WorldCat Identities

World Bank Office of the Senior Vice President and Chief Economist, Development Economics

Overview
Works: 102 works in 207 publications in 1 language and 3,258 library holdings
Classifications: HG3881.5.W57, 331.1
Publication Timeline
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Most widely held works by World Bank
Child labor : cause, consequence, and cure, with remarks on international labor standards by Kaushik Basu( Book )

3 editions published in 1998 in English and held by 69 WorldCat member libraries worldwide

Should child labor be banned outright? Should the World Trade Organization be given the responsibility to discourage child labor using trade sanctions? The answer to this complicated problem depends on the economic milieu, says Basu. At least 120 million of the world's children aged 5 to 14 worked full-time in 1995, most of them under hazardous, unhygienic conditions, for more than 10 hours a day. This is an old problem worldwide but particularly so in Third World countries in recent decades. What has changed, with globalization, is our awareness of these child laborers. (The International Labour Organi-sation distinguishes between child work, which could include light household chores and could have some learning value, and child labor, a pejorative phrase.) By bringing together the main theoretical ideas, Basu hopes to encourage both more theoretical research and empirical work with a better theoretical foundation. Among other things, Basu observes that: * The problem is most serious in Africa, where the child-labor participation rate is 26.2 percent. The rate is 12.8 percent in Asia. But since 1950, the trend is a decline in that participation rate worldwide. For most Latin American countries, the decline is notable but less marked than in Asia. In large parts of Africa, including Ethiopia, the problem has been extremely persistent, but even there the trend is downward. * Child labor has not always been considered evil, and there is no consensus on why it began to decline. In some (not all) countries legislative acts declared it illegal, in some there were rules about compulsory education, and increasing prosperity generally made families less likely to experience poverty if their children weren't working. * Mandating compulsory education is regarded as more effective than outlawing child labor, because attendance at school is easier to monitor, but some experts believe economic progress is the answer to the problem. The justification for many interventions is that the state is more concerned about the well-being of children than their parents are; Basu believes such an assumption to be wrong when child labor occurs as a mass phenomenon rather than as isolated abuse. Basu argues that, in some economies, the market for labor may exhibit multiple equilibria, with one equilibrium having low adult wage and a high incidence of child labor and another equilibrium exhibiting high adult wage and no child labor. The model is used to provide a framework for analyzing the role of international labor standards. This paper-a product of the Office of the Senior Vice President, Development Economics-is part of a larger effort in the Bank to promote understanding of the causes of child labor. The study was funded by the Bank's Research Support Budget under the research project Literacy and Child Labor (RPO 683-07). The author may be contacted at kbasu@worldbank.org
Fiscal adjustment and contingent government liabilities : case studies of the Czech Republic and Macedonia by Hana Polackova Brixi( Book )

4 editions published in 1999 in English and held by 69 WorldCat member libraries worldwide

Governments' contingent liabilities increase fiscal vulnerability, but are omitted in traditional measures of the current deficit. In the Czech Republic this omission may mean that fiscal adjustment has been overstated by 3 to 4 percent of annual GDP, with future budgets having to pay for past guarantees. The stock of existing contingent liabilities in Macedonia could add 2 to 4 percent of GDP to that country's future deficits
Household labor supply, unemployment, and minimum wage legislation by Kaushik Basu( Book )

3 editions published in 1999 in English and held by 69 WorldCat member libraries worldwide

February 1999 When-to cover the risk of underemployment-households oversupply labor to a labor market in which demand is down, a minimum wage set below the prevailing market wage can send the market wage down and unemployment up. Unemployment benefits can, by countering some of the risk of unemployment, neutralize the inefficiencies of households' tendency to oversupply labor. The supply behavior of labor often depends on the demand conditions prevailing in the labor market. If demand is inadequate, households may send additional household members, who otherwise would not have worked, to look for work, for fear the main income earner may lose his job. Basu, Genicot, and Stiglitz study the theoretical consequences of this added worker effect. They show that it can give rise to multiple equilibria in the labor market. Surprisingly, a minimum wage law set below the prevailing market wage can cause the market wage to fall and unemployment to rise. Unemployment benefits, by countering some of the risk of unemployment, can neutralize the inefficiences caused by households' tendency to oversupply labor. This paper-a product of the Office of the Senior Vice President, Development Economics-is part of a larger effort in the Bank to understand unemployment and examine alternative labor market policies. Kaushik Basu may be contacted at kbasu@worldbank.org
Should capital flows be regulated? : a look at the issues and policies by Roumeen Islam( Book )

3 editions published in 2000 in English and held by 68 WorldCat member libraries worldwide

What policies can emerging markets use to improve risk management in open, liberalized markets?
How child labor and child schooling interact with adult labor by Ranjan Ray( Book )

3 editions published in 1999 in English and held by 68 WorldCat member libraries worldwide

The link between household poverty and child labor is much stronger in Pakistan than in Peru. Providing good schools in South Asia could help reduce child labor. The link between child labor and adult labor markets varies with gender
Institutions in transition : reliability of rules and economic performance in former socialist countries by Aymo Brunetti( Book )

3 editions published in 1997 in English and held by 65 WorldCat member libraries worldwide

August 1997 The predictability of a transition economy's institutional framework may well influence the amount of foreign direct investment and economic growth the economy can expect. Building reliable institutions that support a market system is widely believed to be critical to a successful economic transition. Brunetti, Kisunko, and Weder present indicators on the predictability of the institutional framework across twenty transition economies--indicators of the predictability of rules, political stability, the security of property rights, the reliability of the judiciary, and the lack of corruption. They then investigate whether these indicators can explain differences in economic performance. The results suggest that the predictability of the institutional framework may indeed explain a large part of differences in foreign direct investment and in economic growth among transition economies. Political stability and secure property rights are particularly important to entrepreneurial confidence in the economy. This paper--a product of the Office of the Chief Economist and Senior Vice President, Development Economics--was produced as a background paper for World Development Report 1997: The Role of the State in a Changing World. The study was funded in part by the Research Support Budget under the research projects Cross-Country Indicators of Institutional Uncertainty (RPO 680-51) and Indicators of Government Quality as Perceived by the Private Sector (RPO 681-52)
Banking reform in transition countries by Stijn Claessens( )

4 editions published in 1996 in English and held by 65 WorldCat member libraries worldwide

August 1996 The institutional capacity of banks in transition economies improves faster when a new or parallel private banking system is allowed to emerge than it does when the government tries simply to reform existing state-owned banks. Banking reform should stress decentralized institution-building and penalties for weak banks. In reforming the financial sector in transition economies, one important debate is about whether governments should try to reform existing state-owned banks -- the rehabilitation approach -- or whether a new private banking system should be allowed to emerge -- a new entry approach. Or should there be a mix of the two approaches, in which the activities of state banks are restricted while a parallel private banking system develops? Claessens's cross-country comparison of banks' institutional development in 25 transition economies suggests that progress can be faster under the new entry approach, especially relative to initial conditions. Progress under the rehabilitation approach appears to be inhibited by poor incentives. In most countries, even those with a good banking infrastructure and a large segment of good banks, a two-track process has evolved, with large and growing differences between weak and strong banks. Whatever the banking reform approach taken, weak banks have moved very little beyond central planning. Regression estimates suggest that in transition economies three things are associated with slow progress of weak banks: overconcentration, preferential treatment by governments, and limited entry for new banks. The direction of causality is often unclear. Policies and structural conditions can affect bank quality, but whenever a banking system has a certain quality, particular policies may also arise or structures exist. The role of banks will remain limited in many transition economies because of weak legal infrastructures, much uncertainty and inside information, and problems associated with highly leveraged financial intermediaries -- including fraud, political interference, and implicit guarantees. In the short run, self-finance and intermediation among enterprises and through nonbank financial institutions may prevail. This paper -- a product of the Office of the Senior Vice President, Development Economics -- was written as a background paper for World Development Report 1996: From Plan to Market
In search of owners lessons of experience with privatization and corporate governance in transition economics by Cheryl Williamson Gray( )

5 editions published in 1996 in English and held by 65 WorldCat member libraries worldwide

April 1996 Although each approach to privatization has its advantages, well-designed voucher privatization may best meet the objectives of feasibility, governance, fairness, and institution-building. Gray reviews the goals of privatization and evaluates various methods used to achieve them in different transition settings. The task is not only to change ownership but to create good corporate governance and to further the development of legal norms and supporting institutions needed in full-fledged market economies. Initial results of privatization programs are only part of the picture. How they foster further evolution of ownership is equally important. Experiments in privatization abound, from extensive efforts at sales to strategic owners (as in Estonia and Hungary), to programs based primarily on insider buyouts (as in Russia and Slovenia), to innovative mass privatization programs involving the creation of large and powerful new financial intermediaries (as in the Czech and Slovak Republics and Poland). Each approach has inherent strengths and risks. But if the objectives are to sever the links between the state and the enterprise, to school the population in market basics, and to foster further ownership change, the initial weight of evidence seems to favor significant reliance on voucher privatization, especially given the difficulty most countries have finding willing cash investors. Formal programs of enterprise privatization are often only a small part of the picture, although they get the most attention. Even where formal privatization has been slow (as in Bulgaria and the Ukraine), a process of asset recombination is occurring, often behind the scenes -- whether a recombination from state to private firms or from some private firms to others. In the Czech Republic, for example, the ownership of enterprise shares by funds and of fund shares by individuals will change through formal and informal trading, but the ownership of enterprise assets may also shift to some extent as owners or managers sell or spin-off assets into new companies. In Russia, this shifting of assets to new, more closely held firms may be quite widespread, as managers with small minority ownership stakes in newly privatized firms try to gain greater control over assets. As one Hungarian observer noted, this is the period of primitive capital accumulation in the post-socialist world. Formal programs may lay important ground rules but uncertainties of every type overwhelm most formal efforts at privatization. The final outcome is far from predictable. This paper -- a product of the Office of the Chief Economist and Senior Vice President, Development Economics -- was produced as a background paper for World Development Report 1996 on transition economies. The author may be contacted at cgray@worldbank.org
Conscription and crime by Sebastián Galiani( Book )

3 editions published in 2006 in English and held by 65 WorldCat member libraries worldwide

The initiation in criminal activities is, typically, a young phenomenon. The study of the determinants of entry into criminal activities should pay attention to major events affecting youth. In many countries, one of these important events is mandatory participation in military service. The objective of this study is to estimate the causal relationship between mandatory participation in military service and crime. The authors exploit the random assignment through a draft lottery of young men to conscription in Argentina to identify this causal effect. Their results suggest that participation in military service increased the likelihood of developing a criminal record in adulthood (in particular, for property and weapon-related crimes)
An international statistical survey of government employment and wages by Salvatore Schiavo-Campo( )

4 editions published in 1997 in English and held by 64 WorldCat member libraries worldwide

August 1997 Detailed statistical and econometric evidence on government employment and pay, both global and regional. This paper complements a separate study in this Series (Government Employment and Pay: A Global and Regional Perspective, Policy Research Working Paper 1771, May 1997) by providing the detailed statistical and econometric evidence on which that separate study is based. Schiavo-Campo, de Tommaso, and Mukherjee briefly summarize the key findings of the earlier paper for the reader's convenience and to permit this paper to stand alone. However, the purpose of the paper is to provide the country-by-country statistics. The reader is referred to the companion paper for a description and analysis of the main findings. This paper-a joint product of the Office of the Chief Economist and Senior Vice President, Development Economics, and Europe and Central Asia, and Middle East and North Africa Technical Department, Public Sector Management and Information Technology Team-was produced as a background paper for World Development Report 1997 on the role of the state in a changing world
The limits and merits of participation by Paulo Vieira da Cunha( )

6 editions published in 1997 in English and held by 63 WorldCat member libraries worldwide

Once a shout from the radical fringe, the call for participation has resurfaced as a dominant voice in development thinking. But the new truth may be flawed. The goal of economic development is to increase growth and eliminate poverty. Recently, the goal has been broadened to include promoting participatory governance. Arguably, participation-for example, in community water committees-produces two desirable outcomes: democratic processes and better-targeted, more efficiently delivered public services. Participation is desirable as an end in itself, as a means of sharing resources, control, and responsibility within the social group. Yet participation is not always related to democracy. Fascism was a participatory, grassroots political movement. Participation is as much a problem as it is a solution, as much a goal as a tool. It is a problem when it is disorderly and if it is assumed to be a substitute for democratic representation. It is a solution when it changes conflict into negotiated losses. Participation can make development assistance more effective, but it works best for groups that are already participatory; for groups that can already help themselves. The recent literature on the effectiveness of foreign aid to developing countries presents an interesting analogy. Most foreign aid is useless. The only part that really helps development is that which follows rather than precedes policy change. Similarly, participation seems to work well only when the institutions of participation are in place before the need they address arises and when the institutions are compatible with the needÕs objectives. These conditions are not easily met. Discussions of participation cannot ignore issues of political power, local power, populism, and representation. They cannot ignore issues of moral pluralism (the variety of ways in which people value their lives) or cultural diversity. They cannot dismiss the ways in which people can be blocked from better lives by the beliefs of their cultures. They cannot avoid the pressure that a dominant group may exert to forge solutions that are morally unacceptable. These problems are not irrelevant or unimportant. Efforts to promote participation would seem strikingly banal were the history of development efforts not replete with failures to achieve participation where it would have made a difference. It has typically been assumed that people, especially poor people, lack the competence to decide for themselves. Similarly, the failures of participation would seem strikingly banal if people, especially those we are interested in, behaved the way we expected them to. But people do not behave as expected. Their interests may not be in the collective interest, and their goals may not coincide with broader social goals. This paper is a product of the Office of the Senior Vice President and Chief Economist, Development Economics
The economics and law of rent control by Kaushik Basu( )

5 editions published in 1998 in English and held by 61 WorldCat member libraries worldwide

What stirs most people against rent control laws in the United States and elsewhere are stories of people who have held apartments for many years and now pay absurdly low rents for them. There are important reasons for removing rent controls, but the shock value of a low rent is not one of them. Basu and Emerson construct a model of second-generation rent control, describing a regime that does not permit rent increases for sitting tenants - or their eviction. When an apartment becomes vacant, however, the landlord is free to negotiate a new contract with a higher rent. They argue that this stylized system is a good (though polar) approximation of rent control regimes that exist in many cities in India, the United States, and elsewhere. Under such a regime, if inflation exists, landlords prefer to rent to tenants who plan to stay only a short time. The authors assume that there are different types of tenants (where type refers to the amount of time tenants stay in an apartment) and that landlords are unable to determine types before they rent to a tenant. Contracts contingent on departure date are forbidden, so a problem of adverse selection arises. Short stayers are harmed by rent control while long-term tenants benefit. In addition, the equilibrium is Pareto inefficient. Basu and Emerson show that when tenant types are determined endogenously (when a tenant decides how long to stay in one place based on market signals) in the presence of rent control, there may be multiple equilibria, with one equilibrium Pareto-dominated by another. In other words, many lifestyle choices are made based on conditions in the rental housing market. One thing rent control may do is decrease the mobility of the labor force, because tenants may choose to remain in a city where they occupy rent-controlled apartments rather than accept a higher-paying job in another city. Basu and Emerson show that abolishing the rent control regime can do two things: shift the equilibrium to a better outcome and result in lower rents, across the board. A version of this paper - a product of the Office of the Senior Vice President and Chief Economist, Development Economics - was presented at an Applied Microeconomics Workshop at Cornell University. Kaushik Basu may be contacted at kbasu@worldbank.org
Wage and pension pressure on the Polish budget by Alain de Crombrugghe( )

4 editions published in 1997 in English and held by 61 WorldCat member libraries worldwide

June 1997 Poland's current economic recovery should create jobs, not raise wages. Ensuring equitable opportunities for all requires moderating the income claims of the best-protected groups- reforming the pension system. After Poland's remarkable stabilization and liberalization in 1990, the economy faced three related problems: high wage and pension claims, a rising number of pensioners and unemployed workers, and a budget crisis, especially in 1991 and 1992. De Crombrugghe studies the role that wage and pension pressures played in this crisis. He also explains the persistence of the high tax wedge that later helped overcome the budget crisis. The positive effect on revenues of higher wages and higher tax rates could not compensate for both the inevitable loss in profit taxes and the excessive growth of spending on replacement income. Counterfactuals constructed for revenue and spending show the rising number of social benefit earners (pensions, unemployment) to be responsible for much of the budgetary burden. But they also show that the better protection of social income (over other income) explains part of the burden. Part of the employment loss and social spending can be ascribed to the excessive wage recovery of late 1990 and 1991. Insiders set wages ignoring the unemployed and exploiting the pension system in a context of uncertainty about profits and productivity, at a time when there was strong popular support for the protection of replacement income. De Crombrugghe recommends pension reform and caution about wages: the current economic recovery should create jobs, not raise wages, he says, and ensuring equitable opportunities for all requires moderating the income claims of the best-protected groups. This paper-a joint product of the Office of the Senior Vice President, Development Economics and Chief Economist, and Research Advisory Staff-is part of Fiscal Reform in Poland (RPO 678-96), a study funded by the Bank's Research Support Budget
The causes of government and the consequences for growth and well-being by Simon Commander( )

4 editions published in 1997 in English and held by 59 WorldCat member libraries worldwide

June 1997 A range of factors drive size of government: relative prices, the age-dependency ratio, how long a country has been independent, relative political freedom, and openness in trade. Larger governments tend to limit growth, but that tendency can be offset by well-functioning institutions and high-quality bureaucracy. Size of government is not the only issue that matters. Using a large cross-country data set, Commander, Davoodi, and Lee examine the factors that cause governments to grow and analyze how the size of government affects growth, whether measured as income growth or other measures of well-being, such as infant mortality and life expectancy. They find no robust link between government size and per capita income. The factors they find to be important in explaining government size are relative prices, the age-dependency ratio, how long a country has been independent, relative political freedom, and openness in trade. Their results also partially support the view that governments use consumption to buffer external risk, especially in low-income countries. As for how government size affects growth, they find a robust and significant negative relationship between growth and government size, as measured by consumption. Policy distortions, predictably, also have a negative effect on growth. But the positive effects of well-functioning institutions and high quality in government bureaucracies can offset the negative influence of large government size alone. Finally, they find that social-sector spending can exert a positive influence by reducing infant mortality and raising life expectancy. Better income distribution, higher per capita income, higher per capita income growth, and more political freedom have the same positive effect on those two measures of well-being. This paper - a joint product of the Office of the Senior Vice President, Development Economics and Chief Economist, and New Products and Outreach Division, Economic Development Institute - was prepared as a background paper for World Development Report 1997 on the role of the state in a changing world
The costs and benefits of regulation implications for developing countries by J. Luis Guasch( )

5 editions published in 1997 in English and held by 59 WorldCat member libraries worldwide

June 1997 This paper examines the economic impact of regulation in industrial and developing countries. It argues that economic analysis can play an important role in restructuring regulated industries and developing more effective regulations, and in reducing politically driven regulation and capture. The past two decades have seen an unparalleled rise in new health, safety, and environmental regulations in industrial countries. At the same time, in some countries there has been substantial economic deregulation of several industries (including airlines, railroads, trucking, energy, telecommunications, and financialmarkets). Developing countries are engaged in deregulating some sectors of the economy and devising new regulatory frameworks for others. After reviewing the literature, Guasch and Hahn provide an overview of the costs and benefits of regulation throughout the world, highlight the potential gains from reform of regulation and deregulation in both industrial and developing countries, draw lessons from experience with government regulation, and suggest how to improve regulation in developing countries. They find that it is possible to explore systematically the costs and benefits of regulatory activities using standard economic analysis. They conclude that regulation - especially regulation aimed at controlling prices and entry into markets that would otherwise be workably competitive - can limit growth and significantly reduce economic welfare. Although unnecessary process regulation can hurt the economy, social regulations may significantly benefit the average consumer. But some regulations do not meet goals effectively and may sometimes reduce living standards. Developing countries can consider several regulatory policies, tools, and frameworks to improve their approach to regulation. What they choose will depend on available administrative expertise and resources, as well as political constraints and economic impacts. Generally, local and national capabilities for evaluating regulation need to be improved. Regulation is not generally undesirable, but it often has undesirable economic consequences, which result in part from political forces to redistribute wealth. These forces need can be mitigated by more sharply evaluating the consequences and tradeoffs of proposed regulations. This paper - a joint product of the Office of the Chief Economist and Senior Vice President, Development Economics and the Advisory Group, Latin America and the Caribbean Technical Department - was produced as a background paper for World Development Report 1997 on the role of the state in a changing world
The indirect approach by David P Ellerman( )

5 editions published in 2000 in English and held by 59 WorldCat member libraries worldwide

Aid and conditionalities are the "carrot and stick" of the conventional direct approach to fostering economic development. Considering the outcomes of the conventional approach, it might be worthwhile to explore alternative indirect approaches that focus on enabling clients to act more autonomously, rather than try for fuller control of clients' actions with improved carrots and sticks
Hirschmanian themes of social learning and change by David P Ellerman( )

4 editions published in 2001 in English and held by 54 WorldCat member libraries worldwide

Albert Hirschman developed his strategy of unbalanced growth in response to the postwar theories of the "big push," development planning, and balanced growth. Ellerman "translates" today's debate about the effectiveness of conditionality and adjustment lending back into the old debate about balanced versus unbalanced growth
A poverty analysis macroeconomic simulator (PAMS) linking household surveys with macro-models by Luiz A. Pereira da Silva( )

5 editions published in 2002 in English and held by 54 WorldCat member libraries worldwide

The Poverty Analysis Macroeconomic Simulator (PAMS) is a model that links standard household surveys with macro frameworks. It allows users to assess the effect of macroeconomic policies--in particular, those associated with Poverty Reduction Strategies papers--on sectoral employment and income, the incidence of poverty, and income distribution. PAMS (in Excel) has three interconnected components: * A standard aggregate macro-framework that can be taken from any macro-consistency model (for example, RMSM-X, 123) to project GDP, national accounts, the national budget, the BoP, price levels, and so on, in aggregate consistent accounts. * A labor market model breaking down labor categories by skill level and economic sectors whose production total is consistent with that of the macro framework. Individuals from the household surveys are grouped in representative groups of households defined by the labor category of the head of the household. For each labor category, labor demand depends on sectoral output and real wages. Wage income levels by economic sector and labor category can thus be determined. In addition, different income tax rates and different levels of budgetary transfers across labor categories can be added to wage income. * A model that uses the labor model results for each labor category to simulate the income growth for each individual inside its own group, assumed to be the average of its group. After projecting individual incomes, PAMS calculates the incidence of poverty and the inter-group inequality. PAMS can produce historical or counterfactual simulations of: * Alternative growth scenarios with different assumptions for inflation, fiscal, and current account balances. These simulations allow test tradeoffs within a macro stabilization program. * Different combinations of sectoral growth (agricultural or industrial, tradable or nontradable goods sectors), within a given aggregate GDP growth rate. * Tax and budgetary transfer policies. For example, PAMS will simulate a baseline macro-scenario for Burkina Faso corresponding to an existing IMF/World Bank-supported program and introduce changes in tax, fiscal, and sectoral growth policies to reduce poverty and inequality more effectively than the base scenario. So, the authors argue that there are several possible "equilibria" in terms of poverty and inequality within the same macro framework. This paper--a joint product of the Office of the Senior Vice President and Chief Economist, Development Economics, and the Poverty Reduction Group, Poverty Reduction and Economic Management Network--is part of a larger effort in the Bank to provide better tools to evaluate the poverty impact of economic policies
High real interest rates, guarantor risk, and bank recapitalizations by Philip Lawton Brock( )

4 editions published in 1996 in English and held by 51 WorldCat member libraries worldwide

November 1996 The author sets out a methodology for analyzing episodes of high real interest rates in emerging market economies. He reviews the literature on what determines spreads in deposit rates and loan rates. Then he links the causes of interest rate spreads by explicitly modeling the incentive effect of a government deposit guarantee on the behavior of depositories, banks, and firms. The premise: begin with accounting identities that decompose the deposit spread and loan spread into several components. The relative importance of the components can be measured to discover the sources of the high real rates. The results suggest that the expected exchange rate depreciation and credit quality of borrowers are among the most important determinants of high real rates. A government guarantee on deposits affects both the deposit and the loan spread by altering marginal incentives. Although high real rates may signal financial distress, standard recapitulation mechanisms may not improve the situation. The behavior of real interest rates depends on the account unit that has been chosen for financial transaction. High real interest rates often occur when an economy is close to widespread debtor default. If high real interest rates are a financial sector distress symptom, then high real rates will incorporate expectations of a breakdown in the government's enforcement of financial contracts, in addition to other factors the author addresses
On measuring literacy by Kaushik Basu( Book )

2 editions published in 1998 in English and held by 31 WorldCat member libraries worldwide

October 1998 A new approach to evaluating the level of effective literacy in a region or country takes into account the externality within a household of a literate person. Basu and Foster present a new approach to evaluating the level of effective literacy in a region or country, one that takes into account the presence in a household of a literate person. They characterize the approach and give an empirical illustration of its use. They designed the new measures of literacy because traditional measures of the literacy rate (R) ignore how the presence of a literate person in the household affects literacy. They contend that literate household members generate a positive externality-a kind of public good-for illiterate members. They believe their new measures will be superior to R in predicting or explaining other achievements that depend on literacy. They expect the rate of diffusion of a new technology for farming, for example, to be more closely linked to the effective literacy rate than to the usual literacy rate. If an agricultural extension worker leaves behind a brochure explaining how to plant and care for high-yielding varieties, an illiterate person who lives in a household with at least one literate member has access to that public good; an isolated illiterate-whose household has no literate members-may not have. Similarly, if the presence (or absence) of one literate household member increases the chance of a child becoming literate, so the effective literacy rate should be a better predictor of future generations' literacy levels. Some changes in policy emphasis might be expected if the new effective literacy measures are used. There might be a shift, for example, toward ensuring a better distribution of literacy across households or toward addressing more seriously the problem of female illiteracy. More work is needed to determine if a child in a household with a higher percentage of literate adults has more frequent access to literacy skills. This paper-a product of the Office of the Senior Vice President, Development Economics-is part of a larger effort in the Bank to promote research on education and literacy. The authors may be contacted at kbasu@worldbank.org or fosterje@ctrx.vanderbilt.edu
 
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Alternative Names

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World Bank. Development Economics Department. Office of the Senior Vice President and Chief Economist

World Bank. Development Economics Dept. Office of the Senior Vice President and Chief Economist

World Bank. Development Economics Senior Vice Presidency

World Bank. Office of the Chief Economist and Senior Vice President, Development Economics

World Bank. Office of the Senior Vice President, Development Economics

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English (79)