Joint blog post with Gustavo Crespi
The relationship between innovation and employment has never been an easy one. For a long time innovation was seen as a potential threat to employment and economists got to the point of defining technological unemployment as a disease. The argument was that technological change could create unemployment through the substitution of capital for labor. The discussion has then evolved over time to take into account how different types of innovation under different market conditions may imply different effects on employment and employment composition. For instance, process innovation can induce a substitution of capital for labor, but can also result in higher productivity, lower prices, and higher demand, which will eventually create new jobs for displaced workers (the well-known compensation effects). So, the final effects of innovation on employment depend on the balance between substitution and compensation effects.
Few weeks ago a couple of articles by The Economist (“Coming to an office near you” and “The onrushing wave”) revamped the debate on how much employees should be concerned about new technologies pushing them out of their jobs. Although acknowledging that in the long run innovation still seems beneficial both in terms of quantity and quality of jobs, the articles report the opinion of economists (including Larry Summers), who believe that nowadays technical change is increasingly taking the form of
and that we may be facing a temporary phase of maladjustment to the productivity gains induced by the recent high paced sequence of technological changes.
Is innovation a threat to employment in Latin America? Read more…
I came across an astonishing mind blowing number in my commute to work the other day, while listening to Owen Barder (@owenbarder) interview with Michael Clemens (@m_clem) on this Development Drums podcast (highly recommended -end of infomercial).
The number? 60 percent.
Sixty percent of the difference between the income of a person in a developed country and a person in a developing country that can be explained by one thing: the country you live in. Think about that for one minute. Your standard of living is basically determined by where you were born. Not your education, your job, your parents, not your school, your friends, not your health or how hard you work. No. It’s your luck of being born in the right place that determines how well off you are in comparison with other people on this beautiful planet.
So, where does this number come from? Read more…
*By German Sturzenegger y Gastón Gertner
How random selection of beneficiaries can promote transparency
A few months ago, together with a team of IDB Specialists and government officials from Bolivia’s Ministry of Environment & Water (MMAYA), we arrived to Sica Sica, a municipality located in La Paz Department, to supervise a random selection of communities through a public draw. The “lottery” would select 12 of 25 eligible communities in the municipality that would benefit from a water and sanitation program (BO-L1065) funded by IDB and the Spanish Cooperation Fund.
The municipality of Sica Sica, located half-way between the cities of La Paz and Oruro, was the first of twentyone muncipalitites in which a random selection methodology would be applied. Read more…
Much of the education economics literature focuses on how combinations of inputs, incentives and institutional structures result in better education results, in human capital accumulation and, in the longer term, in higher wages and economic growth. In this literature, less attention has been given to external factors, such as the availability of safe drinking water, personal safety or reliable electricity.
A recent paper for Brazil aims to close that gap, looking at the “relationship between access to tap water and schooling achievement which has not been done so far”. The authors (Julia Alexa Barde y Juliana Walkiewitcz from the University of Freiburg) focus on whether a child (fourth graders with an average 10.8 years of age) has access to tap water at home at the time when the Brazilian national standardized tests were administered between 1999 and 2005. The study used data from the Sistema Nacional de Avaliação da Educação Básica, the national education evaluation program implemented every two years by the Brazilian Ministry of Education in that period (in 2007 the question on water access was dropped)
The authors find that the effect of piped water on test scores is significant (explains 11 percent of the standard deviation of test scores) and this effect increases with the level of education of the mother, particularly for families with lower incomes. Read more…
In a recent and very interesting article, William Easterly tried to put an end to his debate with Jeffrey Sachs’ claim that aid would end poverty as exemplified in the Millennium Villages project in Africa, where the hypothesis is that all problems of poverty have discrete technological fixes (for example, bed nets to deter malaria-spreading mosquitoes).
We now know two things: (1) In spite of technical fixes to specific problems, poverty persists in the Millennium Villages and; (2) Notwithstanding, we cannot judge the success or failure of the Millennium Villages without a proper evaluation. Since these multi-faceted interventions were not set-up with rigorous evaluations, there is no estimation of the counterfactual or how the fixes can be measured against what would have happened in the intervention’s absence. Read more…