Indermit S. Gill

An East Asian renaissance : ideas for economic growth

The region has been transformed by these developments, changing from a set of countries that rapidly integrated with the world to one that is also aggressively exploiting the sources of dynamism that lie within Asia. But countries in East Asia now face the domestic side-effects of rapid growth driven by international integration: congestion, conflict, and corruption. The challenge now is to complement global and regional integration with domestic integration. This requires ensuring vibrant cities that are not only linked to the outside world but also well-integrated domestically, strengthening social cohesion and reducing inequality, and providing clean governments which efficiently reinvest the economic returns that accompany fast growth.

Securing our future in a global economy

In the 1990s Latin America and the Caribbean (LAC) began to resurface from the lost decade of the 1980s after a sustained reform effort by the countries to enhance the role of market forces and increase the regions real and financial integration into the global economy. In spite of this, perceptions of economic insecurity run high in the region. This report assesses the extent, causes, and effects of economic insecurity in LAC and identifies policies and institutions that can help reduce the degree of insecurity faced by workers and households in the region, while allowing them to take advantage of the enhanced economic opportunities brought about by the recent reforms. After stating the facts concerning economic insecurity in Chapter 2, the report then sets out a general analytical framework to help organize the various options available to individuals and governments for dealing with economic insecurity (Chapter 3). With this framework, the remaining chapters focus on measures to deal with risks. First, they suggest the causes of macroeconomic or aggregate volatility and some remedies (Chapter 4). Then this report examines how these risks affect individuals and households, and their responses to economic shocks (Chapter 5). Next the report discusses the risk of becoming unemployed, and the public responses to help workers deal with this risk (Chapter 6). Appropriate social insurance and social protection is considered in the final chapter.

Keeping the Promise of Social Security in Latin America

Nations around the world (both large and small, rich and poor) are engaged in debate over how to reform their social security systems and care for the aged. For many countries this debate requires speculation on hypothetical scenarios, but in Latin America a rich body of experience on social security reform has been accumulating for more than a decade (for Chile, more than two decades). This report, entitled, Keeping the Promise of Social Security in Latin America, takes stock of those reforms, evaluates their successes and failures, and considers the lessons that can be drawn for the future of pension policy in the region. The authors draw on a series of background papers and surveys commissioned specifically for this inquiry, as well as existing research conducted by themselves and other pension experts. In the debate on pension reform there is no orthodoxy, as reflected in major differences of opinion among leading experts. Despite more than a decade of experience with pension reform in Latin America, although undoubtedly a major step forward, reforms are still works in progress. This report furthers enrich the policy dialogue that is of crucial importance to the future of the region.

Golden Growth : Restoring the Lustre of the European Economic Model

Europes growth will have to be golden in yet another sense. Economic prosperity has brought to Europeans the gift of longer lives, and the continents population has aged a lot over the last five decades. Over the next five, it will age even more by 2060; almost a third of Europeans will be older than 65 years. Europe will have to rebuild its structures to make fuller use of the energies and experience of its more mature populations people in their golden years. These desires and developments already make the European growth model distinct. Keeping to the discipline of the golden rule would make it distinguished. This report shows how Europeans have organized the six principal economic activities trade, finance, enterprise, innovation, labor, and government in unique ways. But policies in parts of Europe do not recognize the imperatives of demographic maturity and clash with growths golden rule. Conforming growth across the continent to Europes ideals and the iron laws of economics will require difficult decisions. This report was written to inform them. Its findings the changes needed to make trade and finance will not be as hard as those to improve enterprise and innovation; these in turn are not as arduous and urgent as the changes needed to restructure labor and government. Its message the remedies are not out of reach for a part of the world that has proven itself both intrepid and inclusive.

Unified Salary Schedule and Student SAT Scores: Adverse Effects of Adverse Selection in the Market for Secondary School Teachers.

Abstract The use of the unified salary schedule for secondary school teachers, where pay is based solely on the years of schooling and teaching experience, results in adverse selection in the market for teachers. Alternative salaries for mathematics and English teachers are compared with teaching salaries. Unlike prior studies of this issue, this paper empirically examines the effects of these salary structures on learning outcomes. Higher alternative (nonteaching) wages for teachers of any subject (mathematics or verbally oriented) result in the relatively able people leaving or staying away from teaching, which in turn adversely affects student performance in these subject areas. It is found, using data for the U.S. between 1985 and 1991, that there is a strong negative effect of the opportunity cost of teaching in a specialty on the performance of students in that area, evidenced by student scores in the SAT quantitative and verbal sections.

The public-private wage gap in Brazil

Recent changes in public employment in Brazil generate costs to workers that leave this sector. In this study we investigate the wage loss that leaving public employees may experience if they were absorbed by the private sector. Using microdata from the Pesquisa Nacional por Amostra de Domicilios of 1995, we calculate the gross and controlled wage gaps between the two sectors. The results show that both wage gaps are relatively high, although significantly lower for the second measure. The latter indicates the presence of important differences in the composition of the labor force between the two sectors. In fact, public employees tend to be on average better educated, older and have longer tenure than the workers in the private sector. Also, the study shows that there is a significant heterogeneity within the public sector: the wage gap is higher for federal public employees, decreasing for the state and municipal levels. As mudancas que vem ocorrendo no emprego publico no Brasil acarretam diversos custos para os trabalhadores que saem desse setor. Neste trabalho investigamos a magnitude da perda salarial que os trabalhadores realocados do setor publico para o privado podem experimentar. Utilizando os microdados da Pesquisa Nacional por Amostra de Domicilios (PNAD) de 1995, calculamos os hiatos salariais bruto e controlado entre esses setores. Os resultados obtidos mostram que esses hiatos salariais sao relativamente altos, embora significativamente menores quando utilizamos a segunda medida. Essa ultima constatacao indica a existencia de diferencas na composicao da forca de trabalho entre os dois setores. De fato, os trabalhadores empregados no setor publico tendem a ser em media mais escolarizados, mais velhos e possuir maior tempo de experiencia no trabalho do que os trabalhadores empregados no setor privado. Outra constatacao importante e a presenca de uma significativa heterogeneidade dentro do setor publico: o hiato salarial e maior para os empregados na esfera federal, decrescendo para os niveis estadual e municipal.

Crafting Labor Policy : Techniques and Lessons from Latin America

Nothing impacts the welfare of individuals and households more directly than employment and earnings opportunities. In developing countries, labor market reform is a crucial component for the success of overall economic policy reforms. Despite success in other areas of economic reform over the past ten years, Argentina, Brazil, and Chile continue to face significant labor policy issues. To reduce the rhetoric around the issues - in Argentina, a high level of unemployment exists; in Brazil, the high costs of public employment have created large government deficits and public debt; and in Chile, there is a growing income inequality and uncertainty of employment - the book uses a systematically quantitative approach. The value of the quantitative methods in analysis is that they can provide frameworks to better understand the effects of various policy actions. The results can then be translated into benefits and costs that policy makers can more easily explain to their constituents. The policy recommendations resulting from the issues analyzed in Crafting Labor Policy: Techniques and Lessons from Latin America may be beneficial to other developing countries enacting labor market reforms.

Constraints and innovation in reforming national training systems – Cross‐country comparisons

This article traces the experience of countries reforming their vocational education and training policies and summarizes the lessons learned. It is based on a recent joint World Bank‐ILO study focussing on the obstacles to implementing change in vocational education and training systems in response to changing labor markets and innovative approaches to overcoming these constraints in 19 countries worldwide. It tracks the demand‐side pressures and supply‐side responses and highlights some critical issues, constraints and innovations in the reform of these systems. The main messages from this study are: matching instrument to target group is as important as picking the best delivery mode; the government’s role in facilitating the provision of information about vocational education and training has been relatively neglected; a vigorous private response has refuted claims of the reluctance of private providers to enter the field; and political will, not institutional capacity, is the main obstacle to comprehensive reform.

Full employment: a distant dream for Europe

Today, Europe is a continent of low participation, low employment labor markets. Many observers would like to blame poor employment outcomes on the Euro or on austerity. But these are dangerous distractions from real problems that constitute imperatives for structural reform. There are differences across countries, but there is a “European model” of work: almost every European economy has more stringent employment protection and more generous social benefits than peers in North America, Oceania, and East Asia. This has led to low labor force participation and high unemployment, especially among young Europeans. Layered on top of these weak labor markets is the rapid onset of aging; if policies are not changed, Europe will lose about a million workers every year for the next five decades, especially in the 2030s. In short, Europe has to increase both the demand for and supply of labor. To do so, Europeans have to begin viewing competition as a necessary good, not an unnecessary evil. Restructuring unemployment and pension benefits will help to increase participation and reverse the decline of the workforce, but policies that promote competition for jobs and mobility of job-seekers are needed to increase the demand for labor. To get to full employment, Europe has to alter the employment protection laws that give too much power to those with jobs while marginalizing others to the fringes of the economy. Europeans will have to reduce and restructure the generous social benefits that simultaneously discourage young people from searching seriously for work and encourage older workers to quit work too early. Europeans will have to view mobility of workers as a prerequisite of European integration, not just a possible consequence of it. If all this is augmented by reforms to reduce public debt, encourage enterprise and innovation, and stabilize finance, Europe will have a vibrant economy, with high participation and full employment.Jel codesI38 - Government Policy; Provision and Effects of Welfare Programs, J08 - Labor Economics Policies, J21 - Labor Force and Employment, Size, and Structure, J24 - Human Capital; Skills; Occupational Choice; Labor Productivity, J32 - Nonwage Labor Costs and Benefits; Private Pensions, J42 - Monopsony; Segmented Labor Markets

At the frontlines of development : reflections from the World Bank

At the Frontlines of Development former World Bank country directors recount their experiences, both as managers of the World Banks programs in global economic hotspots of the 1990s as well as throughout their careers in development economics. These essays detail, among many stories of development in the 1990s, how China and India lifted hundreds of millions out of poverty, while Russia collapsed; how Bosnia and Herzegovina and Mozambique remade their war-ravaged economies; and how Thailand, Turkey, and Argentina fell into financial crisis. These remarkable stories, told in first-person by the country directors who were there to witness them, provide candid assessments of development in the 1990s-what succeeded, what failed, and what lessons emerged.