Labor Market Flexibility and Jobs in Selected African Countries

Africa enjoyed relatively fast economic growth over the past decade and a half. The sustained growth undoubtedly kindled hopes for a prosperous Africa. However, poverty and inequality remained pervasive. In 2013, poverty was still widespread, and the rate was high in Sub-Saharan Africa-41 percent, compared with the world average of just 10.7 percent and the South Asia average of 15 percent. While the intensity of poverty, measured by the poverty gap, declined from 26 percent to 16 percent during the same period, it is still high compared with the world average of 3.2 percent. Moreover, the benefits of growth were not shared widely, and inequality was widespread and persistent. The median Gini coefficient measuring inequality in Africa was 0.36 in 2014, and 7 percent of total income goes to the bottom 20 percent of the income distribution.

The Cost of Inaction: Obstacles and Lost Jobs in Africa

Africa has no shortage of labor supply. But it lacks high-productivity job opportunities in high- productivity nonagricultural sectors. Its relatively rapid and sustained economic growth over the past decade did not yield enough jobs for the growing wave of jobs seekers-mainly youth in urban areas. Nonagricultural employment continues to be dominated by the informal sector, where wages are low, benefits nonexistent, workplace safety absent, and labor exploitation common. With significant demographic change expected to bring pressure on African labor markets, the urgency of creating high-quality and remunerative jobs at a much faster pace is not only an economic issue but a political and social one. This report investigates the extent to which failure to remove business constraints hinders actual and potential job growth. In particular, using World Bank Enterprise Survey (ES) panel data, the report quantifies the number of actual jobs lost due to the impact of business obstacles on firm survival and employment growth.

Human Capital, Productivity, and Structural Transformation

This paper revisits the role of investment in human capital in closing the productivity gap, boosting labor productivity growth, speeding the rate of structural transformation, and ultimately creating high-quality jobs in Africa. Analysis of detailed sector-level historical data on employment, value added, and human capital shows that investment in human capital is significantly and positively associated with the rate at which countries close the labor productivity gap between agriculture and the rest of the economy. Investment in human capital also significantly increases labor productivity within sectors and the speed at which labor is reallocated from low-productivity to high-productivity employment. In line with other research on this topic, the findings from this study underscore that Africa is ready to benefit significantly from improving human capital through investments in education, health care, and nutrition.

Does Inflation Kill? Food Price Inflation and Child Survival

Since the dawn of the new millennium, significant stride has been made in terms of reducing under-five mortality. While advances in medicine, such as vaccination, considerably reduced communicable diseases, many countries in African, Latin American and elsewhere in the less-developed world continue to grapple with food price hikes that cause hunger and food shortages. The impacts of such food price hikes during the critical periods of early life-the period between inception and the first 1,000 days after birth-on child survival has not been well understood. Using a uniquely constructed data from Ethiopia that combines the Demographic and Health Survey and high-frequency (monthly) food retail prices over 10 years period, we examine the impacts of in-utero exposure to food price inflation on child survival. Follow survival events since inception, we estimate the causal impacts of exposure to malnutrition during each month of early life. The results show that exposure to 10% increase in month-on-month staple food price inflation during in-utero increases childhood mortality by up to 0.03%. Our analysis also uncovers substantial heterogeneity in the effects of early life malnutrition on child mortality depending on specific month of exposure.

Dubai's Economic Transformation: Lessons for Some African Countries

In this paper, we review Dubai’s unique economic transformation model, which has been driven by bold government interventions in globally competitive markets. We highlight diversification strategies and policies that Dubai implemented throughout its transformation. We discuss the respective roles of leadership, governance structure, the public sector, and the business environment and regulations, which were instrumental in rapidly transforming the economy. Finally, with some caveats, we provide some policy lessons for African countries.

Women Self-Selection out of the Credit Market in Africa

Women are disproportionately disadvantaged in access to finance in Africa. While supply-side detriments, such as high interest rates and collateral requirements, are well documented in the literature, little is understood about how demand-side factors contribute to the observed gender gap in access to finance. This paper provides the first empirical evidence on how women managers’ perception about their creditworthiness contributes to the large gender gap in Africa, particularly in the Northern region. One of the innovations of the paper is introducing a theoretical model using the credit market framework with imperfect and asymmetric information to explain what may drive loan applicants to self-select. We use firm-level data for 47 African countries from the World Bank Enterprise Survey. We find that women entrepreneurs in Africa, in general, and in North Africa, in particular, are more likely to self-select themselves out of the credit market due to low perceived creditworthiness compared to their men counterparts. The results also suggest that the observed self-selection behavior is not a response mechanism to current discriminatory lending practices by the banks. The results are robust to different empirical specifications. The findings will inform policies towards greater financial inclusion of women in the region.

An Empirical Analysis of Health Shocks and Informal Risk Sharing Networks

This paper investigates informal risk sharing against health shocks in the presence of multiple risk sharing networks. We use a panel household survey data from rural Ethiopia that covers the period 1994–2004. We find that neither short-term nor long-term health shocks are insured through transfers from networks such as friends, neighbors, and members of informal associations. However, networks related along bloodline such as extended family members provide assistance when health shocks are long-term such as disabilities. The results show that these networks strategically complement planned component of their transfers which are made on a regular basis such as remittance, entitlement, or chop money (small cash sums for household expenses). Moreover, we find significant history dependence in transfers from not only genetically distant networks but also extended family members as well as formal institutions, which seems to discourage dependency. Finally, the findings suggest significant heterogeneity in transfers.

Transforming Africa’s Agriculture through Agro-Industrialization

Economic growth in Africa has been accelerating for the past two decades. The continent enjoyed sustained economic growth registering an annual average growth of more than 5 percent….

Africa’s Agricultural Transformation:Identifying Priority Areas and Overcoming Challenges

Africa has achieved unprecedented economic growth over the past two decades and is experiencing its longest period of sustained economic growth since the 1960s. The growth rate has not only accelerated, but also spread geographically…

Sequential therapies and the cost-effectiveness of treating metastatic colon cancer patients

BACKGROUND–Technological advances in colon cancer treatment have significantly increased survival outcomes among metastatic patients. With different chemotherapy and biologic regimens administered in first, second, and subsequent lines of treatments, costs and survival outcomes vary considerably. However, there is little evidence on how the type of regime administered in the first line of treatment affects the costs and survival outcomes of the second line of treatment. OBJECTIVE–To examine how the cost-effectiveness of second-line treatment for elderly metastatic colon cancer patients varies by the type of regimen administered in the first line of treatment. METHODS–The Surveillance, Epidemiology and End Results (SEER) cancer registry was used, which is linked with the Medicare claims database, to study elderly metastatic patients diagnosed between 2003 and 2009. Average survivals are estimated using the robust nonparametric Kaplan-Meier method. Selection bias was adjusted for using inverse probability weighting and censoring using robust nonparametric methods of estimating the average of total health care costs. RESULTS–Mean incremental survival was 6.7 months (95% CI = 5.7-7.7) for patients who received second-line treatment compared with those receiving only first-line treatment. However, the mean incremental survival varied between 4 months (95% CI = 0.0-7.3) and 9 months (95% CI = 6.5-11.0) depending on whether fluorouracil with or without leucovorin, irinotecan, oxaliplatin, or other agents were administered in first-line treatment. The mean incremental cost associated with receipt of second-line treatment was $60,231 (95% CI = 52,461-64,198) but ranged between $55,368 (95% CI = $48,294-$61,290) and $71,211 (95% CI = $43,168-$99,667), depending on the type of regimen administered in the first-line treatment. Combining survival benefits and costs, the incremental cost-effectiveness ratios per life-year gained associated with the receipt of second-line treatment were $97,368 (95% CI = $80,415-$117,965), $110,621 (95% CI = $89,560-$133,961), $130,689 (95% CI = $101,459-$171,918), and $247,951 (95% CI = $112,629- $808,976) when irinotican, fluorouracil/leucovorin, oxaliplatin, and “other” combinations were, respectively, administered in first-line treatment. In addition, the results varied depending on which statistical method was used. CONCLUSIONS–When therapies are administered in a sequential manner, the cost-effectiveness of the second line of therapy depends on what was administered in the first line of therapy.

Community-Based Health Insurance and Out-of-Pocket Healthcare Spending in Africa--Evidence from Rwanda

In the absence of third party and prepayment systems such as health insurance and tax-based healthcare financing, households in many low-income countries are exposed to the financial risks of paying large medical bills from out-of-pocket. In recent years, community based health insurance schemes have become popular alternatives to fill such void in the healthcare financing systems. This paper investigates the impact of these schemes on out-of-pocket spending based on three rounds of nationally representative data from Rwanda. We estimate an Extended Two-Part Model to address endogeniety in insurance enrollment and censoring in healthcare expenditure data. We find that community based health insurance program has non-linear and mixed impacts on out-of-pocket expenditure. While the program significantly increases the probability of overall spending, it decreases the amount of per capita spending on healthcare. The program also significantly reduces spending on drug but increases outpatient spending with no detectable impact on inpatient services. Furthermore, we find notable heterogeneity in treatment effects in which households in the top income distribution realize the highest reduction in out-of-pocket spending.

Evaluating Endogenous Program Interventions with Heterogeneous Treatment Intensity using Bayesian Potential Outcomes Approach

In this paper, we implement a Bayesian potential outcomes model to evaluate the impact of program interventions using non-randomized data. The approach jointly addresses selection bias in program placement, heterogeneous treatment intensity among the treated, and heterogeneity in treatment effects. Using data from a non-randomized household survey, we evaluate the impact of Ethiopia’s Health Extension Program on fertility and child mortality outcomes. We find that there is significant selection bias in both program placement and intensity of exposure to the program among the treated. On average, the program has significant impact on reducing fertility and child mortality. However, there is notable heterogeneity in the treatment effects ranging from negative impacts for some individuals to positive impacts for the majority in the sample. We recover individual-level treatment effects and present the distributions graphically.

Rising food prices and household welfare in Ethiopia: Evidence from micro data

The Ethiopian economy has witnessed a double-digit rate of inflation since 2003, culminating at 53% in June 2008. Particularly the significant rise in the relative prices of grain and other foodstuff such as sugar, edible oil and other necessities in recent period are very worrisome. Evidently such large changes in both absolute and relative prices in a space of few years can undermine the rebound in per capita incomes in the last decade and the poverty reduction effort of the government. The gravity of the problem has been well understood by policy makers, and efforts are underway to cushion vulnerable households from the consequences of the price surge. The potential role of such interventions can only be known if welfare effects of rising prices are understood. In addition, better measures of the key parameters that drive the demand for grain and other goods is a useful input to the analysis of the causes of relative price changes in Ethiopia.

Impact evaluation of the Ethiopian Health Services Extension Programme

Ethiopia has launched a pro-poor health services extension programme since 2003 to deliver preventive and basic curative health services to its inhabitants. Despite the massive support and recognition the programme has received, there has not been proper evaluation of its impact. This study has applied propensity score matching and regression adjustment techniques to evaluate the short-term and intermediate-term impacts of the programme on child and maternal health indicators in the programme villages. Empirical data for the study were collected from 3095 households from both programme and non-programme villages in rural Ethiopia. The estimated results indicate that the programme has significantly increased the proportion of children fully and individually vaccinated against tuberculosis, polio, diphtheria-pertussis-tetanus, and measles. The study finds heterogeneity in childhood immunisation coverage as a result of differences in terms of the number of health extension workers, in the quality of health posts and in terms of the educational achievement of mothers across programme villages. The proportions of children and women using insecticide-treated bednets for malaria protection are significantly larger in programme villages than in non-programme villages. The effect on preventive maternal care is rather limited. Whereas women in the programme villages appeared to make their first contact with a skilled health service provider significantly earlier during pregnancy, very little effect is detected on other prenatal and postnatal care services. Moreover, the programme has not reduced the incidence and duration of diarrhoea and cough diseases among under-five children.