Fabian Bornhorst

Regional Unemployment and its Persistence in Transition Countries

We look at the differences in regional unemployment rates in six major transition countries and their persistence over time. We analyse the role various adjustment mechanisms play. While movement out of the labour force seems to be one consequence in many regions with high relative unemployment, there are also signs of emerging wage flexibility. Employment creation, by contrast, has not picked up in regions of high unemployment. Labour mobility also remains very limited in size although it appears to respond to basic economic incentives. Policies addressing housing market imperfections and information asymmetries are necessary to increase worker mobility and to integrate better national labour markets.

Natural Resource Endowments, Governance, and the Domestic Revenue Effort: Evidence from a Panel of Countries

The recent development literature stresses that countries that receive large revenues from natural resource endowments typically raise less revenue from domestic taxation, and that this creates governance problems because the lower domestic tax effort reduces the incentive for the public scrutiny of government. Our results from a panel of 30 hydrocarbon producing countries indicate that the offset between hydrocarbon revenues and revenues from other domestic sources is about 20 percent but that it is invariant to governance indicators.

Public Capital and Growth

This paper estimates the impact of public capital on economic growth for forty-eight OECD and non-OECD countries during 1960 - 2001. Using the production function and its extensions, it finds a positive - but concave - elasticity of output with respect to public capital, which is robust to changes in time intervals and varying depreciation rates. Furthermore, in non-OECD countries the growth impact of public capital is higher once longer time intervals are considered.

Investing in Growth

Policymakers in developing countries often point to insufficient infrastructure as a constraint on their countries’ growth prospects. But more important than whether a country can expand its public investment in infrastructure is whether it should. Unfortunately, the results of studies on public investment’s impact on growth are unclear, leading many to conclude that it is unproductive. This article revisits this debate and, using estimates of public capital for 48 advanced and developing economies during 1960–2001, finds that public investment generally has a positive impact on growth. Furthermore, the results indicate that advanced economies use public investment more as a demand management tool — to counter the business cycle — than do emerging and developing economies, where it is more likely used to boost long-term growth prospects.

How Good are Ex Ante Program Evaluation Techniques? The Case of School Enrollment in PROGRESA

This paper evaluates a microsimulation technique by comparing the simulated outcome of a program with its actual effect. The ex ante evaluation is carried out for a conditional cash transfer program, where poor households were given money if the children attended school. A model of occupational choice is used to simulate the expected impact of the program. The results suggest that the transfer would indeed increase school attendance and do more so among girls than boys. While the simulated effect tends to be larger than the actual effect, the latter lies within bootstrapped confidence intervals of the simulation.

Natural Resource Endowments, Governance, and the Domestic Revenue Effort

The recent development literature stresses that countries that receive large revenues from natural resource endowments typically raise less revenue from domestic taxation, and that this creates governance problems because the lower domestic tax effort reduces the incentive for the public scrutiny of government. Our results from a panel of 30 hydrocarbon producing countries indicate that the offset between hydrocarbon revenues and revenues from other domestic sources is about 20 percent but that it is invariant to governance indicators.