Rebekka E. Grun

Jobs for Shared Prosperity : Time for Action in the Middle East and North Africa

Jobs are crucial for individual well-being. They provide a livelihood and, equally important, a sense of dignity. They are also crucial for collective well-being and economic growth. However, the rules and incentives that govern labor markets in Middle East and North Africa (MENA) countries have led to in efficient and inequitable outcomes, both individually and collectively. Several underlying distortions prevent a more productive use of human capital and have led to a widespread sense of unfairness and exclusion, of which the Arab Spring was a powerful expression. The Middle East and North Africa has a large reservoir of untapped human resources, with the worlds highest unemployment rate among youth and the lowest participation of females in the labor force. Desirable jobs, defined as high paying or formal jobs, are few, and private employment is overwhelmingly of low added value. Overall, the regions labor markets can be characterized as being in efficient, inequitable, and locked in low productivity equilibrium.

Household Investment under Violence - The Colombian Case

Households in rural Colombia are confronted with a variety of violent threats: attacks and displacement threats by guerrillas and paramilitaries, gang violence among drug traffickers, and high common delinquency. In this context, households have to adjust their day-to-day decisions, including saving and portfolio choices, in order to be less vulnerable. The authors test the hypothesis that households, when confronted with exogenous violence, reduce their investment and, moreover, shift it from fixed to mobile assets, which would be safer in the case of displacement, and choose the opposite strategy under higher common delinquency associated with property crimes. Empirical evidence from a rich Colombian micro-data set strongly supports the hypothesis. The results shed new light on the economic impact of violence. The immediate reduction in capital stock might be much less severe than more permanent damage via the savings function. This has implications for the appropriate political answer to chronic violence in Colombia as well as in other areas of chronic conflict.

Exit and Save: Migration and Saving Under Violence

This paper examines how households trade off migration and savings when subject to exogenous violence. The authors propose that households under violence decide jointly on migration and saving, because a higher asset-stock is more difficult to carry to a new place. When confronted with exogenous violence, households are expected to consider migration, and reduce their assets, both in order to reduce their exposure to violence, and to make migration easier. In some cases, after a migration decision has been taken, savings can increase as a function of violence to ensure a minimum bundle to carry. Empirical evidence from rich Colombian micro-data supports the conceptual framework for violence that carries a displacement threat, such as guerrilla attacks.