Nanak Kakwani. 1990 "Large Sample Distribution of Several Inequality Measures, with Application to Côte d'Ivoire." Living Standards Measurement Study, Working Paper No. 61, World Bank, Washington, D.C.
Several measures have been devised to analyze income or consumption distribution inequality. The paper presents the large sample distribution of several inequality measures that are used to test if the observed differences in sample estimates of their values are statistically significant. The results presented in the paper are applied to analyze income inequality in Côte d'Ivoire from the data of the Living Standards Survey, 1985.
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Nanak Kakwani. 1990 "Testing for Significance of Poverty Difference, with Application to Côte d'Ivoire." Living Standards Measurement Study, Working Paper No. 62, World Bank, Washington, D.C.
Several poverty indices have been suggested to measure the intensity of poverty suffered by those below the poverty line. Because the studies are estimated on the basis of sample observations, we need to test whether the observed differences in their values are statistically significant. This paper provides distribution free asymptotic conficence interval and statistical inference for several poverty indices. The methodology developed in the paper is applied to analyze poverty in Côte d'Ivoire from the data of the Living Standards Survey, 1985.
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Nanak Kakwani. 1990 "Poverty and Economic Growth with Application to Côte d'Ivoire." Living Standards Measurement Study, Working Paper No. 63, World Bank, Washington, D.C.
The paper explores the relation between economic growth and poverty, and develops the methodology to measure separately the impact of changes in average income and income inequality on poverty. This decomposition provides a link between macro-economic adjustment policies and poverty which is discussed in the context of the adjustment experience of Côte d'Ivoire. The issue of targeting a poverty alleviation budget is shown to be related to the poverty decomposition proposed in the paper. The methodology proposed is applied to the data taken from the 1985 Standards Survey in Côte d'Ivoire.
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Peter Moock, Philip Musgrove and Morton Stencner. 1990 "Education and Earnings in Peru's Informal Nonfarm Family Enterprises." Living Standards Measurement Study, Working Paper No. 64, World Bank, Washington, D.C.
Data from the 1985 Living Standards Survey in Peru are studied to categorize 2,735 nonfarm family enterprises ("informal" business without hired labor) and explain earnings per hour of family labor. Regression analyses show significant effects of schooling on earnings, for all enterprises together; this cannot reflect "screening" but must indicate productivity (allowing for enterprise capital, location and age and sex of workers). Returns differ markedly among four sub-sectors and by location (Lima, other cities, rural) and gender. Results are consistent with education being valueless in traditional activities but paying off in jobs requiring literacy, numeracy and adjustment to change.
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Harold Allderman and Valerie Kozel. 1989 "Formal and Informal Sector Wage Determination in Urban Low-Income Neighborhoods in Pakistan." Living Standards Measurement Study, Working Paper No. 65, World Bank, Washington, D.C.
This paper examines the structure of urban labor markets in Pakistan focusing in particular on wage formation and returns to education for male workers. Empirical work is based on a survey of 1,000 low-income urban households administered in 1986 by the International Food Policy Research Institute (IFPRI) and the Pakistan Institute of Development Economics (PIDE). We identify three distinct segments of the labor market: the self-employed, wage workers in the informal sector, and wage workers in the formal sector, 85 percent of whom are government workers. An intuitively plausible picture of individual job search and labor market participation decisions is obtained using a nested multinomial logit model. The results of this model are then used to estimate selectivity-corrected wage equations for the two wage sectors -- formal and informal -- using a modification of an approach described in Lee (1983) and Trost and Lee (1984). The study found that the difference in average wages between the formal and informal sector is primarily caused by differences in skills (measured in terms of work experience and education), although there is an appreciable premium on wages in the formal sector, particularly for college educated men. A smaller although still significant premium was found for less educated men. Further, we identified two distinct categories of economically inactive individuals -- young, more educated men apparently waiting to find a job in the formal sector rather than accepting less desirable employment in the informal sector, and older, less qualified men who tend to live in wealthier extended families receiving substantial remittances from within Pakistan and abroad. In the latter case, unearned income helps these individuals to remain outside the labor force. To be effective, employment policy must address the very difference kinds of constraints faced by individuals in each of the categories.
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Wim Vijverberg, Jacques van der Gaag. 1990 "Testing for Labor Market Duality, The Private Wage Sector in Côte d'Ivoire." Living Standards Measurement Study, Working Paper No. 66, World Bank, Washington, D.C.
Research on labor market duality, in the context of developing countries, has identified the secondary segment of the labor market more with the self-employed than with salaried employees. This derives in part from the vagueness of the demarcation line between the two sectors of the labor market: the various descriptions of the duality theory are less than specific about wage workers. The wage sector has not entirely escaped attention, but, until recently, tests for the existence of labor market duality lacked rigor. A few recent tests derive information on the existence of duality and the relative magnitudes of the primary and secondary sectors entirely from the structure of the wage equation. these tests are implemented in this paper on data from Côte d'Ivoire. Furthermore, as an innovation relevant to the current state of the art, this paper estimates an indicator of the degree of formality of the job that a worker holds, and integrates this indicator into the structure of the wage equation. The information on which the indicator is built relates to jbo characteristics that are often thought to distinguish the primary from the secondary sector. The indicator is found to have some effect on the structure of the wage equation which therefore suggests the existence of "duality," even though duality is measured by the indicator as a continuum, rather than as a dichotomous split. Analysis of the spread of the indicator reveals a single mode in a distribution that can be viewed as the mixture of two normal distributions. Thus, the Ivorian labor market is one with a primary and a secondary pole, and with substantial overlap between those poles so as to deny the rigorous separation that is common in discussion about labor market duality.
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Elizabeth King. 1990 "Does Education Pay in the Labor Market? The Labor Force Participation, Occupation, and Earnings of Peruvian Women." Living Standards Measurement Study, Working Paper No. 67, World Bank, Washington, D.C.
The paper examines how education and postschool vocational training affect the type and extend of labor market participation of women in Peru. it also estimates monetary returns to different levels of schooling, to formal general and technical schooling, and to training. The sample, which comprises more than 5,600 women in urban and rural Peru, was drawn from the Peruvian Living Standard Survey. More than 70 percent of these women were in the labor force at the time of the survey, about 35 percent of them working in paid jobs. The overall level of female labor force particiaption in Peru is 72 percent, and this percentage is higher in rural areas than in urban areas. The majority--60 percent--of paid female workers are self-employed, but these jobs tend to be very lowpaying. Women holding jobs in the public sector (either in state corporations or the government) are the best paid. In general, education and training enhance the contribution of women in the labor market. Although education does not increase the participation of Peruvian women in th elabor force (and may in fact decrease it), it alerts the occupational distribution of female workers by increasing the proportion of women in paid employment. Among paid employees, education is positively related to hourly earnings; the relationship is nonlinear, with primary education showing higher returns than secondary education. The return to postsecondary education appears low and negative, except for the small fraction of women who have earned a diploma. The poor performance of the Peruvian economy since the early 1970s has influenced this result.
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Valerie Kozel. 1990 "The Composition and Distribution of Income in Côte d'Ivoire." Living Standards Measurement Study, Working Paper No. 68, World Bank, Washington, D.C.
Empirical work on the distribution of welfare typically uses total household consumption expenditures in lieu of total income in measuring welfare levels. However, households must produce income to obtain consumption goods, and thereby welfare levels. Thus the study of welfare distribution, and ultimately to the study of poverty. The paper uses data collected under the auspices of the World Bank Living Standards Unit (now the Welfare and Human Resources Division, in the Population and Human Resources Department) in the Republic of Côte d'Ivoire in 1985. The major findings of the paperare (i) roughly one-third of private income is obtained in the wage sector, slightly less than one-third from agriculture, one-fifth from non-farm self-employment, and the remainder from a variety of other sources (imputed rents, rents and dividends, social security and pension, private transfer payment); (ii) households obtaining income from wage activities are among the wealthiest (measured in terms of income and consumption) in the Côte d'Ivoire, while farm households are among the poorest; and (iii) physical assets, with the exception of land, tend to be highly concentrated in urban households at the upper end of the income distribution; in contrast, land is more equitably distributed in rural areas, and human capital, measured in terms of education, more equitably distributed in urban areas.
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Angus Deaton. 1990 "Price Elasticities from Survey Data, Extension and Indonesian Results." Living Standards Measurement Study, Working Paper No. 69, World Bank, Washington, D.C.
This paper extends and improves the author's earlier work on measuring own and cross price elasticities from spatial variation in prices using household survey data. Double-logarithmic demand functions are replaced by fundtions that relate budget shares to the logarithms of prices and incomes, and zero expenditures are treated appropriately. Formulae are developed for estimation and for the calculation of standard errors. Limited Monte Carlo evidence suggests that the asymptotic regressions work well in practice. A large commodity system of food demands is estimated using Indonesian data from 1981.
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Paul Glewwe. 1990 "Efficient Allocation of Transfers to the Poor, The Problem of Unobserved Household Income." Living Standards Measurement Study, Working Paper No. 70, World Bank, Washington, D.C.
This paper examines the problem of how to transfer money or other forms of assistance to poor households when one observes some characteristics of households, but not their income. this and related issues are often referred to as the targeting problem. the paper first sets out the problem formally as one of minimizing a poverty index given a fixed amount of money available for transfers. Assuming the household survey data are available which include accurate income and/or expenditure information, and the solution for the problem is formulated as a non-linear mathematical programming exercise. Using household survey data from Côte d'Ivoire, the technique is applied to both urban and rural areas separately. The paper concludes with a general discussion and suggestions for future research.
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Paul Glewwe. 1990 "Investing the Determinants of Household Welfare in Côte d' voire." Living Standards Measurement Study, Working Paper No. 71, World Bank, Washington, D.C.
To predict the effect of economic policies on household welfare, one should first understand which characteristics of households and of the localities in which they live, enable them to raise their welfare levels. This paper outlines a simple procedure for investigating the determinants of household welfare and demonstrates its use with recent data from Côte d'Ivoire. Despite the relative simplicity, much information is obtained from its use on cross-sectional survey data. Results specific to Côte d'Ivoire include: high (low) returns to education in urban (rural) areas; high benefits from cocoa land relative to coffee land; a significant impact on economic welfare from availability of medical services, and no apparent benefits from agricultural extension services.
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Mark M. Pitt and Mark R. Rosenzweig. 1990 "The Selectivity of Fertility and the Determinants of Human Capital Investments, Parametric and Semiparametric Estimates." Living Standards Measurement Study, Working Paper No. 72, World Bank, Washington, D.C.
In this paper we assess the importance of heterogeneity and selective fertility in altering estimates and interpretations of the determinants of the human capital of children. We set out a sequential model of human capital investments in children incroporating endogenous fertility and heterogeneity in human capital endowments to illustrate fertility selection problem and issues of identification. Empirical results based on parametric and semiparametric estimates of selectivity models applied to data on birthweight children tending to have substantially lower birth probalities (negative birth selectivity). As a consequence, the positive association between mother's schooling and birthweight is substantially underestimated and the positive effects of delaying childbearing overestimates when birth selectivity is not taken into account. The schooling results indicate strong rejection of the "efficient schooling" model, in which schooling is allocated efficiently across children, but only when the selectivity of fertility is taken into account.
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Hanan Jacoby. 1990 "Shadow Wages and Peasant Family Labor Supply, An Econometric Application to the Peruvian Sierra." Living Standards Measurement Study, Working Paper No. 73, World Bank, Washington, D.C.
A striking feature of developing economies is the large proportion of the work force that is self-employed. Lack of widespread labor market participation in the agricultural sector can pose a major obstacle to the empirical implementation of economic models of the peasant household, whether because wage data are simply not available, or because the assumptions required to make use of wage data stretch the bounds of credulity. This paper develops a methodology for estimating a structural labor supply model for primarily self-employed peasant households, which holds under a general agricultural technology and set of labor market conditions. The unique feature of the approach is that the opportunity cost of time, or shadow wage, of household workers is explicitly estimated from an agricultural production function and is subsequently used to identify a set of structural labor supply parameters. Recent household survey data from rural Peru is employed to estimate and perform various diagnostic tests on the model. The empirical findings lend support to the hypothesis that peasant households allocate their members' time as if to maximize a family utility function, and, moreover, demonstrate the tractability of the shadow wage methodology and its usefulness in estimating more elaborate time allocation models.
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Jere R. Behrman. 1990 "The Action of Human Resources and Poverty on One Anotehr: What we have yet to Learn." Living Standards Measurement Study, Working Paper No. 74, World Bank, Washington, D.C.
Poverty in the developing world is a major challenge. Investments in human resources are considered critical elements of efforts to alleviate poverty; better health and nutrition are thought to raise labor productivity and improve the performance of students. Education, particularly at the primary level, is claimed to have very high rates of return in terms of productivity, income, and non-enonomic success in the developing world. On the otehr hand, inadequacies in human resources often are thought to be manifestations of poverty. Malnutrition and poor health, for example, often are ascribed primarily to inadequate incomes. UNICEF has argued strongly that structural adjustment programs often have very negative effects on the human resources of the poor, and increasing attention is being given to that possibility by the World Bank and otehr international organizations. Therefore there appear to be major ties between human resources and poverty. Moreover, there may be important interactions among investments in various human resources, with education in particular widely thought to improve the results of investments in other human resources. But while the hypothesized relationships between human resources and poverty appear important, they also appear complicated. Precisely because they are complicated and because of the informational difficulties of socioeconomic research, much of what is presumed about these interaction may be based on poor empirical foundations. Since major policies and development strategies often are based on what is known in this area, the possible lack of strong empirical foundations about these interactions may be costly. This paper attempts to sort out relationships between human resources and poverty, based on recent studies. Since this paper deals primarily with behavior at the individual or household level, and since simple economic theory provides guidelines for empirical research at that level, it begins with brief descriptions of the human capital investment model and the household model. It then turns briefly to some measurement issues. Next it considers the impact of human capital investment model and the household model. It then turns briefly to some measurement issues. Next it considers the impact of human resources on the income of poor people, and the determinants of human resource investments. It then takes up allegations of the poor. Next, it considers some macroeconomic issues, including macroeconomic models that focus on human resources. Finally, it offers conclusions about relationships between human resources and poverty. These conclusions question a number of the strong assertions about the strong links between human resources and poverty. For instance, in many cases schooling appears in substantial part to be a proxy for other characteristics, such as ability and motivation and family background, rather than representing purely the effects of schooling per se. Also the economic impact on human resource investments of the poor appears to be more through price effects and less through income effects than often is claimed. For one last example, the UNICEF-type claim about the deleterious effects of adjustment programs on the human resources of the poor seems to be based on very weak empirical foundations. The conclusions also point to a number of areas related to human resource-poverty links in which further research might have a high payoff in terms of understanding and in terms of policy formulation.
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Paul Glewwe and Kwaku A. Twum-Baah. 1991 "The Distribution of Welfare in Ghana, 1987-88." Living Standards Measurement Study, Working Paper No. 75, World Bank, Washington, D.C.
This paper describes the distribution of welfare in Ghana in 1987-88, as measured by consumption expenditures. The data used are from the first year of the Ghana Living Standards Survey. While primarily descritptive, the paper contains information with clear policy implications. Several findings stand out. First, rural residents are, on average, clearly worse off than urban residents. The poorest group are residents of the rural savannah while the wealthiest are those who live in the capital, Accra. Second, education of the household head is strongly positively correlated with household welfare. Third, households where the head is self-employed, especially in agriculture, are generally found at the lower end of the distributin of welfare, while those headed by a wage earner, either in the private or the public sector, are better off. Fourth, unemployment among household heads is not correlated with houseld welfare. Finally, although the poorer groups are less likely to seek medical help when they are ill, malnutrition among young children in these groups is not much higher than that among the better off groups.
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Paul Glewwe. 1991 "Schooling, Skills, and the Returns to Government Investment in Education, An Exploration Using Data from Ghana." Living Standards Measurement Study, Working Paper No. 76, World Bank, Washington, D.C.
Investments in schooling are often regarded as essential for economic development, which implies that such investments have high rates of return in developing countries. This paper examines the accuracy and usefulness of estimates of rates of return to formal schooling based ont he standard human capital model of Becker and Mincer. Regarding accuracy, it investigates whether failure to account for differences in ability and school quality across a random sample significantly biases estimates of the private return to schooling derived from estimates of wage equations. This is done using an unusually rich data set from Ghana. When years of schooling are used to measure the accumulation of human capital, there are virtually no returns to schooling in the private sector. Replacement of years of schooling by reading and mathematical ability does show positive returns to acquired skills. However, these rates of return may be of little use to governments when making schooling investment decisions because such decisions are much more complex than the investment decisions of individuals. In particular, many government investments in education are designed to raise rates of return to schooling by raising school quality, but decisions by individuals assume that both rates of return and school quality are wcogenous.
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John Newman, Steen Jorgensen and Menno Pradhan. 1991 "Workers' Benefits from Bolivia's Emergency Social Fund." Living Standards Measurement Study, Working Paper No. 77, World Bank, Washington, D.C.
Bolivia's Emergency Social Fund (ESF) was established to cushion the adverse effect of its economic crisis and subsequent stabilization program on the poor and to facilitate transition through the phases of structural adjustment. The ESF program represented one of the first World Bank funded efforts to address the social costs of adjustment by including a separate compensatory program, rather than by modifying the implementation of a structural adjustment program in light of the expected social costs. The ESF was established explicitly as a temporary financial institution outside of the normal bureaucratic structure of the government. While its primary emphasis was to provide temporary employment opportunities, it differed from more typical government works projects in being demand-driven. The management team of the ESF approved or rejected funding requests for small-scale, labor intensive projects that came from local governmental and non-governmental agencies, but did not propose any projects themselves. The projects were executed and the workers hired by private subcontractors working under the supervision of the local agency and the central management team of the ESF. This paper is concerned with measuring the effect of the ESF program on employment and income of workers in the ESF projects. The analysis is based on the results of a survey administered to workers in ESF infrastructure projects and to the population at large by the Instituto Nacional de Estadistica (INE) of Bolivia. In the first part of the paper we identify the characteristics of the workers in the ESF infrastructure projects and compare these workers with the population in general and workers in the construction sector in particular. In the second part of the paper we perform a counterfactual simulation, asking what would have been the position of the workers in the absence of the ESF program. Based on this simulation, we infer what the employment and income effect of the ESF program has been on its beneficiaries. The average ESF worker experienced a 12.8 percent increase in wages, an increase of 9.5 hours of work a week, and a 32 percent increase in weekly earnings over what he would have earned if he were working in the absence of the ESF. Taking into account the probability that the individual may not have worked in the absence of the ESF leads to larger gains. The unconditional comparison indicates that the average ESF worker receives a 33 percent in wages, an increase of 15.5 hours of work a week, and a 51 percent increase in earnings. The greatest benefits from participating in the program were received by those who would have been least well-off in the absence of the program.
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Wim P. Vijverberg. 1991 "Dual Selection Criteria with Multiple Alternatives, Migration, Work Status, and Wages." Living Standards Measurement Study, Working Paper No. 78, World Bank, Washington, D.C.
This study develops and implements a new method to account for slectvity bias that results from a two-stage choice with multiple alternatives. The estimation method can handle any number of laternatives at each level, modeled under any distributional assumption. however, at each level one must be able to express teh condition for selecting a particular alternative in a single equation. The technique was demonstrated for a situation where people choose one of three regions and one of two work modes.
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Duncan Thomas. 1991 "Gender Differences in Household Resource Allocation." Living Standards Measurement Study, Working Paper No. 79, World Bank, Washington, D.C.
Using household survey data from the United States, Brazil and Ghana, we examine the relationship between parental education and child height, an indicator of health and nutritional status. In all three countries, the education of the mother has a bigger effect on her daughter's height; pateral education, in contrast, has a bigger impact on his son's height. There are, apparently, differences in the allocation of household resources depending on the gender of the child and these differences vary with the gender of the parent. In Ghana, relative to other women, the education of a woman who is better educated than her husband has a bigger impact on the height of her daughter than her son. In Brazil, women's nonlabor income has a positive impact on the health of her daughter but not on her son's health. If relative education of parents and non-labor income are indicators of power in a household bargaining game, then these results suggest that gender differences in resource allocations reflect both technological differences in child rearing and differences in the preferences of parents.
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Margaret E. Grosh. 1991 "The Household Survey as a Tool for Policy Change, Lessons from the Jamcian Survey of Living Conditions." Living Standards Measurement Study, Working Paper No. 80, World Bank, Washington, D.C.
The story behind the remarkable timeliness and policy impact of the Jamaican Survey of Living Conditions (SLC) is told here with emphasis on the reasons for its success and its shortcomings. The story holds lessons for other countries that wish to institute Living Standards Measurement Study surveys. The Jamaican Survey of Living Conditions was designed and instituted to served as the monitoring mechanism for a fultifaceted, multisectoral initiative to revatilize the social service delivery system in Jamaica. Key strategic choices made in the SLC's implementation resulted in clarity of purpose; timeliness as a priority; extensive adaptation to the local environment; a turorial approach to skills transfer; active involvement of line ministries in the survey process; pursuit of multiple avenues of data analysis; and an effective mix of staff from both the operational and research complexes on the World Bank supervision team. The marginal dollar costs for survey implementation in Jamaica were quite low, but the costs in Bank staff time were quite high.
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