ECA Research with Impact Awards

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Do Investments in Digital Infrastructure Improve Employment Outcomes? Evidence from Türkiye

Does digital infrastructure create better jobs? Using the staggered rollout of fiber optic cable across Türkiye's provinces and administrative employer–employee data, this paper finds that better digital connectivity raises formal employment and wages, with gains concentrated in teleworkable occupations and driven largely by women switching into remote-capable jobs. Wage gains are concentrated among high-skilled workers, though employment gains extend to lower-skilled women in remote-work roles. Road investments, by comparison, produce more mixed results: reduced travel times can improve job access, but competition from nearby regions may offset these gains.

Banu Demir, University of Oxford and Bilkent University, and Arti Grover, World Bank Group

Digital Adoption Grants and Spillovers: Evidence from a Large-Scale Randomized Field Experiment

Can public grants accelerate firm-level digitalization, and do the benefits reach firms that never received one? This paper reports a randomized evaluation of a digital grant program for micro, small, and medium-sized enterprises in North-East Romania, where 1,038 firms were split evenly between an invitation to apply for grants covering up to 90 percent of eligible investment costs and a control group. Invited firms increased their digital investment and raised sales by 26.5 percent. Sales also rose among non-applicant firms located closer to grant recipients, pointing to local spillovers that conventional impact estimates would miss. The results are consistent with financing constraints holding back digital adoption, and suggest the full return to subsidized digital investment exceeds the gains captured by recipients alone.

Stephen Joseph Anderson-MacDonald, Mays Business School; Alexandra Avdeenko, World Bank Group; Juan Espinosa-Balbuena, World Bank Group; Rajesh Chandy, London Business School; Leonardo Iacovone, World Bank Group; Lukasz Marek Marc, World Bank Group

Public Preferences for Economic Reforms Are Shaped More by Design Than Cost

Energy price reforms often face strong public resistance—but this research shows that design and communication can make a significant difference. Randomized survey experiments with 10,000 respondents across five countries, including Uzbekistan, find that around 70 percent strongly opposed an immediate 100 percent price increase. Resistance was nearly halved, however, when the same reform was phased in, targeted at high-energy consumers, or paired with compensation. Informational messages reduced opposition by about as much as halving the price increase itself. A parallel expert survey suggests that design choices are easy to underestimate — a reminder that how a reform is structured and explained can matter as much as its cost.

Christopher Alexander Hoy, World Bank Group; Sering Touray, World Bank Group; Yeon Soo Kim, World Bank Group; Juni Singh, World Bank Group; Muhammad Saad Imtiaz, World Bank Group; Bambang Suharnoko Sjahrir, World Bank Group; Ana Maria Rojas Mendez, World Bank Group; Utz Pape, World Bank Group; Moritz Meyer, World Bank Group; Alan Fuchs, World Bank Group; Gustavo Javier Canavire Bacarreza, World Bank Group; Trang Van Nguyen, World Bank Group; Lydia Kim, World Bank Group; Defne Gencer, World Bank Group; William Hutchins Seitz, World Bank Group; Min A Lee, World Bank Group; Imane Helmy, World Bank Group; Akiko Sagesaka, World Bank Group; Ikuko Uochi, World Bank Group; Ivette Contreras, World Bank Group

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Procuring Low Growth: The Impact of Political Favoritism on Public Procurement and Firm Performance in Bulgaria

This paper assesses the impact of favoritism in public procurement on private sector productivity growth. Using three novel microeconomic data sets including more than 4 million form-year observations, the findings show that politically connected firms are 18 to 32 percent more likely to win public procurement contracts due to their preferential access to uncompetitive tenders. Competitive tenders lead to higher productivity and employment growth, while uncompetitive tenders result in flat growth but higher profit margins. Eliminating favoritism in public procurement could boost aggregate annual total factor productivity growth by 8 percent.

The authors:
Mihaly Fazekas, Central European University and Government Transparency Institute
Viktoriia Poltoratskaya, Central European University and Government Transparency Institute
Marc Schiffbauer, FCI – Investment Climate, World Bank
Bence Tóth, University College London

Investing in Human Capital during Wartime: Experimental Evidence from Ukraine

This study examines the impact of an online tutoring program for Ukrainian students between early 2023 and mid-2024. The program provides three hours of weekly math and Ukrainian language tutoring in small groups over six weeks and uses academic and psychosocial tools to address student challenges. Results show significant improvements in math and Ukrainian language scores, equivalent to 2 to 2.5 years of learning, and a reduction in stress levels. The program improves peer support, fosters positive learning attitudes, and helps students develop social-emotional skills, contributing to improved learning and mental health. The benefit-cost ratios show that benefits of the program outweigh the costs.

Lelys Dinarte-Diaz, Development Economics - Poverty, Inequality, & Human Development, World Bank
James Gresham, Education – Middle East and North Africa, World Bank
Renata Lemos, Education – Europe and Central Asia, World Bank
Harry A. Patrinos, University of Arkansas
Rony Rodriguez-Ramirez, Harvard University

Understanding Central Asian Labor Migration amid Regional Instability

This paper examines how regional instability related to the invasion of Ukraine reshaped migration patterns from the Kyrgyz Republic to Russia. It finds that male migration declined due to fears of military mobilization and rising anti-immigrant sentiments, while female migration increased, likely due to rising labor demand in Russia and household-level substitution effects. The composition of migrants also shifted, with new migrants filling labor shortages as those with stronger ties to Russia reduced their engagement. These results highlight the interplay between geopolitical risks, labor market dynamics, and migration systems in times of crisis.

The authors:
Laurent Loic Yves Bossavie, Social Protection & Labor - Europe and Central Asia, World Bank
Caglar Ozden, Middle East and North Africa Chief Economist’s Office, World Bank
Britta Rude, Social Protection & Labor - Europe and Central Asia, World Bank
Ling Zhou, Shanghai University of Finance and Economics

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The Financial Premium and Real Cost of Bureaucrats in Businesses

This paper characterizes credit allocation distortions in capital markets across state and private-owned enterprises, by implementing Whited and Zhao (2021)’s methodology on a novel firm-level database from 2010-2016. It reveals that state-owned enterprises (SOEs) get subsidized access to debt and equity compared to private firms in the same country and narrow industry but cautions that eliminating SOEs could harm overall productivity due to their technical efficiency. However, targeted reforms that only shut down poor performing SOEs could boost total factor productivity by up to 15% in every country studied.

The authors:
Ana Paula Cusolito, Europe and Central Asia Chief Economist's Office, World Bank
Roberto N. Fattal-Jaef, DECRG - Macroeconomics & Growth, World Bank
Fausto Patino Pena, Macroeconomics, Trade and Investment Global Practice - Latin America and Caribbean, World Bank
Akshat V. Singh, International Monetary Fund

Motivating Improved Healthcare Using Holistic Patient Contracts

The implicit contract in most primary healthcare provision has been the responsiveness of providers to signals of ill-health by patients. However, optimal care requires accurate identification of health issues, either by the patient or through effective screening by physicians. This paper examines the impacts of physicians and patients writing an explicit contract for more holistic primary care moving away from episodic curative care. The results show changes in physician activities towards greater screening, diagnosis and treatment of underlying health issues. For mild-risk patients, the authors observe reductions in overall mortality of a third.

The authors:
Kevin Croke, Harvard T.H. Chan School of Public Health
Benjamin Daniels, Georgetown University
Robert Lipinski, Development Impact Evaluation Unit, World Bank
Daniel Rogger, Development Impact Evaluation Unit, World Bank

Know Thy Foe: Information and Air Pollution in Tbilisi

This study investigates the impact of information provision on household behavior in connection with indoor and outdoor air pollution in Tbilisi, Georgia. The findings show that while the pamphlet with general information alone did not lead to behavioral change, daily text messages significantly enhanced knowledge about pollution, led to increased avoidance behaviors, and improved health outcomes. The study also found that indoor air pollution is usually worse than outdoor, and that how people behave significantly affects pollution infiltration rates.

The authors:
Sandra Baquie, Middle East and North Africa - Poverty and Equity, World Bank
Patrick Behrer, DEC - Sustainability & Infrastructure, World Bank
Xinming Du, The National University of Singapore
Alan Fuchs, Middle East and North Africa - Poverty and Equity, World Bank
Natsuko K. Nozaki, Europe and Central Asia - Poverty and Equity, World Bank

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The Effects of Subsidizing Social Security Contributions: Job Creation or Formalization?

This paper evaluates the impact of an employment subsidy scheme covering employers’ social contribution costs on registered employment in small firms in Turkey. It utilizes a rich, firm-level administrative data set with monthly frequency, which allows for closely following the dynamics of registered employment in firms before and after the implementation of the subsidy. The empirical approach utilizes the geographically targeted implementation of the subsidy to estimate its effects using a difference-in-difference specification. The paper finds that the subsidy scheme had a sizable and positive impact on registered employment in small firms. The results are robust across specifications and to the choice of the control group. Positive effects on formal employment are also fairly constant and sustained over time. Corroborative evidence suggests that the positive effects on registered employment are mainly driven by the formalization of existing workers as opposed to new job creation. Therefore, the results indicate that social security contribution subsidies in small firms can be effective in reducing informality in contexts where informal employment remains common.

Authors:
Gunes A. Asik, TOBB University of Economics and Technology
Laurent Bossavie, Social Protection & Jobs Global Practice, ECA
Jochen Kluve, KFW Development Bank, IZA, Humboldt University
Efsan Nas-Ozen, Social Protection & Jobs Global Practice, ECA
Metin Nebiler, Poverty & Equity Global Practice, ECA
Ana Maria Oviedo, Poverty & Equity Global Practice, AFR

Firm Heterogeneity and the Impact of Payroll Taxes

This paper studies the impact of a large payroll tax cut for older workers in Hungary. Motivated by the predictions of a standard equilibrium job search model, the paper examines the heterogeneous impact of the policy. Employment increases most at low-productivity firms offering low-wage jobs, which tend to hire from unemployment, while the effects are more muted for high-productivity firms offering high-wage jobs. At the same time, wages only increase at high-productivity firms. These results point to important heterogeneity in the incidence of payroll tax cuts across firms and highlight that payroll taxes have a significant impact on the composition of jobs in the labor market.

Authors:
Anikó Biró, Centre for Economic and Regional Studies
Réka Branyiczki, Central European University and Tárki
Attila Lindner, University College London
Lili Márk, Central European University
Dániel Prinz, Health, Nutrition & Population, ECA

Capacity Building as a Route to Export Market Expansion: A Six-Country Experiment in the Western Balkans

The limited market size of many small emerging economies is a key constraint to the growth of innovative small and medium enterprises. Exporting offers a potential solution, but firms may struggle to locate and appeal to foreign buyers. A six-country randomized experiment was conducted with 225 firms in the Western Balkans to test the effectiveness of 30 hours of live group-based training and 5 hours of one-on-one remote consulting in overcoming these constraints. Treated firms used techniques such as search engine optimization and improved Facebook content to increase their digital presence and better reach foreign customers. A year later, positive and significant impacts are found on the number of customers, and a significant intensive margin increase in export sales. Qualitative interviews suggest this improvement came from a combination of sector-specific advice on market expansion, and through an encouragement effect which gave entrepreneurs the confidence to try new sales strategies.

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Authors:
Ana Paula Cusolito, Finance, Competitiveness and Innovation Global Practice, Markets, Competition & Technology Unit
Ornella Darova, University of Pennsylvania
David McKenzie, Development Economics Research Group

Corporate Responses to Size-Based Tax Rates in Lithuania

This paper studies how firms respond to differential, size-based tax rates using administrative tax data in Lithuania. Exploiting a notch in the tax schedule faced by corporations, it documents strong behavioral responses to tax incentives— revenue elasticity is estimated at 0.35 and cost elasticity at −1.3, implying a large total profit elasticity of 7.4. It then leverages the panel structure of the data to provide insights on the dynamic effects of these tax incentives. Firms located close to but below the notch report systematically lower revenue growth in the short term, but the effects dissipate over time.

Authors:
Thiago Scot, Development Impact Evaluation
Pablo Garriga, Latin America and the Caribbean Chief Economist Office