La ti S m n pe er A ci ic ResearchDigest al a Is & C World Bank su a e ri on bb e an VOLUME 9 NUMBER 4 SUMMER 2015 99249 Living on the Edge in Mexico Many households in Mexico are module on social programs in national IN THIS ISSUE vulnerable to falling into poverty. household surveys from 2002–06 and Living on the Edge in Mexico … page 1 Should social programs expand their 2010 to better understand these vul- Should social programs designed for poor nerable households, including their coverage to encompass this group? people in Mexico also extend to those profile and their exposure to risk, and vulnerable to falling back into poverty? V to document the extent to which they ulnerability to poverty is an im- are covered by public transfers and What Has the Rise of China Meant for portant issue in Latin America. insurance mechanisms. The special Labor Markets in Latin America?… page 2 The region has achieved steady module identifies at least 15 types of A recent paper joins in the debate about how reductions in poverty: the rate of cash transfers, which can be broadly China’s growth has affected workers in other moderate poverty (defined as living grouped as scholarships, food vouch- economies on less than $4 a day) fell from about ers, noncontributory pensions, and Educating Our Future Teachers … page 3 42 percent in 2003 to 25.3 percent in training and incentive transfers for 2012. Yet about two out of five Latin starting up productive projects. In many countries it is rarely the most Americans remain vulnerable to fall- In profiling the vulnerable popula- talented students who choose to major in education. Do universities level the playing ing back into poverty (defined as living tion in Mexico, the authors find that field? on $4–10 a day), making it the largest those classified in this economic group economic group in the region. Like live mainly in urban areas (though a The Growing and Long-Lasting Effects most of its peers in the region, Mexico quarter still live in rural areas) and of Brazil’s Trade Liberalization too has made progress in reducing are engaged in wage-earning activities on Workers … page 4 poverty since the early 2000s. But the (73 percent), in microenterprises (74 After Brazil’s trade liberalization of the economic group defined as vulner- percent), in the service sector of hotels 1990s, the effects on jobs and earnings able—those who have left poverty but and restaurants (20 percent), and to continued to grow for many years still lack the economic security to be a lesser extent in retail (19 percent), considered part of the middle class— manufacturing (17 percent), and agri- Capturing Food Consumed Away from Home in Welfare Measures … page 5 remains the largest, at 43 percent of culture (14 percent). While this vulner- the population in 2012. able population shares some charac- What happens to poverty estimates when This situation of high vulnerability teristics with the population in poverty they account for the growing share of food eaten away from home? —with a large number of households (such as household size and incidence just above the poverty line—contrasts of disabilities), it differs significantly in A Behavioral Approach to Water with Mexico’s social policy, which has others (such as access to basic services Conservation … page 6 been focused on identifying and sup- and occupational status). And it differs A comparison with peers is one way to help porting chronically poor households. from the middle class in almost every change people’s behavior in using water The country’s vulnerable households, indicator considered. For example, vul- which by definition are not eligible for nerable people belong to households Using Satellite Images to Estimate Local antipoverty programs, are at high risk that are bigger on average (by one Poverty … page 7 of falling back into poverty in the event member) and are twice as likely to be Can a picture from space help measure of a shock such as loss of employment, unskilled workers (defined as having poverty in a village in Guatemala? a natural disaster, or an economic an incomplete primary education or crisis. less). A recent paper by de la Fuente, Ortiz-Juárez, and Rodríguez-Castelán uses information from a special (continued on page 8) 2 World Bank ResearchDigest What Has the Rise of China Meant for Labor Markets in Latin America? The rapid growth in China led in net exports and prices can be at- The opportunity and vulnerability to a reduction in manufacturing tributed to the growth of China? Did measures developed in the paper sug- employment in Mexico, though China’s growth affect relative wages, gest sizable effects on Latin America. employment, and informality in Latin The authors find important negative not in Argentina or Brazil America? How difficult was it for work- effects on manufacturing exports for C ers to move from a sector that received such countries as Haiti, Honduras, and hina has experienced impres- a negative shock to a sector that re- Mexico. Among the three large coun- sive growth over the past three ceived a positive one? tries, only Mexico has manufacturing decades. Its GDP growth aver- A recent paper by Artuç, Lederman, exports noticeably similar to China’s; aged 10 percent a year, and more than and Rojas contributes to the debate Argentina’s and Brazil’s manufacturing 500 million people have moved out and provides some answers. The au- exports were not significantly threat- of poverty. The country is now the thors conceptualize China’s growth as ened by the growth of China (figure world’s largest exporter and manu- a negative trade shock for manufac- 1). On the contrary, the authors find facturer and a substantial importer of turing exporters and a positive shock positive effects on agricultural exports raw materials. The value of its trade for mining and agricultural exporters, for Argentina and Brazil as well as for has practically doubled every four and identify the size of these shocks Guyana, Paraguay, and Uruguay. They years recently. Along with this growth for a large set of Latin American and also find positive effects on mining has come an increasing academic and Caribbean economies. Using the iden- exports for Brazil, Chile, Honduras, policy debate about China’s effects on tified shocks and an empirical model and Peru. the performance of other economies. of labor markets, the authors analyze The China-related trade shocks For Latin American countries sev- the impact on wages and employment affected Latin American labor mar- eral questions remain unanswered. in three large countries: Argentina, kets, which are characterized by high For example, how much of the change Brazil, and Mexico. labor mobility costs. These high costs Figure 1. Export Similarity Index for Manufacturing, 1999–2011 (continued on page 3) Argentina Brazil 0.8 0.8 0.6 0.6 Index value Index value 0.4 0.4 0.2 0.2 0 0 1999 2001 2003 2005 2007 2009 2011 1999 2001 2003 2005 2007 2009 2011 Mexico World 0.8 0.8 0.6 0.6 Index value Index value 0.4 0.4 0.2 0.2 0 0 1999 2001 2003 2005 2007 2009 2011 1999 2001 2003 2005 2007 2009 2011 European Union United States China Source: Calculations based on World Integrated Trade Solution (WITS) mirror data. Note: The export similarity index measures, for a pair of economies, the proportion of their exports that are similar. World Bank Research Digest 3 Educating Our Future Teachers How to produce excellent teachers? prospective teachers start at a disad- talented young people. One appealing One important way is to make the vantage, does higher education level option is to offer higher salaries for teaching profession more attractive the playing field? teaching positions at public schools. To test this, the authors examine to talented young people the extent to which the skills of stu- G dents majoring in education improve Carlos Felipe Balcázar and Hugo Ñopo. 2015. ood teachers are essential for or deteriorate in several areas—quan- “Broken Gears: The Value Added of Higher Educa- high-quality education systems. titative reasoning, native language tion on Teachers’ Academic Achievement.” Policy A simple anecdotal review of (Spanish), and foreign language Research Working Paper 7168, World Bank, successful education systems such (English)—relative to the skills of stu- Washington, DC. as those in Finland, the Republic of dents in other majors. They do so by Korea, and Singapore highlights the combining the results of two standard- (continued from page 2) importance of teachers in produc- ized tests for Colombian students, one ing good educational outcomes. taken at the end of the senior year in What Has the Rise of China Moreover, there is a growing consen- high school and the other shortly be- Meant for Labor Markets in sus in the economics profession that fore graduation from college. They find Latin America? teachers are an essential link in the that the quantitative reasoning and chain from education spending to foreign language skills of education resulted in big differences between the student learning. Students who have majors deteriorate (or improve less) short- and long-run impacts on relative high-quality teachers during their relative to those of students majoring wages and employment in Argentina, school years are more likely to pursue in other subjects. Brazil, and Mexico. The highest mobil- higher education—and they tend to Even more interesting results come ity costs are found for workers switch- go to a better university and to subse- from a comparison of individuals with ing from informal employment into quently earn more than their peers. similar characteristics (gender, year of formal jobs in agriculture or mining. In many countries, however, the birth, parents’ education, area of resi- These high mobility costs limited both best and the brightest do not choose dence before and during college, and the number of workers absorbed by education majors. Those majoring in academic performance before enrolling these sectors and the reduction in education tend to perform less well ac- in college). The authors find that after informality induced by the favorable ademically than their peers. Talented nearly five years of academic training, China effect. people are discouraged from pursuing the learning gaps between prospective The numerical simulations for a career in education by the lack of teachers and other students widen. Argentina and Brazil indicate that competitive salaries and challenging These results raise a red flag about the positive shocks on agriculture career paths. Nonetheless, what is the the quality of university-level teaching and mining offset the negative shock role of higher education in the forma- programs. on manufacturing, leaving total em- tion of future teachers? Can teaching What can be done? Reforms might ployment and real wages almost un- programs overcome the limitations be needed in the institutions educat- changed in the long run. In these coun- imposed by the selection of less tal- ing future teachers, the curricula they tries a larger positive shock in mining ented students into teaching? A recent follow, or their pedagogical approach- and agriculture was needed to offset paper by Balcázar and Ñopo addresses es. But there is also room for action re- a smaller shock in manufacturing be- this question using data for Colombia. lating to the selection of students into cause this sector employed a larger In Colombia, as in many other teaching, such as introducing stricter share of workers. In the short run real countries, students who choose to admissions standards. This may work wages increased in mining and agricul- study education not only show lower through two channels—by having a ture. In Mexico, however, the shock to academic performance than their direct effect on the skills of education manufacturing provoked a reduction in peers before enrolling in college; they majors and by having an indirect effect employment in this sector in the long also are more likely to come from through their peers. run after an increase in mining real a disadvantaged background. They Yet better teacher education pro- wages and a decrease in manufactur- are more likely to come from a larger grams and higher admissions stan- ing real wages in the short run. family, with less-educated parents dards alone are likely to have only or guardians; they are less likely to modest effects. It would be myopic migrate to pursue their studies; they to think that the solution lies only Erhan Artuç, Daniel Lederman, and Diego Ro- are more likely to have attended a within the teaching community. Also jas. 2015. “The Rise of China and Labor Market public school; and they are more likely necessary is to push for ambitious Adjustments in Latin America.” Policy Research to enroll in a public university and policies aimed at making the teaching Working Paper 7155, World Bank, Washington, in a program with low tuition fees. If profession more attractive to the most DC. 4 World Bank ResearchDigest The Growing and Long-Lasting Effects of Brazil’s Trade Liberalization on Workers Even two decades after Brazil most workers produce agricultural decline became less and less likely to liberalized trade, the costs and goods). This approach, along with de- be formally employed over time and benefits remain unevenly distributed tailed longitudinal data, makes it pos- lost substantial amounts of formal sible to observe labor market dynamics earnings in the years following liber- across the country for 20 years following the beginning of alization. Workers also adjusted in the O the trade policy changes. face of negative labor demand shocks. ne important way in which the While a growing body of research Formal tradable sector workers facing increasing openness of an econ- shows that changes in trade policy larger negative local shocks were more omy leads to welfare gains is have varying regional effects in the likely to transition into formal nontrad- through the reallocation of resources short run, many economists had as- able sector employment, but on aver- across economic activities. Prominent sumed that the short-run effects would age could not offset employment or theories of international trade rely be larger than longer-run effects, with earnings losses in the tradable sector. on the reallocation of inputs across labor markets restabilizing over time Using supplementary data from the sectors or firms in order to generate as workers move away from adversely census, the authors find that regions production gains from trade. However, affected regions. The authors find the facing larger tariff declines experi- academic economists have tradition- opposite pattern. Short-run effects in enced relative increases in informal ally paid little attention to the adjust- the wake of Brazil’s trade liberaliza- employment. Informal sector jobs do ment process, instead focusing on tion vastly underestimate the long-run not provide legally mandated labor long-run models where reallocation is effects. Even two decades after Brazil protections or other benefits and achieved without frictions. This focus liberalized trade, the costs and ben- often involve lower compensation, has created a tension between aca- efits of liberalization remain unevenly fewer opportunities for training and demics advocating trade liberalization distributed across the country. advancement, and generally less favor- and policy makers concerned with the These findings suggest substan- able working conditions. In harder-hit labor market outcomes of workers em- tial barriers to interregional mobility, regions nonemployment also strongly ployed in contracting sectors or firms. but they also imply that local labor increased in the medium run, but in Although many countries un- demand in more adversely affected re- the longer run nonemployed individu- derwent major trade liberalization gions kept falling relative to that in the als eventually find employment in the episodes during the 1980s and 1990s rest of the country for years following informal sector. Geographic migration (including Brazil, India, and Mexico), the end of the liberalization. Indeed, does not appear to respond to chang- we still know very little about the firms adjusted slowly to the changes in ing local labor demand conditions, medium- to long-run effects of these tariffs, and their adjustments often ex- suggesting that regional adjustment policy reforms on labor markets. A re- acerbated poor labor market outcomes occurs primarily through workers’ cent paper by Dix-Carneiro and Kovak in areas facing larger tariff declines. transitions into or out of formal helps fill this gap in the literature by In these locations firms became less employment. examining the dynamics of local labor likely to create new jobs and more The results show that the effects of market adjustment in response to a likely to close. Meanwhile, workers in liberalization on earnings and employ- major trade liberalization episode in those areas lost jobs and earnings, and ment differ sharply across regions and Brazil in the early 1990s. these effects grew steadily for more that these effects grow for many years Using 25 years of administrative than a decade before leveling off in the following liberalization. Contrary to data from Brazil, the authors exploit late 2000s. But earnings grew in other what previous work anticipated, these variation in tariff declines across in- areas, where initial wages were lower findings thus suggest that trade policy dustries and variation in the indus- and tariff reductions were smaller. has long-lasting effects on the labor try mix of local employment across Liberalization spurred growth in for- market. Brazilian regions to measure changes merly marginal cities and towns rather in local labor demand induced by lib- than in Brazil’s large, high-wage cities eralization. As one example, between that traditionally served as the coun- 1990 and 1995 tariffs in apparel fell try’s economic engines. from 51.1 percent to 19.8 percent while The data allow the authors to track tariffs in agriculture rose from 5.9 individual workers over time and thus percent to 7.4 percent. Consequently, to observe outcomes for two other- trade liberalization had a much more wise identical workers who just before Rafael Dix-Carneiro and Brian K. Kovak. 2015. negative effect on labor demand in Rio liberalization lived in regions that “Trade Reform and Regional Dynamics: Evidence de Janeiro (where a significant share would subsequently face different local from 25 Years of Brazilian Matched Employer- of workers produce apparel) than in trade shocks. They find that workers Employee Data.” Policy Research Working Paper Traipu in the state of Alagoas (where whose initial region faced a larger tariff 7025, World Bank, Washington, DC. World Bank Research Digest 5 Capturing Food Consumed Away from Home in Welfare Measures Accounting for food consumed reported by the individual respondent. statistically significant from 2012 on- away from home leads to dramatic Following Peru’s official methodol- ward (figure 2). changes in poverty estimates—and ogy for estimating poverty, the authors The authors’ analysis also produces simulate a baseline scenario in which an unexpected finding: accounting for to lower estimates of consumption FAFH is not accounted for and com- FAFH leads to a change not only in the inequality pare the results with a world in which number of poor people but also in who F it is. FAFH affects the poverty estimate is poor—because it results in a reor- ood consumed away from home in two ways: it has both a direct impact dering of households along the expen- (FAFH) represents an increas- on measured expenditure or consump- diture distribution. About 20 percent of ing share of food consumption tion and, through its effect on the food those in extreme or moderate poverty around the world, and its share will basket, an impact on the value of the in Peru in 2010 “escape” poverty when continue to expand as per capita in- poverty line. Because these two effects FAFH is accounted for. This change is come grows and food systems evolve. may or may not go in the same direc- not trivial: it has a significant effect on Yet the majority of household surveys tion, the overall effect depends on the the profile of the poor. For example, in developing countries collect little magnitude and direction of each of consistent with FAFH increasing as information on FAFH. What implica- them. resources increase, per capita income tions does this have for the measure- Once FAFH is accounted for, the is significantly lower and fewer house- ment of poverty and inequality? The authors find, extreme and moderate hold members are employed among answer is far from clear, even for the poverty change dramatically but in op- those who are classified as poor when direction of any change. posite ways. Extreme poverty is signifi- FAFH is accounted for. A recent paper by Farfan, Genoni, cantly higher—because the higher per- Collecting information on FAFH and Vakis explores this question by calorie cost of FAFH relative to home- through household surveys raises a looking at the case of Peru. Consuming made meals increases the poverty line number of methodological challenges. food away from home is a growing more than the increase in household Further research and replication in trend in the country: by 2013 Peruvian consumption. By contrast, moderate other settings are badly needed to households spent on average 27 per- poverty is significantly lower—because establish some best practices on what cent of their food budget on FAFH. of the increase in measured household information to collect and on how best In addition, Peru is among the few food expenditures. The size of the ef- to collect it. countries that collect high-quality data fect is substantial: the extreme poverty on FAFH. Its national statistical office rate for 2010 is 18 percent higher with (Instituto Nacional de Estadística e FAFH taken into account, and the Informática) has been collecting de- moderate poverty rate 16 percent lower tailed information on FAFH since 2004 (figure 1). as part of its national expenditure sur- While FAFH tends to increase with vey, which serves as the basis for mea- household resources, the budget share Gabriela Farfan, Maria Genoni, and Renos Vakis. suring poverty. The survey includes devoted to FAFH follows the opposite 2015. “You Are What (and Where) You Eat: information on the number of meals pattern. As a result, consumption in- Capturing Food Away from Home in Welfare per week, the type of establishment, equality is lower once FAFH is taken Measures.” Policy Research Working Paper 7257, the type of meal, and the cost—all as into account, though the impact is not World Bank, Washington, DC. Figure 1. Moderate Poverty Rate in Peru with and without FAFH Figure 2. Consumption Inequality in Peru with and without FAFH Taken into Account, 2010–13 Taken into Account, 2010–13 Percent Gini index 40 40 Without FAFH Without FAFH With FAFH 39 With FAFH 35 38 30 37 25 36 20 35 2010 2011 2012 2013 2010 2011 2012 2013 Note: The dotted or dashed lines indicate 95 percent confidence intervals. Note: The dotted or dashed lines indicate 95 percent confidence intervals. 6 World Bank ResearchDigest A Behavioral Approach to Water Conservation An experiment in Costa Rica shows In partnership with local authori- to use less water. Moreover, few had a that enabling people to compare ties, a World Bank team conducted a benchmark to understand, measure, their water use with that of peers randomized control trial in Belen, a and compare their water use. Based small municipality in Costa Rica, with on this deeper understanding of the can help reduce consumption the aim of capturing innovative policy problem, the team was able to design T lessons for scaling up water conserva- and test behavioral policy approaches he United Nations estimates tion across the country. The project —also known as “nudges”—that can that more than two-thirds of built on breakthrough approaches affect individual decision making to the world’s population will live introduced through the growing field reduce water consumption. in water-stressed regions by 2025. of behavioral economics, which chal- The study compared three random- Demographic and economic pres- lenges the underlying, intentionally ized treatment groups and one control sures make water management an simplified assumption of standard group. Consumers in the first treat- increasingly urgent policy priority, models: that people make rational ment group were able to benchmark even in water-rich areas such as Latin decisions based on a self-interested their consumption against the average America, home to nearly 31 percent of cost-benefit analysis. Behavioral eco- consumption of neighborhood peers, the world’s freshwater resources. nomics borrows from other sciences and those in the second group against Developing countries face unique to consider the full scope of social and the average consumption of city resi- challenges in water conservation. psychological influences on human dents. These consumers received with Accelerating urbanization often over- decision making. their bill an easy-to-read sticker with a whelms the capacity of local water ser- Traditionally, many water conser- smiley or “frowny” face indicating that vice provision: while the share of peo- vation initiatives have focused on they had consumed less or more than ple with access to improved water and communication and education cam- their peers. basic sanitation services has increased paigns—convincing people of the Residents in the third group re- globally, there were more urban dwell- value of saving water—or on price ceived planning worksheets with their ers without access in 2010 than there increases to reduce demand for water. bills, prompting them to set a concrete were in 2000. But communication efforts have had goal to reduce their water consump- Costa Rica has climatic characteris- limited success. And water demand tion (compared with the neighborhood tics that in conjunction with its moun- tends to be relatively inelastic—mean- average) while checking off strategies tainous topography make the country a ing that changes in price may not have that they would use. water-rich nation. Yet current water de- a significant effect on consumption, The results were striking. While mand virtually matches production ca- especially for wealthy households. the social comparison with other city pacity, so there is risk of a water deficit When price-based tools do work, they residents led to little change, both the in the near future. In some areas there can also have regressive effects, pricing neighborhood comparison and the are already shortages. And in parts of out low-income households while the planning prompt led to large (about the country water security is threatened consumption of the wealthy changes 4.5 percent) reductions in water con- not only by overall demand growth but little. sumption over the following four also by spatially unbalanced develop- In Belen focus groups revealed a months (figure 1). As the Costa Rican ment (or the overdevelopment of areas wide consensus on the importance of experience demonstrates, these ap- with limited water supplies, such as the water conservation, but few residents proaches are cost-effective—and they coast of Guanacaste). believed that they themselves needed can be replicated in other resource- constrained environments. The results Figure 1. Change in Households’ Average Monthly Water confirm that raising awareness about Consumption after the Intervention how much water individuals consume, Neighborhood City Plan-making and enabling them to compare their Control comparison comparison prompt consumption with that of peers, can go group group group group 0 a long way in helping to change behav- –0.2 ior in the use of this finite resource. –0.4 –0.6 Cubic meters –0.8 Saugato Datta, Juan José Miranda, Laura Zorat- –1.0 to, Oscar Calvo-González, Matthew Darling, and Karina Lorenzana. 2015. “A Behavioral Approach –1.2 to Water Conservation: Evidence from Costa Rica.” –1.4 Policy Research Working Paper 7025, World –1.6 Bank, Washington, DC. World Bank Research Digest 7 Using Satellite Images to Estimate Local Poverty Satellites could aid in identifying census requires hiring hundreds or sophisticated, usually involving a hi- where poverty is, by zooming in to thousands of interviewers to travel erarchy of nested models mirroring photograph the tiniest villages and to every household, the geographic hierar- often several times chy of smaller regions allowing constant monitoring before making contact. We are still far off nested in larger regions. M Because no census from measuring Satellite data could play any researchers have shown ever achieves a 100 an especially useful role that measures of nighttime percent response rate, poverty using only as the base of such a lights are correlated with GDP. there must also be at sensors in space. hierarchy, because mod- If places that are more productive are least some amount of ern sensors can produce brighter when viewed from space, it post-canvassing impu- But there is reason data at a subkilometer seems plausible that data from sat- tation to fill in missing to believe that scale, typically a much ellite sources could also be used to households, so that finer scale than survey improve measures of poverty. But even the most well-run future survey-based data reported at the lev- poverty is not the inverse of GDP, and census will have some poverty estimates el of the municipality or on-the-ground surveys already provide associated uncertainty. province. Estimates at measures of poverty—not to mention Conversely, the NOAA may benefit from the scale of geographic measures correlated with an area’s data are gathered every augmentation using regions can be brought nighttime brightness, such as popula- day of the year, cleaned down to a finer geog- tion density and rates of electric light using well-known algo- sensor data raphy using the sensor use. Would adding luminosity data to rithms (to correct for data; the fine-scale what we already have improve poverty clouds, gas flares, and sensor data can borrow estimates? other anomalies), and bundled into a strength from the regional-level survey In one of the first studies to com- free download (http://ngdc.noaa.gov/ data. bine “big data” sensor information eog/viirs/download_monthly.html). The results show promise for the about luminosity with traditional sur- In the cost-benefit analysis of sensor use of sensor data in future work. Not vey data, Klemens, Coppola, and Shron data, the marginal cost of the satellite surprisingly, we are still far off from found that using the sensor data does data the authors used is negligible. measuring poverty using only sen- improve rural poverty estimates over The authors found that adding sat- sors in space. But the authors’ work using survey data alone. ellite measures of change in luminos- shows that the sensor data do add On the survey side, the authors ity improved regressions predicting information above and beyond the used data from the Guatemalan the change in rural poverty rates using survey data—and at the cost of only a Censuses of 2002 and 2012, by the data for demographic indicators such download and some extra computing Guatemalan Instituto Nacional de as population density, indigenous pop- time. So there is reason to believe that Estadística (INE). The INE asked ulation, and electrification rates. Their future survey-based poverty estimates households questions about income, measures of improvement included may benefit from augmentation using electrification, migration, and other the traditional R2 measure for linear sensor data. relevant issues. In addition, the INE regressions, mean squared error from marked observations as being from cross-validation, and Kullback-Leibler urban or rural locations. Reasoning divergence measuring information that urban lighting patterns differ from loss. rural ones, the authors used the cen- By contrast, adding luminos- sus data to separately consider the re- ity data to survey-based regressions lationship between satellite measures predicting urban poverty gave only a and poverty rates in urban and rural slight improvement. And the verdancy areas. measures showed no statistically sig- On the sensor side, the authors nificant effect in either rural or urban used leaf coverage (or verdancy) data contexts, perhaps because methods from the U.S. National Aeronautics of cleaning verdancy data are less well and Space Administration (NASA) established. and luminosity data from the U.S. With the aim of keeping the model Ben Klemens, Andrea Coppola, and Max Shron. National Oceanic and Atmospheric simple and focused on the data, the 2015. “Estimating Local Poverty Measures Using Administration (NOAA). authors used only linear regressions. Satellite Images: A Pilot Application to Central The relative costs of the census But small-area models of poverty America.” Policy Research Working Paper 7329, and sensor data are worth noting. The estimates are typically much more World Bank, Washington, DC. 8 World Bank ResearchDigest (continued from page 1) In looking at social programs, the families given the eligibility criteria Recent Policy Research authors find that these largely cover defined for it. Working Papers the poor but barely reach the vulner- The low incidence of most social able. Monetary transfers (particularly programs among vulnerable house- 7153 Long-Run Effects of Democracy on Income the conditional cash transfer program holds is not necessarily worrisome, Inequality: Evidence from Repeated Cross- Progresa-Oportunidades) achieve since most of these programs were Sections Carlos Felipe Balcázar the highest coverage among the poor conceived for poor people. Yet the few 7169 Connectivity for Caribbean Countries: An population, but cover only about 17 social programs that have a productive Initial Assessment Cecilia Briceño-Garmendia, Heinrich C. percent of the vulnerable population orientation also have a very low inci- Bofinger, and Diana Cubas (about 22 percent of those living on dence among the vulnerable popula- 7177 Gone with the Storm: Rainfall Shocks and Household Well-Being in Guatemala $4–5.50 a day and about 15 percent tion. This is a greater concern, because Javier E. Baez, Leonardo Lucchetti, Maria E. of those living on $5.50–10 a day). Yet members of this group have higher en- Genoni, and Mateo Salazar 7180 Tackling Social Exclusion: Evidence from after the poor population, the vulner- dowments of human capital, and sup- Chile able group has the second highest port to develop their job skills could Pedro Carneiro, Emanuela Galasso, and Rita Ginja incidence of cash transfers of all kinds. improve their wage prospects while 7190 The Changing Patterns of Financial The middle- and upper-income groups training and credit for working capital Integration in Latin America Tatiana Didier, Matias Moretti, and Sergio L. have a relatively low incidence but re- could help them thrive. Moreover, the Schmukler ceive significantly higher amounts than poor and vulnerable groups are simi- 7228 The Curious Case of Brazil’s Closedness to the vulnerable population. lar in many characteristics, including Trade Otaviano Canuto, Cornelius Fleischhaker, and The analysis also shows that un- levels of food insecurity and exposure Philip Schellekens til 2010 most social programs with to risk. Thus it would be worthwhile 7230 The (Non-) Effect of Violence on Education: Evidence from the “War on Drugs” in Mexico productive components, such as to discuss whether social programs Fernanda Márquez-Padilla, Francisco Pérez- vocational training and productive and insurance mechanisms in Mexico Arce, and Carlos Rodríguez-Castelán 7249 Social and Economic Impacts of Rural Road investment grants, barely reached the should expand their coverage to en- Improvements in the State of Tocantins, Brazil vulnerable. In addition, insurance pro- compass the vulnerable population— Atsushi Iimi, Eric R. Lancelot, Isabela Manelici, and Satoshi Ogita grams to protect against risks (health, or whether a specific set of benefits, 7264 Does Access to Foreign Markets Shape weather, and unemployment) have including targeted interventions and Internal Migration? Evidence from Brazil Laura Hering and Rodrigo Paillacar been expanded only in recent years to universal insurance schemes, should 7309 Extending the School Day in Latin America cover vulnerable households. In par- be created to serve this group. and the Caribbean Peter Holland, David K. Evans, and Pablo ticular, the Seguro Popular scheme, Alfaro developed to protect against financial 7346 The Economics of Policy Instruments to risks linked to poor health, covered Stimulate Wind Power in Brazil Florian Landis and Govinda R. Timilsina almost two-thirds of vulnerable house- 7365 The Export-Productivity Link in Brazilian holds in 2012, up from 13 percent in Manufacturing Firms X. Cirera, D. Lederman, J. A. Máñez, M. E. 2006. The main public weather insur- Alejandro de la Fuente, Eduardo Ortiz-Juárez, Rochina, and J. A. Sanchis ance scheme—part of the Mexican and Carlos Rodríguez-Castelán. 2015. “Living Catastrophe Climate Contingency on the Edge: Vulnerability to Poverty and Public Working Papers can be downloaded at http://econ.worldbank.org Insurance Program (CADENA)—is Transfers in Mexico.” Policy Research Working To download the World Bank Research E-Newsletter, also likely to cover many vulnerable Paper 7165, World Bank, Washington, DC. go to http://econ.worldbank.org/research_newsletter The World Bank Research Digest is a quarterly publica- The Research Digest is financed by the Bank’s Editorial Committee: Indermit S. Gill (managing editor), tion disseminating findings of World Bank research. Research Committee and managed by DECDP, the Aslı Demirgüç-Kunt, and Shiva S. Makki. Editor: Alison The views and interpretations in the articles are those research support unit of the Development Economics Strong; production: Roula Yazigi. For information or of the authors and do not necessarily represent the Senior Vice Presidency (DEC). The Research Digest is free subscriptions, send email to research@worldbank. views of the World Bank, its Executive Directors, or the not copyrighted and may be reproduced with appropri- org or visit http://econ.worldbank.org/research_digest. countries they represent. ate source attribution. The World Bank 1818 H Street, NW Washington, DC 20433, USA Printed on Recycled Paper