Nandini Krishnan

Soft skills or hard cash? : the impact of training and wage subsidy programs on female youth employment in Jordan

Throughout the Middle East, unemployment rates of educated youth have been persistently high and female labor force participation, low. This paper studies the impact of a randomized experiment in Jordan designed to assist female community college graduates find employment. One randomly chosen group of graduates was given a voucher that would pay an employer a subsidy equivalent to the minimum wage for up to 6 months if they hired the graduate; a second group was invited to attend 45 hours of employability skills training designed to provide them with the soft skills employers say graduates often lack; a third group was offered both interventions; and the fourth group forms the control group. The analysis finds that the job voucher led to a 40 percentage point increase in employment in the short-run, but that most of this employment is not formal, and that the average effect is much smaller and no longer statistically significant 4 months after the voucher period has ended. The voucher does appear to have persistent impacts outside the capital, where it almost doubles the employment rate of graduates, but this appears likely to largely reflect displacement effects. Soft-skills training has no average impact on employment, although again there is a weakly significant impact outside the capital. The authors elicit the expectations of academics and development professionals to demonstrate that these findings are novel and unexpected. The results suggest that wage subsidies can help increase employment in the short term, but are not a panacea for the problems of high urban female youth unemployment.

Do Wage Subsidies Provide a Stepping-Stone to Employment for Recent College Graduates? Evidence from a Randomized Experiment in Jordan

This study examines the impact of a randomized experiment in Jordan in which female community college graduates were assigned to receive a wage subsidy voucher. The wage voucher led to a 38 percentage point increase in employment in the short run, but the average effect is much smaller and no longer statistically significant after the voucher period has expired. The extra job experience gained as a result of the wage subsidy does not provide a stepping-stone to new jobs for these recent graduates, which appears to be due to productivity levels not rising above a binding minimum wage.

Estimating the welfare costs of reforming the Iraq public distribution system : a mixed demand approach

The Iraqi Public Distribution System is the largest universal, in-kind subsidy system in the world. In 2012, the Public Distribution System transfers accounted for as much as 30 percent of incomes of the poorest 10 percent of the Iraqi population and provided 70 percent of the calories of the poorest 40 percent. In effect, the Public Distribution System remains the only safety net program that covers all the poor and vulnerable in the country. Yet, it is a very inefficient and expensive means to deliver transfers to the poor and creates distortions in the economy as well as an unsustainable fiscal burden. The fiscal crisis since mid-2014 has put reform of the Public Distribution System back on the agenda. This paper employs a mixed demand approach to analyze the consumption patterns of Iraqi households and quantify the welfare impact of a potential reform of the Public Distribution System in urban areas. The results show that household consumption of Public Distribution System items is relatively inelastic to changes in price. Consumption is more inelastic for the poorest quintiles and, for much of the population, these goods are not inferior, but rather normal goods. Cross-sectional comparisons suggest that with improvements in welfare levels, and with well-functioning markets, some segments of the population are substituting away from the Public Distribution System and increasing their consumption of market substitutes. The removal of all subsidies will require compensating poor households by 74.4 percent of their expenditures compared with nearly 40 percent for the richest households in urban areas.

Estimating the Welfare Costs of Reforming the Iraq Public Distribution System

Iraq’s public distribution system (PDS) is the only universal non-contributory social transfer system in the world. Through three decades of conflict and fragility, food rations delivered through the PDS have remained the single largest safety net among Iraq’s population. Reforming the PDS continues to be politically challenging, notwithstanding its heavy dependence on imports and associated economic distortions as well as an unsustainable fiscal burden. The fiscal crisis since mid-2014 has, however, put PDS reform back on the agenda. In this context, this paper employs a mixed demand approach to analyse consumption patterns in Iraqi households and quantify the welfare impact of a potential reform of the PDS in urban areas. The results of the ex ante simulations show that household consumption of PDS items is relatively inelastic to changes in price, particularly among the poorest quintiles, and that these goods are normal goods. Cross-sectional comparisons suggest that, with improvements in welfare, and with well-functioning markets, some segments of the population are substituting away from the PDS and increasing their consumption of market substitutes. Overall, the results suggest that any one-shot reform will have adverse and sizeable welfare impacts. The removal of all subsidies in urban areas will require compensating poor households by 74 per cent of their expenditures and the richest households by nearly 40 per cent to keep welfare constant. However, a targeted removal of the top 4 deciles from PDS eligibility in urban areas will leave poverty rates unaffected and generate cost savings, but will need to be carefully communicated and managed to counter public discontent.

Losing the Gains of the Past: The Welfare and Distributional Impacts of the Twin Crises in Iraq 2014

Iraq was plunged into two simultaneous crises in the second half of 2014, one driven by a sharp decline in oil prices, the other, by the war against the Islamic State in Iraq and Syria. The severity and recurrent nature of these crises demand a fast understanding and quantification of their welfare impact, which is critical for policy makers. This paper employs an innovative extension of the micro-simulation methodology to provide an ex ante estimate and analysis of the complex and dynamic poverty and distributional impact of the twin crises. The results show an almost complete erosion of the welfare gains of the past, with poverty falling back to 2007 levels and a 20 percent increase in the number of the poor. While the incidence of poverty is higher among internally displaced persons than the rest of the population (except in the Islamic State–affected governorates, where poverty is higher), internally displaced persons make up only a small proportion of Iraqs eight million poor in 2014. The rest comprise of households who already lived below the poverty line, or those who have fallen below the poverty line in the face of the massive economic disruptions the country is facing. The welfare impact of the crises varies widely across space, with the largest increases in poverty headcount rates in Kurdistan and the Islamic State–affected governorates. Yet, the poorest regions in the 2014 crisis scenario are the same as in 2012, the currently Islamic State–affected, and the South, with poverty rates of 40 and 30 percent, respectively. Although the simulated results are not strictly comparable to ex post micro data estimates, because of survey coverage constraints, overall the results are very much in line, particularly in Kurdistan and the South.