure projects, To identify industries worth supporting, the approach proposes to and the private sector tends to underinvest on its own. Information rank products by how much productive knowledge is embedded in externalities exist when knowledge on the profitability of invest- them and to focus on products that are similar to what is being pro- ment opportunities is limited and the risk of free riding discourages duced currently but embody a higher knowledge content.c investment and innovation. Opponents of industrial policy cast doubts on its alleged ratio- Building on these rationales, several approaches further develop nales, but above all, they question the practicality of its implemen- thinking on industrial policy. The New Structural Economics stresses tation. For instance, while admitting the existence of potentially siz- the shift in comparative advantage that results from changes in able knowledge spillovers and dynamic scale economies in certain endowments. The large productivity spillovers from infrastructure industries, skeptics question the whether the public sector has the and associated coordination failures justify a leading role for the capacity to identify these industries. A related concern is the ability state. To identify the industries to be supported, this approach pro- of the public sector to make industrial policy a dynamic process: poses to learn from countries with similar endowments but some- applying credible sunset clauses to old industries, and reallocating what higher income levels. Exports with a solid track record by resources to new industries. More generally, skeptics believe the these countries indicate which sectors could have a comparative knowledge and skill requirements for successful implementation advantage as the economy grows.a exceed the capacity of the public sector. d Source: World Development Report 2013 team. a. Lin 2009, 2012; Lin and Monga 2011. b. Harrison and Rodríguez-Clare 2010 ; Rodrik 2004, 2007. c. Cimoli, Dosi, and Stiglitz 2009; Hausmann and others 2011; Nuebler 2011 . d. Noland and Pack 2003; Pack and Saggi 2006. and sensitive to the availability of water, public port for public-private partnerships. More effi- investments in infrastructure—including roads cient logistics and public investments in major and irrigation facilities—are often essential. The infrastructure facilities usually complement the Brazilian government, for example, viewed in- package of incentives. A recent version of spatial vestment in adaptive agricultural research as a targeting is the idea of charter cities: to attract prerequisite for development. It therefore sup- businesses to a country with low credibility in ported a research corporation (EMBRAPA) that the eyes of foreign investors, sovereignty of a focused on technology generation and transfer city could be handed over to another country in and played a critical role in the success of the exchange for the enforcement of a credible set Brazilian agribusiness sector.122 of rules.123 The objective is to strengthen the in- The emergence of dynamic cities is another vestment climate in a small part of the country, case in point. From Dublin to Shanghai, com- potentially providing a demonstration effect for petitiveness initiatives increasingly involve cit- further reforms, while not threatening the rents ies, more than countries. This shift is a result of powerful local elites elsewhere. of agglomeration effects: the level playing field evokes a flat world, whereas urbanization poli- The information base for targeting exists cies correspond to a world with spikes of eco- nomic activity. Dynamic cities may offer more When there is clarity on the challenges faced favorable tax treatment, easy access to land, by a country, it is also possible to determine simplified administrative procedures, and sup- which types of jobs would help address these Diverse jobs agendas 219 challenges. Thanks to efforts in research and requires the inflow of foreign direct investment, data collection, the information set for decid- enterprise surveys indicate that foreign compa- ing whether and how to support the creation of nies are less concerned about finance, but view more of those good jobs for development is far customs administration, transportation, and from empty. licensing as more severe impediments to firm Consider jobs in farming. Among staple activity and growth (figure 6.10b). One coun- crops, rice, wheat, and maize are more promis- try may choose to focus on microenterprises, ing than sorghum and millet, but the latter crops because their success contributes to poverty are grown in drier and harsher conditions where reduction, and another on young and large farmers are particularly poor.124 Modern cereal firms, because they tend to be the most inno- varieties are high yielding primarily in favorable vative. In both cases, enterprise surveys can be rain-fed and irrigated areas.125 Thus, agricul- used to uncover the most relevant constraints tural policies are bound to affect the well-being (figure 6.10c, 6.10d). For example, shortages of of the rural population differently in different skilled labor, delays in customs, and stringent regions. The choice depends on the country’s labor regulations are viewed as more severe con- natural endowments and societal goals.126 straints by medium and large enterprises than In nonagricultural sectors, the main obsta- by smaller companies. In contrast, micro- and cles to job creation can be identified through small enterprises consider access to finance and quantitative and qualitative assessments of the competition to be more serious obstacles to constraints faced by enterprises. While these as- their growth. Recently, enterprise surveys have sessments need to be interpreted with caution, been conducted for household enterprises op- differences in responses across enterprises reveal erating in rural areas in selected countries. They patterns that can also be used for developing can serve as additional tools for countries to fos- targeted policy interventions (box 6.10).127 ter nonagricultural sectors in rural areas.128 If creating competitive cities is a feature of The effects of removing those constraints a country’s jobs agenda, enterprise surveys can also differ across businesses. Reducing barriers provide information on how different the con- to entry fosters the growth of industries that ex- straints faced by businesses are in cities of dif- perience higher natural turnover rates. Improv- ferent sizes (figure 6.10a). If the jobs agenda ing access to finance stimulates the development BOX 6.10 Caution is needed when interpreting results from enterprise surveys Surveys of entrepreneurs and senior managers can provide feed- Any survey that asks subjective questions has to address issues back on what the private sector sees as significant constraints to of comparability of responses. Where possible, more objective private sector development. Some care in interpreting their questions are preferable. Thus, instead of asking how constraining responses is necessary, however. The respondents will give answers the supply of electricity is on a scale of one to five, questions can ask that reflect constraints on their bottom line—without regard to the for the frequency and length of outages, or the costs of running a broader societal or welfare implications. Almost every entrepreneur generator. These responses can more easily be compared across will complain that taxes and interest rates on loans are too high. But respondents and over time. that does not necessarily mean that taxes should be lowered or that One further complication in interpreting responses from enter- interest rates are out of line with risks faced by creditors. Constraints prise surveys and linking them to enterprise outcomes is the poten- to the individual respondents need to be weighed against the tial for a two-way causal relationship between them. It could be that broader social goals. more onerous conditions are hindering an enterprise’s ability to stay In addition, enterprise surveys only target incumbent enter- in business. But a firm’s poor performance, perhaps stemming from prises. The surveys do not reach discouraged entrants and so do not weak management, could also be affecting the degree to which the ask about the constraints to entry they could not overcome; nor do respondent complains. Performance also affects which dimensions they reach those who recently closed down to ask why they are no of the investment climate matter the most; for example, the avail- longer in business. Thus the issues that may have an important role ability of skills may be more constraining to expanding firms, in shaping who is even asked the questions are unlikely to be whereas labor regulations may be of greater concern to firms that identified. are contracting and facing the need to shed workers. Sources: Hallward-Driemeier and Aterido 2009; World Bank 2004b. 220 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 F I G U R E 6 .10 The assessment of constraints to business varies across enterprises a. Large and medium cities versus small cities b. Foreign versus medium and large private local rms (China, 2005) (104 countries, 2006–10) access to nance customs nancing costs transport local protectionism licensing customs courts skills communications political instability anticompetitive behaviors corruption access to information telecoms unstable policies labor regulation crime electricity transport tax administration water services access to land tax administration crime/disorder tax rates workers’ skills competition electricity nance –0.6 –0.5 –0.4 –0.3 –0.2 –0.1 0 0.1 0.2 0.3 –0.3 –0.2 –0.1 0 0.1 0.2 0.3 di erence in constraint rating, relative to small cities di erence in constraint rating, foreign relative to large city medium city medium and large private local rms c. Large, medium, and small rms versus microenterprises d. Old and mature rms versus young rms (104 countries, 2006–10) (104 countries, 2006–10) skills competition customs corruption labor regulation courts transport tax rates courts labor regulation tax administration crime/disorder licensing tax administration telecoms political instability political instability customs crime/disorder telecoms electricity licensing tax rates electricity corruption skills access to land transport nance access to land competition nance –0.6 –0.5 –0.4 –0.3 –0.2 –0.1 0 0.1 0.2 0.3 0.4 –0.15 –0.1 –0.5 0 0.05 0.1 0.15 0.2 0.25 di erence in constraint rating, relative to micro rms di erence in constraint rating, relative to young rms large rms medium rms small rms old rms mature rms Source: World Development Report 2013 team based on the World Bank’s Enterprise Surveys 2006–10. Note: The analysis is based on a city-level enterprise survey of China in 2005 for panel a, and surveys of more than 60,000 urban enterprises in 104 countries in 2006–10 for other panels. The bars indicate differences in the rating of constraints between firms in two groups. Ratings in the surveys range from 1 (no constraint) to 5 (severe); they are net of the average rating of constraints by each firm, to assess relative severity. The analysis controls for firm age, size, ownership structure, export orientation, industry, and year. of industries that rely more on external funding. companies are more likely to withdraw from the The impact of removing constraints also var- market than private local firms.130 ies across firm size, age, ownership, and other characteristics.129 For example, infrastructure Not all targeting is vulnerable to capture bottlenecks tend to stunt the growth of medium by interest groups and large businesses but do not affect microen- terprises significantly. Similarly, when the judi- Capture by vested interests is arguably the most ciary system is viewed as a hindrance, foreign important concern about targeting. The risk Diverse jobs agendas 221 that the potential beneficiaries could unduly farmers, urban businesses, and female micro- influence the decision process is a real one. A entrepreneurs are all bound to benefit from too-cozy relationship between businesses and targeted policies aimed at their group. But indi- government can make it extremely difficult to vidually they do not have the power to influence remove support, even in the event of a blatant such policies, and they may not be able to orga- failure. Policy capture by vested interest groups nize as effective interest groups. could undermine the often weak capacity of Targeted government interventions are justi- governments in many developing countries. fiable only if they are based on a solid under- Targeted activities that involve a large num- standing of what good jobs for development are ber of beneficiaries are less subject to capture. in a particular context and only if they can be For example, support for smallholder farming, designed to be resistant to capture. One example competitive cities, or female microentrepreneurs is the involvement of the private sector in the is less likely to be influenced by beneficiaries. design and management of special economic In every country, thousands, if not millions, of zones (box 6.11). BOX 6.11 Special economic zones have a mixed record Special economic zones (SEZs) are demarcated geographic areas For example, in Bangladesh, the SEZ program initially aimed to within a country’s boundaries where the rules of business are differ- attract high-technology investments, but the government shifted ent from those that prevail in the national territory. These differen- the focus to garments, where the private sector had shown signs of tial rules principally deal with investment conditions, international success. The shift proved to be critical for the performance of the trade, and customs. The zones have a business environment that is SEZ program. Building effective partnerships with the private sector intended to be more liberal from a policy perspective and more is an important mechanism through which coordination challenges effective from an administrative perspective. can be overcome. Institutionally, the partnership can be established Before the 1970s, most SEZs were operated by developed coun- through representation of the private sector on the board of the tries. Then, starting with East Asia and Latin America, developing SEZ, as in the Dominican Republic and Lesotho. countries began to use SEZs to attract foreign direct investment, A common element of many successful SEZs is the technical often as a part of export-led growth strategies. The objectives competency of the bureaucracy responsible for constructing and broadened over time, as SEZs became instruments of trade, invest- implementing them. While this cautions against targeting when ment, industrial, spatial, and even broader economic policies. In government capacity is weak, several Latin American countries 1986, there were 176 zones in 47 countries; by 2006, there were have recorded successes by relying on private sector ownership 3,500 of them in 130 countries. and management. In the Dominican Republic, where public and SEZs have a mixed record. Their rates of return are still a topic of private zones coexist, there are no clear differences in employment, heated debate among economists. Their performance critically investment, or exports by zone ownership. But the private zones depends on their design and management. SEZs are more likely to generally offer higher-quality infrastructure and more value-added be successful when they are an integral component of the country’s services than the government-run ones and, accordingly, charge development strategy, are aligned with the country’s comparative higher rents. advantage, are cluster-based, and establish linkages with the rest of the economy. Sources: Akinci and Farole 2011; Kingombe and te Velde 2012 for the World Development Report 2013. Farmers in a pomegranate field in Tajikistan © Gennadiy Ratushenko / World Bank Street vendor in Kabul, Afghanistan Wage worker at a garment factory in Vietnam © Steve McCurry / Magnum Photos © Lino Vuth / World Bank Drying peppers in the street in Mexico © Curt Carnemark / World Bank Diverse jobs agendas 223 Notes 37. ADB 2012. 38. World Bank 2011b. 1. Pollin 2009. 39. According to the accepted wisdom, as income 2. De Vreyer and Roubaud, forthcoming. increases, the diversity of industrial structure 3. Fox and Sekkel Gaal 2008. increases before the onset of industrial concen- 4. Altman 2011. tration (Imbs and Wacziarg 2003). Thus, the 5. Because of new discoveries in the natural re- industrialization process in Bangladesh that has source sector, including natural gas, Mozam- involved a shift toward the monoculture of the bique may become a resource-rich country. Yet, garment industry deviates from the general rule. raising agricultural productivity and develop- 40. Jedwab 2012. ing light-manufacturing industries will remain 41. Papua New Guinea country case study for the key issues in this country, according to the World Development Report 2013. Mozambique country case study for the WDR 42. Papua New Guinea country case study for the 2013. World Development Report 2013. 6. Arndt and others 2012; Fox, Bardasi, and Van 43. Gibson and others 2005. den Broeck 2005. 44. Papua New Guinea country case study for the 7. Mozambique country case study for the WDR World Development Report 2013. 2013. 45. Macintyre 2011. 8. Christiaensen and Demery 2007. 46. Papua New Guinea country case study for the 9. Lipton 2005. World Development Report 2013. 10. Otsuka and Larson, forthcoming. 47. Papua New Guinea country case study for the 11. Christiaensen, Demery, and Kuhl 2011. World Development Report 2013. 12. Otsuka and Larson, forthcoming. 48. McCrea 2009. 13. Morris and others 2007. 49. Papua New Guinea country case study for the 14. Conning and Udry 2007. World Development Report 2013. 15. Sawada 2012. 50. Winters and Martins 2004. 16. Mozambique country case study for the WDR 51. Gibson 2006. 2013. 52. McKenzie, Martinez, and Winters 2008; World 17. McCormick 1999; Sonobe and Otsuka 2011. Bank 2006a. 18. Lin 2011b. 53. Bertram 2004. 19. Surveys conducted for Moving Out of Poverty 54. World Bank 2006a. (Narayan and Petesch 2010) identify economic 55. World Bank 2006a. recovery and the restoration of livelihoods as 56. World Bank 2006a. top priorities. 57. World Development Report 2013 team cal- 20. World Bank 2010. culations based on the World Bank migration 21. IDMC and Norwegian Refugee Council 2011; database. UNHCR 2011. 58. Gibson and McKenzie 2012. 22. Cramer 2010. 59. Stillman, McKenzie, and Gibson (2007) also 23. Blattman and Annan 2011. find evidence that migration improves the 24. Finegan and Margo 1994; Jones and others mental health of workers. 2009; Menon and Rodgers 2010; Narayan and 60. World Bank 2006a. Analysis on Tonga suggests Petesch 2010; Schweitzer 1980. an insignificant relationship between migration 25. Iyer and Santos 2012; World Bank 2011b. and tertiary education. 26. World Bank 2005. 61. World Bank 2011a. 27. Shortland 2011. 62. https://www.cia.gov/library/publications/ 28. Blattman and Annan 2011. the-world-factbook/geos/fj.html. 29. Collier 2007; Collier, Hoeffler, and Rohner 63. Stefanova 2008. 2006; World Bank 2010. 64. World Bank 2012c; Zafar 2011. 30. Lemasle 2012. 65. Frankel 2010; Roy and Subramanian 2001; 31. World Bank 2010; World Bank 2011b. Zafar 2011. 32. Dudwick and Srinivasan forthcoming; World 66. Gatti and others 2012. Bank 2010. 67. Tunisia country case study for the World De- 33. Dudwick and Srinivasan forthcoming. velopment Report 2013; Stampini and Verdier- 34. Lin 2011a. Choucane 2011. 35. World Development Indicators. 68. Another social consequence of high levels of 36. World Development Indicators; World Bank youth unemployment is the effect on family Poverty and Inequality database. formation patterns, and what is referred to as 224 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 stalled transitions. In the Middle East and North 98. Fields 2005; Perry and others 2007. Gunther Africa context specifically, this includes delayed and Launov (2012) provide an econometric marriage (Wrigley 2010). The rate of marriage technique for separating the size of these two has been declining as the age of entry into mar- components using data on Côte d’Ivoire. riage has increased (Dhillon and Yousef 2009). 99. Petesch 2012 for the World Development Re- Adequate employment is necessary for a man to port 2013. be perceived as an eligible marriage partner. 100. Loayza and Rigolini 2011. 69. Bell and Blanchflower 2010; Giles, Newhouse, 101. Djankov and Ramalho 2009; Heckman and and Witoelar 2010. Pagés 2000, 2004; Kaplan 2009. For a more nu- 70. ILO 2011a. anced view from a developed-country perspec- 71. World Bank 2006b; Wrigley 2010. tive, see Boeri and van Ours (2008). 72. Binzel 2011; Gatti and others 2012; Matsumoto 102. Freund and others 2012; Ulyssea 2010. and Elder 2010. 103. Fiszbein and others 2009. 73. World Bank 2012a. 104. Anton, Hernandez, and Levy 2012; Perry and 74. Stampini and Verdier-Choucane 2011. These others 2007. figures are based on data collected in the 2005 105. Fields 2005; Kanbur 2009. and 2006 Labor Force Surveys. 106. Almeida and Carneiro 2009; Kan and Lin 2007; 75. According to the 2010 Gallup World Poll, the Kanbur 2009, 2011; Scarpetta and Tressel 2004. proportion of young people preferring to work 107. Chen and Doane 2008; Jütting and de Laiglesia in the public sector ranged from around 40 to 2009; Kanbur 2011. 70 percent in countries in the Middle East and 108. Demographic statistics, including outmigration North Africa. Only Libya had a significantly rates, are based on estimates of the United Na- lower share. tions Population Division. 76. World Bank 2012a. 109. Giles, Wang, and Cai (2011) discuss measures 77. World Bank 2008b. that may facilitate longer working lives as 78. Some call for promoting access to secondary China’s population ages. and university education among marginalized 110. Chawla, Betcherman, and Banerji 2007. groups in the region (see Middle East Youth Ini- 111. WHO and World Bank 2011. tiative 2009). 112. Fiegerman 2011. 79. Boughzala 2004; World Bank 2004a. 113. Boersch-Supran 2003. 80. World Bank 2012a. 114. Cai and others 2012. 81. Gatti and others 2012. 115. World Bank 2011c. 82. World Bank 2009. 116. Cotlear 2011; Reinhardt 2003; Werding and 83. Klapper and Love 2011. McLennan 2011. 84. Freund and others 2012. 117. Schwarz 2009. 85. Centeno and Portes 2006; Mezzadri 2010; 118. See Lin and Monga (2011) and Pack and Saggi Saavedra and Tommasi 2007. (2006) for reviews. For detailed discussion, see 86. Kanbur 2011. Cimoli, Dosi, and Stiglitz (2009); Harrison and 87. Geertz 1968; North 1991; North 1994; Stiglitz Rodríguez-Clare (2010); Lin (2012); Porter 2000. (1990); Rodrik (2004). 88. Some would argue that poverty begets infor- 119. World Bank 2004b. mality because of the constraints that the poor 120. Hayami and Ruttan 1985. face in finding a formal job (Devicenti, Grois- 121. This is not the case for hybrid seeds, which man, and Poggi 2010). farmers cannot self-produce, or for mechanical 89. Perry and others 2007. technologies. 90. ILO 2011b. 122. The Economist 2010. 91. Taymaz 2009. 123. Levitt and Dubner 2009; Mallaby 2010; Romer 92. Perry and others 2007. 2010. 93. Loayza 1996; Perry and others 2007. 124. Otsuka and Larson, forthcoming. 94. See McKenzie and Seynabou (2010) for recent 125. Byerlee 1996; David and Otsuka 1994. evidence from Bolivia, and see de Mel, McKen- 126. David and Otsuka 1994; Fan and Hazell 2001; zie, and Woodruff (2008). Otsuka and Larson, forthcoming. 95. Bosch and Maloney 2010; Maloney 1999. 127. Aterido, Hallward-Driemeier, and Pagés 2007, 96. Fajnzylber, Maloney, and Montes-Rojas 2011. 2009; Beck, Demirgüç-Kunt, and Maksimovic 97. Bernal 2009 for Colombia; Mondragón-Vélez, 2005; Djankov, Freund, and Pham 2010; Peña, and Wills 2010 for Colombia; World Bank Kaufmann and Kraay 2002; Klapper, Laeven, 2008a for Argentina. and Rajan 2006; McKenzie 2010. Diverse jobs agendas 225 128. Sawada 2012 for the World Development Re- ———. 2011. “Does Expanding Health Insurance port 2013. Beyond Formal-Sector Workers Encourage Infor- 129. For example, Aterido, Hallward-Driemeier, and mality? Measuring the Impact of Mexico’s Seguro Pagés 2009; Beck, Demirgüç-Kunt, and Maksi- Popular.” Policy Research Working Paper Series movic 2005; Djankov, Freund, and Pham 2010; 5785, World Bank, Washington, DC. Haltiwanger, Scarpetta, and Schweiger 2008; Beck, Thorsten, Asli Demirgüç-Kunt, and Vojislav Klapper, Laeven, and Rajan 2006; Micco and Maksimovic. 2005. “Financial and Legal Con- Pagés 2006; Rajan and Zingales 1998. straints to Firm Growth: Does Firm Size Matter?” 130. Aterido, Hallward-Driemeier, and Pagés 2009; Journal of Finance 40 (1): 137–77. Hallward-Driemeier 2009. Bell, David N. F., and David Blanchflower. 2010. “Youth Unemployment: Déjà Vu?” Discussion Paper Series 4705, Institute for the Study of Labor, References Bonn. Bernal, Raquel. 2009. “The Informal Labor Market in The word processed describes informally reproduced Colombia: Identification and Characterization.” works that may not be commonly available through Desarrollo y Sociedad 63 (March): 145–208. libraries. Bertram, Geoffrey. 2004. “On the Convergence of Small Island Economies with Their Metropolitan ADB (Asian Development Bank). 2012. Asian Devel- Patrons.” World Development 32 (2): 343–65. opment Outlook 2012: Confronting Rising Inequal- Binzel, Christine. 2011. “Decline in Social Mobility: ity in Asia. Mandaluyong City, Philippines: ADB. Unfulfilled Aspirations among Egypt’s Educated Akinci, Gokhan, and Thomas Farole. 2011. Special Youth.” Discussion Paper Series 6139, Institute for Economic Zones: Progress, Emerging Challenges, the Study of Labor, Bonn. and Future Directions. Washington, DC: World Blacklock, Carolyn, and Tim Bulman. 2012. PNG’s Bank. Maturing Landowner Companies: Telling the Story Alamgir, Mohiuddin. 1978. Bangladesh: A Case of of the Emerging Group of PNG-Owned-and-Man- Below Poverty Level Equilibrium Trap. Dhaka: aged Jobs Generators. Port Moresby: World Bank. Bangladesh Institute of Development Studies. Blattman, Christopher, and Jeannie Annan. 2011. Almeida, Rita, and Pedro Carneiro. 2009. “Enforce- “Reintegrating and Employing High Risk Youth ment of Labor Regulation and Firm Size.” Journal in Liberia: Lessons from a Randomized Evalua- of Comparative Economics 37 (1): 28–46. tion of a Landmine Action Agricultural Training Altman, Miriam. 2011. Employment Policy in South Af- Program for Ex-Combatants.” Yale University, In- rica and the Region. Washington, DC: World Bank. novations for Poverty Action, New Haven, CT. Angel-Urdinola, Diego, Stefanie Brodmann, and Boeri, Tito, and Jan C. van Ours. 2008. The Economics Anne Hilger. 2010. “Labor Markets in Tunisia: of Imperfect Labor Markets. Princeton, NJ: Prince- Recent Trends.” World Bank, Washington, DC. ton University Press. Processed. Boersch-Supran, Axel. 2003. “Labor Market Effects of Anton, Arturo, Fausto Hernandez, and Santiago Levy. Population Aging.” Review of Labour Economics 2012. The End of Informality in Mexico? Fiscal Re- and Industrial Relations 17: 5–44. form for Universal Social Insurance. Washington, Bosch, Mariano, and William Maloney. 2010. “Com- DC: Inter-American Development Bank. parative Analysis of Labor Market Dynamics Us- Arndt, Channing, M. Azhar Hussain, E. Samuel Jones, ing Markov Processes: An Application to Infor- Nhate Virgulino, Finn Tarp, and James Thurlow. mality.” Labour Economics 17 (4): 621–32. 2012. “Explaining Poverty Evolution: The Case of Botero, Juan C., Simeon Djankov, Rafael La Porta, Mozambique.” American Journal of Agricultural Florencio Lopez-de-Silanes, and Andres Shleifer. Economics 94 (4): 854–72. 2004. “The Regulation of Labor.” Quarterly Jour- Aterido, Reyes, Mary Hallward-Driemeier, and Car- nal of Economics 119 (4): 1339–82. men Pagés. 2007. “Investment Climate and Em- Boughzala, Mongi. 2004. “The Labor Market in Tu- ployment Growth: The Impact of Access to Fi- nisia: Study on the Functioning of the Labor nance, Corruption, and Regulations across Firms.” Markets in the Mediterranean Region and the Discussion Paper Series 3138, Institute for the Implications for Employment Policy and Training Study of Labor, Bonn. Systems.” University of Tunis, Tunis. Processed. ———. 2009. “Big Constraints to Small Firms’ Byerlee, Derek. 1996. “Modern Varieties, Productiv- Growth? Business Environment and Employment ity, and Sustainability: Recent Experience and Growth across Firms.” Policy Research Working Emerging Challenges.” World Development 24 (4): Paper Series 5032, World Bank, Washington, DC. 697–718. 226 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Byrnes, Andrew, and Marsha A. Freeman. 2011. Cramer, Christopher. 2010. “Unemployment and “The Impact of the CEDAW Conventions: Paths Participation in Violence.” Background paper for to Equality. A Study for the World Bank.” Back- the WDR 2011. ground paper for the WDR 2012. David, Christina C., and Keijiro Otsuka, eds. 1994. Cai, Fang, John Giles, Philip O’Keefe, and Dewen Modern Rice Technology and Income Distribution Wang. 2012. The Elderly and Old Age Support in in Asia. Boulder, CO: Lynne Rienner. Rural China: Challenges and Prospects. Washing- de Mel, Suresh, David J. McKenzie, and Christopher ton, DC: World Bank. Woodruff. 2008. “Returns to Capital in Micro- Calderon, Alor. 2012. “Employment Outcomes and enterprises: Evidence from a Field Experiment.” Firms’ Productivity Performance in Mexico. Anal- Quarterly Journal of Economics 123 (4): 1329–72. ysis Based on Economic Census Microdatasets.” El Devicienti, Francesco, Fernando Groisman, and Am- Colegio de Mexico, Mexico City. Processed. bra Poggi. 2010. “Are Informality and Poverty Dy- Centeno, Miguel Angel, and Alejandro Portes. 2006. namically Interrelated? Evidence from Argentina.” “The Informal Economy in the Shadow of the In Studies in Applied Welfare Analysis: Papers from State.” In Out of the Shadows: Political Action and the Third ECINEQ Meeting, ed. John A. Bishop, 79– the Informal Economy in Latin America, ed. Maria 106. Bingley: Emerald Group Publishing Limited. Patricia Fernandez-Kelly and Jon Shefner, 1–23. De Vreyer, Philippe, and François Roubaud, eds. University Park: Pennsylvania State University Forthcoming. Urban Labour Markets in Sub- Press. Saharan Africa. Montepellier, France: Institute for Chawla, Mukesh, Gordon Betcherman, and Arup Research and Development. Banerji, eds. 2007. From Red to Gray: The “Third Dhillon, Navtej, and Tarik Yousef. 2009. Generation in Transition” of Aging Populations in Eastern Europe Waiting: The Unfulfilled Promise of Young People in and the Former Soviet Union. Washington, DC: the Middle East. Washington, DC: Brookings In- stitution Press. World Bank. Dinh, Hinh T., Vincent Palmade, Vandana Chandra, Chen, Martha, and Donna Doane. 2008. “Informal- and Frances Cossar. 2012. Light Manufacturing ity in South Asia: A Review.” Background Paper, in Africa: Targeted Policies to Enhance Private In- Swedish International Development Cooperation vestment and Create Jobs. Washington, DC: World Agency, Stockholm. Bank and L’Agence Française de Développement. Christiaensen, Luc, and Lionel Demery. 2007. Down Djankov, Simeon, Caroline Freund, and Cong S. to Earth: Agriculture and Poverty Reduction in Pham. 2010. “Trading on Time.” Review of Eco- Africa. Washington, DC: World Bank. nomics and Statistics 92 (1): 166–73. Christiaensen, Luc, Lionel Demery, and Jesper Kuhl. Djankov, Simeon, and Rita Ramalho. 2009. “Employ- 2011. “The (Evolving) Role of Agriculture in Pov- ment Laws in Developing Countries.” Journal of erty Reduction—An Empirical Perspective.” Jour- Comparative Economics 37 (1): 3–13. nal of Development Economics 96 (2): 239–54. Dudwick, Nora, and Radhika Srinivasan, with Jose Cimoli, Mario, Giovanni Dosi, and Joseph E. Stiglitz, Cueva and Dorsati Mandavi. Forthcoming. Creat- eds. 2009. Industrial Policy and Development: The ing Jobs in Africa’s Fragile States: Are Value Chains Political Economy of Capabilities Accumulation. an Answer? Directions in Development Series. Oxford: Oxford University Press. Washington, DC: World Bank. Collier, Paul. 2007. “Post-Conflict Recovery: How Faaland, Just, and John Richard Parkinson. 1976. Should Policies Be Distinctive.” Centre for the Bangladesh: The Test Case for Development. Lon- Studies of African Economies, Oxford University, don: C. Hurst & Co. Publishers Ltd. Oxford. Processed. Fajnzybler, Pablo, William Maloney, and Gabriel V. Collier, Paul, Anke Hoeffler, and Dominic Rohner. Montes-Rojas. 2011. “Does Formality Improve 2006. “Beyond Greed and Grievance: Feasibility Micro-Firm Performance? Evidence from the Bra- and Civil War.” Working Paper 2006-10, Centre zilian SIMPLES Program.” Journal of Development for the Study of African Economies, Oxford Uni- Economics 94: 262–76. versity, Oxford. Fan, Shenggen, and Peter Hazell. 2001. “Returns to Conning, Jonathan, and Christopher Udry. 2007. Public Investments in the Less-Favored Areas of “Rural Financial Markets in Developing Coun- India and China.” American Journal of Agricultural tries.” In Agricultural Development: Farmers, Farm Economics 83 (5): 1217–22. Production and Farm Markets, Vol. 3 of Handbook Fiegerman, Seth. 2011. “Our New Jobs Problem: Ag- of Agricultural Economics, ed. Robert Evenson and ing Americans.” MainStreet, August 17. Prabhu Pingali, 2857–910. Amsterdam: Elsevier. Fields, Gary. 2005. “A Guide to Multisector Labor Cotlear, Daniel, ed. 2011. Population Aging: Is Latin Market Models.” Social Protection Discussion Pa- America Ready? Washington, DC: World Bank. per Series 0505, World Bank, Washington, DC. Diverse jobs agendas 227 Finegan, T. Aldrich, and Robert A. Margo. 1994. Guarcello, Lorenzo, Furio C. Rosati, and Scott Lyon. “Added and Discouraged Workers in the Late 2011. “Labour Market in South Sudan.” Pro- 1930s: A Re-examination.” Journal of Economic gramme Working Paper, Understanding Chil- History 54 (March): 64–84. dren’s Work, Rome. Fiszbein, Ariel, Norbert Schady, Francisco H. G. Fer- Gunther, Isabel, and Andrey Launov. 2012. “Informal reira, Margaret Grosh, Nial Kelleher, Pedro Olinto, Employment in Developing Countries: Opportu- and Emmanuel Skoufias. 2009. Conditional Cash nity or Last Resort?” Journal of Development Eco- Transfers: Reducing Present and Future Poverty. nomics 97 (1): 88–98. Washington, DC: World Bank. Hallward-Driemeier, Mary. 2009. “Who Survives? Fox, Louise, Elena Bardasi, and Katleen Van den The Impact of Corruption, Competition, and Broeck. 2005. “Poverty in Mozambique: Unrav- Property Rights across Firms.” Policy Research eling Changes and Determinants.” Africa Region Working Paper Series 5084, World Bank, Wash- Working Paper Series 87, World Bank, Washing- ington, DC. ton, DC. Hallward-Driemeier, Mary, and Reyes Aterido. 2009. Fox, Louise, and Melissa Sekkel Gaal. 2008. Working “Comparing Apples with . . . Apples: How to Make Out of Poverty: Job Creation and the Quality of (More) Sense of Subjective Rankings of Con- Growth in Africa. Washington, DC: World Bank. straints to Business.” Policy Research Working Frankel, Jeffrey. 2010. “Mauritius: African Success Paper Series 5054, World Bank, Washington, DC. Story.” Working Paper Series 16569, National Bu- Haltiwanger, John, Stefano Scarpetta, and Helena reau of Economic Research, Cambridge, MA. Schweiger. 2008. “Assessing Job Flows across Freund, Caroline, Antonio Nucifora, Bob Rijkers, Countries: The Role of Industry, Firm Size, and Hassen Arouri, and Rim Chabbeh. 2012. “Job Regulations.” Working Paper Series 13920, Na- Creation: A Big Role for Big Firms? Evidence from tional Bureau of Economic Research, Cambridge, Tunisia.” World Bank, Washington DC. Processed. MA. Gatti, Roberta, Diego Angel-Urdinola, Joana Silva, Harrison, Ann, and Andres Rodriguez-Clare. 2010. and Andras Bodor. 2012. Striving for Better Jobs: “Trade, Foreign Investment, and Industrial Policy The Challenge of Informality in the Middle East and for Developing Countries.” In Development Eco- North Africa. Washington, DC: World Bank. nomics, Vol. 5 of Handbook of Development Eco- Geertz, Clifford. 1968. Peddlers and Princes: Social nomics, ed. Dani Rodrik and Mark Rosenzweig, Development and Economic Change in Two Indo- 4039–214. Amsterdam: Elsevier. nesian Towns. Chicago, IL: University of Chicago Hausmann, Ricardo, César Hidalgo, Sebastián Bus- Press. Gibson, John. 2006. “Are the Pacific Islands Econo- tos, Michele Coscia, Sarah Chung, Juan Jimenez, mies Growth Failures?” Working Paper 3, Pasifika Alexander Simoes, and Muhammend A. Yildirim. Interactions Project, Hamilton, New Zealand. 2011. The Atlas of Economic Complexity: Map- Gibson, John, Gaurav Datt, Allen Bryant, Vicky ping Paths to Prosperity. Cambridge, MA: Harvard Hwang, R. Michael Bourke, and Dilip Parajuli. University. 2005. “Mapping Poverty in Rural Papua New Hayami, Yujiro, and Vernon W. Ruttan. 1985. Agricul- Guinea.” Pacific Economic Bulletin 20 (1): 27–43. tural Development: An International Perspective. Gibson, John, and David McKenzie. 2012. “The Baltimore, MD: Johns Hopkins University Press. Economic Consequences of ‘Brain Drain’ of the Heckman, James J., and Carmen Pagés. 2000. “The Best and Brightest: Microeconomic Evidence Cost of Job Security Regulation: Evidence from from Five Countries.” Economic Journal 122 (560): the Latin American Labor Markets.” Journal of the 339–75. Latin American and Caribbean Economic Associa- Giles, John, David Newhouse, and Firman Witoelar. tion 1 (1): 109–54. 2010. “Stuck for Life? The Long-Term Conse- ———. 2004. “Introduction.” In Law and Employ- quences of Initial Informality in Indonesia.” Paper ment: Lessons from Latin America and the Carib- presented at the Employment and Development bean, ed. James J. Heckman and Carmen Pagés, Conference, Cape Town, May 3. 1–108. Chicago, IL: University of Chicago Press. Giles, John, Dewen Wang, and Wei Cai. 2011. “The IDMC (Internal Displacement Monitoring Centre) Labor Supply and Retirement Behavior of China’s and Norwegian Refugee Council. 2011. Internal Older Workers and Elderly in Comparative Per- Displacement: Global Overview of Trends and De- spective.” Policy Research Working Paper Series velopments in 2010. Geneva: IDMC. 5835, World Bank, Washington, DC. ILO (International Labour Organization). 2011a. Gonzalez de la Rocha, Mercedes. 2012. “Trabajo, Mo- Global Employment Trends for Youth. Geneva: ILO. dos de Subsistencia y Vida Social en Mexico.” CIE- ———. 2011b. Statistical Update on Employment in SAS Guadalajara, Guadalajara. Processed. the Informal Economy. Geneva: ILO. 228 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Imbs, Jean, and Romain Wacziarg. 2003. “Stages of Firm Registration.” World Bank, Washington, DC. Diversification.” American Economic Review 93 Processed. (1): 63–86. Komarov, Vladyslav. 2011. Housing Market and Labor IOM (International Organization for Migration). Mobility. Kiev: Bureau of Economic and Social 2009. Total Returns to South Sudan. Geneva: IOM. Technologies. Iyer, Lakshmi, and Indhira Santos. 2012. “Creating Lemasle, Natacha. 2012. From Conflict to Resilience: Jobs in South Asia’s Conflict Zones.” Policy Re- Ex-Combatants Trade Associations in Post-Conflict: search Working Paper Series 6104, World Bank, Lessons Learned from the Republic of Congo and the Washington, DC. Democratic Republic of Congo. Washington, DC: Jedwab, Remi. 2012. “Why is African Urbanization World Bank. Different? Evidence from Resource Exports in Levitt, Steven, and Stephen Dubner. 2009. “Can Ghana and the Ivory Coast.” Paper presented at ‘Charter Cities’ Change the World? A Q&A with the World Bank Seminar, Washington, DC, Feb- Paul Romer.” Freakonomics, September 29. http:// ruary 6. www.freakonomics.com/2009/09/29/can-charter- Jones, Nicola, Rebecca Holmes, Hannah Marsden, cities-change-the-world-a-qa-with-paul-romer. Shreya Mitra, and David Walker. 2009. “Gender Levy, Santiago. 2008. Good Intentions, Bad Outcomes, and Social Protection in Asia: What Does the Social Policy, Informality, and Economic Growth in Crisis Change?” Paper presented at the Asia-wide Mexico. Washington, DC: Brookings Institution Regional High-Level Meeting, Hanoi, September Press. 29–30. Lin, Justin Yifu. 2009. Economic Development and Jütting, Johannes P., and Juan R. de Laiglesia, eds. Transition: Thought, Strategy and Viability. Cam- 2009. Is Informal Normal? Towards More and bridge, U.K.: Cambridge University Press. Better Jobs in Developing Countries. Paris: OECD ———. 2011a. “From Flying Geese to Leading Drag- Publishing. ons: New Opportunities and Strategies for Struc- Kan, Kamhon, and Yen-Ling Lin. 2007. “The Effects tural Transformation in Developing Countries.” of Employment Protection Legislation on Labor Policy Research Working Paper Series 5702, World Turnover: Empirical Evidence from Taiwan.” Eco- Bank, Washington, DC. nomic Inquiry 49 (2): 398–433. ———. 2011b. “How to Seize the 85 Million Jobs Kanbur, Ravi. 2009. “Conceptualizing Informality: Bonanza.” World Bank (blog), Washington, DC. Regulation and Enforcement.” Indian Journal of http://blogs.worldbank.org/developmenttalk/ Labour Economics 52 (1): 33–42. node/646. ———. 2011. “Avoiding Informality Traps.” Working ———. 2012. New Structural Economics: A Frame- Paper Series 06, Charles H. Dyson School of Ap- work for Rethinking Development and Policy. plied Economics and Management, Ithaca, NY. Washington, DC: World Bank. Kaplan, David Scott. 2009. “Job Creation and Labor Lin, Justin Yifu, and Célestin Monga. 2011. “DPR Reform in Latin America.” Journal of Comparative Debate: Growth Identification and Facilitation: Economics 37 (1): 91–105. The Role of the State in the Dynamics of Struc- Kaplan, David Scott, Joyce Sadka, and Jorge Luis tural Change.” Development Policy Review 29 (3): Silva-Mendez. 2008. “Litigation and Settlement: 259–310. New Evidence from Labor Courts in Mexico.” Lipton, Richard. 2005. “The Family Farm in a Global- Journal of Empirical Legal Studies 5 (2): 309–50. izing World: The Role of Crop Science in Allevi- Kaufmann, Daniel, and Aart Kraay. 2002. “Gover- ating Poverty.” Discussion Paper 40, International nance Indicators, Aid Allocation, and the Millen- Food Policy Research Institute, Washington, DC. nium Challenge Account.” World Bank, Washing- Loayza, Norman. 1996. “The Economics of the Infor- ton, DC. Processed. mal Sector: A Simple Model and Some Evidence Kingombe, Christian, and Dirk Willem te Velde. 2012. from Latin America.” Carnegie-Rochester Confer- “Structural Transformation and Employment ence Series on Public Policy 45: 129–62. Creation: The Role of Growth Facilitation Policies Loayza, Norman, and Jamele Rigolini. 2011. “Infor- in Sub-Saharan Africa.” Background paper for the mal Employment: Safety Net or Growth Engine?” WDR 2013. World Development 39 (9): 1503–15. Klapper, Leora, Luc Laeven, and Raghuram Rajan. Macintyre, Martha. 2011. “Modernity, Gender and 2006. “Entry Regulation as a Barrier to Entrepre- Mining: Experiences from Papua New Guinea.” neurship.” Journal of Financial Economics 82 (3): In Gendering the Field: Towards Sustainable Live- 591–629. lihoods for Mining Communities, ed. Kuntala Klapper, Leora F., and Inessa Love. 2011. “The Im- Lahiri-Dutt, 21–32. Canberra: Australian Na- pact of Business Environment Reforms on New tional University. Diverse jobs agendas 229 Mallaby, Sebastian. 2010. “The Politically Incor- Middle East Youth Initiative. 2009. Missed by the rect Guide to Ending Poverty.” The Atlantic, July/ Boom, Hurt by the Bust: Making Markets Work for August. http://www.theatlantic.com/magazine/ Young People in the Middle East. Washington, DC: archive/2010/07/the-politically-incorrect-guide- Brookings Institution Press; Dubai: Dubai School to-ending-poverty/8134. of Government. Maloney, William F. 1999. “Does Informality Imply Mondragón-Vélez, Camilo, Ximena Peña, and Daniel Segmentation in Urban Labor Markets? Evidence Wills. 2010. “Labor Market Rigidities and Infor- from Sectoral Transitions in Mexico.” World Bank mality in Colombia.” Documentos CEDE 006717, Economic Review 13 (2): 275–302. Universidad de Los Andes, Bogotá. Martinez, Gabriel, and Nelly Aguilera. 2012. The Hu- Morris, Michael, Valerie A. Kelly, Ron J. Kopicki, and man Capital Perspective on Employment Policy. Derek Byerlee. 2007. Fertilizer Use in African Agri- San José, Costa Rica: Inter-American Conference culture: Lessons Learned and Good Practice Guide- on Social Security. lines. Washington, DC: World Bank. Matsumoto, Makiko, and Sara Elder. 2010. “Charac- Mottaleb, Khondoker A., and Tetsushi Sonobe. 2011. terizing the School-To-Work Transition of Young “An Inquiry into the Rapid Growth of the Gar- Men and Women: Evidence from the ILO School- ment Industry in Bangladesh.” Economic Develop- to-Work Transition Surveys.” Employment Work- ment and Cultural Change 60 (1): 67–89. ing Paper 51, International Labour Organization, Narayan, Deepa, and Patti Petesch. 2010. Moving Out Geneva. of Poverty: Rising from the Ashes of Conflict. Wash- McCormick, Dorothy. 1999. “African Enterprise ington, DC: Palgrave Macmillan and World Bank. Clusters and Industrialization: Theory and Real- Noland, Marcus, and Howard Pack, eds. 2003. Indus- ity.” World Development 27 (9): 1531–51. trial Policy in an Era of Globalization: Lessons McCrea, Peter. 2009. “Oil Palm Sector, Situation and from Asia. Washington, DC: Peterson Institute. North, Douglass C. 1991. “Institutions.” Journal of Perception Assessment.” Report for the World Economic Perspectives 5 (1): 97–112. Bank and the Oil Palm Industry Corporation, ———. 1994. “Economic Performance Through Port Moresby, Papua New Guinea. Processed. Time.” American Economic Review 84 (3): 359–68. McKenzie, David. 2010. Impact Assessment in Finance Nuebler, Irmgard. 2011. “Industrial Policies and Ca- and Private Sector Development: What Have We pabilities for Catching Up: Frameworks and Para- Learned and What Should We Learn? Washington, digms.” Employment Working Paper Series 77, DC: World Bank. International Labour Organization, Geneva. McKenzie, David, Pilar Garcia Martinez, and L. Alan Otsuka, Keijiro, and Donald F. Larson, eds. Forth- Winters. 2008. Who Is Coming from Vanuatu to coming. An African Green Revolution: Finding New Zealand under the New Recognized Seasonal Ways to Boost Productivity on Small Farms. Am- Employer (RSE) Program? Waikato, New Zealand: sterdam: Springer. University of Waikato. Pack, Howard, and Kamal Saggi. 2006. “The Case for McKenzie, David, and Sakho Seynabou. 2010. “Does Industrial Policy: A Critical Survey.” Policy Re- It Pay Firms to Register for Taxes? The Impact of search Working Paper Series 3839, World Bank, Formality on Firm Profitability.” Journal of Devel- Washington, DC. opment Economics 91 (1): 15–24. Perry, Guillermo E., William F. Maloney, Omar S. Menon, Nidhiya, and Yana van der Meulen Rodgers. Arias, Pablo Fajnzylber, Andrew D. Mason, and 2010. “War and Women’s Work: Evidence from Jaime Saavedra-Chanduvi. 2007. Informality: Exit the Conflict in Nepal.” Working Paper Series 19, and Exclusion. Washington, DC: World Bank. Department of Economics and International Petesch, Patti. 2011. Women’s Empowerment Arising Business School, Brandeis University, Waltham, from Violent Conflict and Recovery. Washington, MA. DC: U.S. Agency for International Development. Mercer. 2011. Worldwide Cost of Living Survey 2011— ———. 2012. “The Exponential Clash of Conflict, City Ranking. London: Mercer. Good Jobs, and Changing Gender Norms in Four Mezzadri, Alessandra. 2010. “Globalisation, Infor- Economies.” Background paper for the WDR malisation and the State in the Indian Garment 2013. Industry.” International Review of Sociology 20 (3): Piore, Michael, and Andrew Schrank. 2007. “Norms, 491–511. Regulations and Labour Standards in Central Micco, Alejandro, and Carmen Pagés. 2006. “The America.” CEPAL–Serie Estudios y Perspectivas 77: Economic Effects of Employment Protection: Evi- 1–64. dence from International Industry-Level Data.” ———. 2008. “Toward Managed Flexibility: The Re- Discussion Paper Series 2433, Institute for the vival of Labour Market Inspection in the Latin Study of Labor, Bonn. World.” International Labour Review 147 (1): 1–23. 230 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Pires, Roberto Rocha. 2011. “Governing Regulatory Shortland, Anja. 2011. “‘Robin Hook’: The Develop- Discretion: Innovation and Accountability in Two mental Effects of Somali Piracy.” Discussion Paper Models of Labour Inspection Work.” In Regulat- Series 1155, German Institute for Economic Re- ing for Decent Work: New Directions in Labour search, Berlin. Market Regulation, ed. Sangheon Lee and Deirdre Sonobe, Tetsushi, and Keijiro Otsuka. 2006. Cluster- McCann, 313–38. Geneva: International Labour Based Industrial Development: An East Asian Organization. Model. New York: Palgrave Macmillan. Pollin, Robert. 2009. “Labor Market Institutions and ———. 2011. Cluster-Based Industrial Development: Employment Opportunities in Kenya.” University A Comparative Study of Asia and Africa. New York: of Massachusetts-Amherst, Amherst. Processed. Palgrave Macmillan. Porter, Michael E. 1990. The Competitive Advantage of Stampini, Marco, and Audrey Verdier-Choucane. Nations. New York: The Free Press. 2011. “Labor Market Dynamics in Tunisia: The Rajan, Raghuram, and Luigi Zingales. 1998. “Finan- Issue of Youth Unemployment.” Discussion Paper cial Dependence and Growth.” American Eco- Series 5611, Institute for the Study of Labor, Bonn. nomic Review 88 (3): 559–86. Stefanova, Milena. 2008. The Price of Tourism: Land Reinhardt, Uwe. 2003. “Does the Aging of the Popula- Alienation in Vanuatu. Washington, DC: World tion Really Drive Up Demand for Health Care?” Bank. Health Affairs 22: 27–39. Stiglitz, Joseph E. 2000. “Formal and Informal Insti- Republic of South Sudan Disarmament, Demobili- tutions.” In Social Capital: A Multifaceted Perspec- sation and Reintegration Commission. 2012. Re- tive, ed. Partha Dasgupta and Ismael Serageldin, public of South Sudan Disarmament, Demobilisa- 59–68. Washington, DC: World Bank. tion and Reintegration Commission. Juba: Republic Stillman, Steven, David McKenzie, and John Gibson. 2007. “Migration and Mental Health: Evidence of South Sudan. from a Nature Experiment.” Policy Research Rodrik, Dani. 2004. “Industrial Policy for the Twenty- Working Paper Series 4138, World Bank, Wash- First Century.” Discussion Paper Series 4767, ington, DC. Centre for Economic Policy Research, London. Taymaz, Erol. 2009. “Informality and Productivity: ———. 2007. One Economics, Many Recipes: Global- Productivity Differentials between Formal and ization, Institutions, and Economic Growth. Princ- Informal Firms in Turkey.” Working Papers in eton, NJ: Princeton University Press. Economics 09/01, European Research Council, Romer, Paul. 2010. Technologies, Rules, and Progress: Ankara. The Case for Charter Cities. Washington, DC: The Economist. 2010. “Brazilian Agriculture: The Mir- Center for Global Development. acle of the Cerrado.” The Economist, August 26. Roy, Devesh, and Arvind Subramanian. 2001. “Who Ulyssea, Gabriel. 2010. “Regulation of Entry, Labor Can Explain the Mauritian Miracle: Meade, Market Institutions and the Informal Sector.” Romer, Sachs, or Rodrik?” Working Paper Series Journal of Development Economics 91: 87–99. 01/116, International Monetary Fund, Washing- UNHCR (Office of the United Nations High Com- ton, DC. missioner for Refugees). 2011. UNHCR Statistical Saavedra, Jaime, and Mariano Tommasi. 2007. “Infor- Yearbook 2010. 10th ed. Geneva: UNHCR. mality, the State and the Social Contract in Latin Venn, Danielle. 2009. “Legislation, Collective Bar- America: A Preliminary Exploration.” Interna- gaining and Enforcement.” Social, Employment tional Labour Review 146 (3–4): 279–309. and Migration Working Paper Series 89, Organ- Sawada, Naotaka. 2012. “Providing Business Services isation for Economic Co-operation and Develop- for Rural Income Generations: Using the Rural ment, Paris. Investment Climate Survey Data.” Background Villarreal, Hector J. 2012. El Cambio Demográfico y las paper for the WDR 2013. Finanzas Públicas de Mexico. Mexico, D.F.: Centre Scarpetta, Stefano, and Thierry Tressel. 2004. “Boost- de Investigación Económica y Presupuestaria. ing Productivity via Innovation and Adoption of Villarreal, Hector J., and Eduardo Rodriguez-Oreggia. New Technologies: Any Role for Labor Market In- 2012. “Precarious Labor Markets and the Evolu- stitutions?” Policy Research Working Paper Series tion of Poverty: The Mexican Experience.” Insti- 3273, World Bank, Washington, DC. tuto Tecnológico de Monterrey, Monterrey, Mex- Schwarz, Anita M. 2009. “Pensions in Crisis: Europe ico. Processed. and Central Asia Regional Policy Note.” World Werding, Martin, and Stuart McLennan. 2011. “In- Bank, Washington, DC. ternational Portability of Health-Cost Coverage: Schweitzer, Mary M. 1980. “World War II and Labor Concepts and Experience.” Social Protection Dis- Force Participation Rates.” Journal of Economic cussion Paper Series 1115, World Bank, Washing- History 40 (1): 89–95. ton, DC. Diverse jobs agendas 231 WHO (World Health Organization) and World Bank. ———. 2010. World Development Report 2011: Con- 2011. World Report on Disability. Washington, DC: flict, Security, and Development. Washington, DC: WHO and World Bank. World Bank. Winters, Alan, and Pedro Martins. 2004. “When ———. 2011a. Defining Gender in the 21st Century: Comparative Advantage Is Not Enough: Business Talking with Women and Men around the World, Costs in Small Remote Economies.” World Trade A Multi-Country Qualitative Study of Gender and Review 3 (3): 347–83. Economic Choice. Washington, DC: World Bank. World Bank. 2004a. Republic of Tunisia Development ———. 2011b. More and Better Jobs in South Asia. Policy Review: Making Deeper Trade Integration Washington, DC: World Bank. Work for Growth and Jobs. Washington, DC: World ———. 2011c. World Development Report 2012: Gen- Bank. der Equality and Development. Washington, DC: ———. 2004b. World Development Report 2005: A World Bank. Better Investment Climate for Everyone. New York: ———. 2012a. Bread, Freedom, and Dignity: Jobs in Oxford University Press. the Middle East and North Africa. Washington, ———. 2005. Afghanistan: Poverty, Vulnerability and DC: World Bank. Social Protection: An Initial Assessment. Washing- ———. 2012b. Gender Equality and Development in ton, DC: World Bank. the Middle East and North Africa Region. Washing- ———. 2006a. At Home and Away: Expanding Job ton, DC: World Bank. Opportunities for Pacific Islanders through Labour ———. 2012c. “Ten Things You Didn’t Know Mobility. Washington, DC: World Bank. About Mauritius.” World Bank, Washington, DC. ———. 2006b. World Development Report 2007: De- Processed. velopment and the Next Generation. Washington, Wrigley, Patrick. 2010. “Youth ‘Bulges’ in the Middle DC: World Bank. East and North Africa: Risk or Asset?” MENA ———. 2008a. Argentina Labor Market Study: Infor- Knowledge and Learning Fast Brief Series 74, mal Employment in Argentina: Causes and Conse- World Bank, Washington DC. quences. Washington, DC: World Bank. Zafar, Ali. 2011. “Mauritius: An Economic Success ———. 2008b. The Road Not Travelled: Education Story.” In Yes Africa Can: Success Stories from a Reform in the Middle East and North Africa. Wash- Dynamic Continent, ed. Punam Chuhan-Pole and ington, DC: World Bank. Manka Angwafo, 91–106. Washington, DC: World ———. 2009. From Privilege to Competition: Unlock- Bank. ing Private-Led Growth in the Middle East and North Africa. Washington, DC: World Bank. CHAPTER 7 Connected jobs agendas The migration of people matches opportunities across borders. Globalization is leading to a growing international migration of jobs not only in manufacturing but also, increasingly, in services. D ifferent countries face different jobs Jobs agendas are also connected through challenges, but their jobs agendas are the international migration of jobs. The splin- interconnected by two forces—the mi- tering of production tasks has facilitated their gration of people and the migration of jobs. delocalization and outsourcing to developing These two flows have consequences for living countries, resulting in greater trade volumes standards, productivity, and social cohesion in and lower prices of final goods. But it has also sending and receiving countries. The arrival of led to a global redistribution of jobs in manu- migrants or the outsourcing of jobs abroad af- facturing, and the same trend is increasingly fects the living standards of both migrants and visible in services as well. So far, the migration locals. The availability of foreign workers, the of jobs out of industrial countries has mainly af- development of migrant networks channeling fected blue-collar workers, but white-collar jobs savings and ideas, and the arrival of multina- are following. These are not once-and-for-all tional firms bringing more advanced techniques moves. Growing labor costs in Asia may open are all bound to increase productivity. But fam- up opportunities for other developing countries ily structures as well as community life are af- to jump-start industrialization. fected by the movement of people and jobs. The potential gains are considerable, but there are also tradeoffs. Migration of workers Even if development strategies succeed in addressing jobs challenges at the country level, Precise figures on the global number of inter- mismatches between employment opportuni- national migrants are not available, an unsur- ties at home and abroad are bound to occur, prising fact given that a number of them cross encouraging people to leave their communities borders illegally or do not return once their visas and try their chances elsewhere. Almost inevi- and permits expire. That is why estimates tend tably, the international migration of people will to rely on population censuses and household be one of the policy levers to consider in South surveys. Even then, differences across countries Asia and in Sub-Saharan Africa, given the pro- in the way that data are gathered, and in the way jected rapid growth in the labor force in these legislation defines nationality and migratory regions over the coming decades. Migration status, make accurate counts difficult.1 The or- trends will be driven not only by demographic ders of magnitude are relatively uncontroversial, pressures but also by cultural and geographic however. There are more than 200 million mi- proximity, as well as economic factors. grants worldwide, and 90 million of them are Connected jobs agendas 233 workers. Migrants represent between 2.5 and 3 (map 7.1). In a few relatively small recipient percent of the world’s population and the global countries, the foreign-born population makes labor force.2 Many are temporary or seasonal up more than 40 percent of the total population. workers and return to their home country. Israel, Jordan, Kuwait, Qatar, and Singapore are in this group. Among bigger recipient countries, those with the largest share of immigrants in Global patterns of migration their population are Saudi Arabia (27.8 per- Global figures hide important differences across cent), Canada (21.3 percent), Australia (21.0 countries. Some countries are mainly recipients, percent), and the United States (13.5 percent). while others are sources, and yet others neither In absolute numbers, the United States is the host nor send significant numbers of migrants largest recipient of migrants, with 42.8 million, M A P 7.1 Only in some countries are migrants a substantial share of the population a. Immigrants, % of labor force Percent 0–1.99 2.00–4.99 5.00–9.99 10.00–14.99 15.00–100 no data b. Emigrants, % of native labor force Percent 0–1.99 2.00–4.99 5.00–9.99 10.00–14.99 15.00–100 no data This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. Source: World Development Report 2013 team based on Özden and others 2011 and Artuc and others 2012, using census data from around 2000. 234 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 followed by the Russian Federation (12.3 mil- with at least some tertiary education among im- lion), and Germany (10.8 million). Among the migrants increased from 15 to 25 percent in the sending countries, those with the largest num- United Kingdom, and from 25 to 30 percent in bers of migrants are Mexico (10.1 million), In- the United States. Stark country differences are dia (9.1 million), and Bangladesh (6.0 million).3 also present in skilled labor migration. Some de- Russia is so high on the list, because many eth- veloping countries explicitly promote emigra- nic Russians live in countries that were formerly tion of skilled workers, while others complain part of the Soviet Union. about “brain drain.” More than 70 percent of Political turmoil and globalization acceler- citizens with tertiary education in Haiti, Jamaica, ated migration flows in the first half of the 20th and Trinidad and Tobago live abroad. The share century. The partition of Bangladesh, India, and of skilled workers among migrants is particu- Pakistan involved large numbers of people liv- larly high in African countries (map 7.2).6 ing in countries different from their birthplace. Highly skilled migrants fall into a range The decline of transportation costs, the growth of categories including technology and busi- of Persian Gulf economies following surges in ness creators, scientists, scholars, students, and oil prices, and the entry into world markets of health and cultural workers. At 10 percent, their developing countries with large populations share of total migration is still relatively small, have all stimulated a surge of migrant workers but 90 percent of them live in industrial coun- worldwide. tries.7 In some occupations, the concentration Differences in expected earnings between the of skilled migrants is substantial: 27 percent country of origin and the country of destination of all physicians in the United States, 21 per- are an important reason for people to migrate. cent in Australia, and 20 percent in Canada are Earnings gains, however, are offset to varying foreign-trained.8 degrees by the direct costs of migration (such as transportation fees and intermediation ser- Impacts on sending and receiving vices) as well as by indirect costs associated with countries the difficulties of adapting to a different culture and society and leaving family and friends be- The most direct impact of international migra- hind. These costs also help explain aggregate tion is on living standards. Through their work migration flows. For many migrants, physical in receiving countries, and through remittances and cultural proximity (including a common to sending countries, migrants increase their in- language, religion, or way of life) are important comes and those of their families. Migrants also when choosing a host country. Concerns about contribute to global output if their productiv- employment opportunities and personal safety ity abroad is higher than it was at home, which in the sending countries are other important, may often be the case. They can even contribute sometimes crucial, drivers of migration. More to output in the sending country, as networks than 10 million migrants are refugees, and of migrants and returnees serve as channels for nearly 2 million are asylum seekers.4 investment, innovation, and expertise. Social ef- The growth rate in the global number of mi- fects are mixed, however. On the positive side, grant workers peaked between 2005 and 2008 migration connects people from different cul- and then decelerated because of the impact of the tures in ways bound to widen their horizons. global economic crisis. During previous decades, On the negative side, separation from family the growth in migration flows came primarily and friends can be a source of distress and iso- from South-North flows; that is, from develop- lation in the recipient country. Large numbers ing to developed countries. South-South mi- of immigrants can also exacerbate frustration gration, although numerically larger, remained among vulnerable groups in recipient countries, stable over that period.5 if foreigners are seen as competitors for jobs and Skilled workers represent a growing share of public services. international migration. Developed countries The increase in earnings from migration increasingly implement policies to attract talent. may amount to tens of thousands of dollars per Between 1990 and 2000, the share of workers worker per year. After controlling for worker Connected jobs agendas 235 M A P 7. 2 Many migrants are highly skilled a. Highly-skilled immigration, % of highly-skilled labor force Percent 0–4.99 5.00–9.99 10.00–19.99 20.00–29.99 30.00–100 no data b. Highly-skilled labor emigration, % of highly-skilled native labor force Percent 0–4.99 5.00–9.99 10.00–19.99 20.00–29.99 30.00–100 no data This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. Source: World Development Report 2013 team based on Özden and others 2011 and Artuc and others 2012. Note: Highly-skilled migrants are those with at least some tertiary education. characteristics, the gain may range from 50 ing migrants a particularly vulnerable group. percent to more than double the difference in In others, intermediaries are informal agents income per capita between the host and the who provide market-priced migration services sending countries.9,10 Transportation costs and in the absence of other formal mechanisms to rents taken by intermediaries can reduce these address the existence of demand and supply gains, however. In some cases, these intermedi- for migration.11 Migrants also face psychologi- aries are part of illegal organizations linked to cal and physical health risks, often without ac- trafficking of people and criminal abuses, mak- cess to health insurance.12 The persistent flows 236 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 of migration would indicate, though, that the tions for developing countries. Some fear a brain large gains, actual and expected, more than drain, whereby developing countries would suf- compensate for the costs. fer from the loss of valuable human resources. 20 Evidence on the impact of migration on la- According to this view, developing countries put bor outcomes in sending countries is scattered. considerable fiscal resources into the education If employment opportunities for those who mi- of these workers, with the intention of enhanc- grate were limited, earnings and employment ing their productivity and creating an elite of in- would remain unaltered. If they were plentiful, novators, thinkers, and administrators. Thus the earnings rise and the participation rates of previ- migration of skilled workers not only creates a ously inactive persons would increase. Studies fiscal and distributive concern in the short term, for Mexico, Pakistan, and the Philippines show but it also impairs the growth capacities of the that out-migration did affect wages and unem- country in the long term. In this view, develop- ployment rates in the sending country, but no ing countries should create incentives for skilled discernable effects on labor outcomes have been workers to return to their home country, for ex- found in Bangladesh, India, and Sri Lanka.13 ample, through financial reforms of secondary The net effects of migration flows on em- and tertiary education. ployment opportunities and labor earnings de- Others, however, see a “brain gain,” whereby pend on the skills and the jobs of those who developing countries benefit from networks, move abroad. A recent study using data for high- return migration, and the incentives for young and middle-income economies shows that im- people to improve their skills. Returning mi- migration of high-skill workers has positive ef- grants bring home entrepreneurial and technical fects on wages of both high- and low-skill local capacities that enhance productivity in sending workers. On the other hand, emigration of more countries. Experience acquired abroad has been educated workers is associated with declines in found to induce higher wages among salaried wages for both low- and high-skill workers who workers and higher productive efficiency among remain in the country of origin.14 entrepreneurs in several countries.21 Beyond the Remittances are an important source of in- individual benefits are societal benefits that may come for households in sending countries, al- extend to the proliferation of a whole industry though they do not necessarily reach the poorest and the creation of new jobs in an entire local- of the poor. In different countries, an increase ity. Bangalore and Hyderabad in India illustrate in international remittances is associated with this point: returning migrants set up informa- declines in the share of people living in pov- tion technology and communication companies erty.15 Remittances also increase savings and to take advantage of their previous experience investment in recipient families.16 And they are and their links with international companies.22 more resilient than is generally believed. Recent The presence of highly qualified Indian engi- studies show that despite tougher conditions for neers and executives in U.S. corporations paved migrants during the 2009 recession, remittances the way for the rise of the Indian software indus- dipped only slightly.17 Results are mixed on the try.23 The activities of migrant networks are not impact of remittances on income inequality. restricted to skilled migrants or corporate activ- Some studies find that migrants come from the ities. Networks of Mexican low-skill workers in middle of the income (or wealth) distribution the United States have worked with the Mexican and that, in the short term, remittances leave government to redirect and enhance public in- overall inequality unaltered. Others show that in vestment in infrastructure in their communities the medium term inequality decreases, because of origin.24 of the higher economic activity in localities with Networks of migrants can also be impor- migrants.18 Most studies also report that remit- tant sources of foreign direct investment and tances reduce labor force participation among know-how, both of which promote productivity migrants’ relatives.19 growth in sending countries. It is estimated that The growing migration trend among the Chinese migrants contributed more than half highly skilled raises concerns about the implica- of all foreign direct investment in China.25 The Connected jobs agendas 237 impact of returning migrants on their commu- secluded in segregated occupations or neigh- nities may be more modest in smaller countries borhoods, preventing their genuine integration that lack the scale for the development of new in society.32 It may also occur when migrants are vibrant businesses.26 perceived as competing for “nonmigrant” jobs. The increase in talent migration may also Prejudice and tensions may result in distrust of bring a brain gain through its impact on human migrants and lead to the hardening of legal re- capital accumulation in sending countries. The quirements for entering the host country, forced prospect of migration raises the returns to edu- repatriations, and even the building of physical cation and, thus, fosters investment in human walls to prevent migration. These policies may capital. However, these positive effects depend not ease tensions unless a more comprehen- on the size of skill migration and the relative size sive approach is adopted. Irregular or undocu- of the country. Recent evidence indicates that mented migration is growing, partly in reaction large countries with low rates of high-skill emi- to the lack of legal alternatives to migration gration experience a net gain in human capital. given the mounting mismatches between em- In contrast, small countries with high rates of ployment opportunities in sending and receiv- high-skill emigration suffer a net loss.27 ing countries.33 Social impacts are more diverse. In sending countries, researchers find changes in gender and family relations as well as in political at- Migration of jobs titudes. But the nature of these changes de- pends on the country. In some cases, women Quantifying the international migration of jobs and children are empowered by the migration is even more difficult than estimating the global of spouses and parents; in others, they become number of international migrants. The past four more vulnerable.28 Migrants to societies that decades have been marked by the delocalization value liberty and democracy come to appreciate and outsourcing of manufacturing tasks from these values, whereas those in more traditional industrial countries to the developing world, host countries may become more traditional especially to East Asia. More recently, the same themselves.29 pattern is observed for tasks in the services sec- In host countries, most studies have concen- tor. In fact, exports of services are the fastest- trated on the influence of migrants on the em- growing component of global trade. And the ployment and earnings of locals, as well as on share originating in developing countries has the fiscal consequences of migrant inflows. The been growing steadily over the past two decades. majority of these studies finds either no effect But counting how many jobs are affected glob- or a very small negative effect on the average la- ally is not feasible, because the process involves bor earnings of the locals. But the composition job destruction in some countries and job cre- of employment between locals and migrants ation in others, in ways that cannot be easily shifts, creating winners and losers.30 The fiscal matched with each other. consequences for host countries depend on the characteristics of the migrants. The younger Global trends and more skilled they are, the higher the tax revenues. The impact of government spend- The share of manufacturing in total employ- ing in host countries varies, depending on the ment in industrial countries declined by duration of migration and the family composi- roughly one-third between 1970 and 2008, as tion of the migrants. Computations of the net did its share in gross domestic product (GDP) effect on the welfare systems of recipient coun- (figure 7.1).34 Although starting from higher tries are sensitive to hypotheses and estimation levels, the pattern was the same in Japan as in methods.31 Europe and North America. The Republic of Last but not least, migration may also bring Korea industrialized in the 1970s and 1980s, but racial prejudice and exacerbate social tensions in the share of manufacturing in its employment host countries. This happens when migrants are and GDP started declining in 1992. Meanwhile, 238 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 the share of manufacturing in total employment increased steadily in other East Asian countries, F I G U R E 7.1 Manufacturing jobs have migrated away from including China, for four decades. In South Asia high-income countries and Sub-Saharan Africa, the share has been low a. High-income countries and stagnant, whereas it has declined in Latin 45 America and increased in Eastern Europe and 40 Central Asia. The overall pattern is one where manufacturing jobs migrated primarily from 35 Western Europe and the United States to North- percent 30 east Asia and then to the rest of East Asia. The East Asian trends are consistent with the 25 “flying geese” pattern of development, where 20 economic transformation is consistent with dynamic changes in comparative advantage. 15 Industrialization in East Asian countries began 1970 1980 1990 2000 2008 with the development of labor-intensive sectors, manufacturing share of GDP gradually shifted to capital-intensive sectors, and manufacturing share of employment then to knowledge-intensive activities. In paral- lel, wages rose and skills increased.35 First Japan, b. Japan and the Republic of Korea then Korea, and more recently China followed a 45 similar pattern. As labor costs increase further, 40 light manufacturing jobs are likely to migrate away from coastal China, where most industries 35 have concentrated. By some estimates, nearly percent 30 100 million jobs are at stake.36 The migration of light manufacturing jobs 25 out of coastal China could open a once-in-a- 20 generation opportunity for countries in Sub- Saharan Africa and South Asia to jump-start 15 their industrialization. But some observers pre- 1970 1980 1990 2000 2008 dict that the migration will go mainly to the in- manufacturing share of GDP (Japan) land areas in China, where wage rates are lower manufacturing share of employment (Japan) manufacturing share of GDP (Republic of Korea) than on the coast. This would be consistent manufacturing share of employment (Republic of Korea) with the patterns of industrialization in Japan; Korea; Taiwan, China; and the United States, c. Other East Asian countries where the initial geographical concentration of 45 industries was followed by dispersion within the 40 same country.37 However, China’s labor market is relatively integrated to the point where even 35 unskilled wage rates in rural areas have been in- percent 30 creasing rapidly.38 Therefore, an overall decline in the manufacturing share of GDP in China 25 might be unavoidable, opening up the oppor- 20 tunity for labor-intensive industrialization in other developing countries.39 15 The rapid growth of labor productivity in 1991 1995 2000 2005 2008 manufacturing is resulting in the stagnation or manufacturing share of GDP even the decline of the number of manufactur- manufacturing share of employment ing jobs worldwide (figure 7.2). Global employ- ment in manufacturing increased by only 30 percent from 1990 to 2008, with most of the ex- Source: World Development Report 2013 team estimates based on data from the United Nations Industrial Development Organization (UNIDO) database and United Nations Statistics Division. pansion taking place in Asia, especially in China. Note: Japan is not included in panel a. GDP = gross domestic product. Given that manufacturing jobs connect to ex- Connected jobs agendas 239 F I G U R E 7. 2 The global number of manufacturing jobs has not varied much 200 manufacturing jobs, millions 150 100 50 0 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 90 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 19 East Asia and Pacific Europe and Central Asia Latin America and the Caribbean Middle East and North Africa industrial countries Sub-Saharan Africa South Asia China Sources: World Development Report 2013 team based on ILO 2010; Industrial Statistics Database: INDSTAT2-2011 Edition, United Nations Industrial Development Organization, Vienna, and World Development Indicators. port markets and global value chains more than ing share of employment and GDP in services, other jobs and are thus more likely to generate some of which are sold across borders.41 New productivity externalities, this stagnation or de- ways of delivering services, often broken down cline raises the prospect of a fierce international into small tasks and driven by information and competition ahead (question 7). If aggregate communication technology (ICT), are trans- numbers of manufacturing jobs are bound to forming where service activities can be located remain relatively stable, successful industrializa- (box 7.2). The world share of developing coun- tion in one region may come at the expense of tries in global exports of services increased from industrial employment in another region. 11 percent in 1990 to 21 percent in 2008. Ser- Manufacturing could take off in South Asia vices are now the main contributor to economic or Sub-Saharan Africa if technology and man- growth in many developing countries, including agement knowledge were transferred there. Such India.42 a transfer, however, is not simple: fostering en- The rapid expansion of trade in services is trepreneurship, nurturing a more skilled work- bound to increase productivity on a global scale. force, creating a stronger investment climate, But it also is raising fears in developed countries and establishing a more favorable institutional that service sector jobs will migrate to develop- environment would be necessary. There is also ing countries through offshoring or interna- a risk of focusing on industries that are not in tional outsourcing, much the same as manufac- line with the potential comparative advantage turing jobs did over the past four decades. of these regions.40 Combined with poor logistics A telltale sign of the potential for offshor- and weak government capacity, that could mean ing and outsourcing is the substantial number that few manufacturing jobs would actually mi- of service sector tasks already being performed grate to these regions. Studies on the locational remotely within industrial countries.43 In the decisions of multinational corporations show United States, service occupations that are trad- that many factors come into play (box 7.1). able by nature, such as computer systems design Services were once regarded largely as non- and management consulting, display a heavy tradable, but this is no longer the case. Both geographic concentration. This concentration country-specific and global trends show a grow- results partly from agglomeration economies, 240 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 7.1 Why do multinationals locate where they do? Where multinationals locate provides insights into the critical char- Costs associated with complying with business regulations and with acteristics in a host country that firms want or need. Traditionally, taxes can also be important, as are the reliability and cost of contract foreign direct investment (FDI) was categorized either as horizon- enforcement institutions. The literature shows that the relative tal—multinationals seeking better access to larger markets over- importance of these dimensions often varies by different types of seas—or vertical—multinationals moving part of their production sectors, the degree of capital intensity, and technological sophisti- to a lower-cost location. As trade barriers and transportation costs cation. The presence of other firms is also a consideration. Quick and have fallen and supply chains involve ever more specialized tasks, reliable access to suppliers can reduce costs and delays. the importance of locating near the final market has diminished. But In addition to the academic literature, a number of consulting the empirical patterns show that “costs” need to be determined firms provide analysis and rankings of the attractiveness of coun- over a range of dimensions. tries based on the views of top executives of multinationals. A.T. The location-decision question has been examined empirically Kearney has published a Foreign Direct Investment Index since by looking at how the characteristics of host countries predict the 1998. Three dimensions emerge as critical in its analysis: well- inflow of FDI and entry of multinationals. Significant macroeco- functioning financial markets, a strong business environment, and nomic instability or conflict disqualifies most locations. Low wages strong labor skills. A separate index for the location of services also can be attractive, but given that labor is often a small share of over- emphasizes skills, particularly language skills, and the degree of all manufacturing costs, they are often not the predominant consid- global integration. Labor typically accounts for a larger share of eration. And labor costs cannot be evaluated separately from the overall costs in services than in manufacturing. quality of skills; developed countries remain significant destinations The evolution of supply chains into more specialized tasks oper- of FDI in part because of their highly skilled workforces. Access to ating across more diverse locations can offer opportunities for an land, particularly in parts of Africa and Asia where land access is increasing number of developing countries. Multinationals are not more regulated, can be a significant consideration. Poor or inconsis- looking for a strong business environment across the board; they tent public services, including electricity, security, and transporta- care about inputs and services that are specific to their needs and tion infrastructure, can quickly raise costs—through delays, lost thus are location-specific. production, and the expense of privately providing these services. Sources: World Development Report 2013 team based on Alfaro and Chen 2011, Helpman 2006, and Harrison and Rodríguez-Clare 2009. BOX 7.2 E-links create job opportunities in developing countries, but the scale is still modest Internet services are becoming ever more accessible, including in refugee camps in countries, such as Haiti, Pakistan, Uganda, and the developing world. Crowdsourcing tools help businesses to others. Data workers develop skills in English, computers, and a vari- break up larger tasks into many smaller discrete steps. These are ety of project-specific tasks. Samasource has reached 1,600 women then offered to a global online community through competition. and youth over the past three years. The platform TopCoder, for example, brings together close to Similarly, RuralShores aims to bring rural India into the global 400,000 programmers globally. knowledge world. It provides remote processing of noncritical busi- A special type of online outsourcing, branded impact sourcing ness transactions such as data entry, simple bookkeeping, expenses by some, aims to bring employment and supplementary income to handling, and document digitalization and archiving. RuralShores low-income areas. Impact sourcing is estimated to represent 4 per- runs 10 centers in 7 Indian states, employing about 1,000 people. cent of the entire business process outsourcing industry, account- The centers, run as for-profit entities, are all located in remote Indian ing for US$4.5 billion in total revenues and employing around villages. While most employees are high-school graduates, the com- 140,000 people around the globe. Samasource is a nonprofit organi- pany gives preference to people with disabilities and young job- zation based in San Francisco, working with major technology cli- seekers from poor, agrarian families. Impact sourcing does face ents. It splits large projects into “micro work”—small tasks that can challenges that include access to clients and contracts, sustainable be done online using inexpensive computers—and distributes the demand, robust infrastructure, effective recruitment, and identifica- tasks largely to women working with partner service providers in tion of investors. the poorest parts of the world, including remote villages, slums, and Sources: World Development Report 2013 team based on Monitor Inclusive Markets 2011 and Selim 2012 for the World Development Report 2013. Connected jobs agendas 241 supporting specialization. But simple geo- Some researchers claim that a “revolution” is graphic imbalances between the local supply under way that is turning services sectors into and demand for services also contribute to re- the main engine of economic growth in devel- mote provision. oping countries.53 Others argue that developing Trade in services can be expected to expand countries such as India and the Philippines are rapidly in the coming years. Until recently, it was successful in exporting relatively skill-intensive thought that only labor-intensive tasks would services not because of their comparative ad- be relocated to developing countries, allowing vantage in such services but because of policies production in industrial countries to focus on preventing their manufacturing sectors from capital- or skill-intensive tasks.44 However, de- taking off.54 Given the stagnation of global em- veloping countries are now exporting not only ployment in manufacturing and the growing traditional services, such as transportation and trade in services, a relevant question is whether tourism, but also modern and skill-intensive developing countries can successfully skip the services, such as financial intermediation, com- industrialization phase of development. puter and information services, and legal and technical support.45 Skilled jobs performed by Winners and losers accountants, programmers, designers, archi- tects, medical diagnosticians, and financial and The obvious winners of globalization are the statistical analysts are increasingly outsourced workers and entrepreneurs in countries to by firms in industrial countries.46 In India, the which industries and splintered tasks have mi- number of such skilled white-collar jobs has grated. Outsourcing and offshoring, along with grown rapidly.47 However, some of the service the attendant transfer of new technologies and jobs seen as skilled in developing countries are advanced management methods, contributes considered unskilled in industrial countries.48 to productivity growth and improvements in India was a developing world pioneer in living standards. The development of more ef- building a modern export-oriented services sec- ficient industries and services encourage a real- tor, but other countries—Brazil, Chile, China, location of labor toward more productive uses. and Malaysia, to name a few—have also seized It also stimulates the subsequent development the opportunity.49 But outsourcing does not of other interrelated industries and sectors only happen between industrial and develop- through backward and forward linkages. The ing countries. In the United States (the largest development of a modern services sector can offshoring economy), 85 percent of the service lead to greater coordination in value chains and trade is with other industrial countries.50 Two- make a further subdivision of tasks and the re- thirds of service sector exports from developing organization of production possible, leading to countries are actually South-South trade.51 economies of scale.55 Multiple actors—includ- Developing countries tend to specialize in ing multinationals, civil society organizations certain activities within the services sector. For and consumers in industrial countries—are example, Brazil, Costa Rica, and Uruguay are increasingly active in efforts to improve work- strong in professional and ICT-related services; ing conditions and workers’ rights in developing Chile in distribution and transportation ser- countries. To the extent that such efforts bear vices; Mexico in communication and distribu- fruit, enhanced export opportunities improve tion services; and Sub-Saharan African coun- workers’ well-being.56 In all these ways, signifi- tries in professional services.52 This diversity in cant trickle-down effects can have widespread specialization will likely lead to both competi- benefits for recipient countries. tion and cooperation, involving different seg- The hidden winners from the migration of ments of the services sector, rather than a head- jobs are consumers at large. The improved in- on collision between industrial and developing ternational division of labor expands the global countries. availability of goods and services, improving This new phase of globalization is bound to living standards around the world.57 This point influence views and interpretations about struc- can be easily understood by thinking how the tural transformation and the migration of jobs. world would look if China and India could not 242 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 provide cheap goods and services to the rest of income gap created by the international migra- the world. tion of jobs. But jobs tend to migrate more eas- The obvious losers are those who have lost ily than people. their jobs because of the declining competi- tiveness of the industries and services where * * * they used to work. While skilled workers may easily find similar occupations in other indus- The migration of people and the migration of tries without a loss in salary, many low-skilled jobs make clear that jobs challenges, despite being workers are not so fortunate. Low-skilled country specific, can also be global in scope. Both workers or those with industry- or occupation- sending and recipient countries can benefit from specific skills that are no longer in demand are these international movements in a variety of more likely to be forced to accept lower-paying ways, from higher labor earnings to remittances, jobs in different industries or remain unem- from greater productivity to broader networks. ployed.58 Job losses could become a serious is- Consumers worldwide also benefit from less ex- sue not only in industrial countries but also pensive consumer goods. Tensions and costs are in dynamically growing developing countries, associated with these two migrations, however. such as China, as their labor costs increase. Migrant workers may suffer discrimination and There are also hidden losers. These are the segregation or lose their family and cultural con- workers and entrepreneurs in countries which nections and identity, disrupting not only their have failed to develop new industries and ser- own sense of well-being but also have an impact vices connected to world markets and the jobs on communities in origin and host countries. that go with them.59 Workers in those countries, The migration of people and the migration however, may not perceive the lost employment of jobs may transform entire communities, cre- opportunities.60 ating winners and losers. Many see their lives One way to mitigate the welfare losses from improve, but those who lose their jobs to out- globalization, both apparent and hidden, is sourcing and offshoring may experience perma- through the international migration of work- nent declines in well-being, especially if they are ers. Income differentials across countries, unskilled. These spillovers, positive and nega- which reflect differences in the growth rates of tive, are powerful motivators for the political different economies, are important drivers of and social groups that promote or oppose the this migration. By reallocating workers from migration of people and of jobs. But these spill- stagnant or slowly growing economies to rap- overs are international in nature, so coping with idly growing ones, the international migration them only through national policy instruments of workers contributes to the reduction in the may prove unsatisfactory. QUESTION 7 Competing for jobs? Many developing countries face a jobs agenda. determined by the size of the labor force. How- In some, it involves offering avenues to rural ever, the composition of employment is bound populations to move out of poverty. In others, to change. The concern is that the share of it aims at leveraging the gains from urbaniza- good jobs for development may decline in one tion and from integration in global markets. Yet country and increase in another. Whether that in others, the goal is to prevent youth from be- happens depends on the nature of good jobs coming disenfranchised or to reduce the risk of for development and the types of national conflict. These agendas are addressed through policies being adopted to support job creation. national policies that stimulate job creation by While the public’s concern is legitimate, not all the private sector, especially in the areas and measures to support job creation amount to a activities where development payoffs are high- beggar-thy-neighbor policy. est. But jobs agendas of individual countries are connected through globalization: trade in goods Not a competition for total employment and services, investment flows, and migration of but for its composition workers. This begs the question: if jobs can mi- grate from one country to another, do policies International trade and investment can be ex- to support job creation in one country become pected to lead to greater prosperity. Globaliza- policies affecting jobs in other countries—poli- tion, including firm relocation and outsourcing, cies competing for jobs globally? may result in job losses at home in the short Among economists, the conventional wis- term, but the demand for labor should increase dom is that the number of jobs is not deter- in the longer run, as specialization generates ef- mined by international trade and investment ficiency gains in both industrial and developing but by the total number of people in the labor countries.61 Lower prices for goods and services, force. And in general, openness to international and a growing consumption demand from trade and foreign direct investment is beneficial emerging countries as they prosper, can only re- for all the countries involved. Thus, globaliza- inforce the upward trend in the global demand tion is not a zero-sum game. From this point for labor. of view, policies to support job creation are not Empirical evidence to a large extent con- policies competing for jobs, even as they may firms this upbeat assessment. Labor earnings alter the global flows of trade, investment, and and working conditions improve as countries workers. grow richer, and global integration has been The general public seems to have a less san- good for growth. Across developing countries, guine view of the situation. Representative pub- a 1 percent increase in a country’s openness, lic opinion polls show that firm relocation and measured as the share of its foreign trade in its tasks outsourced abroad are seen as a threat to output, has been associated with a 1 percent in- employment in industrial countries (box 7.3). crease in GDP per capita.62 Gains may reach up Globalization is perceived as a head-to-head to 1.5 percentage points on average in the case of competition in which employment gains in one openness in financial services and telecommu- country can be achieved only at the expense of nications.63 Even in Sub-Saharan Africa, where jobs in other countries. trade liberalization was viewed with skepticism, There is merit to both views. Past the short- the increase in output growth rates could be in term impact of outsourcing and delocalization, the range of 0.5 to 0.8 percent.64 Evidence also the total number of jobs in one country should shows that firms engaged in global markets pay not be substantially affected by policy decisions higher wages. This is true of exporting firms in other countries. Some firms may close or start from Colombia to Morocco and from Mexico activities, others may expand or contract their to Korea. It is also true of foreign-owned com- business, but total employment will be roughly panies, whether they operate in Cameroon or 244 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 7.3 Globalization is often viewed as jobs migrating abroad Across European countries, popular perceptions can be inferred global crisis and the European debt crisis, when concerns about un- from the Eurobarometer surveys. One of its questions is the follow- employment were not exacerbated, about one-third to one-half of ing: “What comes first to mind when you hear the word ‘globaliza- respondents see globalization as a relocation of companies abroad. tion’?” The options for answering this question are opportunities for The survey also asked: “Which of the following two propositions is the domestic companies in terms of new outlets; foreign investments one which is closest to your opinion with regard to globalization?” in the country; relocation of some companies to countries where Possible answers included good opportunity for domestic companies; labor is cheaper; increased competition for the country; and other. threat to employment and companies; and “do not know.” With the The third option reflects perceived job insecurity. Even before the exception of Denmark, where only a small minority chose the second 70 60 50 respondents, % 40 30 20 10 0 nd ey ia ria ia tia ly ic n l y en nd m ce d ce ga ar ai an bl Ita an ar iu ee an rk st oa ed la la Sp rtu ng pu lg nl lg m Tu Au Po Ire Gr Fr Cr Sw Bu Fi Hu Be Po Ro Re h ec Cz Note: The figure is based on the following question and answer: Question: “There are multiple consequences of the globalization of trade. When you hear the word ‘globalization,’ what comes first to mind?”; and Answer: “Relocation of some companies to countries where labor is cheaper.” Data are from surveys conducted in 2008. option, between one-third and three-quarters of the respondents saw world—what would suddenly create worldwide peace, global well- globalization as a threat to jobs. being, and the next extraordinary advancements in human develop- Based on opinion polls, policies for jobs are often perceived as a ment, I would say the immediate appearance of 1.8 billion jobs—for- zero-sum game in which gains for one country can be achieved only at mal jobs.” In his view, “this raises an important distinction—not only do the expense of others. The chairman and CEO (Chief Executive Officer) we need to create more jobs, we need to increase the number of good of Gallup put it as follows: “If you were to ask me, from all the world jobs. And we can’t see that quest for good jobs as an internal skirmish polling Gallup has done for more than 75 years, what would fix the between warring political ideologies. It’s an international war.”a Sources: Clifton 2011; Eurobarometer Surveys (database) 2010, European Commission, Brussels. a. Interview given in connection with the book launch. Connected jobs agendas 245 República Bolivariana de Venezuela, Indonesia of more sophisticated goods. In the 1970s and or Zambia.65 1980s, Japan not only began exporting steel, Admittedly, the dispersion of earnings semiconductors, and automobiles but turned within countries has also increased, for instance into a leading supplier. As the major exporter of in the form of higher returns to education, and these products, the United States suffered from it is tempting to attribute this trend to global- Japan’s expansion.67 The United States had been ization. Low-skill jobs in industrial countries characterized by its fluid labor markets. Yet, the are often high-skill jobs from the perspective of potential welfare loss from the decline of Pitts- developing countries, and exporting itself is a burgh, Detroit, and other industrial centers skill-intensive activity. Therefore, international could be substantial, even if labor was reallo- trade and offshore outsourcing can be expected cated smoothly.68 This competition was resolved to increase the relative demand for skills at both by “voluntary export restraints”—a special form ends, favoring better-off workers. The empiri- of quota that actually granted all quota rents to cal results on this possible effect vary widely, Japan but prevented a complete decline of such however.66 For sure, all policies create winners employment in the United States, indicating the and losers, and the distribution of labor earn- importance attributed to these industries.69 ings has widened in parallel with globalization, Concerns are similar for developing countries but a causal relationship is difficult to establish. nowadays. Consider the opportunities opened by Overall, widening disparities may have more to the increase in labor earnings in the coastal areas do with technological progress and financial lib- of China.70 Some labor-intensive manufactur- eralization than with globalization. ing jobs connected with global value chains will A different perspective arises when consid- migrate out of China in search of lower produc- ering the composition of employment, rather tion costs. Given rapid technological progress, than the level or dispersion of labor earnings. the global number of jobs in light manufactur- Globalization provides developing countries ing is unlikely to increase much. Low-income with the opportunity to connect to world mar- countries in both Sub-Saharan Africa and South kets and derive productivity spillovers boosting Asia aspire to attract some of those jobs, so a their economic growth. Manufacturing jobs in- competition is involved. Tension is not limited tegrated in global value chains, as well as jobs to labor-intensive manufacturing jobs. A simi- in technologically advanced services and in fi- lar logic underlies government efforts to attract nance, are often seen as tickets to rapid devel- high-tech companies, as Costa Rica successfully opment. However, rapid technological progress did with Intel.71 This is also the logic behind and economies of scale may mean the global government efforts to foster services exports, number of some of these jobs will not increase exemplified by the success of Brazil, Chile, India, much. For jobs in manufacturing, the experi- Malaysia, and the Philippines.72 ence of the last few decades has shown a relative Because technological progress and global- stability of their global numbers together with a ization connect markets to an unprecedented dramatic change in their spatial distribution. If level, they also result in competition over other so, policies for job creation could lead to a com- types of jobs with high development payoffs. petition not for the level of employment but for Jobs located in a global hub can generate large the jobs with the highest development payoffs. productivity spillovers. London stands as one The experience of Japan and the United of the most economically vibrant cities in Eu- States illustrates the point. In the 1950s, Japan rope largely because it serves as an international exported cheap labor-intensive products in financial center. The financial industry entails exchange for goods embedded with more ad- scale economies and is supported by density. vanced knowledge and technology. This strat- Therefore, the number of global financial cen- egy generated much needed revenue for Japan’s ters is limited, and their formation is shaped by post–World War II recovery. More importantly, location, history, and national policies. Similar it contributed to Japan’s productivity growth logic applies to international transportation and built the foundation for the production hubs such as Singapore, clusters of information 246 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 and computer technology–related industries or an adverse effect on the social welfare of an- such as Silicon Valley and Bangalore, and so on. other country. A key question to ask is what purpose poli- cies serve (figure 7.3). For instance, policies Policies for jobs: Different degrees of for jobs may aim to improve compliance with competition rights, prosecuting forced labor and harmful Even if globalization may result in a competition forms of child labor. Because fundamental la- for good jobs for development, not all efforts bor rights and principles have been endorsed to support job creation amount to beggar-thy- by most countries, promoting compliance with neighbor policies. Whether they do so depends rights amounts to providing a global public on the type of instruments used and the nature good. Thus, interventions against human traf- of the spillovers from jobs.73 ficking or child prostitution in one country are Because globalization involves international unlikely to have adverse effects in other coun- trade and foreign direct investment, it is natural tries and do not lead to a competition for jobs. to first consider trade- and investment-related In the absence of a global public good di- instruments. Some of them, such as import tar- mension, the second question is what market iffs, export subsidies, and local content require- imperfection or institutional failure is being ments, are ruled out by multilateral trade agree- addressed by the policy intervention. Tackling ments; others, such as improving access to credit the institutional failures that lead to conflict, for private exporters and identifying and remov- discrimination, or lack of voice might have an ing specific constraints faced by foreign inves- effect on the international flows of goods, ser- tors, are not. But in reality these are just a nar- vices, and finance, but only indirectly. The risk row subset of policies for jobs. When bidding to that government interventions in these areas attract foreign direct investment, governments will result in a competition for jobs with other can compete directly through tax holidays or countries is limited. The risk is also limited in through dedicated physical infrastructure and the case of interventions aimed at providing human resources. They can also compete indi- jobs opportunities for the poor. In all of these rectly, as when they take actions that appeal to cases, there should be gains in well-being in the both local entrepreneurs and foreign investors. developing country, and no substantial loss in For example, they can contain increases in the well-being in other countries. Therefore, jobs cost of labor by keeping mandated benefits af- policies focused on strengthening social cohe- fordable. Or they can improve the availability sion and improving living standards should be and quality of factors of production, such as acceptable as well. worker skills and public infrastructure. In South The answer is less clear when government in- Asia, for example, the quality of physical infra- terventions aim at enhancing productivity spill- structure and the education of the workforce are overs from jobs. These interventions typically the strongest predictors of entry of new firms.74 include urban development policies, invest- When considering good jobs for development ments in infrastructure and skills, or the pro- more generally, and not just jobs connected to motion of entrepreneurship. Because these in- world markets, the set of policy options is even terventions are likely to affect the international broader. Urban policies are another important flows of goods, services, and finance, the range instrument to stimulate job creation by the pri- of possible outcomes is broader. While no gen- vate sector. Given the potential agglomeration eral rule is available, interventions that under- of economies, relatively small interventions can mine an open trading system most likely reduce have large effects.75 In low-income countries, aggregate well-being—probably more at home enhancing extension services may have a large than abroad. On the other hand, interventions impact on farm productivity and, thus, on pov- aligned with a country’s dynamic comparative erty reduction. Whether this broader set of poli- advantage could result in mutual gains. Admit- cies leads to a competition for jobs depends on tedly, assessing what “aligned” means in practice whether policies in one country have a positive is bound to involve an element of judgment.76 Connected jobs agendas 247 F I G U R E 7. 3 Policies for jobs may or may not harm other countries policies for jobs improving enhancing enhancing enhancing compliance spillovers from spillovers from spillovers from with rights jobs on social jobs on living jobs on cohesion standards productivity positive global spillovers negative rights at gender peace poverty urbanization industrial trade work equality building reduction policies policy distortions examples of policies Source: World Development Report 2013 team. But the East Asian experience, with jobs in man- countries followed their dynamic compara- ufacturing migrating from Japan to Korea and tive advantage under the “flying geese” pattern Taiwan, China, and subsequently to China, and of development, there were few instances of an then to Vietnam, provides some hints. As these open competition for jobs between them. © Piotr Malecki / Panos Pictures Employees at a call center in Poland Connected jobs agendas 249 Notes hindered because of underuse of these resources. See Özden and Schiff 2006. 1. Özden and others 2011. 21. See Wahba (2007) on Egypt; Thomas (2009) on 2. IOM 2008; Lucas 2005. Uganda and South Africa; and De Vreyer, Gubert, 3. IOM 2010. and Robilliard (2010) on the countries of the 4. See IOM 2010; UNHCR 2010. West African Economic and Monetary Union. 5. This finding discounts the effect of political 22. Chacko 2007. See also Saxenian 2004. changes in South Asia and the former Soviet 23. Pandey and others 2006. Union. See Özden and others 2011. 24. Cordova 2009; Garcia Zamora 2005; McKenzie 6. Docquier and Marfouk 2006. and Rapoport 2007; Torres and Kuznetsov 2006. 7. Docquier and Marfouk 2006; Solimano 2010. 25. Gibson and McKenzie 2012. 8. Bach 2008. 26. Kuznetsov and Sabel 2006. 9. Docquier, Özden, and Peri 2011. 27. Beine, Docquier, and Rapoport 2011; Lucas 2010. 28. For Mexico, see Heymann and others (2009). For 10. For the case of migration to New Zealand from Albania, see de Soto and others (2002). Tonga, McKenzie, Gibson, and Stillman (2006) 29. Some, including Keddie (1998), argue that mi- find that migration leads to a 263 percent in- grants bring political radicalization, whereas oth- crease in income. Clemens, Montenegro, and ers, such as Pérez-Armendáriz and Crow (2010), Pritchett (2008) find an annual gain in wages say migrants bring democracy. close to US$10,000 for migration from Mexico to 30. For evidence in the United States, see Abowd and the United States and about US$18,000 for mi- Freeman (1991); Borjas (2003); Card (2001); and gration from the Arab Republic of Egypt, Haiti, LaLonde and Topel (1997). Qualitatively similar India, and Nigeria. results are in Giuletti (2012), Hunt (1992), and 11. Chin 1999; Di Nicola 1999. Pischke and Velling (1997) for the cases of France 12. Hanson 2006; Spener 2009. and Germany; in Friedberg (2001) for Israel; in 13. See Lucas 2005, chapter 3. See also Docquier, Carrasco, Jimeno, and Ortega (2008) for Spain; Özden, and Peri 2010. For a cross country analy- and in Dustmann, Fabbri, and Preston (2005) for sis of this topic, see Hovhannisyan 2012 for the the United Kingdom. See Chiswick and Miller World Development Report 2013. 2009. 14. Lucas 2005, 267–69; Priebe and others 2011. The 31. Lucas 2005, 285–86. For the complex political connection between health and migration is still economy links between attitudes toward migra- a growing area of research. Gibson, McKenzie, tion and the welfare state, see Koopmans (2010) and Stillman (forthcoming) find—using data on and Razin, Sadka, and Suwankiri (2011). migrants from Tonga to New Zealand—that mi- 32. Dingeman and Rumbaut 2010. gration leads to improvements in mental health, 33. Despite the difficulties in measuring irregular whereas McKenzie, Gibson, and Stillman (2006) migration, there is a consensus that the number of find that migration leads to significant and per- irregular migrants was growing in the years before sistent increases in blood pressure. the Great Recession of 2009. New sources for mea- 15. Gupta, Patillo, and Wagh 2009; Lokshin, Bontch- suring irregular migration include administrative Osmolovski, and Glinskaya 2010. records and regularization programs. Other expe- 16. Anzoategui, Demirgüç-Kunt, and Martinez-Peria riences include the IOM (International Organiza- 2011. tion for Migration) Counter-Trafficking Module 17. Sirkeci, Cohen, and Ratha 2012. (CTM), the CIREFI (Centre for Information, Dis- 18. See Shen, Docquier, and Rapoport (2010) for a cussion, and Exchange on the Crossing of Fron- theoretical explanation of the difficulties in ex- tiers and Immigration), or EIL (Enforcement of plaining the link between remittances and in- Immigration Legislation) statistics collected by the equality. Empirical studies include Acosta and European Commission. See IOM 2010. others (2007); Adams (1989); Adams (1992); 34. Because of limited availability of data, figure 7.1 Adams (2004); Adams (2006); McKenzie and shows the gross domestic product share of the in- Rapoport (2007); and Milanovic (1987). dustrial sector, which consists of the manufactur- 19. Adams 2011. ing and the construction and mining sectors. 20. A related problem is the case of “brain waste”: 35. Akamatsu 1962; Lin 2011. skilled workers who perform low-skilled jobs 36. Lin 2011; Lin 2012. in either sending countries (because of stagnant 37. Glaeser and others 1992; Henderson, Lee, and growth) or in host countries (because of occupa- Lee 2001; Mano and Otsuka 2000; Sonobe and tional segregation). In both cases, productivity is Otsuka 2006. 250 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 38. Rozelle and Huang 2012 for the World Develop- farmer and Sztajerowska (2012); Rama (2003); ment Report 2013. and Robertson and others (2009). 39. See, in particular, Dinh and others 2012. 67. See, for example, McKinnon and Ohno 1997. 40. Lin 2012; Lin and others 2010. 68. Gomory and Baumol 2001. 41. Measuring the net effect of offshoring is complex, 69. See, for example, Feenstra 1984 and Hymans and and different methodologies have been proposed. Stafford 1995. From a theoretical point of view, the net effect in 70. Lin 2012. a given country is ambiguous because offshor- 71. Rodríguez-Clare 2001. ing may reduce employment in the short term, 72 Goswami, Mattoo, and Sáez 2011. but the resulting specialization can induce pro- 73. Levy 2012 for the World Development Report ductivity gains that increase employment in the 2013. long term, although with a change in the share of 74. Ghani, Kerr, and O’Connell 2011. different types of labor and occupations within 75. Glaeser and Gottlieb 2008. the total. The Organisation for Economic Co- 76. Lin (2012) proposes to use as a reference the trade operation and Development (OECD 2007) and patterns of countries whose endowments are sim- the United Nations Conference on Trade and ilar but whose income per capita is moderately Development (UNCTAD 2004) indicate that higher than in the country under consideration. offshoring is not necessarily a zero-sum game and that short-term job losses may be more than compensated for by job gains, although with variations across industries and sectors. References 42. Ghani 2010. 43. Jensen 2011. The word processed describes informally reproduced 44. See, for example, Görg 2011. works that may not be commonly available through 45. Goswami, Mattoo, and Sáez 2011. libraries. 46. Millberg and others 2007. 47. See, for example, Suri 2007. Abowd, John M., and Richard B. Freeman. 1991. Im- 48. Goldberg and Pavcnik 2007. migration, Trade, and the Labor Market. Chicago, 49. Goswami, Mattoo, and Sáez 2011. IL: University of Chicago Press. 50. Ebenstein and others 2009. Acosta, Pablo, César Calderón, Pablo Fajnzylber, 51. Goswami, Mattoo, and Sáez 2011. and J. Humberto Lopez. 2007. “What Is the Im- 52. Goswami, Mattoo, and Sáez 2011. pact of International Remittances on Poverty and 53. Ghani 2010. Inequality in Latin America?” Policy Research 54. Goswami, Mattoo, and Sáez 2011; Jensen 2011. Working Paper Series 4249, World Bank, Wash- 55. François and Hoekman 2010. ington, DC. 56. Elliott and Freeman 2003; Newitt 2012 for the Adams, Richard H. 1989. “Worker Remittances and World Development Report 2013. Inequality in Rural Egypt.” Economic Development 57. Bhagwati, Panagariya, and Srinivasan 2004. and Cultural Change 38 (1): 45–71. 58. Ebenstein and others 2009. ———. 1992. “The Effects of Migration and Remit- 59. There is evidence that China’s increasing exports tances on Inequality in Rural Pakistan.” Pakistan affected the export patterns of other Asian coun- Development Review 31 (4 Pt. 2): 1189–203. tries. See Eichengreen, Rhee, and Tong 2007; ———. 2004. “Remittances and Poverty in Guate- Greenaway, Mahabir, and Milner 2008. mala.” Policy Research Working Paper Series 3418, 60. Blomström and Kokko 2009. World Bank, Washington, DC. 61. See, for example, Bhagwati, Panagariya, and ———. 2006. “Remittances and Poverty in Ghana.” Srinivasan 2004; François and Hoekman 2010; Policy Research Working Paper Series 3838, World and Grossman and Rossi-Hansberg 2008. Bank, Washington, DC. 62. Noguer and Siscart 2005. ———. 2011. “Evaluating the Economic Impact of 63. Mattoo and Rathindran 2006. International Remittances on Developing Coun- 64. Brückner and Lederman 2012. tries Using Household Surveys: A Literature 65. See Aw, Chung, and Roberts (2000) and Clerides, Review.” Journal of Development Studies 47 (6): Lach, and Tybout (1998) for exporting firms. See 809–28. Aitken, Harrison, and Lipsey (1996); Velde and Aitken, Brian, Ann Harrison, and Robert E. Lipsey. Morrissey (2003); and Görg, Strobl, and Walsh 1996. “Wages and Foreign Ownership: A Com- (2007) for foreign-owned companies. parative Study of Mexico, Venezuela, and the 66. For general reviews, see Goldberg and Pavcnik United States.” Journal of International Economics (2007); Jansen, Ralf, and Manuel (2011); New- 40 (3–4): 345–71. Connected jobs agendas 251 Akamatsu, Kaname. 1962. “A Historical Pattern of Labor Market Performance of Native-Born Work- Economic Growth in Developing Countries.” De- ers: Some Evidence for Spain.” Journal of Popula- veloping Economies 1 (Suppl. s1): 3–25. tion Economics 21 (3): 627–48. Alfaro, Laura, and Maggie Xiaoyang Chen. 2011. “Se- Chacko, Elizabeth. 2007. “From Brain Drain to Brain lection, Reallocation, and Knowledge Spillovers: Gain: Reverse Migration to Bangalore and Hyder- Identifying the Impact of Multinational Activity abad, India’s Globalizing High Tech Cities.” Geo on Aggregate Productivity.” Paper presented at the Journal 68 (2–3): 131–40. World Bank Conference on Structural Transfor- Chiswick, Barry R., and Paul W. Miller. 2009. “Earn- mation and Economic Growth, Washington, DC, ings And Occupational Attainment among Immi- October 6. grants.” Industrial Relations: A Journal of Economy Anzoategui, Diego, Asli Demirgüç-Kunt, and Maria and Society 48 (3): 454–65. Soledad Martinez-Peria. 2011. “Remittances and Chin, Ko-Lin. 1999. Smuggled Chinese: Clandestine Financial Inclusion: Evidence from El Salvador.” Immigration to United States. Philadelphia: Tem- Policy Research Working Paper Series 5839, World ple University Press. Bank, Washington, DC. Clemens, Michael A., Claudio E. Montenegro, and Artuc, Erhan; Frederic Docquier, Caglar Özden Lant Pritchett. 2008. “The Place Premium: Wage and Chris Parsons. 2012. “Education Structure Differences for Identical Workers across the U.S. of Global Migration Patterns: Estimates Based Border.” Policy Research Working Paper Series on Census Data.” World Bank, Washington DC. 4671, World Bank, Washington, DC. Processed. Clerides, Sofronis K., Saul Lach, and James R. Ty- Aw, Bee Yan, Sukkyun Chung, and Mark J. Roberts. bout. 1998. “Is Learning by Exporting Important? 2000. “Productivity and Turnover in the Export Micro-dynamic Evidence from Colombia, Mexico Market: Micro-level Evidence from the Republic and Morocco.” Quarterly Journal of Economics 113 of Korea and Taiwan (China).” World Bank Eco- (3): 903–47. nomic Review 14 (1): 65–90. Clifton, Jim. 2011. The Coming Jobs War: What Every Bach, Stephen. 2008. “International Mobility of Leader Must Know about the Future of Job Cre- Health Professionals: Brain Drain or Brain Ex- ation. New York: Gallup Press. change?” In The International Mobility of Talent, Cordova, Karina. 2009. “Collective Remittances in ed. Andrés Solimano, 202–34. Oxford: Oxford Mexico: Their Effect on the Labor Market for University Press. Males.” Paper presented at the Second Conference Beine, Michel, Frédéric Docquier, and Hillel Rapo- on International Migration and Development, port. 2011. “Brain Drain and Human Capital World Bank Migration and Development Pro- Formation in Developing Countries: Winners and gram, Washington, DC, September 10. Losers.” Economic Journal 118 (4): 631–52. de Soto, Hermine, Peter Gordon, Ilir Gedeshi, and Bhagwati, Jagdish, Arvind Panagariya, and T. N. Srini- Zamira Sinoimeri. 2002. “Poverty in Albania: A vasan. 2004. “The Muddles over Outsourcing.” Qualitative Assessment.” Europe and Central Asia Journal of Economics Perspectives 18 (4): 93–114. Environmentally and Socially Sustainable Devel- Blomström, Magnus, and Ari Kokko. 2009. “The opment Series 520, World Bank, Washington, DC. Economics of Foreign Direct Investment Incen- De Vreyer, Philippe, Flore Gubert, and Anne-Sophie tives.” In Foreign Direct Investment in the Real and Robilliard. 2010. “Are There Returns to Migration Financial Sector of Industrial Countries, ed. Heinz Experience? An Empirical Analysis Using Data Hermann and Robert Lipsey, 37–56. Heidelberg, on Return Migrants and Non-Migrants in West Germany, and New York: Springer. Africa.” Annales d’Économie et de Statistique 97–98 Borjas, George J. 2003. “The Labor Demand Curve (January/June): 307–28. Is Downward Sloping: Reexamining the Impact Dingeman, Kathleen M., and Ruben G. Rumbaut. of Immigration on the Labor Market.” Quarterly 2010. “The Immigration-Crime Nexus and Post- Journal of Economics 118 (4): 1335–74. Deportation Experiences: Encountering Stereo- Brückner, Markus, and Daniel Lederman. 2012. types in Southern California and El Salvador.” “Trade Causes Growth in Sub-Saharan Africa.” University of La Verne Law Review 31 (2): 363–402. Policy Research Working Paper Series 6007, World Dinh, Hinh T., Vincent Palmade, Vandana Chandra, Bank, Washington, DC. and Frances Cossar. 2012. Light Manufacturing Card, David. 2001. “Immigrant Inflows, Native Out- in Africa: Targeted Policies to Enhance Private In- flows, and the Local Labor Market Impacts of vestment and Create Jobs. Washington, DC: World Higher Immigration.” Journal of Labor Economics Bank and Agence Française de Développement. 19 (1): 22–64. Di Nicola, Andrea. 1999. “Trafficking in Immigrants: Carrasco, Raquel, Juan F. Jimeno, and Anna Carolina A European Perspective.” Research Centre on Ortega. 2008. “The Effect of Immigration on the Transnational Crime, University of Trento. 252 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Docquier, Frédéric, and Abdeslam Marfouk. 2006. and Brightest: Microeconomic Evidence from Five “International Migration by Education Attain- Countries.” Economic Journal 122 (560): 339–75. ment, 1990–2000.” In International Migration, Re- Gibson, John, David McKenzie, and Steven Stillman. mittances, and the Brain Drain, ed. Çaglar Özden Forthcoming. “Selectivity and the Estimated Im- and Maurice Schiff, 151–99. New York: Palgrave pact of Emigration on Incomes and Poverty in Macmillan. Sending Areas: Evidence from the Samoan Quota Docquier, Frédéric, Çaglar Özden, and Giovanni Peri. Migration Lottery.” Economic Development and 2010. “The Wage Effects of Immigration and Emi- Cultural Change. gration.” Working Paper Series 116646, National Giuletti, Corrado. 2012. “Jobs, Migration, and Social Bureau of Economic Research, Cambridge, MA. Inclusion—Empirical Evidence.” In Federal Min- ———. 2011. “The Labor Market Effects of Immi- istry for Economic Cooperation and Development gration and Emigration in OECD Countries.” 2012: Moving Jobs Center Stage. Berlin: Berlin Discussion Paper Series 6528, Institute for the Workshop Series. Study of Labor, Bonn. Glaeser, Edward L., and Joshua D. Gottlieb. 2008. Dustmann, Christian, Francesca Fabbri, and Ian “The Economics of Place-Making Policies.” Work- Preston. 2005. “The Impact of Immigration on ing Paper Series 14373, National Bureau of Eco- the British Labour Market.” Economic Journal 115 nomic Research, Cambridge, MA. (507): F324–41. Glaeser, Edward L., Hedi D. Kallal, Jose A. Scheink- Ebenstein, Avraham, Ann Harrison, Margaret Mc- man, and Andrei Shleifer. 1992. “Growth in Cit- Millan, and Shannon Phillips. 2009. “Estimating ies.” Journal of Political Economy 100 (6): 1126–52. the Impact of Trade and Offshoring on American Goldberg, Pinelopi Koujianou, and Nina Pavcnik. Workers Using the Current Population Surveys,” 2007. “Distributional Effects of Globalization in Working Paper Series 15107, National Bureau of Developing Countries.” Journal of Economic Lit- Economic Research, Cambridge, MA. erature, American Economic Association 45 (1): Eichengreen, Barry, Yeongseop Rhee, and Hui Tong. 39–82. 2007. “China and the Exports of Other Asian Gomory, Ralph E., and William J. Baumol. 2001. Countries.” Review of World Economics 143 (2): Global Trade and Conflicting National Interests. 201–26. Cambridge, MA: MIT Press. Elliott, Kimberly A., and Richard B. Freeman. 2003. Görg, Holger. 2011. “Globalization, Offshoring and Can Labor Standards Improve under Globaliza- Jobs.” In Making Globalization Socially Sustain- tion? Washington, DC: Institute for International able, ed. Marc Bacchetta and Marion Jansen, Economics. 21–47. Geneva: World Trade Organization and In- Feenstra, Robert C. 1984. “Voluntary Export Restraint ternational Labour Organization. in U.S. Autos, 1980–81: Quality, Employment and Görg, Holger, Eric Strobl, and Frank Walsh. 2007. Welfare Effects.” In The Structure and Evolution “Why Do Foreign-Owned Firms Pay More? The of Recent U.S. Trade Policy, ed. Robert E. Baldwin Role of On-the-Job Training.” Review of World and Anne O. Kruger, 35–66. Chicago: University Economics 143 (3): 464–82. of Chicago Press. Goswami, Arti Grover, Aaditya Mattoo, and Sebastián François, Joseph F., and Bernard Hoekman. 2010. Sáez, eds, 2011. Exporting Services: A Develop- “Services Trade and Policy.” Journal of Economic ing Country Perspective. Washington, D.C: World Literature 48 (3): 642–92. Bank. Friedberg, Rachel M. 2001. “The Impact of Mass Mi- Greenaway, David, Aruneema Mahabir, and Chris gration on the Israeli Labor Market.” Quarterly Milner. 2008. “Has China Displaced Other Asian Journal of Economics 116 (4): 1373–408. Countries’ Exports?” China Economic Review 19 Garcia Zamora, Rodolfo. 2005. “Mexico: International (2): 152–69. Migration, Remittances and Development.” In Grossman, Gene M., and Esteban Rossi-Hansberg. OECD (Organisation for Economic Co-operation 2008. “Trading Tasks: A Simple Theory of Off- and Development), Migration, Remittances and shoring.” American Economic Review 98 (5): Development, 81–87. Paris: OECD. 1978–97. Ghani, Ejaz. 2010. The Services Revolution in South Gupta, Sanjeev, Catherine A. Patillo, and Smita Wagh. Asia. New York: Oxford University Press. 2009. “Effect of Remittances on Poverty and Fi- Ghani, Ejaz, William R. Kerr, and Stephen D. nancial Development in Sub-Saharan Africa.” O’Connell. 2011. “Who Creates Jobs?” Economic World Development 37 (1): 104–15. Premise 2011 (70): 1–7. Hanson, Gordon H. 2006. “Illegal Migration from Gibson, John, and David McKenzie. 2012. “The Eco- Mexico to the United States.” Journal of Economic nomic Consequences of ‘Brain Drain’ of the Best Literature 44 (4): 869–924. Connected jobs agendas 253 Harrison, Ann, and Andrés Rodríguez-Clare. 2009. Diaspora Networks and International Migration of “Trade, Foreign Investment, and Industrial Policy Skills: How Countries Can Draw on Their Talent for Developing Countries.” In Development Eco- Abroad, ed. Yevgeny Kuznetsov, 3–20. Washing- nomics, vol. 5 of Handbook of Development Eco- ton, DC: World Bank. nomics, ed. Dani Rodrik and Mark Rosenzweig, LaLonde, Robert, and R Topel. 1997. “Economic 4039–214. Amsterdam: Elsevier. Impact of International Migration and the Eco- Helpman, Elhanan. 2006. “Trade, FDI, and the Orga- nomic Performance of Migrants.” In Handbook nization of Firms.” Journal of Economic Literature of Population and Family Economics, ed. Mark R. 44 (3): 589–630. Rozenweig and Oded Stark, 799–850. Amsterdam: Henderson, Vernon, Todd Lee, and Yung Joon Lee. Elsevier. 2001. “Scale Externalities in Korea.” Journal of Levy, Philip. 2012. “Potential for International Rivalry Urban Economics 49 (3): 479–504. as Governments Pursue Jobs.” Background paper Heymann, Jody, Francisco Flores-Macias, Jeffrey A. for the WDR 2013. Hayes, Malinda Kennedy, Claudia Lahaie, and Ali- Lin, Justin Yifu. 2011. “From Flying Geese to Leading son Earle. 2009. “The Impact of Migration on the Dragons: New Opportunities and Strategies for Well-being of Transnational Families: New Data Structural Transformation in Developing Coun- from Sending Communities in Mexico.” Commu- tries.” Policy Research Working Paper Series 5702, nity, Work and Family 12 (1): 91–103. World Bank, Washington, DC. Hovhannisyan, Shoghik. 2012. “Labor Market and ———. 2012. New Structural Economics: A Frame- Growth Implications of Emigration: Cross- work for Rethinking Development and Policy. Wash- Country Evidence.” Background paper for the ington, DC: World Bank. World Development Report 2013. Lin, Justin Yifu, Célestin Monga, Dirk Willem te Velde, Hunt, Jennifer. 1992. “The Impact of the 1962 Re- Suresh D. Tendulkar, Alice Amsden, K. Y. Amoako, patriates from Algeria on the French Labor Mar- Howard Pack, and Wonhyuk Lim. 2010. “Growth ket.” Industrial and Labor Relations Review 45 (3): Identification and Facilitation: The Role of the 556–72. State in the Dynamics of Structural Change.” De- Hymans, Saul H., and Frank P. Stafford. 1995. “Diver- velopment Policy Review 29 (3): 259–310. gence, Convergence, and the Gains from Trade.” Lokshin, Michael, Mikhail Bontch-Osmolovski, and Review of International Economics 3 (1): 118–23. Elena Glinskaya. 2010. “Work-Related Migration ILO (International Labour Organization). 2010. and Poverty Reduction in Nepal.” Review of Devel- Key Indicators of the Labour Market. Geneva: opment Economics 14 (2): 323–32. ILO. Lucas, Robert E. B. 2005. International Migration and IOM (International Organization for Migration). Economic Development: Lessons from Low-Income 2008. World Migration Report 2008: Managing Countries. Cheltenham, U.K.: Edward Elgar. Labour Mobility in the Evolving Global Economy. ———. 2010. “Migrant Sending Countries, the In- Geneva: IOM. ternationalization of Labor Markets and Devel- ———. 2010. World Migration Report 2010—The Fu- opment.” In The Internationalization of Labor ture of Migration: Building Capacities for Change. Markets, ed. Christiane Kuptsch, 63–87. Geneva: Geneva: IOM. International Labour Organization. Jansen, Marion, Peters Ralf, and Jose Manuel, eds. Mano, Yukichi, and Keijiro Otsuka. 2000. “Agglom- 2011. Trade and Employment: From Myths to Facts. eration Economies and Concentration of Indus- Geneva: International Labour Organization. tries: A Case Study of Manufacturing Sectors in Jensen, J. Bradford. 2011. Global Trade in Services. Postwar Japan.” Journal of Japanese and Interna- Washington, DC: Peter G. Peterson Institute for tional Economies 14 (3): 189–203. International Economics. Mattoo, Aaditya, and Randeep Rathindran. 2006. Keddie, Nikki R. 1998. “The New Religious Politics: “Measuring Services Trade Liberalization and Its Where, When and Why Do ‘Fundamentalisms’ Impact on Economic Growth: An Illustration.” Appear?” Comparative Studies in Society and His- Journal of Economic Integration 21 (1): 64–98. tory 40 (4): 696–723. McKenzie, David, John Gibson, and Steven Stillman. Koopmans, Rudd. 2010. “Trade-Offs between Equal- 2006. “How Important Is Selection? Experimental ity and Difference: Immigrant Integration, Multi- versus Non-experimental Measures of the Income culturalism and the Welfare State in Cross- Gains from Migration.” Journal of the European National Perspective.” Journal of Ethnic and Migra- Economic Association 8: 913–45. tion Studies 36 (1): 1–26. McKenzie, David J., and Hillel Rapoport. 2007. “Net- Kuznetsov, Yevgeny, and Charles Sabel. 2006. “Inter- work Effects and the Dynamics of Migration and national Migration of Talent, Diaspora Networks, Inequality: Theory and Evidence from Mexico.” and Development: Overview of Main Issues.” In Journal of Development Economics 84 (1): 1–24. 254 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 McKinnon, Ronald, and Kenichi Ohno. 1997. Dollar Marija Bogic. 2011. “Good Practice in Health Care and Yen: Resolving Economic Conflict between the for Migrants: Views and Experiences of Care Pro- United States and Japan. Cambridge, MA: MIT fessionals in 16 European Countries.” BMC Public Press. Health 11 (187): 1471–2458. Milanovic, Branko. 1987. “Remittances and Income Rama, Martín. 2003. “Globalization and the Labor Distribution.” Journal of Economic Studies 14 (5): Market.” World Bank Research Observer 18 (2): 24–37. 159–86. Millberg, William, Melissa Mahoney, Markus Schnei- Razin, Assaf, Efraim Sadka, and Benjarong Suwankiri. der, and Rudy von Arnim. 2007. “Dynamic Gains 2011. Migration and the Welfare State Political- from U.S. Services Offshoring.” In Global Capi- Economy Policy Formation. Cambridge, MA: MIT talism Unbound: Winners and Losers from Off- Press. shoring, ed. Eva Paus, 77–94. New York: Palgrave Robertson, Raymond, Drusilla Brown, Gaelle La MacMillan. Borgne Pierre, and Maria Laura Sanchez-Puerta, Monitor Inclusive Markets. 2011. Job Creation through eds. 2009. Globalization, Wages, and the Quality Building the Field of Impact Sourcing. Mumbai: of Jobs: Five Country Studies. Washington, DC: Monitor Inclusive Markets. World Bank. Newfarmer, Richard, and Monika Sztajerowska. 2012. Rodríguez-Clare, Andrés. 2001. “Costa Rica’s Devel- Trade and Employment in a Fast-Changing World. opment Strategy Based on Human Capital and Paris: Organisation for Economic Co-operation Technology: How It Got There, the Impact of and Development. Intel, and Lessons for Other Countries.” Journal Newitt, Kirsten. 2012. “Private Sector Voluntary Ini- of Human Development and Capabilities 2 (2): tiatives on Labour Standards.” Background paper 311–24. for the WDR 2013. Rozelle, Scott, and Jikun Huang. 2012. “China’s La- Noguer, Marta, and Marc Siscart. 2005. “Trade Raises bor Transition and the Future of China’s Rural Income: A Precise and Robust Result.” Journal of Wages and Employment.” Background paper for International Economics 65 (2): 447–60. the WDR 2013. OECD (Organisation for Economic Co-operation Saxenian, Annalee. 2004. “The Bangalore Boom: and Development). 2007. Offshoring and Employ- From Brain Drain to Brain Circulation.” In IT Ex- ment: Trends and Impacts. Paris: OECD. perience in India: Bridging the Digital Divide, ed. Özden, Çaglar, and Maurice Schiff. 2006. International Kenneth Keniston and Deepak Kumar, 169–81. Migration, Remittances, and the Brain Drain. New New Delhi: Sage Publications. York: Palgrave Macmillan and World Bank. Selim, Nadia. 2012. “Innovation for Job Creation.” Özden, Çaglar, Christopher Parsons, Maurice Schiff, Background paper for the WDR 2013. and Terrie L. Walmsley. 2011. “Where on Earth Is Shen, I-Ling, Frédéric Docquier, and Hillel Rapoport. Everybody? The Evolution of Global Bilateral Mi- 2010. “Remittances and Inequality: A Dynamic gration 1960–2000.” World Bank Economic Review Migration Model.” Journal of Economic Inequality 25 (1): 12–56. 8: 197–220. Pandey, Abhishek, Alok Aggarwal, Richard Devane, Sirkeci, Ibrahim, Jeffrey Cohen, and Dilip Ratha, and Yevgeny Kuznetsov. 2006. “The Indian Dias- eds. Migration and Remittances during the Global pora: A Unique Case?” In Diaspora Networks and Financial Crisis and Beyond. Washington, DC: the International Migration of Skills, ed. Yevgeny World Bank. Kuznetsov, 71–98. Washington, DC: World Bank. Solimano, Andrés. 2010. International Migration in Pérez-Armendáriz, Clarisa, and David Crow. 2010. the Age of Crisis and Globalization: Historical and “Do Migrants Remit Democracy? International Recent Experiences. New York: Cambridge Univer- Migration, Political Beliefs, and Behavior in Mex- sity Press. ico.” Comparative Political Studies 43 (1): 119–48. Sonobe, Tetsushi, and Keijiro Otsuka. 2006. Cluster- Pischke, Jörn-Steffen, and Johannes Velling. 1997. Based Industrial Development: An East Asian “Employment Effects of Immigration to Ger- Model. New York: Palgrave Macmillan. many: An Analysis Based on Local Labor Mar- Spener, David. 2009. Clandestine Crossings: Migrants kets.” Review of Economics and Statistics 79 (4): and Coyotes on the Texas-Mexico Border. Ithaca, 594–604. NY: Cornell University Press. Priebe, Stefan, Sima Sandhu, Sónia Dias, Andrea Suri, Navdeep. 2007. “Offshoring Outsourcing of Gaddini, Tim Greacen, Elisabeth Ioannidis, Ulrike Services as a Catalyst of Economic Develop- Kluge, Allan Krasnik, Majda Lamkaddem, Vincent ment: The Case of India.” In Global Capital- Lorant, Rosa Puigpinósi Riera, Attila Sarvary, Joa- ism Unbound: Winners and Loser from Offshor- quim JF Soares, Mindaugas Stankunas, Christa ing, ed. Eva Paus, 163–80. New York: Palgrave Strafsmayr, Kristian Wahlbeck, Marta Welbel, and MacMillan. Connected jobs agendas 255 Thomas, Kevin J. A. 2009. “The Human Capital Char- UNHCR (United Nations High Commissioner for acteristics and Household Living Standards of Refugees). 2010. Global Appeal 2010–2011: Real Returning International Migrants in Eastern and People, Real Needs. Geneva: UNHCR. Southern Africa.” International Migration 50 (4): Velde, Dirk Willem te, and Oliver Morrissey. 2003. 85–106. “Do Workers in Africa Get a Wage Premium if Torres, Federico, and Yevgeny Kuznetsov. 2006. Employed in Firms Owned by Foreigners?” Journal “Mexico: Leveraging Migrants’ Capital to Develop of African Economies 12 (1, Special Issue): 41–73. Hometown Communities.” In Diaspora Networks Wahba, Jackline. 2007. “Return to Overseas Work and the International Migration of Skills, ed. Yevg- Experience: The Case of Egypt.” In International eny Kuznetsov, 99–128. Washington, DC: World Migration, Economic Development and Policy, ed. Bank. Çaglar Özden and Maurice Schiff, 235–58. Wash- UNCTAD (United Nations Conference on Trade and ington, DC: World Bank. Development). 2004. World Investment Report. World Bank. 2011. World Development Indicators New York: United Nations. 2011. Washington, DC: World Bank. PART 3 Policies through the jobs lens Introduction to Part 3 M ost jobs are created by the private sec- tor. While public works and targeted employment programs are justified in certain situations, the primary role of govern- ment is not to directly provide employment. It is to set the conditions for job creation by the pri- vate sector, and especially to remove the obsta- PRIORITIES cles to the creation of more of the jobs with the highest development payoffs, given the circum- stances of the country. LABOR POLICIES When faced with jobs challenges, policy makers tend to look first at labor policies as ei- ther the solution or the problem. It is important, then, to understand the role and the impacts of FUNDAMENTALS policies and institutions like labor market regu- lation, collective bargaining, active labor market programs, and social insurance. But the main constraints to the job creation often lie outside the labor market, and a clear approach is needed to support appropriate policy responses. Source: World Development Report 2013 team. • Fundamentals are necessary for growth and are a precondition for strong job creation by the private sector. Macroeconomic stability, an enabling business environment, human ensure voice and social protection, especially capital, and the rule of law, including the for the most vulnerable. progressive realization of rights, are the key policy fundamentals. • Policy priorities have to be established in sup- port of good jobs for development. Ideally, • Labor policies need to be adequate for growth policies should aim at removing the market to translate into jobs. Policies should seek imperfections and institutional failures pre- to avoid the distortive interventions that venting the private sector from creating more stifle labor reallocation and undermine the of those jobs. If the constraints cannot be creation of jobs in functional cities and easily singled out or are difficult to remove, global value chains. But policies should also offsetting policies may be considered. 257 CHAPTER 8 Labor policies revisited Labor policies can address labor market imperfections. But interventions can hinder dynamism in some cases, while the lack of mechanisms for voice and social protection affects the most vulnerable. L abor markets have imperfections in the country’s legal traditions, politics, and social form of inadequate information, uneven norms and values. bargaining power, limited ability to en- The impact of labor policies is often the sub- force long-term commitments, and insufficient ject of heated debates. In the past decade, im- insurance mechanisms against employment- proved data and methods have generated a great related risks. Imperfections like these create gaps deal of new information not only in industrial between the individual and the social value of countries but increasingly in developing coun- jobs. They can thus result in a level and compo- tries as well. The analyses of these data have led sition of employment that are not optimal from to fresh insights. Estimated effects prove to be a social point of view. relatively modest in most cases—certainly more Labor policies and institutions—regulations, modest than the intensity of the debate would collective representation, active labor market suggest. Excessive or insufficient interventions programs, and unemployment insurance—can can certainly have detrimental effects on pro- in principle be used to address these imperfec- ductivity. But in between these extremes lies a tions. Other policies, such as pensions and other “plateau” where effects enhancing and under- forms of social insurance, address imperfections mining efficiency can be found side by side and elsewhere in the economy but can have impor- most of the impact is redistributive. Overall, tant implications for the functioning of the labor labor policies and institutions are neither the market. major obstacle nor the magic bullet for creating Labor policies and institutions are bundled good jobs for development in most countries. in different ways in different countries (fig- ure 8.1).1 Their configuration tends to vary by level of development, with policies and insti- tutions generally more developed in industrial countries. This is especially so for institutions PRIORITIES providing a vehicle for collective voice, such as bargaining between employers and employees, LABOR POLICIES and for social insurance. But the nature of the labor policies and institutions in any country is affected by more than just the level of develop- FUNDAMENTALS ment and must be seen in the context of the Labor policies revisited 259 F I G U R E 8 .1 The mix of labor policies and institutions varies across countries labor regulation social active insurance labor market programs OECD collective representation agrarian conflict-affected economies countries urbanizing resource-rich countries countries countries with small island high youth nations unemployment formalizing aging countries societies Sources: World Development Report 2013 team estimates based on Eurostat Public Expenditure on Labour Market Policy (LMP) Interventions (database), European Commission; InstitutionaI Characteristics of Trade Unions, Wage Setting, State Intervention and Social Pacts (ICTWSS) (database), Amsterdam Institute for Advanced Labour Studies, Amsterdam; Pallares-Miralles, Romero, and Whitehouse 2012; Public Expenditure and Participant Stocks on Labour Market Programmes (database), Organisation for Economic Co-operation and Development, Paris; Robalino, Newhouse, and Rother, forthcoming; and World Bank, forthcoming. Note: OECD = Organisation for Economic Co-operation and Development. Figures are averages across OECD member countries. Labor regulation indicates the ratio of minimum to average wage. Active labor market programs is the share of gross domestic product spent on them. Collective representation is the coverage of collective bargaining agreements divided by the labor force. Social insurance indicates workers contributing toward old-age pensions as a percentage of the labor force. Countries were classified in the eight groups by the World Development Report 2013 team. One country can belong to several groups. The figure shows unweighted averages across countries. 260 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Labor regulations: fining the degree to which job security is guar- A “plateau” effect anteed (box 8.1). Virtually all countries regulate hiring and termination in some way—severance Labor regulations can be designed to address payments, for example, are mandated by law or labor market failures that result in inefficient through collective agreements in 170 countries.2 or inequitable outcomes. Difficulties in enforc- Similarly, more than 100 countries have rati- ing long-term contracts between employers fied International Labour Organization (ILO) and employees may lead to excessive churning conventions regarding minimum wages, and and underinvestment in training. Inefficiencies many others have established minimum wages in the organization of insurance schemes may even though they have not ratified these con- leave workers unprotected in the case of dis- ventions.3 However, the specific nature of labor missal, which could force them to curtail their regulations reflects the society for which they job search before finding the right match. Un- are written. Important determinants include a even market power can enable firms to set wages country’s legal tradition, as well as civic attitudes that are lower than would be agreed upon un- toward solidarity, inequality, and trust.4 The der more competitive conditions. Discrimina- content, as well as the impact of regulations, is tory practices can have the same effect. Uneven also influenced by interactions with other po- power or incomplete information may lead to tentially complementary institutions such as an unsafe workplace. These market imperfec- collective representation and social insurance. tions and institutional failures can affect job Views on labor regulations can be polarized, creation and lead to gaps between what workers with contrasting implications for policy mak- gain from employment and the social value of ing. Fundamental questions, such as whether their jobs. labor policies should protect jobs or workers, often spark heated debates (question 8). For some, these regulations provide neces- Employment protection legislation and sary guarantees for workers against economic minimum wages volatility and the strong bargaining power of Employment protection legislation (EPL) and firms.5 EPL can offer job security, deterring pre- minimum wages have been widely adopted to carious forms of employment. Minimum wages address some of these failures. EPL consists of can prevent extreme poverty among workers rules governing hiring and termination and de- and address the inefficiencies that stem from BOX 8.1 Employment protection legislation covers more than firing rules Employment protection legislation, or EPL, can be classified into Other types of labor policies can also have implications for job two main groups of rules, one pertaining to hiring, the other to security. Some regulations set specific conditions for the employ- termination. Rules on hiring dictate what types of labor contracts ment of women and young workers. They include maternity leave, are permissible under what conditions—for instance, open-ended, the need for child care facilities, first-contract waivers, or reduced fixed-term, part-time, and apprenticeship contracts. Rules on ter- minimum wage for apprentices. The aim of these policies is to facili- mination govern the ending of contracts including causes (volun- tate the participation of more vulnerable population groups and to tary and involuntary, justified or unfair), end-of-service compen- protect them once they are employed. Antidiscrimination regula- sation (severance pay), and procedures (for instance, third-party tions address socially unaccepted differences in the treatment of notification or approval, advance notice, and vesting periods). The workers, with the goal to reduce inequality and enhance social mix and stringency of these rules result in a continuum of regula- cohesion and fairness in employment. tion across countries, which has been subject to different measure- ment efforts. a Source: World Development Report 2013 team. a. Measures attempting to summarize EPL include those proposed by Botero and others 2004; Employment Protection indicators (database), Organisation for Economic Co-operation and Development, Paris; and Doing Business Indicators (database), World Bank, Washington, DC. Labor policies revisited 261 noncompetitive labor markets.6 By establish- Modest impacts overall . . . ing a reference wage, minimum wages can even benefit uncovered workers through the so-called New data and more rigorous methodologies lighthouse effect.7 EPL and minimum wages are have spurred a wave of empirical studies over also seen as creating the conditions for human the past two decades on the effects of labor reg- capital accumulation and associated productiv- ulation.11 These studies examine the influence ity gains.8 of EPL and minimum wages on employment, Critics of strong EPL and minimum wages wages, the distribution of wages, and to a lesser hold that they tend to reduce employment, extent, productivity. Few have looked at wider hinder productivity growth, and can lead to impacts on social cohesion. divisions in society between those who benefit Based on this wave of new research, the from the regulations and those who do not. Ac- overall impact of EPL and minimum wages is cording to this view, to the extent that EPL and smaller than the intensity of the debate would minimum wages raise labor costs, they can in- suggest (tables 8.1 and 8.2).12 Most estimates crease poverty by pushing low-skilled workers, of the impacts on employment levels tend to young people, and women into unemployment be insignificant or modest.13 Studies of EPL in or into informal sector jobs.9 Hiring and termi- Latin America and the Caribbean, for example, nation restrictions can slow down labor reallo- report mixed results: negative employment ef- cation and hence constrain productivity growth. fects of job security rules have been found in Finally, because they are often perceived as part Argentina, Colombia, and Peru, while no sig- of the social contract, labor market regulations nificant effect was evident in Brazil and some can be difficult to reform, when circumstances Caribbean countries. Different studies for Chile change, generating discord and even conflict.10 have reached both results.14 Overall, the ma- TA B L E 8 .1 There is a wave of new empirical evidence on the impacts of EPL Dimension Indicator Findings Comments Living standards Aggregate employment and Either no impact or modest negative Evidence for both industrial and developing unemployment (positive) impact on employment countries (largely Latin America) (unemployment) Results tend not to be robust. Employment for particular Prime-age males favorably affected Partial reforms for two-track labor markets lead groups Youth, women, and low-skilled unfavorably to more precarious employment for affected affected groups. Employment dynamics Longer durations in employment, unemployment, and out of the labor force Smaller flows between different types of work status Adjustments to shocks Increases in negative impact of shocks Consensus not strong Wage distribution Reduces wage dispersion Productivity Labor and multifactor No consistent conclusion Very little evidence for developing countries productivity growth Training Positive effect Longer-duration employment spells and greater human capital investments Technological change Negative effect Few studies Reallocation of labor Negative effect because smaller labor flows Social cohesion Fairness Signals social responsibility of employers Depends on enforcement and coverage “Two-track” regulations can be seen as unfair. Security Positive because of longer tenure Depends on enforcement and coverage Equality Greater wage equality has modest equalizing Evidence mostly for industrial countries effect on income distribution. Source: Betcherman 2012 for the World Development Report 2013 based on a review of empirical studies of EPL. Note: EPL = employment protection legislation. 262 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 TA B L E 8 . 2 The impacts of minimum wages are a favorite research topic in labor economics Dimension Indicator Findings Comments Living standards Aggregate employment Either no impact or modest negative impact Both industrial and developing countries Some studies show positive employment effect. Employment for particular Negative employment impacts concentrated on Some studies show positive employment effect. groups youth and low-skilled Wages Positive effect Effect strongest around minimum wage Some evidence of positive effect in informal sector Wage distribution Reduces wage inequality Poverty Reduces poverty Some studies find no effect. Productivity Labor and total factor No consistent conclusion Rarely analyzed productivity Social cohesion Fairness Provides “decent” wage Depends on enforcement and coverage Source: Betcherman 2012 for the World Development Report 2013 based on a review of empirical studies of minimum wages. jority of minimum wage studies do find nega- In many developing countries with large tive employment effects, especially on young informal sectors, the generally modest impacts workers. But magnitudes tend to be small and of EPL and minimum wages may stem in part a number of studies report no effect, or in some from poor coverage and weak enforcement. In cases, even positive effects.15 EPL and minimum Brazil, employment effects of strong job secu- wages can shift employment away from young rity provisions were negative in municipalities people, women, and the less-skilled and toward where enforcement was strong.22 Mechanisms prime-age men and the better educated.16 Their for voice and representation and the capacity effects can vary within a country. In Indonesia, of government to effectively administer regu- increasing minimum wages during the 1990s lations influence the effectiveness of enforce- had a negative effect on employment among ment. Certainly, poor rules coupled with weak small firms but not on large firms.17 Across enforcement are not a desirable combination to countries, both EPL and minimum wages are address labor market imperfections. associated with a reduction in wage inequality.18 But many countries appear to set EPL and EPL has clear dynamic effects, reducing labor minimum wages in a range where impacts on market flows and increasing durations in both employment or productivity are modest. Within employment and unemployment.19 In this way, that range, or “plateau,” effects enhancing and strong job security rules slow down labor real- undermining efficiency can be found side by location and limit the efficiency gains from cre- side, and most of the impact is redistributive. ative destruction. Studies on the overall impact The distributional effects tend to be equalizing of EPL on productivity are mixed, however, with among those who are covered by these regula- some finding negative productivity impacts and tions, but divisions can be accentuated between others finding positive or no significant effects.20 those covered and those who are not. With ef- This mix of findings may be caused by other in- ficiency effects relatively modest on the plateau, fluences of job security rules, such as incentives countries can choose where they want to be to invest in training, which can counteract the depending on their normative preferences for lower rates of labor reallocation. Some coun- redistribution. tries have tried to reduce EPL by implementing partial (“dual-track”) reforms that increase the . . . but cliffs at the edge of the plateau scope for nonpermanent employment. How- ever, unless accompanied by reductions in the However, when the edge of the plateau is protection of permanent jobs, this approach reached (either on the too-strict or too-loose seems to result in the more vulnerable groups side), impacts are more negative. Some studies ending up in more precarious employment.21 have found that Indian states with more restric- Labor policies revisited 263 tive EPL have significantly lower employment the business that would be relevant and useful and output, and this effect is strongest where for workers. Information sharing can gener- dispute resolution is ineffective or costly.23 Large ate additional efficiency gains by providing a increases in the minimum wage in Colombia mechanism for resolving conflicts and reducing in the late 1990s led to significant employment wasteful turnover. losses, exacerbated by weak labor demand at the Collective representation and bargaining can time.24 At this edge of the plateau, which can also address problems of uneven market power vary according to the country situation, labor whereby firms may be able to impose lower regulations can slow down job creation in cities, wages or inferior working conditions on indi- or in global value chains, and can cause coun- vidual workers than would be the case under tries to miss out on jobs supporting agglomera- competitive conditions. tion effects and knowledge spillovers. Forgoing the development payoffs from urbanization and Bargaining between firms and workers global integration would be one way to fall off the cliff. The coverage of unions and collective bargain- It does not follow that minimal regulation is ing varies considerably around the world (fig- the answer. If rules are too weak, or not enforced, ure 8.2). Coverage rates are generally low in the problems of poor information, unequal bar- developing countries, where few workers out of gaining power, or inadequate risk management the civil service or protected sectors belong to remain unaddressed. This cliff may be less vis- a trade union. In most countries where regular ible than excessive labor market rigidity, but it data are available, the coverage of collective bar- is no less real. gaining agreements has declined during the past The main challenge is to set EPL and mini- two decades.27 The shift of employment toward mum wages so that they address the imperfec- the services sector, globalization, technological tions in the labor market without falling off the progress, evolving social values, and legislative plateau. The edges of the plateau vary across changes have all been advanced as causes of this countries and even within countries over time, decline.28 as conditions change. In Brazil, for example, The vast majority of the evidence confirms minimum wages had negative impacts on em- the existence of a wage premium in favor of ployment in the 1990s but not over the past union members and other workers covered by decade, even though they were increasing rela- collective agreements. Estimates of the adjusted tive to average wages.25 It is important, then, to union wage effect (controlling for other factors) monitor impacts closely and reflect on the de- range from around 5 percent in Japan and the sign and implementation of regulations and Republic of Korea, up to 15 percent in countries their interaction with other institutions.26 Al- as varied as Brazil, Canada, Germany, Malaysia, though EPL and minimum wages may not ad- Mexico, and the United States.29 South Africa dress labor market imperfections effectively, in stands at the upper end, although there is con- most countries good jobs for development are troversy on how high the union wage effect ac- lacking for other reasons. tually is (box 8.2). Wage effects tend to be stron- gest for women and in countries where union membership is high. It is also clear that unions Collective representation: and collective bargaining have an equalizing ef- New forms of voice fect on earnings distributions by compressing wage differentials. Research has shown that wage Collective bargaining and other forms of “voice” inequality falls during periods when union den- can address information failures at the work- sity is increasing and rises when union member- place in ways that enhance productivity as well ship is in decline.30 Little evidence exists on the as employment security and earnings. For in- impact of unions on poverty. stance, workers may have knowledge about the One relevant question is whether union wage details of production and operations that those gains come at the expense of reduced employ- making decisions do not have. Employers are ment. Unfortunately, few studies have addressed likely to be informed about certain aspects of this question in developing countries. In in- 264 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 FIGURE 8.2 The coverage of collective bargaining is low in developing countries 100 90 80 covered workers, % (around 2005) 70 60 50 40 30 20 10 0 s do ia M sia hu o Es nia La ia B a lg l Ca ria Hu da So Po ry Af d Re nd Gr lic Lu Por ce b l rm g y No ly nm y er in Ice ds Fi nd Fr nd Sw ce Be den Au m Sl ria ia Ne S rk ec Ire ica Bu razi m ga ne an De wa i Lit xic Ge our ut lan Ita In Ind n tv en th pa a a iu b ee an n a st na ne h la la a a to xe tu ng r pi pu la nl e lg r e ov ilip h Ph Cz Sources: World Development Report 2013 team based on ICTWSS database, Visser 2011, and World Bank 2011b. Note: The reported variable is either union membership or collective bargaining coverage as a share of total employment. dustrial countries, studies are divided between ter. The evidence collected on productivity in those finding that unions reduce employment the United States and Europe is not conclusive.32 (or increase unemployment) and those finding In developing countries, effects are positive in no significant effect. Where negative impacts are Malaysia, Mexico, and Uruguay, but negative in found, the magnitude is modest. The most re- Brazil.33 Findings suggest that unionized firms cent estimates by the Organisation for Economic undertake more training than nonunionized Co-operation and Development (OECD) find firms. But differences in the introduction of new that a 10 percentage point decline in union cov- technologies are not significant. erage is associated with an increase in employ- The institutional structure for collective bar- ment of 0.8 percentage points.31 gaining can differ considerably across countries, especially in the degree of centralization and co- ordination. Arrangements vary from firm-level Industrial relations and productivity bargaining with no influence on other firms to The impact of collective bargaining on pro- industry-based bargaining to centralized bar- ductivity reflects the balance of two opposing gaining with national coverage. Prior to the forces. On the one hand, voice may lead to bet- 1990s, researchers found that both centralized ter information sharing, while higher labor costs and decentralized bargaining led to better em- under unionization may encourage manage- ployment performance. Analysis has been less ment to invest more on training and technol- conclusive since then, however.34 ogy, leading to higher productivity. On the other With policy changes, some developing coun- hand, unions may also be able to negotiate re- tries and emerging economies have extended strictions in hours worked and pay rules that worker representation and are seeing new forms reduce effort, hindering productivity. The net of collective bargaining. In China, for example, effect of these forces is then an empirical mat- a number of legislative reforms appear to have Labor policies revisited 265 BOX 8.2 Are bargaining councils the cause of unemployment in South Africa? With unemployment rates well above 20 percent, the South African cant but more in line with union wage differentials observed in labor market is very different from that of other developing coun- other countries. Evidence also suggests that bargaining council tries, usually characterized by low or moderate levels of open unem- extensions do have effects as well, adding around 10 percent to the ployment. Diverse explanations have been put forward, including wages of nonunion workers within the bargaining council system.d growth concentrated in low-labor-intensity sectors, skills deficits, These results imply that the South Africa’s wage-setting institu- work disincentives created by social benefits, and various legacies of tions do have some employment effects, especially among small apartheid. South Africa’s distinct collective bargaining arrangements firms, whose contribution to total job creation is small by interna- are also frequently mentioned as a possible explanation for the lack tional standards. Bargaining councils are estimated to be associated of jobs. with 8–13 percent lower employment in the firms they cover directly Since the 1920s, bargaining over wages and working conditions and with 7–16 percent lower employment in small firms.e in most of South Africa’s manufacturing sector has taken place While these effects are not trivial, bargaining councils can through industrial councils, now known as bargaining councils. explain only a small part of South Africa’s unusually high unemploy- Bargaining councils can request that agreements be extended to ment rates. Given the number of workers employed in industries their entire sector, including to employers and workers who did not covered by collective agreements, eliminating the employment participate in the negotiations. Extensions are common but vary effect of bargaining councils would reduce the unemployment rate considerably across sectors and areas. Firm-level bargaining also by 1.5 percentage points, at the most.f So the main constraints to occurs. It has been argued that sectorwide extensions of bargaining job creation may lie elsewhere. council agreements impose a heavy labor cost burden on small One clue is the relatively small size of the informal sector com- firms, undermining employment creation.a pared to other countries at a similar development level. South Africa Estimates of wage premiums as high as 60 percent for union is different from these countries in other ways, too. During the members appeared to provide some credence to this argument.b A apartheid period, slum clearance, harsh licensing, and strict zoning substantial part of this wage effect was associated with industries regulations rid cities of black-dominated informal sector niches. that could possibly reflect the influence of the councils. Subsequent Two decades after the end of apartheid, spatial segregation remains, research using more recent data and better methodologies has con- and investment in black-dominated areas is low.g The legacy of sep- cluded that early studies overestimated the real wage effect of the aration also results in high transportation costs for the unemployed, bargaining council agreements. The latest research suggests the who tend to live far from where the jobs are. So South Africa’s job wage premium is in the 10–20 percent range.c This level is signifi- creation problems may stem primarily from urban issues. Source: World Development Report 2013 team. a. Butcher and Rouse 2001. b. Schultz and Mwabu 1998. c. Magruder 2010. d. Bhorat, Goga, and van der Westerhuizen 2011. e. Magruder 2010. f. Godfrey and others 2010; Magruder 2010. g. Banerjee and others 2007; Kingdon and Knight 2004. opened the door to a proliferation of unions Solidarność, a Polish trade union federation, and collective bargaining agreements (box 8.3). was prominent in the fight against Communist rule, while the Confederation of South African Trade Unions played a leading role in the fight Voice beyond the firm against apartheid. Employers’ organizations and unions also play In some countries, especially developing roles as social and political agents. They may in- countries, the political involvement of unions fluence the laws that regulate labor markets and can overshadow their activities at the work- even policies beyond the sphere of labor rela- place.35 Because their membership is strong in tions. The nature of such involvement depends the civil service and in protected sectors, unions on the norms and institutional framework in have often opposed reforms involving fiscal the society in which they operate. Historically, consolidation, privatization, or liberalization. A labor unions have contributed to the establish- comparison of economic performances in times ment of social and labor rights, as well as to po- of reform shows that developing countries with litical change, in many countries. For instance, higher union membership and higher shares of 266 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 8.3 New forms of collective bargaining are emerging in China Since the turn of the century, China has undergone important based bargaining has emerged where industries cluster around a changes in labor policies, including enactment of new laws regard- district or village. By the end of 2010, this form of bargaining cov- ing trade unions (in 2001) and employment promotion, labor con- ered over 5 million workers through 73,000 agreements.d tracts, and labor dispute mediation and arbitration (in 2007). These The spread of local, sectoral collective bargaining agreements changes have been accompanied by rapid growth in the number of has occurred against the backdrop of a vibrant private sector unionized workers and workers covered by wage or collective increasingly facing labor shortages and an inadequately regulated agreements (more than 150 million at present). In addition to the labor market that has led to many disruptive labor disputes. In spread of unionization and collective agreements, the International some cases, these agreements appear to protect workers’ rights Labour Organization (ILO) has documented the gradual spread in more effectively.e At the same time, the private sector can also ben- the direct election of union representatives by workers. Such efit from a more stable relationship with workers, a more reliable changes reflect a policy shift that “is intended to bring better pro- supply of labor, and more regular and transparent changes in labor tection of workers’ rights, to create a new balance between flexibil- costs. ity and security and to facilitate a dialogue between employers and The forms of collective representation in China are diversifying, workers on issues of mutual concern.”a with government encouragement. Although evidence is only grad- Another notable change over the past decade has been the ually emerging about the consequences of these changes, some introduction of local, sectoral-based collective bargaining agree- research suggests that sectoral bargaining at the district or local ments. The first of these agreements was negotiated in 2003 in the level holds the most promise.f Centralized “top-down” efforts have wool-sweater manufacturing industry in the Xinhe district of Wen- been made to spur the proliferation of these agreements, with lim- ling in Zhejiang province.b This is a district known as an example of ited success. But the spontaneous spread of this spatial organization transparency and local democracy. Since then, these agreements of collective bargaining suggests that it matches well the interest of have been most prominent in Zhejiang, but have also spread to the private sector in coordinating the operation of industrial clus- some other coastal provinces.c For the most part, local, sectoral- ters with the interest of workers to have voice in the workplace. Source: World Development Report 2013 team. a. Lee and Liu 2011a; 2011b, 8. b. Wei and others 2009. c. The Xinhe district of Wenling has also led the country in increasing transparency in local budgeting through introducing public deliberation in the process. See Ministry of Finance of the People’s Republic of China 2011. d. workercn.cn 2011. e. Liu 2010. f. Liu 2010. employment in the public sector (where most tions and institutional failures they address do unionized workers are) experienced deeper de- not involve conventional employer-employee clines in economic activity before the adoption relationships or workplace-based production of major reforms and slower recoveries after- structures. They are often organized to represent ward.36 This finding is consistent with the re- members’ interests with a particular municipal forms being adopted late, and their implemen- authority or local government. tation being watered-down. On the other hand, Associations of self-employed workers are the level of minimum wages and social security emerging as a vehicle to demand and protect benefits did not affect performance, suggesting their members’ rights and improve their work- that trade unions made a difference because of ing conditions. Some of them have drawn their their political activities, more than because of inspiration from India’s Self Employed Wom- their impact on labor costs. en’s Association (SEWA), which was created 40 Trade unions organized around the employer- years ago. In many cases, groups such as street employee relationship are less suited to provid- vendors in Lima, Peru, or garbage collectors in ing voice to those who do not work for a wage. Pune, India, may not only negotiate with gov- The high incidence of self-employment in most ernment authorities but also resort to litigation developing countries, and the persistence of in- in the courts. Waste pickers in Bogotá, Colom- formality more generally, have created impetus bia, organized to defend their right to provide for innovative institutions for collective repre- services to municipalities (box 8.4). Street ven- sentation. These institutions are different from dors associations in Durban, South Africa, filed traditional unions because the market imperfec- cases in court against the construction of malls Labor policies revisited 267 BOX 8.4 Recicladores forced changes in Bogotá’s solid waste management policies Waste pickers, or recicladores, in Colombia’s capital earn a living need preferential treatment and judicial affirmative action in the by  recycling metals, cardboard, paper, plastic, and glass and sell- tendering and bidding process for government contracts to man- ing them through intermediaries. Efficiency considerations aside, age waste. their experience shows how associations of informal workers can In 2003, the Constitutional Court ruled that the municipal gov- use legal frameworks to access rights. ernment’s tendering process for sanitation services had violated the When reforms for the tendering of public services allowed basic rights of waste pickers. Subsequent cases have referred to municipal governments to give exclusive contracts to private com- constitutional provisions including the “right to survival” as an panies for collecting, transporting, and disposing waste and recy- expression of the “right to life.” Article 11 of the constitution was clables, the recicladores organized and filed legal claims. Organiza- invoked to argue the right to pursue waste picking as a livelihood tions such as the Asociación de Recicladores de Bogotá (ARB), an and the “right to pursue business and trade.” Article 333 was invoked umbrella association of groups representing more than 25,000 to argue that cooperatives of waste pickers, not just corporations, waste pickers, played a key role in aggregating claims and taking can compete in waste recycling markets. The most recent case in cases forward. In making its case, the ARB appealed to the constitu- December 2011 halted a US$1.37 billion contract for the collection tion’s provision of the “right to equality,” arguing that waste pickers and removal of waste in the city. Source: Chen and others 2012 for the World Development Report 2013. and against harassment and confiscation of their works programs such as the Mahatma Gan- inventories of goods by municipal authorities.37 dhi National Rural Employment Guarantee These nontraditional workers’ organizations Act (MGNREGA), offering work to millions in are increasingly participating in global institu- rural India, to tailor-made life-skill courses for tions such as the ILO. For instance, the Interna- small groups of young participants in the Do- tional Domestic Workers Network attended the minican Republic. All ALMPs strive to foster International Labour Conference in 2009 in or- new job opportunities, often for those with the der to prepare for discussion and vote on a new fewest chances in the labor market. ILO convention on domestic work at the Inter- national Labour Conferences in 2010 and 2011.38 A panorama of programs Job search assistance. These are services provid- Active labor market programs: ing information on job vacancies and jobseekers Effective within limits and offering counseling and placement support. Evaluations indicate that job search assistance Active labor market programs (ALMPs) can can improve employment and earnings at a low improve the efficiency of job matching by cost—but only when job vacancies exist. By pro- transmitting information on job openings viding information and making the labor mar- and worker characteristics between employ- ket more meritocratic, more effective matching ers and jobseekers. They can fill the gap when can have positive productivity effects. But job employers or workers underinvest in training search assistance is less relevant in countries because of various market failures, and they where a majority of the workers are farmers and can mitigate the impacts of economic down- self-employed. turns by providing workers with temporary In many high-income and some middle- employment or creating incentives for employ- income countries with largely formal labor mar- ers to hire. ALMPs are politically attractive for kets, job search services have been overhauled in governments eager to do something about job the past 10 years. Although public financing re- creation. mains the norm, private provision of services has The most common active labor market become more common. Performance contracts programs are job search assistance, wage sub- are being used to create incentives for provid- sidies, training, and public works.39 In terms ers. These contracts must ensure that providers of size, interventions range from huge public reach those in most need and do not concen- 268 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 trate only on those who are easy to place.40 Job to demonstrate their skills, or the long-term search support is increasingly being integrated unemployed who are at risk of suffering “scar- with a range of complementary services such ring” effects.43 But many studies show that they as profiling to assess opportunities, life skills, or often do not have their intended effect of creat- other training. “Activation” strategies requiring ing new jobs in a cost-effective fashion.44 job seekers to be brisk, are also becoming more The real costs of wage subsidies are often hard common. Ultimately, the success of job search to calculate; the direct toll on the public purse services depends on the capacity of providers to is only part of the story. To access the subsidies, reach out to employers’ needs.41 firms might replace ineligible workers with Potentially game-changing technological in- eligible ones or dismiss and then hire the same novations are now extending the reach of tra- worker under the subsidy program. If firms ditional intermediation.42 Mobile phones and would have hired anyway, the employment ef- the Internet have opened up possibilities for fect of a subsidy is zero. Design can help increase inclusive information access, connecting un- cost-effectiveness. Improvements in the target- registered firms and hard-to-reach youth. New ing and other features of a subsidy program in actors, including both businesses and nonprofit Turkey reduced this “deadweight loss,” although organizations, have emerged and run services in somewhere between 25 and 50 percent of all various country settings (box 8.5). subsidized jobs would have still been created without the subsidy.45 Proper cost accounting Wage subsidies. These are direct transfers to can reduce the estimated employment impact of employers or reductions in their taxes or so- wage subsidies by up to 90 percent.46 Aggregate cial contributions to encourage them to hire employment effects are hence low at best. Alter- new workers or to keep employees who might native designs, especially to reach the young and otherwise be laid off. Wage subsidies work best low-skilled, can include a wage subsidy linked when they are targeted to particular groups, to other active labor market programs such as such as young people who need an opportunity training.47 The Jóvenes programs and similar in- BOX 8.5 E-links to jobs: New technologies open new frontiers New technologies are revolutionizing how people connect with market, focusing on sectors such as construction and facility jobs. Mobile phones have spread widely and have penetrated management. low-income households around the world. Over 4 billion people While these companies and organizations have been successful, have cell phone access, and 1.5 billion have regular access to the others such as Konbit in Haiti and PULS in Pakistan had to overcome Internet. significant difficulties. Challenges have included attracting sufficient Text messaging, voice, and mobile applications give jobseekers numbers of jobseekers and employers, building trust among users, and employers access to information and job counseling services and ensuring adequate assurance on the quality of jobseekers. In that improve résumés and interview skills and establish networks. response, Konbit has tried to increase the number of users by part- Voice-based services are particularly important for illiterate job- nering with a locally famous radio disk jockey and mobile phone pro- seekers. Companies or nonprofit organizations such as Souktel, vider to advertise its service. Through these efforts, the company Assured Labor, Babajob, and Labournet, operating in places as was successful in attracting 10,000 jobseekers in one month. diverse as Latin America, India, and the Middle East, have estab- The Internet also brings together jobseekers and employers lished thriving job matching networks. Souktel, for example, has through online platforms. The large and fast growing oDesk con- 17,000 jobseekers and 600 companies registered in West Bank and nects about 350,000 companies (mainly small and medium enter- Gaza alone. Sixty percent of registered employers reported they prises) with individual contractors worldwide. From April to June had cut recruiting time and costs by more than 50 percent. 2012, oDesk posted online close to 450,000 jobs and more than Some organizations, such as Assured Labor, specifically focus on 280,000 job applications. Jobs range from typing, web research, and services for middle- to low-wage workers, most without college translation to software development and back-office legal services. degrees. Currently, Assured Labor has 150,000 registered jobseekers Wages range from US$1 to several hundred US$ per hour. While this and 2,000 employers in Mexico. Similarly, Babajob and Labournet in new phenomenon has the potential to create many new jobs and India serve 200,000 and 100,000 jobseekers who can search for generate substantial new wealth, online platforms generally serve employment in databases containing 40,000 and 45,000 employers, people with specialized and technical skills, and as such, reach few of respectively. Labournet is unique in that it serves the informal labor the most vulnerable. Sources: Based on Selim 2012 for the World Development Report 2013 and Monitor Inclusive Markets 2011. Labor policies revisited 269 terventions in several Latin American countries have employed this model with positive results.48 FIGURE 8.3 Combining work and training increases the The impact of wage subsidies tends to rise success rates of programs with tight targeting and the extent of the disad- vantage of the beneficiary group. In Morocco, 0.15 the Idmaj youth wage subsidy effectively eased labor market entry for beneficiaries.49 Argen- 0.10 tina provided wage subsidies to employers hir- success indicator ing former participants in large public works 0.05 programs. These workers exerted more effort in searching for jobs and were perceived as 0 more trustworthy than other similar workers. –0.05 That was true especially for women and young participants.50 But the narrower the focus, the –0.10 higher the potential stigma effects. In Poland, men eligible for the wage subsidies were actually –0.15 less likely to be employed.51 in-class workplace in-class training in-class and training only training only and workplace workplace training training combined Training for jobseekers. Training is the most combined plus other services widely used active labor market program. The growing body of impact evaluations underlines Source: Fares and Puerto 2009. the importance of aligning the skills taught with Note: The figure shows the correlation coefficient between type of training and reported success of a program, with success defined as improving employment or earnings and being cost-effective. labor demand. These evaluations show that positive benefits are not guaranteed and pro- gram costs can be substantial. When programs organizations allows, public training funds can are well conceived and implemented, however, be directed to private and nonprofit providers in they can benefit those furthest from jobs the competitive terms. Performance-based tender- most. In Latin American countries, and in tran- ing can create incentives for more relevant train- sition economies such as Romania, youth and ing, while contracting can be designed so that women record significantly higher success rates the toughest-to-reach groups do not lose out. In from training than do middle-aged men.52 Bulgaria, Hungary, Romania, Serbia, and Slove- Some design features are critical for suc- nia, public employment services purchase train- cess. Integrated programs that include both on- ing programs from various providers through the-job and classroom components pay off. public tenders. Especially in developed and Latin American Research shows that at least some training countries, training for job seekers now often programs help build trust and civic engage- follows this integrated model, sometimes with ment, but information about how that happens complementary services such as life skills train- is scant. In Tunisia, the inclusion of entrepre- ing and counseling. Such combinations increase neurship training in education curricula reform success rates (figure 8.3).53 The Jóvenes pro- improved participants’ optimism about the grams in Latin America, which combine life- future.55 In the Dominican Republic, partici- skills and technical training with work experi- pants in the Juventud y Empleo program were ence, are a case in point. In Colombia, Jóvenes more likely to have higher expectations for the en Acción has increased employability of train- future, higher job satisfaction, and more inten- ees, with an estimated rate of return of 13.5–25 sive search attitudes.56 In northern Uganda, par- percent for female participants.54 ticipation in a comprehensive intervention that In addition, providers need incentives to en- combined grants, vocational training, life skills, sure that the training they offer is relevant for and psychosocial counseling was successful in the needs of employers. Public training agencies increasing community participation.57 often respond too slowly to changing demands from firms and jobseekers alike. Where a coun- Public works. These programs offer short-term try’s institutional capacity and supply of training employment for wages or food. The evidence 270 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 from impact evaluations shows that public many others have not succeeded in improv- works programs can be useful as a safety net, ing outcomes for participants. Moreover, while especially when targeted toward those in the some programs are affordable, others are expen- greatest need.58 Careful setting of the wage level sive. Outcomes for ALMPs depend on their de- can be a self-targeting tool as has been done in sign but also on the institutional capacity of the Colombia’s Empleo en Acción and Argentina’s country to provide services on a national scale Trabajar programs. A similar targeting approach and on a continuous basis. is being used in India’s MGNREGA program, Program and policy design has been re- which is notable not only for its scale and cost vamped in many countries in recent years to but also for its rights-based approach in guaran- achieve better performance. Public funds in- teeing employment (box 8.6). creasingly finance private or nonprofit provi- But seldom are public works a springboard sion. In aging and formalizing countries, a forth- for better jobs in the future. There is little evi- coming attitude by jobseekers is increasingly dence that they help participants get a job after required for them to remain eligible for unem- they leave the program.59 Compared with other ployment and other social benefits. Such activa- ALMPs, public works programs have the lowest tion measures create incentives for job search placement rates after completion and the high- through participation in training or education est costs per placement (figure 8.4). In Poland courses, counseling and other employment ser- and Romania, public works have even adversely vices, or public works. affected employability.60 Their productivity im- Many industrial countries are implement- pact, hence, tends to be very low at best. ing such policies through “one-stop shops” for To become a jobs ladder, public works pro- the administration of both social benefits and grams need to go beyond poverty relief—a ALMPs. Germany’s Jobcenter and the United route some countries already are taking. In El Kingdom’s JobCentre Plus are examples. This Salvador and Papua New Guinea, participants integrated approach can in principle help work- in public works programs obtain additional ers maintain or create links in society, albeit evi- technical and life-skills support. In Sierra Leone, dence here is scant.63 The one-stop-shop model the package comes with compulsory literacy is gaining momentum in a number of develop- and numeracy training, and in Liberia with life- ing countries as varied as Argentina, Azerbaijan, skills training. In Bangladesh, the beneficiaries and Bulgaria. of a rural employment scheme were referred to Another important delivery reform is the microfinance institutions; three years after the growing investment in identifying the employ- program closed, almost 80 percent were still ment constraints faced by jobseekers. Obstacles self-employed in microenterprise activities.61 to finding jobs may range from inadequate skills But overall, very few public works programs to health issues to difficulties balancing family succeed in improving the long-run employabil- responsibilities with work. Statistical profiling, ity of participants. where individual characteristics of beneficiaries Public works have the potential to contribute are linked with likely constraints and appropri- to social cohesion though, especially in conflict- ate remedies, has become an important tool, affected countries. Soon after the conflict ended especially in countries with significant institu- in Sierra Leone, a workfare program was launched tional capacity.64 Comprehensive programs like to help rebuild infrastructure and provide short- Chile Solidario invest heavily in linking ben- term employment opportunities to the poor and eficiaries to the most appropriate programs de- ex-combatants. Public works programs have also pending on their constraints. been launched and scaled up in Guinea, Guinea- In sum, ALMPs can make a difference, but Bissau, Liberia, and the Republic of Yemen. they need to be well aligned to the needs of the In Serbia, participants felt socially more included labor market and designed to address the mar- as a result of a public works program.62 ket imperfections and institutional failures that hinder desired employment outcomes. Overall, evaluations of programs with youth partici- Striving to deliver better outcomes pants show that developing countries have bet- While many programs have met expectations ter results than industrial countries in fostering in countries with very different job challenges, employability. 65 The time horizon also matters: Labor policies revisited 271 BOX 8.6 The Mahatma Gandhi National Rural Employment Guarantee Act launched the biggest public works program in the world Public works programs have been actively used in India since the During the program’s first phase in 2006–07, the budget outlay 1950s. Yet no scheme has had a scope or budget on the scale of was US$2.49 billion. The program issued 37 million job cards and the Mahatma Gandhi National Rural Employment Guarantee Act provided on average 43 person-days of work to 21 million house- (MGNREGA). Launched in 2006 and implemented in three rollout holds, totaling 0.9 billion person-days of work. Since then, the pro- phases, this program guarantees jobs to all districts with rural popu- gram has expanded substantially in its coverage and budget. Dur- lations. The program aims to provide wage employment, improve ing fiscal year 2010–11, 55 million households were provided an the purchasing power of the rural poor, create assets for the com- average of 47 person-days of work, totaling 2.5 billion person-days munity, strengthen natural resource management, and foster social at a cost of US$8.7 billion (0.51 percent of GDP).f That makes MGN- and gender equality.a REGA the largest workfare program in the world. Participation of the The program guarantees up to 100 days of employment a year to poor and vulnerable has been quite significant according to admin- rural households with adult members willing to do unskilled work at istrative data. a wage that is roughly the state statutory minimum wage.b Rural Critics argue that MGNREGA may be affecting the functioning of households wanting to participate in the program are required to rural labor markets. By setting the wage paid by the program at register with their respective village council (gram panchayats) and roughly Rs 100 (US$1.80) a day, it may help to enforce a sort of mini- are issued a free job card with photographs of all members living in mum wage for all casual rural work. If that is above the normal wage it. A job card holder may apply for employment and the government offered, the program may be altering the supply of casual labor and must provide it within 15 days. If the government fails to do so, in crowding out private employers.g It may also be constraining the principle a daily unemployment allowance must be given to the process of labor reallocation out of agriculture and into more pro- applicant. Each household decides how to distribute employment ductive sectors. among its members. Daily wages are based on the amount of work The program has received considerable media attention be- done and are paid directly into post office or bank accounts. The cause of alleged corruption, leakage, inadequate implementation, program includes some provision for adequate worksite facilities, and the like. But few studies have attempted to assess its impact on including access to safe drinking water, shade, a first aid kit in case of rural households, rural labor markets, and productivity in a system- accident, and crèches for women to leave their children. The pro- atic way. Among the emerging evidence, a striking finding is that gram encourages the participation of women through a mandate participation rates in areas where the program is most needed are that they should account for 33 percent of employed workers. In not the highest.h Household surveys show evidence of rationing addition, wages have to be equal for men and women, work has to and unmet demand, limiting the poverty alleviation impact of the be provided within five kilometers of the applicant’s village, and program. Yet, despite the rationing, the program is reaching poor gender discrimination of any type is forbidden.c people and attracting women and disadvantaged castes into the Most of the public works carried out under MGNREGA are labor workforce.i One study in the state of Andhra Pradesh suggests the intensive; contractors and machines are not allowed on work sites. program increases expenditure on food and nonfood goods.j Evi- Projects are meant to be chosen in open village meetings (gram sab- dence of effects on wage levels in rural labor markets and on labor has) to reflect village priorities, and local councils play a substantive reallocation is still inconclusive. Studies on non-labor-market effects role in planning, implementing, and monitoring them. The projects of the program are scant. mainly focus on developing and maintaining community assets Several challenges face the MGNREGA program. Addressing such as water conservation and water harvesting, irrigation chan- leakage and transparency is one. The government has taken this nels, and rural roads. Drought proofing, flood control, and land challenge seriously, for example, through the adoption of development are also supported by the program. The central gov- biometric-unique identification cards. Improving the quality and ernment bears 90 percent of the total cost, covering participants’ relevance of the communal assets to generate wider and long-term wages in full and 75 percent of materials and administrative effects is another challenge. But the biggest one is ensuring that expenses.d State governments pay for 25 percent of materials and demand for work is met, and that wages are paid fully and on time. administrative costs, the daily unemployment allowance, and the Also, if the program’s objective is to lift the poorest, the program expenses of the state employment guarantee council. The act also should accommodate those whose physical conditions do not allow calls for accountability through the use of information and commu- them to perform hard manual work.k nication technology, social audits, and third-party monitoring.e Source: World Development Report 2013 team. f. World Bank 2011b. In terms of budget as a percent of GDP, the MGNREGA is com- Notes: GDP = gross domestic product. parable to the largest cash transfers programs such as PROGRESA/Oportunidades a. Ministry of Rural Development 2012; World Bank 2011d. (0.4 percent GDP in Mexico) or Bolsa Família (0.36 percent GDP in Brazil). Yet in b. Ministry of Rural Development 2012. Initially, the statutory minimum wage varied terms of household coverage, the massive scale of the MGNREGA stands out. across states. But in 2009, the central government delinked MGNREGA wages from g. Basu 2011; Basu, Chau, and Kanbur 2009; Dutta and others 2012; World Bank 2011b. the state-level statutory minimum and established a uniform daily wage of Rs. 100, h. Dutta and others 2012. which is adjustable for state-specific inflation. i. Dutta and others 2012. c. Ministry of Rural Development 2008; World Bank 2011d. j. Ravi and Engler 2009. d. World Bank 2011b. k. World Bank 2011d. e. Ministry of Rural Development 2008. 272 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 cause individuals can influence that level of risk FIGURE 8.4 In Romania, public works programs have (moral hazard), markets do not provide ade- the lowest placement rate and highest quate risk pooling. Social insurance is a package placement costs of programs that can potentially address mar- ket failures such as these. But social insurance 50 25,000,000 programs are also shaped by history, values, and politics, so their design is not exclusively aimed at improving efficiency. 40 20,000,000 Some countries have introduced public un- placement cost, local currency employment insurance systems to help work- placement rate, % ers mitigate the risk of job loss. Many have 30 15,000,000 disability insurance to cover situations where illness or injury affects employment opportu- 20 10,000,000 nities. Most countries also have social safety nets that, while not directly tied to employ- ment status, can provide a coping mechanism 10 5,000,000 when earnings are insufficient to meet a basic living standard. Other social insurance programs not directly 0 0 training employment public related to labor market risks are often tied to the programs services works jobs that people have or to their employment status. The most important of these are old-age placement rate placement cost pensions and health insurance programs that are financed by payroll taxes (social security Source: Rodriguez-Planas and Benus 2010. contributions) from employers, employees, or Note: The placement rate is the percentage of program participants who get a job. both. These benefits are publicly provided be- cause of imperfections in the insurance market, not in the labor market. However, they can have in industrial countries, training programs show important consequences for the types of jobs their real value only in the medium to longer that are created and thus for productivity. Fi- run.66 But a thorough understanding of the jobs nancing them through payroll taxes can affect challenge faced and a good sense of institutional labor demand and employer choices on whether capacities are critical when deciding whether a to provide insurance coverage as part of the em- specific ALMP could be part of the solution. ployment contract. It can also influence work- Even with these innovations, expectations for ers’ behavior, including their incentives to take, active labor market programs need to be kept in keep, and switch jobs, to work in the formal or check. Job search and intermediation can work the informal sector, and to engage in work with only if firms are creating jobs. Short training higher risks and returns. courses cannot solve a fundamental problem in From a jobs perspective, the major questions the education system. Activation incentives will are twofold: how to manage labor market risks be fruitless if deep-rooted discrimination causes and how to design the financing of other types people to withdraw from a job search. of social insurance to have the most favorable impact on employment. Social insurance: The challenge of Managing labor market risks expanding coverage In low-income countries, managing income Many people are unable or unwilling to save loss is more important than managing the loss against major risks such as job loss, disability, of a job. When most people are engaged in sub- the death of a breadwinner, or aging without sistence agriculture or are self-employed, open resources. Because insurers cannot accurately unemployment is not a common occurrence. In assess individual risk (adverse selection) and be- these contexts, social safety nets, including non- Labor policies revisited 273 contributory cash transfers and public works insurance-based programs. But insurance sav- programs, can be critically important to cope ings accounts do not allow for risk pooling, so with adverse shocks.67 that young workers and workers with frequent However, when wage employment is more unemployment spells may not have adequate prevalent, unemployment insurance may be a savings. To address this concern, some plans higher priority. Unemployment insurance can have a redistribution feature. For example, provide income support to workers who lose Chile’s program includes a Solidarity Fund to their jobs and prevent individuals and house- support workers whose account balances are holds from falling into poverty. By supporting too low to provide adequate income support a job search, it can result in better matches and during unemployment. efficiency gains. Effective coverage is far from In all countries, disability is an important la- complete, however; according to the ILO, only 15 bor market risk. According to recent estimates, percent of the unemployed worldwide received the prevalence of disability is about 15 percent benefits during the recent financial crisis.68 An- of the adult population. Rates are higher in low- other concern with unemployment benefit sys- income countries and in aging societies.73 Al- tems is that they may reduce incentives to keep though many people with disabilities do work, jobs, look for jobs, or accept a job offer. Most of inactivity rates among them are significantly the evidence on the incentive effects of unem- higher than for the overall population. In in- ployment benefits comes from industrial coun- dustrial countries, the inactivity rate for persons tries and is mixed. Some studies find that more with disabilities is about 2.5 times higher than it generous benefits—either through higher bene- is for those without disability.74 fit levels, or longer duration of benefits—can in- Disability benefits can provide important crease either the length of unemployment or the income protection, but costs have mounted in unemployment rate.69 Exits from unemploy- some countries and the benefits can create work ment typically increase when benefits expire.70 disincentives among the general population. Over the past decade, unemployment insur- Accommodation of workplaces to persons with ance eligibility and benefits have been reformed disabilities is an important strategy to encour- in a number of countries to reduce job search age them to seek employment. Benefit systems disincentives. While some disincentive effects can be adjusted to this end as well. In-work are inherent in any unemployment insurance payments, time-limited benefits, and working system, recent studies for Denmark, France, Ger- tax credits are all being tested in the European many, Ireland, Italy, and Spain found that even if Union.75 Countries without disability benefits workers remain unemployed for a longer period need to emphasize accommodation and rely on of time, they are eventually able to find more sta- social safety nets where disability is associated ble jobs.71 Studies of unemployment insurance with poverty. in Brazil found that benefits did not affect the duration of unemployment, except when work- Financing social insurance ers were moving from unemployment to self- employment. In this case the transition period A salient feature of social insurance programs was shorter, suggesting that benefits may have in developing countries is their low coverage.76 made it possible to start a new business.72 Across the world only 30 percent of workers Concerns about job search disincentives and have access to social insurance; in Africa and hidden redistribution have led to some interest Asia, the share is less than 25 percent (map 8.1). in unemployment insurance savings accounts. On average, coverage rates are highest in aging While the design can vary, workers make con- societies and formalizing countries and low- tributions to the accounts and can draw money est in conflict-affected countries and agrarian from them during unemployment spells. Any economies, where less than 10 percent of the remaining balance is paid out when the worker working population is enrolled in pension pro- retires and can be used as a pension top-up. grams. In general, low-income workers are the Some countries, mainly in Latin America but least likely to be covered. In most countries in also Austria and Jordan, have adopted these Latin America, coverage rates are below 10 per- savings accounts as an alternative approach to cent in the bottom income quintile but above 50 274 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 M A P 8 .1 Coverage of social insurance remains low in many countries Percent 0–19.99 20.00–39.99 40.00–59.99 60.00–79.99 80.00–100 This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. Source: World Development Report team based on Pallares-Miralles and others 2012, and administrative data from Canada. Note: Coverage refers to number of people who have contributed (at least for one month in the reference year) to an earnings-related mandatory pension scheme, measured as a percentage of the labor force. percent in the top quintile.77 Even if workers are of financing social insurance in most coun- covered on paper by social insurance, they may tries. But whether payroll taxes are the optimal not necessarily receive benefits. Effective cover- model, especially for developing countries, is in- age can be reduced by fiscal pressures and low creasingly being questioned.79 Financing social implementation capacity. insurance through payroll taxes may exacerbate Coverage is low for multiple reasons, includ- the coverage problem by creating disincentives ing limited fiscal space to finance programs, low for the creation of formal sector jobs. institutional capacity to manage the admin- Studies in countries such as Colombia, Tur- istration and delivery of benefits, fragmented key, and some transition countries in Eastern schemes that cover certain groups and not oth- Europe and Central Asia have found that in- ers, and program design providing weak incen- creases in the levels of social insurance contribu- tives to participate. In many developing coun- tions decreased formal employment, by varying tries, workers and firms in the informal sector amounts.80 By contributing to the “tax wedge” generally fall outside the scope of programs. (the gap between total labor costs and take- Reaching the self-employed, farmers, and mi- home pay), payroll taxes to fund social insurance grants is particularly difficult. Social insurance can discourage both labor demand and the will- laws in many countries do not cover micro- and ingness to work. The size of this tax wedge varies small enterprises, or these firms and farms opt considerably across countries. It is most signifi- out because they cannot afford minimum con- cant in industrial countries, aging societies, and tribution costs.78 Weak enforcement capacity formalizing countries (figure 8.5). also contributes to low coverage. However, a complete assessment needs to Payroll taxes (including contributions for so- take into account the value that workers place cial programs) have been the dominant means on access to social insurance. Social contribu- Labor policies revisited 275 tions should not be seen as a pure tax when con- tributors attach value to the attendant benefits. FIGURE 8.5 Labor taxes and social contributions vary And the evidence largely suggests that they do.81 across countries facing different jobs challenges When asked to name the essential elements of a good job, people in China, Colombia, the Arab small island Republic of Egypt, and Sierra Leone rated access nations to pensions and health insurance equally with conflict-a ected countries good wages. In those countries, workers who agrarian participate in social insurance systems indicated economies urbanizing that they would require substantial income in- countries creases to compensate for losing access to social resource-rich insurance. At the same time, workers outside countries these systems would be willing to contribute a countries with high youth employment significant portion of their pay to participate formalizing (figure 8.6).82 But design and implementation countries matter, because the value attached to partici- aging societies pation depends to a significant degree on the industrial adequacy of benefits relative to contributions countries and the efficiency and transparency of benefits 0 5 10 15 20 25 administration. The long-term credibility of the tax wedge, % of commercial profits social insurance system is also a critical factor, especially in aging societies. In trying to extend the coverage of social Source: World Bank 2011a. Note: Labor tax and contributions measured as the amount of taxes and mandatory contributions on labor protection in developing countries, two impor- paid by businesses. tant issues need to be addressed. The first one is which risks are the priorities to address. In low-income countries, pensions for old-age and disability and basic health insurance are more important than unemployment insurance. The second issue is how to extend the prior- FIGURE 8.6 Workers are willing to give up earnings for ity programs to workers in the informal sector. access to health insurance and pensions Some countries are using technology in inno- 30 vative ways to make participation by informal sector workers easier (box 8.7). But technology forgo for access to benefits, % 25 earnings respondents would alone cannot overcome the market imperfec- tions and institutional failures that result in low 20 social protection coverage. For instance, mo- bile phones may make it easier for farmers to 15 pay contributions toward health insurance, but those less prone to be ill may still choose not to 10 enroll. This is why extending social protection 5 coverage requires adequate regulations and re- sources, in addition to modern “technology.” 0 One approach is to run a parallel system for Colombia Egypt, Sierra Leone China informal sector workers in conjunction with the Arab Rep. contributory system. This approach addresses health insurance old-age pension the coverage gap, but if the parallel system is funded out of general tax revenue, it discour- Sources: Bjørkhaug and others 2012; Hatløy and others 2012; Kebede and others 2012; and Zhang and ages enrollment in the contributory system and others 2012; all for the World Development Report 2013. Note: Data are for wage workers who do not receive health insurance or pension benefits paid by their can hinder the development of the formal sec- employer. The figure shows the maximum amount (percentage of typical monthly income) they were tor. These problems could be addressed to some willing to give up to receive benefits. 276 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 8.7 Modern technology can reduce social protection costs, leakage, and corruption Innovative technology-based approaches are transforming the million people. Applications such as mobile phones with fingerprint ways in which insurance and other cash benefits are provided. readers that would allow online verification of identity acceptable India’s new health insurance scheme for the poor uses biometric to service providers are now being piloted. smart cards both to verify that households are eligible and to keep Less glamorous, but just as important, is the “back-end” part of track of hospital procedures not involving cash payments. Almost social protection systems, which allows tracking of transactions on a 30 million households now hold these smart cards. According to a regular basis and generation of key indicators and reports. The Man- recent report from the U.K. Department for International Develop- agement Information Systems (MIS) are arguably even more impor- ment, “evidence from South Africa, India, Kenya, and Liberia has tant for complex social insurance programs, especially as popula- demonstrated that electronic payment systems involving smart tions age and noncommunicable diseases become more prevalent. cards or mobile phones can significantly reduce costs and leakage.”a Keeping track of work histories allows for a better alignment of pen- Another report, by the Consultative Group to Assist the Poor, finds sion benefits and social security contributions. Databases of medi- significant reductions in transaction costs through electronic pay- cal histories support a more efficient design of health protocols and ments in Brazil and Colombia. These “front-end” applications help payments to health care providers. overcome several problems that have plagued service delivery in Information is no longer the sole domain of those administering the past, including the need for beneficiaries to go long distances to the program, however. One of the applications of modern technol- obtain benefits and for middlemen to fill out forms. ogy with the most potential impact is citizen reporting of acts of Many developing countries lack robust systems for identifying corruption and negligence through social media. Massive mobile people, allowing fraud of various kinds, and preventing many phone penetration has been an especially empowering tool. among the poor from accessing social programs. In the Dominican Technology is not a panacea, however, and failed projects are Republic, for example, one-quarter of eligible beneficiaries for a common. In most cases, the technology is not matched with a poverty program could not participate because they lacked proper reengineering of the processes involved. Other common problems documents. Poor identification also hampers efforts to coordinate include poor planning and procurement practices, asymmetric across government and donor-sponsored programs and leads to information between government and vendors, and lack of trained duplication of costs. To confront this challenge, a growing number personnel to operate the systems after they are in place. Despite of countries is moving to biometric technology. India’s unique iden- these problems, the future of social protection will inevitably tification program, known as Aadhaar, is the most ambitious so far, include creative ways of applying new technology. having collected digital fingerprints and iris scans for close to 200 Sources: World Development Report 2013 team based on Bold, Porteous, and Rotman 2012; Devereux and others 2007; DFID 2011; Gelb and Decker 2011; Palacios, Das, and Sun 2011. a. DFID 2011, 9. extent by differentiating the level of benefits be- Well-designed social insurance and social tween the two systems and financing the parallel protection systems have the potential to en- system on at least a partially contributory basis.83 hance the three transformations. Mitigating Another approach is to partially subsidize labor market distortions and covering priority participation by farmers and the self-employed risks can compensate for lost income; it can also in general social insurance programs. In Viet- contribute to subjective well-being by reduc- nam, those classified as poor get their health ing uncertainty. Portability of benefits from insurance cards fully paid by the budget, while one job to another and the capacity of systems the “near poor” get a 50 percent subsidy.84 This to manage transitions can help workers move second approach may look similar to the previ- to higher-productivity jobs and encourage risk ous one, as funding relies on general tax revenue taking. And extending coverage can contribute too. But it has the advantage of not discourag- to social cohesion through its role in building an ing formalization. From a social cohesion point encompassing social contract.85 of view it also allows building universal systems, rather than two-tier systems. 8 277 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Labor policies revisited 277 QUESTION Protecting workers or protecting jobs? Policies that protect people are usually hailed as where jobs have important productivity spill- being better than policies that protect jobs. Pro- overs, the aggregate loss of output is then more viding income support prevents large drops in than the sum of the losses in individual earn- consumption and mitigates the risk of poverty ings. Massive job losses can then lead to ghost among households affected by unemployment, towns and depressed regions, and this prospect underemployment, or loss of labor earnings. suggests that the conventional wisdom may not Relying on transitional income support and, always be right. in some cases retraining programs, rather than measures to protect jobs allows for the realloca- Turnover versus decoupling tion of labor, keeping up the process of creative destruction. Resources are thus allocated more Every day, jobs are created and destroyed. Work- efficiently and economic growth is enhanced. ers are hired and dismissed, or they quit their Preserving jobs that are no longer economi- jobs and start their own businesses; meanwhile cally viable through government transfers and some firms close and others are born. In indus- employment protection legislation prolongs an trial countries, this process of creative destruc- inefficient allocation of resources. tion affects around 15 percent of all jobs every Moreover, job protection also entails a high year.86 In normal times, the probability of job risk of capture. It runs the danger of becom- loss for an individual is largely independent of ing permanent rather than temporary, creating the probability of job loss for another. And the enduringly unproductive, subsidized jobs. The probability of landing another job is also inde- development experience is full of examples in pendent of what happens to other workers. The which explicit job protection has led to little employment shock is then what economists call other than large rents for business owners and “idiosyncratic.” workers in the sectors that benefited from it, sti- But there are exceptional times, when em- fling technological advance, structural change, ployment shocks are systemic. Then, a sustained and growth. decoupling of the normal process of job cre- The conventional wisdom, then, argues ation and job destruction occurs: jobs are lost against the protection of jobs. But in times in large numbers but not created at the same when many jobs are lost or threatened at once pace. This is what occurs in times of severe eco- and few are being created, such conventional nomic crises, when a decline in economic activ- wisdom needs to be revisited. The productivity ity affects a broad swath of firms and industries. of a protected job can still be higher than that Job destruction accelerates, often sharply, and of the alternative jobs the displaced worker may job creation levels off or even decreases (figure find. And the productivity gap may exceed the 8.7). This decoupling leads to unemployment in costs of keeping the job alive. This is likely to be formalized economies and under-employment the case when the alternative after displacement in less formalized ones.87 In many countries, is to be jobless for a long period of time. In this droughts, floods, or other natural disasters can case, in addition to the immediate loss in out- have a similar impact. After the sources of the put, prolonged unemployment can depreciate crisis dissipate, job creation picks up and unem- skills and undermine social cohesion. ployment or underemployment declines. The Importantly, it is the overall productivity of longer it takes for job creation to recover, the the job that needs to be considered, including its longer unemployment or underemployment possible spillovers on the productivity of others. lasts. When people work together, or when they are Decoupling can also occur in times of mas- connected through broader value chains, the sive structural change brought about by rapid loss of a large number of jobs may have ripple technical progress (for example, the introduc- effects on productivity. In areas or activities tion of computers) or policy reforms (for exam- 278 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 FIGUR E 8.7 Decoupling between job creation and job destruction was massive in the United States during recessions 10 recession period 9 % of employment 8 7 6 5 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 job creation job destruction Source: Davis, Faberman, and Haltiwanger 2012. ple, trade liberalization). Structural change can Decoupling hurts affect entire industries. In transition economies, Protecting people should have primacy if shocks such changes were enormous, as entire sectors economies had to cope with uncertainty and are idiosyncratic—if the employment disloca- adapt to new incentives. Public sector restruc- tion is limited and if turnover continues to be turing or the privatization of state-owned en- the norm. A variety of social protection mecha- terprises can cause a similar shock. In all these nisms exist that support people in their transi- cases, unemployment and underemployment tion from one job to another. They concentrate can be large and long-lasting. on sustaining standards of living through unem- Losses in earnings and output are more per- ployment benefits and public transfers. Learning vasive with systemic shocks than with idiosyn- new skills or relocating to where job opportuni- cratic shocks. But sometimes these two types ties are can also play a role. By moving from an of employment shocks can overlap. The recent adversely affected activity to another job, there financial crisis has led to an unusually deep is a gain in output that over time outweighs the recession in many countries. In the United cost of the support mechanisms. Protecting peo- States, high unemployment rates have persisted, ple is thus good for individuals and for society. unemployment spells have lasted longer than If massive decoupling occurs—through either usual, and new job creation is still sluggish four a wider crisis or large-scale structural change— years after the beginning of the crisis.88 Some protecting workers will rarely be enough. Inter- argue that the crisis is not a regular cyclical per- mediation services falter because jobs are sim- turbation but the manifestation of a more en- ply not available. Training may help individual during shift caused by technological change and workers land a job, but it does not create many globalization.89 jobs at the aggregate level, because it does not Labor policies revisited 279 address the cyclical or structural causes of the In some circumstances, then, job protection employment shock. Income support through can be considered. What is meant by that is not unemployment benefits and public transfers permanent restrictions on hiring and firing may suffer from inadequate funds or seriously through employment protection legislation, but affect fiscal accounts. Only sustained job cre- rather time-bound policy measures that miti- ation can deal with the effects of decoupling, gate job destruction. In other words, these are but even under the best of circumstances it may selectively used active labor market policies that take several years to offset the employment de- promote job creation or sustain existing jobs. cline from a systemic shock. The question then Several countries adopted policies of this sort is whether providing income support on a large during the recent recession; Germany, which has scale for long periods of time is preferable to a long tradition with such policies, averted job temporarily supporting employment, while job losses through a coordinated reduction of hours creation picks up. of work (box 8.8). The United States also took The long-term consequences and costs of de- measures to protect jobs during the recent reces- coupling can be higher than is usually thought. sion, most notably by salvaging its auto indus- During periods of massive structural change, try. But the United States relied mostly on ag- the reallocation of workers out of declining gregate demand stimulation and on extensions industries can lead to large output losses be- of unemployment insurance to protect workers, cause little alternative employment is available. rather than on measures to protect jobs. In rela- The productivity of jobs in declining indus- tive terms, changes in employment and unem- tries may be low, but it can still be higher than ployment in the United States were much larger the alternatives. Similarly, during crises, firms than in Germany.94 might not be insolvent but rather illiquid. Death of inherently solvent firms could cause loss of The pitfalls of protecting jobs firm-specific human capital and intangible as- sets, disruption of value chains, and damage There are examples in developing countries to surrounding communities. While the provi- as well. Chile and Mexico introduced work- sion of credit would be the preferred solution, sharing policies and compensatory subsidies identifying insolvent firms might not always be to moderate the impact of the crisis. But these feasible and could be marred by transparency policies had a limited impact in their case. Given problems. Temporary job protection policies their novelty, they required new procedures that can be a workable alternative to provide a life- were difficult to implement quickly, resulting in line for struggling, but inherently solvent, firms. very low take-up rates. More important, these Long-term unemployment can also erode policies are not well suited to countries where a skills and workforce attachment. Aptitudes and large share of employment is informal, because attitudes to perform a given occupation can be they fail to reach the vast majority of employers. lost.90 “Scarring” can occur, with long-run con- The experiences of Chile and Mexico, two coun- sequences for finding employment with similar tries with relatively high administrative capacity earnings.91 Human capital and skills depreciate. that have made progress in formalization, sug- Regardless of whether decoupling is the result of gest that the usefulness of work-sharing policies severe downturns or major structural changes, is limited in developing “countries.” workers may enter a spiral of unappealing jobs There are positive examples as well. The dif- and lower living standards. The potential costs ferent ways in which China and many Latin might be particularly disruptive to social cohe- American countries handled the restructur- sion. Social networks can be undone in ways ing of their economies through the 1980s and that make it more difficult for the dislocated 1990s are telling. At the beginning of its reform to reengage in work and even in other forms of process, China had hundreds of thousands of social activity.92 Prolonged periods of high un- uncompetitive state-owned enterprises (SOEs). employment are of particular concern because But large-scale labor retrenchment would have they can affect young people’s transition from pushed workers into even less productive jobs school to work, and may lead to disenfranchise- until the private sector developed sufficiently ment from society.93 to absorb them. China thus supported its ail- 280 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 8.8 Kurzarbeit has become a new word in labor market policies Kurzarbeit (which translates to “short work” or “reduced working affected employees.c It is estimated that more than 1 percent of per- hours”) has been used in Germany for a century. Under this pro- manent jobs were saved in Germany through kurzarbeit.d In 2009, gram, employees in participating firms can be asked to cut down on more than 3 percent of the labor force was covered by the working hours with a commensurate reduction in compensation. program. The German government, through the Federal Employment The program is touted as beneficial in that it is less expensive for Agency, covers a percentage of the ensuing wage loss. Participation government to contribute funds toward paying the lost hours of of the firm is tied to the consent of the workers affected.a Thus there work to the employee than to pay unemployment benefits. From is an emphasis on social dialogue in the implementation of the pro- the point of view of the employer, it helps retain skilled staff and gram. During economic downturns, German employers tend to reduces churning and retraining costs, thus maintaining firm pro- respond by reducing the number of hours worked, thereby mitigat- ductivity. From the perspective of the employee, the scheme pre- ing the loss in jobs. vents unemployment and the problems that come with it such as More than a dozen countries have adopted programs for loss of income, depreciation of skills, decrease in life satisfaction, reduced working hours based on the general kurzarbeit model but and insecurity. From the societal perspective, it cushions the impact involving a variety of designs and regulations.b The countries of the economic downturn and spreads it more evenly across the where these programs were in place before the global economic labor force. crisis experienced substantial increases in take-up rates during the However, work-share programs only benefit formal sector 2008–09 period. employees, and not even all of them. The kurzarbeit is effective in As a response to the crisis, several countries implementing a saving permanent jobs but has no significant impact on temporary work-share program increased the percentage of wages covered, employment or on the hours worked by temporary workers.e Work- extended benefit duration, and relaxed the criteria for qualifying for share programs are also more effective in countries with less flexible the program. In Germany, the period during which firms could labor market regulations, where take-up rates are higher.f Further- request subsidies was extended from 6 to 24 months; the govern- more, long-term reliance on this type of program can lead to signifi- ment coverage of social insurance costs was increased to 50 per- cant delays in necessary labor reallocation and therefore could hin- cent; temporary help workers were made eligible; and the program der growth and productivity in the medium term. was allowed to cover up to 67 percent of wage losses incurred by Source: World Development Report 2013 team. a. If the adoption of the work-share program was foreseen in a collective agreement, the consent of the employees is not necessary; see Eurofound 2009. b. These are Argentina, Belgium, Canada, Colombia, the Czech Republic, Denmark, Finland, Italy, Japan, Luxembourg, Mexico, New Zealand, Norway, Poland, and Turkey. See Hijzen and Venn 2011 c. Burda and Hunt 2011. d. Cahuc and Carcillo 2011. e. Cahuc and Carcillo 2011. f. Robalino and Banerji 2009. ing SOEs through access to banking credit while industries that can coordinate to engage in rent rapidly modernizing its economy, preventing seeking to secure permanent government sup- social disruptions in the process.95 Latin Ameri- port. If such policies are adopted, it is necessary can countries also embarked on the dismantling to establish and enforce trigger rules and sun- of inefficient industries that had developed un- set clauses that define the extent and size of the der import substitution policies. But they did so protection. If the institutional prerequisites to more abruptly. Sudden downsizing may have ensure that support is temporary do not exist, caused a more durable rise in informality and or are not credible, job protection policies can led to slower productivity growth.96 be dangerous indeed. And they should not be The risk with job protection policies is that considered at all if job losses do not result from they can create permanent inefficiency, espe- a systemic employment shock, involving a large cially in countries with weak institutions. Job decoupling of job creation and job destruction. protection policies involve firms or even whole Labor policies revisited 281 Notes 7. The term lighthouse effect was introduced by Souza and Baltar (1980). See also Boeri, Garib- 1. A particular country can be included in more aldi, and Ribeiro 2011; Neri, Gonzaga, and Ca- than one group. Country types have been classi- margo 2001. fied according to the following definitions. Agrar- 8. Acemoglu 2001. ian economies: a rural share of population of 60 9. For more on the channels through which the percent or above in 2010 (World Development minimum wage can influence poverty, see Fields Indicators [WDI], World Bank, Washington, DC, and Kanbur (2007). http://data.worldbank.org/data-catalog/world- 10. Cahuc and Kramarz 2004. development-indicators); conflict-affected coun- 11. See Boeri, Helppie, and Macis (2008) and Free- tries: derived from a combination of two sources: man (2009) for reviews of many of these studies. (i) countries in the Uppsala Conflict Data Pro- 12. Betcherman 2012 for the World Development gram database with at least 1,000 battle deaths in Report 2013. an internal or internationalized internal conflict 13. For EPL, negative impacts on employment are in 2010, or (ii) with UN peace keeping and peace found by Nickell and Layard (1999) for OECD building missions (2012 World Bank fragility countries; Heckman and Pagés (2000), but not list); urbanizing economies: with 65 percent or Heckman and Pagés (2004), for OECD and Latin less of the population living in urbanized areas American countries; Mondino and Montoya in 2000, and with an increase of 4.5 percentage (2004) for Argentina; Micco and Pagés (2006) points by 2010 (WDI); resource-rich countries: for Chile; Kugler (2004) for Colombia; Ahsan with mineral exports accounting for at least 20 and Pagés (2009) and Gupta, Hasan, and Kumar percent of total exports over 2005–10 (World (2008) for India; Saavedra and Torero (2004) for Integrated Trade Solution); countries with high Peru; Djankov and Ramalho (2009) for a large youth unemployment: with a “youth bulge index” set of developing countries; and Kaplan (2009) score of 0.90 or above. The youth bulge index for Latin America. In contrast, Baccaro and is calculated as total youth employment (2010) Rei (2007) and Bassanini and Duval (2006) for times youth unemployment rate (mean, 2001– OECD countries; Paes de Barros and Corseuil 10) divided by total population (2010, WDI); (2004) for Brazil; Downes, Mamingi, and An- formalizing economies: pension contributors toine (2004) for three Caribbean countries; and representing between 25 and 75 percent of the Petrin and Sivadasan (2006) for Chile find no total labor force (PDB Provisional Pension Data- significant effect of EPL upon employment or base, February 2012); aging societies: an elderly unemployment. For minimum wages, among population (aged 65 or above) that is more than those who find negative employment effects are 8 percent of the working-age group (15-to-64- Fajnzylber (2001), Lemos (2004), and Neumark, year-olds) (WDI); small island nations: island Cunningham, and Siga (2006) for Brazil; Arango nations with a population of less than 2 mil- and Pachón (2004), Bell (1997), and Maloney lion (UN Office of the High Representative for and Núñez Méndez (2003) for Colombia; Kertesi the Least Developed Countries, Landlocked De- and Kollo (2003) for Hungary; Alatas and Cam- veloping Countries and Small Island Developing eron (2003), Rama (2001), and SMERU Research States and WDI). Institute (2001) for Indonesia; and Strobl and 2. Holzmann and Vodopivec 2012. Walsh (2003) for Trinidad and Tobago. Among 3. One hundred sixteen countries have ratified those who find no effect are Lemos (2007) for conventions 26 and 131, which are related to Brazil; Gindling and Terrell (2007) for Costa the minimum wage. The World Bank’s Do- Rica; and Bell (1997) and Feliciano (1998) for ing Business Indicators 2012 report informs that Mexico. 147 countries, of a sample of 182, have a mini- 14. Micco and Pagés 2006; Petrin and Sivadasan mum wage defined for a 19-year-old worker or 2006. apprentice. 15. Card and Krueger 1995. 4. Aghion, Algan, and Cahuc 2011; Aghion and 16. Although some studies have found that youth others 2010; Alesina and others 2010; Botero and employment can be positively affected by mini- others 2004. mum wage increases (for example, Card and 5. This applies to other areas of regulation as well. Krueger 1995), most studies have found negative For example, restrictions of night and overtime employment effects, although the magnitude is work; provisions for sickness, vacation, and ma- typically modest (for example, Montenegro and ternity leave; and health and safety regulations all Pagés 2004 for Chile; Arango and Pachón 2004 establish a “floor” for workers. for Colombia; SMERU Research Institute 2001 6. Boeri and van Ours 2008; Eyraud and Saget 2008. for Indonesia; and Neumark and Nizalova 2007 282 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 for the United States). Employment of women employment do not. All of these studies are based has been found to fall in several cases as a result on data from industrial countries. In a study of of minimum wage increases (for example, Feli- developed and developing countries, Micco and ciano 1998 for Mexico and Arango and Pachón Pagés (2006) conclude that labor regulations do 2004 for Colombia), although Pagés and Mon- not robustly affect labor productivity. In a study tenegro (2007) identified a shift in employment of Asian and Latin American countries, DeFreitas toward women in Chile. Where researchers have and Marshall (1998) find that job security pro- looked at employment effects of minimum tections have a positive productivity effect in wage increases on the less skilled, they typically some situations and a negative effect in others. find negative effects (for example, Arango and Bassanini and Venn (2007) find a positive effect Pachón 2004; Kertesi and Kollo 2003; Montene- of minimum wages on productivity in OECD gro and Pagés 2004; and SMERU Research In- countries. stitute 2001). In general, workers in small firms 21. Blanchard and Landier 2002; Dolado, García- are most likely to be affected by employment Serrano, and Jimeno 2002; OECD 2004. losses caused by increases in the minimum wage 22. Almeida and Carneiro 2009. (Kertesi and Kollo 2003; Rama 2001). Regard- 23. Ahsan and Pagés 2009; World Bank 2011b. ing EPL, Montenegro and Pagés (2004) found 24. Kucera and Roncolato 2008. that the introduction of more protective rules 25. Berg 2011; Fajnzylber 2001; Foguel, Ramos, and in Chile had adverse effects for women rela- Carneiro 2001; Lemos 2004; Neumark, Cunning- tive to men, for youth relative to the more ex- ham, and Siga 2006. perienced, and for the skilled relative to the less 26. For an analytical discussion on the need for skilled. Similarly, cross-country analysis by the joint design of labor market institutions, see Organisation for Economic Co-operation and Blanchard and Tirole (2008). For a discussion of Development (OECD 2004) identified negative the design of labor market institutions in a devel- impacts of EPL on women and youth. oping country setting, see Blanchard (2005). 17. Alatas and Cameron 2003; Rama 2001. 27. The share of workers covered by a collective 18. For minimum wages, a number of studies in agreement is generally larger than the union Latin America find increased wage equality (for membership rates. The reason is that agreements example, Fajnzylber 2001 for Brazil; Gindling and negotiated between unions and employers are Terrell 1995 for Costa Rica; and Bosch and Mana- sometimes extended to other workplaces not in- corda 2010 for Mexico). OECD (2011) identifies volved in the bargaining. declining real minimum wages and less restric- 28. Hayter 2011. Recent changes in legislation are tive EPL as factors behind increasing inequality summarized in ILO and International Institute in many countries. for Labour Studies (2012). 19. See Messina and Vallanti (2007) for European 29. For summaries of the evidence on the union countries; Eslava and others (2004) for Colombia; wage effect, see Aidt and Tzannatos (2002) and Haltiwanger, Scarpetta, and Schweiger (2008) for Freeman (2009). OECD and Latin American countries; Bentolila 30. DiNardo, Fortin, and Lemieux 1996. and others (2011) for OECD countries; and Ca- 31. This is based on regressions using panel data for ballero (2004) for 60 developing and developed 22 OECD countries from 1985 to 2007. For de- countries. Eichhorst and others (2010), however, tails, see OECD (2011). found no systematic difference in adjustment 32. Aidt and Tzannatos 2002. to shocks by EPL differences for a sample of 20 33. Freeman 2009. OECD countries. 34. Aidt and Tzannatos 2002. 20. Belot, Boone, and van Ours (2007) find positive 35. Betcherman 2012 for the World Development effects, but only in environments where workers Report 2013. invested in firm-specific skills. Koeniger (2005) 36. Forteza and Rama 2006. and Nickell and Layard (1999) find positive 37. Chen and others 2012 for the World Develop- productivity effects, but results depended on ment Report 2013. estimation specifications. Autor, Kerr, and Ku- 38. Chen and others 2012 for the World Develop- gler (2007) find that increases in employment ment Report 2013. protection had a negative effect on total factor 39. Small-business development and microcredit productivity but a positive one on labor pro- generally do not fall under this category because ductivity. In contrast, Bassanini and Venn (2008) they aim to foster entrepreneurship. and Cingano and others (2010) find negative im- 40. Almeida and others 2012. pacts. Bassanini, Nunziata, and Venn (2009) find 41. Kuddo 2009. that dismissal regulations have a depressing effect 42. Information provision can help bring people on labor but restrictions on the use of temporary to available jobs. Information will not solve the Labor policies revisited 283 signaling insufficiency of the market, however, if 67. Grosh, del Ninno, and Ouerghi 2008. employers cannot judge the full capabilities and 68. ILO 2010b. abilities of applicants. 69. Boeri and van Ours 2008; Holmlund 1998; Mar- 43. Bell and Blanchflower 2010. golis, Navarro, and Robalino 2011; Olinto and 44. Betcherman, Olivas, and Dar (2004) find that others 2007; Vodopivec, Worgotter, and Raju 2005. most evaluated wage subsidies do not improve 70. van Ours and Vodopivec 2006. employment or earnings of participants. 71. Tatsiramos 2009. 45. Betcherman, Daysal, and Pagés 2010. 72. Ribe, Robalino, and Walker 2011. 46. Calmfors 1994; Martin and Grubb 2001. 73. WHO and World Bank 2011. 47. For evidence on the positive impact of these 74. OECD 2010. combined programs, see Cockx, van der Linden, 75. OECD 2010. and Karaa (1998) and Katz (1996). Robalino and 76. Dorfman and Palacios 2012; Holzmann, Ro- Sanchez-Puerta (2008) also provide a review. balino, and Takayama 2009; ILO 2010b; Robalino 48. Almeida and others 2012. and others 2012. 49. World Bank 2011c. 77. Ribe, Robalino, and Walker 2011. 50. Galasso, Ravallion, and Salvia 2004. 78. Cho and others 2012; Rutkowski and others 51. Kluve, Lehmann, and Schmidt 1999; Kluve, 2005. Lehmann, and Schmidt 2008. 79. Bird and Smart 2012; Levy 2008. 52. Rodriguez-Planas and Benus 2010. 80. Betcherman, Daysal, and Pagés 2010; Kugler and 53. Almeida, Behrman, and Robalino 2012. For Kugler 2003; Rutkowski and others 2005. OECD countries, see Almeida and Carneiro 81. These observations are based on the FAFO sur- (2009); Heckman, Stixrud, and Urzua (2006); vey conducted for the World Development Re- and Holzer and Lerman (2009). port 2013. 54. Attanasio, Kugler, and Meghir 2008. 82. Bärnighausen and others (2007) provide corrob- 55. Premand and others 2011. orating evidence for China, finding that infor- 56. Acevedo Alameda, Garcia, and Martinez 2011; mal sector workers were willing to pay nearly 5 World Bank 2008. percent of their income for access to basic health insurance. 57. Blattman, Fiala, and Martinez 2011. 83. Some examples of these sorts of approaches are 58. del Ninno, Subbarao, and Milazzo 2009. being implemented in South Asian countries. See 59. The evidence on the ineffectiveness of public World Bank 2011d. works has been widely documented; see, for ex- 84. Lieberman and Wagstaff 2009. ample, Betcherman, Olivas, and Dar (2004) and 85. Babajanian 2012; Almeida and others 2012 for Martin and Grubb (2001) for reviews, and Card, the World Development Report 2013. Kluve, and Weber (2010) and Kluve (2010) for 86. Cahuc and Zylberberg 2006 for France; Davis, metastudies. Carling and Richardson (2004) and Haltiwanger, and Schuh 1996 for the United Sianesi (2008) conclude that the closer a policy States. There are similar rates for Mexico although is to regular work, the better its longer-term em- with much more churning, reported by Kaplan, ployability effects on participants. Martínez González, and Robertson (2007). 60. Kluve, Lehmann, and Schmidt 2008 for Poland; 87. See Bosch, Goni, and Maloney (2007) for Bra- Rodriguez-Planas 2010 for Romania. zil, and Bosch and Maloney (2006) and Kaplan, 61. Hashemi and Rosenberg 2006. Martínez González, and Robertson (2007) for 62. Bonin and Rinne 2006. The Beautiful Serbia pro- Mexico. gram combined vocational training and public 88. Haltiwanger 2012; Haltiwanger, Jarmin, and Mi- works in the construction sector for disadvan- randa 2011; Herkenhoff and Ohanian 2011. taged unemployed in Serbia and Montenegro 89. Stiglitz 2009; Gatti and others 2011. in 2004 and 2005. The positive effect of this 90. Pissarides 1992. program was much stronger for subjective well- 91. “Scarring” refers to an increasing probability of being than for labor market outcomes—the latter unemployment and lower earnings among those were insignificant. who have suffered unemployment previously. It 63. Almeida and others 2012; de Koning, Kotzeva, implies that the negative effects of unemploy- and Tsvetkov 2007. ment extend beyond the period of unemploy- 64. Almeida and others 2012 for the World Develop- ment; see Arulampalam, Gregg, and Gregory ment Report 2013. (2001). The term is also used to describe the psy- 65. Kluve and others, forthcoming. chological impacts of unemployment and its du- 66. Card, Kluve, and Weber 2010; Hotz, Imbens, and ration even after unemployment spells conclude; Klerman 2006; Lechner, Miquel, and Wunsch see Clark, Georgellis, and Safney (2001); Knabe 2005. and Ratzel (2009). 284 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 92. Biewen and Steffes (2010), Bramoullé and Saint- Lucian Pop, Maria Laura Sanchez-Puerta, and Mi- Paul (2010), and Calvó-Armengol and Jackson chael Weber. 2012. “Improving Access to Jobs and (2004) are modern accounts of the role of be- Earnings Opportunities: The Role of Activation ing connected to social networks to find a job. and Graduation Policies in Developing Coun- Wahba and Zenou (2005) find evidence of net- tries.” Social Protection and Labor Discussion work effects among high- and low-skill workers Paper Series 1204, World Bank, Washington, DC. in Egypt; Munshi (2003) finds that immigrants Almeida, Rita, Jere R. Behrman, and David A. Ro- with larger networks are more likely to be hired balino, eds. 2012. The Right Skills for the Job? Re- in higher-paying nonagricultural jobs. thinking Training Policies for Workers. Washington, 93. Bell and Blanchflower 2011; Cramer 2010; DC: World Bank. Fougère, Kramarz, and Pouget 2009; World Bank Almeida, Rita, and Pedro Carneiro. 2009. “Enforce- 2006. ment of Labor Regulation and Firm Size.” Journal 94. Burda and Hunt 2011; Cazes, Verick, and Al Hus- of Comparative Economics 37 (1): 28–46. sami 2011; Farber 2011; Ohanian 2010. Almeida, Rita, David Margolis, David Robalino, and 95. Fang, Park, and Zhao 2008. Michael Weber. 2012. “Facilitating Labor Market 96. Hirschmann 1987. Transitions.” Background Paper for the WDR 2013. Arango, Carlos, and Angelica Pachón. 2004. “Mini- References mum Wages in Colombia: Holding the Middle with a Bite on the Poor.” Borradores de Economía The word processed describes informally reproduced Serie 280, Banco de la República de Colombia, works that may not be commonly available through Bogotá. libraries. Arulampalam, Wiji, Paul Gregg, and Mary Gregory. 2001. “Unemployment Scarring.” Economic Jour- Acemoglu, Daron. 2001. “Good Jobs Versus Bad Jobs.” nal 111 (475): 577–84. Journal of Labor Economics 19 (1): 1–21. Attanasio, Orazio, Adriana Kugler, and Costas Meghir. Acevedo Alameda, Paloma, Brigida Garcia, and Se- 2008. “Training Disadvantaged Youth in Latin bastian Martinez. 2011. Informe de Linea de Base America: Evidence from a Randomized Trial.” de la Evaluación de Impacto del Banco Mundial del Working Paper Series 13931, National Bureau of Programa Juventud y Empleo en República Domin- Economic Research, Cambridge, MA. icana. Washington, DC: World Bank. Autor, David H., William Kerr, and Adriana D. Kugler. Aghion, Philippe, Yann Algan, and Pierre Cahuc. 2007. “Do Employment Protections Reduce Pro- 2011. “Civil Society and the State: The Interplay ductivity? Evidence from U.S. States.” Economic between Cooperation and the Minimum Wage Journal 117 (6): 189–217. Regulation.” Journal of the European Economic Babajanian, Babken. 2012. Social Protection and Its Association 9 (1): 3–42. Contribution to Social Cohesion and State-Building. Aghion, Philippe, Yann Algan, Pierre Cahuc, and London: Overseas Development Institute. Andrei Shleifer. 2010. “Regulation and Distrust.” Baccaro, Lucio, and Diego Rei. 2007. “Institutional Quarterly Journal of Economics 125 (3): 1015–49. Determinants of Unemployment in OECD Coun- Ahsan, Ahmad, and Carmen Pagés. 2009. “Are All tries: A Time-Series Cross-Section Analysis (1960– Labor Regulations Equal? Evidence from Indian 1998).” International Organization 160: 527–69. Manufacturing.” Journal of Comparative Econom- Banerjee, Abhijit V., Sebastian Galiani, Jim Levinsohn, ics 37 (1): 62–75. Zoë McLaren, and Ingrid Woolard. 2007. “Why Aidt, Toke, and Zafiris Tzannatos. 2002. Unions and Has Unemployment Risen in the New South Collective Bargaining: Economic Effects in a Global Africa?” Economics of Transition 16 (4): 715–40. Environment. Washington, DC: World Bank. Bärnighausen, Till, Yuanli Liu, Xinping Zhang, and Alatas, Vivi, and Lisa Ann Cameron. 2003. “The Im- Rainer Sauerborn. 2007. “A Contingent Valuation pact of Minimum Wages on Employment in a Study of Willingness to Pay for Health Insurance Low Income Country: An Evaluation Using the among Informal Sector Workers in Urban China.” Difference-in-Differences Approach.” Policy Re- BMC Health Services Research 7 (114): 2–16. search Working Paper Series 2985, World Bank, Bassanini, Andrea, and Romain Duval. 2006. “Em- Washington, DC. ployment Patterns in OECD Countries: Reassess- Alesina, Alberto, Yann Algan, Pierre Cahuc, and Paola ing the Role of Policies and Institutions.” Working Giuliano. 2010. “Family Values and the Regulation Papers Series 486, Economic Department, Organ- of Labor.” Working Paper Series 15747, National isation for Economic Co-operation and Develop- Bureau of Economic Research, Cambridge, MA. ment, Paris. Almeida, Rita, Juliana Arbelaez, Maddalena Honorati, Bassanini, Andrea, Luca Nunziata, and Danielle Venn. Arvo Kuddo, Tanja Lohmann, Mirey Ovadiya, 2009. “Job Protection Legislation and Productiv- Labor policies revisited 285 ity Growth in OECD Countries.” Economic Policy Bhorat, Haroon, Sumayya Goga, and Carlene van 58 (April): 349–402. der Westerhuizen. 2011. “Institutional Wage Ef- Bassanini, Andrea, and Danielle Venn. 2007. “Assess- fects: Revisiting Union and Bargaining Council ing the Impact of Labour Market Policies on Pro- Wage Premia in South Africa.” Working Paper ductivity: A Difference-in-Differences Approach.” Series 11/146, Development Policy Research Unit, Social, Employment and Migration Working School of Economics, University of Cape Town, Papers Series 54, Organisation for Economic Cape Town, South Africa. Co-operation and Development, Paris. Biewen, Martin, and Susanne Steffes. 2010. “Un- ———. 2008. “The Impact of Labour Market Poli- employment Persistence: Is There Evidence for cies on Productivity in OECD Countries.” Inter- Stigma Effects?” Economic Letters 106 (3): 188–90. national Productivity Monitor, Centre for the Study Bird, Richard M., and Michael Smart. 2012. “Financ- of Living Standards 17: 3–15. ing Social Expenditures in Developing Countries: Basu, Arnab. 2011. “Impact of Rural Employment Payroll or Value Added Taxes?” International Cen- Guarantee Schemes on Seasonal Labor Markets: ter for Public Policy Working Paper Series 1206, Optimum Compensation and Workers’ Welfare.” Andrew Young School of Policy Studies, Georgia Discussion Paper Series 5701, Institute for the State University, Atlanta. Study of Labor, Bonn. Blanchard, Olivier. 2005. “Designing Labor Market Basu, Arnab, Nancy Chau, and Ravi Kanbur. 2009. Institutions.” In Labor Markets and Institutions, “A Theory of Employment Guarantees: Contest- ed. Jorge Restrepo, and Andrea R. Tokman, 367– ability, Credibility and Distributional Concerns.” 81. Santiago: Banco Central de Chile. Journal of Public Economics 99 (3-4): 482–97. Blanchard, Olivier, and Augustin Landier. 2002. “The Bell, David N. F., and David G. Blanchflower. 2010. Perverse Effects of Partial Labour Market Reform: “Youth Unemployment: Déjà Vu?” Discussion Pa- Fixed-Term Contracts in France.” Economic Jour- per Series 4705, Institute for the Study of Labor, nal 112 (480): 214–44. Bonn. Blanchard, Olivier J., and Jean Tirole. 2008. “The Joint ———. 2011. “Youth Unemployment in Europe and Design of Unemployment Insurance and Em- the United States.” Discussion Paper Series 5673, ployment Protection: A First Pass.” Journal of the Institute for the Study of Labor, Bonn. European Economic Association 6 (1): 45–77. Bell, Linda A. 1997. “The Impact of Minimum Wages Blattman, Christopher, Nathan Fiala, and Sebastian in Mexico and Colombia.” Journal of Labor Eco- Martinez. 2011. Employment Generation in Rural nomics 15 (3): S102–35. Belot, Michèle, Jan Boone, and Jan van Ours. 2007. Africa, Mid-Term Results from an Experimental “Welfare-Improving Employment Protection.” Evaluation of the Youth Opportunities Program in Economica 74 (295): 381–96. Northern Uganda. New Haven, CT: Yale Univer- Bentolila, Samuel, Pierre Cahuc, Juan Dolado, and sity, Innovations for Poverty Action. Thomas Le Barbanchon. 2011. “Why Have Spanish Boeri, Tito, Pietro Garibaldi, and Marta Ribeiro. 2011. and French Unemployment Rates Differed So Much “The Lighthouse Effect and Beyond.” Review of during the Great Recession?” VOX, January 22. Income and Wealth 57: S54–78. Berg, Janine. 2011. “Laws or Luck? Understand- Boeri, Tito, Brooke Helppie, and Mario Macis. 2008. ing Rising Formality in Brazil in the 2000s.” In “Labor Regulations in Developing Countries: A Regulating for Decent Work, New Directions in Review of the Evidence and Directions for Future Labour Market Regulation, ed. Sangheon Lee and Research.” Social Protection Discussion Paper Deirdre McCann, 123–50. Basingstoke, U.K.: Pal- Series 0833, World Bank, Washington, DC. grave Macmillan; Geneva: International Labour Boeri, Tito, and Jan C. van Ours. 2008. The Economics Organization. of Imperfect Labor Markets. Princeton, NJ: Prince- Betcherman, Gordon. 2012. “Labor Market Institu- ton University Press. tions: A Review of the Literature.” Background Bold, Chris, David Porteous, and Sarah Rotman. paper for the World Development Report 2013. 2012. Social Cash Transfers and Financial Inclu- Betcherman, Gordon, N. Meltem Daysal, and Car- sion: Evidence from Four Countries. Washington, men Pagés. 2010. “Do Employment Subsidies DC: Consultative Group to Assist the Poor. Work? Evidence from Regionally Targeted Sub- Bonin, Holger, and Ulf Rinne. 2006. “Beautiful Ser- sidies in Turkey.” Labor Economics 17 (4): 710–22. bia.” Discussion Paper Series 2533, Institute for Betcherman, Gordon, Karina Olivas, and Amit Dar. the Study of Labor, Bonn. 2004. “Impacts of Active Labor Market Programs: Bosch, Mariano, Edwin Goni, and William F. Malo- New Evidence from Evaluations with Particular ney. 2007. “The Determinants of Rising Informal- Attention to Developing and Transition Coun- ity in Brazil: Evidence from Gross Worker Flows.” tries.” Social Protection Discussion Paper Series Discussion Paper Series 2970, Institute for the 0402, World Bank, Washington, DC. Study of Labor, Bonn. 286 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Bosch, Mariano, and William Maloney. 2006. “Gross Carling, Kenneth, and Katarina Richardson. 2004. Worker Flows in the Presence of Informal Labor “The Relative Efficiency of Labor Market Pro- Markets: The Mexican Experience 1987–2002.” grams: Swedish Experience from the 1990s.” La- Discussion Paper Series 2864, Institute for the bour Economics 11 (3): 335–54. Study of Labor, Bonn. Cazes, Sandrine, Sher Verick, and Fares Al Hussami. Bosch, Mariano and Marco Manacorda. 2010. “Min- 2011. “Diverging Trends in Unemployment in the imum Wages and Earnings Inequality in Urban United States and Europe: Evidence from Okun’s Mexico.” Discussion Paper 7882, Centre for Eco- Law and the Global Financial Crisis.” Employment nomic Policy Research, London. Working Paper Series 106, Employment Sector, Botero, Juan C., Simeon Djankov, Rafael La Porta, International Labour Organization, Geneva. Florencio Lopez-de-Silanes, and Andres Shleifer. Chen, Martha, Chris Bonner, Mahendra Chetty, 2004. “The Regulation of Labor.” Quarterly Jour- Lucia Fernandez, Karin Pape, Federico Parra, nal of Economics 119 (4): 1339–82. Arbind Singh, and Caroline Skinner. 2012. “Ur- Bramoullé, Yann, and Gilles Saint-Paul. 2010. “Social ban Informal Workers: Representative Voice and Networks and Labor Market Transitions.” Labour Economic Rights.” Background paper for the Economics 17 (1): 188–95. WDR 2013. Burda, Michael C., and Jennifer Hunt. 2011. “What Cho, Yoonyoung, David Margolis, David Newhouse, Explains the German Labor Market Miracle in the and David A. Robalino. 2012. “Labor Markets in Great Recession?” Working Paper Series 17187, Middle and Low Income Countries: Trends and National Bureau of Economic Research, Cam- Implications for Social Protection and Labor Poli- bridge, MA. cies.” Social Protection Discussion Paper Series Butcher, Kristin F., and Cecilia Elena Rouse. 2001. 67613, World Bank, Washington, DC. Wage Effects of Unions and Industrial Councils in Cingano, Federico, Marco Leonardi, Julian Messina, South Africa. Washington, DC: World Bank, Pov- and Giovanni Pica. 2010. “The Effects of Employ- erty and Human Resources. ment Protection Legislation and Financial Mar- Caballero, Ricardo J. 2004. “Effective Labor Regula- ket Imperfections on Investment: Evidence from tion and Microeconomic Flexibility.” Working a Firm-Level Panel of EU Countries.” Economic Policy 25 (61): 117–63. Paper Series 10744, National Bureau of Economic Clark, Andrew, Yannis Georgellis, and Peter Safney. Research, Cambridge, MA. 2001. “Scarring: The Psychological Impact of Past Cahuc, Pierre, and Stéphane Carcillo. 2011. “Is Short- Unemployment.” Economica 68 (May): 221–41. Time Work a Good Method to Keep Unemploy- Cockx, Bart, Bruno van der Linden, and Adel Karaa. ment Down?” Discussion Paper Series 5430, Insti- 1998. “Active Labour Market Policies and Job Ten- tute for the Study of Labor, Bonn. ure.” Oxford Economic Papers 50: 685–708. Cahuc, Pierre, and Francis Kramarz. 2004. De la Pré- Cramer, Christopher. 2010. Unemployment and Par- carité à la Mobilité: Vers une Sécurité Sociale Pro- ticipation in Violence. Washington, DC: World fessionnelle. Paris: Ministère de l’Economie, des Bank. Finances et de l’Industrie. Davis, Steven J., R. Jason Faberman, and John Halti- Cahuc, Pierre, and André Zylberberg. 2006. The wanger. 2012. “Labor Market Flows in the Cross- Natural Survival of Work: Job Creation and Job De- Section and Over Time.” Journal of Monetary Eco- struction in a Growing Economy. Cambridge, MA: nomics 59: 1–18. MIT Press. Davis, Steven J., John C. Haltiwanger, and Scott Calmfors, Lars. 1994. Active Labour Market Policy and Schuh. 1996. Job Creation and Destruction. Cam- Unemployment: A Framework for the Analysis of bridge, MA: MIT Press. Crucial Design Features. Paris: Organisation for de Koning, Jaap, Mariana Kotzeva, and Stoyan Economic Co-operation and Development. Tsvetkov. 2007. “Mid-Term Evaluation of the Calvó-Armengol, Antoni, and Matthew O. Jackson. Bulgarian Programme ‘From Social Assistance to 2004. “The Effects of Social Networks on Employ- Employment.’” In Employment and Training Poli- ment and Inequality.” American Economic Review cies in Central and Eastern Europe: A Transitional 94 (3): 426–54. Labour Market Perspective, ed. Jaap de Koning. Card, David, Jochen Kluve, and Andrea Weber. 103–31. Amsterdam: Dutch University Press. 2010. “Active Labour Market Policy Evaluations: DeFreitas, Gregory, and Adriana Marshall. 1998. A Meta-Analysis.” Economic Journal 120 (11): “Labour Surplus, Worker Rights and Productiv- 452–77. ity Growth: A Comparative Analysis of Asia and Card, David, and Alan Krueger. 1995. Myth and Latin America.” Labour 12 (3): 515–39. Measurement: The New Economics of the Mini- del Ninno, Carlo, Kalanidhi Subbarao, and Anna- mum Wage. Princeton, NJ: Princeton University maria Milazzo. 2009. “How to Make Public Works Press. Work: A Review of Experiences.” Social Protection Labor policies revisited 287 Discussion Paper Series 905, World Bank, Wash- Fajnzylber, Pablo. 2001. “Minimum Wage Effects ington, DC. throughout the Wage Distribution: Evidence from Devereux, Stephen, Catherine Mthinda, Fergus Brazil’s Formal and Informal Sectors.” Working Power, Patrick Sakala, and Abigail Suka. 2007. An Paper Series 151, Centro de Desenvolvimento e Evaluation of Concern Worldwide’s Dowa Emer- Planejamento Regional, Belo Horizonte, Brazil. gency Cash Transfer Project (DECT) in Malawi, FAFO. 2012. “Household Survey on Good Jobs.” Fafo 2006/07. Lilongwe: Concern Worldwide. Institute for Applied International Studies, Oslo. DFID (Department for International Development). Background work for the World Development 2011. DFID Cash Transfers Evidence Paper. Lon- Report 2013. don: DFID Policy Division. Fang, Cai, Albert Park, and Yaohui Zhao. 2008. “The DiNardo, John E., Nicole M. Fortin, and Thomas Chinese Labor Market in the Reform Era.” In Lemieux. 1996. “Labor Market Institutions and China’s Great Economic Transformation, ed. Loren the Distribution of Wages, 1973–1992: A Semi- Brandt and Thomas G. Rawski, 167–214. Cam- parametric Approach.” Econometrica 64 (5): bridge, U.K.: Cambridge University Press. 1001–44. Fang, Tony, and Ying Ge. 2011. “Unions and Firm In- Djankov, Simeon, and Rita Ramalho. 2009. “Employ- novation in China: Synergy or Strife?” China Eco- ment Laws in Developing Countries.” Journal of nomic Review 23 (1): 170–80. Comparative Economics 37 (1): 3–13. Farber, Henry S. 2011. “Job Loss in the Great Reces- Dolado, Juan J., Carlos García-Serrano, and Juan F. sion: Historical Perspective from the Displaced Jimeno. 2002. “Drawing Lessons from the Boom Workers Survey, 1984–2010.” Discussion Paper of Temporary Jobs in Spain.” Economic Journal Series 5696, Institute for the Study of Labor, Bonn. 112 (480): 270–95. Fares, Jean, and Olga Susana Puerto. 2009. “Towards Dorfman, Mark, and Robert Palacios. 2012. The World Comprehensive Training.” Social Protection Dis- Bank in Pensions: A Background Paper for the Social cussion Paper Series 0924, World Bank, Washing- Protection Strategy. Washington, DC: World Bank. ton, DC. Downes, Andrew S., Nlandu Mamingi, and Rose- Feliciano, Zadia. 1998. “Does the Minimum Wage Af- Marie Belle Antoine. 2004. “Labor Market Regula- fect Employment in Mexico?” Eastern Economic tion and Employment in the Caribbean.” In Law Journal 24 (2): 165–80. and Employment: Lessons from Latin America and Fields, Gary, and Ravi Kanbur. 2007. “Minimum the Caribbean, ed. James J. Heckman and Carmen Wages and Poverty with Income-Sharing.” Journal Pagés, 517–52. Chicago: University of Chicago Press. of Economic Inequality 5 (2): 135–47. Dutta, Puja, Rinku Murgai, Martin Ravallion, and Foguel, Miguel Natan, Lauro Ramos, and Francisco Dominique van del Walle. 2012. “Does India’s Galrao Carneiro. 2001. “The Impact of the Mini- Employment Guarantee Scheme Guarantee Em- mum Wage on the Labor Market, Poverty and Fis- ployment?” Policy Research Working Paper Series cal Budget in Brazil.” Discussion Paper Series 839, 6003, World Bank, Washington, DC. Institute of Applied Economic Research, Brasilia. Eichhorst, Werner, Veronica Escudero, Paul Marx, Forteza, Alvaro, and Martín Rama. 2006. “Labor Mar- and Steven Tobin. 2010. The Impact of the Crisis on ket ‘Rigidity’ and the Success of Economic Re- Employment and the Role of Labour Market Institu- forms across More Than 100 Countries.” Journal tions. Geneva: International Labour Organization. of Policy Reform 9 (1): 75–105. Eslava, Marcela, John C. Haltiwanger, Adriana Kugler, Fougère, Denis, Francis Kramarz, and Julien Pouget. and Maurice Kugler. 2004. “The Effects of Struc- 2009. “Youth Unemployment and Crime in tural Reforms on Productivity and Profitability France.” Journal of European Economic Association Enhancing Reallocation: Evidence from Colom- 7 (5): 909–38. bia.” Journal of Development Economics 75 (2): Freeman, Richard. 2009. “Labor Regulations, Unions, 333–71. and Social Protection in Developing Countries: Eurofound (European Foundation for the Improve- Market Distortions or Efficient Institutions?” In ment of Living and Working Conditions). 2009. Handbook of Development Economics, Vol. 5, ed. Eurofound European Industrial Relations Diction- Dani Rodrik and Mark Rosenzweig, 4657–702. ary. Dublin: Eurofound. Amsterdam: Elsevier. Eyraud, François, and Catherine Saget. 2008. “The Galasso, Emanuela, Martin Ravallion, and Agustin Revival of Minimum Wage-Setting Institutions.” Salvia. 2004. “Assisting the Transition from Work- In In Defence of Labour Market Institutions: Cul- fare to Work: A Randomized Experiment.” Indus- tivating Justice in the Developing World, ed. Ja- trial and Labor Relations Review 58 (1): 128–42. nine Berg and David Kucera, 100–18. New York: Gatti, Domenico Delli, Mauro Gallegati, Bruce C. Palgrave Macmillan and International Labour Greenwald, Alberto Russo, and Joseph E. Stiglitz. Organization. 2011. “Sectoral Imbalances and Long Run Crises.” 288 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Paper presented at the International Economic Heckman, James J., Jora Stixrud, and Sergio Urzua. Association Meeting, Beijing, July 4. 2006. “The Effects of Cognitive and Noncogni- Gelb, Alan, and Caroline Decker. 2011. “Cash at Your tive Abilities on Labor Market Outcomes and So- Fingertips: Biometric Technology for Transfers in cial Behavior.” Journal of Labor Economics 24 (3): Developing and Resource-Rich Countries.” Work- 411–82. ing Paper Series 253, Center for Global Develop- Herkenhoff, Kyle F., and Lee E. Ohanian. 2011. “Labor ment, Washington, DC. Market Dysfunction during the Great Recession.” Gindling, T. H., and Katherine Terrell. 1995. “The Na- Working Paper Series 17313, National Bureau of ture of Minimum Wages and Their Effectiveness Economic Research, Cambridge, MA. as a Wage Floor in Costa Rica, 1976–91.” World Hijzen, Alexander, and Danielle Venn. 2011. “The Role Development 23 (8): 1439–58. of Short-Time Work Schemes during the 2008–09 ———. 2007. “The Effects of Multiple Minimum Recession.” Social, Employment and Migration Wages throughout the Labor Market: The Case Working Papers Series 115, Organisation for Eco- of Costa Rica.” Labour Economics 14 (3): 485–511. nomic Co-operation and Development, Paris. Godfrey, Shane, Johann Maree, Darcy Du Toit, and Hirschmann, Albert O. 1987. “The Political Economy Jan Theron. 2010. Collective Bargaining in South of Latin American Development: Seven Exercises Africa: Past, Present and Future. Cape Town: Juta. in Retrospection.” Latin American Research Re- Grosh, Margaret, Carlo del Ninno, and Azedine view 22 (3): 7–36. Ouerghi. 2008. For Protection and Promotion: The Holmlund, Bertil. 1998. “Unemployment Insurance Design and Implementation of Effective Safety Nets. in Theory and Practice.” Scandinavian Journal of Washington, DC: World Bank. Economics 100 (1): 113–41. Gunther, Isabel, and Andrey Launov. 2012. “Informal Holzer, Harry, and Robert Lerman. 2009. The Future Employment in Developing Countries: Opportu- of Middle-Skill Jobs. Washington, DC: Center on nity or Last Resort?” Journal of Development Eco- Children and Families, Brookings Institutution. nomics 97 (1): 88–98. Holzmann, Robert, David Robalino, and Noriyuki Gupta, Poonam, Rana Hasan, and Utsav Kumar. 2008. Takayama. 2009. Closing the Coverage Gap: The “What Constrains Indian Manufacturing?” Work- Role of Social Pensions and Other Retirement In- ing Paper Series 119, Economics and Research De- come Transfers. Washington, DC: World Bank. partment, Asian Development Bank, New Delhi. Holzmann, Robert, and Milan Vodopivec, eds. 2012. Haltiwanger, John. 2012. “Job Creation and Firm Dy- Reforming Severance Pay: An International Per- namics in the U.S.” In Innovation Policy and the spective. Washington, DC: World Bank. Economy, Vol. 12, ed. Josh Lerner and Scott Stern, Hotz, V. Joseph, Guido Imbens, and Jacob Alex 17–38. Chicago: University of Chicago Press. Klerman. 2006. “Evaluating the Differential Ef- Haltiwanger, John, Ron S. Jarmin, and Javier Mi- fects of Alternative Welfare-to-Work Training randa. 2011. Business Dynamics Statistics Brief- Components: A Re-Analysis of the California ing: Historically Large Decline in Job Creation from GAIN Program.” Journal of Labor Economics 24: Startup and Existing Firms in the 2008–2009 Re- 521–66. cession. Kansas City: Euwing Marion Kauffman Ibarrarán, Pablo, and David Rosas Shady. 2008. Eval- Foundation. uating the Impact of Job Training Programs in Latin Haltiwanger, John, Stefano Scarpetta, and Helena Sch- America: Evidence from IDB Funded Operations. weiger. 2008. “Assessing Job Flows across Countries: Washington, DC: Inter-American Development The Role of Industry, Firm Size and Regulations.” Bank. Working Paper Series 13920, National Bureau of ILO (International Labour Organization). 2010a. Ac- Economic Research, Cambridge, MA. celerating Action against Child Labour. Geneva: ILO. Hashemi, Syed, and Richard Rosenberg. 2006. Gradu- ———. 2010b. World Social Security Report 2010/11: ating the Poorest into Microfinance: Linking Safety Providing Coverage in Times of Crisis and Beyond. Nets and Financial Services. Washington, DC: Geneva: ILO. Consultative Group to Assist the Poor. ILO and International Institute for Labour Studies. Hayter, Susan, ed. 2011. The Role of Collective Bargain- 2012. Better Jobs for a Better Economy. Geneva: ing in the Global Economy. Geneva: Edward Elgar. ILO. Heckman, James J., and Carmen Pagés. 2000. “The Kaplan, David Scott. 2009. “Job Creation and Labor Cost of Job Security Regulation: Evidence from Reform in Latin America.” Journal of Comparative the Latin American Labor Markets.” Journal of the Economics 37 (1): 91–105. Latin American and Caribbean Economic Associa- Kaplan, David Scott, Gabriel Martínez González, and tion 1 (1): 109–54. Raymond Robertson. 2007. “Mexican Employ- Heckman, James J., and Carmen Pagés. 2004. Law and ment Dynamics: Evidence from Matched Firm- Employment: Lessons from Latin America and the Worker Data.” Policy Research Working Paper Caribbean. Cambridge, MA: NBER Books. Series 4433, World Bank, Washington, DC. Labor policies revisited 289 Katz, Lawrence. 1996. “Wage Subsidies for the Disad- Lee, Hee Chang, and Mingwei Liu. 2011a. “Collective vantaged.” Working Paper Series 5679, National Bargaining in Transition: Measuring the Effects of Bureau of Economic Research, Cambridge, MA. Collective Voice in China.” In The Role of Collective Kertesi, Gabor, and Janos Kollo. 2003. “The Employ- Bargaining in the Global Economy: Negotiating for ment Effects of Nearly Doubling the Minimum Social Justice, ed. Susan Hayter, 205–26. Chelten- Wage: The Case of Hungary.” Working Papers 6, ham, U.K.: Edward Elgar. Hungarian Academy of Sciences, Budapest. ———. 2011b. “Measuring the Effects of the Collec- Kingdon, Geeta Gandhi, and John Knight. 2004. “Un- tive Voice Mechanism and the Labour Contract employment in South Africa: The Nature of the Law: A Survey of Labour Relations and Human Beast.” World Development 32 (3): 391–408. Resource Management Practices in China.” Inter- Kluve, Jochen. 2010. “The Effectiveness of European national Labour Organization, Geneva. Active Labor Market Programs.” Labour Econom- Lemos, Sara. 2004. “Minimum Wage Policy and Em- ics 17 (6): 904–18. ployment Effects: Evidence from Brazil.” Economía Kluve, Jochen, Hartmut Lehmann, and Christoph 5 (1): 219–66. Schmidt. 1999. “Active Labor Market Policies in ———. 2007. “A Survey of the Effects of the Mini- Poland: Human Capital Enhancement, Stigmati- mum Wage in Latin America.” Discussion Papers zation or Benefit Churning.” Journal of Compara- in Economics 07/04, University of Leicester, U.K. tive Economics 1 (27): 61–89. Levy, Santiago. 2008. Good Intentions, Bad Outcomes, ———. 2008. “Disentangling Treatment Effects of Social Policy, Informality, and Economic Growth in Active Labor Market Policies: The Role of Labor Mexico. Washington, DC: Brookings Institution Force Status Sequences.” Labour Economics 15 (6): Press. 1270–95. Lieberman, Samuel S., and Adam Wagstaff. 2009. Kluve, Jochen, Friederike Rother, Susana Puerto- Health Financing and Delivery in Vietnam: Look- Gonzalez, Michael Weber, and David Robalino. ing Forward. Health, Nutrition, and Population Forthcoming. Youth Employment Inventory (YEI) Series. Washington, DC: World Bank. Synthesis Report: New Evidence on Employment Liu, Mingwei. 2010. “Union Organizing in China: Interventions for Young People. Washington, DC: Still a Monolithic Labor Movement?” Industrial & World Bank. Labor Relations Review 64 (1): 30–52. Knabe, Andreas, and Steffen Ratzel. 2009. “Scarring Magruder, Jeremy R. 2010. “Intergenerational Net- or Scaring? The Psychological Impact of Past Un- works, Unemployment, and Persistent Inequality employment and Future Unemployment Risk.” in South Africa.” Applied Economics 2 (1): 62–85. Economica 78: 283–93. Maloney, William F., and Jairo Núñez Méndez. 2003. Koeniger, Winfried. 2005. “Dismissal Costs and Inno- vation.” Economics Letters 88 (1): 79–84. “Measuring the Impact of Minimum Wages: Evi- Kucera, David, and Leanne Roncolato. 2008. “Infor- dence from Latin America.” Working Paper Series mal Employment: Two Contested Policy Issues.” 9800, National Bureau of Economic Research, International Labour Review 147 (4): 321–48. Cambridge, MA. Kuddo, Arvo. 2009. “Employment Services and Ac- Margolis, David, Lucas Navarro, and David Robalino. tive Labor Market Programs in Eastern European 2011. “Unemployment Insurance, Job Search and and Central Asian Countries.” Social Protection Informal Employment.” Discussion Paper Series Discussion Paper Series 0918, World Bank, Wash- 6660, Institute for the Study of Labor, Bonn. ington, DC. Martin, John P., and David Grubb. 2001. “What Kugler, Adriana. 2004. “The Effect of Job Security Works and for Whom? A Review of OECD Coun- Regulations on Labor Market Flexibility: Evidence tries’ Experiences with Active Labour Market Poli- from the Colombian Labor Market Reform.” In cies.” Swedish Economic Policy Review 8 (2): 9–60. Law and Employment: Lessons from Latin America Messina, Julián, and Giovanna Vallanti. 2007. “Job and the Caribbean, ed. James J. Heckman and Flow Dynamics and Firing Restrictions Evi- Carmen Pagés, 2004, 183–228. Chicago: Univer- dence from Europe.” Economic Journal 117 (521): sity of Chicago Press. F279–301. Kugler, Adriana, and Maurice Kugler. 2003. “The La- Micco, Alejandro, and Carmen Pagés. 2006. “The bor Market Effects of Payroll Taxes in a Middle- Economic Effects of Employment Protection: Evi- Income Country.” Discussion Papers Series 4046, dence from International Industry-Level Data.” Centre for Economic Policy Research, London. Discussion Papers Series 2433, Institute for the Lechner, Michael, Ruth Miquel, and Conny Wunsch. Study of Labor, Bonn. 2005. “The Curse and Blessing of Training the Un- Ministry of Finance. 2011. “How to Promote Public employed in a Changing Economy: The Case of Deliberation in Budgeting.” (Chinese). People’s East Germany after Unification.” Discussion Paper Republic of China. Series 5171, Center for Economic and Policy Re- Ministry of Rural Development. 2008. The National search, Washington, DC. Rural Employment Guarantee Act 2005 (NREGA): 290 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Operational Guidelines 2008. New Delhi: Depart- Paes de Barros, Ricardo, and Carlos Henrique Corseuil. ment of Rural Development, Government of India. 2004. “The Impact of Regulations on Brazilian ———. 2012. Report to the People. New Delhi: De- Labor Market Performance.” In Law and Employ- partment of Rural Development, Government of ment: Lessons from Latin America and the Carib- India. bean, ed. James J. Heckman and Carmen Pagés, Mondino, Guillermo, and Silvia Montoya. 2004. “The 273–350. Chicago: University of Chicago Press. Effect of Labor Market Regulations on Employ- Pagés, Carmen, and Claudio E. Montenegro. 2007. ment Decisions by Firms: Empirical Evidence for “Job Security and the Age Composition of Em- Argentina.” In Law and Employment: Lessons from ployment: Evicence from Chile.” Estudios de Latin American and the Caribbean, ed. James J. Economía 34 (2): 109–39. Heckman and Carmen Pagés, 351–400. Chicago: Palacios, Robert, Jishnu Das, and Changqing Sun. University of Chicago Press. 2011. India’s Health Insurance Scheme for the Poor: Monitor Inclusive Markets. 2011. Job Creation through Evidence from the Early Experience of the Rashtriya Building the Field of Impact Sourcing. Mumbai: Swasthya Bima Yojana. New Delhi: Centre for Monitor Inclusive Markets. Policy Research. Montenegro, Claudio E., and Carmen Pagés. 2004. Pallares-Miralles, Montserrat, Carolina Romero, and “Who Benefits from Labor Market Regulations? Edward Whitehouse. 2012. “International Patterns Chile, 1960–1998.” In Law and Employment: Les- of Pension Provision II: A Worldwide Overview of sons from Latin American and the Caribbean, ed. Facts and Figures.” Social Protection Discussion James J. Heckman and Carmen Pagés, 401–34. Paper Series 1211, World Bank, Washington, DC. Chicago: University of Chicago Press. Petrin, Amil, and Jagadeesh Sivadasan. 2006. “Job Se- Munshi, Kaivan. 2003. “Networks in the Modern curity Does Affect Economic Efficiency: Theory, Economy: Mexican Migrants in the United States A New Statistic, and Evidence from Chile.” Work- Labor Market.” Quarterly Journal of Economics 118 ing Paper Series 12757, National Bureau of Eco- (2): 549–99. nomic Research, Cambridge, MA. Neri, Marcelo, Gustavo Gonzaga, and José Márcio Pissarides, Christopher A. 1992. “Loss of Skill during Camargo. 2001. “Salário Mínimo, Efeito Farol e Po- Unemployment and the Persistence of Employ- breza.” Revista de Economia Política 21 (2): 79–90. ment Shocks.” Quarterly Journal of Economics 107 Neumark, David, Wendy V. Cunningham, and Lucas (4): 1371–91. Siga. 2006. “The Effects of the Minimum Wage Premand, Patrick, Stefanie Brodmann, Rita Almeida, in Brazil on the Distribution of Family Incomes: and Barouni Mahdi. 2011. Entrepreneurship 1996–2001.” Journal of Development Economics 80 Training and Self-Employment among University (1): 136–59. Graduates: Evidence from a Randomized Evalua- Neumark, David, and Olena Nizalova. 2007. “Mini- mum Wage Effects in the Longer Run.” Journal of tion in Tunisia. Washington, DC: World Bank. Human Resources 42 (22): 435–52. Rama, Martín. 2001. “The Consequences of Dou- Nickell, Stephen, and Richard Layard. 1999. “Labor bling the Minimum Wage: The Case of Indone- Market Institutions and Economic Performance.” sia.” Industrial and Labor Relations Review 54 (4): In Handbook of Labor Economics, Vol. 3, ed. Orley 864–81. Ashenfelter and David Card, 3029–84. Amster- Ravi, Shamik, and Monika Engler. 2009. “Workfare in dam: Elsevier. Low Income Countries: An Effective Way to Fight OECD (Organisation for Economic Co-operation Poverty? The Case of India’s NREGS.” Working and Development). 2004. OECD Employment Paper, Indian School of Business, Hyderabad. Outlook: 2004. Paris: OECD. Ribe, Helena, David A. Robalino, and Ian Walker. ———. 2006. OECD Employment Outlook: 2006. 2011. Achieving Effective Social Protection for All Paris: OECD. in Latin America and the Caribbean: From Right to ———. 2010. Sickness, Disability, and Work: Breaking Reality. Washington, DC: World Bank. the Barriers. A Synthesis of Findings across OECD Robalino, David, and Arup Banerji. 2009. “Addressing Countries. Paris: OECD. the Employment Effects of the Financial Crisis.” ———. 2011. Divided We Stand. Paris: OECD. Employment Policy Primer Note 14, World Bank, Ohanian, Lee E. 2010. “The Economic Crisis from a Washington, DC. Neoclassical Perspective.” Journal of Economic Per- Robalino, David, David Newhouse, and Friederike spectives 24 (4): 45–66. Rother. Forthcoming. “Labor and Social Protec- Olinto, Pedro, Kathy Lindert, Rita Almeida, Jason tion Policies during the Crisis and Recovery.” In Hobbs, and Rodrigo G. Verdú. 2007. The Impacts Labor Markets in Developing Countries during the of Public Transfers on Labor Supply in Brazil and Great Recession: Impacts and Policy Responses, ed. Abroad: A Review of the Evidence. Washington, Arup Banerji, David Newhouse, David Robalino, DC: World Bank. and Pierella Paci. Washington, DC: World Bank. Labor policies revisited 291 Robalino, David, Aleksandra Posarac, Friederike van Ours, Jan C., and Milan Vodopivec. 2006. “Short- Rother, Michael Weber, Arvo Kuddo, and Kwa- ening the Potential Duration of Unemployment bena Otoo. 2012. “Towards Smarter Worker Pro- Benefits Does Not Affect the Quality of Post- tection Systems: Improving Labor Regulations Unemployment Jobs: Evidence from a Natural and Social Insurance Systems While Creating Experiment.” Discussion Paper Series 5741, Cen- (Good) Jobs.” Social Protection Discussion Paper tre for Economic Policy Research, London. Series 1212, World Bank, Washington, DC. Visser, Jelle. 2011. “ICTWSS: Database on Institu- Robalino, David A., and Maria Laura Sanchez-Puerta. tional Characteristics of Trade Unions, Wage 2008. Managing Labor Market Risks and Creating Setting, State Intervention and Social Pacts in 34 Better Jobs: Alternative Designs for Income Protec- Countries between 1960 and 2007.” University of tion and Active Labor Market Policies. Washington, Amsterdam, Amsterdam. Processed. DC: World Bank. Vodopivec, Milan, Andreas Worgotter, and Dhushy- Rodriguez-Planas, Nuria. 2010. “Channels Through anth Raju. 2005. “Unemployment Benefit Systems Which Public Employment Services and Small in Central and Eastern Europe: A Review of the Business Assistance Programs Work.” Oxford Bul- 1990s.” Comparative Economic Studies 47 (4): letin of Economics and Statistics 72 (4): 458–85. 615–51. Rodriguez-Planas, Nuria, and Jacob Benus. 2010. Wahba, Jacqueline, and Yves Zenou. 2005. “Density, “Evaluating Active Labor Market Programs in Social Networks and Job Search Methods: Theory Romania.” Empirical Economics 38 (1): 65–84. and Application to Egypt.” Journal of Development Rutkowski, Jan, Stefano Scarpetta, Arup Banerji, Philip Economics 78: 443–73. O’Keefe, Gaelle Pierre, and Milan Vodopivec. 2005. Wei, Weiwei, Jianqiang Ping, Min Zhao, Shasha Liao, Enhancing Job Opportunities: Eastern Europe and and Xeurong Wang. 2009. “Sectoral Collective the Soviet Union. Washington, DC: World Bank. Bargaining: Sectoral Collective Bargaining of the Saavedra, Jaime, and Maximo Torero. 2004. “Labor Wool-Sweater Manufacturing Industry at Xinhe Market Reforms and Their Impact over Formal District of Wenling.” China Institute of Industrial Labor Demand and Job Market Turnover: The Relations. Processed (in Chinese). Case of Peru.” In Law and Employment: Lessons WHO (World Health Organization) and World Bank. 2011. World Report on Disability. Washing- from Latin America and the Caribbean, ed. James ton, DC: WHO and World Bank. J. Heckman and Carmen Pagés, 131–82. Chicago: workercn.cn. 2011. “Zhejiang: The Implications of University of Chicago Press. Harmonizing the Management-Union Relation- Schultz, T. Paul, and Germano Mwabu. 1998. “Labor ship in a Labor Abundant Province.” April 6 (in Unions and the Distribution of Wages and Em- Chinese). ployment in South Africa.” Industrial and Labor World Bank. 2006. World Development Report 2007: Relations Review 51 (4): 680–703. Development and the Next Generation. Washing- Selim, Nadia. 2012. “Innovation for Job Creation.” ton, DC: World Bank. Background paper for the World Development ———. 2008. Nota Conceptual de la Evaluación de Report 2013. Impacto del Banco Mundial del Programa Juventud Sianesi, Barbara. 2008. “Differential Effects of Active y Empleo en República Dominicana. Washington, Labour Market Programs for the Unemployed.” DC: World Bank. Labour Economics 15 (3): 370–99. ———. 2011a. Doing Business 2012: Doing Business SMERU Research Institute. 2001. Wage and Employ- in a More Transparent World. Washington, DC: ment Effects of Minimum Wage Policy in the Indo- World Bank. nesian Urban Labor Market. Jakarta: SMERU Re- ———. 2011b. More and Better Jobs in South Asia. search Institute. Washington, DC: World Bank. Souza, Paulo R., and Paulo E. Baltar. 1980. “Salario ———. 2011c. Program Document for Morocco First Minimo e Taxa de Salarios no Brasil.” Pesquisa e Skills and Employment Development Policy Loan. Planejamento Economico 10: 1045–58. Washington, DC: World Bank. Stiglitz, Joseph E. 2009. “The Current Economic Cri- ———. 2011d. Social Protection for a Changing India. sis and Lessons for Economic Theory.” Eastern Washington, DC: World Bank. Economic Journal 35: 281–96. ———. Forthcoming. Doing Business 2013: Past, Strobl, Eric, and Frank Walsh. 2003. “Minimum Present, and Future of Business Regulation. Wash- Wages and Compliance: The Case of Trinidad ington, DC: World Bank. and Tobago.” Economic Development and Cultural Change 51 (2): 427–50. Tatsiramos, Konstantinos. 2009. “Geographic Labour Mobility and Unemployment Insurance in Europe.” Journal of Population Economics 22 (2): 267–83. CHAPTER 9 Beyond labor policies Fundamentals need to be in place, and constraints to the creation of jobs with high development payoffs need to be removed or offset. Policy coordination across borders can help. A prerequisite for improved living stan- economies, or to generate enough employment dards is a policy environment conducive opportunities for young men in conflict-affected to private-sector-led job creation. Macro- countries. economic stability, an enabling business envi- An active role of government, however, needs ronment, human capital, and the rule of law are to be carefully considered. Jobs are mainly cre- all necessary ingredients. Adequate macroeco- ated by the private sector with government nomic policies mitigate aggregate fluctuations intervention justified when individual incen- and keep key relative prices aligned. The busi- tives are misaligned with social goals—when, ness environment provides the basic public for example, employment is not rewarding for goods needed for the private sector to operate: women, when young people are “queuing” to infrastructure, access to finance, and sound reg- be civil servants, when cities are too congested ulation. Human capital is formed through good to productively absorb more rural migrants, or nutrition, health, and education that builds hu- when logistics costs are too high for domestic man skills. The rule of law ensures the enforce- firms to engage in international trade. In these ment of contracts; it also includes the progressive cases, government policy should aim to remove realization of rights to avoid a situation where the constraints that prevent individuals, farms, growth coexists with unacceptable forms of work. and firms from making the best choices for so- These are the fundamentals on which policies for ciety. If constraints cannot be precisely identi- jobs rest (figure 9.1). fied, or reforms are not politically feasible, poli- Fundamentals alone may not be enough cies can aim at offsetting the constraints rather to facilitate job creation and address the jobs than relieving them directly. In most cases, the challenges faced by many developing countries. policies to create good jobs for development lie Labor policies need to be set within a sensible outside of the labor market. range—a plateau that avoids two cliffs: one is Domestic policies for jobs are part of the so- the misguided intervention that clogs the cre- lution, but there is also scope for international ation of jobs in cities and in global value chains; coordination. Rights are a global public good— the other, the lack of voice and social protection their violation in one country harms the world. especially for the most vulnerable. But policies for job creation in one country can Markets might work without much friction affect employment and earnings in another, but that may not be sufficient to make small- positively or negatively, while migration policies holder farming more productive in agrarian can generate opportunities abroad or shut them Beyond labor policies 293 down. Labor standards, rules for international on the composition of employment. Economic trade and foreign direct investment (FDI), and downturns lead to transitions to informal em- migration agreements are among the instru- ployment or to household-based activities, and ments available to manage these international not necessarily to joblessness. Hence, research spillovers. International organizations have a role focuses on how macroeconomic fluctuations af- to play in coordinating the important global proj- fect the share of informal employment, rather ect of producing and using high-quality data on than the unemployment rate.3 Country case jobs, on which sound policy making must rest. studies of the impact of the global crisis have confirmed the resilience of employment in de- veloping countries. But macroeconomic sta- bility is not less relevant there: while aggregate fluctuations do not greatly affect the number of PRIORITIES workers employed, they do affect the earnings of those at work as well as their access to basic LABOR POLICIES social protection instruments.4 Macroeconomic instability is often the out- come of unsustainable budget deficits and lax FUNDAMENTALS monetary policy. In the 1980s, Brazil plunged into a debt and high-inflation crisis that slashed its economic growth and halved the share of ex- Establishing the fundamentals ports in its GDP. Triggered by high international interest rates in the late 1970s, the crisis then A vast majority of jobs are created by the pri- was compounded by the difficulty of keeping vate sector—in formal sector firms as well as in spending by subnational governments in check. microenterprises and farms. The relevant condi- Tight budgets and rigid monetary policy rules tions for private sector investment and job cre- may not be a magic wand, however. Budget defi- ation are macroeconomic stability, an enabling cits are more or less worrisome depending on business environment, human capital, and the how quickly an economy is growing, whereas rule of law. F I G U R E 9.1 Three distinct layers of policies are needed Macroeconomic stability In its assessment of the policy ingredients of growth strategies across 13 successful develop- ing countries, the Commission on Employment and Growth noted: “No economy can flour- Know your jobs challenge ish in the midst of macroeconomic instability. PRIORITIES Remove or offset the constraints Wild fluctuations in the price level, the exchange rate, the interest rate, or the tax burden serve as a major deterrent to private investment, the proximate driver of growth.”1 Macroeconomic Stay on the efficiency plateau Avoid misguided interventions instability also affects employment and earnings Provide voice and extend protection LABOR POLICIES in the short run. According to a recent estimate, a 1 percent decline in gross domestic product (GDP) is associated with an increase in the unemployment rate of 0.19 percentage point Macroeconomic stability in Japan, 0.45 in the United States, and 0.85 in An enabling business environment Spain.2 Human capital In developing countries, where income sup- FUNDAMENTALS Rule of law and respect for rights port mechanisms are more limited, the short- term impact of macroeconomic instability is of- ten not so much on open unemployment as it is Source: World Development Report 2013 team. 294 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 the independence of central banks needs to tional markets and global value chains.10 A case be weighed against the overall coherence of a has even been made in favor of currency under- development strategy. An assessment of the valuation, on the grounds that the export sec- soundness of macroeconomic management re- tors of developing countries suffer dispropor- quires taking account of the impact of fiscal and tionately from institutional failures and market monetary policies on economic growth.5 imperfections.11 However, not all countries in Not all macroeconomic instability is self- the world can simultaneously have an under- inflicted, however. Turbulence may result from valued currency. And while the argument that shocks over which countries have little con- jobs integrated with world markets have posi- trol, from natural disasters to crises originating tive growth spillovers is sensible, these jobs are abroad. Precautionary policies can be adopted not necessarily the ones with the highest devel- to cushion those shocks if and when they oc- opment payoffs. Different countries have dif- cur. But most often there is a need to respond ferent jobs agendas, from creating employment with short-term stimulus or adjustment pack- opportunities for women to supporting the de- ages. The effectiveness of these responses is a velopment of jobs in cities. The exchange rate is matter of controversy. A recent study based on only one instrument and would seldom be able the experience of 29 aid-dependent countries to deliver on such diverse agendas. estimates that GDP increases by close to 0.5 percentage points for every percentage point of An enabling business environment GDP in additional government spending. This so-called multiplier effect is substantially lower Across firms and countries at varying levels of than in the United States, where a range between development, the most important constraints 0.8 and 1.5 is considered plausible.6 on formal private sector businesses are remark- Wild fluctuations are only one way in which ably consistent: access to finance, infrastructure, the macroeconomic context can adversely affect and aspects of regulation including taxation and employment and earnings. The misalignment of unfair competition (figure 9.2). Skills shortages key relative prices is another. Surges in a coun- are also key, but mainly in the case of large firms try’s foreign exchange earnings often lead to an and especially in richer countries. overvaluation of its currency, making imports Access to finance provides firms with the more affordable and exports less competitive. ability to expand, to invest in new technologies, Resource-rich countries in the developing world or to smooth cash flow over time.12 Financial face similar currency appreciation pressures.7 markets also play an important role in the al- The commodity booms of the last few years location of resources toward more productive have only strengthened these pressures. Cur- uses.13 Transparency within the financial sector rency overvaluation can also happen in coun- avoids resources being channeled to those with tries where large volumes of foreign assistance political connections or economic power, and are needed to jump-start development, cope it also supports financial inclusion. Expanded with natural disasters, or facilitate recovery af- credit registries keeping track of positive as well ter a conflict. In Afghanistan, for instance, civil- as negative episodes in debtors’ histories help ian aid from multilateral and bilateral donors people demonstrate that they are creditworthy. was estimated at around 40 percent of GDP in But regulatory oversight is needed to ensure 2010/11.8 Currency overvaluation is a concern transparency and competition in the alloca- for many other countries where foreign aid does tion of funds. The financial crisis of 2008 has not reach the levels in Afghanistan but still funds reopened heated debates about the appropriate a significant fraction of the budget. An analysis of level of regulation of the financial sector and the 83 developing countries between 1970 and 2004 need to balance prudence and stability with in- confirms that aid fosters growth (albeit with de- novation and inclusion. creasing returns) but induces overvaluation and Access to affordable infrastructure of reason- has a negative impact on export diversification.9 able quality is, often, another top constraint to Avoiding exchange rate misalignment is nec- firm growth and job creation. Electricity en- essary to sustain a vibrant export sector and ables the use of more sophisticated technology. hence create jobs that are connected to interna- It also frees up time from domestic chores; in Beyond labor policies 295 F I G U R E 9. 2 Finance and electricity are among the top constraints faced by formal private enterprises Firm size Income level Constraint Small Medium Large Low Lower middle Upper middle High All Access to finance Power shortage Lack of skills Informal competition Tax rates most severe second-most severe third-most severe Source: IFC, forthcoming. Note: The analysis is based on World Bank enterprise surveys covering 46,556 enterprises in 106 countries. Small firms have fewer than 20 employees, medium firms have 21–99, and large firms 100 and more. rural areas, it can significantly increase women’s terms and in time needed to comply. Steps taken employment.14 Telecommunications allows for to meet requirements or to pay fees are a burden better information flows among suppliers, pro- to businesses, as are delays in receiving permits ducers, and customers, and the Internet and or licenses. The time it takes to comply with mobile technology facilitate the spread of new regulations or to receive permits varies greatly ideas. Roads provide greater access to markets, across firms in the same location, suggesting as do ports and airports.15 discretionary power and corruption.19 Beyond In many low-income countries, poor-quality these broader cost measures, regulations affect infrastructure is an especially severe challenge. the types of opportunities that are available and Part of the problem stems from how infrastruc- how widely they are available. Regulations can ture services are regulated, however, and not relieve or exacerbate uncertainty and corrup- only from insufficient resources to build ad- tion, but they can also have a deeper influence ditional facilities and roads. By one estimate, on the degree of competition and thus the struc- improved infrastructure was responsible for ture of industries in the economy. more than half of Sub-Saharan Africa’s recent Because business regulations affect the de- growth.16 But efficiency improvements stem- gree of competition, they shape the pressures to ming from better management of spending and innovate and increase productivity. Competi- maintenance, pricing policies, and regulations tion contributes to the reallocation of resources would be needed to close a significant portion of from inefficient activities to more productive the remaining gap in infrastructure services. In ones. Regulations that serve to protect an in- many countries and infrastructure sub-sectors, dustry or deter new entrants can be particularly monopolies—based on political connections— costly in terms of forgone output and employ- have resulted in lower quantities of services be- ment growth.20 Across countries, regulations ing provided, at higher prices and of lower qual- on business entry are inversely correlated with ity than in areas where competition has been productivity and firm creation, with stronger allowed to thrive.17 effects in sectors that tend to have higher turn- Regulation is another area that influences over rates.21 Easing entry requirements helped the opportunities for businesses to grow. Some increase business registration and employ- regulations determine the rules of the game, en- ment and drove down prices for consumers in couraging—or discouraging—certain activities. Mexico. The effect was achieved largely through Others affect firms at various stages of their life creation of new firms rather than formalization cycle, from getting started, to enforcing con- of existing informal firms.22 Combining relaxed tracts, to closing down.18 Regulations impact entry requirements with other regulatory re- on the cost of doing business, both in monetary forms, such as investment promotion and trade 296 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 logistics, tends to be more effective than simply stimulation through a nurturing environment easing entry.23 from the womb through the first years of life raises significantly the returns to later educa- tion investments.30 Supporting young children Human capital born into poverty during these crucial develop- Good nutrition, health, and education outcomes ment phases can significantly improve equal- are development goals in themselves, because ity of opportunities. The later the support, the they directly improve people’s lives. But they more difficult and costly it is to put that child also equip people for productive employment back on a normal developmental trajectory. In and open job opportunities—and through this Romania, during the early transition years, the employment channel, human capital drives eco- cognitive performance of orphans was lower nomic and social advances. According to the the older they were when they left state orphan- Commission on Growth and Development, “ev- ages. Social, emotional, and cognitive isolation ery country that sustained high growth for long was common in these facilities.31 periods put substantial efforts into schooling its While foundations are laid early on, hu- citizens and deepening its human capital.”24 man capital and skills continue to be formed Connections between human capital and throughout childhood, young adulthood, and jobs are manifold. There is robust evidence working life. Schooling is fundamental for the from around the world that each additional year further development of cognitive and social of schooling raises labor earnings substantially, skills until the end of adolescence, but learning and that this earnings premium reflects the abilities continue to be shaped by physical and higher productivity of more educated workers.25 mental health. Social skills remain malleable Together, nutrition, health, and education form through adolescence and early adult years.32 skills and abilities that have been clearly linked Young adults can continue into more special- to productivity growth and poverty reduction ized skill-building, including at tertiary levels, in the medium to longer run.26 Better health but their success depends on whether they have also brings, directly, higher labor productivity. acquired the generic skills needed to learn and For example, where malaria is endemic, work- adapt to different tasks and problem-solving en- ers can expect to suffer an average of two bouts vironments. These abilities are especially impor- of fever each year, losing 5 to 10 working days tant in more dynamic economies. each time.27 In rural Ethiopia, onchocercal skin Unfortunately, the evidence shows that many disease lowers the earnings of affected workers countries are falling short in building up the by 10 to 15 percent.28 As such, human capital human capital of their children and youth. The becomes a fundamental ingredient for desirable quality of delivery systems has often failed to job outcomes. keep pace with the expansion of access to basic Human capital formation is cumulative. It is social services. In education, for example, by a life-cycle process that proceeds in consecutive 2010, the net primary school enrollment rate in stages, each of them building on the previous low-income countries had reached 80 percent, one. Of crucial importance are adequate health primary school completion was at 68 percent, and nutrition during the first 1,000 days of life, and gross lower secondary school enrollment from inception to two years of age. Brain devel- exceeded 50 percent.33 But learning outcomes opment in this period affects physical health, were clearly lagging behind. In a large major- learning abilities, and social behavior through- ity of developing countries that took part in out life.29 In the early years, a child develops the Programme for International Student As- all the basic brain and physiological structures sessment (PISA) in 2009, at least 20 percent of upon which later growth and learning depend. 15-year-old students were functionally illiterate. Stunting in early childhood has been proven to For a number of countries, including Indonesia, have a significant negative effect on cognitive the Kyrgyz Republic, Panama, Peru, Qatar, Tuni- development; iodine deficiency can lead to poor sia, and the two Indian states that participated in brain development; and insufficient cognitive the PISA, more than 60 percent of 15-year-old stimulation reduces learning abilities. Ensur- students failed to reach this level. Similarly, early ing adequate nutrition, health, and cognitive reading tests taken at the end of second grade Beyond labor policies 297 revealed that, in diverse countries, a significant share of students were unable to read a single F I G U R E 9. 3 The rule of law is associated with development word: around 30 percent in Honduran rural schools, 50 percent in The Gambia and more 2 than 80 percent in Mali.34 Enrollment numbers, hence, do not necessarily signal actual learning and skill building. 1 rule of law score The rule of law and respect for rights 0 Across countries, the presence of institutions that uphold the rule of law is associated with higher levels of development (figure 9.3).35 –1 Clear property rights and institutional mecha- nisms that strengthen governance can create a climate in which firms are willing to make in- –2 vestments, enter into contracts, and create new 200 3,000 60,000 jobs. In such a climate, individuals may be more GDP per capita, constant 2000 US$ inclined to take the risks needed to set up new businesses and become entrepreneurs.36 The link between respect for property and de- Sources: World Development Indicators 2010 (database) World Bank, Washington, DC; World Governance Indicators 2010. velopment is well established.37 Property rights Note: GDP = gross domestic product. The rule of law score is a measure of the extent to which agents foster private sector growth by allowing firms have confidence in the rules of society, including the quality of contract enforcement, property rights, the to invest without fearing that their assets will police, and the courts, as well as the likelihood of crime and violence. be stolen or confiscated. The ability to enforce contracts widens the circle of potential suppliers and customers, as personal connections become forcing the rules that govern transactions and less important in establishing trust.38 Entre- helping ensure that the costs and benefits of preneurs who believe their property rights are growth are fairly distributed.42 The justice sys- secure reinvest more of their profits than those tem can enforce contracts, reduce transaction who do not.39 Increasing the security of prop- costs for firms, and create a safe and more pre- erty rights often involves setting up effective dictable business environment.43 The presence titling and registration processes. Mechanisms of effective courts increases the willingness of for valuing and protecting other types of prop- firms to invest.44 erty, including legislation governing intellectual An institutional environment that respects property, are also important. rights is another integral part of the rule of law. Rampant crime and violence can be devas- The International Labour Organization’s core tating for development and for job creation.40 labor standards provide guidance on what is un- Lawlessness can drive firms away and discourage acceptable in the areas of child labor, forced la- domestic and foreign investment. Across coun- bor, discrimination, and freedom of association tries, investment climate surveys consistently and collective bargaining.45 Health and safety find crime and corruption to be obstacles to at work also necessitate attention by govern- conducting business.41 Inclusive and responsive ments and employers. Ensuring that standards institutions, which lead to a reduction of violent are enforced in practice requires providing ac- behavior, increase safety and security. Strength- cess to information to workers and employers. ening efforts to detect and prosecute white-collar Information can increase the extent to which crime and malfeasance can reduce corruption. workers are able and willing to hold employ- An effective judicial system is a key ingredi- ers and intermediaries accountable. It can also ent for enforcing property rights and reducing help ensure that all parties involved are aware of crime and corruption. An independent, ac- their obligations. Strengthening institutions for countable, and fair judiciary can contribute to enforcement and grievance redress is another private sector growth and job creation by en- necessary building block. 298 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Ensuring that rights and standards are up- phy, endowments, and institutions. In some held requires a focus not only on implement- circumstances, there are no constraints to the ing acquired rights but also on expanding their emergence of good jobs for development and reach to workers in jobs that fall outside of for- no specific policy is needed. In others, govern- mal laws and regulations. Associations of infor- ments can support the private sector in creating mal workers can play a key role in informing more of these jobs. Sometimes removing exist- them, helping them access legal mechanisms, ing constraints that impede the creation of jobs and offering them collective voice. But often, with high development payoffs is possible. In information alone is not enough: garment other cases, policies may need to circumvent the workers in the Lao People’s Democratic Repub- constraints. lic reported that they were told about their basic A simple approach to setting policy priori- conditions of employment, but they did not al- ties follows a series of steps. First, the country ways understand the details, nor how to enforce context must be assessed and the particular jobs their rights.46 Not only can organizations of challenge or challenges it faces must be identi- informal workers support workers in learning fied. The second step is examining whether the about and accessing rights and standards, but jobs with the highest development payoffs are they can also bring cases to court on behalf of really the most attractive to individuals or the individuals and groups.47 most profitable for firms. When incentives are The quality of institutions for accountability aligned—with the individual and social value affects the extent to which labor rights are en- of jobs equal—there should be no shortage of forced in practice.48 Because court proceedings good jobs for development and intervention are often lengthy and costly, alternative mecha- is not needed. The third step is determining nisms for resolving disputes, including concilia- whether the institutional failures and market tion, mediation, and arbitration prior to court imperfections leading to misaligned incentives hearings can expand access to justice and griev- can be pinpointed or not. The fourth step is un- ance redress.49 These alternative mechanisms derstanding whether politically feasible reforms are especially valuable to workers who cannot can remove or correct those failures and imper- access the court system due to high costs or fections. If not, the last step involves assessing other barriers. whether incentives should be realigned through other policies (figure 9.4). Step one: What are good jobs for development? Assessing the development payoffs from jobs in a particular country context is an important PRIORITIES first step in identifying priorities. The nature of LABOR the jobs with the greatest payoffs varies with the POLICIES characteristics of the country, including its phase of development, endowments, and institutions. FUNDAMENTALS Jobs challenges differ in agrarian economies, conflict-affected countries, resource-rich coun- tries, and countries with high youth unemploy- ment, as well as in other settings. And the jobs Setting policy priorities for jobs with the greatest development impact differ as well, resulting in diverse jobs agendas. In addition to ensuring that the fundamentals are in place and that labor policies are set in a Step two: Are there enough of these jobs? A coun- sensible range, decision makers can help real- try may or may not face constraints in creating ize the development payoffs that come from good jobs for development. For example, light jobs. Some jobs do more than others for living manufacturing can offer employment oppor- standards, productivity, and social cohesion. tunities for women, with significant impacts on What those jobs are depends on the country reducing poverty. If a boom is under way, the context—its level of development, demogra- development payoff of new manufacturing jobs Beyond labor policies 299 F I G U R E 9. 4 A decision tree can help set policy priorities No intervention is needed. Remove the Step 4 constraints. Step 1 Can the constraints YES What are good jobs be removed? for development? O set NO the constraints. Are there enough YES Can the constraints YES Can the constraints YES of these jobs? be identi ed? be o set? Design NO NO NO engagement strategy. Step 2 Step 3 Step 5 Source: World Development Report 2013 team. might materialize. If so, it is difficult to justify footprint and pollution created by various types government interventions beyond establishing of jobs. And analysis of values surveys can dis- the fundamentals and adopting adequate labor cover which types of jobs link to networks and policies. provide social identity. Misaligned incentives exist when good jobs for development are not rewarding enough to Step three: Can the constraints be identified? individuals or profitable enough to farms and Understanding why the individual and social firms. Data and analysis can be used to identify values of specific types of jobs differ is next. gaps between the individual and the social value Gaps of this sort indicate the presence of unex- of jobs. Arguably, many key areas in develop- ploited spillovers from jobs. The gaps typically ment economics deal with these gaps. For in- arise from market imperfections and institu- stance, the tools of public finance can be applied tional failures that cause people to work in jobs to measure the tax burden on capital and labor that are suboptimal from a social point of view, and to assess the extent of cross-subsidization lead firms to create jobs that are not as good for between individuals or firms. Labor economics development as they could be, or connect peo- methods can be used to uncover gaps between ple less through jobs than would be socially de- the actual earnings of specific groups of work- sirable. But identifying where those constraints ers and their potential earnings. Poverty analy- are is not always easy. For instance, a broad set ses help in identifying the kinds of jobs that are of cultural, social, and economic forces may more likely to provide opportunities to the poor, result in insufficient employment opportuni- or the locations where job creation would have a ties for women. Similarly, it may be difficult to greater impact on poverty reduction. Productiv- pinpoint whether the key obstacles to making ity studies can help quantify the spillovers from cities functional lie in the land market, or in the employment in FDI companies, in firms con- institutional arrangements to coordinate urban nected to global markets, or in functional cities. development, or in the ability to raise revenue to Environmental studies shed light on the carbon finance infrastructure. 300 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Step four: Can the restraints be removed? If the and physical infrastructure (box 9.1). Simi- institutional failures and market imperfections larly, if politically charged regulations slow the leading to misaligned incentives can be identi- reallocation of labor toward more productive fied, reforms should be considered. It is a good activities, urban infrastructure and logistics economic principle to target reforms to the could enhance the attractiveness of jobs in cit- failures and imperfections at the root of the ies and jobs connected to world markets (ques- problem. Where reforms are technically and po- tion 9). But there are cases when constraints can litically feasible, policy makers should directly neither be removed nor offset. An engagement tackle the major constraints hindering the cre- strategy involving a deeper analysis of the op- ation of more good jobs for development. tions and buy-in by key stakeholders is needed then. Step five: Can the constraints be offset? Reforms Policy making to remove or offset constraints might not be feasible, technically or politi- has to be selective and supported by good public cally. Or perhaps the constraints for jobs are finance principles. The costs and benefits of pol- not identifiable. An alternative is to enact off- icy options need to be assessed, but the calcula- setting policies that can restore the incentives tions are different when the overall development for job creation. For instance, if a diffuse but impact is the guiding objective. But they are also entrenched set of priors and beliefs makes it more difficult. For instance, an employment difficult for women to work, efforts could aim program for ex-combatants in a conflict-affected at increasing their employability through tar- country could be assessed in terms of whether geted investments and interventions in social the earnings gains of participants justify the pro- BOX 9.1 How does women’s labor force participation increase? Some developing countries have experienced important increases returns to their earnings. These investments and interventions can in women’s labor force participation over a relatively short period of be categorized into three groups. They can address shortages in time. Nowhere has the change been faster than in Latin America. the availability of services (such as lack of electricity or daycare Since the 1980s, more than 70 million women have entered the labor facilities) that force women to allocate large amounts of time to force, raising the women’s labor participation rate from 36 percent home production. They can make it easier for women to accumu- to 43 percent. In Colombia, the rate increased from 47 percent in late productive assets, such as education, capital, and land, facili- 1984 to 65 percent in 2006. By contrast, in the Middle East and North tating their entry into high-productivity market activities. And they Africa, women’s labor force participation has only grown by 0.17 per- can remove norms or regulations that imply biased or even discrim- centage points per year over the last three decades. inatory practices, preventing women from having equal employ- Recent research attributes this rapid transformation to increases ment opportunities. in labor force participation among married or cohabiting women There are successful experiences with targeted investments with children, rather than to demographics, education or business and interventions of these three sorts. Public provision or subsidi- cycles. Changes in social attitudes contributed to the transforma- zation of child care can reduce the costs women incur at home tion, but this is a complex area with limited scope—and justifica- when they engage in market work. Examples include Estancias tion—for direct policy intervention. For instance, women’s partici- Infantiles in Mexico, Hogares Comunitarios in Colombia, and similar pation rates are very low in the West Bank and Gaza, particularly programs in Argentina and Brazil. Improvements in infrastructure among married women. But this cannot be mechanically attributed services—especially in water and electricity—can free up women’s to religion, as countries like Indonesia have high participation rates. time spent on domestic and care work. Electrification in rural South Other social norms and regulations prevent women from participat- Africa, for instance, has increased women’s labor force participa- ing, despite their willingness and capacity to do so. tion by about 9 percent. Correcting biases in service delivery insti- While the scope to influence social attitudes is limited, evidence tutions, such as the workings of government land distribution and suggests that public policies and programs in other areas have an registration schemes, allows women to own and inherit assets. important role to play. It also suggests that a combination of tar- Finally, the use of active labor market policies, the promotion of geted investments and interventions in social and physical infra- networks, and the removal of discriminatory regulations, are structure can modify women’s labor force participation and the important to make work more rewarding for women. Source: World Development Report 2013 team based on Amador and others 2011, Chioda 2012, and World Bank 2011i. Beyond labor policies 301 gram costs. But a full accounting would need to and famine was not a distant possibility.51 Two incorporate the potentially positive effects on decades later, Vietnam is the world’s second- peace building. In the Democratic Republic of largest exporter of rice after Thailand; the Congo, the cost of a reintegration program for ex- second-largest exporter of coffee after Brazil; the combatants was about US$800 per beneficiary.50 largest exporter of pepper; and a top exporter Such a program would likely be judged as cost of rubber, cashew nuts, and seafood products. inefficient by traditional standards. Whether or The poverty rate declined to 16 percent by 2006, not it is still worth implementing depends on the fastest reduction in poverty ever recorded. the implicit value policy makers attach to its These two decades of accelerated progress took social cohesion benefits. These spillovers from Vietnam out of the least-developed-country jobs may not be measured precisely, but at least category and made it a lower-middle-income they should be stated, for policy decisions to be economy with upbeat growth prospects. transparent. Vietnam’s transformation from an inef- ficient agrarian economy into an export pow- erhouse started with land reform. In the late Diverse jobs agendas, 1980s and early 1990s, the country abandoned diverse policy priorities collectivization by initially allowing local au- thorities to reallocate communal land to indi- Following a protocol to identify constraints to vidual households and subsequently extend- the creation of good jobs for development, and ing land-use rights to them. The devolution then remove or offset them, may sound abstract. of land to rural households was remarkably But some countries have successfully done this egalitarian, especially in the north.52 By 1993, in practice, and it is possible to learn directly land-use rights could be legally transferred and from their experiences (box 9.2). The stories of exchanged, mortgaged, and inherited. Land re- Vietnam, Rwanda, Chile, and Slovenia, show form was part of a broader package of reforms, that policy can effectively support the creation or Doi Moi, which took Vietnam from central of jobs with high development payoffs. Each of planning to a market economy with a socialist these countries faced a different jobs challenge, orientation.53 The package included the gradual so their policy choices are relevant for other removal of barriers to entry in most sectors, in- countries confronted with similar jobs agen- cluding the commercialization of agricultural das. Getting the fundamentals right by ensuring products. Competition brought farmgate prices macroeconomic stability, improving the busi- much closer to international prices. Combined ness environment, and adhering to the rule of with a strong emphasis on agricultural exten- law, featured prominently in all four cases. All sion, land reform and deregulation led to rap- four countries also embraced labor policies and idly growing agricultural productivity on very institutions within a reasonable range. But it is small farm plots. telling that the main constraints they targeted In parallel, policies aimed to create em- were not in the labor market. ployment opportunities outside agriculture. Vietnam opened to foreign investors, first in selected sectors such as natural resource ex- Agrarian economies: Vietnam ploitation and light manufacturing, and then Increasing productivity in agriculture, thereby more broadly in the context of its accession to freeing up labor to work in rural off-farm em- the World Trade Organization (WTO) in 2007. ployment and to eventually migrate to cities, is Registered FDI increased fourfold in just two the main challenge facing agrarian economies. years, from 1992 to 1994; by 2007, FDI inflows At the beginning of its economic reform pro- were consistently exceeding 8 percent of GDP.54 cess, in the late 1980s and early 1990s, Vietnam Initially investors partnered with state-owned was a clear illustration of this challenge. In 1993, enterprises (SOEs), because of the complexity the first year for which reliable data exist, over of a legal system still in transition. But SOEs 70 percent of employment was in agriculture, had gradually been given the flexibility to make 58 percent of the population lived in poverty, their own business decisions, and many were 302 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 9.2 There have been successes in tackling jobs challenges around the world The Republic of Korea effectively used policies to bring out the process.c Benefiting from a booming global commodities market agglomeration and integration benefits of an urbanizing country.a and a competitive exchange rate, its economy was growing at Almost three-quarters of the population was rural in 1960, but by around 5 percent a year before the 2008 financial crisis. But unlike 2000, four-fifths were urban. Seoul, which has grown to more than other rapidly growing countries, Brazil’s job creation in the formal 10 million people today, was a motor for the country’s overall sector was three times as high as in the informal sector. Just in the growth, especially from the late 1980s until the mid-1990s. Many five years leading up to the crisis, the formal share of total employ- industrial clusters were established in close proximity to the capital ment increased by about 5 percentage points. In some ways, Brazil city. Carefully designed and phased urban development policies is an unlikely “formalizer”—it has a heavily regulated business sec- accompanied the transition from jobs in agriculture to jobs in light tor and a costly labor system. Although its rapid formalization is too manufacturing and then to jobs in industries with higher value recent to be fully explained yet, it appears efforts to simplify and added. Land development programs were established first, fol- extend the reach of programs and regulations have been contrib- lowed by a land-use regulation system, and then by comprehen- uting factors. The government has expanded the coverage of its sive urban planning. Housing and transportation policies held social protection system through noncontributory programs. It has the diseconomies of urbanization in check. The global integration also simplified tax rules for small businesses, increased incentives of Korea’s urban hubs was a core driver of its growth dynamic. for firms to formalize their workers, and improved enforcement of The country invested massively in skills to support its structural tax and labor regulations. transformation. The mean years of education of the adult popula- In aging societies the increase in the old-age dependency ratio tion increased from 4.3 in 1960 to 11.8 in 2010. International test reduces the average productivity per person, while the growing costs scores now place Korea at the top of Organization of Economic of caring for the elderly undermine living standards. But the reforms Cooperation and Development (OECD) countries in reading, math- needed to address these challenges are politically difficult to imple- ematics, and science outcomes for 15-year-olds. ment and often involve hard tradeoffs. Poland is an example of a Small island nations are characterized by their size, isolation, and country that has taken several successful steps.d By the turn of the exposure to climatic risks. In these circumstances, reaping the pro- century, labor force participation rates were declining due to the ductivity gains from agglomeration and global integration is espe- growing incidence of early retirement and disability pensions. But cially challenging. Tonga is using migration as an active instrument several reforms that reduced the inflows of new beneficiaries led to to connect to the world economy.b Approximately 100,000 Tongans an increase in the employment-to-population ratio from 60 percent live abroad, almost as many as at home. Remittances account for an in 2006 to 65 percent in 2009. Changes in the application of eligibility estimated 32 percent of GDP and reach 80 percent of households, rules of disability pensions, enacted in 2005, sharply reduced the raising the education levels and productive investments. Migration intake of new beneficiaries. In 2009, a pension reform tackled early agreements also reach poorer and less-skilled workers. In 2007, New retirement options. This reform is such that old-age pension benefits Zealand launched the Recognized Seasonal Employer (RSE) pro- adjust downward as life expectancy increases. Hence, the country is gram, which provides temporary opportunities for seasonal workers expected to have a fiscally sustainable pension system in the long from the Pacific to work in horticulture and viticulture. For the house- run. That sustainability came at a cost: benefits as a percentage of holds of participants, the program has led to income gains of up earnings at retirement became significantly lower than the average in to 38 percent, more purchases of durable goods, and a broader the European Union. In 2012, a new wave of pension reforms raised improvement in well-being. In addition to income, RSE workers the retirement age to 67 for men and women from the current 65 for brought home their newly acquired knowledge of agricultural tech- men and 60 for women. This increase should help to raise the benefit niques, computer literacy, and English-language skills. level without adversely affecting fiscal sustainability. Policies and pro- Formalizing countries can envision increasing the coverage of grams to ease labor market entry for the inactive and unemployed of their social protection systems to levels typical of industrial coun- all ages remain modest, however, and their impact still needs to be tries. But costs are high, as is the risk of distoring incentives and determined. Also, long-term health care continues to rely largely on undermining productivity. Brazil is one country that has been able informal arrangements, but reforms are now publicly debated. to not only grow quickly but expand the formal sector in the Source: World Development Report 2013 team. a. Park and others 2011; Yusuf and Nabeshima 2006. b. Gibson, McKenzie, and Rohorua 2008; World Bank 2010a. c. Fajnzylber, Maloney, and Montes-Rojas 2011; OECD and ILO 2011. d. Styczynska 2012; World Bank 2011b. totally or partially sold to private investors. By by now a rapidly urbanizing economy, which is the turn of the century, greenfield FDI invest- a testimony to its success. ments had become the norm, especially in sec- tors such as garments, footwear, appliances, Conflict-affected countries: Rwanda and consumer electronics.55 Firms in these sec- tors are employing workers in large numbers. Rwanda today seems far removed from the war Important challenges remain, but Vietnam is and genocide of the mid-1990s, and jobs contrib- Beyond labor policies 303 uted to such a remarkable turnaround. The con- help.65 But the economic reintegration and so- flict has had a severe impact on society and the cial cohesion through jobs have established a economy, with massive loss of life, destruction of basis for future progress.66 infrastructure, a crisis of state institutions, and a drop in GDP that exceeded 50 percent.56 The Resource-rich countries: Chile cessation of conflict and an aggressive package of reforms allowed Rwanda’s economy to rebound While many countries rich in resources seem to pre-crisis levels by 2000.57 Growth has contin- unable to diversify and are beset by poor gov- ued, reaching an estimated 8.8 percent in 2011, ernance, Chile’s savvy management of its cop- and the poverty rate fell by 12 percentage points per riches makes it a notable exception. In 2010, between 2005 and 2010.58 Chile was home to 28 percent of the world’s A precondition for sustainable job creation copper reserves and about one-third of world in countries emerging from conflict is securing copper production; for the past two decades, peace and reducing risks of recurring violence.59 it has accounted for 17 percent of world cop- In the wake of the conflict, the Rwandan gov- per exports.67 But despite the prominence of ernment supported the reintegration and demo- copper in its economy, Chile has been able to bilization of more than 54,000 former combat- diversify its exports and its economy while ef- ants. Ex-combatants received a combination of fectively managing resource-related risks such cash assistance, counseling, vocational training, as currency appreciation and macroeconomic education, support for income-generating ac- turbulence. Nonmineral exports increased sig- tivities, and social reintegration activities involv- nificantly as a share of total exports after the ing community members.60 More than a decade 1980s, before retreating somewhat during the after the end of conflict, most former combat- global commodities boom after 2007 (figure ants were participating in vocational training or 9.5). Employment in the nonmining sectors working, mainly in subsistence agriculture and has grown strongly at more than 2 percent an- self-employment, similar to the rest of Rwanda’s nually over the past two decades.68 The unem- population.61 Although many ex-combatants ployment rate has averaged around 8 percent continued to experience social and psychological over the past decade, a far cry from the record hardships, their relations with their neighbors 20 percent of the early 1980s.69 were reportedly good, and trust was improving. A set of macroeconomic, institutional, ex- In 2012, 73 percent of ex-combatants expressed port-diversification, and skill-building policies satisfaction with their social integration, and 85 contributed to this broad-based job creation percent of community members felt that there path. Chile combines the use of a resource sta- was trust between the two groups.62 bilization mechanism (since 1987, with the While the number of ex-combatants only current framework adopted in 2006) with a represents a small share of Rwanda’s total popu- transparent fiscal rule (since 1999) that jointly lation of 10 million, reintegration through jobs regulate how copper extraction rents are used.70 had social cohesion payoffs, which established a A structural surplus target is the anchor for de- basis for the country to move forward. Rwanda termining inflows and outflows into two funds, has built on this start by rejuvenating the private one for pensions and other long-term govern- sector through reforms to institutions and busi- ment liabilities, the other for short-term sta- ness regulations.63 A good example of the gov- bilization purposes. The funds are authorized ernment’s private sector development strategy to invest their portfolio fully abroad, relieving was its decision to revitalize its coffee industry pressures on the exchange rate.71 In parallel, through deregulation and investments in new governance reforms over the past decades in all technology, a decision that has led to new job areas of public sector management have led to creation.64 Rwanda still faces serious jobs chal- significant success: Chile climbed 5 percentiles lenges. More than 80 percent of the population in its voice and accountability rating between works in subsistence agriculture and house- 1996 and 2009 and also improved its political hold enterprises, where productivity needs to stability and control of corruption ratings.72 be improved. Also, opportunities for off-farm Further, Chile adopted an active export- employment need to expand, and growth in oriented growth policy, opening up to trade the currently small manufacturing sector would and welcoming direct foreign investment, 304 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 F I G U R E 9. 5 Chile reduced its dependence on mineral exports 70 mineral exports in total exports, % 65 60 55 50 45 40 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 Source: World Development Report 2013 team, based on export values data from Chile’s Central Bank and copper price index from IMF’s International Financial Statistics database. Note: The figure shows the share of mineral exports in total exports, measured at constant 1990 prices. Total exports and mineral export values were deflated using the export price index and the copper price index, respectively. thereby enhancing the productivity spillovers young people, European Commission President from global integration. An ambitious inno- José Manuel Barroso recently highlighted Slove- vation strategy to raise competitiveness was nia as an example of best practice in the employ- developed.73 Public funds were used specifi- ment of youth.79 cally to boost education expenditures, which Slovenia’s relative success in reducing youth almost doubled in real terms between 1990 unemployment does not strictly follow tradi- and 2009.74 While quality as well as equity in tional recipes. Its spending on active labor mar- the education system are much debated today, ket policies is about average for transition coun- the share of low-skilled workers declined in all tries. Although some reforms have been made to economic sectors.75 liberalize the rules for contract and temporary work, Slovenia’s labor regulations remain more restrictive than the Organisation for Economic Countries with high youth unemployment: Co-operation and Development (OECD) aver- Slovenia age, a policy stance that is usually associated Slovenia has made inroads into the problem with reduced job opportunities for young peo- of high youth unemployment (figure 9.6). ple. Minimum wages—also frequently cited as a Throughout the first decade after the breakup of barrier for youth employment—are on the high the former Yugoslavia, young people were three side. But potential distortions from these poli- times as likely as adults to be unemployed. By cies seem to be somewhat offset by a model of 2010, this ratio had fallen to two to one.76 The consensus-based decision making. In Slovenia, youth employment rate, which was 10 percent- trade unions and employers’ organizations, both age points above the European Union (EU) with broad coverage, set wages that respond well average in 2000, was lower than the EU average to macroeconomic trends and sectoral produc- in 2010.77 By then, the share of Slovenia’s youth tivity patterns.80 not in education, employment, or training was Sustained growth supported by increased just 7.5 percent among the 15- to 24-year age competition in product markets, is ultimately group, well below the EU average of 11.2 per- responsible for much of Slovenia’s decrease cent.78 While the crisis has certainly been felt by in youth unemployment. Taking advantage of Beyond labor policies 305 European integration, the economy successfully restructured its export sector to access EU mar- F I G U R E 9. 6 Unemployment rates for youth have fallen in kets. Very good infrastructure and a fairly skilled Slovenia workforce helped as well. This dynamism, re- quiring the use of more advanced production 35 and management techniques in modern sec- tors, was especially well-suited for youth. While 30 the story is a good one in many ways, further policy reforms could help Slovenia realize more 25 of the development payoffs that flow from jobs 20 for young people. Some of these reforms are in percent the labor market, such as removing the incen- 15 tives created by employment protection laws that tilt job creation for youth toward contract 10 and temporary work. But others are outside the labor market, such as introducing measures to 5 encourage more FDI.81 0 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 Connected jobs agendas: Global 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 partnerships for jobs youth unemployment rate, % unemployment rate, % Policies for jobs in one country can have spill- Source: International Labour Organization, Key Indicators of the Labour Market (KILM) 2011. overs on other countries, both positive and Note: The youth unemployment rate refers to the 15-to-24 age group, whereas the general unemployment negative. An important issue is whether inter- rate is for people aged 15 and above. national coordination mechanisms could in- fluence the decisions that governments make, enhancing the positive spillovers and mitigat- ing the negative ones. Several areas lend them- through peer pressure or by providing positive selves to coordination. Promoting compliance incentives for governments and firms to comply. with rights and labor standards, a global public But it is not certain that these kinds of pressures good, is the most obvious one, but the effective- and incentives actually change working condi- ness of the mechanisms for doing so is limited. tions on the ground, and the risk that improve- Measures to facilitate FDI flows, especially in ments come at the expense of job creation can- services, would have substantial effects on pro- not be ruled out. ductivity in developing countries but they may ILO conventions provide a framework for also have social implications. Migration has im- rights, standards, and conditions at work. At pacts on both sending and recipient countries, the country level, conventions can influence suggesting that bilateral agreements could lead domestic legislation if countries do align their to better outcomes for both parties. laws with global standards. They can be a chan- nel for voice and coordination internationally, as demonstrated by the adoption of conven- Rights and standards: Pressure goes only tions for home-based and domestic workers.82 so far Evidence from the ratification of the eight con- Several mechanisms operating across borders ventions included in the ILO’s 1998 Declaration exist to set standards and provide channels on Fundamental Rights and Principles at Work for improving workers’ rights and their work- (the core labor standards) suggests that coun- ing conditions. They include the issuance and tries respond to pressure from the international ratification of ILO conventions, bilateral and community.83 Yet, the persistence of forced la- multilateral trade agreements, and initiatives in- bor, children working in hazardous conditions, volving the private sector, civil society, and other discrimination, and lack of voice also suggests stakeholders. These mechanisms operate either that ratification on its own is not sufficient. 306 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Trade agreements have also been used with vironmental concerns into their operations.90 the intent of supporting workers rights. Some of While some develop their own codes of con- them incorporate incentives to improve work- duct, collective initiatives are increasingly im- ing conditions and access to voice. For instance, portant for improving working conditions the 1999 bilateral trade agreement between in global supply chains. Shared codes enable Cambodia and the United States included pro- companies to collaborate with other businesses visions to increase Cambodia’s quota for gar- in industry-led platforms, and with trade ment imports into the United States market if unions and nongovernmental organizations in regular reviews showed improvements in work- multistakeholder initiatives (sometimes with ing conditions. government observers).91 Whether labor clauses actually lead to better Almost all such initiatives have defined stan- outcomes for workers on either side of a trade dards of practice, but they differ substantially in agreement is the subject of a running debate. their governance structures, in their procedures Skeptics point out that the agreements, on their for implementation, monitoring, and verifica- own, can be weak instruments for improving tion, and in whether they involve certification rights and working conditions and cannot sub- and labeling.92 CSR initiatives focused on labor stitute for adequate enforcement of domestic la- issues are generally concentrated in sectors rely- bor laws.84 There are also concerns about politi- ing on global supply chains that are exposed to cal capture and pressures from interest groups reputational risk, such as garments, sportswear, and uneven bargaining power between treaty food and, increasingly, electronics.93 Codes of parties.85 Labor clauses could be used as a pro- conduct are most frequently adopted by com- tectionist tool, undermining trade and employ- panies based in the European Union and North ment opportunities in developing countries. America, which then make compliance with Supporters claim that labor clauses in trade labor standards a condition for doing business agreements not only improve the enforcement with them. A small number of voluntary initia- of existing labor and employment standards tives have also emerged in developing countries, but also lead to increased FDI to developing although these are generally a response to exter- countries, thus benefiting workers in developing nal pressure more than a reaction to campaign- countries in both direct and indirect ways.86 ing by local consumers.94 Linking rights to trade agreements may have There is limited evidence to demonstrate an impact on working conditions if comple- how far CSR initiatives go beyond good inten- mented by investments in capacity for enforce- tions to result in tangible and sustainable im- ment and compliance at the country level. Af- provements in rights and working conditions. ter it signed the Central America Free Trade The clearest impacts are found in the area of Agreement, the Dominican Republic increased health and safety and, to a lesser extent, in regu- the number of labor inspectors and invested larization of working hours. Improvements on in capacity building.87 And after it entered the freedom of association and discrimination are bilateral trade agreement with Cambodia, the much less likely. Overall, the benefits are more United States funded two ILO projects there. pronounced for permanent workers than for One of them, Better Factories Cambodia, in- migrants, agency workers, and seasonal and volved building capacity for compliance and temporary workers.95 Codes do not operate in monitoring of working conditions in garment a vacuum, so the capacity of local actors and factories. The other supported an arbitration the quality of domestic laws and institutions are council to resolve collective labor disputes.88 critical to the effectiveness of the efforts.96 Subsequent reviews have found improvements These findings stress the need for approaches in working conditions and collective rights.89 to improving working conditions that extend Beyond the initiatives of governments to sectoral and national-level engagement with through conventions and trade agreements, governments, employers, trade unions, and civil there has been a growing emphasis on pri- society organizations. Voluntary labor initiatives vate sector accountability. Under the broader cannot substitute for domestic efforts to set up corporate social responsibility (CSR) agenda, adequate legal protections and put in place insti- companies voluntarily assume social and en- tutions to support compliance and provide av- Beyond labor policies 307 BOX 9.3 Improving business practices facilitates compliance with labor standards The Better Work program seeks to improve compliance with inter- agement, supporting country teams with tools for advisory services, national labor standards and national laws, while promoting busi- monitoring and evaluation, and impact assessment. ness competitiveness. The program operates through partnerships Better Work is modeled on the Better Factories Cambodia pro- with governments, employer and worker organizations, and inter- gram, which was introduced in conjunction with the bilateral trade national buyers. It currently includes global garment brands and agreement between Cambodia and the United States. Results of retailers with supply chains outsourcing production to Cambodia, evaluations of Better Factories Cambodia, covering more than 90 Haiti, Indonesia, Jordan, Lesotho, Nicaragua, and Vietnam. percent of participating factories, found that compliance on occu- The program involves thorough workplace assessments that pational safety and health improved 20 percent. Correct payment of examine compliance with international labor standards and wages, overtime, and benefits increased 37 percent. Initially, incen- national labor law, as well as advisory services to help employers tives to improve working conditions were driven by the quota and workers jointly create and implement improvement plans. Tai- increases called for under the trade agreement; however, with the lored training services support workplace cooperation and address expiration of the Multi-Fiber Arrangement (MFA), quota increases specific issues, such as supervisory skills, human resource systems, were no longer possible. Nevertheless, the Cambodian garment and occupational safety and health. The program undertakes public industry has continued to invest in monitoring, having identified reporting, which presents aggregate noncompliance data from all labor compliance as an important part of its claim to a niche in participating factories in a country and allows comparisons across the global garment industry. This niche exists despite the expiration countries according to specific indicators. A Better Work global of the MFA largely because of the role that reputation plays in the team ensures quality, consistency, and effective knowledge man- supply chain. Sources: World Development Report 2013 team based on Better Work Programme, International Finance Corporation, Washington, DC, and International Labour Organization, Geneva; Robertson and others 2009; and Adler and Hwang 2012 for the World Development Report 2013. enues for redress. The public and private sectors ance with labor standards in the garment sector can work together, as in Brazil, where in 2003 (box 9.3).98 the Ministry of Labor began publishing lists of companies found to be using forced labor. The Further liberalizing trade, but managing increased public awareness led companies to the tradeoffs subscribe to a National Pact to Combat Slave Labor, with civil society organizations establish- International trade in goods has been gradu- ing a committee to monitor the pact.97 ally liberalized, and the notion that freer trade While most jobs in developing countries is mutually beneficial for the transacting par- fall outside the scope of CSR initiatives, these ties is now widely shared. Various mechanisms efforts have the potential for a wider influence have been used in the liberalization process, if they can be expanded to include workers, including multilateral, regional, and bilateral mainly women, who do not have formal con- agreements, as well as unilateral commitments. tracts. At the same time, local governance and At the multilateral level, liberalization has been institutions could be boosted through activities achieved through negotiations under the frame- to strengthen the capacity of actors and insti- work of the General Agreement on Tariffs and tutions and improve processes of dialogue and Trade (GATT) first, and then of its successor, cooperation. Demonstration effects may also the WTO. The most recent round of multilateral occur at the country level if CSR efforts increase negotiations, the Doha Development Agenda, the visibility of activities to improve rights and aims for better market access for the export- working conditions, and if labor inspectorates ing industries of developing countries. Average and third-party monitoring bodies gain expe- bound tariffs would fall from 40 to 30 percent rience and capacity. The potential benefits of for agricultural products, and from 10 to 5 per- local capacity building are illustrated by the ex- cent for manufactures. Actual tariffs could fall perience of Better Work, a partnership program by 11 to 14 percentage points for the former, and between the ILO and the International Finance by 2 to 3 percentage points for the latter. Cuts Corporation (IFC) aimed at improving compli- could be much sharper in sectors such as tex- 308 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 tiles and clothing. The least-developed countries proposals in the Doha agenda and in regional could even benefit from duty-free quota access trade discussions offer prospects for significant on almost all of their exports to industrial coun- liberalization (figure 9.7). 102 tries.99 For developing countries, the success of However, the productivity gains from ser- the Doha Round could therefore have a substan- vices liberalization would be substantial. Elec- tive impact on the creation of jobs connected to tricity, finance, telecommunications, and trade global value chains, which are typically good have a direct impact on production and trans- jobs for development. But the Doha negotia- action costs, making downstream sectors more tions are in limbo. competitive. By boosting job creation and rais- Despite the progress in trade liberalization, ing labor earnings, these productivity gains many developing countries still lack the com- should also lead to improved living standards. petitiveness to harness the benefits from global Social impacts can be more mixed. They are integration. Providing them with direct as- clearly positive when cell phones connect people sistance to reduce logistics costs and improve (especially the poor) to markets for their prod- the competitiveness of firms and farms is thus ucts, to employment opportunities, or to gov- a priority. The Aid for Trade initiative aims to ernment services. They can be negative when increase aid to developing countries so that they the disappearance of retail trade leads to the can tap existing market opportunities. Aid for decline of traditional urban areas and affects the Trade has increased substantially and now ac- livelihoods of older shopkeepers who may not counts for about a third of total aid to devel- find alternative employment easily. oping countries. To date, most of the resources An adequate sequencing of services liberal- have been channeled to infrastructure invest- ization and domestic regulation can help man- ments and trade facilitation. But the assistance age these tradeoffs and, in doing so, address the could be made more effective by focusing on the concerns of developing countries. For instance, export activities most suited to addressing the in telecommunications, enhanced domestic specific jobs challenges facing recipient coun- competition improves welfare more than hand- tries. Increasing the involvement of the private ing over existing providers to better-performing sector would also enhance the effectiveness of foreign operators. Evidence from 86 developing the assistance provided.100 countries between 1985 and 1999 suggests that In contrast to trade in goods, services liber- both competition and liberalization can inde- alization has made slow progress, at both the pendently improve performance. But penetra- multilateral and the regional levels. Services are tion of telecommunications services, measured subject to more pervasive regulations, because by main-line access, is lower if competition is they are characterized by well-known market introduced after liberalization, rather than at imperfections. These range from natural mo- the same time.103 nopolies in the distribution of electricity to net- A careful design of liberalization, can also work externalities in telecommunications, and cushion social impacts. For instance, in its pref- from asymmetric information and moral hazard erential trade agreement with the United States, in finance to market power in retail trade. While Oman chose a sequential approach for the lib- the liberalization of trade in goods is associated eralization of its retail trade. Foreign nationals with domestic liberalization, the liberalization were initially permitted to own up to 100 per- of trade in services usually requires domestic cent of the equity in established retail enter- regulation. Setting up markets for electricity, en- prises valued at more than US$5 million, with suring universal service in telecommunications, the threshold subsequently declining to US$1 adopting appropriate banking supervision, and million. This agreement allowed for gradual managing the social impacts of large distribu- adjustment. At the same time, it was gener- tors on retail trade are challenging tasks.101 ous in relation to foreign ownership, which is Not surprisingly, liberalization in services restricted to 49 percent in Oman’s prevailing is much less advanced in developing countries multilateral agreements.104 Similarly, concerns than in industrial countries. The former are about the impact of liberalization on urban also reluctant to make additional commitments. centers are addressed through land-zoning re- Neither existing agreements under General strictions, as some industrial countries do. But Agreement on Trade in Services (GATS) nor these restrictions can also be used as entry de- Beyond labor policies 309 F I G U R E 9. 7 Offers to liberalize services are generally modest 90 80 services trade restrictiveness index 70 excess 60 protection 50 GATS 40 commitments Doha 30 o er 20 actual protection 10 0 Europe and OECD East Asia Middle Sub- Latin South Central Asia and Pacific East and Saharan America Asia North Africa and the Africa Caribbean Source: Borchert, Gootiiz, and Mattoo 2010. Note: GATS = General Agreement on Trade in Services; OECD = Organisation for Economic Co-operation and Development. The figure compares the applied trade policies in major services sectors with countries’ commitments under GATS and the best offers that they have made in the Doha negotiations. The figure is based on data from 62 countries. The country services trade restrictiveness index is a weighted average of a country’s policies or commitments to market access by foreigners in financial, retailing, telecommunication, transportation and selected professional services sectors. Weights are sectoral gross domestic product shares. The regional index is a simple average of country indices. terrents, reducing competition and undermin- than 1 million people, most of them women. ing job creation.105 Preferential access for developing country im- The limited traction in services liberalization ports from sectors with more “brain jobs” can is due largely to the potential tradeoffs involved. thus be used to create employment opportu- Developing countries may lack knowledge on nities for women in countries where gender the gains from opening markets, the on precon- equality is far from being attained.107 However, ditions for realizing such gains in light of existing as countries move up the ladder of global value tradeoffs, and on the policy options available for chains, women may also lose job opportunities. maximizing the gains and handling the trade- This was the case in Malaysia, where the share of offs. Similar to the case of trade in goods, many women working in manufacturing declined in countries also lack the ability to implement poli- the mid-1980s.108 cies and agreements. International collabora- tion is thus needed to address such knowledge Migration policies: Toward bilateral gaps and facilitate implementation.106 agreements International agreements can also be used to promote global public goods. One case in point Movements of people across borders have elic- is gender equality. Trade is not gender neutral. Its ited diverse policy reactions by recipient coun- liberalization, including services trade, changes tries over the course of history. These have in- women’s access to jobs. Traditionally men were cluded physical walls that keep foreigners away, more likely to have “brawn jobs,” involving policies preventing forced and bonded labor stronger physical requirements. But “brain jobs” across oceans, and policies of open migration. involving dexterity, attention, or communica- In addition, there has been a range of specific tion—from stitching garments to processing measures including amnesties for irregular mi- data—present more opportunities for women. grants, statutes controlling entry by refugees, In Delhi and Mumbai, call centers employ more and complex systems for granting visas. In most 310 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 cases, these policies have been introduced uni- the large earnings differentials between coun- laterally by the recipient country and have in- tries, suggesting that the free movement of la- volved little or no international dialogue or co- bor would accelerate global productivity growth operation with sending countries. and poverty reduction enormously.111 Another In contrast to the movement of goods and perspective focuses on national security and services across borders, few international agree- the protection of communities and their cul- ments concern migration in general and migra- tures, implying the need for barriers to contain tion of workers in particular. Those in existence migration. Yet another highlights the moral have limited coverage. ILO Conventions 97 and imperative to protect the human rights of mi- 143, in force since 1952 and 1978, respectively, grants, no matter their legal status, and to give seek to protect migrants from discrimination shelter to those who suffer any form of perse- and abuse, and call for penalties and sanctions cution.112 None of these views suffices, because against those who promote clandestine or ille- none of them alone can address the complex gal migration. But these conventions have been tradeoffs that migration poses for policy design. ratified by only 49 and 23 countries, respectively. There are many examples of such tradeoffs. Mode 4 of GATS covers exports of services con- The more that is spent in protecting the welfare ducted through individuals present in another of migrants, which sending countries and con- WTO member country.109 It entered into force cerned citizens everywhere demand, the more in 1995 and covers all signatories to the WTO, expensive the use of migrant labor will become, but only a limited number of services have been and the fewer the number of workers who will liberalized by either developed or developing be hired. The more that is done to assimilate countries, with very few moving ahead in sensi- and integrate the migrants, which some host- tive areas like health services. Finally, the United country groups favor, the less likely migrants Nations International Convention on the rights will be to return to their home countries. The of all migrant workers and members of their more active the policies to attract “talent” mi- families aims to “contribute to the harmoniza- grants, the greater the “brain drain” concerns tion of the attitudes of States through the accep- among sending countries. The higher the pro- tance of basic principles concerning the treat- tection of sectors such as agriculture by indus- ment of migrant workers and members of their trial countries, the more likely are migrants families.” This convention entered into force in from developing countries to work in those 2003 but has been ratified by only 22 countries, sectors. Conditioning foreign aid on banning mostly sending countries. migration seems unacceptable and would affect Growing differences in ages, incomes, skills fundamental rights of workers by constraining and economic perspectives between countries their freedom to move. Stern visa restrictions are likely to create mounting pressures for mi- and deportations usually backfire and may turn gration. Despite the interest of both industrial overstayers into irregular migrants. These exam- and developing countries in “talent” migra- ples indicate that unilateral policies cannot ad- tion, low-skill migrants will still account for dress all these dilemmas. However, the adoption the bulk of cross-border flows in the years to of global agreements setting the conditions of come.110 But readiness to make the most of migration and superseding country legislation, these growing differences between countries, seems unlikely. This is why an intermediate so- and manage migration in a mutually beneficial lution can be more effective. way, is limited. Multicountry agreements have In many instances, both sending and host been slow to develop. Bilateral agreements that countries can benefit from migration through take into consideration geographical and his- a collaborative approach. Most abuses perpe- torical trends, protect basic rights of workers, trated by traffickers, firms, or workers are as- and take into account the social impacts of mi- sociated with illegal migrant flows. The for- gration, could benefit both host and sending malization of these flows is a basic tool for countries. protecting the rights of migrant workers, while Migration is an area where a global perspec- at the same time having them honor the terms tive is warranted, but views on what needs to under which they were welcomed. This formal- be done are quite diverse. One view focuses on ization, however, is difficult to enforce without Beyond labor policies 311 the cooperation of institutions in both sending very diverse production units, including micro- and receiving countries.113 Bilateral agreements enterprises. Assessing whether employment ex- can include provisions regarding quotas by oc- periences affect trust and willingness to engage cupation, industry, region, and duration of stay. in society requires information on individual They can distinguish between temporary move- values and behaviors. Such information is nec- ments of workers and steps to permanent mi- essary to tackle an emerging research agenda on gration, with conditions and protocols for mov- jobs and development (box 9.4). ing from one country to another and regulation However, the paucity of empirical analyses of recruitment agencies and intermediaries. on the employment impact of the global crisis They can include considerations about taxation in developing countries and the difficulty of and social security, including on benefits to be comparing measures of informal employment provided, portability of contributions, and cost- across countries suggest that data quality and sharing arrangements. These agreements can availability are limited. Much effort goes into design incentives so that firms, worker associa- measuring unemployment rates, even with a tions, and governments in both sending and re- relatively high frequency.116 But open unem- ceiving countries have an interest in enforcing ployment is not a very telling indicator in coun- the provisions.114 tries where an important fraction of the labor Formalizing and extending temporary mi- force is not salaried. Four indicators are listed to gration agreements could capture part of the monitor progress toward the employment tar- wage gain from migration that is currently ab- get under the Millennium Development Goal sorbed by intermediaries, to the benefit of both (MDG) on eradicating poverty. This target calls migrants and their employers. Agreements in for “achieving full and productive employment the financial sector could lower the cost of re- and decent work for all, including women and mittances to migrants and avoid the prevalence young people.” But the four indicators con- of illegal transactions. Reconsidering the financ- sidered only partially capture advances in the ing of higher education in both developing and quantity and quality of jobs in the developing developed countries could favor a more bal- world.117 Many available employment figures anced sharing of the returns to investments in are actually inferred through interpolation be- the case of talent migrants. More generally, bi- tween years and extrapolation using data from lateral coordination is a sensible way to manage “similar” countries, but how reliable these migration and ensure mutual benefits for send- methods are remains an open question. ing and recipient countries. These remarks are not meant to criticize statistical agencies at the country level or data collection efforts at the international level. Their Jobs are center stage, but where are efforts are filling important gaps and mobilizing the numbers? expertise to improve definitions, reach agree- ments on best practices, and provide technical Policies for jobs need to be based on reliable data assistance to those generating primary data.118 and rigorous analysis.115 Given that a large share Despite the limitations, data on informal em- of the people at work in developing countries are ployment, the unemployment rate, or the MDG not wage employees, and that even a larger share employment target serve an important objec- lacks social security coverage, the measurement tive, namely, increasing awareness on the im- of employment must look beyond whatever for- portance of jobs for promoting development. mal employment data the country gathers. De- However, moving jobs center stage could re- termining which jobs have the greatest payoffs main an aspirational statement in the absence for poverty reduction requires linking informa- of a sustained effort to improve the amount and tion on a household’s income or consumption comparability of data. with information on the employment of its Today’s challenges regarding labor statistics members. Understanding which firms create can be regrouped into three key areas: data gaps; more jobs, or whether labor reallocation leads to data quality issues; and planning, coordination, substantial growth rather than just churning, re- and communication issues. In some countries, quires information on the inputs and outputs of labor statistics do not exist at all or are collected 312 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 BOX 9.4 Knowledge gaps on jobs and development chart the research agenda Increased reliance on disaggregated survey data, together with rig- time may shed light on the links between jobs and behaviors. Inter- orous program evaluation and controlled experiments, has pushed disciplinary research could provide insights on the broader relation- the knowledge frontier on jobs and development in recent years. ship between jobs and institutional development processes. On almost all relevant issues a substantive body of evidence already Anthropological approaches may provide insights on the mecha- exists. Current efforts of the research community promise its expan- nisms at play; for instance on how jobs affect perceptions on fair- sion in the coming years, in ways that should contribute to better ness and the willingness to trust others. informed policy making. However, knowledge gaps remain in sev- Spillovers from jobs. Research on the magnitude of spillovers eral areas. from jobs is patchy. The agenda is long, but a promising area con- Jobs and living standards. An abundance of high-quality work cerns the impact of jobs on the acquisition of cognitive and noncog- has been done on the measurement of poverty and the assessment nitive skills, and how this impact varies depending on the character- of poverty alleviation programs. Less is known on how employment istics of the job and those of the person who holds it. Evidence on dynamics affect household living standards and movements in and agglomeration effects across cities with different characteristics is out of poverty. Research on transitions between different employ- also scarce, as are estimates of the environmental impacts of differ- ment statuses, occupations, industries, and types of jobs can shed ent types of jobs. light on incentives to work and formalize, as well as on impacts of Labor policies. A growing number of empirical studies focus on jobs on household well-being. Knowledge is also limited on the the impact of labor policies and institutions, and many of these subjective value workers attach to various characteristics of their studies are very rigorous. However, a careful review suggests that jobs, including to social security benefits such as old-age and dis- the relationship between policies and institutions on the one hand, ability pensions. and outcomes on the other, is not linear. Rather, it evokes a “plateau” Jobs and productivity. Many studies are available on firm dynam- of modest effects, but with “cliffs” at both ends where the impacts ics, including births, growth, and deaths. There is also a growing lit- on efficiency and the distribution of jobs can be sizeable. Empirical erature on the impacts of trade liberalization and foreign direct work to determine where these cliffs lie and how to identify the investment on productivity and earnings at the plant level. Much of institutional characteristics that demarcate the limits of the plateau this research focuses on formal sector firms, however. Much less would be of much value for policy makers. no triple aq:research is available on the dynamics of micro- and small enter- Connected jobs agendas. More research is needed on how inter- asterisks prises inhere the informal sector, despite their importance for employ- national trade, investment at both ends, and migration affect the like other ment. There is also some disconnect between studies based on composition of employment across countries. Knowledge gaps are plant-level surveys and the growing literature on the effects of chapters? common in all of these areas. The ability of national policies and urbanization. The dialogue between these different literatures is in supranational mechanisms such as trade agreements to affect jobs part hampered by different visions of production processes on in different countries is only partially understood. More solid knowl- issues such as returns to scale or externalities. edge on the right sequencing of international commitments and Jobs and social cohesion. Research in this area is tentative and the domestic policies related to services could address the reluctance of empirical evidence is scarce. The importance of the topic and the developing countries to make further progress in the direction of paucity of robust results mean that the payoffs to high-quality liberalization. Rigorous evaluations of migration policies would also research in this area could be very high. Natural experiments com- be helpful. bined with longitudinal data spanning relatively long periods of Source: World Development Report 2013 team. only sporadically. Where labor statistics do ensure that establishment surveys include infor- exist, data quality is a concern throughout the mal firms and microenterprises. statistical production chain, from the use of ap- A quarter of a century ago, a renewed empha- propriate definitions to questionnaire design, sis on poverty reduction as the key objective of from sampling frames to interviewing protocols, development policy launched a long-term data and from data entry and coding to verification effort. Across the world, information on house- and estimation procedures. Planning, coordina- hold living standards was collected through tion, and communication issues are exacerbated standardized surveys, the sampling methods when different institutions are responsible for and the variable definitions used were duly doc- collecting and disseminating the data.119 The umented, and the data and documentation were most urgent priorities are to standardize the made available to researchers and practitioners employment modules attached to the house- whenever possible. A similar approach should hold surveys used for poverty analysis, and to be envisioned to move jobs center stage. 9 Beyond labor policies 313 QUESTION How to accelerate labor reallocation? Creative destruction, the mainstay of economic productivity. If the dispersion observed within growth, happens to a large extent through la- each industry narrowed to the point of match- bor reallocation. As workers move from jobs ing the dispersion observed in the United States, in low-productivity farms and obsolete firms India’s average productivity in manufacturing to jobs in more dynamic economic units, out- could increase by more than half.123 Instead, de- put increases and the economy moves closer spite India’s buoyant economic growth during to the efficiency frontier. Differences in pro- the past two decades, the performance of the ductivity across economic units underlie this labor-intensive manufacturing sector has been creative destruction process. Such differences sluggish.124 The bulk of the growth in nonfarm can reflect a healthy ecosystem driven by com- employment has been in the informal sector. petition which offers the basis for efficiency- The conventional wisdom, when a country enhancing job reallocation. Market imperfec- is riddled with misguided labor regulations, is tions and government failures may hinder labor to repeal them. This repeal may be easier said reallocation, however, resulting in a wider dis- than done, however. India’s complex labor reg- persion of productivity and many missed op- ulatory system has been in place for 60 years; portunities for growth.120 even the ambitious reform program triggered Stringent regulations that obstruct the move- by the balance-of-payment crisis of 1991 left ment of workers from low- to high-productivity labor regulations largely untouched.125 The IDA areas or that prevent their separation from ob- of 1947 has been amended at the state level but solete firms are a case in point. These regula- not always toward the plateau. Between 1958 tions may stem from good intentions, such as and 1992, seven states amended the IDA to give containing congestion in cities or providing employers more latitude in labor decisions. earnings stability to workers. But their cost in These states subsequently experienced higher productivity growth can be substantial. Regu- growth in output, employment, investment, lations of this kind do not sit on the efficiency and productivity in their formal manufactur- “plateau” where labor policies are mainly redis- ing sector. But six other states changed the IDA tributive; they are rather on the cliff, and have in the opposite direction, which resulted in a unambiguously negative effects on economic worsening in firm performance and an expan- efficiency. sion of the informal sector.126 Overall, the dis- India is arguably an example of a country persion of productivity in India’s manufactur- whose complex and cumbersome labor policies ing sector remained stable, or even increased, have pushed it off the “plateau.” The country has between 1987 and 1994.127 more than 40 national and state-level labor laws. Most of them apply to the organized (or formal) From bypassing regulatory obstacles . . . sector and to firms above a certain size. As firms’ employment increases, they fall under the pur- India’s response to these regulatory obstacles has view of a growing number of regulations.121 The been to learn how to live with them, and this has Industrial Disputes Act (IDA) of 1947 is particu- been achieved through widespread noncompli- larly restrictive. Governing employee-employer ance.128 For example, large firms rely on con- relationships, the IDA makes it extremely diffi- tractors, who in turn hire workers; thus total cult for firms to terminate employment.122 employment is “sliced” into smaller packages, The stringency of labor regulations is con- each escaping the most stringent labor market sistent with the “missing middle” phenomenon, regulations. Short-term contracts and tempo- characteristic of India and other developing rary employment agencies are other mecha- countries, where medium-size businesses make nisms used to circumvent the regulations. The up a disproportionately small share of the to- propensity of firms to hire contract workers has tal. Also consistent with the stringency of la- increased over time for all firms employing 10 bor regulations is the substantial dispersion of or more workers and is highest among medium- 314 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 sized firms (50–99 workers).129 A 10-year study F I G U R E 9. 8 Is there a “missing middle” in the distribution of of 1,300 firms also finds insignificant differences manufacturing firms in India? between medium and larger firms in their hir- ing of manual workers.130 The share of informal a. Including own-account firms workers in total employment in organized firms grew from 32 percent in 2000 to 52 percent in 25 2005 to 68 percent in 2010.131 Consistent with noncompliance, the distri- 20 bution of firms by size does not show substan- tial discontinuities around the threshold levels where regulations become more stringent. Con- millions of jobs, 2005 15 sidering the entire distribution, including infor- mal firms, the biggest discontinuity is between 10 firms employing up to 4 workers and those em- ploying 5 to 10 (figure 9.8a). However, there is 5 no 5-worker threshold in the applicable labor market regulations. On the other hand, there is 0 no discontinuity in the distribution when cross- 1–4 5–10 11–20 21–50 51–100 101–200 200 and more ing the 50-worker cutoff point, despite it being the threshold above which firms fall under the purview of the IDA (figure 9.8b). Admittedly, other factors could influence employment size India’s distribution of firms by size.132 But over- all, these patterns are consistent with firms by- passing labor regulations. b. Excluding own-account firms 5 . . . to actively offsetting them . . . 4 While India has learned how to live with cum- bersome regulatory obstacles, other developing countries with similar constraints have accom- millions of jobs, 2005 3 plished more efficiency-enhancing labor reallo- cation. Sri Lanka inherited the same labor regu- 2 lations from the British colonial administration as India did. Without reaching the extremes in 1 India, many Latin American countries face sim- ilar regulatory obstacles. Although China’s labor 0 regulations were less stringent until the 1990s, 1–4 5–10 11–20 21–50 51–100 101–200 200 and more its household registration (hukou) system rep- resented the ultimate obstacle to labor realloca- tion.133 Yet, all of these countries have managed to spur growth in high-productivity sectors and employment size locations. Sri Lanka gradually liberalized many of its organized markets during the 1980s and 1990s but did not non-own-account own-account reform its complicated and costly employment protection legislation. Under the Termination of Employment of Workman Act (TEWA) of Source: Hasan and Jandoc 2010. 1971, firms with 15 or more employees cannot Note: Data for the organized, or formal, sector are from the Annual Survey of Industries (ASI) conducted by lay off workers without official authorization India’s Central Statistical Organisation; data for the unorganized or informal sector are from the National Sample Survey Organisation (NSSO) Survey of Unorganized Manufacturing Enterprises. Own-account and are liable for termination payments of up manufacturing enterprises are those operating without hired workers employed on a regular basis. to four years of salary, depending on the em- Beyond labor policies 315 ployee’s length of service. Yet the country’s gar- across state borders to find employment. And ment industry was a runaway success. Replac- an estimated two-fifths to one-half of formal ing tea as the country’s major source of export sector workers change jobs every year.135 revenue, the industry now accounts for half of Nowhere is the extent of labor reallocation Sri Lanka’s sales abroad, up from almost noth- more striking than in China, and much of it ing in the 1970s. It also accounts for much of happened under the hukou system. Since its in- the increase in employment in manufactur- troduction in the 1950s, this system governed ing.134 The success of the garment industry has where people could live, effectively preventing been a magnet for rural migrants, with 45 per- rural-to-urban labor flows and reserving em- cent of them moving to the western provinces ployment in cities for their residents (box 9.5). where the garment industry is concentrated. With market-oriented reforms, the system was Restrictive labor market regulations are gradually liberalized, and many restrictions on a common feature of many Latin American internal migration were lifted. But the hukou countries too. In Brazil, after years of economic system has not been completely abolished; even reforms, hiring workers remains as burden- today it may still inhibit migrant flows and re- some as ever. If anything, the sustained increase duce the incidence of workers moving with in formalization over the past decade has made dependents. Despite this barrier to labor mobil- compliance with labor regulations more com- ity, China experienced phenomenal growth in mon. Yet, Brazil’s labor market has been char- labor-intensive manufacturing, involving mas- acterized by massive internal migration and sive internal migration from the hinterland to remarkably high labor turnover rates. Lifetime coastal areas, and from villages to towns and interstate migration is estimated to have dou- urban centers. This geographically concentrated bled between the 1980s and the 1990s, reach- development absorbed an important share of ing two-fifths of the population by 1999. In the rural surplus labor, while integrating China into 1990s, one-third of the workers who changed international value chains and making it the jobs in Brazil’s formal sector had migrated “world’s factory.”136 BOX 9.5 China’s hukou system has been partially liberalized A hukou is analogous to an internal passport. Legal residency in a the food ration scheme that was still in force. Restrictions were not city, town, or village is determined by an individual’s birth place. lifted until the mid-1990s, when reforms were well under way. By Rural and urban populations are registered separately. The hukou then, the fast growth of labor-intensive and export-oriented sectors system regulates many social entitlements of citizens, including and the dramatic surge of private sector activities in urban areas education, housing, utilities subsidies, and social protection. generated a substantial demand for low-skilled labor. Only at that Together with other policies such as urban food rationing during point was the hukou system substantially liberalized. the period under central planning the hukou system prevented The implementation of this liberalization process has been con- the rural labor force from moving out of agriculture. It maintained ducted in a decentralized way. Most medium and large cities have an exclusive urban labor market with basic social welfare, and gradually lowered the criteria for migrants to change hukou identi- supported industrial policy, effectively creating rural-urban ties, and hence their accompanying entitlements. However, the cri- segmentation. teria remain exceptionally strict in major cities and in cities with high At the beginning of the reform process, cities and towns could income levels, including Shanghai, Beijing, and Guangzhou. For afford basic social welfare only for a limited population. Inflows of example, Shanghai was the first city to make the residence permit rural workers were therefore seen as a double-edged sword that system open to all, but its qualifying conditions are among the could increase the well-being of rural residents but also lead to con- strictest. Shanghai’s system favors immigrants with college degrees gestion and overcrowded infrastructure. After reforms in urban or special talents, and those who do business or invest. It also areas were under way in the mid-1980s, and the growth of township requires seven years of social insurance contributions before apply- and village enterprises stagnated, farmers were allowed to work in ing. In addition, the city has a tight overall quota on hukou conver- small and medium cities—but only on the condition that they con- sions, and the actual number of conversions has to date been very tinued to be self-sufficient in terms of staples, in accordance with low. Sources: World Development Report 2013 team based on Cai, Du, and Meiyan 2002; Cai and Meiyan 2011; Cai, Park, and Zhao 2008; Chaudhuri and Datt 2009; and Giles, Wang, and Park 2012. 316 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 . . . through productivity spillovers ingly left to subnational governments, empha- These examples point to a successful second-best sizing the importance of regional hubs and fa- approach to offset regulatory obstacles. Instead cilitating a location-specific policy agenda built of trying to avoid or evade labor regulations, on local strengths. These efforts supported the this approach involves actively taking advantage relocation of industries toward previously less- of productivity spillovers from jobs in industrial favored regions. While local policies were largely clusters, dynamic cities, or global value chains to targeted at fostering small and medium firms, make the regulations less relevant in practice. they also attracted bigger firms and multi- In Sri Lanka, the development of export national companies. The impact on internal processing zones (EPZs) drove the takeoff of migration was significant. A 1 percent increase the garment industry. These economic enclaves in the concentration of FDI in a particular loca- offered better infrastructure and a more favor- tion was associated with a 0.2 percent increase able regulatory environment than the rest of the in the location’s immigration rate. And a 1 per- economy. As a result, they attracted large inflows cent increase in employment in export sectors of FDI and became the source of a large fraction was associated with a 0.3 percent reduction in of Sri Lanka’s exports (figure 9.9).137 Local pro- outmigration.138 ducers in these zones were able to benefit from In China, labor reallocation is rooted in the cluster effects. Outperforming competitors in development of competitive cities. The urban many other developing countries, the industry share of the population jumped from just 27 has managed to move up the value chain, trans- percent in 1990 to almost 50 percent in 2010. forming factories into design centers. In Brazil, the surge of internal migration is This transformation is unprecedented, with the closely associated with the country’s continu- urban population increasing from 170 million ing integration into the global economy and a in 1978 to 456 million in 2000 and 665 million development policy that favors agglomeration today. The increase was supported through a effects. In the 1990s, Brazil implemented major phenomenal expansion of commercial power trade liberalization measures, gradually relaxed supply, urban infrastructure, highways, and restrictions on FDI, and devalued its currency. ports. In 1988, China had barely 100 kilometers In this context, development policy was increas- of expressways; 10 years later, the total length F I G U R E 9. 9 Export processing zones were a driver of foreign direct investment in Sri Lanka 80 70 60 50 percent 40 30 20 10 0 Sri Lanka Philippines Malaysia China Indonesia Korea, Rep. EPZ share of total FDI EPZ share of total exports EPZ share of manufacturing exports Source: Jayanthakumaran 2003. Note: EPZ = Export Processing Zone; FDI = foreign direct investment. The figure summarizes EPZ activities during the 1980s. Beyond labor policies 317 F I G U R E 9.10 Restrictions to hukou conversion increase with city size and income a. Population b. GDP per capita 1.0 1.0 threshold for hukou conversion, index threshold for hukou conversion, index 0.8 0.8 0.6 0.6 0.4 0.4 0.2 0.2 0 0 3 4 5 6 9 10 11 population, millions GDP per capita, thousand yuan per year Source: Wang, Song, and O’Keefe 2012 for the World Development Report 2013. Note: GDP = gross domestic product. The index measuring the threshold for hukou conversion takes into account requirements on investment, employment and family reunion. Each dot represents one of 120 cities in 30 provinces. was second to the United States; and by 2009, cordingly, the criteria for changing hukou iden- more than 60,000 kilometers were in use.139 tities in these cities are generally defined by Regional competition and experimentation skills, investments, income, and residence re- in part underpin these successes. In China, lo- quirements. The numbers of migrants meeting cal governments have substantial autonomy to these criteria have been small.143 raise fiscal and nonfiscal resources. They thus Back to India, then, where the slow pace of have considerable scope to take responsibility urbanization is even more striking than the for local development. The Chinese Commu- rigidity of its labor regulations. In 1990, the nist Party also rewards local officials based on share of India’s population living in cities was local performance, prompting them to actively the same as China’s: 27 percent. Two decades engage in economic competition.140 later, it had grown only to 30 percent.144 The This decentralized institutional setting al- functionality of the cities also poses severe lowed cities in China to experiment with re- challenges. For instance, large swaths of Delhi forms to the hukou system as a tool for urban- or Mumbai have access to no more than four ization. It has been argued that a large fraction to five hours of water supply a day. Energy of cities in China are too small because of it.141 shortfalls have increased in recent years and are But the decentralized implementation of the perceived as the top constraint for doing busi- system allowed major globalizing cities to use ness. A company can expect 17 power shut- the hukou system as a screening tool to select downs a month. The cost imposed on firms more skilled migrants and enhance the produc- by the power problem is among the highest in tivity spillovers from jobs. Most medium and the world.145 Judging from the experiences of large cities have gradually eased the criteria for Brazil, China, and Sri Lanka, and after 60 years migrants to change hukou identities. However, of partial success in making labor regulations bigger and richer globalizing cities have em- more flexible, the key for India to accelerate braced a more skill-intensive pattern of growth, labor reallocation and thereby realize its devel- putting more weight on productivity growth opment potential may lie in its urbanization than on poverty reduction (figure 9.10).142 Ac- policy. © Sebastião Salgado / Amazonas—Press Images Worker at a construction site in Jakarta, Indonesia Beyond labor policies 319 Notes 31. O’Connor and others 2000. 32. Cunha, Heckman, and Schennach 2010; Hei- 1. Commission on Growth and Development neck and Anger 2010. 2008, 53. 33. Data from Education Statistics (Edstats), World 2. Ball, Leigh, and Loungani, forthcoming. Bank, Washington, DC. http://web.worldbank 3. Bosch and Maloney 2010; Fiess, Fugazza, and .org/WBSITE/EXTERNAL/TOPICS/EXTED Maloney 2010. UCATION/EXTDATASTATISTICS/EXTEDST 4. World Bank 2012b, various issues. ATS/0,,menuPK:3232818~pagePK:64168427~ 5. Commission on Growth and Development piPK:64168435~theSitePK:3232764,00.html 2008. 34. Gove and Cvelich 2010. 6. Kraay 2012. 35. IMF 2003; Rodrik 2000. 7. Frankel 2012. 36. World Bank 1997; World Bank 2004b; World 8. World Bank 2012a. Bank 2011h. 37. Keefer 2009; North 1981, 1990. 9. Elbadawi, Kaltani, and Soto 2009. 38. Acemoglu, Johnson, and Robinson 2001; North 10. Options to cope with the abundance of foreign 1990; Rodrik, Subramanian, and Trebbi 2004. exchange earnings include creating profession- 39. World Bank 2004b. ally managed sovereign funds to smooth the 40. World Bank 2011h. impact of surges in earnings, adopting coun- 41. World Bank 2004b. tercyclical fiscal policy to stabilize aggregate 42. World Bank 2012e. demand, and targeting monetary policy on a 43. World Bank 2004b. rate of inflation more directly influenced by the 44. Laeven and Woodruff 2007. abundance of foreign exchange than the change 45. ILO 1998. in the consumer price index. Arezki, Sy, and 46. World Bank 2012c. Gylfason 2012. 47. Chen and others 2012 for the World Develop- 11. Rodrik 2008. ment Report 2013. 12. IFC, forthcoming. 48. Locke, Amengual, and Mangla 2009. 13. King and Levine 1993; Levine 2005. 49. Purcell 2010. 14. Dinkelman 2011. 50. World Bank 2010b. Note that this unit cost is 15. IFC, forthcoming. the aggregate cost of the Multi-Country Demo- 16. Foster and Briceño-Garmendia 2010. bilization and Reintegration Program, includ- 17. Foster and Briceño-Garmendia 2010. ing all forms of reintegration support, not only 18. World Bank (2011a) measures 11 areas of busi- employment. ness regulations across 183 economies. 51. Glewwe 2004. 19. Hallward-Driemeier, Khun-Jush, and Pritchett 52. Ravallion and van de Walle 2008. 2010. 53. Rama 2009. 20. Ramachandran, Gelb, and Shah 2009; World 54. World Bank 2012f. Bank 2009a. 55. World Bank 2009b; World Bank 2011e. 21. Klapper, Laeven, and Rajan 2006. 56. Up to 800,000 lives were lost from civil war and 22. Bruhn 2008. genocide. About 3.8 million people were dis- 23. IFC, forthcoming. placed, of whom about 2 million fled to refu- 24. Commission on Growth and Development gee camps in the Democratic Republic of the 2008, 37. Congo and Tanzania. World Bank 2007. 25. Montenegro and Patrinos 2012 for the World 57. World Bank 2007. Development Report 2013; Psacharopoulos and 58. World Bank 2012d. Patrinos 2004. 59. World Bank 2011h. 26. See, for example, Hanushek and Woessmann 60. MDRP 2008. (2008) on the productivity link. Structural 61. The exception was female ex-combatants, who change and poverty links are explored in Lee had unemployment rates higher than the rest of and Newhouse (2012) for the World Develop- the population. Consia Consultants 2007; Stav- ment Report 2013. rou, Jorgensen, and O’Riordan 2007; MDRP 27. Bloom and Canning 2008. 2010; Mehreteab 2005. 28. Kim, Tandon, and Hailu 1997. 62. Rwanda Demobilization and Reintegration 29. Engle and others 2007; Grantham-McGregor Commission 2012. and others 2007; Heckman 2008; Walker and 63. Rwanda was named a top reformer in 2010 by others 2007; Young and Richardson 2007. Doing Business (http://www.doing business.org/ 30. Engle and others 2007. reforms/top-reformers-2010/). 320 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 64. Dudwick and Srinivasan, forthcoming; World 88. Adler and Hwang 2012 for the World Develop- Bank 2011h. ment Report 2013. 65. World Bank 2011d. 89. Berik and Rodger 2010; Polaski 2006. 66. A study of farmers and workers in coffee en- 90. Levi and others 2012 for the World Develop- terprises found that interactions through these ment Report 2013; Newitt 2012 for the World jobs were associated with improved attitudes Development Report 2013. toward interethnic collaboration as well as less 91. Examples of multistakeholder initiatives in- distrust and positive views about reconciliation. clude the U.K.-based Ethical Trading Initiative, Tobias and Boudreaux 2011. http://www.ethicaltrade.org/; the U.S.-based 67. United States Geological Survey, http:// Fair Labor Association, http://www.fairlabor minerals.usgs.gov/minerals/pubs/commodity/ .org/; and Social Accountability International, copper/mcs-2012-coppe.pdf; UNCTAD Statis- http://www.sa-intl.org/. tics, http://unctadstat.unctad.org/. 92. Levi and others 2012 for the World Develop- 68. BADECEL (database), Economic Commis- ment Report 2013; Newitt 2012 for the WDR sion for Latin America, Santiago, http://websie 2013; UNCTAD 2011. .eclac.cl/badecel/badecel_new/index.html. 93. Newitt 2012 for the World Development Report 69. World Bank 2012f. 2013. 94. These include the Wine Industry Ethical Trade 70. Sinnott, Nash, and de la Torre 2010. At the out- Association in South Africa, http://wieta.org.za set of the international financial crisis, Chile’s .www34.cpt3.host-h.net/; and Fibre Citoyenne, stabilization fund accounted for US$20 billion a multistakeholder initiative in the Moroccan (or 12 percent of GDP) in 2008, permitting the garment sector, http://www.fibrecitoyenne.org/. country to finance a substantial countercyclical 95. Barrientos and Smith 2007. expansion of expenditures. 96. Locke, forthcoming; Locke, Quin, and Brause 71. Sinnott, Nash, and De la Torre 2010. After the 2007. Asian financial crisis of 1997, the government 97. Maranhao Costa and Trindade 2009. adopted a free floating exchange rate policy and 98. See “Better Work,” International Finance Cor- introduced instruments to mitigate exchange poration, Washington, DC; International La- rate risk. World Bank 2006. bour Organization, Geneva, http://www.better 72. Worldwide Governance Indicators. See Kauf- work.org/EN/Pages/newhome.aspx. mann, Kraay, and Mastruzzi 2010. 99. Laborde and Martin 2011a; Laborde and Mar- 73. Consejo Nacional de Innovación 2008; World tin 2011b. Bank 2008. 100. Hoekman 2011. 74. World Bank 2011f. 101. François and Hoekman 2010; Hoekman and 75. World Bank 2006. Mattoo 2011. 76. OECD Scoreboard for Youth, http://www.oecd 102. Hoekman and Mattoo 2011. .org/document/31/0,3746,en_2649_ 103. Fink, Mattoo, and Rathindran 2003; François 37457_46328479_1_1_1_37457,00.html. and Hoekman 2010. 77. OECD 2010. 104. Roy 2008. 78. OECD 2010. 105. Bertrand and Kramarz 2002; Wrigley and Lowe 79. EU Press Release, http://www.eu-skladi.si/ 2010. information-and-publicity/news-on-cohesion- 106. Hoekman and Mattoo 2011. 107. Randriamaro 2007. policy-implementation/latest-news/barroso- 108. World Bank 2011g. slovenia-example-of-best-practice-in-youth- 109. See World Trade Organization, “Movement employment#c1=News%20Item&c1=novica. of National Pensions,” http://www.wto.org/ 80. OECD 2009. english/tratop_e/serv_e/mouvement_persons_ 81. OECD 2011. e/mouvement_persons_e.htm. 82. ILO 1996; ILO 2011. 110. Solimano 2008. 83. Chau and Kanbur (2001) find evidence of a 111. See, for instance, Winters and others (2002) and peer effect whereby ratification depends on the World Bank (2005). number of similar countries that have already 112. See, for instance, EFRA (2011), and Angenendt ratified the convention. (2012). 84. Aaronson and Zimmerman 2008; Elliott and 113. Regional agreements also exist, for example, for Freeman 2003. the European Union’s Schengen area. 85. Hafner-Burton 2009. 114. For a discussion on these issues, see Pritchett 86. Mosley 2011. (2006). 87. Schrank 2009. 115. Kanbur and Svejnar 2009. Beyond labor policies 321 116. Around the world, 65 countries produce impose central control over entry and produc- monthly or quarterly labor force surveys, tion in the organized manufacturing sector. whereas 116 produce annual surveys. 126. Ahsan and Pagés 2009; Besley and Burgess 117. The four indicators are GDP per employed per- 2004. Also see Bhattacharjea (2006) for con- son (a measure of productivity), the employment- cerns about the evidence presented by Besley to-population rate, the proportion of the em- and Burgess (2004) because of the interpreta- ployed population living on less than US$1.25 tion and enforcement of the amendments to the per day (the so-called working poor), and the IDA of 1947. proportion of own-account and unremuner- 127. Hsieh and Klenow 2009. ated workers in employed population (also 128. Bhattacharjea 2006. called vulnerable workers). United Nations De- 129. Hasan and Jandoc 2012. velopment Group 2010. 130. Deshpande and others 2004. 118. International standards on labor statistics are of 131. Preliminary estimates by Santosh Mehrotra two types: those outlined in Conventions and (Planning Commission of India). Recommendations adopted by the ILO Interna- 132. Hasan and Jandoc 2012. tional Labour Conference, and the Resolutions 133. Several labor laws have been enacted in China and Guidelines adopted by the International since 2000, including a revision to the Trade Conference of Labour Statisticians (ICLS). The Union Law in 2001; the Labor Contract Law, first type of standards is part of the interna- the Employment Promotion Law, and the La- tional labor code and is legally binding in rati- bor Dispute Mediation and Arbitration Law in fying countries, whereas standards adopted by 2008; and the Social Insurance Law in 2011. The the ICLS are intended to provide guidance to implementation of these regulations may lead countries, promote international comparabil- to lower flexibility in the labor market. ity of labor statistics, and encourage coherence 134. World Bank 2004a. in concepts and methods across sources and 135. More interesting, the migration flows of for- domains. mal sector workers were directed toward un- 119. ILO 2012. conventional destinations: a few states in Bra- 120. Bartelsman, Haltiwanger, and Scarpetta 2011; zil’s Center-West, North, and Northeast. These Hsieh and Klenow 2009, 2011; McMillan and flows contradict the assertion that the typical Rodrik 2011; McMillan and Verduzco for the migrant flow runs from the low-income North World Development Report 2013; Pagés 2010. to the higher-income South. Aguayo-Tellez, 121. For example, once employment in a firm using Muendler, and Poole 2010. power reaches 10 workers (20 for firms that do 136. World Bank 2009c; Lin 2012. not use power), the firm enters the organized 137. Jayanthakumaran 2003. sector and becomes subject to the Factories Act 138. Aguayo-Tellez, Muendler, and Poole 2010; of 1948. Once it reaches 50 workers, it is subject Amaral-Filho 2003; Lastres, Cassiolato, and to the IDA of 1947 and must offer mandatory Campos 2006. health insurance under the Employee State In- 139. Bardhan 2010. surance Act of 1948. Once it reaches 100 work- 140. Bardhan 2010 ers, it effectively loses the rights to terminate 141. Au and Henderson 2006. workers. 142. Wang, Song, and O’Keefe 2012 for the World 122. Panagariya 2008. Development Report 2013. 123. Hsieh and Klenow 2009. 143. Cai 2011; Cai, Du, and Meiyan 2002; Cai, Park, 124. Panagariya 2008. The entire decline in the and Zhao 2008; Chaudhuri and Datt 2009; share of agriculture since 1990–91 has been Giles, Wang, and Park 2012. absorbed by services. Agriculture as a share of 144. World Bank 2012f. GDP fell from 46 percent in 1970–71 to 27 per- 145. Bardhan 2010; World Bank 2011c. cent in 1990–91 and to 21 percent in 2004–05; industry’s share of GDP rose from 22 percent in 1970–71 to 27 percent in 1990–91 and re- References mained at the same level through 2004–05; the share of manufacturing, consequently, rose The word processed describes informally reproduced from 13 percent in 1970–71 to 17 percent in works that may not be commonly available through 1990–91 through 2004–05. libraries. 125. The reforms focus on the liberalization of trade and foreign investment and the dismantling of Aaronson, Susan, and Jamie Zimmerman. 2008. the License Raj system introduced in 1951 to Trade Imbalance: The Struggle to Weigh Human 322 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Rights Concerns in Trade Policymaking. New York: tivity: The Role of Allocation and Selection.” Uni- Cambridge University Press. versity of Maryland, College Park, MD. Processed. Acemoglu, Daron, Simon Johnson, and James A. Rob- Berik, Gunseli, and Yana van der Meulen Rodger. inson. 2001. “The Colonial Origins of Compara- 2010. “Options for Enforcing Labour Standards: tive Development: An Empirical Investigation.” Lessons from Bangladesh and Cambodia.” Journal American Economic Review 91 (5): 1369–401. of International Development 22 (1): 56–85. Adler, Daniel, and Hans Hwang. 2012. “From Law on Bertrand, Marianne, and Francis Kramarz. 2002. the Books to Law in Action: A Note on the Role “Does Entry Regulation Hinder Job Creation? Ev- of Regulation in the Production of Good Jobs in idence from the French Retail Industry.” Quarterly Cambodia’s Garment Sector.” Background paper Journal of Economics 117 (4): 1369–413. for the WDR 2013. Besley, Timothy, and Robin Burgess. 2004. “Can La- Aguayo-Tellez, Ernesto, Marc-Andres Muendler, and bor Regulation Hinder Economic Performance? Jennifer P. Poole. 2010. “Globalization and Formal Evidence from India.” Quarterly Journal of Eco- Sector Migration in Brazil.” World Development 38 nomics 119 (1): 91–134. (6): 840–56. Bhattacharjea, Aditya. 2006. “Labour Market Regula- Ahsan, Ahmad, and Carmen Pagés. 2009. “Are All tion and Industrial Performance in India.” Work- Labor Regulations Equal? Evidence from Indian ing Papers 141, Centre for Development Econom- Manufacturing.” Journal of Comparative Econom- ics, Delhi School of Economics, New Delhi. ics 37 (1): 62–75. Bloom, David E., and David Canning. 2008. “Popu- Amador, Diego, Raquel Bermal, and Ximena Peña. lation Health and Economic Growth.” Working 2011. “The Rise in Female Participation in Co- Paper 24, Commission on Growth and Develop- lombia: Fertility, Mental Status, or Education?” ment. Washington DC. Background Paper for the World Development Borchert, Ingo, Batshur Gootiiz, and Aaditya Mattoo. Report 2012. 2010. “Restrictions on Services Trade and FDI in Amaral-Filho, Jair. 2003. “Ajustes Estruturais, No- Developing Countries.” World Bank, Washington, vas Formas de Intervencao Publica e Regime de DC. Processed. Crescimento, Economico no Ceara.” In Regiões e Bosch, Mariano, and William Maloney. 2010. “Com- Cidades, Cidades nas Regiões: O Desafio Urbano- parative Analysis of Labor Market Dynamics Us- Regional, ed. Maria Flora Gonçalves, Carlos An- ing Markov Processes: An Application to Infor- tônio Brandão, and Antônio Carlos Galvão, 367– mality.” Labour Economics 17 (4): 621–32. 85. São Paolo: Universidade Estadual Paulist. Bruhn, Miriam. 2008. “License to Sell: The Effect of Angenendt, Steffen. 2012. “Migration and Social In- Business Registration Reform on Entrepreneur- clusion—Looking through the Good Jobs Lens.” ial Activity in Mexico.” Policy Research Working In Moving Jobs to Center Stage. Berlin: BMZ (Bun- desministerium fuer Wirtschaftliche Zussamenar- Paper Series 4538, World Bank, Washington, DC. beit), Berlin Workshop Series. Cai, Fang. 2011. “Hukou System Reform and Unifi- Arezki, Rabah, Amadou Sy, and Thorvaldur Gylfa- cation of Rural-Urban Social Welfare.” China and son. 2012. Beyond the Curse: Policies to Harness World Economy 19 (3): 33–48. the Power of Natural Resources. Washington, DC: Cai, Fang, Yang Du, and Wang Meiyan. 2002. “What International Monetary Fund. Determine Hukou System Reform? A Case of Bei- Au, Chun Chung, and J. Vernon Henderson. 2006. jing.” Working Paper Series 15, Chinese Academy “Are Chinese Cities Too Small?” Review of Eco- of Social Sciences, Beijing. nomic Studies 73 (3): 549–76. Cai, Fang, and Wang Meiyan. 2011. “Labor Market Ball, Laurence, Daniel Leigh, and Prakash Loungani. Changes, Labor Disputes and Social Cohesion in Forthcoming. “Okun’s Law: Fit at 50?” Working China.” Working Paper Series 307, Organisation Paper, International Monetary Fund, Washing- for Economic Co-operation and Development, ton, DC. Paris. Bardhan, Pranab K. 2010. Awakening Giants, Feet of Cai, Fang, Albert Park, and Yaohui Zhao. 2008. “The Clay: Assessing the Economic Rise of China and In- Chinese Labor Market in the Reform Era.” In dia. Princeton, NJ: Princeton University Press. China’s Great Economic Transformation, ed. Lo- Barrientos, Stephanie, and Sally Smith. 2007. “Do ren Brandt and Thomas G. Rawski, 167–214. New Workers Benefit from Ethical Trade? Assessing York: Cambridge University Press. Codes of Labour Practice in Global Production Chau, Nancy H., and Ravi Kanbur. 2001. “The Adop- Systems.” Third World Quarterly 28 (4): 713–29. tion of International Labor Standards Conven- Bartelsman, Eric, John Haltiwanger, and Stefano Scar- tions: Who, When and Why?” In Brookings Trade petta. 2011. “Cross-Country Differences in Produc- Forum: 2001, ed. Nancy H. Chau, Ravi Kanbur, Beyond labor policies 323 Ann E. Harrison, and Peter Morici, 113–56. Wash- piriri, Reynaldo Martorell, Mary Eming Young, ington, DC: Brookings Institution. and the International Child Development Steer- Chaudhuri, Shubham, and Gaurav Datt. 2009. From ing Group. 2007. “Strategies to Avoid the Loss Poor Areas to Poor People: China’s Evolving Poverty of Developmental Potential in More Than 200 Agenda, An Assessment of Poverty and Inequality in Million Children in the Developing World.” Lan- China. Washington, DC: World Bank. cet 369: 229–42. Chen, Martha, Chris Bonner, Mahendra Chetty, Fajnzylber, Pablo, William Maloney, and Gabriel V. Lucia Fernandez, Karin Pape, Federico Parra, Montes-Rojas. 2011. “Does Formality Improve Arbind Singh, and Caroline Skinner. 2012. “Ur- Micro-Firm Performance? Evidence from the Bra- ban Informal Workers: Representative Voice and zilian SIMPLES Program.” Journal of Development Economic Rights.” Background paper for the Economics 94: 262–76. WDR 2013. Fiess, Norbert, Marco Fugazza, and William Maloney. Chioda, Laura. 2012. Work and Family: Latin Ameri- 2010. “Informal Self-Employment and Macroeco- can and Caribbean Women in Search of a New Bal- nomic Fluctuations.” Journal of Development Eco- ance. Washington, DC: World Bank. nomics 91 (2): 211–26. Commission on Growth and Development. 2008. The Fink, Carsten, Aaditya Mattoo, and Randeep Rathin- Growth Commission Report: Strategies for Sustained dran. 2003. “An Assessment of Telecommunica- Growth and Inclusive Development. Washington, tions Reform in Developing Countries.” Informa- DC: Commission on Growth and Development. tion Economics and Policy 15 (4): 443–66. Consejo Nacional de Innovación. 2008. Hacia una Es- Foster, Vivien, and Cecilia Briceño-Garmendia, eds. trategia Nacional de Innovación para la Competitiv- 2010. Africa’s Infrastructure: A Time for Transfor- idad. Santiago: Consejo Nacional de Innovación. mation. Washington, DC: World Bank. Consia Consultants. 2007. Second External Annual In- François, Joseph F., and Bernard Hoekman. 2010. dependent Evaluation of the Rwanda Demobiliza- “Services Trade and Policy.” Journal of Economic tion and Reintegration Program (RDRP). Copen- Literature 48 (3): 642–92. hagen: Consia Consultants. Frankel, Jeffrey. 2012. “The Natural Resource Curse: Cunha, Flavio, James J. Heckman, and Susanne A Survey of Diagnoses and Some Prescriptions.” Schennach. 2010. “Estimating the Technology of Paper presented at the International Monetary Cognitive and Noncognitive Skill Formation.” Fund High-Level Seminar, “Commodity Price Econometrica 78 (3): 883–931. Volatility and Inclusive Growth in Low-Income Deshpande, Lalit K., Alakh N. Sharma, Anup K. Karan, Countries,” Washington, DC, September 21. and Sandip Sarkar. 2004. Liberalisation and La- Gibson, John, David McKenzie, and Halahingano bour: Labour Flexibility in Indian Manufacturing. Rohorua. 2008. “How Pro-Poor Is the Selection New Delhi: Manohar Publishers and Distributors. of Seasonal Migrant Workers from Tonga under Dinkelman, Taryn. 2011. “The Effects of Rural Elec- New Zealand’s Recognized Seasonal Employer trification on Employment: New Evidence from Program.” Policy Research Working Paper Series South Africa.” American Economic Review 101 (7): 4698, World Bank, Washington, DC. 3078–108. Giles, John, Dewen Wang, and Albert Park. 2012. Dudwick, Nora, and Radhika Srinivasan, with Jose “Expanding Social Insurance Coverage in Urban Cueva and Dorsati Mandavi. Forthcoming. Creat- China: Understanding the Evolutions of Policy ing Jobs in Africa’s Fragile States: Are Value Chains and Participation.” World Bank, Washington, DC. an Answer? Directions in Development Series. Processed. Washington, DC: World Bank. Glewwe, Paul W. 2004. “An Overview of Economic EFRA (European Union Agency for Fundamental Growth and Household Welfare in Vietnam Rights). 2011. Fundamental Rights of Migrants in an 1990s.” In Economic Growth, Poverty and House- Irregular Situation in the European Union. Luxem- hold Welfare in Vietnam, ed. Paul Glewwe, Nisha bourg: Publications Office of the European Union. Agarwal, and David Dollar, 1–26. Washington, Elbadawi, Ibrahim, Linda Kaltani, and Raimundo DC: World Bank. Soto. 2009. Aid, Real Exchange Rate Misalignment Grantham-McGregor, Sally, Yin Bun Cheung, San- and Economic Performance in Sub-Saharan Africa. tiago Cueto, Paul Glewwe, Linda Richter, Barbara Santiago: Universidad Católica de Chile. Strupp, and the International Child Development Elliott, Kimberly A., and Richard B. Freeman. 2003. Steering Group. 2007. “Development Potential in Can Labor Standards Improve under Globalization? the First 5 Years for Children in Developing Coun- Washington, DC: Peterson Institute, Institute for tries.” Lancet 369: 60–70. International Economics. Gove, Amber, and Peter Cvelich. 2010. Early Reading: Engle, Patrice L., Maureen M. Black, Jere R. Behrman, Igniting Education for All. Research Triangle Park, Meena Cabral de Mello, Paul J. Gertler, Lydia Ka- NC: Research Triangle Institute. 324 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Hafner-Burton, Emilie. 2009. Forced to be Good: Why ———. 2011. C189 Domestic Workers Convention. Trade Agreements Boost Human Rights. Ithaca, NY: Adopted by the International Labour Conference Cornell University Press. at its 100th session, ILO, Geneva, June 16. Hallward-Driemeier, Mary, Gita Khun-Jush, and Lant ———. 2012. “What Are the Key Challenges Facing Pritchett. 2010. “Deals Versus Rules: Policy Imple- Labour Statistics Today?” ILO, Geneva. Processed. mentation Uncertainty and Why Firms Hate It.” IMF (International Monetary Fund). 2003. “Growth Working Paper Series 16001, National Bureau of and Institutions.” In World Economic Outlook: Economic Research, Cambridge, MA. April 2003; Growth and Institutions, 95–128. Hanushek, Eric A., and Ludger Woessmann. 2008. Washington, DC: IMF. “The Role of Cognitive Skills in Economic De- Jayanthakumaran, Kankesu. 2003. “Benefit-Cost Ap- velopment.” Journal of Economic Literature 46 (3): praisals of Export Processing Zones: A Survey of 607–88. the Literature.” Development Policy Review 21 (1): Hasan, Rana, and Karl Jandoc. 2010. “The Distribu- 51–65. tion of Firm Size in India: What Can Survey Data Kanbur, Ravi and Jan Svejnar. 2009. “Overview.” In Tell Us?” Working Paper Series 213, Asian Devel- Labor Markets and Economic Development, ed. opment Bank, Manila. Ravi Kanbur and Jan Svejnar, 1–12. New York: ———. 2012. “Labor Regulations and the Firm Size Routledge. Distribution in Indian Manufacturing.” In Re- Kaufmann, Daniel, Aart Kraay, and Massimo Mas- forms and Economic Transformation in India, ed. truzzi. 2010. “The Worldwide Governance Indica- Jagdish Bhagwati and Arvind Panagariya. New tors: Methodology and Analytical Issues.” Policy York: Oxford University Press. Research Working Paper Series 5430, World Bank, Heckman, James J. 2008. “The Case for Investing in Washington, DC. Disadvantaged Young Children.” In Big Ideas for Keefer, Philip. 2009. “Governance.” In The SAGE Children: Investing in Our Nation’s Future, 49–58. Handbook of Comparative Politics, ed. Todd Land- Washington, DC: First Focus. man and Neil Robinson, 439–62. London: SAGE Heineck, Guido, and Silke Anger. 2010. “The Returns Publications. to Cognitive Abilities and Personality Traits in Kim, Aehyung, Ajay Tandon, and Asrat Hailu. 1997. Germany.” Labour Economics 17 (3): 535–46. “Health and Labor Productivity: The Economic Hoekman, Bernard. 2011. “Aid for Trade: Why, What, Impact of Onchocercal Skin Disease.” Policy Re- and Where Are We?” In Unfinished Business? The search Working Paper Series 1836, World Bank, WTO’s Doha Agenda, ed. Will Martin and Aad- Washington, DC. itya Mattoo, 233–54. London: London Publishing King, Robert, and Ross Levine. 1993. “Finance and Partnership. Growth: Schumpeter Might Be Right.” Quarterly Hoekman, Bernard, and Aaditya Mattoo. 2011. “Ser- Journal of Economics 108 (3): 717–37. vices Trade Liberalization and Regulatory Reform: Klapper, Leora, Luc Laeven, and Raghuram Rajan. Re-invigorating International Cooperation.” Pol- 2006. “Entry Regulation as a Barrier to Entrepre- icy Research Working Paper Series 5517, World neurship.” Journal of Financial Economics 82 (3): Bank, Washington, DC. 591–629. Hsieh, Chang-Tai, and Peter J. Klenow. 2009. “Misal- Kraay, Aart. 2012. “How Large Is the Government location and Manufacturing TFP in China and Spending Multiplier? Evidence from World Bank India.” Quarterly Journal of Economics 124 (4): Lending.” Quarterly Journal of Economics 127 (2): 1403–48. 1–59. ———. 2011. “The Life Cycle of Plants in India Laborde, David, and Will Martin. 2011a. “Agricultural and Mexico.” Chicago Booth Research Paper Se- Market Access.” In Unfinished Business? The WTO’s ries 11-33, University of Chicago, IL. Doha Agenda, ed. Will Martin and Aaditya Mattoo, IFC (International Finance Corporation). Forthcom- 35–54. London: London Publishing Partnership. ing. IFC Job Study: Assessing Private Sector Contri- ———. 2011b. “Non-agricultural Market Access.” In butions to Job Creation. Washington, DC: IFC. Unfinished Business? The WTO’s Doha Agenda, ed. ILO (International Labour Organization). 1996. Will Martin and Aaditya Mattoo, 55–68. London: C177 Home Work Convention (Entry into force: London Publishing Partnership. 22 April 2000). Adopted by the International La- Laeven, Luc, and Christopher Woodruff. 2007. “The bour Conference at its 83rd session, ILO, Geneva, Quality of the Legal System, Firm Ownership, and June 20. Firm Size.” Review of Economics and Statistics 89 ———. 1998. Declaration on Fundamental Princi- (4): 601–14. ples and Rights at Work. Adopted by the Interna- Lastres, Helena M. M., Cassiolato Jose E., and Renato tional Labour Conference at its 86th session, ILO, Campos. 2006. “Arranjos e Sistemas Produtivos e Geneva, June 18. Inovativos Locais: Vantagens e Enfoque.” In Es- Beyond labor policies 325 trategias para o Desenvolvimento: Um Enfoque so- Newitt, Kirsten. 2012. “Private Sector Voluntary Ini- bre Arranjos Produtivos Locais do Norte, Nodeste e tiatives on Labour Standards.” Background paper Centro-Oeste Brasileiro, ed. Helena M. M. Lastres for the WDR 2013. and Jose E. Cassiolato, 13–28. Rio de Janeiro: In- North, Douglass C. 1981. Structure and Change in stituto de Economia da Universidade Federal do Economic History. New York: W. W. Norton. Rio de Janeiro. ———. 1990. Institutions, Institutional Change and Lee, Jean, and David Newhouse. 2012. “Cognitive Economic Performance. Cambridge, U.K.: Cam- Skills and Labor Market Outcomes.” Background bridge University Press. paper for the WDR 2013. O’Connor, Thomas, Michael Rutter, Celia Beckett, Levi, Margaret, Christopher Adolph, Aaron Erlich, Lisa Keaveney, Jana Kreppner, and the English Anne Greenleaf, Milli Lake, and Jennifer Noveck. and Romanian Adoptees Study Team. 2000. “The 2012. “Aligning Rights and Interests: Why, When, Effects of Global Severe Privation on Cognitive and How to Uphold Labor Standards.” Back- Competence: Extension and Longitudinal Follow- ground paper for the WDR 2013. up.” Child Development 71 (2): 376–90. Levine, Ross. 2005. “Finance and Growth: Theory and OECD (Organisation for Economic Co-operation Evidence.” In Handbook of Economic Growth, ed. and Development). 2009. OECD Reviews of La- Philippe Aghion and Steven Durlauf, 865–934. bour Market and Social Policies: Slovenia. Paris: Amsterdam: Elsevier. OECD. Lin, Justin Yifu. 2012. Demystifying the Chinese Econ- ———. 2010. Off to a Good Start? Jobs for Youth. omy. Cambridge, U.K.: Cambridge University Paris: OECD. Press. ———. 2011. OECD Economic Surveys: Slovenia. Locke, Richard. Forthcoming. Beyond Compliance: Paris: OECD. Promoting Labor Justice in a Global Economy. New OECD and ILO (International Labour Organiza- York: Cambridge University Press. tion). 2011. G20 Country Policy Briefs: Brazil— Locke, Richard, Matthew Amengual, and Ashkay Share of Formal Employment Continues to Grow. Mangla. 2009. “Virtue out of Necessity? Compli- Paris: OECD and ILO. ance, Commitment and the Improvement of La- Pagés, Carmen, ed. 2010. The Age of Productivity: bor Conditions in Global Supply Chains.” Politics Transforming Economies from the Bottom Up. New & Society 37 (3): 319–51. York: Palgrave Macmillan. Locke, Richard, Fei Quin, and Alberto Brause. 2007. Panagariya, Arvind. 2008. India: The Emerging Giant. “Does Monitoring Improve Labor Standards? New York: Oxford University Press. Lessons from Nike.” Industrial and Labor Relations Park, Jaegil, Daejong Kim, Yongseok Ko, Eunnan Kim, Review 61 (1): 3–31. Keunhyun Park, and Keuntae Kim. 2011. Urban- Maranhao Costa, Patricia Trindade. 2009. Fighting ization and Urban Policies in Korea. Korea Re- Forced Labour: The Example of Brazil. Geneva: search Institute for Human Settlements. International Labour Organization. Polaski, Sandra. 2006. “Combining Global and Local McMillan, Margaret S., and Dani Rodrik. 2011. “Glo- Forces: The Case of Labor Rights in Cambodia.” balization, Structural Change and Productivity World Development 34 (5): 919–32. Growth.” Working Paper Series 17143, National Pritchett, Lant. 2006. Let Their People Come: Breaking Bureau of Economic Research, Cambridge, MA. the Gridlock on Global Labor Mobility. Washing- MDRP (Multi-Country Demobilization and Reinte- ton, DC: Center for Global Development. gration Program). 2008. The Rwanda Demobiliza- Psacharopoulos, George, and Harry Patrinos. 2004. tion and Reintegration Program: Reflections on the “Returns to Investment in Education: A Further Reintegration of Ex-Combatants. Washington, DC: Update.” Education Economics 12 (2): 111–34. MDRP. Purcell, Julius. 2010. Individual Disputes at the Work- ———. 2010. Final Report Overview of Program place: Alternative Disputes Resolution. Dublin: Achievements. Washington, DC: MDRP. European Foundation for the Improvement of Mehreteab, Amanuel. 2005. Rwanda Demobiliza- Living and Working Conditions. tion and Reintegration Program: Tracer Study. Ki- Rama, Martín. 2009. “Making Difficult Choices: gali: Rwanda Demobilization and Reintegration Vietnam in Transition.” Working Paper Series 40, Commission. Growth and Development Commission, World Montenegro, Claudio E. and Harry Anthony Patrinos. Bank, Washington, DC. 2012. “Returns to Schooling around the World.” Ramachandran, Vijaya, Alan Gelb, and Manju Kedia Background paper for the WDR 2013. Shah. 2009. Africa’s Private Sector: What’s Wrong Mosley, Layna. 2011. Labor Rights and Multinational with the Business Environment and What to Do Production. New York: Cambridge University About It. Washington, DC: Center for Global Press. Development. 326 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Randriamaro, Zo. 2007. Gender and Trade: Overview UNCTAD (United Nations Conference on Trade and Report (2006). Brighton, U.K.: BRIDGE. Development). 2011. World Investment Report Ravallion, Martin, and Dominique van de Walle. 2011: Non-Equity Modes of International Produc- 2008. Land in Transition: Reform and Poverty in tion and Development. New York and Geneva: Rural Vietnam. Washington, DC: World Bank. UNCTAD. Robertson, Raymond, Drusilla Brown, Gaëlle La United Nations Development Group. 2010. Thematic Borgne Pierre, and Maria Laura Sanchez-Puerta, Paper on MDG1: Eradicate Extreme Poverty and eds. 2009. Globalization, Wages, and the Quality Hunger, Review of Progress. New York: United of Jobs: Five Country Studies. Washington, DC: Nations. World Bank. Walker, Susan, Theodore Wachs, Julie Meeks Gardner, Rodrik, Dani. 2000. “Institutions for High-Quality Betsy Lozoff, Gail Wassermann, Ernesto Pollitt, Growth: What They Are and How to Acquire Julie Carter, and the International Child Develop- Them.” Studies in Comparative International De- ment Steering Group. 2007. “Child Development: velopment 35 (3): 3–31. Risk Factors for Adverse Outcomes in Developing ———. 2008. “The Real Exchange Rate and Eco- Countries.” Lancet 369: 145–57. nomic Growth.” Brookings Papers on Economic Wang, Dewen, Jin Song, and Philip O’Keefe. 2012. Activity 39 (2): 365–439. “Understanding the Hukou System through Rodrik, Dani, Arvind Subramanian, and Francesco Quantifying Hukou Thresholds: Methodology Trebbi. 2004. “Institutions Rule: the Primacy of and Empirical Findings.” Background paper for Institutions over Geography and Integration in the WDR 2013. Economic Development.” Journal of Economic Winters, Alan, Terrie Walmsley, Zhen Kun Wang, and Growth 9 (2): 131–65. Roman Grynberg. 2002. “Negotiating the Liber- Roy, Martin. 2008. “Out of Stock or Just in Time? alization of the Temporary Movement of Natural Doha and the Liberalization of Distribution Persons.” University of Sussex Discussion Paper Services.” In Opening Markets for Trade in Ser- 87, Sussex, U.K. vices: Countries and Sectors in Bilateral and WTO World Bank. 1997. World Development Report 1997: Negotiations, ed. Juan Marchetti and Martin Roy, The State in a Changing World. New York: Oxford 224–63. Geneva: World Trade Organization; University Press. New York: Cambridge University Press. ———. 2004a. Sri Lanka: Reshaping Economic Geog- Rwanda Demobilization and Reintegration Commis- raphy; Connecting People to Prosperity. Washing- sion. 2012. Tracer: Community Dynamics and Pay- ton, DC: World Bank. ment Verification Study. Kigali: Rwanda Demobili- ———. 2004b. World Development Report 2005: A zation and Reintegration Commission. Better Investment Climate for Everyone. New York: Schrank, Andrew. 2009. “Professionalization and Pro- bity in a Patrimonial State: Labor Inspectors in the Oxford University Press. Dominican Republic.” Latin America Politics and ———. 2005. Global Economic Prospects: Economic Society 51 (2): 91–114. Implications of Remittances and Migration. Wash- Sinnott, Emily, John Nash, and Augusto de la Torre. ington, DC: World Bank. 2010. Natural Resources in Latin America and the ———. 2006. Chile Development Policy Review. Caribbean. Beyond Booms and Busts? Washington, Washington, DC: World Bank. DC: World Bank. ———. 2007. Rwanda: Toward Sustained Growth and Solimano, Andres. 2008. The International Mobility Competitiveness, Vol. I, Synthesis and Priority Mea- of Talent: Types, Causes and Development Impact. sures. Washington, DC: World Bank. New York: Oxford University Press. ———. 2008. Chile: Toward a Cohesive and Well Gov- Stavrou, Aki, Rasmus Jorgensen, and Jennifer erned National Innovation System. Washington, O’Riordan. 2007. Beneficiary Impact Assessment DC: World Bank. and Tracer Study. Taastrup, Denmark: Nordic ———. 2009a. From Privilege to Competition: Un- Consulting Group. locking Private-Led Growth in the Middle East and Styczynska, Izabela. 2012. Provision of Long Term Care North Africa. Washington, DC: World Bank. for the Elderly in Poland in Comparison to Other ———. 2009b. Vietnam Development Report 2009: European Countries. Prague: Policy Association Capital Matters. Washington, DC: World Bank. for an Open Society. ———. 2009c. World Development Report: Reshap- Tobias, Jutta, and Karol Boudreaux. 2011. “Entre- ing Economic Geography. Washington, DC: World preneurship and Conflict Reduction in the Post- Bank. Genocide Rwanda Coffee Industry.” Journal of ———. 2010a. Country Assistance Strategy for the Small Business and Entrepreneurship 24 (2): 217–42. Kingdom of Tonga. Washington, DC: World Bank. Beyond labor policies 327 ———. 2010b. MDRP (Multi-Country Demobiliza- the Middle East and North Africa Region.” Com- tion and Reintegration Program) Report. Washing- panion report to the World Development Report ton, DC: World Bank. 2012. ———. 2011a. Doing Business 2012: Doing Business ———. 2012a. Afghanistan in Transition: Looking Be- in a More Transparent World. Washington, DC: yond 2014. Washington, DC: World Bank. World Bank. ———. 2012b. Job Trends. Washington, DC: World ———. 2011b. Fueling Growth and Competitiveness Bank. in Poland Through Employment, Skills, Innovation, ———. 2012c. Labor Practices in Lao PDR. Washing- Technical Report. Washington, DC: World Bank. ton, DC: World Bank. ———. 2011c. More and Better Jobs in South Asia. ———. 2012d. “Rwanda Ninth Poverty Reduction Washington, DC: World Bank. Support Financing.” Program Information Docu- ———. 2011d. Rwanda Economic Update: Resilience ment, World Bank, Washington, DC. in the Face of Economic Adversity. Washington, ———. 2012e. The World Bank: New Directions in DC: World Bank. Justice Reform. Washington, DC: World Bank. ———. 2011e. Vietnam Development Report 2012: ———. 2012f. World Development Indicators 2012. Market Economy for a Middle-Income Country. Washington, DC: World Bank. Washington, DC: World Bank. Wrigley, Neil, and Michelle Lowe. 2010. The Globaliza- ———. 2011f. World Development Indicators 2011. tion of Trade in Retail Services. Paris: Organisation Washington, DC: World Bank. for Economic Co-operation and Development. ———. 2011g. World Development Report 2012: Gen- Young, Mary Eming, and Linda Richardson. 2007. der Equality and Development. Washington, DC: Early Child Development: From Measurement to World Bank. Action. Washington, DC: World Bank. ———. 2011h. World Development Report 2011: Yusuf, Shahid, and Kaoru Nabeshima. 2006. Post- Conflict, Security, and Development. Washington, Industrial East Asian Cities: Innovation for Growth. DC: World Bank. Palo Alto, CA: Stanford University Press. ———. 2011i. “Capabilities, Opportunities, and Par- ticipation: Gender Equality and Development in APPENDIXES Glossary JOBS Jobs: While precise definitions vary, jobs are labor activities that generate income, monetary or in kind, without violating fundamental rights and principles at work. Jobs can take the form of wage employment, self-employment, and farming. They can be formal or informal. Good jobs for development: These are jobs that contribute the most to societal goals. The development payoff of a job is the sum of the value it has to the worker and its spillovers (if any) on others. The individual value is the first-order measure of the development payoff, but spillovers can be substantial. Jobs lens: Strategies, policies, and programs adopt a jobs lens if they take into account the development payoffs from jobs. The jobs lens involves aims at realizing the untapped develop- ment payoffs by addressing the constraints that prevent the private sector from creating more good jobs for development. SKILLS Cognitive skills: They include verbal ability, working memory, numeracy, and problem- solving abilities. They are the foundation for the acquisition and building of other skills throughout life. Social skills: They facilitate interaction and communication with others. They are based on personality traits that underlie behaviors such as teamwork, reliability, discipline, or work effort. Technical skills: They enable the performance of specific tasks. They take the form of knowl- edge that is specific to a particular occupation or group of occupations. Entrepreneurship: It is the combination of innovative capacity to put new ideas into effect with managerial capacity to increase a firm’s efficiency within the limits of known technology. TRANSFORMATIONS Living standards: They encompass the material and subjective aspects of well-being. Jobs con- tribute to living standards through earnings opportunities that lift people out of poverty, make them less vulnerable, motivate them, and contribute to their broader happiness and satisfac- tion with life. 329 330 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Productivity: It is the amount of output generated with a given amount of inputs. A higher productivity of individual jobs, the creation of more productive jobs and destruction of less productive ones, and the reallocation of workers within countries and across borders drive changes in aggregate productivity. Social cohesion: Societies are cohesive when they have the capacity to manage collective deci- sion making peacefully. Jobs can contribute to social cohesion by nurturing trust in others beyond the group people belong to. They can also do so by fostering civic engagement. RIGHTS Core labor standards: A set of eight International Labour Organization conventions included in the 1998 Declaration of the Fundamental Principles and Rights at Work. These conven- tions cover child labor, discrimination, forced labor, and freedom of association and collective bargaining. Health and safety at work: Occupational accidents and work-related diseases can undermine workers’ health, are an important source of mortality, and can have high costs to society. DEVELOPMENT PAYOFFS Spillovers: Beyond their direct impact on the well-being of the people who hold them, jobs can have additional impacts on societal goals. Jobs may influence the living standards of oth- ers, their productivity, or the way collective decisionmaking works. Spillovers from jobs can be positive or negative. Earnings of others: Uneven bargaining power or discrimination may lead to labor earnings that are too low or too high, with others gaining or losing as a result. Jobs supported through government transfers or restrictive regulations also affect the earnings and employment opportunities of others. Household allocations: Jobs can change the status of their jobholders and increase their say on how resources are allocated among household members. Jobs that empower women can lead to greater investments in children’s education and health. Poverty reduction: In societies that value poverty reduction, jobs that take people out of hard- ship increase overall well-being. In these societies, employment opportunities tilted in favor of the poor are seen as preferable, even if aggregate earnings or output do not change. Agglomeration effects: Work-related interactions can increase the productivity of others. The sharing of ideas; learning from customers, suppliers and competitors; and a better matching of skills across a larger pool of workers are among the mechanisms through which these pro- ductivity gains take place. Global integration: Jobs linked to world markets and jobs in foreign-owned companies al- low acquiring more advanced technical and managerial skills. These jobs can also change the industrial structure in ways that favor the most productive economic units and push the least productive out of business. Glossary 331 Environmental effects: Jobs have negative impacts on aggregate productivity when they dam- age the environment or lead to an overuse of scarce resources. But they can also have positive environmental effects, as in the case of jobs to manage forests and other common resources. Social identity: Jobs can impact the well-being of others by influencing the values and be- havior of those who hold them in ways that affect society at large. Jobs can shape the norms influencing how the jobholder interacts with others. Networks: Jobs connect people to each other. They convey information among coworkers and society more broadly. Jobs may also contribute to tolerance when interactions at the workplace increase direct knowledge among people of different social and ethnic backgrounds. Sense of fairness: Job allocations at odds with the idea of equality of opportunity may lead to frustration and disengagement from society and collective decision-making processes. Jobs that live up to standards of transparency and merit can contribute to the sense of fairness in society. JOBS CHALLENGES Agrarian economies: In these economies most people are still engaged in agriculture, often in very small family farms, and cities are not yet a source of economic dynamism. Conflict-affected countries: These are countries undergoing or emerging from conflict, where peace-keeping forces may still be needed or where deaths from conflict may still be high. Resource-rich countries: Minerals account for a large share of exports. Exploitation of re- sources brings dramatic economic growth but undermines competitiveness and encourages jobs based on transfers. Small island nations: Their size and remoteness make it difficult for them to reap the benefits of agglomeration and global integration. Their fragile ecosystems add to their vulnerability. Urbanizing countries: The share of the urban population is growing rapidly. Cities are a magnet for rural migrants but may fail to move up from exports of light manufacturing to higher value added products. Countries with high youth unemployment: Prolonged joblessness and idleness affect a large share of the often sizeable youth population. The allocation of business opportunities and jobs is tainted by privilege. Formalizing countries: The coverage of social protection systems is large enough to envision extending it to the entire workforce, but how to do it without undermining productivity is a challenge. Aging societies: The share of the working-age population is declining and the costs of pro- viding and caring for the growing number of elderly is increasing, putting a double burden on living standards. Bibliographical note This Report draws on a wide range of background papers commissioned by the team, as well as on contributions by numerous colleagues inside and outside of the World Bank. The team gratefully acknowledges the papers, notes, presentations, and data analyses by: Ana Abras, Daniel Adler, Christopher Adolph, Cristian Aedo, Alpasan Akay, Yilmaz Akyuz, Rita Almeida, Miriam Altman, Uma Rani Amara, Colin Andrews, Steffen Angenendt, Omar Arias, Hassen Arouri, Javier Arias-Vasquez, Gabriela Armenta, Ragui Assaad, João Pedro Azevedo, Elisabeth Baehr, Aminata Bakouan, Sajitha Bashir, Daniel Berliner, Janine Berg, M. Inés Berniell, Haroon Bhorat, Constanza Biavaschi, Ingunn Bjørkhaug, David Blanch- flower, Erik Bloom, Nicholas Bloom, Chris Bonner, Alessio Brown, Drusilla Brown, Tilman Brueck, Martha Chen, Mahendra Chetty, Yoonyoung Cho, Hayat Chowdhury, Sarah Cook, Katia Covarrubias, Hai-Anh Dang, Maitreyi Bordia Das, Benjamin Davis, Arjan de Haan, Joost de Laat, Rajeev Dehejia, Peter Dewees, Stefania Di Giuseppe, Rafael Díez de Medina, Susanne Dorasil, Nora Dudwick, Gilles Duranton, Werner Eichhorst, Aaron Erlich, Jonna Estudillo, Christine Evans-Klock, Paolo Falco, Lucia Fernandez, Gary Fields, Sandra Fredman, Richard Freeman, Caroline Freund, Leonardo Garrido, John Giles, T. H. Gindling, Corrado Giulietti, Anne Greenleaf, Michael Grimm, Lorenzo Guarcello, John Haltiwanger, Anne Hatløy, Ricardo Hausmann, Yuki Higuchi, Margo Hoftijzer, Maddalena Honorati, Shoghik Hovhannisyan, Alejandro Hoyos, Jikun Huang, Steffen Hummelsheim, Hans Hwang, Gabriela Inchauste, Beata Javorcik, Johannes Jütting, Tewodros Kebede, Jennifer Keller, Michael Kend- zia, Niny Khor, Talip Kilic, Austin Kilroy, Christian Kingombe, Johannes Koettl, Irina Kovrova, Adea Kryeziu, David Kucera, Nandika Kumanayake, Milli Lake, Peter Lanjouw, Donald Lar- son, Jean Lee, Hartmut Lehman, Margaret Levi, Philip Levy, Richard Locke, Javier Luque, Scott Lyon, William Maloney, Ghazala Mansuri, David Margolis, Pedro Martins, Tomoya Matsu- moto, Dimitris Mavridis, Catriona McLeod, Margaret McMillan, Johan Mistiaen, Martin Moreno, Marc-Andreas Muendler, Alexander Muravyev, Yoo-Jeung Nam, Ambar Narayan, David Newhouse, Kirsten Newitt, Andrew Norton, Jennifer Noveck, Antonio Nucifora, Philip O’Keefe, Sergio Olivieri, Remco Oostendorp, Ana Maria Oviedo, Caglar Özden, Pierella Paci, Karin Pape, Federico Parra, Harry Anthony Patrinos, Patti Petesch, Janneke Pieters, Uma Rani, Marco Ranzani, Bob Rijkers, David Robalino, Raymond Robertson, Nuría Rodríguez-Planas, Paul Romer, Furio Camillo Rosati, Friederike Rother, Scott Rozelle, Jaime Saavedra Chanduvi, Klas Sander, Mauricio Sarrias, Naotaka Sawada, Ricarda Schmidl, Helmar Schneider, Nadia Selim, Binayak Sen, Slesh Shrestha, Arbind Singh, Caroline Skinner, Jin Song, Tetsushi Sonobe, Walter Sosa, Dirk Willem te Velde, Sailesh Tiwari, Ihnsan Tunali, Erol Tymaz, Zia Uddin, Inigo Verduzco, Marco Vivarelli, Jacqueline Wahba, Dewen Wang, Michael Weber, Christian Welzel, Frank-Borge Wietzke, Hernan Winkler, Firman Witoelar, Monica Yanez-Pagans, Huafeng Zhang, and Klaus Zimmerman. Many people inside and outside of the World Bank gave comments to the team and sup- ported the preparation of the Report in various ways: Paloma Acevedo, Cristian Aedo, Junaid Kamal Ahmad, Ahmad Ahsan, Rita Almeida, Til- 332 man Altenburg, Colin Andrews, Omar Arias, Gabriela Armenta, Erhan Artuc, Orazio Bibliographical note 333 Attanasio, Ajita Berar Awad, João Pedro Azevedo, Peter Bakvis, Elena Bardasi, Nicholas Barr, Andrew Beath, Deepak Bhattasali, Benu Bidani, Erik Bloom, Richard Blundell, Carlos Braga, Milan Brahmbhatt, Hana Brixi, Miriam Bruhn, Sharan Burrows, Wei Ca, Sandrine Cazes, Barry Chiswick, Luc Christiansen, Michael Cichon, Tito Cordella, Paulo Correa, Wendy Cun- ningham, Karen Curtis, Mahesh Dahal, Andrea Mario Dall’Olio, Maitreyi Das, Joost de Laat, Augosto de la Torre, Gabriel Demombynes, Stefan Dercon, Shanta Devarajan, Peter Dewees, Charles di Leva, Carolina Diaz-Bonilla, Nancy Donaldson, Nora Dudwick, Olivier Dupriez, Friedel Eggelmeyer, Philippe Egger, Marcelo Jorge Fabre, Gabriel Alejandro Faccini Palma, Marcel Fafchamps, Marianne Fay, Juan Feng, Colin Fenwick, Manuela Ferro, Deon Filmer, Georg Fischer, Ciprian Fisiy, Ariel Fiszbein, Roberto Foa, Louise Fox, Caroline Freund, Ber- nard Funck, Leonardo Garrido, Roberta Gatti, Varun Gauri, Steve Gibbons, Indermit Gill, Delfin Go, Pablo Gottret, Timo Graf von Koenigsmarck, Duncan Green, Mary Hallward- Driemeier, Mark Hanush, Bernard Harborne, Niels Harild, Rana Hasan, Susan Hayter, James Heckman, Rasmus Heltberg, Bernard Hoekman, Bert Hofman, Robin Horn, James Howard, Chang-Tai Hsieh, Elisabeth Huybens, Herwig Immervoll, Gabriela Inchauste, Selina Jackson, Steen Lau Jorgensen, Roy Katayama, Philip Keefer, William James Kemp, Austin Kilroy, Eliza- beth King, Leora Klapper, Judith Klemmer, Jeni Klugman, Kalpana Kochhar, Markus Kostner, Aphichoke Kotikula, Rachel Kranton, Arvo Kuddo, Somik Lall, Esperanza Lasagabaster, Daniel Lederman, Philippe Leite, Jeffrey Lewis, Eduardo Ley, Michael Lipton, Gladys López-Acevedo, Malte Luebker, Amy Luinstra, Mattias Lundberg, Xubei Luo, Nora Lustig, Larissa Luy, Ghazala Mansuri, Alexandre Marc, Andrew Mason, Elizabeth Mata Lorenzo, Aaditya Mattoo, Piotr Mazurkiewicz, Siobhan McInerney-Lankford, David McKenzie, Gerard McLinden, Julian Messina, Roland Michelitsch, Pradeep Mitra, Layna Mosley, Rose Mungai, Ana Maria Muñoz Boudet, Reema Nanavaty, Urvashi Narain, Ambar Narayan, Reema Nayar, David Newhouse, Philip O’Keefe, Anna Olefir, Israel Osorio-Rodarte, Caglar Özden, Pierella Paci, Howard Pack, Truman Packard, Carmen Pagés, Robert Palacios, Montserrat Pallares-Millares, Pia Peeters, Nicola Pontara, Aleksandra Posarac, Peter Poschen, Patrick Premand, Menachem Prywes, Stephen Pursey, Rita Ramalho, Martin Ravallion, Michelle Rebosio, Ritva Reinikka, Jose Guilherme Reis, Ana Revenga, Carolyn Reynolds, Francesca Riccardone, Jamele Rigolini, Bob Rijkers, David Robalino, Nigel Roberts, Halsey Rogers, Mark Rosenzweig, Friederike Rother, Robert Francis Rowe, Jan Rutkowski, Jaime Saavedra Chanduvi, Frank Sader, Juan Sebastián Saez, Jamil Salmi, Carolina Sánchez Paramo, Maria Laura Sanchez Puerta, Justin Sanderfur, Prem Sangraula, Indhira Santos, Sigrid Schenk-Dornbusch, Grit Schmalisch, Anita Schwarz, Sudhir Shetty, Saurabh Shome, Sandor Sipos, Radhika Srinivasan, Stavros Stavrou, Henriette Strothmann, Manami Suga, Naotaka Sugawara, Victor Sulla, Jee-Peng Tan, Afia Tasneem, Ehab Tawfik, Graham Teskey, Manuela Tomei, Carrie Turk, Alexandria Valerio, Bernice Van Bronkhurst, Aleem Walji, David Warren, Michael Weber, Deborah Welzel, Jill Wilkins, Alys Willman, Doris Witteler-Stiepelmann, Michael Woolcock, Colin Xu, Xiao Ye, Nobuo Yoshida, and Anders Zeijlon. The World Development Report 2013 team benefited from close collaboration with the team preparing the International Finance Corporation’s Jobs Study: “Assessing Private Sec- tor Contributions to Job Creation,” led by Roland Michelitsch. The team also benefited from the interaction with the Jobs Knowledge Platform, which was launched during the prepara- tion of the report under the guidance of Mary Hallward-Driemeier, Gladys López-Acevedo, David Robalino, and Claudia Sepulveda. The team also engaged closely with the Implementation Task Force for the Report con- vened by Mahmoud Mohieldin, led by Tamar Manuelyan Atinc and Arup Banerji, and includ- ing Omar Arias, Najy Benhassine, Mary Hallward-Driemeier, Roland Michelitsch, Pierella Paci, and Idah Pswarayi-Riddihough. Background papers and notes Abras, Ana, Alejandro Hoyos, Ambar Narayan, and Sailesh Tiwari. 2012. “Inequality of Opportunities in the Labor Market: Evidence from Life in Transition Surveys in Europe and Central Asia.” Adler, Daniel, and Hans Hwang. 2012. “From Law on the Books to Law in Action: A Note on the Role of Regulation in the Production of Good Jobs in Cambodia’s Garment Sector.” Almeida, Rita, David Margolis, David Robalino, and Michael Weber. 2012. “Facilitating Labor Market Transitions and Managing Risks.” Aedo, Cristian, Jesko Hentschel, Javier Luque, and Martin Moreno. 2012. “Skills Around the World: Structure and Recent Dynamics.” Andrews, Colin, and Adea Kryeziu. 2012. “Public Works and the Jobs Agenda: Pathways for Social Cohesion.” Arias, Omar, and Walter Sosa. 2012. “Do Jobs Cause Trust? Results from Pseudo-Panel Analysis of Euro and Latino Barometer Surveys.” Arias-Vasquez, Javier, Jean N. Lee, and David Newhouse. 2012. “The Role of Sectoral Growth Patterns in Labor Market Development.” Azevedo, João Pedro, Gabriela Inchauste, Sergio Olivieri, Jaime Saavedra Chanduvi, and Hernan Winkler. 2012. “Is Labor Income Responsible for Poverty Reduction? A Decomposition Approach.” Bashir, Sajitha, T. H. Gindling, and Ana Maria Oviedo. 2012. “Better Jobs in Central America: The Role of Human Capital.” Betcherman, Gordon. 2012. “Labor Market Institutions: A Review of the Literature.” Bhorat, Haroon. 2012. “Temporary Employment Services in South Africa.” Biavaschi, Costanza, Werner Eichhorst, Corrado Giulietti, Michael J. Kendzia, Alexander Muravyev, Janneke Pieters, Nuría Rodríguez-Planas, Ricarda Schmidl, and Klaus F. Zimmermann. 2012. “Youth Unemployment and Vocational Training.” Bjørkhaug, Ingunn, Anne Hatløy, Tewodros Kebede, and Huafeng Zhang. 2012. “Perception of Good Jobs: Colombia.” Chen, Martha, Chris Bonner, Mahendra Chetty, Lucia Fernandez, Karin Pape, Federico Parra, Arbind Singh, and Caroline Skinner. 2012. “Urban Informal Workers: Representative Voice and Economic Rights.” Cho, Yoonyoung, and Maddalena Honorati. 2012. “A Meta-Analysis of Entrepreneurship Programs In Developing Countries.” Covarrubias, Katia, Benjamin Davis, Aminata Bakouan, and Stefania Di Giuseppe. 2012. “Household Income Generation Strategies.” Das, Maitreyi Bordia. 2012. “Stubborn Inequalities, Subtle Processes: Exclusion and Discrimination in the Labor Market.” Dehejia, Rajeev, Drusilla Brown, and Raymond Robertson. 2012. “Life Satisfaction, Mental Well-Being and Workplace Characteristics: Evidence from Vietnam, Jordan, and Haiti.” Dudwick, Nora. 2012. “The Relationship Between Jobs and Social Cohesion: Some Examples from Ethnography.” Duranton, Gilles. 2012. “Agglomeration and Jobs in Developing Countries.” Estudillo, Jonna P., Tomoya Matsumoto, Hayat Chowdhury, Zia Uddin, Nandika Kumanayake, and Keijiro Otsuka. 2012. “Labor Markets, Occupational Choice, and Rural Poverty in Selected Countries in Asia and Sub-Saharan Africa.” 334 Background papers and notes 335 Falco, Paolo, William Maloney, Bob Rijkers, and Mauricio Sarrias. 2012. “Subjective Well-Being, Informality, and Preference Heterogeneity in Africa.” Fredman, Sandra. 2012. “Anti-Discrimination Laws and Work in the Developing World: A Thematic Overview.” Giles, John, Dimitris Mavridis, and Firman Witoelar. 2012. “Subjective Well-Being, Social Cohesion, and Labor Market Outcomes in Indonesia.” Gindling, T. H., and David Newhouse. 2012. “Self-Employment in the Developing World.” Hatløy, Anne, Tewodros Kebede, Huafeng Zhang, and Ingunn Bjørkhaug. 2012. “Perception of Good Jobs: Sierra Leone.” Hovhannisyan, Shoghik. 2012. “Labor Market and Growth Implications of Emigration: Cross-Country Evidence.” Inchauste, Gabriela. 2012. “Jobs and Transitions Out of Poverty: A Literature Review.” Inchauste, Gabriela, Sergio Olivieri, Jaime Saavedra Chanduvi, and Hernan Winkler. 2012. “Decompos- ing Recent Declines in Poverty: Evidence from Bangladesh, Peru, and Thailand.” Javorcik, Beata Smarzynska. 2012. “Does FDI Bring Good Jobs to Host Countries?” Kebede, Tewodros, Anne Hatløy, Huafeng Zhang, and Ingunn Bjørkhaug. 2012. “Perception of Good Jobs: Egypt.” Kilroy, Austin. 2012. “Jobs to Social Cohesion: Via Interests, Attitudes, and Identities.” Kingombe, Christian, and Dirk Willem te Velde. 2012. “Structural Transformation and Employment Creation: The Role of Growth Facilitation Policies in Sub-Saharan Africa.” Kovrova, Irina, Scott Lyon, and Furio Camillo Rosati. 2012. “NEET Youth Dynamics in Indonesia and Brazil: A Cohort Analysis.” Larson, Donald, Keijiro Otsuka, Tomoya Matsumoto, and Talip Kilic. 2012. “Can Africa’s Agriculture Depend on Smallholder Farmers?” Lee, Jean N., and David Newhouse. 2012. “Cognitive Skills and Labor Market Outcomes.” Levi, Margaret, Christopher Adolph, Aaron Erlich, Anne Greenleaf, Milli Lake, and Jennifer Noveck. 2012. “Aligning Rights and Interests: Why, When, and How to Uphold Labor Standards.” Levy, Philip. 2012. “Potential for International Rivalry as Governments Pursue Jobs.” Lyon, Scott, Furio Camillo Rosati, and Lorenzo Guarcello. 2012. “At the Margins: Young People Neither in Education nor in Employment.” Mansuri, Ghazala, Slesh Shrestha, Hernan Winkler, and Monica Yanez-Pagans. 2012a. “A Plot of My Own: Land Titling and Economic Mobility in Rural Uganda.” ———. 2012b. “Health or Wealth? Income Earner Death and Economic Mobility in Rural Pakistan.” Martins, Pedro. 2012. “Growth, Employment and Poverty in Africa: Tales of Lions and Cheetahs.” McMillan, Margaret S., and Inigo Verduzco. 2012. “Measuring the Impact of Structural Change on Labor’s Share of Income.” Montenegro, Claudio E., and Harry Anthony Patrinos. 2012. “Returns to Schooling around the World.” Newitt, Kirsten. 2012. “Private Sector Voluntary Initiatives on Labour Standards.” Norton, Andrew, and Arjan de Haan. 2012. “Social Cohesion: Theoretical Debates and Practical Appli- cations with Respect to Jobs.” Oostendorp, Remco. 2012. “The Occupational Wages around the World (OWW) Database: Update for 1983–2008.” Petesch, Patti. 2012. “The Exponential Clash of Conflict, Good Jobs, and Changing Gender Norms in Four Economies.” Ranzani, Marco, and Furio Camillo Rosati. 2012. “The NEET Trap: A Dynamic Analysis for Mexico.” Rijkers, Bob, Hassan Arouri, Caroline Freund, and Antonio Nucifora. 2012. “Which Firms Create Jobs in Tunisia?” Rozelle, Scott, and Jikun Huang. 2012. “China’s Labor Transition and the Future of China’s Rural Wages and Employment.” Sander, Klas, and Peter A. Dewees. 2012. “Sustainable Management of Trees, Reduction in Forest Degradation, and Job Creation for the Poor.” Sawada, Naotaka. 2012. “Providing Business Services for Rural Income Generations: Using the Rural Investment Climate Survey Data.” 336 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Selim, Nadia. 2012. “Innovation for Job Creation.” Sonobe, Tetsushi, Yuki Higuchi, and Keijiro Otsuka. 2012. “Productivity Growth and Job Creation in the Development Process of Industrial Clusters.” Wang, Dewen, Jin Song, and Philip O’Keefe. 2012. “Understanding the Hukou System through Quantify- ing Hukou Thresholds: Methodology and Empirical Findings.” Welzel, Christian. 2012. “The Contribution of ‘Good’ Jobs to Development and Cohesion: The Human Empowerment Perspective.” Wietzke, Frank-Borge, and Catriona McLeod. 2012. “Jobs, Well-Being, and Social Cohesion: Evidence from Value and Perception Surveys.” Zhang, Huafeng, Ingunn Bjørkhaug, Anne Hatløy, and Tewodros Kebede. 2012. “Perception of Good Jobs: China.” Selected indicators General notes Table 1 Labor force Table 2 Skills Table 3 Employment structure Table 4 Living standards Table 5 Productivity Table 6 Social cohesion Table 7 Policies and institutions Table 8 Connectedness Technical notes Table 9 Micro-data sources 338 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 General notes countries, are from the OECD and Eurostat websites. For developing countries, the indica- Indicators tors are based on micro-data processed by the Tables 1 to 8 include 68 jobs-related indica- World Development Report 2013 team, follow- tors. These indicators summarize the level and ing the same criteria and definitions as the composition of employment in each country, OECD and Eurostat websites. including not only wage work but also self- The micro-data underlying these 31 indica- employment and farming. They cover the con- tors are from a large set of household surveys, nections between jobs and living standards, labor force surveys, population censuses and productivity and social cohesion and provide enterprise surveys. The World Development measures of migration. Definitions are provided Report 2013 team relied on four large-scale in the technical notes. micro-data repositories: the World Bank’s Inter- national Income Distribution Database (I2D2), Eurostat, the Minnesota Population Center’s Sources Integrated Public Use Microdata Series (IPUMS Data for 37 of the 68 indicators in tables 1 to International, version 6.1), and the World Bank 8 are from publicly available sources. The pro- enterprise surveys database. The team also gath- cess of selecting these public sources favored ered many additional living standards and labor cross-country comparability over country cov- force surveys. erage. For a majority of the indicators, there are To be considered as a micro-data source for a range of additional data sources, including any of the 31 indicators, living standards sur- national statistical offices, international reposi- veys or labor force surveys have to be nationally tories, and specific studies. However, only data representative. For highly urbanized countries, produced using the same criteria in all coun- this requirement implies that surveys cover tries are retained. In most cases, there is a single secondary cities and towns; for other countries, data source for each of these 37 indicators. For they also have to include rural areas. In all, more instance, the five unemployment indicators in than 800 household surveys and censuses— tables 1 and 6 are entirely based on the Key In- including data on more than 600 million dicators of the Labor Market (KILM) database people—were standardized by the World De- of the International Labour Organization (ILO). velopment Report 2013 team to ensure the Educational attainment in table 2 is an in- comparability of data across countries. Table 9 dicator that draws on two sources using differ- summarizes the source of information for the ent criteria: the Programme for International indicators that are based on micro-data. Fur- Student Assessment (PISA) and the Trends in ther information on sources is provided in the International Mathematics and Science Study technical notes. (TIMSS). These sources are jointly available for six countries only, which allows reporting them Years both without much overlap. The specific source used in each case is noted in table 2. Data in tables 1 to 8 generally covers three years: The other 31 indicators in tables 1 to 8 are 1995, 2005, and 2010. In a few cases, other years based, totally or partially, on micro-data pro- had to be retained due to data availability For ex- cessed by the World Development Report 2013 ample, the most recent estimate of wages by oc- team. The indicators entirely based on the cupation (in table 4) is for 2008, and the first set team’s data processing refer to skills as a con- of comparable observations for minimum wages straint (table 2), the working poor (table 4), (in table 7) is for 2007. Similarly, data on edu- the gender gap in earnings (table 4), workers in cational attainment (table 2) are presented for micro-enterprises (table 5), wage inequality 2003, 2006, and 2009, as these are the points in (table 6), and youth not in school or at work time for which PISA data are available (TIMSS (table 6). In all other cases, data for Organisa- data labeled as 2006 are actually for 2007). tion for Economic Co-operation and Develop- For the 31 indicators computed using mi- ment (OECD) member countries, other indus- cro-data processed by the World Development trial countries, and European Union accession Report 2013 team, 1995, 2005, and 2010 are Selected Indicators 339 reference points. The micro-data sources used Unless otherwise noted, data for China do not are seldom available on an annual basis. For include data for Hong Kong SAR, China; Macao these indicators, data are for the nearest point SAR, China; or Taiwan, China. Data for Indone- within a five-year window. For example, figures sia include Timor Leste through 1999. Data for reported for 1995 are from the closest year over Serbia include Montenegro through 2005, and the period 1993–97. The precise year of the sur- exclude Kosovo from 1999 onwards. vey data varies from country to country. Symbols Countries An empty space means that data are not avail- Tables 1 to 8 include 156 countries or econo- able, or that the indicator cannot be calculated. mies. The word country may refer to any terri- A “0” or “0.0” means that the value of the indi- tory for which separate social or economic sta- cator is nil or small enough that it would round tistics are available. Data are shown for countries to zero at the displayed number of decimal and economies as they were constituted in 2010. places. 340 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 TABLE 1 Labor force Population Working age Participation Unemployment (millions) population (%) rate (%) rate (%) Total Total Total Total 1995 2005 2010 1995 2005 2010 1995 2005 2010 1995 2005 2010 Afghanistan 22.5 29.9 34.4 48.7 65.2 8.5 Albania 3.1 3.1 3.2 61.7 69.1 68.1 57.8 13.5 13.8 Algeria 28.3 32.9 35.5 27.9 15.3 11.4 Angola 12.1 16.5 19.1 Argentina 34.8 38.6 40.5 61.0 64.7 65.6 63.5 69.0 67.8 18.8 10.6 8.6 Armenia 3.2 3.1 3.1 66.6 54.3 36.4 28.4 28.6 Australia 18.1 20.4 22.3 66.6 67.3 67.6 74.1 75.4 76.5 8.5 5.0 5.2 Austria 8.0 8.2 8.4 67.1 67.9 67.5 71.5 72.4 75.1 3.7 5.2 4.4 Azerbaijan 7.7 8.4 9.0 63.2 48.0 8.1 6.0 Bangladesh 117.5 140.6 148.7 59.0 60.5 60.0 2.5 4.3 5.0 Barbados 0.3 0.3 0.3 83.9 73.2 19.7 9.1 8.1 Belarus 10.2 9.8 9.5 70.0 70.3 Belgium 10.1 10.5 10.9 66.2 65.6 65.9 62.1 66.7 67.7 9.3 8.4 8.3 Belize 0.2 0.3 0.3 52.8 58.1 3.1 4.0 Benin 5.7 7.6 8.8 50.4 78.6 Bhutan 0.5 0.7 0.7 61.7 68.8 12.5 11.0 8.2 Bolivia 7.5 9.1 9.9 55.7 57.2 59.6 71.4 71.8 74.7 3.6 5.4 Bosnia and Herzegovina 3.3 3.8 3.8 80.9 58.5 31.8 27.2 Botswana 1.6 1.9 2.0 59.9 68.5 21.5 17.6 Brazil 161.8 186.0 194.9 62.1 66.6 67.9 72.1 74.0 73.9 6.0 9.3 8.3 Bulgaria 8.4 7.7 7.5 67.0 69.0 68.9 68.7 62.1 66.5 15.7 10.1 10.2 Burkina Faso 10.7 14.2 16.5 48.3 50.5 86.8 86.7 2.6 2.7 Burundi 6.1 7.3 8.4 Cambodia 11.2 13.4 14.1 56.3 62.1 63.4 77.0 84.6 84.8 1.7 Cameroon 13.9 17.6 19.6 51.4 89.7 69.4 67.5 8.1 4.4 Canada 29.4 32.3 34.1 67.6 69.2 69.4 74.7 77.7 77.8 9.5 6.7 8.0 Central African Republic 3.3 4.0 4.4 51.3 75.4 Chad 7.0 9.8 11.2 49.0 0.7 Chile 14.4 16.3 17.1 63.8 67.1 68.7 59.1 59.3 64.8 4.7 8.0 8.1 China 1211.2 1307.6 1340.9 66.7 71.4 74.5 71.7 71.0 2.9 2.7 2.9 Colombia 36.5 43.0 46.3 53.9 62.8 64.5 56.0 69.3 71.9 8.7 11.3 11.6 Congo, Dem. Rep. 44.1 57.4 66.0 50.1 70.9 Congo, Rep. 2.7 3.5 4.0 57.3 66.0 Costa Rica 3.5 4.3 4.7 60.5 65.9 68.5 61.7 65.5 65.3 5.2 6.6 7.8 Côte d’Ivoire 14.7 18.0 19.7 Croatia 4.7 4.4 4.4 66.9 67.2 63.3 61.5 10.0 12.6 11.8 Cuba 10.9 11.3 11.3 8.3 1.9 1.6 Czech Republic 10.3 10.2 10.5 68.0 71.0 70.6 70.4 70.2 4.0 7.9 7.3 Denmark 5.2 5.4 5.5 67.4 66.2 65.6 72.3 79.8 79.4 7.0 4.8 7.5 Dominican Republic 7.9 9.3 9.9 58.5 61.9 63.5 63.1 58.2 59.4 15.8 18.0 14.2 Ecuador 11.4 13.4 14.5 58.0 61.1 62.5 72.1 73.4 66.8 6.9 7.7 6.5 Egypt, Arab Rep. 62.1 74.2 81.1 56.2 63.2 48.5 59.8 11.3 11.2 8.7 El Salvador 5.7 6.1 6.2 56.5 58.7 61.1 62.9 63.5 64.8 7.6 7.2 7.3 Eritrea 3.2 4.5 5.3 Estonia 1.4 1.3 1.3 65.8 68.0 67.8 70.1 73.8 9.7 7.9 16.9 Ethiopia 57.0 74.3 82.9 49.2 49.4 70.4 84.4 3.1 5.4 Fiji 0.8 0.8 0.9 61.2 65.7 48.9 54.6 5.4 4.6 Finland 5.1 5.2 5.4 66.8 66.7 66.4 72.1 74.7 74.5 15.3 8.4 8.4 France 59.4 63.0 64.9 65.3 65.0 64.8 67.6 69.9 70.5 11.8 8.9 9.4 Gabon 1.1 1.4 1.5 58.5 58.4 17.8 Gambia, The 1.1 1.5 1.7 Georgia 4.7 4.4 4.5 66.5 67.6 64.2 13.8 16.5 Germany 81.6 82.5 81.7 68.3 66.9 65.9 70.5 73.8 76.6 8.1 11.1 7.1 Ghana 17.0 21.6 24.4 55.3 75.6 3.6 Greece 10.6 11.1 11.3 67.5 67.5 66.7 60.4 66.8 68.2 9.1 9.8 12.5 Guatemala 10.0 12.7 14.4 53.8 68.0 3.1 Guinea 7.6 9.0 10.0 49.4 83.6 3.1 Guinea-Bissau 1.1 1.4 1.5 Haiti 7.9 9.3 10.0 Honduras 5.6 6.9 7.6 52.2 55.4 58.2 60.6 63.6 63.2 3.2 4.2 Hungary 10.3 10.1 10.0 67.6 68.7 68.6 58.9 61.3 62.4 10.2 7.2 11.2 India 932.2 1094.6 1170.9 59.9 61.8 64.5 62.0 62.2 56.6 2.2 4.4 3.6 Indonesia 199.4 227.3 239.9 61.9 66.0 65.4 63.8 64.8 61.6 4.4 11.2 7.9 Iran, Islamic Rep. 59.8 69.7 74.0 65.9 49.0 9.1 12.1 10.5 Iraq 20.9 27.6 32.0 48.6 57.4 43.5 41.5 18.0 Ireland 3.6 4.2 4.5 64.0 68.2 67.3 61.6 70.8 69.8 12.0 4.3 13.6 Israel 5.5 6.9 7.6 60.9 61.7 62.2 60.8 62.4 64.5 6.9 9.0 6.6 Italy 56.8 58.6 60.5 68.8 66.4 65.7 57.6 62.5 62.2 11.7 7.7 8.4 Jamaica 2.5 2.7 2.7 60.1 86.3 16.2 10.9 11.4 Japan 125.4 127.8 127.5 69.5 66.1 63.8 71.5 72.6 74.0 3.2 4.4 5.0 Jordan 4.2 5.4 6.0 56.0 47.5 14.6 12.4 12.9 Kazakhstan 15.8 15.1 16.3 63.8 70.3 55.9 64.3 11.0 8.1 6.6 Kenya 27.4 35.6 40.5 51.4 53.8 58.7 60.6 Kiribati 0.1 0.1 0.1 58.4 66.5 Korea, Rep. 45.1 48.1 48.9 70.7 71.7 73.2 64.9 66.3 65.8 2.1 3.7 3.7 Kosovo 2.0 1.8 1.8 62.5 46.5 41.4 Kyrgyz Republic 4.6 5.1 5.4 57.9 57.4 8.1 8.2 Lao PDR 4.8 5.8 6.2 52.0 59.5 87.7 2.6 1.4 Selected Indicators 341 TABLE 1 Labor force, continued Population Working age Participation Unemployment (millions) population (%) rate (%) rate (%) Total Total Total Total 1995 2005 2010 1995 2005 2010 1995 2005 2010 1995 2005 2010 Latvia 2.5 2.3 2.2 65.7 68.7 68.9 69.6 73.2 20.2 8.9 18.7 Lebanon 3.5 4.1 4.2 64.7 47.9 8.5 7.9 Lesotho 1.8 2.1 2.2 39.3 25.3 Liberia 2.1 3.2 4.0 55.6 73.1 5.6 3.7 Libya 4.8 5.8 6.4 Lithuania 3.6 3.4 3.3 65.9 67.8 68.9 68.4 70.5 17.1 8.3 17.8 Macedonia, FYR 2.0 2.0 2.1 66.6 69.1 70.6 62.2 64.2 36.0 37.3 32.0 Madagascar 13.1 17.9 20.7 51.8 51.0 89.1 2.6 Malawi 9.9 12.8 14.9 53.5 49.9 89.2 7.8 Malaysia 20.7 26.1 28.4 3.1 3.5 3.7 Mali 9.8 13.2 15.4 62.2 50.7 83.4 57.3 3.3 8.8 Mauritania 2.3 3.0 3.5 52.2 83.1 33.0 Mauritius 1.1 1.2 1.3 68.8 69.9 63.6 62.2 5.8 9.6 7.7 Mexico 92.3 106.5 113.4 59.3 63.5 65.9 61.5 61.9 63.7 6.9 3.5 5.2 Moldova 3.7 3.6 3.6 67.6 73.5 7.3 7.4 Mongolia 2.3 2.5 2.8 68.4 68.1 3.3 Montenegro 0.6 0.6 0.6 68.7 56.9 30.3 Morocco 26.9 30.4 32.0 55.9 61.7 52.2 54.3 22.9 11.0 10.0 Mozambique 15.9 20.8 23.4 51.6 50.2 48.2 79.9 83.1 91.2 2.2 Myanmar 42.1 46.3 48.0 Namibia 1.7 2.1 2.3 52.2 56.9 19.4 21.9 37.6 Nepal 21.6 27.3 30.0 55.0 55.7 57.4 62.3 81.3 75.7 4.5 2.7 Netherlands 15.5 16.3 16.6 68.4 67.5 67.1 69.2 76.9 78.2 7.2 4.7 4.5 New Zealand 3.7 4.1 4.4 65.4 66.4 66.5 74.5 77.3 77.5 6.5 3.8 6.5 Nicaragua 4.6 5.4 5.8 51.6 59.1 65.6 67.3 16.9 5.6 Niger 9.2 13.0 15.5 47.6 59.2 5.1 Nigeria 110.0 139.8 158.4 53.3 63.3 62.7 63.7 Norway 4.4 4.6 4.9 64.6 65.5 66.2 78.3 78.1 4.9 4.6 3.6 Oman 2.2 2.4 2.8 76.8 Pakistan 127.3 158.6 173.6 53.7 55.3 56.7 55.2 5.0 7.4 5.0 Panama 2.7 3.2 3.5 60.7 62.7 62.6 62.2 67.3 68.4 14.0 9.8 6.5 Papua New Guinea 4.7 6.1 6.9 55.7 56.2 70.5 Paraguay 4.8 5.9 6.5 53.1 58.9 61.6 79.7 73.5 72.0 3.4 5.8 5.6 Peru 23.8 27.6 29.1 59.3 61.3 61.0 74.3 74.4 78.0 7.1 11.4 6.3 Philippines 69.3 85.5 93.3 58.3 60.7 62.4 64.1 62.1 63.7 8.4 7.7 7.5 Poland 38.6 38.2 38.2 65.9 70.1 71.3 67.4 64.4 65.6 13.3 17.7 9.6 Portugal 10.0 10.5 10.6 67.3 67.3 66.9 67.4 73.4 74.0 7.2 7.6 10.8 Romania 22.7 21.6 21.4 67.3 69.5 69.9 71.5 62.3 63.6 8.0 7.2 7.3 Russian Federation 148.1 143.2 141.8 52.4 9.4 7.2 7.5 Rwanda 5.6 9.2 10.6 51.9 53.5 76.3 85.7 0.6 Saudi Arabia 18.5 24.0 27.4 6.3 5.4 Senegal 8.4 10.9 12.4 58.7 53.7 59.3 51.6 10.0 Serbia 7.7 7.4 7.3 64.5 59.1 20.8 16.6 Sierra Leone 3.9 5.2 5.9 52.6 67.1 3.4 Singapore 3.5 4.3 5.1 2.7 5.6 5.9 Slovak Republic 5.4 5.4 5.4 66.3 71.3 72.4 69.3 68.9 68.7 13.1 16.2 14.4 Slovenia 2.0 2.0 2.1 69.4 70.3 69.4 66.3 70.7 71.5 7.2 6.5 7.2 Somalia 6.5 8.4 9.3 South Africa 39.1 47.2 50.0 62.3 62.6 57.6 68.2 16.9 23.8 24.7 Spain 39.4 43.4 46.1 68.0 68.7 68.2 60.6 69.7 73.4 22.7 9.2 20.1 Sri Lanka 18.2 19.8 20.9 65.3 67.3 66.9 60.8 58.8 59.1 12.2 7.7 4.9 Sudan 30.1 38.4 43.6 Swaziland 1.0 1.1 1.2 57.1 61.8 21.7 Sweden 8.8 9.0 9.4 63.7 65.2 65.3 77.7 78.7 79.5 9.1 7.7 8.4 Switzerland 7.0 7.4 7.8 67.7 67.9 68.0 79.1 80.9 82.4 3.3 4.4 4.5 Syrian Arab Republic 14.2 18.5 20.4 57.5 51.1 7.2 8.2 8.4 Tajikistan 5.8 6.5 6.9 57.0 54.4 Tanzania 29.9 38.8 44.8 48.8 51.3 50.5 77.4 91.4 78.4 4.3 Thailand 59.7 66.7 69.1 74.1 66.3 67.5 80.7 82.1 81.5 1.1 1.3 1.2 Timor-Leste 0.9 1.0 1.1 53.7 53.3 63.3 43.0 Togo 4.1 5.4 6.0 55.1 82.8 Tonga 0.1 0.1 0.1 55.7 60.6 13.3 1.1 Trinidad and Tobago 1.3 1.3 1.3 17.2 8.0 4.6 Tunisia 9.0 10.0 10.5 61.0 51.4 15.9 14.2 14.2 Turkey 58.9 68.1 72.8 63.0 65.5 67.0 56.8 49.8 51.9 7.6 10.6 11.9 Turkmenistan 4.2 4.7 5.0 Uganda 20.8 28.4 33.4 51.4 85.7 2.0 4.2 Ukraine 51.5 47.1 45.9 67.8 68.3 5.6 7.2 8.8 United Kingdom 58.0 60.2 62.2 64.7 66.0 66.1 74.7 75.4 75.5 8.6 4.7 7.8 United States 266.3 295.8 309.1 65.4 67.0 66.8 76.9 75.4 73.9 5.6 5.1 9.6 Uruguay 3.2 3.3 3.4 62.4 61.6 62.9 71.7 72.7 75.0 10.2 12.2 7.6 Uzbekistan 22.8 26.2 28.2 Venezuela, RB 22.0 26.6 28.8 59.8 63.6 64.0 69.2 10.2 11.4 7.6 Vietnam 72.0 82.4 86.9 61.9 68.3 69.0 84.4 80.5 79.6 1.9 2.1 2.4 West Bank and Gaza 2.5 3.6 4.2 51.9 55.6 45.1 42.6 43.0 Yemen, Rep. 15.1 20.6 24.1 52.1 8.3 16.1 14.6 Zambia 8.9 11.5 12.9 62.3 64.2 15.3 15.9 Zimbabwe 11.7 12.6 12.6 5.0 4.2 342 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 TABLE 1 Labor force, continued Population Working age Participation Unemployment (millions) population (%) rate (%) rate (%) Men Men Men Men 1995 2005 2010 1995 2005 2010 1995 2005 2010 1995 2005 2010 Afghanistan 11.6 15.5 17.8 47.9 85.2 7.6 Albania 1.6 1.6 1.6 61.0 69.4 73.5 65.8 14.4 12.2 Algeria 14.3 16.6 17.9 26.0 14.9 10.0 Angola 6.0 8.2 9.4 Argentina 17.1 18.9 19.8 61.8 64.2 65.4 80.4 81.7 81.0 16.5 9.2 7.8 Armenia 1.5 1.4 1.4 65.6 64.6 38.0 21.9 Australia 9.0 10.1 11.1 67.4 67.9 68.1 83.9 82.6 82.9 8.8 4.9 5.1 Austria 3.8 4.0 4.1 69.9 70.0 69.4 80.8 79.3 80.9 3.1 4.9 4.6 Azerbaijan 3.8 4.1 4.5 62.1 57.9 8.0 5.2 Bangladesh 60.3 71.9 75.3 58.5 59.1 89.0 2.7 3.4 4.2 Barbados 0.1 0.1 0.1 85.6 79.7 16.6 7.3 6.8 Belarus 4.8 4.6 4.4 72.3 72.0 Belgium 5.0 5.1 5.3 68.2 67.4 67.6 72.3 73.9 73.4 7.3 7.6 8.1 Belize 0.1 0.1 0.2 51.9 81.9 2.9 2.6 Benin 2.7 3.7 4.4 47.9 77.4 Bhutan 0.3 0.3 0.4 60.3 76.1 10 7.5 Bolivia 3.7 4.6 5.0 54.4 55.8 58.9 83.1 82.1 84.5 3.3 4.5 Bosnia and Herzegovina 1.6 1.8 1.8 84.5 73.7 29.5 25.6 Botswana 0.8 0.9 1.0 59.0 74.7 19.4 15.3 Brazil 80.2 91.7 95.9 61.5 66.3 67.5 87.7 85.6 85.1 5.1 7.1 6.1 Bulgaria 4.1 3.8 3.6 67.8 70.7 70.9 71.7 67.0 70.8 15.5 10.3 10.9 Burkina Faso 5.2 7.0 8.2 45.8 47.9 92.2 91.7 2.9 Burundi 3.0 3.5 4.1 Cambodia 5.4 6.5 6.9 54.0 60.7 62.1 80.7 90.8 89.1 1.5 Cameroon 6.9 8.8 9.8 49.4 90.5 76.8 70.0 9.5 4.2 Canada 14.5 16.0 16.9 68.7 70.3 70.3 81.5 82.5 81.5 9.8 7.0 8.7 Central African Republic 1.6 2.0 2.2 49.5 76.6 Chad 3.5 4.9 5.6 46.9 1.1 Chile 7.1 8.1 8.5 64.0 67.6 69.2 80.7 76.7 77.8 4.4 7.0 7.2 China 618.1 673.8 687.5 70.5 74.1 78.6 78.2 2.4 2.6 Colombia 18.0 21.2 22.8 52.4 61.9 63.6 80.7 84.1 84.8 6.8 8.7 9.1 Congo, Dem. Rep. 21.8 28.5 32.8 48.9 72.2 Congo, Rep. 1.4 1.8 2.0 55.7 68.0 Costa Rica 1.8 2.2 2.4 59.3 65.4 67.6 86.4 84.0 82.1 4.6 5.0 6.6 Côte d’Ivoire 7.6 9.2 10.1 Croatia 2.3 2.1 2.1 69.2 69.5 70.0 67.2 9.5 11.6 11.4 Cuba 5.5 5.7 5.7 5.4 1.8 1.4 Czech Republic 5.0 5.0 5.2 69.9 73.1 72.7 80.6 78.4 78.6 3.4 6.5 6.4 Denmark 2.6 2.7 2.7 69.3 67.5 66.7 85.6 83.6 82.6 5.6 4.4 8.4 Dominican Republic 4.0 4.7 5.0 57.4 61.9 63.1 85.1 75.6 75.3 10.2 11.1 8.5 Ecuador 5.7 6.7 7.2 56.9 60.4 61.8 89.3 86.6 81.8 5.5 5.6 5.2 Egypt, Arab Rep. 31.2 37.3 40.7 56.7 62.8 80.7 78.6 7.6 7.1 5.9 El Salvador 2.8 2.9 2.9 54.2 56.3 59.1 84.5 81.9 82.6 8.7 8.9 9.0 Eritrea 1.6 2.2 2.6 Estonia 0.7 0.6 0.6 67.9 70.9 70.9 79.9 73.6 76.8 10.5 8.8 19.5 Ethiopia 28.3 36.9 41.3 47.8 47.3 90.4 91.6 3.0 2.7 Fiji 0.4 0.4 0.4 60.8 65.3 72.1 75.1 4.8 4.1 Finland 2.5 2.6 2.6 69.3 68.9 68.4 74.8 76.6 76.4 15.4 8.1 9.0 France 28.9 30.6 31.6 66.9 66.5 66.2 74.9 75.2 74.9 10.0 8.0 9.0 Gabon 0.5 0.7 0.8 59.1 66.2 19.1 Gambia, The 0.6 0.7 0.9 Georgia 2.2 2.1 2.1 66.0 68.4 71.9 14.8 16.8 Germany 39.7 40.3 40.0 71.6 69.3 67.9 79.6 80.6 82.3 7.2 11.3 7.5 Ghana 8.6 11.0 12.4 53.9 76.4 3.5 Greece 5.2 5.5 5.6 68.3 68.7 68.2 77.2 79.2 78.9 6.2 6.1 9.9 Guatemala 5.0 6.2 7.0 51.2 90.9 2.8 Guinea 3.8 4.6 5.0 45.8 85.7 4.6 Guinea-Bissau 0.6 0.7 0.8 Haiti 3.9 4.6 5.0 Honduras 2.8 3.4 3.8 50.6 53.6 56.4 87.6 85.9 85.8 3.2 3.2 Hungary 4.9 4.8 4.8 69.3 71.1 71.3 67.9 67.9 68.3 11.3 7.0 11.6 India 484.0 566.6 604.8 59.3 61.1 63.7 85.7 85.1 82.1 2.4 4.1 3.3 Indonesia 99.7 113.5 119.6 60.9 65.6 64.7 89.1 84.4 83.0 3.8 9.5 7.5 Iran, Islamic Rep. 30.1 35.5 37.5 64.6 79.3 8.5 10.5 9.1 Iraq 10.4 13.8 16.1 48.6 56.1 78.0 72.4 19.2 Ireland 1.8 2.1 2.2 64.7 68.9 67.7 76.1 80.6 77.4 11.9 4.6 16.8 Israel 2.7 3.4 3.8 61.1 62.0 62.4 69.0 66.8 68.2 5.6 8.5 6.8 Italy 27.5 28.5 29.6 70.5 68.4 67.6 73.2 74.6 73.3 9.1 6.2 7.6 Jamaica 1.2 1.3 1.3 61.4 87.7 10.8 7.4 8.5 Japan 61.5 62.4 62.1 71.2 68.0 65.9 84.5 84.4 84.8 3.1 4.6 5.4 Jordan 2.2 2.8 3.1 55.8 71.8 12.1 11.8 10.3 Kazakhstan 7.6 7.2 7.8 63.2 70.3 62.7 71.6 6.7 5.6 Kenya 13.7 17.8 20.2 50.1 53.0 68.3 68.7 Kiribati 58.2 70.4 Korea, Rep. 22.6 24.0 24.4 71.3 72.7 74.7 78.7 78.2 77.1 2.3 4.0 4.0 Kosovo 61.9 63.9 32.9 Kyrgyz Republic 2.3 2.5 2.6 57.9 69.4 7.4 7.3 Lao PDR 2.4 2.9 3.1 50.8 58.3 90.3 2.6 1.3 Selected Indicators 343 TABLE 1 Labor force, continued Population Working age Participation Unemployment (millions) population (%) rate (%) rate (%) Men Men Men Men 1995 2005 2010 1995 2005 2010 1995 2005 2010 1995 2005 2010 Latvia 1.2 1.1 1.0 68.0 71.9 72.5 74.4 75.8 20.6 9.1 21.7 Lebanon 1.7 2.0 2.1 63.3 74.5 7.3 Lesotho 0.9 1.0 1.1 30.7 23.0 Liberia 1.0 1.6 2.0 54.2 77.1 6.8 3.4 Libya 2.5 2.9 3.2 Lithuania 1.7 1.6 1.5 67.5 70.1 71.8 72.1 72.4 15.3 8.2 21.2 Macedonia, FYR 1.0 1.0 1.0 66.7 69.7 71.4 75.0 77.7 Madagascar 6.6 8.9 10.3 51.1 49.5 91.6 1.7 Malawi 4.9 6.4 7.5 53.3 49.7 91.3 5.4 Malaysia 10.5 13.3 14.4 2.8 3.4 3.6 Mali 4.9 6.6 7.7 60.3 48.1 88.0 68.0 3.3 7.2 Mauritania 1.1 1.5 1.7 48.3 89.5 Mauritius 0.6 0.6 0.6 69.3 70.2 81.9 79.3 4.6 5.8 4.6 Mexico 45.7 52.6 55.9 58.8 62.9 65.4 85.7 83.1 83.0 6.0 3.4 5.2 Moldova 1.8 1.7 1.7 67.8 79.0 8.7 9.1 Mongolia 1.1 1.3 1.4 67.2 73.0 3.0 Montenegro 0.3 0.3 0.3 69.2 64.2 26.2 Morocco 13.4 15.0 15.7 54.6 60.9 84.7 83.7 18.7 10.8 9.8 Mozambique 7.6 10.0 11.4 49.8 48.0 46.4 79.6 82.3 90.6 3.4 Myanmar 20.9 22.9 23.6 Namibia 0.8 1.0 1.1 50.7 64.6 17.9 19.4 32.5 Nepal 10.8 13.5 14.9 54.4 52.6 53.7 64.2 88.1 81.0 3.1 Netherlands 7.6 8.1 8.2 70.3 69.0 68.3 79.9 83.7 83.7 6.1 4.4 4.4 New Zealand 1.8 2.0 2.1 65.9 66.6 66.5 83.7 84.4 83.6 6.4 3.5 6.2 Nicaragua 2.3 2.7 2.9 50.3 58.3 87.3 88.1 75.0 15.9 5.4 Niger 4.6 6.5 7.8 47.3 65.7 3.6 Nigeria 55.4 70.7 80.2 50.2 60.9 82.0 74.2 Norway 2.2 2.3 2.4 66.4 67.1 67.7 81.2 81.6 80.6 5.1 4.8 4.1 Oman 1.3 1.3 1.6 Pakistan 65.5 81.0 88.2 52.7 54.0 85.1 83.2 3.7 6.2 4.0 Panama 1.4 1.6 1.8 60.5 61.5 61.9 83.1 84.2 85.3 10.8 7.6 5.3 Papua New Guinea 2.4 3.1 3.5 54.2 55.2 70.0 Paraguay 2.4 3.0 3.3 52.7 59.1 61.7 93.7 87.7 86.5 3.1 4.8 4.4 Peru 12.0 13.8 14.6 58.4 61.1 60.6 86.0 84.3 86.2 6.0 9.6 4.4 Philippines 35.0 43.0 46.8 57.9 60.6 62.3 80.5 77.6 76.6 7.7 7.7 7.5 Poland 18.8 18.5 18.4 67.2 72.0 73.3 73.9 70.8 72.4 12.1 16.6 9.3 Portugal 4.8 5.1 5.2 68.3 68.7 68.5 76.4 79.0 78.2 6.4 6.7 9.8 Romania 11.1 10.5 10.4 68.3 71.0 71.6 77.7 69.4 71.5 7.5 7.8 7.9 Russian Federation 69.4 66.4 65.6 47.9 9.7 7.3 8.0 Rwanda 2.7 4.5 5.2 49.8 51.8 75.4 83.7 0.9 Saudi Arabia 10.3 13.5 15.2 4.7 3.5 Senegal 4.2 5.4 6.2 58.2 50.9 77.8 71.5 7.9 Serbia 3.8 3.7 3.6 65.9 67.4 16.8 15.3 Sierra Leone 1.9 2.5 2.9 50.0 66.8 4.5 Singapore 1.8 2.1 2.6 2.6 5.6 5.4 Slovak Republic 2.6 2.6 2.6 67.3 73.0 74.4 77.3 76.5 76.1 12.6 15.4 14.2 Slovenia 1.0 1.0 1.0 71.7 73.0 72.3 71.1 75.1 75.4 7.4 6.1 7.4 Somalia 3.2 4.1 4.6 South Africa 19.3 23.3 24.8 61.3 61.4 68.0 72.3 14.4 20.0 22.6 Spain 19.3 21.4 22.8 69.4 70.4 69.9 75.5 80.9 80.7 17.8 7.0 19.7 Sri Lanka 9.2 9.8 10.3 64.3 66.5 65.5 82.1 80.2 80.9 9.0 5.6 3.5 Sudan 15.2 19.3 21.9 Swaziland 0.5 0.5 0.6 57.0 71.3 20.4 Sweden 4.4 4.5 4.7 65.4 66.8 66.7 79.6 80.9 82.3 9.8 7.8 8.5 Switzerland 3.4 3.6 3.8 69.5 69.5 69.5 90.0 87.4 88.3 2.9 3.9 4.2 Syrian Arab Republic 7.1 9.4 10.3 56.6 81.3 5.5 5.3 5.7 Tajikistan 2.9 3.2 3.4 56.0 63.5 Tanzania 14.8 19.4 22.4 46.5 50.1 50.3 83.6 92.0 80.7 2.8 Thailand 29.7 32.8 34.0 73.5 65.4 66.8 89.8 88.4 88.0 1.0 1.5 1.2 Timor-Leste 0.4 0.5 0.6 53.5 53.3 77.5 57.9 Togo 2.0 2.7 3.0 53.6 82.2 Tonga 0.0 0.1 0.1 54.7 77.6 3.6 Trinidad and Tobago 0.6 0.6 0.7 15.2 5.8 3.5 Tunisia 4.5 5.0 5.3 60.4 77.2 15.5 13.1 Turkey 29.4 34.0 36.3 63.1 65.9 67.4 81.1 73.0 74.5 7.8 10.4 11.4 Turkmenistan 2.1 2.3 2.5 Uganda 10.3 14.2 16.7 52.9 87.9 1.8 3.1 Ukraine 23.9 21.7 21.1 69.7 75.8 6.3 7.5 6.6 United Kingdom 28.2 29.5 30.6 66.3 67.1 67.1 83.3 82.0 81.7 10.0 5.0 8.6 United States 130.2 145.6 152.5 66.5 68.0 67.8 84.3 81.8 79.6 5.6 5.1 10.5 Uruguay 1.6 1.6 1.6 62.7 62.3 63.2 86.4 82.9 84.5 8.0 9.5 5.4 Uzbekistan 11.3 13.0 14.0 Venezuela, RB 11.1 13.4 14.5 59.7 63.6 84.1 83.5 9.0 10.3 7.2 Vietnam 35.3 40.6 43.0 60.4 68.6 69.6 85.9 82.3 81.9 2.2 1.9 West Bank and Gaza 1.3 1.8 2.1 52.1 56.6 79.0 70.0 65.9 Yemen, Rep. 7.6 10.4 12.1 50.5 9.3 11.9 11.5 Zambia 4.4 5.7 6.5 61.3 62.5 14.9 Zimbabwe 5.8 6.2 6.2 6.8 4.2 344 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 TABLE 1 Labor force, continued Population Working age Participation Unemployment (millions) population (%) rate (%) rate (%) Women Women Women Women 1995 2005 2010 1995 2005 2010 1995 2005 2010 1995 2005 2010 Afghanistan 10.8 14.4 16.6 49.6 45.1 9.5 Albania 1.6 1.6 1.6 62.4 68.7 62.3 49.2 12.2 15.9 Algeria 14.0 16.3 17.6 38.4 17.5 20.0 Angola 6.1 8.3 9.6 Argentina 17.7 19.7 20.7 61.0 62.8 63.8 47.7 57.2 55.5 22.3 12.4 9.8 Armenia 1.7 1.6 1.7 67.6 45.0 34.4 35.0 Australia 9.1 10.3 11.2 65.7 66.8 67.1 64.2 68.2 70.0 8.1 5.2 5.4 Austria 4.1 4.2 4.3 64.5 66.0 65.8 62.3 65.6 69.3 4.3 5.5 4.2 Azerbaijan 3.9 4.3 4.6 64.2 39.3 8.3 6.9 Bangladesh 57.2 68.7 73.4 59.5 61.8 31.0 2.2 7.0 7.4 Barbados 0.1 0.1 0.1 82.4 67.3 22.7 10.9 9.4 Belarus 5.4 5.2 5.1 68.1 68.9 Belgium 5.2 5.4 5.5 64.3 63.8 64.3 51.7 59.5 61.8 12.2 9.5 8.5 Belize 0.1 0.1 0.2 53.6 34.8 3.3 5.3 Benin 2.9 3.9 4.5 53.1 79.8 Bhutan 0.3 0.3 0.3 62.9 62.1 17.9 17.2 Bolivia 3.8 4.6 5.0 57.0 58.5 60.3 60.5 62.4 65.8 4.0 6.5 Bosnia and Herzegovina 1.7 2.0 2.0 77.5 43.3 35.7 30.0 Botswana 0.8 0.9 1.0 60.7 63.0 23.9 19.9 Brazil 81.7 94.3 99.0 62.6 67.0 68.4 57.4 63.1 63.5 7.2 12.2 11.0 Bulgaria 4.3 4.0 3.9 66.3 67.5 67.1 65.8 57.3 62.3 15.8 9.8 9.5 Burkina Faso 5.4 7.2 8.3 50.7 53.0 82.0 82.4 1.7 Burundi 3.1 3.7 4.3 Cambodia 5.8 6.8 7.2 58.4 63.3 64.6 74.0 79.2 80.8 1.8 Cameroon 7.0 8.8 9.8 53.3 89.0 62.7 65.0 6.5 4.6 Canada 14.8 16.3 17.2 66.6 68.2 68.5 67.8 72.9 74.2 9.1 6.5 7.2 Central African Republic 1.7 2.0 2.2 53.1 74.5 Chad 3.5 4.9 5.6 51.0 0.3 Chile 7.3 8.2 8.7 63.6 66.7 68.1 37.4 42.3 51.8 5.3 9.8 9.6 China 593.1 633.8 653.4 72.3 74.9 64.8 63.7 3.1 3.2 Colombia 18.4 21.8 23.5 55.3 63.8 65.3 33.2 55.4 59.8 11.3 14.9 15.0 Congo, Dem. Rep. 22.2 28.9 33.2 51.3 69.6 Congo, Rep. 1.4 1.8 2.0 58.8 64.2 Costa Rica 1.7 2.1 2.3 61.7 66.4 69.3 37.7 47.5 49.2 6.6 9.6 9.9 Côte d’Ivoire 7.1 8.8 9.7 Croatia 2.4 2.3 2.3 64.8 65.0 56.7 55.9 10.5 13.8 12.2 Cuba 5.4 5.6 5.6 13.0 2.2 2.0 Czech Republic 5.3 5.2 5.4 66.3 69.1 68.5 62.4 61.5 4.8 9.8 8.5 Denmark 2.6 2.7 2.8 65.6 64.8 64.5 64.1 75.9 76.0 8.6 5.3 6.5 Dominican Republic 3.9 4.6 4.9 59.6 61.9 63.9 73.3 40.7 44.0 26.2 28.8 22.8 Ecuador 5.7 6.7 7.2 59.6 61.8 63.1 55.3 60.4 52.5 8.8 10.8 8.4 Egypt, Arab Rep. 30.9 36.9 40.4 55.7 63.6 15.3 40.7 24.1 25.1 19.2 El Salvador 3.0 3.2 3.3 58.6 60.9 62.9 44.5 48.2 49.7 5.9 4.8 4.9 Eritrea 1.6 2.3 2.7 Estonia 0.8 0.7 0.7 64.0 65.6 65.1 66.9 71.0 8.9 7.1 14.3 Ethiopia 28.7 37.3 41.7 50.5 51.5 66.5 78.0 3.3 8.2 Fiji 0.4 0.4 0.4 61.5 66.0 25.3 33.9 7.8 5.9 Finland 2.6 2.7 2.7 64.4 64.6 64.4 69.4 72.8 72.5 15.1 8.7 7.7 France 30.5 32.4 33.3 63.8 63.6 63.5 60.6 64.7 66.1 14.1 9.8 9.7 Gabon 0.5 0.7 0.8 57.9 50.7 16.1 Gambia, The 0.6 0.8 0.9 Georgia 2.5 2.3 2.4 67.1 67.0 57.2 12.7 16.1 Germany 41.9 42.1 41.7 65.2 64.6 63.9 61.3 66.9 70.8 9.4 10.9 6.6 Ghana 8.4 10.6 12.0 56.6 74.9 3.6 Greece 5.4 5.6 5.7 66.7 66.2 65.2 44.3 54.5 57.6 13.8 15.3 16.2 Guatemala 5.0 6.5 7.4 56.3 49.0 3.7 Guinea 3.7 4.5 4.9 52.8 81.8 1.7 Guinea-Bissau 0.6 0.7 0.8 Haiti 4.0 4.7 5.0 Honduras 2.8 3.4 3.8 53.8 57.2 59.9 35.9 44.0 43.6 3.4 6.2 Hungary 5.4 5.3 5.3 66.1 66.6 66.3 50.3 55.1 56.7 8.7 7.5 10.7 India 448.1 528.0 566.1 60.5 62.4 65.5 37.2 38.7 30.1 1.7 5.1 4.5 Indonesia 99.7 113.8 120.2 62.8 66.4 66.1 39.6 45.4 40.9 5.5 14.2 8.5 Iran, Islamic Rep. 29.7 34.2 36.4 67.3 19.5 13.4 18.2 16.8 Iraq 10.5 13.8 16.0 48.5 58.6 9.3 12.8 14.2 Ireland 1.8 2.1 2.2 63.3 67.5 67.0 47.1 60.8 62.2 12.1 4.0 9.6 Israel 2.8 3.5 3.9 60.7 61.5 61.9 52.7 58.1 60.9 8.6 9.5 6.5 Italy 29.3 30.2 30.9 67.1 64.5 64.0 42.4 50.4 51.1 16.1 10.1 9.7 Jamaica 1.3 1.3 1.4 58.8 84.8 22.5 15.3 14.8 Japan 64.0 65.4 65.4 67.9 64.2 61.8 58.4 60.8 63.2 3.3 4.2 4.5 Jordan 2.0 2.6 2.9 56.1 21.6 29.9 16.5 24.1 Kazakhstan 8.2 7.9 8.5 64.8 70.3 49.7 58.0 9.6 7.5 Kenya 13.8 17.8 20.3 52.7 54.5 49.9 53.0 Kiribati 58.6 62.7 3.3 Korea, Rep. 22.5 24.1 24.5 70.2 70.7 71.8 51.4 54.5 54.5 1.7 3.4 Kosovo 63.0 28.3 60.5 9.4 Kyrgyz Republic 2.3 2.6 2.7 58.1 46.0 9.1 Lao PDR 2.4 2.9 3.1 53.3 60.6 85.3 2.6 1.4 15.7 Selected Indicators 345 TABLE 1 Labor force, continued Population Working age Participation Unemployment (millions) population (%) rate (%) rate (%) Women Women Women Women 1995 2005 2010 1995 2005 2010 1995 2005 2010 1995 2005 2010 Latvia 1.4 1.2 1.2 63.7 65.9 65.8 65.1 70.7 19.8 8.7 Lebanon 1.8 2.1 2.2 66.1 22.9 9.5 Lesotho 0.9 1.1 1.1 47.1 28.0 Liberia 1.1 1.6 2.0 56.9 69.4 4.2 4.1 Libya 2.3 2.8 3.1 Lithuania 1.9 1.8 1.8 64.5 65.8 66.5 64.9 68.8 15.9 8.3 14.4 Macedonia, FYR 1.0 1.0 1.0 66.4 68.5 69.9 49.2 50.4 40.8 38.4 32.2 Madagascar 6.6 9.0 10.4 52.5 52.5 86.6 3.5 Malawi 5.0 6.4 7.4 53.6 50.0 87.3 10.0 Malaysia 10.2 12.8 14.0 3.8 3.7 3.8 Mali 5.0 6.6 7.7 64.1 53.1 79.2 47.8 3.3 10.9 Mauritania 1.1 1.5 1.7 55.7 72.7 Mauritius 0.6 0.6 0.6 68.3 69.7 45.3 45.2 8.2 16.5 12.8 Mexico 46.6 53.9 57.5 59.7 64.1 66.5 39.5 43.2 46.3 8.6 3.6 5.2 Moldova 1.9 1.9 1.9 67.4 69.0 6.0 5.7 Mongolia 1.2 1.3 1.4 69.4 63.5 3.6 Montenegro 0.3 0.3 0.3 68.3 50.0 35.5 Morocco 13.5 15.4 16.3 57.1 62.5 21.4 26.4 32.2 11.5 10.5 Mozambique 8.3 10.7 12.0 53.3 52.3 49.9 80.0 83.7 91.8 1.3 Myanmar 21.2 23.4 24.3 Namibia 0.8 1.1 1.1 53.5 50.4 21.1 25.0 43.0 Nepal 10.8 13.7 15.1 55.6 58.5 60.5 60.3 75.6 70.9 2.4 Netherlands 7.8 8.2 8.4 66.6 66.1 65.9 58.3 70.0 72.6 8.7 5.1 4.5 New Zealand 1.9 2.1 2.2 64.9 66.3 66.4 65.6 70.6 71.8 6.5 4.1 6.8 Nicaragua 2.3 2.7 2.9 52.9 59.8 45.2 47.8 31.1 19.3 6.0 Niger 4.6 6.5 7.7 47.9 52.6 8.1 Nigeria 54.6 69.1 78.2 56.5 65.8 44.9 53.1 75.5 Norway 2.2 2.3 2.4 62.8 64.0 64.8 72.3 74.9 75.5 4.6 4.4 3.0 Oman 0.9 1.1 1.1 Pakistan 61.9 77.7 85.4 54.8 56.6 28.2 26.8 14.0 13.0 8.7 Panama 1.3 1.6 1.7 61.0 63.8 63.3 41.5 50.9 52.1 20.1 13.3 8.5 Papua New Guinea 2.3 3.0 3.4 57.4 71.1 Paraguay 2.4 2.9 3.2 53.6 58.6 61.5 66.0 59.2 57.2 3.7 7.2 7.5 Peru 11.9 13.7 14.5 60.2 61.5 61.4 63.4 64.9 70.2 8.7 13.7 8.8 Philippines 34.3 42.5 46.5 58.8 60.7 62.4 47.9 46.4 50.6 9.4 7.8 7.4 Poland 19.8 19.7 19.8 64.7 68.4 69.4 55.3 58.1 59.0 14.7 19.1 10.0 Portugal 5.2 5.4 5.5 66.5 66.1 65.5 59.1 67.9 69.9 8.2 8.7 11.9 Romania 11.6 11.1 11.0 66.4 68.1 68.3 65.4 67.9 55.0 8.6 6.4 6.5 Russian Federation 78.8 76.7 76.2 56.0 56.3 9.2 7.0 6.9 Rwanda 2.9 4.7 5.4 53.7 54.9 77.0 87.4 0.4 Saudi Arabia 8.2 10.6 12.3 14.7 15.9 Senegal 4.2 5.5 6.3 59.3 56.3 43.2 35.0 13.6 Serbia 3.9 3.8 3.7 63.1 50.9 26.2 18.4 Sierra Leone 2.0 2.6 3.0 55.0 67.3 2.3 Singapore 1.8 2.1 2.5 2.8 6.2 6.5 Slovak Republic 2.8 2.8 2.8 65.3 69.7 70.5 61.4 61.5 61.3 13.8 17.2 14.6 Slovenia 1.0 1.0 1.0 67.3 67.7 66.7 61.5 66.1 67.4 6.8 7.0 7.0 Somalia 3.3 4.2 4.7 South Africa 19.8 23.9 25.2 63.2 63.7 48.5 64.4 20.0 28.2 27.3 Spain 20.1 22.0 23.3 66.6 67.0 66.6 45.8 58.3 65.9 30.8 12.2 20.5 Sri Lanka 9.1 10.0 10.6 66.3 67.9 68.2 40.4 39.3 39.7 18.7 11.9 7.7 Sudan 15.0 19.1 21.6 Swaziland 0.5 0.6 0.6 57.2 52.8 23.2 Sweden 4.5 4.6 4.7 61.9 63.6 64.0 75.9 76.3 76.7 8.2 7.6 8.2 Switzerland 3.6 3.8 4.0 65.9 66.3 66.6 68.3 74.3 76.4 3.8 5.1 5.0 Syrian Arab Republic 7.0 9.1 10.1 58.4 20.5 14.2 23.8 22.5 Tajikistan 2.9 3.3 3.5 58.0 45.6 Tanzania 15.1 19.5 22.4 51.1 52.5 50.7 72.0 90.9 76.2 5.8 Thailand 30.0 33.9 35.1 74.8 67.1 68.1 72.2 76.4 75.7 1.1 1.2 1.1 Timor-Leste 0.4 0.5 0.6 53.9 53.4 48.7 27.9 Togo 2.1 2.7 3.0 56.6 83.4 Tonga 0.0 0.1 0.1 56.7 43.7 7.4 Trinidad and Tobago 0.6 0.7 0.7 20.6 11.0 6.2 Tunisia 4.5 5.0 5.3 61.5 25.5 17.3 17.3 Turkey 29.5 34.1 36.5 62.8 65.2 66.7 32.7 25.2 29.6 7.3 11.2 13.0 Turkmenistan 2.1 2.4 2.6 Uganda 10.5 14.3 16.7 50.1 83.5 2.2 5.1 Ukraine 27.6 25.4 24.8 66.3 61.5 4.9 6.8 6.1 United Kingdom 29.8 30.7 31.6 63.2 64.8 65.0 66.0 68.8 69.4 6.8 4.2 6.7 United States 136.1 150.1 156.6 64.4 66.2 66.3 69.7 69.7 68.4 5.6 5.1 8.6 Uruguay 1.7 1.7 1.7 62.1 61.1 62.7 58.5 63.6 66.4 13.2 15.3 10.1 Uzbekistan 11.5 13.2 14.2 Venezuela, RB 10.9 13.2 14.4 59.9 63.6 43.6 54.7 12.8 13.0 8.1 Vietnam 36.7 41.8 44.0 63.3 67.9 68.5 83.1 78.8 77.3 1.7 2.4 West Bank and Gaza 1.2 1.8 2.0 51.6 54.5 9.9 14.2 18.2 Yemen, Rep. 7.5 10.3 11.9 53.7 3.9 46.3 40.9 Zambia 4.5 5.7 6.4 63.2 65.9 15.9 Zimbabwe 5.9 6.3 6.4 3.0 4.1 346 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 TABLE 1 Labor force, continued Participation rate (%) Participation rate (%) Ages 15 to 24 Ages 25 to 64 Men Women Men Women 1995 2005 2010 1995 2005 2010 1995 2005 2010 1995 2005 2010 Afghanistan 72.3 36.7 92.3 49.3 Albania 52.3 39.6 50.9 33.8 82.6 76.8 67.2 55.7 Algeria Angola Argentina 54.7 50.1 36.5 32.4 92.7 92.6 64.5 63.4 Armenia 30.2 25.6 79.1 53.4 Australia 73.8 72.0 69.8 69.8 69.6 67.3 86.9 85.4 86.5 62.6 67.9 70.7 Austria 64.6 63.6 63.6 58.9 54.8 54.1 84.5 82.7 84.6 63.1 67.9 72.6 Azerbaijan 27.4 26.0 70.1 45.0 Bangladesh Barbados 62.0 50.5 85.6 72.3 Belarus 31.2 29.5 87.3 79.9 Belgium 36.0 37.6 35.2 31.7 32.3 29.8 81.1 82.2 82.1 56.5 65.5 68.9 Belize 62.3 28.0 93.8 38.6 Benin 46.3 61.8 93.8 88.0 Bhutan 45.9 46.7 90.3 70.1 Bolivia 59.1 55.5 59.0 45.2 44.2 46.1 95.2 95.6 96.7 68.0 71.2 75.2 Bosnia and Herzegovina 52.3 32.7 79.5 46.1 Botswana 45.2 37.4 88.6 74.0 Brazil 78.5 74.7 71.3 51.8 55.9 54.0 91.9 90.2 90.1 59.7 65.9 66.6 Bulgaria 40.9 31.1 33.5 38.4 24.5 24.2 80.4 76.1 79.5 72.8 65.2 70.6 Burkina Faso 86.1 83.0 77.6 77.5 96.0 97.1 84.3 85.3 Burundi Cambodia 58.7 81.1 78.4 68.3 75.7 75.0 92.3 96.4 95.5 76.6 81.0 83.7 Cameroon 51.7 71.8 43.8 63.2 92.6 69.9 73.7 65.1 Canada 64.9 66.0 64.4 61.3 65.7 64.6 85.8 86.6 85.6 69.4 74.6 76.5 Central African Republic 72.1 73.7 79.2 75.0 Chad Chile 49.1 38.2 43.8 26.3 24.4 30.4 91.9 90.9 90.5 41.3 48.1 58.6 China 60.4 59.6 58.7 55.1 90.5 90.8 74.5 74.1 Colombia 62.5 61.9 42.8 43.4 93.4 94.2 60.5 65.9 Congo, Dem. Rep. 37.5 47.8 91.3 82.0 Congo, Rep. 40.5 41.7 84.3 76.4 Costa Rica 71.7 61.1 57.8 35.1 36.4 36.1 93.3 94.5 93.1 38.9 52.1 54.2 Côte d’Ivoire Croatia 43.0 40.2 32.9 27.6 77.0 74.0 62.2 62.0 Cuba Czech Republic 58.7 38.9 36.2 42.0 28.9 25.3 87.9 87.7 87.8 70.9 69.9 69.1 Denmark 77.0 70.0 67.6 69.4 66.2 67.4 87.7 86.3 86.1 74.3 77.9 78.0 Dominican Republic 67.9 51.5 49.0 38.6 26.2 26.5 95.2 87.5 87.9 44.1 47.0 51.8 Ecuador 78.1 66.7 55.4 45.1 45.6 33.8 95.1 96.4 94.5 60.9 66.8 59.9 Egypt, Arab Rep. 51.1 25.9 95.0 48.7 El Salvador 69.8 63.0 62.8 31.9 31.6 31.6 94.0 92.2 93.2 51.5 55.6 57.8 Eritrea Estonia 58.3 39.7 42.3 39.7 29.5 34.3 86.1 84.2 86.3 73.1 77.0 79.9 Ethiopia 81.3 81.7 48.0 72.3 96.4 97.2 53.6 81.3 Fiji 49.7 44.1 21.2 23.8 82.5 88.0 27.2 37.3 Finland 51.1 50.9 49.4 48.1 50.4 49.3 79.9 82.2 82.4 73.8 77.9 77.7 France 37.3 41.8 42.8 33.8 34.3 35.5 84.0 83.4 82.5 67.4 71.9 73.0 Gabon 26.4 22.2 86.8 68.4 Gambia, The Georgia 41.8 23.6 81.8 67.3 Germany 54.6 52.4 53.7 50.3 46.7 48.9 84.4 86.7 88.2 63.3 71.2 75.2 Ghana 43.6 44.3 94.8 89.6 Greece 41.3 37.0 33.4 32.5 30.4 27.2 86.3 88.0 87.1 47.3 59.5 63.0 Guatemala 80.0 40.9 97.2 53.5 Guinea 67.9 74.2 95.1 84.8 Guinea-Bissau Haiti Honduras 75.7 73.4 71.9 28.1 33.1 29.5 95.6 94.5 95.3 40.5 50.6 51.6 Hungary 44.6 30.3 27.7 31.9 23.8 22.1 75.4 76.9 77.4 55.5 62.0 63.9 India 66.0 63.3 52.1 29.1 27.6 19.1 94.9 94.8 95.1 40.7 43.4 34.4 Indonesia 65.7 59.5 47.5 35.1 37.9 26.9 98.9 93.9 94.6 41.5 48.1 45.2 Iran, Islamic Rep. 58.7 16.9 93.2 21.1 Iraq 51.4 4.7 83.1 16.7 Ireland 48.3 56.6 43.1 41.4 49.9 41.5 86.5 87.7 85.0 49.1 63.9 66.8 Israel 35.1 30.4 28.9 34.6 34.4 33.7 83.4 80.3 81.6 59.8 66.3 69.7 Italy 43.9 38.7 33.2 33.6 28.7 23.4 80.6 81.4 80.8 44.6 54.3 56.0 Jamaica 62.6 58.7 97.9 94.9 Japan 48.0 44.5 42.3 47.2 45.0 44.0 94.7 92.6 92.9 61.4 63.9 66.7 Jordan Kazakhstan 33.1 32.4 26.5 25.1 74.7 89.6 57.8 70.0 Kenya 42.6 40.6 35.3 29.2 83.3 88.7 58.6 69.0 Kiribati 60.0 55.6 75.5 65.8 Korea, Rep. 31.2 26.7 20.2 41.8 39.0 30.4 92.6 88.8 88.2 54.7 58.2 59.7 Kosovo 46.8 31.8 72.8 26.7 Kyrgyz Republic 52.1 32.3 78.1 53.2 Lao PDR 78.5 80.6 96.2 87.7 Selected Indicators 347 TABLE 1 Labor force, continued Participation rate (%) Participation rate (%) Ages 15 to 24 Ages 25 to 64 Men Women Men Women 1995 2005 2010 1995 2005 2010 1995 2005 2010 1995 2005 2010 Latvia 43.8 43.0 31.3 37.7 84.0 85.2 74.3 79.0 Lebanon 43.7 17.8 88.4 24.9 Lesotho Liberia 58.5 58.0 87.8 75.8 Libya Lithuania 29.5 32.8 20.5 26.3 85.4 84.5 77.0 80.1 Macedonia, FYR 42.0 42.2 29.3 24.0 85.0 87.9 55.0 57.7 Madagascar 83.1 80.2 96.9 90.4 Malawi 80.3 78.7 97.9 93.0 Malaysia Mali 80.6 53.5 75.5 42.5 92.1 78.1 81.0 50.9 Mauritania 81.3 59.9 92.0 78.6 Mauritius 53.3 45.7 35.6 31.4 90.7 89.8 48.2 49.2 Mexico 71.8 61.3 61.8 37.3 33.3 33.2 92.6 92.8 92.3 40.6 47.3 51.4 Moldova 50.9 41.7 87.9 76.9 Mongolia 41.2 30.7 89.4 80.4 Montenegro 39.3 27.6 73.0 56.8 Morocco Mozambique 59.2 56.1 76.1 68.8 70.0 82.8 91.5 96.7 98.0 86.4 91.9 96.6 Myanmar Namibia 37.8 34.3 83.6 61.1 Nepal 50.0 76.4 58.0 53.5 69.1 52.7 72.1 93.9 91.5 64.1 78.9 80.3 Netherlands 62.2 71.2 68.6 61.8 70.8 69.4 84.1 86.4 87.1 57.4 69.8 73.3 New Zealand 71.2 65.6 62.2 63.0 59.4 58.5 87.5 89.7 89.9 66.4 73.5 75.3 Nicaragua 73.7 76.8 33.1 34.9 95.8 95.9 52.4 54.9 Niger 54.5 45.6 71.2 55.8 Nigeria 47.3 30.9 27.2 23.7 97.6 91.0 52.9 64.0 Norway 54.3 60.5 56.6 55.4 60.1 56.8 87.9 86.1 86.4 76.8 78.1 80.0 Oman Pakistan 70.8 64.9 25.5 23.8 93.9 94.5 29.8 28.4 Panama 62.5 62.1 62.8 28.4 35.3 32.4 92.6 93.1 93.7 47.3 56.8 59.2 Papua New Guinea 68.3 68.4 70.8 72.4 Paraguay 86.8 73.5 70.0 56.8 45.0 43.6 96.8 95.2 94.5 70.3 66.3 63.3 Peru 67.4 64.9 67.2 51.8 51.8 54.6 95.8 93.6 94.7 69.3 70.5 76.4 Philippines 56.0 52.1 50.3 32.6 31.6 31.9 93.1 90.4 89.5 55.1 53.8 59.4 Poland 43.9 39.5 39.1 35.6 31.8 29.7 82.2 80.1 80.6 67.9 65.5 65.7 Portugal 47.2 46.9 38.6 38.9 38.9 34.8 86.4 86.6 86.2 65.0 74.2 76.5 Romania 50.1 35.9 36.2 42.3 26.5 26.1 86.5 79.1 80.5 72.6 63.3 62.9 Russian Federation Rwanda 65.1 69.5 66.7 73.5 84.2 95.4 84.7 97.4 Saudi Arabia Senegal 60.0 53.8 25.9 24.8 88.6 83.4 55.4 41.4 Serbia 34.6 21.2 75.0 57.0 Sierra Leone 35.2 46.5 85.1 77.5 Singapore Slovak Republic 52.0 40.7 36.4 40.4 32.4 25.5 86.2 87.4 86.4 68.3 69.9 70.1 Slovenia 44.6 44.5 44.4 40.7 36.3 34.8 79.1 82.4 82.0 67.7 73.0 73.7 Somalia South Africa 30.3 42.5 26.8 43.0 86.5 87.4 58.8 74.1 Spain 44.6 52.3 45.1 38.6 42.9 40.1 85.4 87.2 87.3 48.1 61.5 70.5 Sri Lanka 57.9 53.7 50.8 36.8 32.9 28.1 92.7 89.5 90.8 41.9 41.3 43.3 Sudan Swaziland 39.4 37.4 90.8 62.4 Sweden 44.2 49.1 52.1 46.8 51.3 51.4 88.3 88.4 90.1 82.9 82.1 83.1 Switzerland 65.0 66.6 69.1 62.1 64.7 66.5 95.5 91.9 92.5 69.6 76.2 78.5 Syrian Arab Republic 63.3 18.9 93.7 21.5 Tajikistan 43.8 37.0 75.9 50.9 Tanzania 58.9 80.2 57.0 55.2 81.2 55.3 97.8 97.6 95.3 82.5 95.5 87.8 Thailand 71.8 58.4 56.0 64.8 45.2 39.9 96.2 95.7 95.4 74.8 83.0 83.0 Timor-Leste 47.6 17.5 37.8 10.5 94.4 79.8 54.2 36.8 Togo 63.1 68.8 92.8 90.4 Tonga 53.9 29.7 91.4 51.1 Trinidad and Tobago Tunisia 50.0 27.3 91.0 24.6 Turkey 63.7 51.7 49.8 34.2 24.5 25.5 89.1 83.3 82.3 37.0 75.5 31.0 Turkmenistan Uganda 75.4 70.0 95.2 92.9 Ukraine 40.6 29.6 86.0 69.2 United Kingdom 67.9 65.3 61.8 59.2 59.2 56.4 87.1 86.1 86.5 67.6 71.0 72.4 United States 70.2 62.9 56.7 62.3 58.6 53.5 87.8 86.4 85.1 71.5 71.6 71.8 Uruguay 72.6 60.3 61.3 52.5 45.8 44.5 91.5 90.9 92.5 60.5 68.9 72.8 Uzbekistan Venezuela, RB 64.0 60.1 29.3 35.1 93.9 93.9 50.3 63.1 Vietnam 79.7 57.6 56.3 80.1 53.8 49.5 89.1 94.9 93.9 84.4 89.2 87.9 West Bank and Gaza 43.0 42.5 7.2 7.7 86.8 85.8 18.4 26.0 Yemen, Rep. Zambia 43.1 55.3 74.4 72.5 Zimbabwe 348 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 TABLE 2 Skills Average schooling Average schooling Average schooling Skills as a (years) (years) (years) constraint (%) Total Men Women Total 1995 2005 2010 1995 2005 2010 1995 2005 2010 2005 2010 Afghanistan 2.2 3.4 4.2 3.4 5.5 6.7 0.9 1.1 1.5 18 Albania 9.4 10.3 10.3 9.8 10.5 10.4 9.1 10.1 10.1 10 Algeria 6.3 7.7 8.3 7.7 8.8 9.1 4.8 6.7 7.5 Angola 21 26 Argentina 8.6 9.1 9.3 8.5 9.0 9.1 8.7 9.3 9.5 49 57 Armenia 10.4 10.4 10.4 10.5 10.1 9.8 10.3 10.6 11.0 2 23 Australia 11.7 11.9 12.1 11.5 11.5 11.7 11.9 12.2 12.5 Austria 8.5 9.3 9.5 9.5 10.3 10.3 7.6 8.4 8.8 Azerbaijan 2 15 Bangladesh 3.7 5.2 5.8 4.3 5.5 6.0 3.1 4.8 5.6 25 Barbados 8.8 9.3 9.5 8.8 9.2 9.2 8.7 9.5 9.8 Belarus 7 61 Belgium 9.9 10.5 10.5 10.0 10.6 10.7 9.8 10.4 10.4 Belize 8.8 9.3 9.5 8.8 9.4 9.5 8.7 9.3 9.5 Benin 2.6 3.6 4.2 3.6 4.8 5.5 1.6 2.4 2.9 26 26 Bhutan 13 Bolivia 7.8 9.4 9.9 8.6 10.1 10.5 6.9 8.7 9.3 28 37 Bosnia and Herzegovina 4 19 Botswana 8.2 9.2 9.6 8.3 9.4 9.8 8.2 9.1 9.4 20 32 Brazil 5.4 7.2 7.5 5.3 7.1 7.4 5.4 7.3 7.7 40 69 Bulgaria 9.1 9.7 9.9 9.2 9.7 9.8 9.0 9.7 9.9 10 21 Burkina Faso 13 37 Burundi 2.2 2.9 3.3 2.7 3.4 3.9 1.6 2.3 2.7 12 Cambodia 5.6 5.9 6.0 6.1 6.2 6.3 5.3 5.6 5.8 7 Cameroon 5.0 5.8 6.1 5.8 6.5 6.8 4.1 5.0 5.4 8 38 Canada 10.8 12.1 12.1 10.8 12.1 12.0 10.7 12.2 12.1 Central African Republic 3.0 3.5 3.6 4.1 4.7 4.8 1.9 2.4 2.6 Chad 53 Chile 8.8 9.7 10.2 8.9 9.8 10.3 8.7 9.6 10.1 42 41 China 6.4 7.6 8.2 6.9 8.2 8.7 5.9 7.0 7.6 Colombia 6.5 7.0 7.7 6.6 7.0 7.7 6.4 7.1 7.7 29 45 Congo, Dem. Rep. 3.2 3.5 3.5 4.6 4.7 4.6 2.0 2.3 2.4 13 65 Congo, Rep. 5.7 5.9 6.0 6.4 6.7 6.9 5.1 5.1 5.2 51 Costa Rica 7.6 8.1 8.7 7.6 8.0 8.6 7.5 8.1 8.8 13 38 Côte d’Ivoire 4.2 5.2 5.5 27 Croatia 8.1 8.7 9.0 8.7 9.2 9.4 7.5 8.3 8.6 7 Cuba 9.5 10.1 10.6 9.7 10.3 10.7 9.3 10.0 10.5 Czech Republic 11.4 12.7 12.1 11.6 12.9 12.3 11.2 12.6 12.0 12 29 Denmark 9.7 9.9 10.1 9.9 10.1 10.2 9.5 9.7 9.9 Dominican Republic 6.3 7.0 7.4 6.5 7.0 7.3 6.1 7.0 7.5 31 Ecuador 7.2 7.6 8.1 7.4 7.8 8.3 7.1 7.5 7.9 36 34 Egypt, Arab Rep. 5.1 6.6 7.1 6.1 7.5 7.9 4.0 5.6 6.3 30 El Salvador 5.6 7.3 8.0 5.8 7.7 8.3 5.4 7.0 7.7 32 30 Eritrea 1 Estonia 10.4 11.6 11.8 10.3 11.3 11.5 10.5 11.8 12.1 7 30 Ethiopia Fiji 10.1 9.4 10.0 10.3 9.4 9.9 9.9 9.3 10.0 14 Finland 9.1 9.8 10.0 9.2 9.7 9.9 9.0 9.8 10.1 France 8.6 9.9 10.5 8.8 10.2 10.7 8.3 9.6 10.4 Gabon 6.2 7.7 8.4 5.5 7.1 7.9 7.0 8.2 8.8 43 Gambia, The 2.5 3.1 3.5 3.2 3.8 4.2 1.7 2.3 2.9 12 Georgia 14 26 Germany 9.2 11.8 11.8 9.9 12.2 12.1 8.4 11.5 11.6 7 Ghana 6.1 6.8 7.1 7.6 7.7 7.8 4.6 5.8 6.4 5 Greece 8.7 9.9 10.7 9.2 10.2 10.9 8.2 9.6 10.5 9 Guatemala 3.9 4.0 4.8 4.3 4.4 5.3 3.5 3.6 4.4 29 33 Guinea 12 Guinea-Bissau 12 Haiti 4.0 4.8 5.2 5.6 6.8 7.3 2.6 3.0 3.1 Honduras 5.6 6.8 7.5 5.7 7.0 7.6 5.4 6.7 7.4 23 28 Hungary 10.4 11.5 11.7 10.7 11.6 11.8 10.2 11.4 11.5 13 6 India 3.8 4.7 5.1 4.9 5.8 6.1 2.6 3.6 4.1 14 Indonesia 4.7 5.7 6.2 5.4 6.4 6.9 3.9 5.1 5.6 19 4 Iran, Islamic Rep. 6.1 8.1 8.6 7.3 9.3 9.6 4.9 6.8 7.5 Iraq 4.9 5.4 5.8 6.0 6.4 6.8 3.7 4.4 4.9 Ireland 10.7 11.3 11.6 10.6 11.1 11.5 10.8 11.4 11.7 16 Israel 10.9 11.3 11.3 10.9 11.2 11.2 10.8 11.3 11.5 Italy 8.3 9.1 9.5 8.6 9.5 9.9 7.9 8.8 9.2 Jamaica 8.1 9.6 9.9 7.9 9.4 9.7 8.3 9.8 10.0 42 20 Japan 10.6 11.3 11.6 11.0 11.6 11.8 10.2 11.0 11.4 Jordan 7.4 8.7 9.2 8.3 9.4 9.8 6.4 8.0 8.6 Kazakhstan 8.8 10.1 10.4 9.0 10.2 10.5 8.6 10.0 10.3 9 50 Kenya 6.2 7.1 7.3 6.9 7.7 7.8 5.4 6.5 6.8 3 Kiribati Korea, Rep. 10.6 11.5 11.8 11.4 12.1 12.4 9.7 10.8 11.3 7 Kosovo 10 Kyrgyz Republic 8.4 8.6 8.7 8.6 8.6 8.7 8.3 8.6 8.8 19 28 Lao PDR 3.9 4.7 5.1 4.8 5.4 5.7 3.0 3.9 4.5 11 19 Selected Indicators 349 TABLE 2 Skills, continued Average schooling Average schooling Average schooling Skills as a (years) (years) (years) constraint (%) Total Men Women Total 1995 2005 2010 1995 2005 2010 1995 2005 2010 2005 2010 Latvia 8.9 10.2 10.6 9.1 10.2 10.6 8.8 10.2 10.6 18 39 Lebanon 38 Lesotho 5.1 6.0 6.6 4.1 4.9 5.5 5.9 7.0 7.5 30 17 Liberia 3.0 4.2 5.4 4.3 5.7 7.0 1.8 2.8 3.9 5 Libya 5.7 7.2 7.9 6.1 6.9 7.4 5.3 7.6 8.3 Lithuania 9.2 10.4 10.9 9.5 10.5 10.9 8.9 10.3 10.9 15 40 Macedonia, FYR 6 15 Madagascar 30 17 Malawi 3.1 4.4 4.7 3.8 5.1 5.2 2.3 3.7 4.2 50 22 Malaysia 8.4 9.7 10.1 8.9 10.0 10.4 7.9 9.4 9.9 Mali 1.0 1.5 2.0 1.3 1.9 2.3 0.7 1.2 1.7 8 12 Mauritania 3.1 4.1 4.6 4.0 5.1 5.6 2.3 3.1 3.7 23 Mauritius 6.8 7.3 7.9 7.4 7.7 8.2 6.3 6.9 7.5 43 46 Mexico 7.1 8.4 9.1 7.4 8.7 9.4 6.8 8.1 8.8 10 31 Moldova 8.8 9.4 9.7 9.2 9.6 9.7 8.5 9.2 9.6 12 41 Mongolia 7.8 8.0 8.4 7.8 7.8 8.3 7.7 8.1 8.5 29 15 Montenegro 20 7 Morocco 3.5 4.4 5.0 4.5 5.5 6.1 2.5 3.4 4.0 21 Mozambique 0.9 1.2 1.8 1.3 1.7 2.3 0.6 0.8 1.2 19 Myanmar 3.1 4.1 4.6 3.1 4.1 4.8 3.1 4.0 4.5 Namibia 6.1 5.9 6.0 6.1 5.6 5.5 6.1 6.1 6.4 20 Nepal 2.6 3.4 4.0 3.7 4.1 4.4 1.6 2.7 3.5 6 Netherlands 10.5 10.8 11.0 10.8 11.1 11.2 10.2 10.6 10.8 New Zealand 12.0 12.4 12.7 12.1 12.5 12.7 11.8 12.3 12.6 Nicaragua 4.8 6.1 6.7 5.8 6.9 7.5 3.9 5.3 6.0 23 24 Niger 1.2 1.5 1.8 1.8 2.1 2.4 0.6 0.9 1.2 18 37 Nigeria 6 Norway 11.0 12.3 12.3 11.2 12.3 12.2 10.8 12.4 12.4 Oman 35 Pakistan 3.4 4.9 5.6 4.6 6.2 6.8 2.1 3.6 4.3 Panama 8.4 9.3 9.6 8.3 9.1 9.3 8.5 9.5 9.8 14 19 Papua New Guinea 3.3 3.9 4.1 4.0 4.6 4.7 2.6 3.2 3.4 Paraguay 6.3 7.6 8.5 6.4 7.7 8.6 6.2 7.5 8.5 36 51 Peru 7.8 8.7 9.0 8.3 9.2 9.4 7.4 8.2 8.6 32 28 Philippines 7.9 8.6 9.0 7.9 8.4 8.7 8.0 8.9 9.2 12 8 Poland 9.2 9.7 9.9 9.2 9.7 9.8 9.1 9.7 10.0 15 36 Portugal 7.0 7.6 8.0 7.3 7.8 8.1 6.7 7.4 7.8 12 Romania 9.6 10.1 10.4 10.0 10.4 10.6 9.2 9.8 10.1 14 43 Russian Federation 10.2 11.3 11.5 10.5 11.5 11.7 9.9 11.1 11.3 13 57 Rwanda 2.6 3.6 3.9 3.0 3.8 4.1 2.3 3.4 3.8 12 Saudi Arabia 6.3 7.7 8.5 7.1 8.0 8.7 5.1 7.2 8.2 Senegal 3.8 4.7 5.2 4.9 5.8 6.3 2.8 3.6 4.1 10 Serbia 8.5 9.0 9.2 9.0 9.4 9.4 7.9 8.7 8.9 20 17 Sierra Leone 2.6 3.4 3.7 3.5 4.3 4.6 1.8 2.5 2.8 16 Singapore 7.4 8.5 9.1 7.8 9.0 9.5 7.0 7.9 8.8 Slovak Republic 11.0 11.1 11.2 11.4 11.0 11.0 10.7 11.1 11.3 8 30 Slovenia 11.0 11.5 11.7 11.2 11.6 11.7 10.9 11.4 11.6 5 15 Somalia South Africa 8.3 8.3 8.6 8.2 8.3 8.4 8.3 8.3 8.7 9 Spain 8.2 9.7 10.4 8.5 9.9 10.5 8.0 9.5 10.3 14 Sri Lanka 9.7 10.8 11.1 9.9 10.9 11.1 9.5 10.7 11.0 21 Sudan 2.5 3.0 3.3 3.1 3.5 3.7 1.9 2.5 2.8 Swaziland 6.3 7.3 7.6 5.9 7.1 7.4 6.7 7.5 7.8 13 Sweden 10.8 11.5 11.6 10.5 11.3 11.4 11.1 11.7 11.7 Switzerland 9.6 9.7 9.9 10.3 10.3 10.4 8.9 9.1 9.4 Syrian Arab Republic 4.5 4.8 5.3 5.2 5.2 5.5 3.9 4.5 5.0 36 Tajikistan 9.6 9.3 9.3 9.9 8.8 8.6 9.3 9.8 10.0 5 34 Tanzania 4.4 5.0 5.5 5.1 5.6 6.0 3.7 4.5 5.1 20 Thailand 5.9 6.8 7.5 6.2 7.0 7.7 5.6 6.6 7.3 30 Timor-Leste 19 Togo 4.5 5.4 5.9 6.3 7.3 7.9 2.8 3.6 4.0 17 Tonga 9.2 9.2 9.4 9.3 9.3 9.5 9.1 9.2 9.2 59 Trinidad and Tobago 8.5 9.3 9.6 8.5 9.1 9.5 8.6 9.5 9.8 Tunisia 5.1 6.6 7.3 6.1 7.4 8.0 4.1 5.7 6.6 Turkey 5.4 6.5 7.0 6.5 7.4 7.9 4.4 5.6 6.1 33 25 Turkmenistan Uganda 4.0 4.9 5.4 4.8 5.6 5.9 3.2 4.2 4.8 10 Ukraine 10.4 10.9 11.1 10.7 11.0 11.2 10.2 10.7 11.0 20 42 United Kingdom 8.6 9.3 9.8 8.4 9.1 9.5 8.7 9.5 10.0 United States 12.6 12.9 13.1 12.7 12.9 13.0 12.6 12.9 13.2 Uruguay 7.6 8.0 8.6 8.2 7.8 8.3 7.1 8.2 8.8 25 31 Uzbekistan 5 35 Venezuela, RB 5.5 6.4 7.0 5.5 6.3 7.0 5.5 6.5 7.0 28 25 Vietnam 4.6 5.7 6.4 4.9 6.0 6.6 4.3 5.5 6.3 14 9 West Bank and Gaza Yemen, Rep. 1.6 3.0 3.7 2.6 4.2 5.0 0.7 1.7 2.4 24 Zambia 6.0 6.5 7.0 6.2 7.0 7.4 5.9 6.0 6.5 8 Zimbabwe 6.7 7.5 7.7 7.4 7.8 7.9 6.0 7.1 7.4 350 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 TABLE 2 Skills, continued Educational attainment Educational attainment Educational attainment Reading Mathematics Science 2003 2006 2009 2003 2006 2009 2003 2006 2009 Afghanistan Albania 385 377 391 Algeria 387* 408* Angola Argentina 374 398 381 388 391 401 Armenia 478* 499* 461* 488* Australia 525 513 515 524 520 514 525 527 527 Austria 491 490 470 506 505 496 491 511 494 Azerbaijan 353 362 476 431 382 373 Bangladesh Barbados Belarus Belgium 507 501 506 529 520 515 509 510 507 Belize Benin Bhutan Bolivia Bosnia and Herzegovina 456* 466* Botswana 366* 364* 365* 355* Brazil 403 393 412 356 370 386 390 390 405 Bulgaria 402 429 476* 413 428 479* 434 439 Burkina Faso Burundi Cambodia Cameroon Canada 528 527 524 532 527 527 519 534 529 Central African Republic Chad Chile 442 449 387* 411 421 413* 438 447 China Colombia 385 413 370 381 388 402 Congo, Dem. Rep. Congo, Rep. Costa Rica Côte d’Ivoire Croatia 477 476 467 460 493 486 Cuba Czech Republic 489 483 478 516 510 493 523 513 500 Denmark 492 494 495 514 513 503 475 496 499 Dominican Republic Ecuador Egypt, Arab Rep. 406* 391* 421* 408* El Salvador 340* 387* Eritrea Estonia 501 501 531* 515 512 552* 531 528 Ethiopia Fiji Finland 543 547 536 544 548 541 548 563 554 France 496 488 496 511 496 497 511 495 498 Gabon Gambia, The Georgia 410* 421* Germany 491 495 497 503 504 513 502 516 520 Ghana 276* 309* 255* 303* Greece 472 460 483 445 459 466 481 473 470 Guatemala Guinea Guinea-Bissau Haiti Honduras Hungary 482 482 494 490 491 490 503 504 503 India Indonesia 382 393 402 360 391 371 395 393 383 Iran, Islamic Rep. 411* 403* 453* 459* Iraq Ireland 515 517 496 503 501 487 505 508 508 Israel 439 474 496* 442 447 488* 454 455 Italy 476 469 486 466 462 483 486 475 489 Jamaica Japan 498 498 520 534 523 529 548 531 539 Jordan 401 405 424* 384 387 475* 422 415 Kazakhstan 390 405 400 Kenya Kiribati Korea, Rep. 534 556 539 542 547 546 538 522 538 Kosovo Kyrgyz Republic 285 314 311 331 322 330 Lao PDR *An asterisk denotes data from TIMSS. All other data are from PISA. Selected Indicators 351 TABLE 2 Skills, continued Educational attainment Educational attainment Educational attainment Reading Mathematics Science 2003 2006 2009 2003 2006 2009 2003 2006 2009 Latvia 491 479 484 483 486 482 489 490 494 Lebanon 433* 449* 393* 414* Lesotho Liberia Libya Lithuania 470 468 502* 486 477 519* 488 491 Macedonia, FYR 435* 449* Madagascar Malawi Malaysia 508* 474* 510* 471* Mali Mauritania Mauritius Mexico 400 411 425 385 406 419 405 410 416 Moldova 460* 472* Mongolia Montenegro 392 408 399 403 412 401 Morocco 387* 381* 396* 402* Mozambique Myanmar Namibia Nepal Netherlands 513 507 508 538 531 526 524 525 522 New Zealand 522 521 521 523 522 519 521 530 532 Nicaragua Niger Nigeria Norway 500 484 503 495 490 498 484 487 500 Oman 372* 423* Pakistan Panama 371 360 376 Papua New Guinea Paraguay Peru 370 365 369 Philippines 378* 377* Poland 497 508 500 490 495 495 498 498 508 Portugal 478 472 489 466 466 487 468 474 493 Romania 396 424 475* 415 427 470* 418 428 Russian Federation 442 440 459 468 476 468 489 479 478 Rwanda Saudi Arabia 332* 329* 398* 403* Senegal Serbia 412 401 442 437 435 442 436 436 443 Sierra Leone Singapore 526 605* 593* 562 578* 567* 542 Slovak Republic 469 466 477 498 492 497 495 488 490 Slovenia 494 483 493* 504 501 520* 519 512 Somalia South Africa 264* 244* Spain 481 461 481 485 480 483 487 488 488 Sri Lanka Sudan Swaziland Sweden 514 507 497 509 502 494 506 503 495 Switzerland 499 499 501 527 530 534 513 512 517 Syrian Arab Republic 395* 452* Tajikistan Tanzania Thailand 420 417 421 417 417 419 429 421 425 Timor-Leste Togo Tonga Trinidad and Tobago 416 414 410 Tunisia 375 380 404 359 365 371 385 386 401 Turkey 441 447 464 423 424 445 434 424 454 Turkmenistan Uganda Ukraine 462* 485* United Kingdom 495 494 495 492 515 514 United States 495 500 483 474 487 491 489 502 Uruguay 434 413 426 422 427 427 438 428 427 Uzbekistan Venezuela, RB Vietnam West Bank and Gaza 390* 435* Yemen, Rep. Zambia Zimbabwe *An asterisk denotes data from TIMSS. All other data are from PISA. 352 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 TABLE 3 Employment structure Employment in Employment in Employment in Employment in primary sector (%) secondary sector (%) tertiary sector (%) civil service (%) 1995 2005 2010 1995 2005 2010 1995 2005 2010 1995 2005 2010 Afghanistan 59.1 12.5 28.4 1.8 3.3 3.2 Albania 3.0 47.1 40.2 20.5 56.8 32.4 15.9 11.2 Algeria Angola Argentina 7.3 6.7 5.8 34.6 30.3 29.4 58.1 63.0 64.8 8.7 9.0 Armenia 10.4 16.5 15.6 Australia 5.0 3.6 3.3 22.8 21.3 21.1 72.2 75.1 75.5 13.4 14.0 14.6 Austria 7.4 5.5 5.2 32.0 27.5 24.9 60.6 66.9 69.9 14.9 11.8 11.5 Azerbaijan 24.8 18.2 57.0 21.7 15.4 14.3 Bangladesh 39.0 21.0 40.0 2.2 Barbados Belarus 22.1 24.4 Belgium 2.7 2.0 1.4 28.3 24.7 23.4 69.1 63.3 65.3 18.9 18.7 18.8 Belize 29.7 18.7 51.6 12.6 Benin 45.1 9.2 45.7 1.4 Bhutan 69.1 7.2 23.7 8.8 Bolivia 43.8 40.0 35.6 18.2 18.9 18.8 38.1 41.1 45.6 6.2 Bosnia and Herzegovina 30.4 40.5 29.1 Botswana 25.5 18.1 56.5 16.0 15.5 15.2 Brazil 26.3 20.5 17.0 19.8 21.4 22.2 53.9 58.1 60.9 8.9 10.6 11.0 Bulgaria 23.9 8.9 6.8 33.5 34.2 33.3 42.6 56.6 59.9 18.0 16.3 13.9 Burkina Faso 89.1 88.0 2.7 2.8 8.2 9.2 Burundi Cambodia 72.5 62.3 60.1 7.4 12.3 13.1 20.1 25.3 26.8 Cameroon 68.7 6.1 25.1 Canada 4.1 2.7 2.4 22.0 22.0 21.5 74.0 75.3 76.5 19.4 17.8 18.6 Central African Republic 66.9 9.2 23.9 Chad Chile 15.7 13.2 11.2 26.1 23.0 23.2 58.2 63.9 65.6 8.1 8.5 9.3 China 52.2 44.8 36.7 23.0 23.8 28.7 24.8 31.4 34.6 5.4 Colombia 27.0 20.7 18.5 21.8 20.0 19.8 51.2 59.3 61.7 3.2 6.1 5.3 Congo, Dem. Rep. 71.5 8.0 20.6 Congo, Rep. 36.4 23.9 39.7 7.6 Costa Rica 7.2 15.2 11.9 28.8 21.6 20.0 64.0 63.1 68.1 13.3 11.3 11.7 Côte d’Ivoire Croatia 19.9 17.3 14.9 29.1 28.6 27.3 50.9 54.0 57.6 15.9 16.1 15.5 Cuba 37.1 41.6 42.5 Czech Republic 6.6 4.0 3.1 41.8 39.5 38.0 51.5 56.5 57.9 14.0 13.4 Denmark 4.4 2.8 2.4 27.0 23.4 19.6 68.6 73.5 77.7 30.4 30.6 30.7 Dominican Republic 16.8 14.8 14.6 23.7 22.3 18.1 59.4 63.0 67.4 9.7 Ecuador 38.1 31.3 28.4 17.3 17.5 18.6 44.6 51.3 53.0 9.0 7.5 7.9 Egypt, Arab Rep. 33.3 39.1 22.8 18.8 44.0 42.1 22.8 23.6 El Salvador 27.0 20.2 26.3 22.1 46.7 57.7 7.2 Eritrea Estonia 10.2 5.2 4.2 34.2 33.8 30.1 55.6 61.1 65.1 24.2 20.8 22.8 Ethiopia 81.9 82.8 3.5 6.0 14.5 11.2 1.3 1.7 Fiji 32.9 26.1 20.5 17.5 46.6 56.4 11.1 11.9 11.4 Finland 8.0 4.8 4.4 26.8 25.6 23.2 64.9 69.5 71.9 24.3 23.1 22.0 France 4.9 3.6 2.9 26.9 23.7 22.2 68.1 72.4 74.5 22.8 Gabon 23.8 21.2 55.0 13.4 Gambia, The Georgia 53.3 9.7 37.0 Germany 3.2 2.3 1.6 36.0 29.7 28.4 60.8 67.9 70.0 13.1 11.6 11.2 Ghana 57.4 14.2 28.5 Greece 20.4 12.4 12.5 23.2 22.4 19.7 56.3 65.1 67.7 6.8 7.6 8.2 Guatemala 33.8 22.6 43.6 4.3 4.5 Guinea 1.7 2.1 Guinea-Bissau Haiti Honduras 37.4 34.3 37.1 25.0 23.0 20.3 37.6 42.7 42.5 6.2 6.2 Hungary 8.0 5.0 4.5 32.6 32.4 30.7 59.4 62.6 64.9 21.9 22.1 22.0 India 61.9 56.1 51.2 15.8 19.0 22.3 22.3 24.9 26.4 2.8 2.3 Indonesia 45.3 45.7 37.1 17.3 17.7 18.7 37.3 36.7 44.1 4.9 3.7 Iran, Islamic Rep. 20.8 32.7 46.5 11.7 10.6 Iraq 2.9 29.8 67.3 Ireland 9.1 5.9 4.6 29.3 27.9 19.5 61.5 65.5 75.5 17.5 15.5 18.4 Israel 2.9 2.0 1.7 28.7 21.4 20.4 67.7 75.7 77.1 19.0 17.2 17.0 Italy 6.6 4.2 3.8 33.7 30.8 28.8 59.8 65.0 67.5 18.3 16.0 15.1 Jamaica 19.5 17.9 62.6 Japan 5.7 4.4 3.7 33.6 27.9 25.3 60.4 66.4 69.7 8.0 7.0 7.1 Jordan 3.8 22.8 73.4 16.1 14.9 16.2 Kazakhstan Kenya 67.9 72.3 4.6 7.9 27.5 19.8 4.3 Kiribati 3.4 6.3 90.3 Korea, Rep. 12.4 7.9 6.6 33.3 26.8 17.0 54.3 65.2 76.4 4.3 Kosovo 17.3 26.7 56.0 Kyrgyz Republic 51.3 10.2 38.5 18.3 14.3 Lao PDR 71.3 10.7 18.1 Selected Indicators 353 TABLE 3 Employment structure, continued Employment in Employment in Employment in Employment in primary sector (%) secondary sector (%) tertiary sector (%) civil service (%) 1995 2005 2010 1995 2005 2010 1995 2005 2010 1995 2005 2010 Latvia 17.3 12.1 8.8 27.2 25.8 24.0 55.4 61.8 66.9 24.4 22.7 23.2 Lebanon 7.3 54.6 38.1 Lesotho Liberia 44.2 1.9 53.8 Libya 36.4 Lithuania 20.7 14.0 9.0 28.5 29.1 24.4 50.8 56.9 66.2 21.4 23.4 25.0 Macedonia, FYR 19.5 32.3 48.2 Madagascar 70.1 3.9 26.0 2.0 2.1 Malawi 84.9 4.6 10.5 2.7 Malaysia Mali 70.7 58.0 6.6 12.2 22.8 29.8 Mauritania 25.2 9.7 65.2 Mauritius 12.0 11.5 32.4 31.4 55.6 57.1 14.0 14.7 13.8 Mexico 23.8 14.9 13.1 21.5 25.5 25.5 54.2 59.0 60.6 12.4 8.9 8.8 Moldova 48.7 15.8 35.5 19.3 17.9 Mongolia 40.5 16.8 42.7 Montenegro Morocco 39.2 34.9 24.3 24.8 36.6 40.3 7.5 7.7 Mozambique 87.2 81.2 83.5 3.9 3.2 3.8 8.8 15.6 12.7 Myanmar Namibia 44.5 12.7 42.8 Nepal 80.1 76.3 8.1 10.5 11.8 13.2 Netherlands 3.7 3.2 2.8 22.6 19.6 15.9 70.6 72.4 71.6 13.8 12.8 12.5 New Zealand 9.7 7.1 6.6 25.1 22.0 20.9 65.2 70.7 72.5 12.4 10.2 10.7 Nicaragua 43.8 35.9 31.7 14.7 18.8 18.3 41.4 45.2 50.0 5.4 Niger Nigeria 68.1 2.7 29.2 Norway 5.4 3.3 2.5 23.0 20.8 19.7 71.3 75.7 77.6 30.9 30.1 30.8 Oman 14.0 Pakistan 41.8 43.4 21.3 21.2 36.9 35.5 Panama 21.3 19.9 18.1 17.9 16.9 18.5 60.7 63.3 63.4 8.8 7.9 Papua New Guinea 25.2 6.8 68.8 Paraguay 40.8 32.4 25.8 16.5 15.7 19.2 42.7 51.9 54.9 5.1 6.6 Peru 31.7 37.5 31.7 15.7 13.7 16.4 52.6 48.8 51.9 8.2 9.5 Philippines 40.2 38.7 33.5 17.1 16.0 14.5 42.7 45.3 52.0 7.4 7.1 7.8 Poland 22.6 17.4 12.8 32.0 29.2 30.2 45.3 53.4 56.9 16.2 11.4 10.6 Portugal 11.5 11.8 10.9 32.2 30.6 27.7 56.3 57.5 61.4 13.6 12.5 Romania 40.3 32.1 30.1 31.0 30.3 28.7 28.7 37.5 41.2 13.1 13.9 13.0 Russian Federation 20.1 21.5 Rwanda 88.6 78.0 1.7 5.0 9.7 17.0 Saudi Arabia Senegal 5.1 36.2 29.7 14.5 65.2 49.3 2.9 2.7 Serbia 22.9 24.9 52.2 14.2 Sierra Leone 70.8 5.5 23.7 Singapore 5.4 5.0 5.0 Slovak Republic 9.2 4.7 3.2 38.9 38.8 37.1 51.9 56.3 59.6 30.7 16.0 14.8 Slovenia 10.1 8.8 8.8 43.1 37.2 32.5 46.4 53.3 58.3 11.6 15.5 16.0 Somalia South Africa 14.3 7.8 27.9 25.5 57.9 66.6 12.8 8.9 Spain 9.0 5.3 4.3 30.2 29.7 23.1 60.8 65.0 72.6 14.8 14.1 15.5 Sri Lanka 38.8 30.9 31.6 20.9 26.4 26.3 40.3 42.7 42.1 8.2 10.7 Sudan Swaziland 16.3 19.0 64.7 Sweden 3.1 2.0 2.1 25.9 22.0 19.9 71.0 75.7 77.7 30.3 28.0 Switzerland 4.4 3.8 3.3 28.6 23.7 21.1 67.0 72.5 70.9 11.8 12.4 12.1 Syrian Arab Republic 25.4 26.6 47.9 20.7 19.8 Tajikistan 67.0 4.5 28.5 Tanzania 75.8 78.5 4.5 2.7 19.7 18.8 Thailand 28.9 44.3 42.1 24.5 19.9 20.0 46.6 35.8 38.0 6.7 7.3 Timor-Leste 50.5 9.8 39.7 3.0 Togo 59.1 8.6 32.3 Tonga 33.1 26.0 40.9 Trinidad and Tobago 24.3 21.2 21.1 Tunisia 21.8 37.2 41.0 Turkey 43.4 29.5 23.7 22.3 24.8 26.2 34.3 45.8 50.1 9.8 11.2 12.8 Turkmenistan Uganda 73.1 6.4 20.5 1.8 Ukraine 9.6 31.9 58.6 22.4 19.5 20.3 United Kingdom 2.0 1.3 1.2 27.3 22.2 19.1 70.2 76.3 78.9 17.0 19.7 19.6 United States 2.9 1.6 1.6 24.3 20.6 16.7 72.9 77.8 81.2 15.0 15.0 15.6 Uruguay 5.2 4.6 11.6 21.0 21.9 21.4 73.9 73.5 67.0 14.1 11.2 12.5 Uzbekistan Venezuela, RB 14.2 10.4 24.0 21.7 61.9 67.8 Vietnam 61.8 52.3 54.0 14.8 20.0 20.4 23.4 27.8 25.7 4.3 4.4 West Bank and Gaza 11.0 6.9 26.3 41.7 38.2 32.8 47.3 54.9 40.9 23.6 23.8 Yemen, Rep. 8.5 Zambia 72.1 6.4 21.5 Zimbabwe 5.9 354 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 TABLE 3 Employment structure, continued Wage Self- Employment in Employment in employment (%) employment (%) farming (%) urban areas (%) 1995 2005 2010 1995 2005 2010 1995 2005 2010 1995 2005 2010 Afghanistan 22.6 22.2 55.1 16.5 Albania 43.6 13.5 42.9 23.0 37.7 Algeria Angola Argentina Armenia 55.5 Australia 84.6 13.6 1.8 89.7 88.8 Austria 87.8 87.1 8.1 8.8 4.1 4.1 60.5 59.6 Azerbaijan 78.2 12.8 9.0 46.3 Bangladesh 36.0 20.0 44.0 24.0 Barbados Belarus 73.2 Belgium 87.7 88.8 11.0 10.1 1.3 1.1 95.8 95.8 Belize 65.2 18.3 16.5 52.5 Benin 9.4 46.2 44.5 37.0 Bhutan 23.8 9.1 67.1 22.1 Bolivia 28.5 33.1 36.1 29.2 29.3 30.3 42.3 37.6 33.7 57.0 63.0 64.3 Bosnia and Herzegovina 69.8 9.8 20.3 Botswana 68.4 12.2 19.3 Brazil 58.7 62.9 66.5 22.0 22.3 21.7 19.3 14.9 11.8 77.4 81.6 83.7 Bulgaria 92.4 86.4 7.6 10.0 0.0 3.6 72.4 54.6 50.3 Burkina Faso 3.6 4.4 7.6 7.9 88.8 87.7 12.6 15.3 Burundi Cambodia 12.4 22.7 25.9 17.0 19.2 19.2 70.6 58.1 54.9 18.2 17.8 17.4 Cameroon 23.0 30.1 Canada Central African Republic 10.0 24.5 65.5 42.9 Chad 24.9 Chile 74.5 75.8 76.3 19.9 20.8 20.8 5.6 3.4 3.0 85.8 88.8 88.5 China 48.0 36.8 25.8 28.0 38.0 45.6 Colombia 50.7 46.4 36.9 41.6 12.4 12.0 76.5 78.4 Congo, Dem. Rep. 9.1 20.3 70.6 31.8 Congo, Rep. 21.6 42.3 36.1 48.2 Costa Rica 73.0 71.3 72.6 24.2 22.8 23.2 2.8 5.8 4.2 46.8 61.9 62.1 Côte d’Ivoire Croatia 78.0 7.7 14.4 54.1 Cuba Czech Republic 83.6 84.3 15.6 14.7 0.7 1.0 59.0 59.4 Denmark 90.6 91.7 8.1 7.2 1.4 1.1 64.4 75.6 Dominican Republic 60.0 52.2 50.4 29.3 35.0 37.1 10.7 12.7 12.5 54.2 66.7 69.3 Ecuador 48.9 52.0 54.6 27.3 27.4 27.7 23.7 20.6 17.7 54.5 67.0 67.7 Egypt, Arab Rep. 53.3 13.2 33.5 38.9 El Salvador 56.2 56.2 28.8 32.0 15.0 11.8 61.3 64.9 67.7 Eritrea Estonia 93.0 93.7 5.0 5.1 2.0 1.2 50.3 53.3 Ethiopia 9.7 6.0 4.8 11.7 85.6 82.3 12.4 11.7 Fiji 59.8 68.9 9.3 11.7 30.8 19.4 33.4 Finland 86.8 86.2 10.0 10.9 3.2 2.9 46.8 46.6 France 90.9 91.4 6.9 6.8 2.2 1.8 83.5 83.1 Gabon 55.8 23.3 20.9 81.2 Gambia, The Georgia 52.1 13.8 34.1 38.6 40.5 Germany 90.7 92.0 8.3 7.6 1.0 0.4 81.5 84.9 Ghana 18.5 25.9 55.6 36.2 Greece 65.3 66.2 23.2 22.6 11.5 11.2 42.1 53.0 Guatemala 48.5 28.0 23.5 54.3 Guinea 45.5 54.2 0.3 27.7 Guinea-Bissau Haiti Honduras 45.9 43.0 43.0 28.4 33.0 31.9 25.7 24.0 25.1 46.9 50.8 48.6 Hungary 84.6 87.5 13.3 10.8 2.1 1.7 58.1 55.3 India 43.3 45.1 50.5 17.1 21.0 20.3 39.6 33.9 29.2 22.0 23.4 25.8 Indonesia 48.6 38.6 42.3 23.7 24.9 27.3 27.7 36.6 30.4 33.6 39.2 48.6 Iran, Islamic Rep. 41.4 Iraq 99.9 0.0 0.0 66.8 Ireland 83.4 83.6 11.5 11.4 5.1 5.1 65.6 65.7 Israel Italy 74.4 75.9 22.7 21.9 2.9 2.3 82.5 83.7 Jamaica 61.8 21.8 16.4 58.7 Japan Jordan Kazakhstan 52.7 56.6 Kenya 31.4 29.1 10.4 7.4 58.2 63.5 16.0 21.2 Kiribati 58.4 Korea, Rep. Kosovo 67.6 17.3 15.1 Kyrgyz Republic 86.0 1.9 12.1 38.2 Lao PDR 15.5 16.9 67.6 30.3 Selected Indicators 355 TABLE 3 Employment structure, continued Wage Self- Employment in Employment in employment (%) employment (%) farming (%) urban areas (%) 1995 2005 2010 1995 2005 2010 1995 2005 2010 1995 2005 2010 Latvia 90.0 91.1 5.3 6.2 4.7 2.7 51.1 53.4 Lebanon . Lesotho Liberia 14.2 43.8 42.0 24.6 Libya Lithuania 87.3 89.1 4.8 5.9 8.0 5.0 45.8 47.0 Macedonia, FYR 71.8 11.2 17.0 62.5 Madagascar 12.6 18.9 68.5 15.7 Malawi 29.3 10.2 10.8 7.0 59.9 82.8 19.8 9.0 Malaysia Mali 3.0 11.0 14.9 33.0 82.2 56.1 12.4 27.9 Mauritania 35.6 42.8 21.6 54.0 Mauritius 79.9 78.8 15.6 15.9 4.5 5.3 56.4 Mexico 63.1 68.5 72.8 23.0 23.6 20.1 13.8 7.8 7.1 74.2 79.2 80.0 Moldova 57.8 2.8 39.4 36.8 Mongolia 49.3 11.5 39.2 51.0 Montenegro Morocco Mozambique 9.7 12.9 8.9 4.5 7.3 8.6 85.8 79.9 82.5 14.8 27.9 27.1 Myanmar Namibia 54.7 9.6 35.6 42.4 Nepal 17.2 14.4 9.6 13.3 73.3 72.6 6.0 13.4 21.0 Netherlands 89.0 88.0 9.5 10.3 1.6 1.7 New Zealand Nicaragua 48.4 26.6 25.1 58.2 58.3 . Niger 16.6 Nigeria 9.0 19.3 23.2 57.7 67.7 23.0 43.1 Norway 89.1 92.4 8.3 5.9 2.6 1.8 68.2 68.8 Oman Pakistan 38.3 37.1 23.8 23.1 37.8 39.8 33.1 32.1 Panama 66.9 61.1 65.2 19.1 24.3 21.9 13.9 14.6 12.9 63.7 66.0 68.0 Papua New Guinea 32.6 40.6 26.9 10.7 Paraguay 37.1 46.7 51.6 26.2 24.7 24.8 36.7 28.6 23.5 51.8 58.8 60.9 Peru 41.8 39.7 42.8 31.9 29.4 30.9 26.3 31.0 26.3 66.4 63.4 65.9 Philippines 48.0 47.9 55.9 20.1 22.4 21.5 31.8 29.7 22.6 47.5 48.3 48.3 Poland 78.7 80.1 8.6 8.9 12.8 11.0 55.7 54.7 Portugal 78.2 81.2 15.2 13.1 6.6 5.7 76.8 76.9 Romania 84.2 72.0 72.0 3.5 9.1 7.2 12.3 18.9 20.8 48.8 51.6 43.9 Russian Federation 78.8 Rwanda 11.0 23.9 4.0 9.1 85.1 67.0 8.5 15.8 Saudi Arabia Senegal 39.1 23.2 58.6 42.5 2.3 34.3 45.8 Serbia 65.6 13.5 20.9 Sierra Leone 9.3 20.1 70.6 35.3 Singapore Slovak Republic 90.0 90.2 9.7 9.5 0.3 0.3 62.0 62.3 Slovenia 91.6 93.1 6.4 5.6 2.0 1.3 Somalia South Africa 78.6 18.5 2.9 65.9 69.2 Spain 83.1 83.9 14.3 14.1 2.6 2.0 75.3 75.4 Sri Lanka 63.0 58.9 56.0 14.3 20.7 22.3 22.7 20.5 21.7 12.5 12.3 10.9 Sudan Swaziland 59.3 30.4 10.3 30.6 Sweden 91.1 93.9 8.3 5.9 0.6 0.2 33.9 38.8 Switzerland Syrian Arab Republic 54.2 24.1 21.7 50.5 Tajikistan 64.0 8.1 28.0 21.1 Tanzania 8.0 8.1 17.1 11.6 74.9 80.4 25.5 25.5 21.1 Thailand 56.4 40.6 41.3 18.0 19.8 20.9 25.6 39.6 37.8 62.2 30.6 31.3 Timor-Leste 99.8 28.0 0.2 21.8 0.0 50.2 20.3 Togo 9.2 32.5 58.2 32.4 Tonga 43.1 24.2 32.7 Trinidad and Tobago Tunisia 68.3 16.6 15.0 66.0 Turkey 54.2 60.9 18.7 16.3 27.1 22.8 58.1 Turkmenistan Uganda 18.7 13.8 67.5 17.4 Ukraine 97.7 2.2 0.2 73.8 United Kingdom 87.8 88.8 11.7 10.6 0.5 0.6 95.2 96.1 United States 89.3 10.1 0.6 77.5 Uruguay 73.1 71.2 71.3 24.7 27.0 24.1 2.2 1.8 4.6 93.9 Uzbekistan Venezuela, RB 60.0 55.7 31.9 38.2 8.2 6.2 19.4 Vietnam 7.7 33.1 36.3 31.0 19.5 7.9 61.3 47.5 55.8 27.3 25.7 25.9 West Bank and Gaza 58.8 66.6 25.9 21.5 15.3 11.9 56.6 72.1 Yemen, Rep. 34.1 Zambia 17.2 12.6 70.2 30.4 Zimbabwe 356 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 TABLE 4 Living standards Wages in selected occupations (2005 US$ per year) Accountant Chemical engineer Bus driver Sewing machine operator 1995 2005 2008 1995 2005 2008 1995 2005 2008 1995 2005 2008 Afghanistan Albania Algeria Angola 7,139 1,989 Argentina 10,849 17,214 9,581 2,948 Armenia Australia 32,498 40,267 39,694 59,054 28,065 29,331 22,418 21,019 Austria 57,907 38,574 27,954 19,402 Azerbaijan 2,769 7,483 454 1,785 6,544 Bangladesh 1,548 1,201 578 1,077 584 Barbados 32,772 13,553 4806 Belarus 1,188 2,657 761 1,133 Belgium 22,692 22,093 Belize Benin Bhutan 25028 5967 4989 Bolivia 12,745 5,159 1,173 2,134 Bosnia and Herzegovina Botswana 1,528 Brazil 20,045 3,134 Bulgaria Burkina Faso 3,516 Burundi Cambodia 293 225 707 Cameroon Canada 25,459 37,540 41,143 37,116 60,033 20,146 21,033 27,400 12,253 13,125 13,159 Central African Republic 21,735 10,284 1,028 799 Chad Chile 12,951 5,184 China 1,096 2,913 874 2,538 501 891 1,327 Colombia Congo, Dem. Rep. Congo, Rep. Costa Rica 10,761 8,998 12,518 9,078 12,011 5,198 3,993 5,973 3,475 2,541 2,579 Côte d’Ivoire Croatia 8,955 6,953 5,424 6,281 Cuba Czech Republic 14,387 23,583 5,918 14,559 22,528 4,024 8,478 12,911 3,133 4,383 Denmark 123,067 116,081 51,740 47,102 Dominican Republic 2,561 2,561 Ecuador Egypt, Arab Rep. 2,778 4,469 1,041 615 El Salvador 16,107 15,103 17,006 12,547 12,267 16,327 2,688 2,906 4,083 2,053 2,496 2,079 Eritrea 3,077 1,518 615 Estonia 8,180 5,166 3,593 2,011 Ethiopia Fiji Finland 42,583 59,695 44,183 55,887 30,885 32,263 23,362 24,554 France Gabon 12,045 2,725 Gambia, The Georgia Germany 68,538 63,483 71,989 78,873 73,544 86,265 48,206 41,013 44,482 29,536 26,388 31,576 Ghana 5,589 1,516 2,298 519 760 867 562 Greece Guatemala 1,476 Guinea Guinea-Bissau Haiti Honduras 3,206 32,684 2,304 953 Hungary 4,548 24,679 10,439 28,345 4,514 8,987 India 3,261 912 800 Indonesia 2,533 818 731 Iran, Islamic Rep. Iraq Ireland Israel Italy 55,684 52,973 58,298 30,449 34,726 40,328 20,270 21,559 24,880 17,366 18,269 20,791 Jamaica Japan 50,366 30,710 30,452 29,592 19,914 19,836 Jordan 8,320 8,163 3,580 4,925 3,830 2,488 1,757 2,945 Kazakhstan 5,965 3,269 2,165 957 Kenya Kiribati Korea, Rep. 22,122 38,755 20,206 29,415 14,914 14,647 13,291 13,698 Kosovo Kyrgyz Republic 605 251 Lao PDR Selected Indicators 357 TABLE 4 Living standards, continued Wages in selected occupations (2005 US$ per year) Accountant Chemical engineer Bus driver Sewing machine operator 1995 2005 2008 1995 2005 2008 1995 2005 2008 1995 2005 2008 Latvia 8,347 12,686 3,837 10,368 2,763 5,877 2,181 3,066 Lebanon Lesotho Liberia Libya Lithuania 3,939 11,976 2,864 5,228 2,030 4,155 Macedonia, FYR Madagascar 1,205 466 488 424 Malawi 16,360 1,106 389 Malaysia 1,673 Mali Mauritania Mauritius 17,701 16,091 19,100 3,465 2,826 3,622 2,330 1,895 2,369 Mexico 3,319 3,220 11,355 1,796 2,623 2,682 1,552 2,115 2,158 Moldova 1,130 1,644 3,693 1,436 2,345 588 1,535 377 1,040 1,691 Mongolia Montenegro Morocco Mozambique Myanmar 4,880 11,869 4,164 16,617 2,733 10,575 2,082 7,985 Namibia 19,393 Nepal Netherlands New Zealand Nicaragua 3,891 11,728 1,327 Niger Nigeria 4,472 21,678 3,012 944 Norway 24,680 28,863 36,446 Oman Pakistan 3,193 2,182 1,230 851 Panama Papua New Guinea 16,770 23,560 5,500 3,779 Paraguay Peru 17,836 24,789 23,679 1,543 2,181 5,702 2,516 2,474 2,579 Philippines 5,853 3,951 6,513 3,408 2,640 1,919 2,314 1,653 2,159 Poland 7,068 12,502 5,867 12,150 3,869 7,961 3,656 7,059 Portugal 19,084 23,948 32,444 34,440 8,653 9,039 6,259 5,940 Romania 4,773 9,876 15,849 3,476 5,661 10,681 2,754 3,395 6,386 1,549 2,082 3,805 Russian Federation 2,288 2,780 2,922 759 1,542 Rwanda Saudi Arabia Senegal Serbia Sierra Leone 5,782 463 449 Singapore 44,523 28,089 29,164 27,275 10,665 9,229 9,005 6,424 Slovak Republic 4,394 7,829 2,753 7,315 2,027 5,963 2,053 2,583 Slovenia 11,945 19,381 12,974 6,153 Somalia South Africa Spain Sri Lanka 1,101 1,054 Sudan 11,213 14,663 7,095 4,341 Swaziland 16,472 8,697 Sweden 37,390 33,607 24,762 28,083 Switzerland Syrian Arab Republic Tajikistan 288 357 108 338 Tanzania Thailand 14,657 13,861 7,118 16,327 4,072 3,291 4,343 2,562 Timor-Leste Togo 11,021 Tonga Trinidad and Tobago 7,777 1,903 Tunisia 4,911 4,702 2,849 Turkey 14,624 16,305 17,410 5,823 3,140 5,648 Turkmenistan Uganda 3,784 1,235 866 237 Ukraine 1,909 767 United Kingdom 46,991 60,352 56,524 33,624 21,452 30,880 32,388 22,402 23,513 United States 43,432 50,457 67,014 82,647 27,533 30,958 18,100 18,515 Uruguay 10,389 4,782 Uzbekistan Venezuela, RB 7,857 7,275 2,205 1,924 Vietnam West Bank and Gaza 3,464 Yemen, Rep. 7,572 9,466 5,429 3,360 Zambia 2,758 522 781 304 Zimbabwe 358 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 TABLE 4 Living standards, continued Working poor (% below Satisfied with life Labor share Gender gap in earnings $1.25 PPP US$ a day) (% in latest survey) (% of national income) (women/men) 1995 2005 2010 Employed Unemployed Out of labor force 1995 2005 2010 1995 2005 2010 Afghanistan Albania 46.3 33.3 35.5 0.79 Algeria 55.4 39.3 57.5 29.9 22.8 Angola Argentina 0.0 5.0 1.0 87.1 71.6 90.4 37.8 34.8 0.90 0.96 Armenia 11.0 39.4 42.6 43.9 Australia 86.9 65.6 81.5 54.3 52.8 52.5 Austria 59.6 54.5 54.2 0.87 0.88 Azerbaijan 16.0 24.5 24.4 18.9 Bangladesh 40.4 41.5 42.4 0.68 Barbados Belarus 1.0 45.7 52.9 55.5 Belgium 56.9 56.5 57.2 0.93 0.85 Belize 12.0 Benin 47.0 18.3 Bhutan 10.0 89.5 88.9 Bolivia 17.0 18.0 16.0 37.5 37.6 31.5 0.76 Bosnia and Herzegovina 58.7 38.2 49.1 54.3 59.9 Botswana 31.9 Brazil 11.0 9.0 6.0 85.6 74.2 82.3 48.8 46.7 49.1 0.84 0.88 0.89 Bulgaria 2.0 0.0 51.9 31.3 38.3 38.9 40.7 42.5 0.93 0.82 Burkina Faso 71.0 57.0 48.7 37.1 47.1 24.9 22.0 0.80 Burundi 86.0 40.7 Cambodia 32.0 23.0 1.05 0.99 Cameroon 10.0 22.5 20.0 20.8 Canada 91.4 78.7 90.7 55.8 54.3 Central African Republic 62.0 20.7 Chad 18.8 Chile 3.0 1.0 1.0 80.1 73.2 74.6 40.5 39.8 42.3 0.96 0.93 0.86 China 72.5 65.8 74.9 Colombia 13.0 8.0 91.3 84.1 89.9 36.0 35.1 35.0 0.91 Congo, Dem. Rep. 0.89 Congo, Rep. Costa Rica 0.0 4.0 3.0 50.0 51.9 55.4 Côte d’Ivoire 24.1 Croatia 0.0 56.9 57.0 0.93 Cuba 48.5 46.2 44.5 Czech Republic 47.5 48.0 49.2 1.01 0.99 Denmark 60.4 62.9 66.5 Dominican Republic 5.0 6.0 2.0 37.7 Ecuador 14.0 9.0 5.0 Egypt, Arab Rep. 2.0 52.2 42.9 54.6 24.4 27.2 26.1 0.59 El Salvador 10.0 12.0 9.0 82.3 75.6 78.0 Eritrea Estonia 0.0 59.6 49.9 59.7 0.77 0.69 Ethiopia 61.0 40.2 38.2 47.5 0.84 Fiji 39.0 Finland 94.4 69.9 87.4 56.7 56.4 56.6 France 80.8 63.5 71.6 58.0 58.0 58.4 0.77 0.88 Gabon 5.0 22.3 Gambia, The 66.0 Georgia 42.8 28.4 33.8 19.2 33.3 0.60 Germany 86.0 50.6 78.1 59.7 55.9 54.7 0.99 Ghana 39.0 63.3 59.7 64.9 0.77 Greece 34.9 38.7 39.3 0.89 0.93 Guatemala 14.0 88.1 89.3 82.4 34.4 32.6 Guinea Guinea-Bissau Haiti Honduras 27.0 26.0 18.0 47.7 48.7 49.5 Hungary 0.0 0.0 54.4 54.5 54.6 1.01 India 38.9 51.2 39.0 30.5 29.1 30.0 0.68 0.73 0.73 Indonesia 47.0 22.0 18.0 73.3 69.3 77.4 0.86 Iran, Islamic Rep. 63.3 60.7 66.9 23.4 21.8 Iraq 31.4 22.1 31.3 6.7 14.7 21.9 0.70 Ireland 50.3 46.2 48.8 0.93 1.02 Israel 80.7 71.9 67.6 56.6 54.1 53.3 Italy 85.7 69.4 80.6 45.8 45.3 46.4 1.12 0.90 Jamaica 48.5 51.0 0.98 Japan 80.9 70.6 85.2 52.1 49.5 Jordan 47.7 40.2 50.6 45.0 42.0 44.0 Kazakhstan 39.0 34.4 34.4 Kenya 43.0 35.1 41.4 40.4 0.81 Kiribati Korea, Rep. 72.5 55.0 71.2 51.5 51.1 51.6 Kosovo Kyrgyz Republic 64.9 73.4 64.7 40.0 27.2 32.0 Lao PDR 49.0 34.0 Selected Indicators 359 TABLE 4 Living standards, continued Working poor (% below Satisfied with life Labor share Gender gap in earnings $1.25 PPP US$ a day) (% in latest survey) (% of national income) (women/men) 1995 2005 2010 Employed Unemployed Out of labor force 1995 2005 2010 1995 2005 2010 Latvia 0.0 0.0 50.0 47.3 47.9 0.74 0.67 Lebanon 35.5 Lesotho 57.4 48.8 48.4 Liberia 84.0 Libya Lithuania 0.0 41.6 45.1 49.5 0.69 0.71 Macedonia, FYR 51.1 43.9 44.0 Madagascar 72.0 Malawi Malaysia 79.6 75.0 81.2 Mali 86.0 58.2 53.1 54.5 0.49 Mauritania 25.2 Mauritius 43.3 38.7 38.4 0.76 Mexico 6.0 5.0 4.0 89.2 83.5 89.5 32.3 30.4 0.94 Moldova 27.0 12.0 52.1 49.1 42.6 50.6 49.9 57.5 0.85 Mongolia 27.5 26.1 33.8 0.77 Montenegro Morocco 36.7 20.0 52.2 37.4 34.2 Mozambique 16.9 27.7 27.3 1.09 0.93 Myanmar Namibia 49.0 47.6 46.4 44.4 Nepal 53.0 25.0 0.72 Netherlands 96.4 76.6 93.4 56.5 55.8 55.8 New Zealand 37.0 40.6 Nicaragua 21.0 15.0 Niger 17.1 17.0 15.8 Nigeria 71.4 76.7 80.6 17.3 5.2 4.1 Norway 94.5 58.3 89.4 54.2 46.8 46.7 Oman 33.4 26.4 32.5 Pakistan 26.6 29.2 29.1 0.63 0.36 Panama 16.0 9.0 6.0 39.2 34.5 31.4 Papua New Guinea 26.0 17.3 Paraguay 12.0 7.0 7.0 35.2 36.9 37.1 Peru 14.0 9.0 5.0 75.5 68.5 74.7 27.9 25.3 23.8 0.71 0.82 0.81 Philippines 23.0 18.0 67.4 69.5 64.9 25.3 27.7 27.9 0.89 Poland 0.0 0.0 0.0 82.2 64.5 71.4 45.1 40.7 42.4 0.89 0.96 Portugal 54.7 58.2 58.2 0.83 0.90 Romania 5.0 1.0 0.0 67.4 25.7 45.6 39.6 44.3 47.1 0.86 0.81 0.89 Russian Federation 59.5 41.2 59.6 48.5 49.9 52.1 Rwanda 42.2 44.7 0.93 0.90 Saudi Arabia 77.2 67.1 78.6 35.1 28.1 Senegal 34.0 17.6 24.1 21.6 Serbia 0.0 70.9 55.9 53.1 65.7 56.6 53.6 Sierra Leone 53.0 Singapore 83.3 71.6 83.9 43.9 42.1 44.3 Slovak Republic 0.0 0.0 65.1 58.1 60.9 Slovenia 85.0 65.5 72.5 Somalia South Africa 81.9 63.4 77.7 54.9 49.9 49.8 0.85 Spain 93.4 94.5 83.6 53.0 52.9 53.3 0.80 0.83 Sri Lanka 46.4 57.3 57.3 0.86 0.80 Sudan 37.1 25.1 25.1 Swaziland 79.0 Sweden 92.4 77.1 88.6 60.2 62.0 61.1 1.06 0.91 Switzerland 93.7 75.6 90.7 64.1 65.8 Syrian Arab Republic 2.0 1.08 Tajikistan 35.0 15.9 15.7 0.66 Tanzania 23.5 22.1 27.2 0.79 Thailand 4.0 1.0 0.0 84.5 72.1 91.3 32.3 32.9 33.2 0.89 0.89 0.95 Timor-Leste 37.0 Togo 39.0 Tonga Trinidad and Tobago 82.5 71.6 79.8 46.2 30.6 33.0 Tunisia 41.8 35.8 36.1 Turkey 85.9 70.4 84.3 22.2 27.1 0.96 0.96 Turkmenistan 25.0 Uganda 49.6 31.2 49.6 Ukraine 0.0 60.1 57.3 48.4 53.2 55.7 56.3 United Kingdom 89.8 79.6 91.8 58.2 60.1 0.98 United States 85.9 81.0 87.8 57.2 56.2 56.0 0.85 Uruguay 1.0 1.0 0.0 88.9 80.2 86.8 43.0 38.5 0.99 Uzbekistan Venezuela, RB 10.0 13.0 80.8 75.0 76.6 35.6 30.6 0.93 0.94 Vietnam 50.0 21.0 17.0 82.6 46.3 82.2 0.94 0.89 0.80 West Bank and Gaza 0.0 0.77 0.73 Yemen, Rep. 13.0 0.70 Zambia 56.0 65.0 64.3 56.2 64.5 0.89 Zimbabwe 25.0 25.1 28.1 360 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 TABLE 5 Productivity Value added per worker (2005 US$ per year) Primary sector Secondary sector Tertiary sector 1995 2005 2010 1995 2005 2010 1995 2005 2010 Afghanistan                   Albania 2,409 2,622 3,885 6,602 10,419 8,110 3,031 13,496 14,021 Algeria   5,364     23,962     6,979   Angola                   Argentina 169,887 115,095 134,720 30,924 18,165 24,822 27,453 8,976 14,530 Armenia   2,452 4,636   15,285 28,403   4,803 10,819 Australia 40,133 61,462 70,416 73,971 95,996 90,412 55,153 70,239 89,745 Austria 32,626 22,953 26,250 83,512 89,626 99,691 95,032 88,496 84,955 Azerbaijan 903 909 1,627 1,915 18,994 44,847 1,115 1,939 6,286 Bangladesh 394 398   2,406 1,720   1,914 1,348   Barbados 25,047 24,469   19,951 19,992   22,501 23,701   Belarus 3,261     4,693     5,595     Belgium 51,682 40,155 67,238 103,700 93,212 91,242 104,053 99,852 99,674 Belize 7,302 7,920   12,726 10,017   12,421 11,235   Benin   1,066     1,960     1,684   Bhutan   1,474 1,017   6,136 25,363   2,837 4,794 Bolivia 22,960 827   3,106 3,780   1,971 2,861   Bosnia and Herzegovina                   Botswana 2,562 858   20,939 47,317   7,425 12,354   Brazil 2,764 2,618 5,048 17,135 13,428 18,599 15,379 10,798 16,888 Bulgaria 3,536 10,254 11,062 4,412 8,675 13,748 7,076 11,058 15,240 Burkina Faso 207 348   3,803 6,551   2,813 3,125   Burundi                   Cambodia     615     3,359     2,762 Cameroon                   Canada 42,189 46,905 84,494 81,109 112,454 129,063 52,079 67,069 76,038 Central African Republic                   Chad 316     5,679     2,875     Chile 8,839 7,230 7,742 20,778 32,805 39,481 14,640 18,340 21,281 China 576 912 1,649 3,077 6,683 10,799 1,972 4,425 7,788 Colombia 143,353 3,298 5,171 9,289 13,472 23,951 7,423 8,389 12,101 Congo, Dem. Rep.                   Congo, Rep.   626     16,495     2,705   Costa Rica 6,904 6,367 7,964 13,678 14,495 16,232 11,644 11,324 13,886 Côte d’Ivoire                   Croatia 5,509 8,061 12,516 16,501 26,744 34,397 18,959 33,420 39,446 Cuba 2,778 2,396 2,848 7,880 8,687 12,553 10,416 10,477 12,875 Czech Republic 10,589 21,146 30,708 13,520 26,449 38,029 17,605 31,396 41,145 Denmark 78,444 46,179 65,098 83,948 107,422 120,024 93,598 95,626 108,138 Dominican Republic 4,614 5,113 4,814 10,323 14,995 17,142 6,144 10,549 11,879 Ecuador 17,147 1,428 1,942 6,974 13,671 14,885 4,995 7,264 8,338 Egypt, Arab Rep. 2,299 2,125 2,759 6,839 7,234 10,894 5,391 4,543 7,308 El Salvador 3,217 4,267 4,839 6,845 10,911 10,641 7,131 8,254 8,561 Eritrea                   Estonia 286 1,122 1,831 477 1,338 1,992 538 1,770 2,157 Ethiopia 264 216   1,986 678   1,619 1,136   Fiji                   Finland 44,202 46,796 63,793 97,244 105,407 111,333 75,501 78,173 83,346 France 61,774 51,238 59,087 84,530 77,422 83,291 98,683 95,476 107,508 Gabon 4,968 4,517   92,742 113,418   24,212 11,700   Gambia, The 665     2,418     7,841     Georgia   1,091     10,531     5,537   Germany 39,654 37,059 35,975 83,494 83,183 82,362 102,070 87,032 82,997 Ghana   1,204     3,353     3,797   Greece                   Guatemala 2,485 2,226   5,193 7,885   10,519 7,908   Guinea 434     6,850     4,665     Guinea-Bissau                   Haiti                   Honduras 1,441 1,373   3,167 5,364   3,032 5,649   Hungary 15,389 24,218 22,162 13,658 27,139 31,452 16,227 30,227 31,631 India 530 620 1,154 1,919 2,733 4,089 2,395 3,917 6,775 Indonesia 1,223 947 2,527 7,292 7,779 15,500 3,393 3,462 5,637 Iran, Islamic Rep. 9,417 3,798   16,510 13,886   14,977 9,339   Iraq                   Ireland 53,117 27,237 22,334 88,974 127,274 172,844 60,801 100,012 103,349 Israel                   Italy 36,317 49,362 41,152 68,402 77,744 75,596 85,677 98,654 93,103 Jamaica 2,865 3,409 3,123 13,424 14,414 13,113 6,946 10,989 11,501 Japan 32,158 28,324 30,531 116,579 93,297 115,414 131,008 99,791 107,592 Jordan   10,358 27,585   13,865 26,114   9,033 13,463 Kazakhstan   1,725 3,016   18,115 28,778   8,638 13,905 Kenya   644     3,941     2,425   Kiribati                   Korea, Rep. 15,783 15,431 14,515 37,835 51,736 91,830 28,615 33,609 30,423 Kosovo                   Kyrgyz Republic 1,035 921 1,550 1,274 1,399 2,183 1,125 1,166 2,142 Lao PDR 690     5,064     2,400     Selected Indicators 361 TABLE 5 Productivity, continued Value added per worker (2005 US$ per year) Primary sector Secondary sector Tertiary sector 1995 2005 2010 1995 2005 2010 1995 2005 2010 Latvia 3,207 5,585 11,889 7,771 14,025 23,498 8,546 20,297 28,582 Lebanon                   Lesotho 652     6,868     2,365     Liberia   888 879   1,717 489   1,146 526 Libya                   Lithuania 4,290 6,692 10,421 8,886 22,045 31,384 9,674 21,276 27,697 Macedonia, FYR   6,775 8,551   9,675 14,199   13,631 17,705 Madagascar   207     2,309     2,047   Malawi                   Malaysia 9,322 7,825 11,257 18,628 23,171 26,866 13,692 10,460 12,878 Mali   881     6,310     2,198   Mauritania                   Mauritius 8,652 7,300 6,256 9,137 10,423 14,876 13,003 13,840 17,007 Mexico 2,494 5,183 6,269 13,386 27,286 27,497 13,003 22,058 21,103 Moldova 929 1,055 1,468 2,606 2,262 3,040 1,148 3,305 6,502 Mongolia 1,779 1,355 1,825 4,588 5,234 8,190 2,048 2,385 3,915 Montenegro                   Morocco 13,450 1,949 2,764 5,359 8,431 10,669 4,611 9,749 11,517 Mozambique   188     4,724     1,556   Myanmar 4,933     4,676     6,976     Namibia 2,600 3,717 8,562 18,084 22,451 30,857 11,804 12,665 11,758 Nepal                   Netherlands 71,226 56,148 54,577 97,454 97,381 124,750 79,808 82,539 86,039 New Zealand 36,258 45,578   52,576 67,432   49,929 57,782   Nicaragua 1,506 1,539   5,147 3,503   3,252 2,359   Niger                   Nigeria   1,796     8,285     1,333   Norway 56,806 72,622 85,197 138,356 290,065 318,919 82,263 105,301 118,318 Oman 9,161     158,023     14,500     Pakistan 1,139 1,139 1,187 2,564 3,092 3,519 2,929 3,172 3,968 Panama 3,933 4,407 4,143 10,280 11,691 13,451 12,711 14,334 18,196 Papua New Guinea                   Paraguay 2,743 2,149 5,335 7,104 4,204 6,493 6,952 3,642 6,241 Peru 58,831 46,902 61,865 7,986 9,308 12,014 5,533 5,007 6,279 Philippines 1,860 1,197 1,724 7,581 7,197 9,750 4,380 3,716 5,093 Poland 4,038 5,933 7,196 12,748 23,585 27,886 14,647 27,215 30,078 Portugal 15,813 9,349 9,359 30,226 32,333 34,814 40,227 50,158 51,660 Romania 2,410 3,564 4,085 6,205 13,115 15,498 5,560 16,253 27,896 Russian Federation 2,951 5,713 7,744 7,167 14,600 19,908 7,369 10,919 16,432 Rwanda   295     2,134     1,698   Saudi Arabia   33,414 30,025   146,499 120,850   19,343 20,513 Senegal   857     3,030     3,406   Serbia   5,228 5,949   10,346 16,543   11,991 18,115 Sierra Leone   395     2,099     750   Singapore 9,160 3,408 2,873 67,962 90,290 87,976 61,005 55,810 64,964 Slovak Republic 256 539 45,309 377 691 33,247 422 790 35,907 Slovenia 53 51 11,699 99 156 41,034 161 202 48,714 Somalia                   South Africa   6,241 10,725   22,418 22,059   18,468 16,554 Spain 32,396 41,405 48,517 63,427 64,101 80,812 70,171 66,716 69,968 Sri Lanka 1,545 1,366 2,015 2,866 4,160 6,217 3,686 5,467 7,548 Sudan                   Swaziland                   Sweden 84,800 57,864 93,839 98,760 119,616 135,069 78,875 87,010 94,173 Switzerland 61,238 34,325 48,439 124,652 122,634 166,833 120,305 106,178 130,553 Syrian Arab Republic 17,111 34,206 61,887 9,922 44,830 40,385 17,821 31,138 38,924 Tajikistan 245 355   923 1,624   379 1,648   Tanzania   303     4,392     1,888   Thailand 1,294 1,252 1,934 14,421 11,532 15,349 12,577 6,490 8,209 Timor-Leste                   Togo   619     2,450     1,119   Tonga                   Trinidad and Tobago 3,466 3,403 3,883 28,504 54,117 82,586 12,489 17,024 24,172 Tunisia                   Turkey 4,162 7,974 10,596 16,599 25,270 27,153 16,311 29,236 33,775 Turkmenistan                   Uganda   293 395   3,951 4,542   1,655 1,870 Ukraine 1,405 2,366 3,997 3,199 5,825 11,824 6,283 4,419 7,756 United Kingdom 55,402 58,380 56,013 68,950 92,373 88,189 57,625 86,429 75,957 United States 41,807 57,756 59,247 85,509 100,647 118,051 77,029 93,562 97,669 Uruguay 35,312 26,313   21,948 15,641   18,551 10,712   Uzbekistan 1,312     2,437     1,900     Venezuela, RB 4,708 5,358   20,515 36,656   10,073 7,370   Vietnam 351 538   2,391 2,846   1,979 1,862   West Bank and Gaza                   Yemen, Rep. 6,093     30,134     19,342     Zambia   534     7,446     3,541   Zimbabwe   285     2,776     3,404 362 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 TABLE 5 Productivity, continued Value added per worker Employment in micro-enterprises Informal employment (2005 US$ per year) (% of non-agricultural employment) (% of non-agricultural employment) 1995 2005 2010 1995 2005 2010 1995 2005 2010 Afghanistan       Albania 2,935 6,784 8,379 Algeria   11,055   Angola       Argentina 29,815 12,243 17,954 57.7 55.9 44.0 49.7 Armenia   5,399 11,088 49.6 Australia 58,730 75,297 89,305 31.7 30.7 Austria 86,977 85,765 85,704 32.1 34.6 Azerbaijan 1,026 3,584 9,545 26.5 Bangladesh 967 948   Barbados 19,868 20,723   Belarus 4,565     Belgium 102,383 96,998 96,414 25.3 24.0 Belize 11,094 10,353   Benin   1,429   Bhutan   2,798 3,525 Bolivia 2,720 2,242   79.3 80.5 75.1 Bosnia and Herzegovina       Botswana 10,235 14,150   Brazil 12,450 9,633 15,252 60.0 57.0 55.3 47.3 42.2 Bulgaria 5,391 10,176 14,455 25.2 22.9 Burkina Faso 523 868   Burundi       Cambodia     1,270 Cameroon       95.3 Canada 58,070 76,449 88,633 Central African Republic       Chad 807     Chile 15,308 20,223 23,977 52.1 44.9 44.7 33.1 China 1,500 3,386 6,145 Colombia 9,380 8,253 13,223 70.0 53.4 63.5 59.6 Congo, Dem. Rep.       Congo, Rep.   4,819   Costa Rica 11,089 10,938 13,136 52.1 51.5 47.9 39.6 39.9 43.8 Côte d’Ivoire       Croatia 15,556 27,173 34,043 Cuba 7,923 8,521 10,912 Czech Republic 15,574 29,321 39,648 31.6 30.7 Denmark 90,386 96,856 109,655 Dominican Republic 6,918 10,290 11,621 48.5 Ecuador 6,160 6,486 7,810   42.2 45.5 71.3 60.9 Egypt, Arab Rep. 4,658 4,431 6,677 51.2 El Salvador 6,000 8,041 8,216 66.4 Eritrea       Estonia 492 1,591 2,073 21.4 21.1 Ethiopia 404 366   Fiji       Finland 78,868 84,467 88,167 France 93,016 89,373 100,485 28.7 29.2 Gabon 24,595 22,182   Gambia, The 2,773     Georgia   3,530   Germany 93,510 84,878 81,878 26.2 22.6 Ghana   2,257   Greece       56.8 54.3 Guatemala 5,276 6,028   Guinea 1,581     Guinea-Bissau       Haiti       Honduras 2,475 3,921   58.7 60.6 66.3 49.0 54.6 73.9 Hungary 15,312 28,939 31,419 37.3 35.8 India 1,163 1,846 3,318 79.4 77.8 83.5 Indonesia 3,140 3,176 6,273 63.2 61.6 Iran, Islamic Rep. 13,874 9,318   Iraq       72.4 Ireland 68,280 103,279 113,892 34.5 41.1 Israel       Italy 77,205 90,200 86,879 47.7 47.8 Jamaica 7,303 10,241 10,099 Japan 120,171 93,118 105,389 Jordan   10,087 16,149 Kazakhstan   8,132 13,573 Kenya   1,445   Kiribati       Korea, Rep. 29,831 37,049 39,749 Kosovo       Kyrgyz Republic 1,108 1,124 1,949 Lao PDR 1,053     Selected Indicators 363 TABLE 5 Productivity, continued Value added per worker Employment in micro-enterprises Informal employment (2005 US$ per year) (% of non-agricultural employment) (% of non-agricultural employment) 1995 2005 2010 1995 2005 2010 1995 2005 2010 Latvia 7,344 16,901 25,859 29.9 26.8 Lebanon       Lesotho 2,064     34.9 Liberia   650 696 60.0 Libya       Lithuania 8,412 19,457 26,750 20.2 17.5 Macedonia, FYR   10,994 14,788 29.0 12.6 Madagascar   585   73.6 Malawi       Malaysia 14,397 13,983 16,556 Mali   1,576   81.8 Mauritania       Mauritius 10,838 12,093 15,443 35.5 Mexico 10,565 20,886 20,837 71.0 59.8 63.4 54.8 53.7 Moldova 1,273 2,216 4,249 15.9 Mongolia 2,381 2,457 3,720 Montenegro       Morocco 5,349 5,975 7,741 Mozambique   543   Myanmar 5,406     Namibia 9,068 11,449 14,685 43.9 Nepal       93.0 Netherlands 81,927 80,589 83,545 New Zealand 49,224 59,050   Nicaragua 2,639 2,350   58.8 65.7 Niger       Nigeria   2,362   Norway 93,069 143,121 158,628 Oman 25,608     Pakistan 2,047 2,282 2,627 94.2 96.2 78.4 Panama 10,430 11,998 14,765 44.8 50.5 45.1 33.7 44.1 43.8 Papua New Guinea       78.3 Paraguay 5,294 3,254 6,106 70.7 Peru 6,704 6,508 8,211 78.0 70.6 Philippines 3,783 3,404 4,612 70.1 Poland 11,599 22,272 26,446 43.0 43.5 12.7 Portugal 34,097 40,237 42,290 43.7 43.0 Romania 4,500 11,251 17,157 20.2 19.4 Russian Federation 6,594 11,503 16,536 Rwanda   607   Saudi Arabia   45,337 40,961 Senegal   1,972   Serbia   9,975 14,802   47.8 6.1 Sierra Leone   607   85.3 Singapore 63,970 62,872 69,405 Slovak Republic 389 738 35,205 42.7 43.7 Slovenia 122 170 42,848 23.9 25.6 Somalia       South Africa   18,701 17,639 46.2 32.7 Spain 64,748 64,666 71,604 41.1 42.6 Sri Lanka 2,484 3,583 5,238 62.1 Sudan       Swaziland       Sweden 84,223 93,600 102,345 Switzerland 119,203 108,315 129,181 Syrian Arab Republic 15,173 35,585 43,556 Tajikistan 376 920   Tanzania   768   87.6 76.2 Thailand 7,079 5,246 7,083 42.3 Timor-Leste       96.6 100.0 Togo   931   Tonga       Trinidad and Tobago 15,785 27,808 42,053 Tunisia       Turkey 10,987 22,158 26,490 54.6 46.6 30.6 Turkmenistan       Uganda   789 1,057 68.5 Ukraine 2,099 4,322 8,090 United Kingdom 60,062 86,592 77,322 27.6 28.2 United States 78,008 95,269 100,365 Uruguay 20,492 12,684   54.5 51.3 44.6 39.8 Uzbekistan 1,666     Venezuela, RB 11,929 13,319   60.3 47.5 Vietnam 885 1,370   68.2 West Bank and Gaza       57.2 Yemen, Rep. 13,181     Zambia   1,649   69.5 Zimbabwe   945   51.6 364 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 TABLE 6 Social cohesion Trust Civic participation Wage inequality (% in latest survey) (% in latest survey) (90%/10% ratio) Out of Out of Employed Unemployed labor force Employed Unemployed labor force 1995 2005 2010 Afghanistan 2.5 Albania 22.4 27.5 26.8 2.6 3.9 Algeria 10.1 10.6 13.9 Angola Argentina 19.9 10.1 15.5 32.4 32.0 28.7 5.8 5.5 Armenia Australia 49.2 38.5 41.2 64.9 28.7 55.0 10.3 8.8 Austria 41.9 4.4 5.2 Azerbaijan 10.0 Bangladesh 24.8 24.6 23.7 3.8 3.8 Barbados 6.1 Belarus 4.7 Belgium 29.5 2.9 3.0 Belize 5.7 Benin 39.5 37.7 37.7 Bhutan Bolivia 21.6 16.3 21.9 31.2 29.3 30.9 10.0 8.5 7.5 Bosnia and Herzegovina 13.9 16.1 18.0 Botswana 17.3 12.3 55.0 42.3 55.3 28.3 Brazil 8.4 11.3 10.4 66.8 50.0 72.8 10.4 7.4 6.0 Bulgaria 21.3 23.0 22.9 11.4 6.6 5.8 3.6 4.5 Burkina Faso 12.3 13.3 17.5 43.7 35.2 33.0 Burundi Cambodia 20.0 6.9 8.6 Cameroon 10.4 Canada 44.9 36.5 40.3 72.4 46.6 63.4 Central African Republic Chad Chile 14.1 18.5 10.2 45.5 44.2 42.2 7.0 5.5 5.5 China 52.7 43.1 53.0 15.7 26.0 23.5 5.6 4.0 Colombia 16.0 12.5 11.4 36.2 33.1 39.1 6.5 6.6 Congo, Dem. Rep. Congo, Rep. Costa Rica 10.1 4.6 6.9 30.9 20.3 28.0 Côte d’Ivoire Croatia 2.9 Cuba Czech Republic Denmark 47.3 Dominican Republic Ecuador 12.2 8.7 11.6 19.8 0.0 16.8 6.5 6.6 4.9 Egypt, Arab Rep. 16.9 17.3 20.0 11.8 4.6 3.0 El Salvador 15.8 12.2 13.7 34.1 35.9 27.3 Eritrea Estonia 4.3 4.3 Ethiopia 21.4 27.2 26.9 49.5 36.5 52.6 11.8 Fiji Finland 65.9 44.5 52.6 54.4 42.3 43.0 France 19.4 18.5 17.7 43.6 27.5 34.7 4.7 4.9 Gabon 10.7 Gambia, The Georgia 21.2 10.4 21.7 7.4 4.7 3.5 7.4 Germany 40.6 22.6 34.1 47.1 25.5 44.6 6.3 Ghana 8.7 8.0 8.7 81.7 76.2 81.2 9.1 Greece 8.8 4.3 4.2 Guatemala 17.5 24.1 10.6 35.9 32.0 35.0 6.2 Guinea Guinea-Bissau Haiti Honduras 18.2 13.8 16.4 51.0 59.3 49.8 6.6 9.7 8.8 Hungary 4.2 India 23.4 19.1 27.1 54.2 40.6 34.6 12.1 11.4 10.7 Indonesia 45.7 25.0 40.7 60.6 51.2 58.9 10.4 4.2 8.6 Iran, Islamic Rep. 11.2 10.3 10.0 50.0 43.4 33.5 Iraq 36.7 46.0 43.2 4.4 Ireland 34.7 5.8 5.6 Israel 27.5 17.6 18.1 Italy 31.3 26.3 26.1 44.4 22.8 35.7 3.4 3.2 Jamaica 5.7 Japan 39.3 12.5 40.3 34.1 31.3 39.7 Jordan 33.6 27.1 23.9 Kazakhstan Kenya 73.3 74.3 70.1 13.3 Kiribati Korea, Rep. 30.0 40.3 25.6 36.4 23.6 33.5 Kosovo 3.5 Kyrgyz Republic 17.6 12.4 17.4 Lao PDR Selected Indicators 365 TABLE 6 Social cohesion, continued Trust Civic participation Wage inequality (% in latest survey) (% in latest survey) (90%/10% ratio) Out of Out of Employed Unemployed labor force Employed Unemployed labor force 1995 2005 2010 Latvia 4.7 6.1 Lebanon Lesotho 3.3 4.0 44.6 44.6 44.9 Liberia 83.8 78.5 80.6 Libya Lithuania 4.9 4.3 Macedonia, FYR 11.7 14.7 15.0 12.3 2.7 Madagascar 12.5 10.3 9.4 Malawi 44.4 45.3 75.3 62.9 61.7 10.1 Malaysia 9.5 9.6 7.7 29.4 21.2 28.0 Mali 16.6 20.0 17.1 65.6 59.4 51.6 24.4 Mauritania Mauritius 5.8 6.7 Mexico 17.5 15.1 12.8 64.6 50.5 59.7 8.4 6.5 Moldova 16.0 14.6 22.3 36.0 18.9 33.9 8.1 Mongolia 3.6 Montenegro 2.9 Morocco 12.3 20.8 17.5 17.0 8.7 11.1 Mozambique 62.8 58.1 52.6 6.7 10.5 Myanmar Namibia 33.3 36.2 35.2 33.4 39.1 Nepal 6.0 Netherlands 47.0 25.8 42.7 60.3 31.3 57.0 New Zealand Nicaragua 21.5 24.2 20.5 46.8 42.7 42.7 6.8 5.8 Niger 7.0 Nigeria 24.9 27.2 26.3 63.8 60.0 61.1 5.0 28.8 Norway 77.4 66.7 66.3 58.3 45.5 46.6 Oman Pakistan 32.5 25.4 29.7 6.3 6.4 Panama 27.6 12.5 21.7 25.6 34.9 22.9 7.6 6.7 5.5 Papua New Guinea 10.9 Paraguay 5.5 9.3 6.3 45.1 52.2 38.8 6.8 6.5 5.3 Peru 5.7 9.0 7.1 54.7 36.4 42.6 6.3 6.8 6.1 Philippines 8.1 12.4 6.8 6.1 6.3 Poland 19.3 21.8 18.9 28.2 15.6 27.7 5.4 5.2 Portugal 8.2 4.9 4.3 Romania 18.7 14.3 22.1 19.6 6.7 8.4 3.2 5.5 3.7 Russian Federation 26.7 18.1 26.7 13.2 6.6 17.7 Rwanda 4.0 8.4 70.8 70.8 37.8 31.3 Saudi Arabia 52.6 62.7 52.4 Senegal 50.3 42.9 40.0 Serbia 15.9 11.1 15.8 18.6 15.1 9.8 3.8 Sierra Leone 4.7 Singapore 15.8 16.7 18.7 Slovak Republic 3.0 Slovenia 17.7 13.3 19.2 51.4 32.6 38.6 3.2 3.2 Somalia South Africa 16.1 21.6 19.3 66.3 52.9 66.2 14.0 Spain 22.0 23.8 17.4 28.4 24.9 22.2 4.5 4.2 Sri Lanka 6.2 5.7 Sudan Swaziland Sweden 72.3 43.8 60.4 63.7 52.3 59.9 4.3 3.8 Switzerland 59.4 7.5 45.6 69.5 51.2 64.0 Syrian Arab Republic 3.3 Tajikistan 15.0 Tanzania 7.6 9.3 6.7 79.9 75.1 74.8 12.9 13.3 Thailand 42.7 32.4 44.4 35.4 24.7 37.9 8.9 10.8 9.6 Timor-Leste 8.5 5.5 Togo 14.6 Tonga Trinidad and Tobago 3.8 3.0 4.1 59.0 56.0 63.6 Tunisia Turkey 4.8 3.3 5.1 13.8 6.6 4.0 4.0 4.2 Turkmenistan Uganda 7.0 4.7 9.6 60.4 55.2 54.3 13.6 Ukraine 29.1 35.7 25.3 19.2 22.1 13.9 4.7 United Kingdom 31.0 19.5 32.0 66.2 38.2 57.5 5.3 United States 40.2 36.5 40.7 66.1 47.0 63.2 12.5 Uruguay 30.2 15.7 29.4 29.5 29.8 30.9 6.0 6.4 5.8 Uzbekistan Venezuela, RB 16.9 16.7 13.4 33.7 27.3 30.5 4.6 5.5 Vietnam 51.9 52.2 53.7 49.6 51.5 59.0 7.7 8.0 8.7 West Bank and Gaza 3.8 4.0 Yemen, Rep. 42.4 Zambia 11.5 12.5 10.6 81.0 70.3 78.7 11.1 Zimbabwe 13.9 10.4 5.3 59.4 61.3 65.4 366 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 TABLE 6 Social cohesion, continued Youth unemployment (% of youth labor force) Youth not in school or at work (% of youth cohort) Men Women Men Women 1995 2005 2010 1995 2005 2010 1995 2005 2010 1995 2005 2010 Afghanistan 8.2 50.0 Albania 22.8 26.2 16.6 28.3 50.2 33.7 41.7 35.1 Algeria 42.8 46.3 Angola Argentina 29.9 21.6 18.8 37.6 28.0 24.7 14.7 14.8 24.8 24.8 Armenia 47.2 37.4 69.4 54.7 52.2 67.2 Australia 15.9 10.9 11.9 14.8 10.4 11.1 15.3 18.1 18.5 19.0 Austria 4.8 10.7 8.9 5.6 9.9 8.8 14.5 18.5 14.5 20.0 Azerbaijan 18.2 13.4 10.4 15.5 49.3 57.8 Bangladesh 8.0 8.0 5.7 13.6 Barbados 33.3 24.1 42.4 28.7 23.1 28.9 Belarus 53.4 60.3 Belgium 19.7 21.0 22.4 23.7 22.1 22.4 10.6 12.7 15.1 11.6 Belize 19.1 13.8 31.7 28.8 26.6 69.2 Benin 14.9 20.1 Bhutan 5.5 10.7 7.2 14.7 17.7 22.8 Bolivia 5.2 7.0 3.5 5.5 15.8 17.0 18.3 18.5 Bosnia and Herzegovina 60.4 44.7 65.6 51.9 32.0 33.7 Botswana 33.5 42.4 25.7 38.9 Brazil 9.7 15.3 13.9 14.1 24.9 23.1 10.4 11.5 12.1 28.2 26.0 24.8 Bulgaria 23.4 24.1 21.0 21.7 33.5 29.3 17.4 36.0 32.3 29.6 Burkina Faso 4.6 2.9 5.8 5.7 17.5 15.0 Burundi Cambodia 3.5 3.3 7.9 4.0 3.6 15.2 11.5 10.6 Cameroon 20.0 7.8 34.2 19.6 Canada 16.3 14.2 17.1 13.2 10.6 12.4 Central African Republic 26.4 27.0 Chad Chile 10.8 17.3 16.6 12.7 23.8 21.7 11.6 13.5 17.6 30.4 24.5 26.8 China 9.8 12.8 9.4 11.0 Colombia 15.6 17.9 18.2 21.8 28.3 29.9 16.9 14.5 38.4 33.3 Congo, Dem. Rep. 13.2 23.1 Congo, Rep. 6.0 13.4 Costa Rica 10.2 11.3 9.6 13.0 21.5 13.4 11.5 9.3 12.8 37.5 28.2 27.1 Côte d’Ivoire Croatia 30.2 31.1 35.1 35.0 20.8 20.5 Cuba 3.5 2.8 4.4 3.5 Czech Republic 7.2 19.4 18.3 8.7 19.1 18.5 11.5 9.6 15.3 12.3 Denmark 7.8 8.6 16.1 12.3 8.6 11.8 9.5 11.9 15.1 14.5 Dominican Republic 20.9 21.2 41.5 44.5 10.6 14.5 14.1 31.7 28.8 28.1 Ecuador 13.0 12.2 11.7 18.6 20.6 18.1 6.8 7.9 8.3 31.1 27.6 23.6 Egypt, Arab Rep. 23.3 62.2 15.2 45.7 El Salvador 13.4 11.3 13.0 8.4 13.0 14.1 13.5 41.7 39.3 36.7 Eritrea Estonia 21.0 16.6 35.4 15.4 15.1 30.0 16.0 10.6 13.3 11.2 Ethiopia 4.1 11.2 7.5 1.8 43.6 10.9 Fiji 11.3 16.8 24.0 19.6 49.9 36.7 Finland 25.7 18.4 21.6 28.7 19.4 18.9 20.2 17.2 15.1 13.1 France 23.7 19.5 22.2 30.6 21.9 23.7 8.6 10.5 12.7 10.5 Gabon 41.7 40.2 20.0 31.3 Gambia, The Georgia 26.8 32.4 30.6 40.7 Germany 8.3 16.1 10.4 8.0 14.0 8.8 15.3 13.0 9.0 8.5 Ghana 12.9 20.8 Greece 19.4 18.7 26.7 37.7 34.8 40.6 17.3 16.1 21.3 20.2 Guatemala 4.6 40.7 Guinea 6.6 16.9 Guinea-Bissau Haiti Honduras 4.3 5.2 6.9 11.2 9.3 10.2 10.0 51.7 43.0 42.7 Hungary 20.7 19.7 27.9 15.6 19.1 24.9 13.6 13.1 12.4 19.4 India 8.3 9.9 9.9 8.0 10.3 11.3 9.7 10.0 10.0 56.1 51.8 50.5 Indonesia 14.3 28.8 21.6 17.0 37.7 23.0 19.3 23.3 13.8 45.1 44.0 33.6 Iran, Islamic Rep. 21.2 20.2 34.0 33.9 21.6 55.1 Iraq 25.6 75.6 Ireland 20.3 9.1 34.0 17.4 7.9 21.5 9.9 17.0 11.8 17.1 Israel 12.8 17.0 14.5 17.1 18.6 12.9 Italy 29.8 21.5 26.8 38.2 27.4 29.4 20.5 20.7 22.6 20.6 Jamaica 25.1 22.0 22.5 44.6 36.3 33.1 20.5 44.0 Japan 6.1 9.9 10.4 6.1 7.4 8.0 Jordan 23.7 22.6 47.9 45.9 Kazakhstan 13.1 6.8 15.7 8.2 54.0 13.8 56.9 14.9 Kenya 24.5 16.3 36.8 31.6 Kiribati 21.8 22.4 Korea, Rep. 7.8 12.2 11.2 5.3 9.0 9.0 Kosovo 37.7 59.3 Kyrgyz Republic 13.3 16.2 24.9 36.7 Lao PDR 6.4 3.9 2.1 5.3 Selected Indicators 367 TABLE 6 Social cohesion, continued Youth unemployment (% of youth labor force) Youth not in school or at work (% of youth cohort) Men Women Men Women 1995 2005 2010 1995 2005 2010 1995 2005 2010 1995 2005 2010 Latvia 34.2 11.7 35.4 34.1 16.1 33.5 10.2 11.8 14.0 15.8 Lebanon 20.3 19.0 18.1 33.3 Lesotho 37.9 29.0 58.5 41.9 Liberia 5.7 3.4 3.7 6.6 6.8 15.2 Libya Lithuania 28.5 16.0 38.4 21.7 15.3 30.8 11.9 8.0 12.3 3.6 Macedonia, FYR 63.0 53.8 62.1 53.4 Madagascar 1.7 2.8 8.8 12.2 Malawi 19.4 5.4 44.9 11.1 Malaysia 10.5 10.3 11.5 11.8 12.2 21.4 Mali 10.2 26.7 19.8 47.6 Mauritania 23.9 34.6 Mauritius 21.4 20.5 19.4 28.1 34.3 29.0 27.6 26.1 45.7 39.0 Mexico 9.2 6.1 9.0 15.3 7.4 10.1 11.3 10.9 12.0 41.9 34.3 33.7 Moldova 19.1 20.1 18.3 15.0 5.8 6.6 Mongolia 19.5 20.7 14.0 16.9 Montenegro 32.3 24.9 Morocco 16.2 22.8 14.4 19.4 Mozambique 15.3 9.0 5.9 19.7 11.5 8.3 Myanmar Namibia 29.6 36.7 54.6 33.8 47.0 63.8 20.4 29.2 Nepal 33.5 8.4 8.3 36.2 19.6 15.4 Netherlands 11.5 8.0 8.8 12.7 8.4 8.6 8.3 11.9 10.7 12.8 New Zealand 12.3 9.4 16.8 12.2 10.1 17.4 Nicaragua 22.4 8.1 24.7 9.7 20.9 10.5 52.3 39.4 Niger 15.2 45.3 Nigeria 7.2 22.2 43.4 36.1 Norway 11.9 12.5 10.9 11.8 11.5 7.7 7.4 17.8 6.1 20.5 Oman Pakistan 7.6 11.0 7.0 18.1 14.9 10.5 11.4 9.9 65.8 59.6 Panama 23.0 18.5 11.7 35.6 29.6 21.1 15.4 11.8 10.6 36.4 30.1 30.8 Papua New Guinea 17.3 18.7 Paraguay 5.5 12.1 8.7 7.3 20.5 16.8 6.3 9.7 9.9 27.7 29.7 28.3 Peru 9.8 16.2 12.5 13.6 17.4 15.6 11.9 15.4 11.7 25.3 28.7 21.6 Philippines 14.4 14.9 16.2 19.1 18.9 19.3 10.6 10.7 19.9 24.9 27.4 31.9 Poland 29.0 36.7 22.4 33.8 39.2 25.4 16.4 8.5 17.7 12.3 Portugal 14.1 13.7 21.1 17.7 19.1 23.7 12.3 13.4 13.3 15.2 Romania 18.8 21.5 22.3 23.1 18.4 21.8 30.8 2.0 11.3 32.8 6.3 16.7 Russian Federation 17.8 14.5 16.9 20.0 17.2 17.5 Rwanda 1.0 0.5 13.9 4.1 15.5 4.5 Saudi Arabia 23.6 45.8 Senegal 11.9 20.1 13.4 19.8 50.5 58.7 Serbia 43.2 31.0 55.5 41.3 23.4 19.1 Sierra Leone 7.3 3.5 16.0 25.6 Singapore 4.5 6.4 9.8 5.5 11.6 16.6 Slovak Republic 26.0 30.7 34.7 23.1 28.8 32.0 12.5 6.6 11.4 8.8 Slovenia 18.1 14.5 15.2 19.6 17.8 13.8 6.8 5.1 5.3 4.1 Somalia South Africa 42.7 47.2 54.7 54.6 18.0 27.4 27.0 36.8 Spain 33.6 16.7 43.2 49.2 23.5 39.8 12.4 19.6 15.8 18.1 Sri Lanka 20.4 17.1 37.0 27.9 4.0 19.3 14.6 28.9 32.9 36.1 Sudan Swaziland 44.2 43.0 2.2 13.4 Sweden 20.6 22.3 26.7 18.4 21.6 23.7 14.5 15.7 11.7 13.7 Switzerland 5.7 8.5 7.3 5.3 9.1 8.4 Syrian Arab Republic 12.7 15.3 46.1 40.2 13.3 55.4 Tajikistan 26.9 43.4 Tanzania 7.4 10.1 3.2 5.3 9.5 17.5 9.1 16.9 Thailand 2.6 4.9 3.7 2.3 4.6 5.1 5.4 1.6 2.5 13.0 11.5 12.0 Timor-Leste 10.4 15.6 26.5 22.5 Togo 6.2 13.0 Tonga 32.0 9.9 27.0 15.1 22.9 34.9 Trinidad and Tobago 28.3 12.9 8.8 35.2 21.6 12.9 Tunisia 33.3 31.4 29.0 29.3 Turkey 16.9 19.5 21.0 13.1 20.6 23.1 27.3 21.9 57.9 46.9 Turkmenistan Uganda 3.8 13.5 Ukraine 15.2 14.4 17.6 24.2 United Kingdom 17.9 13.6 21.3 12.2 10.7 16.9 12.7 12.8 18.4 16.4 United States 12.5 12.4 20.8 11.6 10.1 15.8 10.7 13.8 Uruguay 21.3 25.4 16.9 29.2 34.9 26.5 15.3 15.0 14.2 25.2 23.5 22.1 Uzbekistan Venezuela, RB 20.2 14.3 12.3 35.2 22.0 15.9 15.0 10.2 36.0 20.5 Vietnam 3.4 4.4 2.9 4.9 9.3 4.6 4.3 14.3 7.4 7.9 West Bank and Gaza 21.3 19.6 37.9 30.6 Yemen, Rep. 20.2 9.8 Zambia 21.8 22.4 Zimbabwe 20.7 7.6 12.4 7.6 368 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 TABLE 7 Policies and institutions Core ILO Minimum wage Separation cost (weeks of salary) Union membership conventions ratified (2005 US$ per year) After 1 year After 10 years (% of wage employment) 2012 2007 2010 2012 2012 1995 2005 2010 Afghanistan 5 0 0 13.0 30.3 Albania 8 1,608 2,160 4.3 34.4 Algeria 8 1,848 2,460 17.3 17.3 Angola 8 1,296 1,308 8.6 80.1 Argentina 8 2,952 4,824 8.7 52.0 Armenia 8 540 948 13.0 13.0 Australia 7 13,464 13,896 5.0 16.0 32 22 19 Austria 8 6,780 7,704 2.0 2.0 41 33 28 Azerbaijan 8 648 1,068 21.7 21.7 Bangladesh 7 288 252 9.3 54.3 Barbados 8 Belarus 8 936 1,104 21.7 21.7 Belgium 8 15,996 18,804 5.0 8.0 56 53 52 Belize 8 3,300 3,156 2.0 14.0 Benin 8 600 732 5.6 18.4 Bhutan 0 0 0 5.3 10.3 Bolivia 8 696 960 Bosnia and Herzegovina 8 4,092 4,356 2.0 16.4 Botswana 8 1,308 1,164 6.7 42.0 9 Brazil 7 2,136 3,000 5.9 20.9 30 29 Bulgaria 8 1,296 1,788 8.6 8.6 39 22 20 Burkina Faso 8 672 756 5.4 16.3 Burundi 8 48 36 4.3 26.0 Cambodia 8 468 444 4.3 34.4 Cameroon 8 504 684 5.8 23.8 Canada 5 13,104 17,952 2.0 18.0 34 30 30 Central African Republic 8 408 432 21.7 21.7 Chad 8 552 780 4.3 20.6 Chile 8 0 0 8.6 47.6 16 13 14 China 4 1,080 1,728 8.6 47.6 92 74 79 Colombia 8 2,076 2,628 4.3 30.0 Congo, Dem. Rep. 8 180 696 4.2 16.8 Congo, Rep. 8 864 1,296 4.3 17.8 Costa Rica 8 3,600 3,852 7.1 29.5 Côte d’Ivoire 8 0 0 5.6 22.8 Croatia 8 4,452 5,748 4.3 25.1 Cuba 7 Czech Republic 8 3,996 4,608 21.7 21.7 44 20 17 Denmark 8 0 0 0.0 0.0 77 72 69 Dominican Republic 8 2,700 2,436 7.8 45.8 Ecuador 8 1,800 2,328 14.1 54.2 Egypt, Arab Rep. 8 276 336 13.0 67.2 El Salvador 8 768 936 4.3 42.9 Eritrea 7 0 0 4.0 29.3 Estonia 8 3,264 4,236 8.6 17.2 32 9 7 Ethiopia 8 0 0 8.6 30.1 Fiji 8 2,472 3,132 5.3 14.3 Finland 8 18,816 22,212 4.3 17.3 80 72 70 France 8 7,284 8,484 5.2 17.3 9 8 8 Gabon 8 432 516 1.0 26.0 Gambia, The 8 0 0 26.0 26.0 Georgia 8 252 264 4.3 4.3 Germany 8 9,816 12,276 6.2 39.0 29 22 19 Ghana 7 252 276 10.7 91.0 Greece 8 10,512 12,756 24.0 24.0 31 25 24 Guatemala 8 1,776 1,992 5.1 50.6 Guinea 8 0 0 3.2 13.0 Guinea-Bissau 7 0 0 13.0 43.3 Haiti 8 504 1,356 4.3 17.3 Honduras 8 1,788 3,504 8.7 52.0 Hungary 8 3,516 4,200 4.3 20.9 49 17 17 India 4 204 264 6.5 25.8 41 Indonesia 8 1,104 1,140 17.3 95.3 5 11 Iran, Islamic Rep. 5 1,848 3,324 4.3 43.3 Iraq 7 0 1,248 0.0 0.0 Ireland 8 16,992 19,308 2.7 11.0 52 37 37 Israel 8 9,036 10,608 8.7 47.7 61 34 Italy 8 16,236 18,768 6.5 8.7 38 34 35 Jamaica 8 2,388 2,232 2.0 26.0 Japan 6 12,108 14,652 4.3 4.3 24 19 18 Jordan 7 1,752 2,160 4.3 4.3 Kazakhstan 8 864 1,200 8.7 8.7 Kenya 7 924 1,068 6.5 25.8 Kiribati 8 0 0 4.3 4.3 Korea, Rep. 4 6,960 6,756 8.6 47.6 13 10 10 Kosovo 0 0 13.0 26.0 Kyrgyz Republic 8 96 132 17.3 17.3 Lao PDR 5 300 684 11.6 84.4 Selected Indicators 369 TABLE 7 Policies and institutions, continued Core ILO Minimum wage Separation cost (weeks of salary) Union membership conventions ratified (2005 US$ per year) After 1 year After 10 years (% of wage employment) 2012 2007 2010 2012 2012 1995 2005 2010 Latvia 8 2,424 3,816 5.3 14.0 28 19 15 Lebanon 7 2,244 3,408 4.3 13.0 Lesotho 8 6.3 24.3 Liberia 6 588 564 8.3 44.3 Libya 8 Lithuania 8 2,460 3,552 17.3 30.3 33 10 9 Macedonia, FYR 8 1,104 1,824 8.7 17.3 Madagascar 8 288 420 3.1 21.0 Malawi 8 192 252 6.3 34.3 Malaysia 5 0 0 5.7 41.3 13 10 Mali 8 156 156 9.5 18.4 Mauritania 8 876 888 5.4 16.3 Mauritius 8 1,188 1,692 4.7 18.6 Mexico 6 1,368 1,332 14.6 30.0 18 18 Moldova 8 648 1,044 18.3 27.3 Mongolia 8 660 888 8.7 8.7 Montenegro 8 732 1,572 28.1 28.1 Morocco 7 2,364 2,736 6.5 36.0 Mozambique 8 732 1,032 6.5 69.3 Myanmar 2 Namibia 8 0 0 5.3 14.3 Nepal 7 360 660 8.6 47.2 Netherlands 8 9,672 11,448 4.3 13.0 26 21 19 New Zealand 6 14,292 14,868 0.0 0.0 27 21 21 Nicaragua 8 996 1,308 4.3 21.7 Niger 8 612 636 9.5 7.8 Nigeria 8 0 0 6.3 26.9 Norway 8 36,444 45,504 4.3 13.0 57 55 54 Oman 4 3,528 3,924 4.3 4.3 Pakistan 8 372 480 8.6 47.2 Panama 8 3,192 3,984 3.4 34.0 Papua New Guinea 8 456 1,296 3.7 21.3 Paraguay 8 1,464 1,824 7.1 52.9 Peru 8 1,728 2,004 2.9 17.1 Philippines 8 1,500 1,860 8.7 47.7 31 12 Poland 8 2,724 4,080 8.7 26.0 31 19 15 Portugal 8 6,660 8,520 17.3 54.0 25 21 19 Romania 8 1,776 2,316 8.3 8.3 69 34 33 Russian Federation 8 2,544 3,816 17.3 17.3 76 44 43 Rwanda 8 228 0 8.6 17.3 Saudi Arabia 5 0 0 6.5 36.8 Senegal 8 780 828 6.4 20.6 Serbia 8 1,296 2,196 1.4 14.4 Sierra Leone 6 636 552 17.5 152.7 Singapore 5 0 0 1.0 4.0 14 19 18 Slovak Republic 8 2,892 4,752 17.3 26.0 56 23 17 Slovenia 8 7,356 11,160 5.2 17.3 60 44 27 Somalia 3 South Africa 8 5,472 5,556 5.0 14.0 32 28 Spain 8 9,432 11,400 5.0 30.7 16 15 16 Sri Lanka 8 396 384 15.2 104.3 20 Sudan 7 780 984 4.3 47.7 Swaziland 8 1,080 912 3.4 26.6 Sweden 8 0 0 4.3 26.0 87 76 69 Switzerland 8 0 0 8.7 13.0 23 19 18 Syrian Arab Republic 8 1,272 1,440 8.7 8.7 Tajikistan 8 72 156 13.0 19.5 Tanzania 8 408 648 5.0 14.0 Thailand 5 744 852 19.3 54.3 Timor-Leste 4 0 0 4.3 4.3 Togo 8 288 648 5.6 18.4 Tonga 0 0 0 0.0 0.0 Trinidad and Tobago 8 0 0 8.6 34.6 Tunisia 8 1,176 1,308 6.0 17.3 Turkey 8 4,440 5,436 8.3 51.3 13 8 6 Turkmenistan 7 Uganda 8 36 36 4.3 13.0 Ukraine 8 888 1,344 13.0 13.0 United Kingdom 8 16,044 16,188 1.0 15.1 33 29 27 United States 2 13,992 13,488 0.0 0.0 15 13 12 Uruguay 8 1,560 2,532 5.2 31.2 Uzbekistan 7 108 264 17.3 17.3 Venezuela, RB 8 2,472 3,504 Vietnam 5 228 408 8.7 43.3 West Bank and Gaza 0 0 0 8.7 47.7 Yemen, Rep. 8 1,140 1,068 8.6 47.6 Zambia 8 840 624 13.0 91.0 Zimbabwe 8 72 2,040 26.0 143.0 370 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 TABLE 7 Policies and institutions, continued Labor market policies Social security contributions Social security coverage (spending in % of GDP) (% of salary) (% of employment) 1995 2005 2009 1995 2005 2010 1995 2005 2010 Afghanistan 3.7 Albania 34.4 23.1 37.9 Algeria 34.0 34.0 Angola Argentina 4.97 45.4 24.7 24.8 47.0 Armenia 1.89 3.0 3.0 32.1 Australia 1.95 0.91 0.87 9.0 9.0 90.7 Austria 1.97 2.13 2.34 37.7 37.8 93.7 Azerbaijan 25.0 25.0 35.4 Bangladesh 0.09 2.5 Barbados 17.6 17.6 83.5 Belarus 22.0 29.5 93.5 Belgium 3.94 3.41 3.77 22.3 22.4 91.4 Belize 61.0 Benin 14.0 12.5 5.5 Bhutan 14.0 Bolivia 22.2 20.5 12.2 Bosnia and Herzegovina 24.5 Botswana 9.0 Brazil 31.0 29.0 29.3 59.3 Bulgaria 30.2 21.3 81.1 78.7 Burkina Faso 14.5 18.0 1.2 Burundi 9.5 9.5 3.5 Cambodia Cameroon 12.0 10.1 16.2 Canada 1.83 0.94 1.33 14.6 14.0 95.4 87.4 Central African Republic 1.5 Chad 8.5 8.5 2.7 Chile 3.13 24.7 20.3 18.0 57.7 China 0.06 32.0 32.0 33.5 Colombia 0.00 40.0 44.8 27.8 Congo, Dem. Rep. 8.5 8.5 14.2 Congo, Rep. 14.3 14.3 9.7 Costa Rica 0.60 23.3 23.8 58.6 Côte d’Ivoire 11.5 13.0 11.5 12.8 Croatia 36.7 36.7 76.0 Cuba 14.0 14.0 Czech Republic 0.24 0.48 0.72 34.0 34.0 31.5 95.4 Denmark 6.02 3.92 3.33 8.0 8.0 92.9 Dominican Republic 12.5 26.9 Ecuador 24.5 19.0 26.4 Egypt, Arab Rep. 35.0 35.0 55.1 El Salvador 22.9 Eritrea Estonia 0.19 1.62 34.5 29.9 94.5 Ethiopia 10.0 15.0 Fiji 16.0 27.0 Finland 5.27 2.81 2.80 32.9 28.9 89.7 France 2.70 2.49 2.42 34.9 34.9 87.3 Gabon Gambia, The 2.7 Georgia 20.0 25.0 29.2 Germany 3.51 2.93 2.53 41.5 38.9 86.9 Ghana 17.5 17.5 8.7 Greece 0.78 25.2 25.2 86.0 Guatemala 15.5 15.5 20.3 Guinea 12.1 Guinea-Bissau 2.0 Haiti 15.0 15.0 Honduras 10.5 10.5 17.3 Hungary 1.29 0.69 1.15 45.5 38.5 79.9 92.0 India 6.74 22.2 22.2 10.3 Indonesia 0.15 12.2 5.7 5.7 11.0 Iran, Islamic Rep. 30.0 30.0 Iraq 43.1 Ireland 3.91 1.46 3.47 14.8 14.8 88.9 Israel 1.02 0.90 6.7 8.9 Italy 1.34 1.86 39.5 40.1 90.1 Jamaica 0.00 5.0 5.0 5.0 17.2 Japan 0.69 0.60 0.85 31.8 31.9 95.4 Jordan 15.0 16.5 18.0 25.6 38.4 Kazakhstan 10.0 10.0 62.5 Kenya 3.78 10.0 10.0 20.8 7.5 Kiribati 15.0 15.0 Korea, Rep. 0.32 1.02 12.4 28.8 49.5 Kosovo Kyrgyz Republic 39.0 29.0 27.3 52.7 40.4 Lao PDR 9.5 9.5 Selected Indicators 371 TABLE 7 Policies and institutions, continued Labor market policies Social security contributions Social security coverage (spending in % of GDP) (% of salary) (% of employment) 1995 2005 2009 1995 2005 2010 1995 2005 2010 Latvia 0.11 33.1 33.1 91.7 Lebanon 8.5 8.5 34.5 Lesotho 4.4 Liberia Libya 14.3 14.3 68.5 Lithuania 31.2 31.3 82.9 Macedonia, FYR 52.3 Madagascar 11.8 11.8 5.3 Malawi Malaysia 0.57 24.3 24.3 49.0 Mali 0.22 20.0 13.0 11.5 7.9 Mauritania 6.0 6.0 Mauritius 0.04 9.0 10.0 53.4 Mexico 0.04 26.0 7.2 7.2 32.0 27.4 Moldova 29.0 29.0 56.7 Mongolia 33.5 Montenegro Morocco 12.9 12.9 23.8 Mozambique 1.9 Myanmar Namibia 9.6 Nepal 20.0 20.0 3.4 Netherlands 4.14 3.31 2.92 25.5 22.4 90.7 New Zealand 1.80 0.81 0.84 Nicaragua 32.8 19.8 21.7 Niger 1.9 Nigeria 15.0 15.0 8.1 Norway 2.33 1.24 21.9 21.9 93.2 Oman Pakistan 0.33 14.0 12.0 3.9 Panama 18.0 19.8 Papua New Guinea 13.2 14.4 4.4 Paraguay 23.0 23.0 12.4 Peru 0.06 23.2 23.2 21.7 Philippines 0.02 10.4 10.6 25.0 Poland 0.30 26.0 26.7 81.4 Portugal 1.32 1.94 2.08 34.8 34.8 92.0 Romania 36.8 33.7 67.9 Russian Federation 24.1 33.3 66.8 Rwanda 8.0 8.0 4.6 Saudi Arabia 20.0 20.0 Senegal 16.5 16.5 5.1 Serbia 0.13 45.0 Sierra Leone 15.0 15.0 5.5 Singapore 36.0 35.0 66.2 62.1 Slovak Republic 1.18 0.60 0.93 29.6 23.6 81.9 78.9 Slovenia 0.68 0.96 37.5 37.5 87.4 Somalia South Africa 2.0 2.0 6.7 Spain 2.86 2.24 3.86 37.8 37.3 85.6 69.4 Sri Lanka 20.0 20.0 21.8 24.1 Sudan 25.0 27.0 5.2 Swaziland 15.4 Sweden 4.62 2.44 1.84 28.7 28.7 88.8 Switzerland 1.59 1.66 10.4 10.4 95.4 Syrian Arab Republic 24.0 24.0 26.8 Tajikistan Tanzania 20.0 20.0 4.3 Thailand 0.04 9.7 9.7 22.8 Timor-Leste Togo 7.3 Tonga Trinidad and Tobago 1.20 9.9 10.8 71.1 Tunisia 25.8 23.0 48.6 Turkey 0.12 30.5 38.0 16.2 58.6 Turkmenistan 23.0 23.0 Uganda 0.78 15.0 15.0 10.3 Ukraine 0.00 38.8 41.8 62.1 United Kingdom 1.13 0.62 0.71 23.8 23.8 93.2 United States 0.52 0.37 1.18 18.6 18.6 92.2 Uruguay 0.01 40.5 35.5 32.0 78.5 Uzbekistan 36.5 29.0 Venezuela, RB 25.5 14.2 23.9 33.9 Vietnam 20.0 20.0 23.0 9.2 19.3 West Bank and Gaza 14.0 Yemen, Rep. 15.0 10.7 10.4 Zambia 10.9 Zimbabwe 6.0 8.0 20.0 372 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 TABLE 8 Connectedness Conventions on Immigrants Emigrants Remittances migration ratified (% of population) (% of native population) (% of GDP) 2010 1990 2000 2010 1990 2000 2010 1995 2005 2010 Afghanistan 0 0.3 0.3 0.3 6.4 Albania 3 2.0 2.5 2.8 6.0 25.5 31.6 17.6 15.4 9.7 Algeria 2 1.1 0.8 0.7 5.9 4.2 3.3 2.7 2.0 1.3 Angola 0 0.3 0.3 0.3 2.5 2.6 2.7 0.1 0.1 Argentina 1 5.1 4.2 3.6 1.4 1.6 2.4 0.0 0.2 0.2 Armenia 2 18.6 18.7 10.5 14.0 25.1 23.9 4.5 10.2 10.6 Australia 0 21.0 21.0 21.1 2.2 2.9 2.5 0.4 0.4 0.4 Austria 0 10.3 12.4 15.6 6.8 7.0 7.8 0.4 0.9 0.9 Azerbaijan 1 5.0 4.3 2.9 13.4 16.3 14.0 0.1 5.2 2.7 Bangladesh 0 0.8 0.8 0.7 4.6 3.7 3.5 3.2 7.2 10.8 Barbados 1 8.2 9.2 10.3 27.5 26.6 30 3.3 4.5 3 Belarus 0 12.3 11.2 11.5 22.5 16.4 17.4 0.2 0.8 0.7 Belgium 1 8.9 8.6 8.9 4.3 3.5 4.4 1.7 1.9 2.2 Belize 2 16.1 14.6 13.6 14.4 2.2 4.1 5.7 Benin 1 1.6 2.1 2.6 5.4 5.2 5.8 5.0 4.0 3.8 Bhutan 0 4.3 5.6 5.5 2.7 2.1 6.1 0.2 0.3 Bolivia 1 0.9 1.1 1.5 3.3 4.2 6.5 0.1 3.6 5.5 Bosnia and Herzegovina 3 1.3 2.6 0.7 16.3 26.5 28.1 18.7 11.4 Botswana 0 2.0 3.2 5.7 5.1 2.2 3.2 1.2 1.3 0.7 Brazil 1 0.5 0.4 0.4 0.3 0.5 0.7 0.4 0.4 0.2 Bulgaria 0 0.2 1.2 1.4 7.0 8.8 13.9 0.5 5.6 2.9 Burkina Faso 3 3.7 4.7 6.3 9.8 10.6 9.3 3.3 1.0 1.1 Burundi 0 5.9 1.2 0.7 4.1 3.3 4.1 0.0 1.4 Cambodia 0 0.4 1.9 2.4 2.5 2.3 2.5 0.3 3.2 3.3 Cameroon 2 2.2 1.5 1.0 1.0 0.9 1.4 0.1 0.5 0.9 Canada 0 16.2 18.1 21.1 4.7 4.7 4.2 Central African Republic 0 2.1 1.9 1.8 1.2 0.7 2.9 0.0 Chad 0 1.2 1.3 3.5 2.7 1.7 2.2 0.1 Chile 1 0.8 1.2 1.9 3.6 3.2 3.6 0.0 0.0 China 0 0.0 0.0 0.1 0.4 0.5 0.6 0.1 1.0 0.9 Colombia 1 0.3 0.3 0.2 3.0 3.7 4.4 0.9 2.3 1.4 Congo, Dem. Rep. 0 2.1 1.2 0.7 1.0 1.3 1.4 Congo, Rep. 0 5.4 3.3 3.5 2.3 2.0 5.1 0.2 0.2 0.1 Costa Rica 0 13.6 7.9 10.5 2.7 2.8 2.9 1.1 2.1 1.5 Côte d’Ivoire 0 14.5 14.1 12.2 2.7 3.7 6.3 1.4 1.0 0.8 Croatia 0 9.9 13.9 15.8 8.2 14.1 16.9 2.5 1.6 2.2 Cuba 1 0.3 0.2 0.1 7.7 8.6 9.8 Czech Republic 0 4.1 4.4 4.3 5.8 8.2 3.5 0.3 0.8 0.6 Denmark 0 4.6 6.9 8.7 4.1 4.1 4.9 0.3 0.3 0.2 Dominican Republic 0 4.0 4.1 4.4 6.0 9.3 9.8 5.1 8.0 6.5 Ecuador 2 0.8 0.8 2.7 2.2 4.9 7.5 1.9 6.7 4.4 Egypt, Arab Rep. 1 0.3 0.3 0.3 3.3 3.2 4.4 5.4 5.6 3.5 El Salvador 1 0.9 0.5 0.7 9.7 13.7 17.1 11.2 17.7 16.1 Eritrea 0 0.4 0.4 0.3 9.4 8.9 15.2 Estonia 0 24.3 18.2 13.6 14.1 17.1 12.8 0.0 1.9 1.7 Ethiopia 0 2.4 1.0 0.7 0.3 0.4 0.7 0.4 1.4 0.8 Fiji 0 1.9 2 2.2 9.3 13.7 17.8 1.7 6.2 5.8 Finland 0 1.3 2.6 4.2 6.2 6.9 6.0 0.1 0.4 0.3 France 1 10.1 10.3 10.3 2.3 2.7 2.9 0.3 0.6 0.6 Gabon 0 13.7 17.0 18.9 1.7 1.4 2.0 0.1 0.1 Gambia, The 0 12.2 14.3 16.8 2.7 3.1 4.3 9.3 11.0 Georgia 0 7.0 4.9 3.8 16.6 21.2 19.8 8.1 5.4 6.9 Germany 1 7.5 12.1 13.2 4.1 4.7 4.7 0.2 0.3 0.3 Ghana 1 4.8 7.9 7.6 2.7 2.6 3.5 0.3 0.9 0.4 Greece 0 4.1 6.7 10.0 9.8 9.3 10.6 2.5 0.5 0.5 Guatemala 2 3.0 0.4 0.4 3.4 4.8 5.7 2.4 11.3 10.2 Guinea 2 4.2 8.5 4.0 7.0 5.3 5.3 0.0 1.4 1.3 Guinea-Bissau 0 1.4 1.6 1.3 6.4 5.7 6.9 0.7 3.5 5.8 Haiti 0 0.3 0.3 0.3 6.6 8.0 9.2 23.7 22.6 Honduras 1 5.5 0.5 0.3 3.2 5.2 7.0 3.2 18.7 17.3 Hungary 0 3.3 2.9 3.7 4.0 4.2 4.6 0.3 1.8 1.8 India 0 0.9 0.6 0.4 0.9 0.9 0.9 1.7 2.7 3.2 Indonesia 0 0.3 0.1 0.1 0.6 0.9 1.0 0.3 1.9 1.0 Iran, Islamic Rep. 0 7.8 4.3 2.9 1.3 1.6 1.8 1.8 0.5 0.3 Iraq 0 0.5 0.6 0.3 3.6 4.1 4.6 2.3 0.1 Ireland 0 6.5 10.1 20.1 22.5 24.5 17.1 0.5 0.3 0.3 Israel 1 35.0 35.9 38.6 14.5 15.0 17.9 0.7 0.6 0.6 Italy 2 2.5 3.7 7.4 6.4 5.4 5.8 0.2 0.1 0.3 Jamaica 2 0.9 1.0 1.1 20.8 26.1 27.0 11.2 15.8 14.5 Japan 0 0.9 1.3 1.7 0.6 0.7 0.6 0.0 0.0 0.0 Jordan 0 36.2 40.2 49.2 32.6 27.7 19.3 21.4 19.9 13.8 Kazakhstan 0 22.1 19.3 18.9 18.7 21.8 21.9 0.6 0.3 0.2 Kenya 2 0.7 2.4 2.0 1.3 1.2 1.1 3.3 4.3 5.5 Kiribati 0 3 2.4 2 6.8 11.9 6.2 12.3 Korea, Rep. 0 1.3 1.2 1.1 3.6 3.9 4.1 0.7 0.8 0.9 Kosovo 0 18.8 16.7 Kyrgyz Republic 2 14.2 7.6 4.1 12.7 13.2 10.6 0.1 13.1 26.6 Lao PDR 0 0.5 0.4 0.3 6.5 6.0 5.6 1.3 0.0 0.6 Selected Indicators 373 TABLE 8 Connectedness, continued Conventions on Immigrants Emigrants Remittances migration ratified (% of population) (% of native population) (% of GDP) 2012 1990 2000 2010 1990 2000 2010 1995 2005 2010 Latvia 0 24.3 18.1 15.0 13.6 14.9 12.6 0.7 2.4 2.6 Lebanon 0 17.8 18.5 17.9 19.8 18.1 16.1 22.5 19.4 Lesotho 1 0.5 0.3 0.3 16.7 8.2 16.5 50.4 44.1 34.2 Liberia 0 3.8 5.6 2.4 4.3 9.0 10.0 5.9 2.7 Libya 1 10.6 10.7 10.7 1.8 2.3 1.9 0.0 0.0 Lithuania 0 9.4 6.1 3.9 15.0 14.0 12.0 0.0 2.1 4.3 Macedonia, FYR 2 5.0 6.3 6.3 11.0 15.4 18.8 1.5 3.8 4.2 Madagascar 1 0.4 0.3 0.2 0.8 0.4 0.4 0.4 0.2 Malawi 1 12.3 2.5 1.9 3.2 2.1 1.4 0.0 Malaysia 1 5.6 6.6 8.3 3.3 5.0 5.4 0.1 0.8 0.5 Mali 1 1.9 1.5 1.1 7.0 6.5 6.2 4.5 3.3 4.6 Mauritania 1 4.7 2.4 2.9 4.4 3.6 3.4 0.4 Mauritius 1 0.8 3.3 3.4 8.8 6.9 10.2 3.3 3.4 2.3 Mexico 1 0.8 0.5 0.6 5.4 8.8 9.5 1.5 2.7 2.1 Moldova 1 15.7 13.0 11.5 16.4 17.0 19.6 0.1 30.8 23.6 Mongolia 0 0.3 0.3 0.4 0.1 0.2 1.2 7.1 4.5 Montenegro 2 6.7 0.0 5.3 7.3 Morocco 1 0.2 0.2 0.2 6.2 5.3 8.6 6.0 7.7 7.1 Mozambique 0 0.9 2.0 1.9 4.1 4.0 4.9 2.6 0.9 1.4 Myanmar 0 0.3 0.2 0.2 0.5 0.7 1.1 Namibia 0 7.9 6.6 6.1 7.6 3.4 0.8 0.4 0.2 0.1 Nepal 0 2.3 2.9 3.2 3.1 3.1 3.3 1.3 14.9 21.7 Netherlands 1 8.0 10.0 10.5 5.0 5.0 6.3 0.3 0.3 0.5 New Zealand 1 15.2 17.8 22.0 10.9 13.5 15.5 2.6 0.7 0.6 Nicaragua 1 1.0 0.6 0.7 7.2 9.1 11.3 2.4 12.6 12.5 Niger 1 1.7 1.5 1.3 1.9 2.0 2.5 0.4 1.9 1.6 Nigeria 2 0.5 0.6 0.7 0.4 0.5 0.6 2.9 3.0 5.1 Norway 2 4.6 6.6 9.9 3.9 4.6 4.0 0.2 0.2 0.2 Oman 0 22.7 27.5 29.7 12.4 14.3 0.8 0.3 0.1 0.1 Pakistan 0 5.9 2.9 2.4 3.2 2.6 2.7 2.8 3.9 5.5 Panama 0 2.6 2.9 3.4 5.9 5.7 4.0 1.4 0.8 0.9 Papua New Guinea 0 0.8 0.5 0.4 0.6 0.7 0.9 0.3 0.1 0.2 Paraguay 1 4.3 3.3 2.5 7.0 7.1 7.5 3.6 3.6 3.7 Peru 1 0.3 0.2 0.1 1.3 2.6 3.6 1.1 1.8 1.6 Philippines 3 0.3 0.4 0.5 3.2 3.8 4.4 7.2 13.2 10.7 Poland 0 3.0 2.1 2.2 9.7 12.0 7.8 0.5 2.1 1.6 Portugal 2 4.4 6.2 8.6 15.7 12.2 18.7 3.4 1.6 1.6 Romania 0 0.6 0.6 0.6 7.1 5.5 11.5 0.0 4.8 2.4 Russian Federation 0 7.8 8.1 8.6 8.6 7.3 7.8 0.6 0.4 0.4 Rwanda 1 1.0 4.8 4.4 4.5 3.0 2.5 1.6 0.8 1.6 Saudi Arabia 0 29.4 25.6 26.6 1.4 1.4 0.9 0.0 0.1 Senegal 1 3.7 2.4 1.7 4.3 3.5 5.0 3.0 9.1 10.5 Serbia 2 1.3 11.4 7.2 2.8 7.9 8.7 Sierra Leone 0 3.9 2.3 1.8 1.6 3.6 4.4 2.7 0.2 3.0 Singapore 0 23.9 33.6 38.7 6.3 9.6 8.7 Slovak Republic 0 0.8 2.2 2.4 6.6 9.3 8.9 0.1 1.5 1.8 Slovenia 2 8.9 8.8 8.0 4.3 4.8 6.5 1.3 0.7 0.7 Somalia 0 9.6 0.3 0.2 3.1 4.8 8.0 South Africa 0 3.5 2.3 3.7 1.1 1.6 1.8 0.1 0.3 0.3 Spain 1 2.1 4.4 13.8 4.0 2.8 3.3 0.5 0.7 0.8 Sri Lanka 1 2.7 2.1 1.6 3.7 4.0 8.3 6.2 8.2 8.4 Sudan 0 6.2 3.1 2.2 2.1 2.2 2.9 2.5 3.7 2.9 Swaziland 0 8.3 3.6 3.8 8.5 4.7 13.7 4.9 3.7 2.9 Sweden 1 9.1 11.2 13.9 2.7 3.3 3.8 0.1 0.2 0.1 Switzerland 0 20.5 21.8 22.5 6.0 5.5 6.3 0.5 0.5 0.5 Syrian Arab Republic 1 5.6 5.8 10.8 3.9 3.7 4.9 3.0 2.9 2.8 Tajikistan 3 8.0 5.4 4.1 6.6 8.6 10.7 20.2 40.0 Tanzania 1 2.3 2.6 1.5 0.8 0.7 0.7 0.0 0.1 0.1 Thailand 0 0.7 1.3 1.7 0.5 1.1 1.2 1.0 0.7 0.6 Timor-Leste 1 1.2 1.1 1.2 0.5 1.9 1.5 Togo 0 4.4 3.7 3.1 4.6 4.9 5.9 1.1 9.1 10.5 Tonga 0 3.2 1.6 0.8 22.4 31 31.5 15.1 26.5 23.7 Trinidad and Tobago 1 4.2 3.2 2.6 14.9 19.4 21.5 0.6 0.6 0.6 Tunisia 0 0.5 0.4 0.3 6.5 5.6 5.8 3.8 4.3 4.5 Turkey 1 2.1 2.0 1.9 4.5 4.6 5.6 2.0 0.2 0.1 Turkmenistan 0 8.4 5.4 4.1 9.0 7.3 5.1 0.2 Uganda 2 3.1 2.6 1.9 1.2 2.2 2.3 3.5 5.3 Ukraine 0 13.3 11.2 11.5 14.3 11.8 13.8 0.0 0.7 4.1 United Kingdom 1 6.5 8.1 10.4 7.3 6.9 7.7 0.2 0.3 0.3 United States 0 9.3 12.3 13.8 0.7 0.8 0.9 0.0 0.0 0.0 Uruguay 2 3.2 2.7 2.4 6.9 6.8 9.7 0.4 0.3 Uzbekistan 0 8.1 5.5 4.1 5.9 6.6 6.7 Venezuela, RB 2 5.2 4.2 3.5 1.1 1.4 1.8 0.0 0.1 0.0 Vietnam 0 0.0 0.1 0.1 1.6 2.2 2.5 6.0 7.8 West Bank and Gaza 0 46.0 46.9 49.3 60.4 18.1 17.6 Yemen, Rep. 0 2.9 2.3 2.2 4.3 3.4 4.6 25.4 7.7 4.0 Zambia 1 3.6 3.5 1.8 2.3 1.6 1.4 0.7 0.3 Zimbabwe 0 6.0 3.3 3.0 3.0 2.9 9.3 0.6 374 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 Technical notes •   Educational  attainment: Average score in reading, mathematics and science; units are Table 1: Labor force such that the mean is 500 and standard de- viation is 100. Observations from PISA are •   Population: Number of people living in the from students aged between 15 years and territory of a country or economy; in mil- 3 months and 16 years and 2 months at the lions; total and by gender (three indicators). beginning of the assessment period. Observa- Figures are from population censuses and tions from TIMSS (marked with an asterisk) demographic estimates. Data source: World are from a nationally representative sample Development Indicators (WDI), at http:// of all students enrolled in the grade that rep- data.worldbank.org/indicator/SP.POP.TOTL. resents 8 years of formal schooling, provided •   Working age population: Persons aged 15 to that the mean age at the time of testing is at 64 as a fraction of the population; in percent; least 13.5 years. TIMSS does not assess edu- total and by gender (three indicators). Data cational attainment in reading. Data sources: source: see table 9. PISA at http://www.oecd.org/pisa, and TIMSS and PIRLS International Study Center, Lynch •   Participation rate: Share of the working age School of Education, Boston at http://tims- population that is in the labor force, with the sandpirls.bc.edu/index.html. labor force defined as persons who work or are unemployed during a reference period; in percent; total, by gender and by age group Table 3: Employment structure (five indicators). Data source: see table 9. •   Employment by sector: Share of employment •   Unemployment rate: Share of the labor force in primary, secondary, and tertiary activities, that is unemployed, with the unemployed based on the International Standard Industry defined as persons who are available to work Classification (ISIC); in percent (three indi- and are actively looking for a job during a cators). The primary sector corresponds to reference period; in percent; total and by gen- division 1 (ISIC revision 2), tabulation cat- der (three indicators). Data source: KILM, at egories A and B (ISIC revision 3), or tabula- http://www.ilo.org/kilm. tion category A (ISIC revision 4); it includes agriculture, hunting, forestry, and fishing. The secondary sector encompasses divisions 2–5 Table 2: Skills (ISIC revision 2), tabulation categories C–F •   Average schooling: Mean of highest complet- (ISIC revision 3), or tabulation categories ed level of formal schooling among all persons B–F (ISIC revision 4); it includes mining and aged 15 and above; in years; total and by gen- quarrying (including oil production), manu- der (three indicators). Figures are estimated facturing, construction, and public utilities based on data from population censuses. The (electricity, gas, and water). The tertiary sector methodology is described by Robert J. Barro corresponds to divisions 6–9 (ISIC revision and Jong-Wha Lee, 2010, “A New Data Set of 2), tabulation categories G–P (ISIC revision Educational Attainment in the World, 1950– 3), or tabulation categories G–U (ISIC revi- 2010,” NBER Working Papers 15902, National sion 4); it includes wholesale and retail trade Bureau of Economic Research. Data source: and restaurants and hotels; transport, storage, http://www.barrolee.com. and communications; financing, insurance, real estate, and business services; and com- •   Skills as a constraint: Share of firms identi- munity, social, and personal services. Data fying an inadequately skilled workforce as a sources: see table 9. “major” or “very severe” obstacle to business; in percent. Figures are from enterprise surveys •   Employment  in  civil  service: Share of total covering firms with at least five employees employment in the public sector; in percent. and mainly formal. “Major” and “very severe” Public sector employment includes all em- are the two top levels in a scale of five. Data ployment of the general government as de- source: International Financial Corporation/ fined in System of National Accounts (SNA) World Bank Enterprise Surveys, at http:// 1993, plus resident and operating at central, www.enterprisesurveys.org. state (or regional), and local levels of govern- Selected Indicators 375 ment. Persons employed directly by these in- their life at the time of the interview; in per- stitutions are included regardless of their type cent of all respondents; by work status (three of employment contract; workers in state- indicators). The question in the survey is: “All owned enterprises are not included. Data things considered, how satisfied are you with source: LABORSTA tables on “Public Sector your life as a whole these days?” Possible an- Employment” and “General Employment swers range from 1(“completely dissatisfied”) Level,” at http://laborsta.ilo.org. to 10 (“completely satisfied”). Responses of 6 or higher were considered affirmative. Data •   Employment  by  work  status: Share of em- source: World Values Survey, 1999–2008, at ployment in wage work, self employment, and http://www.worldvaluessurvey.org. farming; in percent (three indicators). The self-employed include employers and non- •   Labor  share  of  national  income: Compen- remunerated family workers outside farming. sation of employees as a share of GDP; in Data sources: see table 9. percent. Compensation of employees cor- responds is measured by account D.1 in the •   Employment  in  urban  areas: Share of em- SNA, and GDP by account B.1 in the Sys- ployment in cities and towns; in percent. tem of National Accounts). Compensation Urban is defined by national statistical offices. of employees includes payments in cash and Data sources: see table 9. in-kind. It also includes government contri- butions to social insurance schemes that pro- Table 4: Living standards vide benefits to the employees. Data source: UNDATA, at http://data.un.org. •   Wages  by  occupation: Average wages of ac- countants, chemical engineers, bus drivers, •   Gender  gap  in  earnings: Wage earnings for and sewing machine operators; in annual US$ women relative to the wage earnings of men at 2005 prices (four indicators). Wages are having the same characteristics; as a ratio. The based on data from the ILO October Inquiry estimate is based on a country-specific regres- database, calibrated into a normalized format sion of the logarithm of monthly earnings in referring to average monthly wage rate for an local currency on years of education and po- adult worker and transformed into dollars tential years of experience (and its square), using the exchange rate of the local currency controlling for industry, occupation, urban in the same year. The data are then converted residence and gender. The methodology is de- to 2005 prices using the U.S. GDP deflator. scribed by Claudio E. Montenegro and Harry The methodology is described by R.H. Oos- Anthony Patrinos, 2012, “Returns to School- tendorp, 2012, “The Occupational Wages ing around the World,” background paper for around the World (OWW) Database: Up- the World Development Report 2013. Data date for 1983–2008,” background paper for sources: see table 9. the World Development Report 2013. Data source: http://www.worldbank.org/wdr2013. Table 5: Productivity •   Working  poor: Share of total employment •   Value-added  per  worker: Total value-added represented by workers who are members of per worker; in annual US$ at 2005 prices; to- households living in extreme poverty; in per- tal and by sector of activity (four indicators). cent. Households living in extreme poverty are Value-added is the output of a sector net of identified on the basis of poverty rates comput- intermediate inputs. It is calculated without ed from the international poverty line of 1.25 making deductions for depreciation of fabri- US$ PPP per day at 2005 prices. The use of the cated assets or depletion and degradation of international poverty line means that figures natural resources. The origin of value-added are not necessarily comparable to estimates is determined by the International Standard generated using national poverty lines. Data Industrial Classification (ISIC), revision 3. sources: see table 9, and for the poverty rate, see Value-added data are converted to US$ using http://iresearch.worldbank.org/PovcalNet/. current exchange rates and then converted to •   Life satisfaction: Persons aged 14 and above 2005 prices using the U.S. GDP deflator. Data who answered affirmatively to a survey ask- source: WDI, at http://data.worldbank.org/ ing them whether they were satisfied with data-catalog/world-development-indicators. 376 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 •   Employment  in  micro-enterprises: Share of community or country; in percent; by work non-agricultural employment in firms with 10 status (three indicators). The figures are based or less employees; in percent. In some coun- on surveys asking the question: “Now I am go- tries the cutoff point is 9 employees. All own- ing to read off a list of voluntary organizations. account workers and unpaid family workers For each one, could you tell me whether you are counted as working in micro-enterprises. are an active member, an inactive member or Both formal and informal firms are included. not a member of that type of organization?” Data sources: see table 9. Possible answers include a variety of church or religious organizations; sports or recreational   nformal  employment: Share of informal •  I organizations; arts, music or educational or- employment in non-agricultural employ- ganizations; labor unions; political parties; ment; in percent. Informal employment environmental organizations; professional as- includes employment in informal sector sociations; humanitarian or charitable orga- enterprises and informal jobs in formal nizations; consumer organizations; and oth- firms; it excludes agricultural employment. ers. Respondents need to be at least 14 years In principle, informal sector and informal old in the case of the World Values Survey; 18 employment are measured according to the years old for Afro Barometer; 15 years old for Resolution of the 15th International Con- Euro Barometer; and 16 years old for Latino- ference of Labor Statisticians (ICLS). How- barómetro Data sources: World Values Survey, ever, there is wide variation in definitions 1999–2008 wave, at http://www.worldvalues and methodology across countries. Data survey.org; Afrobarometer, 2008–09, at http:// sources: KILM, at http://www.ilo.org/em- www.afrobarometer.org; Latinobarómetro pelm/what/WCMS_114240/lang--en/index. 2007 at http://www.latinobarometro.org; and htm and Vanek, Joann, Martha Chen, Ralf Euro Barometer 2007 at http://ec.europa.eu/ Hussmanns, James Heintz, and Françoise public_opinion/index_en.htm. Carré. 2012. Women and Men in the Infor- mal Economy: A Statistical Picture. Geneva: •   Wage inequality: Labor earnings at the 90th Women in Informal Employment: Global- percentile of the wage distribution; as a ratio izing and Organizing and International La- of labor earnings at the 10th percentile. The bour Organization. wage distribution of each country is con- structed based on earnings data from wage workers who report positive wages and iden- Table 6: Social cohesion tify the frequency of their payment. Data •   Trust: Share of people who report that oth- sources: see table 9. ers can be trusted; in percent; by work sta- •   Youth  unemployment: Share of the labor tus (three indicators). The figures are based force age 15 to 24 that is unemployed; in per- on responses to surveys asking the question: cent; by gender (two indicators). Data source: “Generally speaking, would you say that most KILM, at http://www.ilo.org/kilm. people can be trusted or that you need to be very careful in dealing with people?” The in- •   Youth not in school or at work: Share of the terviewed are at least 14 years old in the case population aged 15–24 that is not engaged in of the World Values Survey, 16 years old for education, employment, or training; in per- the Latinobarómetro, 18 years old for Arab cent; by gender (two indicators). Data sources: Barometer, and 15 years old for the Afro- see table 9. barometer. Data sources: World Values Survey, 1999–2008, at http://www.worldvaluessurvey. Table 7: Policies and institutions org; Afrobarometer, Round 1, Year 2004, at http://www.afrobarometer.org; Latinobaró- •   Core  ILO  Conventions  ratified: Indicates metro 2007 at http://www.latinóbarómetro. how many of the following have been rati- org; and Arab Barometer 2006 at http://www. fied by the country: Convention 29, concern- arabbarometer.org/. ing forced or compulsory labor; Convention •   Civic participation: Share of people who re- 87, on freedom of association and protection port being engaged in matters related to their of the right to organize; Convention 98, con- Selected Indicators 377 cerning the application of the principles of the versity of Amsterdam, Version 3.0, May 2011, right to Organize and to bargain collectively; at http://www.uva-aias.net/208. Convention 100, on equal remuneration; •   Labor market policies: Government spending Convention 105, concerning the abolition in programs to help the unemployed back to of forced labor; Convention 111, concerning work, or to support the income or consump- discrimination in respect of employment and tion levels of unemployed or inactive persons; occupation; Convention 138, on the mini- in percent of GDP. Seven types of programs mum age for admission to employment; and are considered: macroeconomic stimulus Convention 182, concerning the prohibi- policies, measures to increase labor demand, tion and immediate action for the elimina- active labor market policies, unemployment tion of the worst forms of child. Data source: benefits, other social protection measures, NORMLEX database, at http://www.ilo.org/ social dialogue and compliance with labor dyn/normlex/en. standards. Data sources: International Labour •   Minimum wage: The lowest a private sector Organization/World Bank, Inventory of policy employer can pay a 19-year-old worker who responses to the financial and economic crisis: has no previous experience in the economy’s Joint synthesis report, mimeo, July 2012; and most populated city; in US$ at 2005 prices. OECD (2012) Employment and Labour Mar- The applicable minimum wage can be legally kets: Key Tables from OECD, at: http://stats. enacted or agreed upon in collective bargain- oecd.org/Index.aspx?DataSetCode=LMPEXP. ing agreements. When a zero is reported, it •   Social  security  contributions: The sum of does not necessarily mean that there is no employer and employee contributions to- minimum wage in force in the country or wards social security programs for sickness, economy. For instance, there may be rates ap- old age, injury and unemployment; in percent plicable to regular workers but not to appren- of the employee’s gross salary. Data sources: tices. Data source: Doing Business Indicators, ILO SECSOC Database of the Social Security at www.doingbusiness.org. Department, at http://www.ilo.org/public/ •   Separation  cost: Severance pay and others english/protection/secsoc; Martín Rama and costs associated with redundancy dismissal; Raquel Artecona, 2002, “A Database of Labor in weeks of salary per separated worker; after Market Indicators across Countries,” Com- 1 and 10 years of continuous employment missioned by a Committee of the National (two indicators). For comparability, figures Academies. refer to a hypothetical worker and firm across •   Social  security  coverage: Share of the labor all countries. The worker is a male, non- force actively contributing to old-age pension executive employee, earning the economy’s schemes; in percent. Data sources: Montser- average wage. The firm is a limited liability rat Pallares-Miralles, Carolina Romero, and company with 60 workers in the manufactur- Edwards Whitehouse, 2012 “International ing sector of the economy’s most populated Patterns of Pension Provision II. A Worldwide city. Separation costs include the cost of ad- Overview of Facts and Figures,” SP Discus- vance notice requirements, severance pay- sion Paper No. 1211. World Bank, Washing- ments and penalties in the case of redundancy ton, DC; Martín Rama and Raquel Artecona, dismissals justified by economic, operational 2002, “A Database of Labor Market Indicators or structural reasons, not by the behavior of across Countries,” Commissioned by a Com- the worker. Data source: Doing Business Indi- mittee of the National Academies. cators, at www.doingbusiness.org. •   Union  membership: Share of wage work- Table 8: Connectedness ers with union membership; in percent. Data source: Jelle Visser, Data Base on Institutional •   Conventions  on  migration  ratified: Indi- Characteristics of Trade Unions, Wage Setting, cates how many of the following have been State Intervention and Social Pacts, 1960– ratified by the country: ILO Convention 97, 2010 (ICTWSS) Jelle Visser Amsterdam Insti- concerning migration for employment; ILO tute for Advanced Labour Studies AIAS Uni- Convention 143, concerning migrations in 378 WO R L D D E V E LO P M E N T R E P O RT 2 0 1 3 abusive conditions and the promotion of percent. The native population is computed equality of opportunity and treatment of as the total population minus immigrants migrant workers; and the United Nations plus emigrants. Data source: Özden, Çaglar, (UN) Convention on the Protection of the Christopher Parsons, Maurice Schiff, and Rights of All Migrant Workers and Members Terrie L. Walmsley. 2011. “Where on Earth Is of Their Families. In the case of the UN Con- Everybody? The Evolution of Global Bilateral vention, accessions and successions are also Migration 1960–2000.” World Bank Economic treated as ratifications. Data source: ILOLEX: Review, 25 (1): 12–56, at http://go.worldbank Database of International Labor Standards .org/JITC7NYTT0. (http://www.ilo.org/ilolex/english/convdisp1 •   Remittances: Foreign currency inflows from .htm; and United Nations Treaty Collec- workers abroad; in percent of GDP. The in- tion, at http://treaties.un.org/pages/View- flows comprise current transfers by migrant Details.aspx?src=TREATY&mtdsg_no=IV- workers and compensation earned by non- 13&chapter=4&lang=en. resident workers. Current transfers from •   Immigrants: Share of the population that is migrant workers are considered remittances foreign born; in percent. Data source: Özden, when workers have resided in the host coun- Çaglar, Christopher Parsons, Maurice Schiff, try for more than a year, irrespective of their and Terrie L. Walmsley. 2011. “Where on immigration status. Compensation earned by Earth Is Everybody? The Evolution of Global nonresident workers refers to the wages and Bilateral Migration 1960–2000.” World Bank salaries of migrant workers having lived in Economic Review, 25 (1): 12–56, at http://data the host country for less than one year. Data .worldbank.org/indicator/SM.POP.TOTL. source: World Development Indicators, at http://data.worldbank.org/indicator/BX.TRF •   Emigrants: Share of the native population that .PWKR.DT.GD.ZS. is residing in another country or economy; in Selected Indicators 379 TABLE 9 Micro-data sources Selected databases Selected databases 1995 2005 2010 1995 2005 2010 Afghanistan LSSN Latvia OECD/EU OECD/EU OECD/EU Albania LSSN LSSN Lebanon LSSN Algeria Lesotho Angola Liberia LSSN Argentina MIX MIX MIX Libya Armenia LSSN Lithuania OECD/EU OECD/EU OECD/EU Australia OECD/EU OECD/EU OECD/EU Macedonia, FYR OECD/EU OECD/EU MIX Austria OECD/EU OECD/EU OECD/EU Madagascar LSSN Azerbaijan LSSN Malawi LSSN MIX Bangladesh LSSN LFSN Malaysia Barbados LFSP Mali LSSN LSSN Belarus LSSN Mauritania LSSN Belgium OECD/EU OECD/EU OECD/EU Mauritius LFSN LFSN Belize LFSN Mexico LSSN OECD/EU OECD/EU Benin LSSN Moldova LSSN Bhutan LSSN Mongolia LSSN Bolivia LFSN LFSN LFSN Montenegro LFSN Bosnia and Herzegovina LSSN Morocco CENSUS CENSUS Botswana LSSN Mozambique LSSN LSSN LSSN Brazil LFSP LFSN LFSN Myanmar Bulgaria LSSN OECD/EU OECD/EU Namibia LSSN Burkina Faso LSSN LSSN Nepal LSSN LSSN LSSN Burundi Netherlands OECD/EU OECD/EU OECD/EU Cambodia LSSN LSSN LSSN New Zealand OECD/EU OECD/EU OECD/EU Cameroon LSSN LSSN Nicaragua LSSN LSSN Canada OECD/EU OECD/EU OECD/EU Niger LSSN Central African Republic OECD/EU LSSN Nigeria LSSN LSSN Chad LSSN Norway OECD/EU OECD/EU OECD/EU Chile LSSN OECD/EU OECD/EU Oman China MIX MIX MIX Pakistan LFSN LFSN Colombia CENSUS LFSN LFSN Panama LFSN LFSN LFSN Congo, Dem. Rep. LSSN Papua New Guinea LSSN Congo, Rep. LSSN Paraguay LFSN LFSN LFSN Costa Rica LFSN LFSN LFSN Peru LFSN LFSN LFSN Côte d’Ivoire Philippines LFSN LFSN LFSN Croatia OECD/EU OECD/EU Poland OECD/EU OECD/EU OECD/EU Cuba Portugal OECD/EU OECD/EU OECD/EU Czech Republic OECD/EU OECD/EU Romania LSSN OECD/EU OECD/EU Denmark OECD/EU OECD/EU OECD/EU Russian Federation LSSN Dominican Republic LFSN LFSN LFSN Rwanda LSSN LSSN Ecuador LFSN LFSN LFSN Saudi Arabia Egypt, Arab Rep. CENSUS LSSN Senegal LSSN LSSN El Salvador LFSN LFSN LFSN Serbia LFSN Eritrea Sierra Leone LSSN Estonia OECD/EU OECD/EU OECD/EU Singapore Ethiopia LSSN LSSN Slovak Republic OECD/EU OECD/EU OECD/EU Fiji CENSUS LSSN Slovenia OECD/EU OECD/EU OECD/EU Finland OECD/EU OECD/EU OECD/EU Somalia France OECD/EU OECD/EU OECD/EU South Africa LFSN LFSN Gabon LSSN Spain OECD/EU OECD/EU OECD/EU Gambia, The Sri Lanka LSSN LFSN LFSN Georgia LSSN LSSN Sudan Germany OECD/EU OECD/EU OECD/EU Swaziland LSSN Ghana LSSN Sweden OECD/EU OECD/EU OECD/EU Greece OECD/EU OECD/EU OECD/EU Switzerland OECD/EU OECD/EU OECD/EU Guatemala LFSN Syrian Arab Republic LSSN Guinea LSSN Tajikistan LSSN Guinea-Bissau Tanzania LFSN LFSN LFSN Haiti Thailand LSSN LSSN LSSN Honduras LFSN LFSN LFSN Timor-Leste LSSN LFSN Hungary OECD/EU OECD/EU OECD/EU Togo LSSN India LFSN LFSN LFSN Tonga LSSN Indonesia LSSN LSSN LSSN Trinidad and Tobago Iran, Islamic Rep. LSSN Tunisia LFSN Iraq CENSUS LSSN Turkey OECD/EU OECD/EU OECD/EU Ireland OECD/EU OECD/EU OECD/EU Turkmenistan Israel OECD/EU OECD/EU OECD/EU Uganda LSSN Italy OECD/EU OECD/EU OECD/EU Ukraine LSSN Jamaica LFSN United Kingdom OECD/EU OECD/EU OECD/EU Japan OECD/EU OECD/EU OECD/EU United States OECD/EU OECD/EU OECD/EU Jordan CENSUS Uruguay LFSP LFSP LFSN Kazakhstan LFSN LSSN Uzbekistan Kenya LSSN LSSN Venezuela, RB LFSN LFSP Kiribati LSSN Vietnam LSSN LSSN LSSN Korea, Rep. OECD/EU OECD/EU West Bank and Gaza CENSUS LSSN LSSN Kosovo OECD/EU LFSP Yemen, Rep. LSSN Kyrgyz Republic LSSN Zambia LSSN Lao PDR LSSN LSSN Zimbabwe CENSUS Data from population census by IPUMS LFSN Labor force survey with national coverage LFSP Labor force survey with partial coverage LSSN Living standards survey with national coverage MIX A combination of micro data from censuses with key ratios from household surveys OECD/EU Data from the Organisation for Economic Co-operation and Development or Eurostat Index Boxes, figures, maps, notes, and tables are indicated by b, f, m, n, and t following the page numbers. A health insurance, subsidizing farmers’ participation in Aadhaar (Indian identification program for social insurance programs, 276 programs), 276b irrigation and, 192 access to finance, 11, 23, 294, 295f life satisfaction of farmers, 85, 86f access to information, rights, and voice, 140–41 manufacturing earnings vs., 165f access to jobs, inequality in, 13, 137, 138b, 139f, 140, 173f prevalence of jobs in, 3, 5, 49 accountability, 176. See also transparency productivity, 79, 81, 88 active labor market programs (ALMPs), 267–72 extension services and, 246 delivering better outcomes, 270–72 farm size related to, 106–7, 119n29, 191 types of programs, 267–70 innovation and, 107, 191–92, 197 public works programs, 269–70 poverty reduction, effect on, 191 training programs for job seekers, 269 sharecropping, 197 wage subsidy programs, 268–69 small farms, 88, 104–6 affirmative action programs, 141–42 subsistence agriculture and unemployment, 272 Afghanistan targeting investment in, 217–19 female employment in, 194 technological progress, 106–7, 119n32 foreign assistance, effect of, 294 Aid for Trade initiative, 33, 308 illegal poppy cultivation in, 194 ALMPs. See active labor market programs skills level as constraint in, 181n81 alternative dispute resolution, 141, 142b Africa. See also specific countries and regions antidiscrimination policies, 141–42 micro- and small enterprises in, 110b apprenticeship programs, 176 age discrimination, 215 Arab Spring, 13, 127, 137, 207 age of workforce, 6, 51. See also aging population; youth ARB (Asociación de Recicladores de Bogotá), 267b agglomeration effects, 27, 161, 167–68, 167f, 193, 200, 202, 239 Argentina aging population as aging society, 213 need for new jobs and, 51 child care and female labor participation in, 30b, 300b retention in work force, 90b educational attainment in, 7, 55 aging societies informal sector in, 211 defined, 281n1 benefits for workers, 62b incentives for job seekers in, 270 job loss, social effects of, 131–32, 133b jobs agenda in, 18, 20f, 190, 213–16, 214–16f, 216b job security rules in, 261 long-term credibility of social insurance system in, 275 microenterprises in, 105 mix of labor policies and institutions in, 259f “one-stop shops” for administration of both social benefits and policy making in, 31, 302b ALMPs in, 270 tax wedge effect in, 274, 275f Trabajar programs, 270 agrarian economies wage subsidy programs in, 269 defined, 281n1 Armenia jobs agenda in, 18, 20f, 190–93, 192–93f, 194b high youth unemployment in, 19 mix of labor policies and institutions in, 259f inequality in access to jobs in, 137 policy making in, 3, 29–30, 301–2 underemployment in, 49 tax wedge effect in, 275f Arrow, Kenneth, 145n11 agricultural sector Asia. See also specific countries and regions environmental spillovers and, 170 agrarian economies in, 191–92, 192f fertilizer use and, 192 jobs creation in, 7 381 382 INDEX manufacturing sector in, 117 Botswana small and family farms in, 11, 98, 104, 104f as resource-rich country, 200f Asociación de Recicladores de Bogotá (ARB), 267b social skills in, 176 Assured Labor, 268b Bourdieu, Pierre, 128b A.T. Kearny’s Foreign Direct Investment Index, 240b brain drain, 234, 236, 310 Australia brain gain, 236–37 educational level of migrants to, 234 brain jobs and gender equality, 33, 309 migrant population as percent of total population in, 233 brain waste, 248n20 Austria Brazil unemployment insurance savings accounts in, 273 cash transfer programs in, 212 unemployment rates in, 49 child care and female labor participation in, 30b, 300b autonomy and creativity in job, effect of, 129 child labor in, 157b Azerbaijan debt and high-inflation crisis (1980s), effect of, 293 inequality of job opportunities in, 137 electronic payment systems for social insurance programs in, “one-stop shops” for administration of both social benefits and 276b ALMPs in, 270 environmentally friendly industries in, 169 self-employment in, 56 global financial crisis (2008), effect of, 61 idleness rates of youth in, 51f B informal workers in Babajobs (job assistance program), 55, 268b legal protections for, 141 Bangladesh voluntary exit from formal sector, 211 agricultural advances in, 198 internal migration in, 37, 316, 320n134 economic success story of, 197–99, 197b investment in agricultural research in, 218 jobs migration to, 20 Employment Generation Program for the Poorest, 142 labor market regulation in, 213, 315 entrepreneurs in, 198, 198b management of small enterprises in, 116 garment industry in, 15, 117, 117b, 134, 171, 172f, 198, 222n39 microenterprises, formalizing of, 211 industrialization process in, 197–99, 222n39 minimum wages in jobs strategy vs. growth strategy in, 89 for domestic workers, 141 meaning of “job” in, 63 impacts on employment, 263 migration from, 19, 52, 234 National Pact to Combat Slave Labor, 307 wages and unemployment rates, effect on, 236 policy removal of constraints to job creation in, 31, 32f, 302b partition’s effect on population of, 234 poverty reduction in, 87 poverty reduction in, 9, 79 private sector in, 7, 58 productivity effects of jobs in, 161 public-private partnership in, 307 public works programs in, 270 services sector in, 241 special economic zones (SEZs) in, 221b social protection system in, 302b structural transformation in, 88 spatial relocation of manufacturing sector in, 101 as urbanizing country, 197–98b, 197–99 trade liberalization in, 168 women’s income, household effects of, 15, 164 training funds in, 181n82 bargaining between firms and workers. See collective bargaining unemployment insurance’s effects in, 273 Barroso, José Manuel, 304 union wage effect in, 263 Beautiful Serbia program, 283n62 urban scale and productivity in, 167 benefits youth issues in, 6f portability of, 276 budget deficits, 23, 293–94 value of, 9f, 82–83, 83b Bulgaria Better Factories Cambodia, 306, 307b inequality in access to jobs in, 137 Better Work program, 307b job loss, social effects of, 131–32 Bhatt, Ela, 63, 135b low fertility rates in, 213–14 bilateral trade agreements, 32, 306, 307b “one-stop shops” for administration of both social benefits and blue-collar jobs, migration of, 232 ALMPs in, 270 Bolivia poverty reduction in, 166, 166f informal employment rates in, 64b regime change and unemployment in, 133b microenterprises in, 105 training programs purchased by public employment services Booth, Charles, 77b in, 269 Bosnia and Herzegovina Burkina Faso ethnic/racial cross-cutting interactions at work in, 15, 135 conditional cash transfers, household effects of, 164 population decline in, 214 skills level as constraint in, 181n81 Index 383 C good jobs defined as having access to pensions and health Cambodia insurance in, 15, 275, 275f, 283n82 Arbitration Council, 141, 142b health insurance benefits in, 83b Better Factories Cambodia, 306, 307b hukou (household registration system) in, 314, 315, 315b, 317, bilateral trade agreement with U.S., 32, 306, 307b 317f garment industry in, 142b, 306 industrialization in, 238 Canada innovation in, 108 educational level of migrants to, 234 jobs migration from, 245 migrant population as percent of total population in, 233 jobs migration to, 20 poverty reduction, effect of jobs on, 78 labor force growth in, 6 union wage effect in, 263 labor reallocation and urbanization in, 37, 100, 104, 316 carbon emissions. See environmental impact labor regulations in, 314, 320n132 cash-for-work programs, 143b, 195 “meaningful” work, value of, 83b cash transfer programs, 212–13, 212b, 273 microenterprises in, 105 Central America Free Trade Agreement, 306 network effects of working in, 171 Central Europe. See Eastern and Central Europe outsourcing attractiveness of, 7, 54, 55 Chad as resource-rich country, 19 pension benefits in, 83 Charoen Pokphand Group (Thailand), 12, 111 population decline in, 214 charter cities, 218 private sector in, 7, 8f, 58, 60f, 68n49 child care and female labor participation, 30b, 300b productivity growth in, 104 child development, 24–25, 296 road construction in, 162 child labor, 15, 50–51, 65–66, 65f, 66b, 155b, 157b, 201, 246, 297 services sector in, 241 Chile [spatial relocation of manufacturing sector in, 101 as aging society, 213 state-owned enterprises (SOEs) in, 7, 8f, 104, 108, 279–80 cash transfer programs in, 212 trade liberalization in, 168 exchange rates in, 303, 319n71 upsizing in, 11 export diversification of, 303, 304f urban scale and productivity in, 167 idleness rates of youth in, 51f value of jobs to individuals and society in, 158, 159f job protection policies in, 279 churning, 111, 112, 260 job security rules in, 261 civic engagement. See trust and civic engagement jobs migration to, 20 civil service, 7, 58, 137, 158 labor market regulation in, 213 civil society organizations, 135, 140 manufacturing sector in, 11, 103 climate change, 169, 169f microenterprises in, 106b Club de Madrid, 128b minimum wages, effect on employment of women in, 282n16 collective bargaining policy removal of constraints to job creation in, 30–31, 32f, 301, coverage of, 263–64, 264f, 282n27 303–4 ILO core labor standards on, 157b, 297 services sector in, 241 productivity and, 264–65 Solidarity Fund to assist during times of financial weakness in, unemployment and, 265b 30–31, 273, 319n70 wages and, 26 training programs in, 62b, 181n82 collective voice, 258, 263–67, 298. See also collective bargaining upsizing in, 11 Colombia youth issues in, 6f autonomy and creativity in job, effect of, 129 China electronic payment systems for social insurance programs in, as aging society, 213, 215 276b agricultural sector in, 81 Empleo en Acción, 270 autonomy and creativity in job, effect of, 129 fairness in access to job opportunities in, 172 civil service in, 158 Familias en Acción, 62b collective bargaining and unions in, 27, 264–65, 266b female labor participation in, 30b, 300b competition in, 104, 317 good jobs defined as having access to pensions and health educational attainment in, 7, 54 insurance in, 15, 275, 275f entrepreneurship in, 117 health insurance benefits in, 83b environmentally friendly industries in, 169 Hogares Comunitarios, 30b, 300b export patterns of, 249n59 informal sector in, 211 fairness in access to job opportunities in, 172 job security rules in, 261 family businesses, growth of, 12 Jóvenes en Acción, 269 footwear industry in, 12 “meaningful” work, value of, 83b global financial crisis (2008), effect on, 61 minimum wage in, 26, 263 384 INDEX pension benefits in, 83 demographics productivity and trade liberalization in, 168 aging population. See aging population social identity and jobs in, 134b in formalizing economies, 212b social insurance contributions in, 274 population decline, 6, 214 underemployment in, 49 poverty reduction and, 78–79 value of jobs to individuals and society in, 159f shifts in, 6. See also international migration wages in, 243 workers, 48 waste pickers, organization of, 266, 267b youth, 51. See also youth Commission on Growth and Development, 293, 296 developing countries. See also low-income countries Communist Party, 132b ALMPs, effectiveness of, 270 community-based programs for jobs, 195 corporate codes of conduct in, 306 community involvement, 131, 132f, 145n13, 145n15. See also trust diversity of jobs and types of work in, 5–6 and civic engagement female labor participation in, 30b, 300b competing for jobs globally, 37, 194b, 234, 243–47. See also global financial crisis (2008), effect on, 61, 61f, 293 globalization informal employment in, 6 conditional cash transfers, household effects of, 164 job protection policies in, 279–80 Confederation of South African Trade Unions, 265 labor earnings, growth in, 58 conflict-affected countries macroeconomic instability in, 293 defined, 281n1 micro- and small enterprises as job creators in, 11, 13f, 105, demobilization programs in, 140, 195 105f, 108–9 jobs agenda, 19, 20f, 190, 193–96, 194–95b, 196f productivity in manufacturing sector in, 107–8, 108f mix of labor policies and institutions in, 259f resilience of employment in, 293 policy making in, 3, 30, 302–3 skipping over industrialization phase of development in, 241 tax wedge effect in, 275f social insurance coverage in, 273, 274, 274m conflict studies on job spillovers, 160b structural transformation in, 52 Congo, Democratic Republic of trade in services in, 33 community-based programs for jobs, 195 unions’ political involvement in, 265 cost of integration program for excombatants, 301 disability insurance, 272, 273, 302b as resource-rich country, 19 disabled persons, employment of, 84 Consultative Group to Assist the Poor, 276b discrimination. See ethnic differences; labor discrimination contracts, ability to enter into, 297 displaced persons, 133, 195b Convention on the Rights of the Child (UN), 65, 66b dissimilarity index to measure inequality, 132b Cook Islands, sustained growth in, 204 distrust. See trust and civic engagement coordination failures, 218b diversity in world of work, 49 corporate social responsibility, 32–33, 198, 306–7 Doha Development Agenda, 33, 307–8 corruption, 198, 276b, 295, 297 Doi Moi (Vietnamese land reform), 29, 301 Costa Rica domestic violence, 133b Intel location of semiconductor plant in, 178, 245 domestic workers, 31, 141, 141b, 156, 267 services sector in, 241 Dominican Republic Côte d’Ivoire Central America Free Trade Agreement and, 306 productivity and trade liberalization in, 168 female labor force participation in, 54b women’s income, household effects of, 164 job satisfaction in, 86 crowd-sourcing tools, 240b Juventud y Empleo program, 15, 142–43, 171, 269 currency overvaluation, 23, 294 micro- and small enterprises in, 110b Czech Republic poverty programs in, 276b minimum wages for domestic workers in, 141 returns to education in, 178 Roma children, discrimination against, 157b skills training in, 181n100 special economic zones (SEZs) in, 221b D downsizing, 11, 101, 103, 133b, 280 data needs dual economies, 64b approaches to, 28–29, 299 Durkheim, Emile, 128b jobs numbers, need for, 34–35, 311–12, 312b, 320n116 Dutch disease, 199, 205 job spillover effects, need for data sources on, 163, 163b Decent Work and Decent Work Agenda, 15, 158, 158b, 170b, 246 E deforestation, 170, 170b earnings. See labor earnings; wages demobilization programs, 140, 195 ease of doing business, 24, 194b, 295 Democratic Republic of Congo. See Congo, Democratic East Asia and Pacific. See also specific countries Republic of child labor in, 51, 157b Index 385 dynamic skills development in, 177b good jobs defined as having access to pensions and health economic development in, 87, 112 insurance in, 15, 275, 275f “flying geese” pattern of development in, 238, 247 health insurance benefits in, 83b global financial crisis (2008), effect on, 61 informal employment in jobs migration to, 237, 247 gender differences in, 210 jobs strategy vs. growth strategy in, 89 of youth, 206–7 labor productivity in, 55f irrelevant skills acquired in, 176 manufacturing sector in, 22f, 238, 238f “meaningful” work, value of, 83b migration from agriculture in, 52, 53f migration from, 248n10 need for new jobs in, 51, 52f pension benefits in, 83 nonwage jobs in, 5f, 50, 50f skills level as constraint in, 181n81 reallocation of labor in, 100, 101f unfairness in access to job opportunities in, 137 special economic zones (SEZs) in, 221b value of jobs to individuals and society in, 158, 159f trade liberalization in, 168, 309f elderly. See aging population urbanizing countries in, 197, 198b electricity, access to, 30b, 294–95, 295f, 300b Easterly, William, 128b electronic payment systems for social insurance programs, 276b Eastern and Central Europe. See also specific countries El Salvador aging societies in, 213 financial crisis, effect on, 91n8 dual model apprenticeships in, 176–77 microenterprises in, 105 fairness in access to job opportunities in, 172 migration from, 19, 52 manufacturing sector in, 11 public works programs in, 270 unemployment insurance in, 62b Temporary Income Assistance Program, 143 Eastern Europe and Central Asia. See also specific countries Empleo en Acción (Colombia), 270 global financial crisis (2008), effect on, 61 Employee State Insurance Act of 1948 (India), 320n122 labor productivity in, 55f employment histories, need for, 163b manufacturing sector in, 238 employment protection legislation (EPL), 260–62, 260b, 261t, microenterprises in, 106 281n13, 282n20 need for new jobs in, 51, 52f employment shocks population decline in, 214 effect on living standards, 9 self-employment in, 56 idiosyncratic nature of, 277–78 trade liberalization in, 309f systemic nature of, 277–79 wage vs. non-wage jobs in, 5f, 6, 50, 50f employment support. See also cash-for-work programs; wage economic development subsidies decomposition of, 99b pro-poor, pro-youth, and pro-women programs, 198 drivers of, 99b targeting of investment climate and, 217–21 job spillovers to, 16–17, 17f, 160–61, 160f employment-to-population ratio, 41n145, 320n117 link with jobs, 9, 87–88, 88b, 99, 99f employment turbulence, 98–104 prosperity and, 56, 57f, 58 empowerment, 76, 126 strategies, 87–89 enabling business environment, 23–24, 294–96 economic downturns. See financial crises enterprise surveys, 219, 219b economic geography on job spillovers, 160b entrepreneurship, 12, 36, 114–18, 115f, 195, 198, 198b Ecuador environmental economics, 28, 160b, 299 poverty reduction, effect of jobs on, 78 environmental impact, 16, 161, 167–68, 169–70, 169f, 170b youth unemployment associated with violence in, 132–33 EPL. See employment protection legislation educational attainment EPZs. See export processing zones high-skill jobs and, 55, 178 equity analysis on job spillovers, 160b human capital and, 24–25, 296 Estancias Infantiles (Mexico), 30b, 300b incentives for educated workers to return to home countries, 236 Ethical Trading Initiative (UK), 319n91 of migrants, 234 Ethiopia private sector employment and, 7, 58 economic development without reduction of poverty in, 87 returns to education, 178 entrepreneurship in, 117 in urbanizing countries, 198 gross job creation and destruction in, 99 youth unemployment and, 7, 58, 207 growth elasticities of employment in, 88b efficiency gains, 102f household businesses in, 112 Egypt manufacturing sector in, 11, 103, 194b autonomy and creativity in job, effect of, 129 onchocercal skin disease, effect on labor earnings in, 296 exports, 54 Productive Safety Net Program, 143 as resource-rich country, 194b 386 INDEX skills level as constraint in, 181n81 jobs agenda in, 18, 20f, 190, 210–13, 211f, 212b, 213f timber industry in, 194b mix of labor policies and institutions in, 259f upsizing in, 11 policy making in, 3, 31, 302b ethnic differences, jobs connecting people across, 13, 134–36, 136b, social cohesion in, 89 172, 319n66 tax wedge effect in, 274, 275f Eurobarometer, 132b, 244b unemployment/under-employment in, 277 Europe/European Union. See also Eastern and Central Europe; formal sector Eastern Europe and Central Asia in agrarian economies, 191 corporate codes of conduct in, 32, 306 voluntary exit from, 211 debt and vulnerability in, 60–61 fraud in social insurance programs, 276b disability insurance systems in, 273 freedom of association, 65f, 157b, 179n10, 297 transition economies in, 103–4 Fukuyama, Francis, 145n11 trust issues and unemployment in, 132b fundamentals. See job creation union productivity in, 264 women’s working hours in, 52 G exchange rates. See foreign exchange rates and earnings Gallup World Poll export processing zones (EPZs), 37, 316, 316f on creation of good jobs, 244 exports, 54, 199, 249n59, 303, 304f. See also trade liberalization on youth preference to work in public sector, 223n75 extractive industries, 83, 133b, 155b, 191, 199–202, 200f, 303 gangs. See youth garment industry F Better Work program, 307b Factories Act of 1948 (India), 320n122 entrepreneurship training for, 117, 117b fairness, sense of, 16, 90b, 137, 139f, 140, 161, 171f, 172, 173f. See global competition in, 194b also access to jobs, inequality in health and safety risks in, 84b Familias en Acción (Colombia), 62b industrial sector diversity and, 222n39 family businesses, 111, 156. See also household businesses labor regulations for, 142b family farms, 11, 98, 104–5. See also small farms organizing rights of, 298 farming. See agricultural sector social identity and, 134, 171, 171f FDI. See foreign direct investment in urbanizing countries, 198, 198b female labor force participation. See women Garment Manufacturers Association of Cambodia, 142b fertility rates, decrease in, 213–14, 216b GATS (General Agreement on Trade in Services), 33, 308, 310 fertilizer use in agrarian economies, 192 GATT (General Agreement on Tariffs and Trade), 307 Fibre Citoyenne (Morocco), 319n94 “gazelles,” industrial countries as, 12, 110 Fiji GDP. See gross domestic product female labor force participation in, 54b gender differences migration from, 19, 52 in employment, 6, 50, 210 as small island nation, 203–5 job spillover effects and, 162 financial crises in unemployment and “unhappiness effect,” 84 decoupling from job creation from job destruction during, 277, in wage income, 50, 77, 79f, 164, 165f 278f in working hours, 52 effect on jobs, 8, 58–61, 293 gender studies on job spillovers, 160b effect on unemployment insurance coverage, 273 General Agreement on Tariffs and Trade (GATT), 307 Great Recession, 60–61, 61f, 62b, 88b, 236 General Agreement on Trade in Services (GATS), 33, 308, 310 unemployment in U.S. and, 278 Georgia financial sector, 245, 294 ethnic differences, jobs connecting people across, 136b food prices, 60 inequality of job opportunities in, 137 forced labor, 14–15, 31, 65, 65f, 68n75, 155–56, 157b, 246, 297, 307 Germany foreign direct investment (FDI), 15, 168–69, 168f, 219, 240b, apprenticeships in, 176–77, 181n97 301–2, 305, 316, 316f educational attainment in, 7, 55 Foreign Direct Investment Index (A.T. Kearny), 240b JobCentre, 270 foreign exchange rates and earnings job protection policies (job sharing) during recession in, 26, macroeconomic stability and, 294 279, 280b in resource-rich countries, 23, 202 migrant population as percent of total population in, 234 risk management for, 319n71 poverty reduction, effect of jobs on, 78 sovereign funds and, 318n10 union wage effect in, 263 formalizing economies Ghana defined, 281n1 female owners of microenterprises in, 116 incentives for job seekers in, 270 firm size and growth in, 12, 111 Index 387 growth elasticities of employment in, 88b HOI (Human Opportunity Index), 138b idleness rates of youth in, 51f household businesses, 11, 98, 104–5, 110b, 179n12 informal firm owners in, 67n43 household income management training interventions in, 118, 120–21n81 decision making when women have labor income, 15, 160, microcredit investments in, 164 164–65, 166f outsourcing attractiveness of, 55 jobs as source of, 78, 80f social interactions afforded by jobs in, 135 job spillover effects on, 160–61, 164–65, 166f youth issues in, 6f household surveys, 163b global financial crisis (2008). See financial crises hukou (Chinese household registration system), 314, 315, 315b, globalization, 6–7, 54–55, 58. See also jobs migration 317, 317f competing for jobs, 194b, 243–47, 244b human capital accumulation, 24–25, 99b, 296–97. See also job spillovers to, 161, 168–69 educational attainment winners and losers, 241–42 child development and, 24–25, 296 global partnerships for jobs, 31–34, 305–11 Human Opportunity Index (HOI), 138b good jobs. See also Decent Work and Decent Work Agenda human rights, 5, 14–15, 156. See also child labor; forced labor competition for, 246–47, 247f human trafficking, 235, 246 meaning of, 17–18, 20f, 275, 275f, 283n82 Hungary setting policy priorities for, 27, 28, 28f, 298–99, 299f self-employment in, 56 Green Revolution, 11, 98, 107, 170b, 191, 192f, 198 training programs purchased by public employment services gross domestic product (GDP), 41n145, 98–99, 99f, 293, 294, in, 269 320n117 underemployment in, 49 gross job creation, 98, 99, 119n3 Guatemala I productivity effects of jobs in, 161 ICLS. See International Conference of Labour Statisticians underemployment in, 49 identity economics on job spillovers, 160b “Guidelines Concerning a Statistical Definition of Informal idleness rates of youth, 6, 6f, 50, 51f Employment” (ICLS), 64b IFC (International Finance Corporation), 179n9, 307 Guinea illegal activities in conflict-affected countries, 194 ethnic differences, jobs connecting people across, 136b ILO. See International Labour Organization public works programs in, 270 incentives Guyana, social effects of job loss in, 131–32, 133b for educated workers to return to home countries, 236 for job assistance providers, 267–68 H for job seekers, 270 Haiti unemployment insurance’s effects on, 273 educational level of migrants from, 234 India garment industry in, 84b Aadhaar (identification program for social insurance Better Work program, 307b programs), 276b job matching networks in, 268b as aging society, 213 job satisfaction in, 86 Babajobs, 55, 268b life satisfaction in, 85 child labor in, 157b migration from, 248n10 construction in, 88b hazardous work, 83–84, 84b, 155–57 educational attainment in, 7, 54 child labor, 51, 65, 66b, 155b educational learning outcomes in, 296–97 health and safety risks, 25, 83–84, 84b, 155, 179n10, 236, 297, 306. electronic payment systems for social insurance programs in, See also hazardous work 276b health care costs in aging societies, 215 Employee State Insurance Act of 1948, 320n122 health insurance benefits, 27, 83b, 212b, 275–76, 275f ethnic/racial cross-cutting interactions at work in, 135 health status Factories Act of 1948, 320n122 high productivity as result of, 296 firm size and growth in, 12, 112 jobs and unemployment, effect on, 10 garbage collectors, organization of, 266 migration improving, 248n13 idleness rates of youth in, 6f, 51f hedonic pricing, 83b Industrial Disputes Act (IDA) of 1947, 313, 314, 320n122 high-income countries informal employment rates in, 64b, 315 job search services in, 267 information technology (IT) sector in, 54, 117, 246 manufacturing jobs in, 22f infrastructure constraints in, 317 self-employment in, 56 job matching networks in, 268b stimulus packages in reaction to global financial crisis, 61, 62b labor force growth in, 6 Hogares Comunitarios (Colombia), 30b, 300b labor laws and regulations in, 313 388 INDEX ways to bypass, 314–15 persons with disabilities in, 273 labor reallocation in, 314f tax wedge effect in, 274, 275f Mahatma Gandhi National Rural Employment Guarantee Act unemployment insurance in, 273 (MGNREGA), 267, 270, 271b Industrial Disputes Act (IDA) of 1947 (India), 313, 314, manufacturing sector in, 12, 313, 314f, 320n124 320n122 spatial relocation of, 101 industrial policy, 217, 218b microenterprises in, 105 industrial relations and productivity, 264–65 migration from, 19, 52, 234, 236, 248n10 industry associations. See also collective voice “missing middle” phenomenon in, 313, 314f codes of conduct, 156 National Association of Software and Service Companies inequality of opportunities. See access to jobs, inequality in (NASSCOM), 177b informal competition, effect of, 295f National Skills Mission, 174 informality trap, 210 outsourcing attractiveness of, 7, 20, 54, 55 informal sector. See also formalizing economies partition’s effect on population of, 234 definition of, 64, 64b population decline in, 214 global financial crisis, effect on, 62b productivity in, 107–8 happiness of informal firm owners, 67n43 Scheduled Castes and Tribes in, 142 legal protections for, 141, 141b Self Employed Women’s Association (SEWA), 27, 63, 134, 135b, measurement of, 64b 266 obstacles to formalization, 210–11, 211f services sector in, 239, 241 organizing into associations, 25, 298 social skills in, 176 poverty and, 223n88 targeting and slow growth in, 217 prevalence of, 6, 49 technology-related industries in, 246 productivity and, 6, 49, 210 temporary and part-time work in, 7, 48 social identity and, 134 temporary staffing industry in, 57b social insurance programs and, 274, 275–76 trade liberalization in, 168, 320n125 women and, 210 trading firm growth in, 111 worksharing policies and compensatory subsidies and, 279 urbanization in, 317 youth and, 206–7 urban scale and productivity in, 167 information, access to, 140–41, 283n42 women in information externalities discouraging investment and innovation, job opportunities for, 33, 178, 309 218b labor earnings, effect on household allocations, 15 information technology (IT) sector, 54 working hours of, 52 infrastructure Indian Staffing Federation, 57b in conflict-affected countries, 195, 196f Indonesia lack of access to affordable infrastructure of reasonable quality community participation in, 14, 132f as constraint, 24, 294–95, 295f, 299 educational learning outcomes in, 296–97 quality as factor in attracting jobs, 246 female labor participation in, 30b, 54b innovation post-conflict recovery role of, 194b agricultural, 107, 191–92, 197 financial crisis in Thailand (1997), effect on, 59 information externalities discouraging, 218b foreign companies in, 245 large firms and, 11, 108, 109f garment industry in, 84b spatial distribution of employment and, 100 Better Work program, 307b by upsizing firms, 103 global financial crisis (2008), effect on, 61 young firms and, 108, 109f idleness rates of youth in, 51f insolvent firms, 279 life satisfaction in, 76 Intel, 178 microenterprises in, 105 intellectual property, 297 minimum wage in, 26, 262 International Conference of Labour Statisticians (ICLS), 63, 64b, productivity and urban scale in, 167 320n118 skills level as constraint in, 174, 181n81 International Domestic Workers Network, 267 structural transformation in, 53b international economics on job spillovers, 160b, 168 trade liberalization in, 168 International Finance Corporation (IFC), 179n9, 307 youth issues in, 6f international labor standards, 68n75, 156, 157b, 179n6, 179n9 industrial clusters, 168, 193 International Labour Organization (ILO) industrial countries. See also high-income countries on child labor, 65, 66b ALMPs, effectiveness of, 270 Conventions 97 and 143 on migration, 310 creative destruction of jobs in, 277 core labor standards, 25, 31, 157b, 297, 305 “gazelles,” 12, 110 Index 389 countries ratifying conventions of, 41n128, 260, 281n3, 305, decoupling from job destruction, 277–79 310, 319n83 fundamental requirements for, 3, 22, 23–25, 23f, 292–98 Decent Work Agenda, 15, 158, 158b, 170b, 246 enabling business environment, 294–96 Declaration on Fundamental Rights and Principles at Work, 5, human capital, 24–25, 296–97 31, 65, 305 macroeconomic stability, 23, 23f, 293–94 Domestic Workers Convention and the Domestic Workers rule of law, 25, 297–98, 297f Recommendation, 31, 141, 141b, 267 gross vs. net, 98, 99, 119n3 International Finance Corporation (IFC), partnership with, 307 highest development payoffs for, 245 Key Indicators of the Labor Market database, 64b need for new jobs, 51, 52f labor statistics, standards on, 320n118 simultaneous with job destruction, 10, 11f, 98, 99–100, 100f on unemployment insurance coverage, 273 job destruction on unemployment rate’s effect on social unrest, 145n1 decoupling from job creation, 277–79 on unions’ proliferation, 266b labor reallocation and, 313 on working poor, 80b simultaneous with job creation, 10, 11f, 98, 99–100, 100f international migration, 19–21, 33–34, 232–37 jobless growth, 98–104 bilateral agreements on, 33–34, 310–11 joblessness. See unemployment conflict’s effect on, 194 job protection policies, 25, 26, 37, 277–80, 280b drivers of, 234 jobs effect on labor force, 51 activities considered not to be, 65–66 global patterns of, 19, 21m, 233–34, 233m, 235m data needed on, 34–35, 311–12, 312b impacts on sending and receiving countries, 234–37, 248n29, defined, 5, 49, 63, 66 310 development agenda and, 2 international coordination of policies, 34, 292–93, 309–11 jobs strategies vs. growth strategies, 36, 87–89, 90b irregular migration, 237, 248n33, 310 multiple forms of, 5, 49, 63–66 legal protection for overseas workers, 34, 141, 310 nonproduction activities, 49 racial discrimination and, 20, 237 preservation of jobs vs. protection of people, 37, 277–80 return home of migrants seen as brain gain, 236 jobs agenda, 17–21, 190–230 from small island nations, 204–5, 205f aging societies, 18, 20f, 190, 213–16, 214–16f, 216b South-North vs. South-South, 234 agrarian economies, 18, 20f, 190–93, 192–93f, 194b International Organization for Migration, 195b conflict-affected countries, 19, 20f, 190, 193–96, 194–95b, 196f Internet, 55, 268. See also technological change constraints on, 219–20, 220f Internet and job opportunities, 240b data gap on, 312b investment climate, 25, 297. See also targeted investment climate formalizing economies, 18, 20f, 190, 210–13, 211f, 212b, 213f irrigation, 192 global competition and, 243–47. See also globalization Italy global partnerships and, 305–11 short-time work scheme in, 88b high youth unemployment, countries with, 18, 20f, 190, 206–10, social capital in, 128b 207–8f, 210f training programs in, 62b international migration and, 232–37. See also international unemployment insurance in, 273 migration jobs migration and, 237–42. See also jobs migration J policy priorities for jobs, 3, 22–23, 23f, 27–29, 28f, 298–301, 299f Jamaica resource-rich countries, 19, 20f, 190, 199–203, 200–201t, 203b, educational level of migrants from, 234 203f migrants from, 19 small island nations, 19, 20f, 190, 203–6, 204–6f migration from, 52 targeted investment climate and, 26, 195, 217–21, 218–19b, Japan 220f, 221b industrialization in, 238 urbanizing countries, 18, 20f, 190, 197–98b, 197–99, 199f manufacturing sector in, 22f job satisfaction, 83b productivity growth in, 245 Jobs counseling, 208 unemployment rate in, 23 job search union wage effect in, 263 active labor market programs (ALMPs), 267–72 job benefits, value of, 9, 82–83, 83b. See also spillover effects assistance programs, 267–70 JobCentre (Germany), 270 “one-stop shops” for administration of both social benefits and JobCentre Plus (UK), 270 ALMPs, 270 job creation unemployment insurance and, 273 agricultural innovation and, 107 job security, 26, 85, 85f, 260–62 collaboration of private sector with public sector for, 90b jobs lens data needed on, 34–35, 311–12, 312b aging societies, 216f 390 INDEX agrarian economies, 193f Korea University of Technology and Education’s Bridge Model, conflict-affected countries, 196f 177b formalizing countries, 213f Kurzarbeit (reduced working hours) in Germany, 279, 280b high youth unemployment, countries with, 210f Kuwait, migrant population in, 19, 52, 233 resource-rich countries, 203f Kyrgyz Republic small island nations, 206f educational learning outcomes in, 296–97 three-layered approach of, 3, 292, 293f fairness in access to job opportunities in, 173f urbanizing countries, 199f jobs migration, 20–21, 237–42. See also globalization L to countries where labor is cheaper, 244f labor discrimination, 31, 65, 65f, 68n75, 129, 141–42, 157b, 164, global trends, 20–21, 237–41, 238–39f, 244b 237, 260, 297 multinational corporations and, 240b labor earnings, 9, 9f, 15, 48, 158, 160, 243, 245 job spillover effects. See spillover effects labor economics, 28, 164, 299 jobs strategies, 89–90 labor laws and regulations growth strategies vs., 36, 87–89, 90b employment protection legislation (EPL), 260–62, 260b, 261t, Jordan 281n13, 282n20 garment industry in, 84b gaps in coverage, 156 Better Work program, 307b as obstacle to formalization, 211f, 213 high youth unemployment in, 19 “plateau” effect, 26, 27, 258, 260–63, 292, 313 job satisfaction in, 86 social protection regulation, 275 life satisfaction in, 85 labor market migrant population in, 52, 233 female labor force participation, 54b, 77 unemployment insurance savings accounts in, 273 growth of, 48 Jóvenes programs, 268–69 mismatch of supply and demand, 232, 270 judicial systems, 25, 297, 298 participation rate, 51, 90b Juventud y Empleo program (Dominican Republic), 15, 142–43, risk management of, 272–73 171, 269 shrinking labor force, 214f labor policies, 3, 22, 258–91. See also labor laws and regulations; K policy making KDP (Kecamatan Development Project), 145n14 active labor market programs (ALMPs), 267–72. See also active Kenya labor market programs as agrarian economy, 190 collective representation, 263–67. See also collective bargaining agricultural productivity in, 106, 119n29 data gap on, 312b electronic payment systems for social insurance programs in, different configurations in different countries, 3, 258, 259f, 276b 281n1 vocational training in entrepreneurship in, 146n71 impact of, 3, 27, 258 Key Indicators of the Labor Market database (ILO), 64b protecting jobs, pros and cons of, 26–27, 37, 277–80 Ibn Khaldun, 128b social insurance coverage, 272–76 knowledge gaps. See data needs temporary job protection policies, 277–79, 280b knowledge-intensive jobs, 54 labor reallocation, 37, 100, 101f, 104, 313–17 knowledge spillovers, 15, 27, 116, 167–69, 168f, 177, 178, 193, 218b labor statistics. See data needs knowledge transfers, 117 Labournet (job assistance program), 268b Konbit (job assistance program), 268b land. See property rights Korea, Republic of landowner companies, 203b dynamic skills development in, 177b Lao People’s Democratic Republic, garment workers in, 298 educational attainment in, 7, 55 large firms, 11, 11f, 36, 108, 109f financial crisis in Thailand (1997), effect on, 59 Latin America and Caribbean industrialization of, 237, 238 aging societies in, 213 jobs strategy in, 87, 89, 90b, 302b dismantling of inefficient industries in, 280 manufacturing sector in, 22f emigration from Caribbean countries, 205 decline in, 237 EPL impacts in, 261 suburban expansion of, 100–101, 102f female labor participation in, 30b, 300b microenterprises in, 105 financial crisis in Mexico (1995), effect on, 58–59 policy removal of constraints to job creation in, 31, 32f, 302b formalizing economies in, 212 productivity and urban scale in, 167 growth elasticities of employment in, 88b trade liberalization in, 168 inequality in access to jobs in, 137 unemployment rates in, 49 informal vs. formal firms’ productivity in, 210 union wage effect in, 26, 263 job matching networks in, 268b wages in, 243 job training programs in, 269 Index 391 Jóvenes programs in, 268–69 returns to education in, 60f labor productivity in, 55f self-employment in, 56 manufacturing sector in, 11, 238 stimulus packages in reaction to global financial crisis, 61, 62b micro- and small enterprises in, 110b unemployment in, 128 minimum wages, effect on wage equality in, 282n18 women in wage employment in, 50 mining hazards in, 83 low-skilled workers need for new jobs in, 52f job losses by, 242 nonwage jobs in, 5f, 50, 50f lower wages of, 58 population decline in, 214 migration and, 21, 310 regulatory impediments in, 314, 315 self-employment in, 132b M special economic zones (SEZs) in, 221b Macedonia, former Yugoslav Republic of targeting in import substitution phase in, 217 ethnic/racial cross-cutting interactions at work in, 135 trade liberalization in, 309f unemployment rates in, 49 training investment in, 181n83 macroeconomic stability, 23, 23f, 293–98 trust issues and unemployment in, 132b macroeconomic stimulus, 62b unemployment insurance in, 62b Mahatma Gandhi National Rural Employment Guarantee Act coverage rates, 273–74 (MGNREGA, India), 267, 270, 271b savings accounts, 273 Malaysia wage subsidy programs in, 269 Bumiputras in, 142 Latinobarómetro, 132b, 137, 138b financial crisis in Thailand (1997), effect on, 59 Latvia jobs migration to, 20 fairness in access to job opportunities in, 172, 173f services sector in, 241 poverty reduction in, 166, 166f unemployment rates in, 49 lawlessness, 297 union productivity in, 264 legal pluralism, 156 union wage effect in, 263 legal systems, 297–98, 297f women’s job opportunities in, 33, 309 Lesotho Mali garment industry’s Better Work program, 307b child labor in mines in, 155, 155b special economic zones (SEZs) in, 221b educational learning outcomes in, 297 Liberia management electronic payment systems for social insurance programs in, of small enterprises, 115, 116, 116f 276b training interventions, 117–18 high-risk youth programs in, 142 Management Information Systems (MIS) for social insurance illegal activities in, 194 programs, 276b post-conflict youth employment in, 194, 195 manpower planning, 176, 177b public works programs in, 270 “Manual of Surveys of Informal Employment and Informal Life in Transition Survey, 138b Sector” (Delhi Group), 64b life satisfaction, 10, 76, 84–86, 85–86f manufacturing sector lighthouse effect, 261, 281n7 agricultural earnings vs., 165f living standards, 9–10, 76–96. See also poverty reduction decline in jobs in, 54, 237 in agrarian economies, 191 global competition in, 194b EPL impacts on, 261–62, 261t global redistribution of jobs in, 22f, 232, 237–39, 238–39f job spillovers to, 8f, 163–66 light manufacturing, 193, 198, 238, 298 labor productivity’s effect on, 215, 215f microenterprises, 110b life satisfaction and, 84–86 outsourcing, 54 material well-being and, 76–82 productivity, 107–8, 108f measurement of, 77b, 312b simultaneous job creation and destruction, 10, 11f, 99–101 migration and, 234 small firms and microenterprises, 11 minimum wage’s impacts on, 261–62, 262t spatial relocation, 100–101, 102f number of hours worked vs. time for schooling and leisure, material well-being, 10, 15, 76–82, 83b 76–77, 78f Mauritius long-term care industry, 214 economic diversification in, 206 low-income countries work-related injuries in, 84 agricultural productivity in, 191, 246 MDGs. See Millennium Development Goals exit from poverty. See poverty reduction “meaningful” work, value of, 83b, 85–86 job spillovers in, 161 mental health pensions for old-age and disability and basic health insurance, benefits of migration, 248n13 importance of, 275 unemployment and, 84, 126 392 INDEX Mexico stimulus packages in reaction to global financial crisis, 61, 62b cash transfer programs, 212–13, 212b women in wage employment in, 50 ease of doing business in, 24, 295 middle-skilled jobs, decline in, 54 Estancias Infantiles, 30b, 300b migration. See displaced persons; international migration; jobs financial crisis (1995) in, 58 migration; rural-urban migration firm size and growth in, 12, 112, 113t Millennium Development Goals (MDGs), 35, 77b, 158b, 311 formalization in, 211, 212b minimum wages global financial crisis (2008), effect on, 61, 91n8 competing for jobs and, 246 informal sector in, 115, 212b for domestic workers, 141, 141b job protection policies in, 279 impacts of, 26, 260–63, 262t, 281–82n16 job satisfaction in, 86 MGNREGA’s effect on, 271b management training interventions in, 118 World Bank’s Doing Business Indicators 2012 report on, microenterprises in, 105, 112, 116, 211 281n3 migration from, 19, 52, 234, 236, 248n10 mining. See extractive industries poverty reduction in, 87 MIS (Management Information Systems) for social insurance services sector in, 241 programs, 276b SNA used to estimate unremunerated activities in households mismatches in, 64 ALMPs with needs of labor market, 270 Temporary Works Program, 62b data needed for identifying. See data needs traffic congestion in Mexico City, 167 good jobs and value to firms, 299 training programs in, 62b, 181n82 labor force supply with demand, 25, 232 union productivity in, 264 manufacturing jobs with regional potential, 239 union wage effect in, 26, 263 skills with economic demands, 174–75, 207 wages in, 243 Mismia Mines Ltd. (Papua New Guinea), 201 women’s income, household effects of, 164, 166 “missing middle” phenomenon, 313, 314f MFA (Multi-Fiber Arrangement) expiration, 307b mobile phone technology, 7, 55, 268, 268b, 275 MGNREGA. See Mahatma Gandhi National Rural Employment Morocco Guarantee Act (India) Fibre Citoyenne, 319n94 microenterprises. See also entrepreneurship; household businesses inequality in access to jobs in, 13, 140 in formalizing economies, 211 social networks in, 136 job creation and, 11, 13f, 98, 209 wages in, 243 minimum wages, effect on hiring of, 282n16 wage subsidy programs in, 269 productivity and, 105–6, 105f, 106b, 108–13, 110b Mozambique self-employment in, 110, 270. See also self-employment agricultural productivity and poverty rate in, 191–92 social insurance programs and, 274 growth elasticities of employment in, 88b targeted investment in, 219 as resource-rich country, 191, 200f, 222n5 in urbanizing countries, 197 rural-urban migration in, 193 wages, 11, 12f skills level as constraint in, 181n81 microfinance institutions, 197 working poor in, 191 middle classes in formalizing economies, 210 Multi-Fiber Arrangement (MFA) expiration, 307b Middle East and North Africa multinational corporations, 156, 168, 240b, 244–45 female labor participation in, 30b, 300b multiplier effect and government spending, 294 GDP per capita in, 91n49 job matching networks in, 268b N labor productivity in, 55f Nanyang Polytechnic (Singapore), 178 need for new jobs in, 52f National Association of Software and Service Companies nonwage jobs in, 5f, 50, 50f (NASSCOM), 177b state as employer in, 7, 58 National Pact to Combat Slave Labor (Brazil), 307 trade liberalization in, 309f National Social Security Institute (Brazil), 141 youth unemployment in natural shocks highly educated and public sector jobs, 208 in small island countries, 205–6 rate, 207 underemployment and unemployment due to, 277 stalled transitions due to, 223n68 nepotism, 137 middle-income countries net job creation, 10, 98, 119n3 job search services in, 267 networks, 13, 136–37, 161, 171–72, 171f, 279, 284n92 job spillovers in, 161 New Structural Economics, 218b micro- and small enterprises as job creators in, 12, 105 New Zealand’s Recognized Seasonal Employer (RSE) program, 31, self-employment in, 56 302b Index 393 Nigeria parental education as factor in access to jobs, 172, 173f migration from, 248n10 partnership models with foreign companies, 178 skills level as constraint in, 181n81 part-time work, 7, 48, 56, 85 nongovernmental organizations, 156. See also civil society payroll taxes as funding mechanism for social insurance programs, organizations 274 nonproduction activities, 49 pensions nontradable sectors, 58, 59f in aging society, 31, 215, 302b nonwage work, 5, 5f, 49–50, 50f, 156 good jobs defined as having access to, 275, 275f Northern Uganda Social Action Fund, 142 value of, 83, 83b, 273 Norway and foreign currency problems, 202 people with disabilities, employment of, 84, 142 Nozick, Robert, 138b Peru educational learning outcomes in, 296–97 O female labor force participation in, 54b occupational accidents or illnesses, 83–84, 84b. See also hazardous informal employment, gender differences in, 210 work job security rules in, 261 oDesk (job assistance program), 268b poverty reduction in, 9 OECD. See Organisation for Economic Co-operation and as resource-rich country, 200f Development social skills in, 176 OECD countries street vendors, organization of, 266 trade liberalization in, 309f underemployment in, 49 unemployment insurance in, 62b women entrepreneurship training in, 118 offshoring, 239, 241, 249n41 pharmaceutical industry, 199 oil-rich countries. See resource-rich countries Philippines Okun’s Law, 88b informal workers, legal protections for, 141 old-age dependency ratio, 213 microenterprises in, 105 old-age pensions. See pensions minimum wages for domestic workers in, 141 Oman’s trade agreement with U.S., 308 private sector in, 7, 58 “one-stop shops” for administration of both social benefits and services sector in, 241 ALMPs, 270 skills shortages in, 174 on-the-job training, 174, 176–77 wages and unemployment rates, effect on migration from, Oportunidades (Mexican cash transfer program), 212b 236 Organisation for Economic Co-operation and Development PISA (Programme for International Student Assessment), 25, (OECD) 67n32, 296 on cohesive society, 128b plant-level surveys, 163b on green jobs, 170b “plateau” effect, 26, 27, 258, 260–63, 292, 313 on offshoring, 249n41 Poland on union coverage, 264 age discrimination in, 215 outsourcing, 7, 48, 54, 55, 169, 237, 239, 241, 243 policy removal of constraints to job creation in, 31, 32f, 302b public works programs in, 270 P wage subsidy programs in, 269 Pacific region. See East Asia and Pacific policy capture by vested interest groups, 220–21 Pakistan policy making, 21–34, 292–326. See also jobs agenda; jobs lens; agricultural sector in, 81 labor policies female labor force participation in, 6, 48 in aging societies, 31, 302b idleness rates of youth in, 6f, 51f in agrarian economies, 29–30, 301–2 job matching networks in, 268b choices, 35 management training interventions in, 118 competition for good jobs and, 246–47, 247f partition’s effect on population of, 234 in conflict-affected countries, 30, 302–3 as resource-rich country, 200f cost-benefit analysis, 3, 300–301 underemployment in, 49 in countries with high youth unemployment, 31, 304–5 wages and unemployment rates, effect on migration from, 236 enabling business environment and, 294–96 working adults in households, effect on poverty reduction in, in formalizing economies, 3, 31, 302b 82 global partnerships for jobs, 305–11 palm oil exports, 202 human capital and, 296–97 Papua New Guinea international coordination, 292–93 landowner companies in, 203b job protection policies, 25, 26, 277–80, 280b public works programs in, 270 macroeconomic stability and, 23, 23f, 293–94 as resource-rich country, 199–202, 200f priorities for jobs, 3, 22–23, 23f, 27–29, 28f, 298–301, 299f 394 INDEX removing constraints by government action, 3, 21–22, 28–29, labor reallocation and, 100, 101f, 104 292, 294–95, 298 living standards tied to, 215, 215f in resource-rich countries, 3, 23, 30–31, 303–4 manufacturing sector and, 238 rule of law and, 25, 297–98, 297f migration’s effect on, 19 in small island nations, 302b minimum wage’s impacts on, 261–62, 262t social cohesion, benefits to, 36, 140–44, 246 ripple effect of lost jobs, 277 targeting in, 217, 300 sectoral differences, 107–13 three-stage approach, 3, 292, 293f services liberalization and, 308 in urbanizing economies, 31, 302b small farms and firms, 104–6 political instability technological progress and, 100, 106–7, 245 in conflict-affected countries, 195 turbulence of productivity growth, 98–104 migrant flows and, 234 unions and, 264–65 political instability in conflict-affected countries, 196f productivity-enhancing structural change, 100 portability of benefits, 276 productivity studies, 28, 299 Portugal Programme for International Student Assessment (PISA), 25, firm size and growth in, 12, 111–12 67n32, 296 underemployment in, 49 property rights, 17, 25, 297, 301 post-conflict programs, 143, 143b pro-poor growth, 87, 91–92n50 poverty analyses, 28, 160b, 299 prosperity, 8, 9, 56, 57f, 58, 62, 243 poverty reduction public good in agrarian economies, 191–92, 192f globalization and, 33, 246 decomposed by sources of income, 79, 82f investment climate as, 217 economic development with no impact on, 87, 89 technology as, 191 jobs as path to, 7, 9, 10f, 56, 76–80, 81f public-private partnerships, 218b, 221b job spillover effect on, 16, 160–61, 166–67, 166f public sector. See also civil service pro-poor growth, 87 in agrarian economies, 191–92 relapses into poverty, 82 collaboration with private sector in job creation, 90b in slow growth periods, 87 “queuing” for jobs in, 7, 8, 58 working poor and, 7, 41n145, 77, 80b, 82, 110, 191, 320n117 restructuring, effect on jobs, 278 power shortage, effect of, 295f youth preference to work in, 208, 223n75 price of labor, 58 public utilities, 154 priority setting. See policy making public works programs, 36, 58, 143, 146n70, 269–70, 273, 283n59 private sector Putnam, Robert, 128b central role in job creation, 3, 7–8, 21, 58, 60f, 292 collaboration with public sector in job creation, 90b Q defined, 39n22, 68n49 Qatar enabling business environment and, 294–96 educational learning outcomes in, 296–97 macroeconomic stability and, 293–98 migrant population in, 19, 52, 233 training commitment of, 177 quotas for hiring underrepresented groups, 142 privatization, effect on jobs, 278 pro-competitive business environment, 103 R production activities, 49 racial differences. See ethnic differences Productive Safety Net Program (Ethiopia), 143 Rawls, John, 138b productivity, 10–12, 98–125 reallocation of labor, 37, 100, 101f, 104, 313–17 aggregate productivity, 101 recessions. See financial crises in agrarian economies, 191 Recognized Seasonal Employer (RSE) program (New Zealand), 31, agricultural sector, 79, 81, 88 302b data gap on, 312b reform to offset constraints to job creation, 3, 300. See also policy developing countries compared to industrial countries, 54, 55f making downsizing vs. upsizing, 11, 101, 103, 103f refugees from conflict-affected countries, 194 efficiency gains at firm level, 101, 102f regulation. See also labor laws and regulations EPL impacts on, 261–62, 261t business regulation, 24, 194b, 295 firm size and, 12, 108, 108–9f, 111–12, 111f. See also remittances, 19, 197, 200, 204, 205b, 236, 311 microenterprises research performed by Asia-located affiliates, 67n27 in formalizing economies, 211 resource-rich countries informal employment’s effect on, 6, 49, 210 currency appreciation pressures in, 294 job protection and, 277 defined, 281n1 job spillover effect on, 8f, 161, 167–70, 277 extractive industries in, 88–89. See also extractive industries Index 395 jobs agenda in, 19, 20f, 190, 199–203, 200–201t, 203b, 203f job satisfaction and, 85 mix of labor policies and institutions in, 259f Recognized Seasonal Employer (RSE) program (New Zealand), policy making in, 3, 23, 30–31, 303–4 31 tax wedge effect in, 275f sectoral differences returns to education, 58, 60f, 178, 181n101 economic development and, 88b right to life, 267b in productivity, 107–13 ripple effect of lost jobs, 277. See also spillover effects Self Employed Women’s Association (SEWA), 27, 63, 134, 135b, Ritzen, Jozef, 128b 266 Roma children, discrimination against, 157b self-employment Romania in agrarian economies, 193 child development in, 296 entrepreneurship and, 114, 115f. See also entrepreneurship gross job creation and destruction in, 100 hazards of, 83 inequality in access to jobs in, 137 health insurance, subsidizing participation in programs, 276 job training programs in, 269 life satisfaction and, 85 manufacturing sector in, 103 microenterprises and, 110, 270 population decline in, 214 preference for, 56, 67n43 public works programs in, 270, 272f prevalence of, 3, 5, 49 upsizing in, 11 regional differences in, 49–50, 50f Rowntree, Benjamin Seebohm, 77b social identity and, 134 rule of law, 25, 297–98, 297f temporary work, effect on measuring, 49 RuralShores, 240b unemployment and rural-urban migration effect on measuring, 49 in agrarian economies, 193 social safety nets for, 272 economic growth and, 52, 53f urbanization and, 193 hukou (Chinese household registration system) and, 314, 315, Senegal 315b, 317, 317f outsourcing attractiveness of, 55 networking and choice of location, 137 women in formal sector work in, 191 reallocation of workers. See reallocation of labor sense of fairness. See fairness, sense of structural changes in job market and, 6, 48 Serbia rural vs. urban jobs in terms of earnings, 165f job loss, social effects of, 131 Russian Federation public works programs in, 270, 283n62 educational attainment in, 7, 55 training programs purchased by public employment services entrepreneurship in, 117 in, 269 fairness in access to job opportunities in, 172, 173f services sector, 20, 33, 54, 239. See also General Agreement on global financial crisis (2008), effect on, 61 Trade in Services (GATS) migrant population as percent of total population in, 234 severance payments, 260 Rwanda SEWA. See Self Employed Women’s Association civil war in, 318n56 SEZs (special economic zones), 221, 221b interethnic collaboration and jobs in, 319n66 shocks policy removal of constraints to job creation in, 30, 32f, 301, as drivers of households into poverty, 82 302–3 employment. See employment shocks public works program in, 143 natural disasters. See natural shocks technical and vocational education (TVE) in, 176 underemployment and unemployment due to, 277 tourism in, 88b Sierra Leone unemployment rates of female ex-combatants in, 318n61 fairness in access to job opportunities in, 172 women in wage employment in, 50 good jobs defined as having access to pensions and health insurance in, 15, 275, 275f S health insurance benefits in, 83b safety on the job. See health and safety risks network effects of working in, 171 Samasource, 240b post-conflict youth employment in, 195 Samoan migration to New Zealand, 204 public works programs in, 270 Samsung, 177b value of jobs to individuals and society in, 158, 159f savings accounts for unemployment insurance, 273 vocational training in entrepreneurship in, 146n71 savings decline among older age groups, 214 Singapore scale economies, 218b as aging society, 213 “scarring,” 268, 279, 283–84n91 domestic workers, legal protection of, 141b school-to-work transitions, 164, 178, 181n96 dynamic skills development in, 177b seasonal workers jobs strategy in, 87, 89, 90b 396 INDEX migrant population in, 52, 233 aspirations and expectations, 14, 137–39 Nanyang Polytechnic, 178 connection with jobs, 14, 126 partnering with India’s Tata Group in, 178 data gap on, 312b population decline in, 214 defined, 128b productivity effects of jobs in, 161 economic development without increasing, 87 training funds in, 181n82 EPL impacts on, 261–62, 261t as transportation hub, 245–46 job spillover effects to, 8f, 15, 83b, 85–86, 87, 134–39, 170–73, unemployment rates in, 49 171f. See also spillover effects skilled workers minimum wage’s impacts on, 261–62, 262t earnings vs. those of unskilled workers, 165f policies contributing to, 36, 140–44, 246 exporting skilled jobs, 241 social interactions created by jobs, 13, 134–37 middle-skilled jobs, decline in, 54 socially important jobs and, 15, 16–17f migration of, 234, 236–37, 311 social tensions, reduction of, 14, 127–33, 143b pay of, 48 transparency and, 202 in resource-rich countries, 202 trust and civic engagement. See trust and civic engagement returns to education, 58 unemployment’s effect on, 277, 279 shortage of, 48, 174, 207 universal social insurance programs and, 276 skills, 36, 174–78 social identity, 84, 134, 134b, 142–44, 161, 170–71 acquisition of, 174, 175b social insurance and social protection programs, 26–27, 62b, as constraint, 174, 175f, 181n81, 295f 212–13, 215, 272–76, 274m. See also unemployment dynamic skills development, 177b insurance economic development’s effect on mix of, 56f financing of, 273–76 as human capital, 296 managing market risks, 272–73 improving skills to increase earnings, 158 portability of benefits, 276 learning on the job, 176–78 technology to make participation easier, 275, 276b manpower planning and, 176, 177b social networks. See networks measurement of, 175b social safety nets not tied to labor market, 272 mismatches with economic demands, 174–75, 207 social security programs, 272 National Qualification Frameworks, 177b social skills, 176 productivity traps when skills insufficient, 178 social unrest, link to unemployment, 12, 126, 127, 132, 140, 142 prolonged unemployment’s effect on, 277, 279 social value of jobs. See value of jobs social skills, 176 SOEs. See state-owned enterprises types of, 55, 67n33 Solidarnos ´c´ (Polish trade union federation), 265 slavery, 155 Souktel (job assistance program), 268b Slovenia South Africa fairness in access to job opportunities in, 172, 173f affirmative action in, 142 gross job creation and destruction in, 100 electronic payment systems for social insurance programs in, policy removal of constraints to job creation in, 31, 32f, 301, 276b 304–5 female labor force participation in, 54b trade liberalization in, 168 electrification and, 30b, 300b training programs purchased by public employment services global financial crisis (2008), effect on, 61 in, 269 informal employment in youth unemployment in, 31, 304–5, 305f gender differences, 210, 211 small and medium enterprises (SMEs), 177b size of informal sector, 265b small businesses. See microenterprises job satisfaction in, 86 small farms, 88, 104–6, 104f, 113f minimum wages for domestic workers in, 141 small island nations outsourcing attractiveness of, 55 defined, 281n1 poverty reduction, effect of jobs on, 78 jobs agenda in, 19, 20f, 190, 203–6, 204–6f street vendors, organization of, 266–67 mix of labor policies and institutions in, 259f temporary and part-time work in, 7, 48 policy making in, 31, 302b unemployment in tax wedge effect in, 275f bargaining councils as cause of, 265b smart cards and insurance benefits, 276b rates of, 49 SMEs (small and medium enterprises), 177b union wage effect in, 26, 263 SNA (system of national accounts), 64–65, 77b vocational training in entrepreneurship in, 146n71 social capital, 128b, 129 Wine Industry Ethical Trade Association, 319n94 social cohesion, 12–14, 126–50 women’s income, household effects of, 164 access to information, rights, and voice, 140–41 youth unemployment in, 6, 50 South Asia statistical profiling and linking job seekers with programs, 270 agricultural productivity in, 106 stimulus packages in reaction to global financial crisis, 61 competing for jobs in, 246 structural transformation light manufacturing jobs, 245 economic growth and, 52, 53f growth of labor force in, 48 job destruction vs. job creation during, 278, 279 labor productivity in, 55f jobs migration and, 6–7, 52, 53b, 100, 241 manufacturing sector in, 238 productivity and, 54 need for new jobs in, 52f in urbanizing countries, 100, 198 nonwage jobs in, 5f, 50, 50f Subodhini, Sachchithananthan, 143b trade liberalization in, 309f Sub-Saharan Africa. See also specific countries South-South migration, 234 agrarian economies in, 191–92, 192f South-South trade, 241 agricultural productivity in, 106, 107 South Sudan, job challenges in, 195b agricultural sector in, 82 Spain apprenticeships in, 176 ethnic differences, jobs connecting people across, 136b child labor in, 51 unemployment rate in, 23, 49 competing for light manufacturing jobs, 245 youth unemployment in, 6 customary land holdings in, 105 spatial relocation of manufacturing sector, 100–101, 102f Green Revolution of little consequence in, 98, 191, 192f spatial targeting, 218 growth of labor force in, 48 special economic zones (SEZs), 221, 221b household businesses in, 112 spillover effects, 2, 15–17, 82–84, 83b, 159–62, 162f informal enterprises in, 110 to development, 16–17, 17f, 160–61, 160f infrastructure improvements in, 295 from earnings of others, 160, 163–64 labor productivity in, 55f economics and social sciences on, 160b, 163 management of small enterprises in, 115, 116f to environment, 16, 161, 167–68, 169–70, 169f, 170b manufacturing sector in, 117, 193, 238 to global integration, 161, 168–69, 293 migration from agriculture in, 52, 53f government interventions aimed at, 16, 246 need for new jobs in, 51, 52f to household allocations, 160, 164–65 nonwage jobs in, 5–6, 5f, 50, 50f jobs strategies and, 89 services sector in, 241 to knowledge. See knowledge spillovers small and family farms in, 11, 98, 104, 104f to living standards, 8f, 163–66 trade liberalization in, 168, 243, 309f need for data sources on, 163, 163b, 312b urbanization in, 193, 200 to networking, 161, 171–72, 171f women employees in to poverty reduction, 16, 160–61, 166–67, 166f formal sector work, 191 to productivity, 8f, 161, 167–70, 277 working hours, 52 to sense of fairness, 16, 161, 171f, 172, 173f Sudanese civil war, 195b to social cohesion, 8f, 15, 83b, 85–86, 87, 134–39, 170–73, 171f sweatshops, 65 to social identity, 161, 170–71, 171f system of national accounts (SNA), 64–65, 77b tradeoffs and, 162 Sri Lanka T cash-for-work programs in, 143b Taiwan as conflict-affected country, 194 microenterprises in, 105 export processing zones (EPZs) in, 37, 316, 316f trade liberalization in, 168 foreign direct investment (FDI) in, 316, 316f urban scale and productivity in, 167 garment industry in, 37, 315, 316 Tanzania labor regulations in, 314 agricultural productivity in, 106 microcredit investments in, 164 economic development without reduction of poverty in, 87 microenterprises in, 116 female labor force participation in, 6 skills level as constraint in, 181n81 growth elasticities of employment in, 88b technical and vocational education (TVE) in, 176 household businesses in, 112 Termination of Employment of Workman Act (TEWA) of 1971, idleness rates of youth in, 6f, 51f 314–15 management training interventions in, 118 unemployment rates in, 49 as resource-rich country, 200f wages and unemployment rates, effect on migration from, 236 skills level as constraint in, 181n81 youth unemployment in, 207 targeted investment climate, 26, 195, 217–21, 218–19b, 220f, 221b state-owned enterprises (SOEs) Tata Group (India), 12, 111, 178 in China, 7, 8f, 104, 108, 279–80 tax policy, 163–64 in Vietnam, 301–2 competing for jobs and, 246 398 INDEX as incentive to create good jobs, 28, 299 trade agreements, 32, 306 payroll taxes as funding mechanism for social insurance trade in services, 241, 308–9 programs, 274 trade liberalization, 33, 168, 243, 246, 307–9, 309f tax rates as constraint, 295f tradeoffs, 36, 162 tax wedge effect, 274, 275f trade with Pacific Island nations, 203–4, 204f TeamLease, 57b training programs technical and vocational education (TVE), 176, 181n89 in active labor market programs, 272 technological change funding for, 181nn82–83 agricultural. See innovation massive unemployment not affected by, 278–79 decoupling of job destruction and job creation during, 277–78 on-the-job programs, 176–77, 269, 269f e-links to jobs, 268b in post-conflict countries, 143b job competition and, 7, 245 skills building via, 174, 176–77 market production shift induced by, 52 social identity and, 142–43, 143b productivity and, 100, 106–7, 245 success rates of, 26, 27f, 62b, 269, 269f productivity improved by, 55, 99b, 100 transition economies, 103–4, 112, 278 as public good, 191 transnational companies, 54 in urbanizing countries, 197 transparency, 36, 140–41, 202 technology and telecommunications, social insurance programs transportation hubs, 245–46 using to make participation easier, 275, 276b Trinidad and Tobago technology sector, 104 educational level of migrants from, 234 technology transfer, 239 ethnic/racial cross-cutting interactions at work in, 13, 135, telecommunications. See also mobile phone technology; 172 technological change trust and civic engagement, 14, 126–33 competition and liberalization, 308 correlated with job characteristics, 129, 131f needs, 24, 295 correlated with peaceful collective decision making, 127, 129f social insurance programs using to make participation easier, correlated with unemployment, 14, 14f, 127–28, 130f, 133b 275, 276b defined, 127 Temporary Income Assistance Program (El Salvador), 143 distrust of migrants, 237 temporary work evolution of, 132b in conflict-affected countries, 195 social tensions and, 14, 127–29 defined, 67n2 training programs and, 269 in industrial countries, 7, 48, 56 Tunisia legal protections, 156 educational learning outcomes in, 296–97 negativity from, 140 entrepreneurial training in, 143–44, 269 as percent of total wage employment, 7, 49 firm growth in, 209 protection policies, 279 GDP per capita in, 91n49 self-employment’s effect on measuring, 49 microenterprises in, 105 temporary staffing industry, 57b social unrest and social justice in, 127 for youth at risk and vulnerable populations, 143, 208 unemployment despite GDP growth in, 209 Termination of Employment of Workman Act (TEWA) of 1971 university-educated youth searching for jobs in, 207–8, 208f (Sri Lanka), 314–15 Turkey TFP. See total factor productivity global financial crisis (2008), effect on, 61 Thailand idleness rates of youth in, 51f as aging society, 213 inequality of job opportunities in, 137 agribusiness growth in, 12, 111 informal vs. formal firms’ productivity in, 210 financial crisis in (1997), 59 outsourcing attractiveness of, 55 informal employment rates in, 64b private sector in, 7, 58 poverty reduction in, 9 productivity effects of jobs in, 161 technical and vocational education (TVE) in, 176 self-employment in, 56 unemployment rates in, 49 trade liberalization in, 168 timber industry in Ethiopia, 194b training programs in, 62b Tonga, migration from, 19, 31, 32f, 52, 248n10, 302b urban scale and productivity in, 167 TopCoder, 240b vocational training enrollment in, 174 total factor productivity (TFP), 99, 99f, 104, 108, 119n33, 120n40, wage subsidy programs in, 268 210 youth issues in, 6f tourism, 20, 88b, 205–6 turnover vs. decoupling of job destruction and job creation, Trabajar programs (Argentina), 270 277–79 tradable sectors, 58, 59f TVE (technical and vocational education), 176, 181n89 Index 399 U Environment Programme, 170b Uganda international conventions, 179n5 agricultural productivity in, 106 system of national accounts (SNA), 64–65, 77b agricultural sector in, 81 Universal Declaration of Human Rights, 5, 65, 156 post-conflict programs in, 143b United States social interactions afforded by jobs in, 135–36 affirmative action programs in, 141 training programs in, 269 corporate codes of conduct in, 32, 306 vocational training in, 142 decoupling of job destruction and job creation during working adults in households, effect on poverty reduction in, recessions in, 277, 278f 82 educational attainment in, 54–55 Ukraine educational level of migrants to, 234 aging population in, 215, 216b ethnic/racial cross-cutting interactions at work in, 135 agribusiness in, 88b firm size and growth in, 12, 112 idleness rates of youth in, 6f, 51f gross job creation and destruction in, 99 population decline in, 6, 214 industrial centers’ decline in, 245 underemployment long-term care industry in, 214 in agrarian economies, 191 long-term job creation record of, 26 brain waste, 248n20 manufacturing sector in, 11 in formalized and formalizing economies, 277 migrant population, 52, 233 measurement of, 49 multiplier effect and government spending in, 294 of youth, 50 part-time and temporary employment increasing in, 56 unemployment services sector in, 239 in agrarian economies, 191 technology-related industries in, 246 in formalized and formalizing economies, 277 temporary job protection policies during 2008 crisis in, 279 higher earnings and, 76 training programs in, 62b life satisfaction and, 85, 86f underemployment in, 49 in low-income countries, 128 unemployment insurance in, 279 measurement of, 49, 119n1 unemployment rate in, 23 mental health and, 84 due to 2008 financial crisis in, 278 prolonged unemployment’s effect on skills and social cohesion, union productivity in, 264 277, 279 union wage effect in, 263 “scarring” effect of, 268, 279, 283–84n91 urban traffic congestion in, 167 self-employment’s effect on measuring, 49 youth gangs and unemployment in, 133 social unrest, link to, 12, 127, 132 Universal Declaration of Human Rights (UN), 5, 65, 156 subsistence agriculture and, 272 unskilled workers’ earnings vs. skilled workers’ earnings, 165f trust and civic engagement correlated with, 14, 14f, 127–28, UPP (Urban Poverty Program), 145n14 130f, 133b upsizing, 11, 101, 103, 103f of youth. See youth unemployment urbanization unemployment insurance, 62b, 272, 273 in agrarian economies, 88 unions, 26, 157b, 164, 263–64. See also collective bargaining charter cities, 218 United Arab Emirates cost to live in cities, 200, 201f, 202 economic diversification in, 199–200 informal employment and, 210 migrant population in, 19, 52 innovation and, 100 United Kingdom knowledge spillovers and, 178 Department for International Development on electronic productivity and urban scale, 167, 179n31 payment systems for social insurance programs, 276b self-employment and, 193 educational level of migrants to, 234 structural change and, 6, 52 Ethical Trading Initiative, 319n91 urbanizing economies JobCentre Plus, 270 defined, 281n1 traffic congestion in London, 167 jobs agenda in, 18, 20f, 190, 197–98b, 197–99, 199f unemployment and “unhappiness effect” in, 85 mix of labor policies and institutions in, 259f youth unemployment and riots (2011) in, 127 policy making in, 31, 302b United Nations tax wedge effect in, 275f Conference on Trade and Development (UNCTAD), 249n41 Uruguay Convention on rights of migrant workers, 33–34, 310 as aging society, 213 Convention on the Rights of the Child, 65, 66b informal employment rates in, 64b Decent Work Agenda and, 15, 158, 158b, 170b services sector in, 241 Delhi Group, 64b union productivity in, 264 400 INDEX Uzbekistan differences in total work by gender, change over the business inequality of job opportunities in, 137 cycle vs. over the long term, 67n23 earnings of, 48, 50, 165–66f V entrepreneurship training for, 118 value of jobs, 2–3, 14–17, 82–84, 83b, 154–59. See also living hazardous work performed by, 83 standards; spillover effects household allocations when women earn income, 15, 160, development payoffs, 162–73, 163b 164–65, 166f to individuals and society, 158–59, 159b importance of jobs to well-being of, 76, 88, 178, 198 values surveys, 28–29, 299 informal employment of, 210 Vanuatu, 206 job spillovers from women working in garment industry, 15, Venezuela, República Bolivariana de 171, 172f foreign companies in, 245 job training programs for, 269 manufacturing sector in, 100 labor force participation of, 30b, 48, 54b, 134, 300b vicious circles, 8, 116, 154, 216b light manufacturing jobs and, 298 Vietnam minimum wages, effect on employment of, 282n16 agricultural sector in, 81, 154 nonwage work and, 5, 5f Doi Moi (land reform), 29, 301 in resource-rich countries, 201 FDI in, 30, 301–2 structural transformation and, 53–54, 54b female labor force participation in, 6, 48, 50 trade’s effect on access to jobs, 33, 309 garment industry’s Better Work program, 307b in urbanizing countries, 197, 198 health insurance for poor and “near poor” in, 27, 276 Women in Informal Employment: Globalizing and Organizing household businesses in, 112 (WIEGO), 64b job satisfaction in, 86 Woolcock, Michael, 128b life satisfaction in, 85 working conditions, improvement in, 243, 306. See also hazardous management training interventions in, 118 work policy removal of constraints to job creation in, 29–30, 32f, working poor, 7, 41n145, 77, 80b, 82, 110, 191, 320n117 301–2 work-life balance choices, 164 poverty reduction in, 17, 79, 154 work-sharing arrangements, 62b, 279, 280b reallocation of labor in, 100 work time savings system, 90b spatial relocation of manufacturing sector in, 101 World Bank’s Doing Business Indicators 2012 report, 281n3 violence, 25, 133b, 142, 143. See also conflict-affected countries World Development Report link to unemployment, 12, 132 2007: Development and the Next Generation, 160b virtuous circles, 8, 62, 154, 197, 216 2009: Reshaping Economic Geography, 160b vocational training, 142, 146n71, 174, 181n88 2011: Conflict, Security, and Development, 160b in conflict-affected countries, 195 2012: Gender Equality and Development, 160b voice, 27, 126, 137, 140–41, 158, 262, 265–67. See also collective World Trade Organization (WTO), 30, 33, 301, 307, 310 voice World Value Surveys, 85, 128, 132 vulnerability of jobs, 7, 58–61 vulnerable workers, 22, 41n145, 62, 320n117 Y Yemen, Republic of W public works programs in, 143, 270 wages. See also labor earnings; minimum wages skills level as constraint in, 181n81 globalization and higher pay, 243 unfairness in access to job opportunities in, 137 higher pay in same sector, 79, 81 youth microenterprises vs. large firms, 11, 12f bulge index, 281n1 wage subsidies, 62b, 116, 163, 268–69, 283n44 gangs welfare-to-work transitions, 90b in conflict-affected countries, 195 well-being. See material well-being unemployment and, 132–33 West Africa. See also specific countries high-risk youth programs, 142 microenterprises in, 110b job spillover effects reaching, 3, 171 slave trade, lasting effect in, 155 job training programs for, 269 white-collar jobs, migration of, 232, 241 migrant youth, effect on host countries, 237 WIEGO (Women in Informal Employment: Globalizing and minimum wages, effect on employment of, 281–82n16 Organizing), 64b not in employment, education, or training (NEETs), 6, 6f, 67n9 Wine Industry Ethical Trade Association (South Africa), 319n94 number of hours worked, decrease in, 76 Wisconsin Longitudinal Study, 145n15 population growth of, 48 women. See also gender differences social unrest and, 13, 127 in conflict-affected countries, 194, 194b underemployment, 50 Index 401 youth unemployment stalled transitions due to, 222–23n68 countries with high youth unemployment tax wedge effect in, 275f defined, 281n1 education systems and, 89 Z jobs agenda in, 18, 20f, 190, 206–10, 207–8f, 210f Zambia mix of labor policies and institutions in, 259f economic development without reduction of poverty in, 87 policy making in, 26, 31, 304–5 foreign companies in, 245 social unrest and, 6, 12, 50, 126, 132, 140, 142 informal workers, legal protections for, 141 disproportionate share of unemployed, 5, 6, 50 as resource-rich country, 200f gangs and, 132–33 ECO-AUDIT Environmental Benefits Statement The World Bank is committed to preserving Saved: endangered forests and natural resources. • 168 trees The Office of the Publisher has chosen to • 76 million Btu of total print World Development Report 2013: energy Jobs on recycled paper with 50 percent • 14,479 pounds of net postconsumer fiber in accordance with greenhouse gases the recommended standards for paper • 78,530 gallons of usage set by the Green Press Initiative, a waste water nonprofit program supporting publishers • 5,257 pounds of in using fiber that is not sourced from solid waste endangered forests. For more information, visit www.greenpressinitiative.org.