WDR 2013: Jobs (but no migration please)

I went to the UK launch of the WDR this afternoon at the shiny new ODI offices in London. The bottom line is similar to but less poetic than something the Nigerian Central Bank Governor said in Oxford a few months ago:

"If a politician tells you that they are going to create a job, throw them out of the window. Fix the roads, fix the power, fix the security, and the people will create their own jobs."

Or in the report's words "Labor policies matter less than assumed" (as an aside, Kathleen referred a few times to this page (38) as their "tweets" which jarred for some reason - but its a good summary of the arguments).

Stefan Dercon had a great line on the WDR as a valiant attempt to construct a coherent narrative from an incoherent literature. He also pointed out the lack of any political economy analysis. Which leads to the obvious criticism about migration.

I thought I'd wait until I'd actually read the thing before commenting, but yeah, its pretty weak. Here is the WDR explaining "Global patterns of migration":

The decline of transportation costs, the growth of Persian Gulf economies following surges in oil prices, and the entry into world markets of developing countries with large populations have all stimulated a surge of migrant workers worldwide. 

Differences in expected earnings between the country of origin and the country of destination are an important reason for people to migrate. Earnings gains, however, are offset to varying degrees by the direct costs of migration (such as transportation fees and intermediation services) as well as by indirect costs associated with the difficulties of adapting to a different culture and society and leaving family and friends behind. These costs also help explain aggregate migration flows.

As well as those "costs" there's also the whole global apartheid thing, in which a person's right to choose where to live and work is determined by the country of their birth and not by their talents or aspirations. There are 700 million people who would like to permanently move to another country - including over 38% of the population in every sub-Saharan African country surveyed (the WDR does cite the Gallup World Poll, just not this particular finding).

Gabriel Demombynes notes that the 2009 WDR (Economic geography) was much stronger on migration. As from a quick glance was the 1995 WDR (Workers in an integrating world). Perhaps the problem is just fatigue?

Blattman on Cameron and the UN

Well worth a read in full if you haven't already:

This is a big leap for the UN. Cameron is trying to haul them into the 1990s. He’ll get a lot of credit for that. You’ll forgive me, though, for wishing we didn’t live in a world where we’re delighted when our global government is just 20 instead of 40 years behind the times.

I also liked a line that a friend told me on Friday:

But this "golden thread" just isn't really a "thread." It's just a list.

Development success in Bangladesh

in the past 20 years Bangladesh has made extraordinary improvements in almost every indicator of human welfare. The average Bangladeshi can now expect to live four years longer than the average Indian, though Indians are twice as rich. Girls’ education has soared, and the country has hugely reduced the numbers of early deaths of infants, children and mothers. Some of these changes are among the fastest social improvements ever seen. Remarkably, the country has achieved all this even though economic growth, until recently, has been sluggish and income has risen only modestly.

ᔥ The Economist ↬ TH

Bigot of the Year

Britain's most senior Catholic has been named "bigot of the year" by Stonewall for writing that gay relationships are "harmful to the physical, mental and spiritual wellbeing of those involved," that gay marriage is "madness" and a "grotesque subversion" of a human right, and making a bizarre analogy between the introduction of gay marriage and the reintroduction of slavery.

All of which is pretty disgusting, but I'm such a nerd that I'm almost more annoyed when he explicitly uses the word "evidence" when I'm pretty sure there is no such evidence.

All children deserve to begin life with a mother and father; the evidence in favour of the stability and well being which this provides is overwhelming and unequivocal. It cannot be provided by a same-sex couple, however well-intentioned they may be.

Cardinal, that's a step too far. It's also personal - I managed without a father just fine thanks for your concern Cardinal. All children deserve love but the gender of their parents is irrelevant, and that is an evidence-based statement.

Research has shown that the kids of same-sex couples — both adopted and biological kids — fare no worse than the kids of straight couples on mental health, social functioning, school performance and a variety of other life-success measures. 

In a 2010 review of virtually every study on gay parenting, New York University sociologist Judith Stacey and University of Southern California sociologist Tim Biblarz found no differences [my emphasis] between children raised in homes with two heterosexual parents and children raised with lesbian parents.

Is there an award for evidence-abuser of the year?

What Works in Aid to Education

From a new review by Abby Riddell:

many of the lessons of what works in foreign aid to education are known, but they are not implemented. These lessons are of two sorts,  

1: the interface of aid with education systems in recipient countries To make a difference, what is of paramount importance is to start at the level of the whole education sector—rather than to pick out the sub-sector most popular with donors and channel a disproportionate share of funds to make this ‘work’ better, for this distorts a government’s sector-wide planning. [Ed: Girl's Education anyone??]

2: the ‘nuts and bolts’ of education systems themselves—what makes them work, how the different bits fit together and how aid monies can distort priorities, making the government co-ordination efforts more difficult as well as creating fragmented accountability. Add to this the projectized capacity development and the untouched institutional or organizational development, together with any lack of leadership or ownership of the capacity development, and the distorting influence of aid monies likely trumps their contributions.

Poverty in Japan

Noah Smith smacks down Bryan Caplan on the causes of poverty in the US with some simple comparative analysis:

Or perhaps Caplan is just dead wrong. Perhaps his preconceived notions about poverty, developed in self-imposed isolation from the actual phenomenon, are simply not an accurate guide to extant reality. 

As it happens, I have had a fair bit of contact with the Japanese poor. In general, although they do engage in more bad behavior than other Japanese people, they engage in less bad behavior than middle-class people in America. In general, they work very hard, abstain from drugs, don't have children out of wedlock, and obey the law. Every day they get up, slave away diligently and conscientiously for 8 or 10 hours at a mind-numbing menial job at pittance wages, and every night they return to sleep on the floor of tiny bare rabbit-hutch studio apartments barely larger than my bathroom. They were born well-behaving and hard-working and poor, and they will die well-behaving and hard-working and poor. Every day, even as people like Bryan Caplan inadvertently mock their struggles, the Japanese poor make a mockery of Caplan's prejudices and stereotypes. 

If I had never seen the Japanese poor - if my only contact with poverty had been with the American poor, who tend to bully and rob people like myself at alarming rates - then I expect I would find Bryan Caplan's thesis quite reasonable, and even obvious. But that is why, if you want to know what is actually going on in reality, you have to get outside your bubble. 

Cash transfers in Northern Kenya

The BBC have a short clip here of the new DFID Minister Justine Greening visiting the Hunger Safety Net Programme in Northern Kenya, where eligible households are said to get $40 every couple of months via a "Smartcard."



OPM is managing the evaluation of the project: you can see the Year 1 impact report here.

Chart of the day: Returns to education

via Francisco Mejía

Surveys, lions, and suicide bombers

The opening paragraph of the OPM survey manual is fucking cool:

OPM has an ability to carry out surveys in amazing places, ranging from the deserts of Northern Kenya via the mountains of Pakistan to the tiny islands of the Maldives. People deal with the usual challenges of sand, snow, sea sickness, and occasionally with hazards such as lions or suicide bombers.

The impact of remittances on poverty in Nigeria

"the receipt of internal remittances reduces the poverty headcount of households by 11.14% and poverty gap by 9.7% while the receipt of international remittances reduces poverty headcount, poverty gap and squared poverty gap by almost 100%"

From a new working paper by Nnaemeka Chukwuone, Ebele Amaechina, Benjamin Okpukpara, Evelyn Iyoko and Sunday E. Enebeli-Uzor (via the Partnership for Economic Policy).

New media, new work

So Newsweek has announced that it is closing its print edition, a few days after Alan Rusbridger was forced to deny that the Guardian has similar plans. Andrew Sullivan, who blogs at the Newsweek-owned "Daily Beast" reflects

The shift in my own mind has happened gradually. Even up to a year ago, I was still getting my New York Times every morning on paper, wrapped in blue plastic. Piles of them would sit in my blog-cave, read and half-read, skimmed, and noted. 

Until a couple of years ago, I also read physical books on paper, and then shifted to cheaper, easier, lighter tablet versions. Then it became a hassle to get the physical NYT delivered in Provincetown so I tried a summer of reading it on a tablet. I now read almost everything on my iPad. And as I ramble down the aisle of Amtrak's Acela, I see so many reading from tablets or laptops, with the few newspapers and physical magazines seeming almost quaint, like some giant brick of a mobile phone from the 1980s. Almost no one under 30 is reading them. 

I sympathise. I look at the Guardian website almost every day, but I can't remember the last time that I actually bought a paper copy. Sullivan continues

I also began to wonder what a magazine really is. Can it even exist online? It's a form that's only really been around for three centuries - and it was based on a group of people associating with each other under a single editor and bound together with paper and staples. At The New Republic in the 1990s, I knew intuitively that most people read TRB, the Diarist and the Notebook before they dug into a 12,000 word review of a book on medieval Jewish mysticism. But they were all in it together. You couldn't just buy Kinsley's perky column. It came physically attached to Leon Wieseltier's sun-blocking ego. 

But since every page on the web is now as accessible as every other page, how do you connect writers together with paper and staples, instead of having readers pick individual writers or pieces and ignore the rest? And the connection between writers and photographers and editors is what a magazine is. It defines it - and yet that connection is now close to gone. Around 70 percent of Dish readers have this page bookmarked and come to us directly. (If you read us all the time and haven't, please do). You can't sell bundles anymore.

Which is exactly how I read these days. The Guardian website is basically the only "bundled" media I consume. The rest is a personally selected collage wrapped up in my Google Reader account, consisting of all the important economics, development, and Africa bloggers, academics, with a couple of comics (Dilbert, XKCD), and my favourite Guardian and FT weekend columnists thrown in. This is quite a natural progression, given that it is almost (marginally) costless for me to do this. [Warning: Descent into wild conjecture and ill-thought out theory rapidly approaching]. Coase's theory of the firm bases the existence of companies on the role of transaction costs. As transaction costs external to the firm disappear, so does the reason for the firm. Which leads to an atomised media economy, where individuals are firms.

But I still read the Guardian. I suppose that there is a role for organisations to provide the raw news - the unknown unknowns that I don't know I might be interested in, and thus wouldn't search for or subscribe to. Someone who has a culture and values that I think I can trust. 

What does all of this mean, if anything, for the rest of the economy? In my line of work, we already have a similarly atomised economy. Many consultants are independent, and assemble into temporary teams for specific projects, establishing "mini-firms" that come together for a particular task and then disperse. At present the process of assembling these teams is a costly one. Searching for potential team members for very specialised roles and then assessing their quality is time-consuming. These are Coase's transaction costs, and provide a strong case for the existence of consulting firms - transaction costs can be minimized through a centralized process of quality assessment ("recruitment"), which doesn't have to be repeated for every project. This is also why networking is so important. Diamond, Mortensen, and Pissarides won the Economics Nobel Prize in 2010 for developing new models of "frictional" unemployment, driven by this process of search and matching. So this is a costly process with relevance to the wider economy and significant macroeconomic implications. But this large problem also presents a large opportunity. There are big gains to be made from improving this search and matching process. Already some of the biggest firms in the world are ones in the business of search and information sharing. Whether it be through linkedin or some other kind of online database or network - will further reductions in frictional transaction costs lead to further atomisation of the firm? Presumably there is still a role for a "Guardian" - a multi-purpose provider who can tell you about the unknown unknowns - the things that you wouldn't think to search for to begin with, and whose values and culture you can trust. 

Whether any of this makes any sense, and what the implications of this are for youth unemployment, well, you tell me.

What do Africans think about the UN?

There is an interesting paradox here: the people (e.g., Mozambicans) who know least about the UN give it the highest rating, whereas people who seem relatively well informed (e.g., South Africans) have far more mixed opinions.

I'm not sure that paradox is the word they are going for there.... from Afrobarometer. 

The State of the Game between Juba and Khartoum

I continue to be fascinated by the nature of the strategic interaction between Juba and Khartoum, without really pretending to understand it very well. As it turns out, Juba's strategy seems to be push ahead with a Kenya pipeline whilst resuming export through North Sudan in the meantime, to give them an alternative option. So what is Khartoum's optimal response to such a move?

A friend suggests that Khartoum's strategy is to continue to create chaos in Jonglei (South Sudan) in order to disrupt future exploration, knowing that a Kenyan pipeline would not be economically viable without further discoveries.

I thought I'd also email someone who is an actual game theory expert, who makes the interesting point that - a little counter-intuitively - it may actually be in Khartoum's interest to encourage the development of a Kenya pipeline, as a way of credibly committing themselves to continued future cooperation on mutually favourable terms.

Paraphrasing the words of the great philosopher Sting, “If Someone Does Not Trust You, Set Them Free“.

The oil deal

I haven't read any coverage yet, so I've just had a quick skim of the actual agreement (available here, HT: Nicki Kindersley). 

As a reminder, pre-agreement North Sudan wanted to charge half of the value of the oil, or around $36 a barrel. South Sudan wanted to pay $1 a barrel. 

It looks like there is a 

- processing fee - $1.60 per barrel

- transportation fee - $8.40 per barrel for one oilfield and $6.50 for the other

- transit fee - $1 per barrel

so a total of $11 or $9.10

plus a Transitional Financial Arrangement (payoff) of an additional $15 per barrel until a total of $3.028 billion has been paid (at production of 180,000 barrels per day this would take just over 3 years).

So - whilst this seems like a good deal for North Sudan in the short run and a good deal for South Sudan in the long run, my main concern is the hold-up problem. What is stopping North Sudan ripping up the agreement in 3 years, demanding a higher cut, and just confiscating oil (again). Here is Tony Venables from Oxford in a paper on these issues;

Even if the purchaser and investor entered an agreement before the investment is undertaken, ex post the purchaser may act opportunistically, breaking the agreement and only offering a lower price ... 

The hold-up problem between states is radically more severe than that within countries because the whole domain of international law is fragile: essentially, the concept of national sovereignty constitutes a barrier to the enforcement of any contract entered into by states.

Thoughts?