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  • Author: Anders Jensen
  • Publication Date: 10-2019
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: This paper shows how the increase in information trails through the long-run transition from self-employment to employee-jobs explains the rise of the modern income tax system. I construct a new database which covers 100 household surveys across countries at different income levels and 140 years of historical data within the US (1870-2010). Using these data, I first establish four new stylized facts: 1) within country, the share of employees increases over the income distribution, and increases at all levels of income as a country develops; 2) the income tax exemption threshold moves down the income distribution as a country develops, tracking employee growth; 3) the employee share above the exemption threshold is maximized and remains constantly high; 4) decreases in the exemption threshold are strongly associated with increases in tax collection. These findings are consistent with a model where a high employee share is a necessary condition for effective taxation and where the rise in income covered by information trails through increases in employee share drives expansion of the income tax base. To provide a causal estimate of employee share on income tax systems, I study a state-led US development program implemented in the 1950s-60s which increased the level of employee share. The identification strategy exploits within-state changes in court-litigation status which generate quasi-experimental variation in the effective implementation date of the program. I find that the exogenous increase in employee share is associated with an expansion of the state income tax base and an increase in state income tax revenue.
  • Topic: Political Economy, Finance, Economy, International Development, Tax Systems
  • Political Geography: North America, United States of America
  • Author: Katherine Baicker, Theodore Svoronos
  • Publication Date: 07-2019
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: Given the complex relationships between patients’ demographics, underlying health needs, and outcomes, establishing the causal effects of health policy and delivery interventions on health outcomes is often empirically challenging. The single interrupted time series (SITS) design has become a popular evaluation method in contexts where a randomized controlled trial is not feasible. In this paper, we formalize the structure and assumptions underlying the single ITS design and show that it is significantly more vulnerable to confounding than is often acknowledged and, as a result, can produce misleading results. We illustrate this empirically using the Oregon Health Insurance Experiment, showing that an evaluation using a single interrupted time series design instead of the randomized controlled trial would have produced large and statistically significant results of the wrong sign. We discuss the pitfalls of the SITS design, and suggest circumstances in which it is and is not likely to be reliable.
  • Topic: Health, Governance, Health Care Policy
  • Political Geography: North America, United States of America
  • Author: Eduardo Levy Yeyati, Martin Montane, Luca Sartorio
  • Publication Date: 07-2019
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: The past 5 years have witnessed a flurry of RCT evaluations that shed new light on the impact and cost effectiveness of Active Labor Market Policies (ALMPs) aiming to improve workers´ access to new jobs and better wages. We report the first systematic review of 102 RCT interventions comprising a total of 652 estimated impacts. We find that (i) a third of these estimates are positive and statistically significant (PPS) at conventional levels; (ii) programs are more likely to yield positive results when GDP growth is higher and unemployment lower; (iii) programs aimed at building human capital, such as vocational training, independent worker assistance and wage subsidies, show significant positive impact, and (iv) program length, monetary incentives, individualized follow up and activity targeting are all key features in determining the effectiveness of the interventions.
  • Topic: Vocational Training, Labor Policies, Wage Subsidies, Randomized Controlled Trials
  • Political Geography: Global Focus, United States of America
  • Author: Michael Woolcock
  • Publication Date: 06-2019
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: Many development agencies and governments now seek to engage directly with local communities, whether as a means to the realization of more familiar goals (infrastructure, healthcare, education) or as an end in itself (promoting greater inclusion, participation, well-being). These same agencies and governments, however, are also under increasing pressure to formally demonstrate that their actions ‘work’ and achieve their goals within relatively short timeframes – expectations which are, for the most part, necessary and desirable. But adequately assessing ‘community-driven’ approaches to development requires the deployment of theory and methods that accommodate their distinctive characteristics: building bridges is a qualitatively different task to building the rule of law and empowering minorities. Moreover, the ‘lessons’ inferred from average treatment effects derived from even the most rigorous assessments of community-driven interventions are likely to translate poorly to different contexts and scales of operation. Some guidance for anticipating and managing these conundrums are provided.
  • Topic: Development, Government, Infrastructure, International Development
  • Political Geography: Global Focus, United States of America
  • Author: Eduardo Levy Yeyati, Eduardo Gómez
  • Publication Date: 05-2019
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: Recent studies that have emphasized the costs of accumulating reserves for self-insurance purposes have overlooked two potentially important side-effects. First, the impact of the resulting lower spreads on the service costs of the stock of sovereign debt, which could substantially reduce the marginal cost of holding reserves. Second, when reserve accumulation reflects countercyclical LAW central bank interventions, the actual cost of reserves should be measured as the sum of valuation effects due to exchange rate changes and the local-to-foreign currency exchange rate differential (the inverse of a carry trade profit and loss total return flow), which yields a cost that is typically smaller than the one arising from traditional estimates based on the sovereign credit risk spreads. We document those effects empirically to illustrate that the cost of holding reserves may have been considerably smaller than usually assumed in both the academic literature and the policy debate.
  • Topic: Financial Crisis, Exchange Rate Policy, International Reserves, Capital Flows
  • Political Geography: Global Focus, United States of America
  • Author: Michael Woolcock
  • Publication Date: 02-2019
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: A defining task of development is enhancing a state’s capability for policy implementation. In most low- income countries, alas, such capabilities seem to be stagnant or declining, in no small part because dominant reform strategies are ill-suited to addressing complex non-technical aspects. This has been recognized for at least six decades – indeed, it was a centerpiece of Albert Hirschman’s understanding of the development process – yet this critique, and the significance of its implications, remain on the margins of scholarship and policy. Why? I consider three options, concluding that, paradoxically, followers of Hirschman’s approach inadequately appreciated that gaining more operational traction for their approach was itself a type of problem requiring their ideas to embark on ‘a long voyage of discovery’, a task best accomplished, in this instance, by building – and tapping into the distinctive insights of – a diverse community of development practitioners.
  • Topic: Development, Political Economy, Developing World, International Development
  • Political Geography: North America, United States of America
  • Author: Matt Andrews
  • Publication Date: 12-2018
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: Observers claim that public policies fail ‘often’. This paper asks, ‘how often’? It is an important question, because public policies absorb resources to address major social issues. We should know if policies are proving bad social investments; routinely failing to solve focal problems at high costs. Unfortunately, it is not easy to assess this. Many public policy organizations—governments in particular—do not provide accessible views onto overall success or failure. The World Bank does, however, provide such view—and it supports policy interventions one finds in governments across the world. The paper thus examines World Bank failure rates. It finds that there are different answers to the ‘how often’ question, depending on responses to a second question, ‘what is failure anyway?’ In studying both questions, the paper identifies a bias in the World Bank—and probably all organizations adopting rational ‘plan and control’ policy processes—to measuring ‘project and product success’ rather than a broader view of success as ‘problems are solved with development impact’. This means that policy organizations like the Bank judge success based on whether planned products are delivered through an efficient process; not whether policies solve the problems that warranted intervention in the first place, or whether the policies promoted development outcomes. Is this how citizens would want their public policy organizations to conceptualize success?
  • Topic: Foreign Policy, Government, World Bank, International Development
  • Political Geography: Global Focus, United States of America
  • Author: Dan Levy, Mae Klinger, Theodore Svoronos
  • Publication Date: 09-2018
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: Two-stage examinations consist of a first stage in which students work individually as they typically do in examinations (stage 1), followed by a second stage in which they work in groups to complete another examination (stage 2), which typically consists of a subset of the questions from the first examination. Data from two-stage midterm and final examinations are used to assess the extent to which individuals improve their performance when collaborating with other students. On average, the group (stage 2) score was about one standard deviation above the individual (stage 1) score. While this difference cannot be interpreted as the causal effect of two-stage examinations on learning, it suggests that individuals experienced substantial performance gains when working in groups in an examination. This average performance gain was comparable with the average difference between the top performer of the group in stage 1 and the group’s stage 1 average, and was equivalent to about two-thirds of the difference between the “super student” score (i.e. the sum of the maximum score for each question in stage 1) and the group’s stage 1 average. This last result suggests that group collaboration takes substantial (albeit partial) advantage of the aggregate knowledge and skills of the group’s individual members. Student feedback about their experience with two-stage examinations reveal that that these types of examinations are generally perceived to be more helpful for learning and are less stressful than traditional examinations. Finally, using data on group gender compositions, we investigate the potential role of gender dynamics on group efficiency.
  • Topic: Education, Gender Issues, Collaborative Learning, Collaborative Efficiency
  • Political Geography: Global Focus, United States of America
  • Author: Andres Gomez-Lievano, Oscar Patterson-Lomba, Ricardo Hausmann
  • Publication Date: 12-2016
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: The prevalence of many urban phenomena changes systematically with population size1. We propose a theory that unifies models of economic complexity2, 3 and cultural evolution4 to derive urban scaling. The theory accounts for the difference in scaling exponents and average prevalence across phenomena, as well as the difference in the variance within phenomena across cities of similar size. The central ideas are that a number of necessary complementary factors must be simultaneously present for a phenomenon to occur, and that the diversity of factors is logarithmically related to population size. The model reveals that phenomena that require more factors will be less prevalent, scale more superlinearly and show larger variance across cities of similar size. The theory applies to data on education, employment, innovation, disease and crime, and it entails the ability to predict the prevalence of a phenomenon across cities, given information about the prevalence in a single city.
  • Topic: Economics, Urbanization, Employment, Economic Theory
  • Political Geography: Global Focus, United States of America
  • Author: Matt Andrews, Lant Pritchett, Michael Woolcock
  • Publication Date: 01-2016
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: We divide the 102 historically developing countries (HDCs) into those with ‘very weak’, ‘weak’, ‘middle’, and ‘strong’ state capability. Analyzing the levels and recent growth rates of the HDCs’ capability for policy implementation reveals how pervasively “stuck” most of them are. Only eight HDCs have attained strong capability, and since most of these are small (e.g., Singapore, UAE), less than 100 million (or 1.7%) of the roughly 5.8 billion people in HDCs currently live in high capability states. Almost half (49) of these countries have very weak or weak capability, and thus their long-run pace of acquiring capability is also very slow. Alarmingly, three quarters of these countries (36 of 49) have experienced negative growth in state capability in recent decades, while more than a third of all countries (36 of 102) have low and (in the medium run at least) deteriorating state capability. At current rates, the ‘time to high capability’ of the 49 currently weak capability states and the 36 with negative growth is obviously “forever”. But even for the 13 with positive growth, only three would reach strong capability by the end of the 21st century at their current medium run growth.
  • Topic: Developing World, International Development, State, Public Policy
  • Political Geography: Global Focus, United States of America
  • Author: Michael Clemens, Claudio E. Montenegro, Lant Pritchett
  • Publication Date: 03-2016
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: Large international differences in the price of labor can be sustained by differences between workers, or by natural and policy barriers to worker mobility. We use migrant selection theory and evidence to place lower bounds on the ad valorem equivalent of labor mobility barriers to the United States, with unique nationally-representative microdata on both U.S. immigrant workers and workers in their 42 home countries. The average price equivalent of migration barriers in this setting, for low-skill males, is greater than $13,700 per worker per year. Natural and policy barriers may each create annual global losses of trillions of dollars.
  • Topic: Labor Issues, Immigration, Economy, Borders
  • Political Geography: North America, United States of America
  • Author: Matt Andrews, Lant Pritchett, Michael Woolcock
  • Publication Date: 01-2016
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: Many of the challenges in international development are complex in nature. They involve many actors in uncertain contexts and with unclear solutions. Our work has proposed an approach to addressing such challenges, called Problem Driven Iterative Adaptation (PDIA). This paper is the most recent in a series intended to show how one can do PDIA, building on the first paper, "Doing Problem Driven Work." The current paper addresses a key part of the approach one moves to once a problem has been identified, performing real-time experimental iterations. This is intended as a practical paper that builds on experience and embeds exercises for readers who are actually involved in this kind of work.
  • Topic: International Development, State, Experimental Iterations
  • Political Geography: Global Focus, United States of America
  • Author: Matt Andrews, Lant Pritchett, Michael Woolcock
  • Publication Date: 01-2016
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: Development and state building processes are about change. Change is, however, elusive in many contexts. In prior work, we have offered problem driven iterative adaptation (PDIA) as an approach to tackle wicked hard change challenges. This is our fourth practical working paper on ‘how’ to do PDIA. The working paper addresses questions about authority, given that authority is needed to make change happen—especially in hierarchical government settings. This authority is often difficult to attain, however. It is seldom located in one office of person, and is often harder to lock-in with complex challenges, given that they commonly involve significant risk and uncertainty and require engagement by many agents responding to different kinds of authority. Every effort must be taken to address such challenges, and efforts should include an explicit strategy to establish an appropriate authorizing environment. This working paper suggests ideas to adopt in this strategy, with practical exercises and examples to help the reader apply such ideas in her or his own work.
  • Topic: Development, Government, International Development, State
  • Political Geography: Global Focus, United States of America
  • Author: Michael Woolcock
  • Publication Date: 07-2014
  • Content Type: Working Paper
  • Institution: The John F. Kennedy School of Government at Harvard University
  • Abstract: The coherence and effectiveness of engagement with the world's 'fragile and conflict-affected states'—beyond ethical imperatives and geo-strategic considerations—turns on answers to two vexing questions. First, on what defensible basis is any given country, at any given historical moment, deemed to be (or not to be) 'fragile'? Second, if a defining characteristic of state fragility is low levels of capability to implement core responsibilities, how can international agencies best support domestic public organizations to acquire capability? The first issue may appear to be a methodological one (wherein more and better data would provide a firmer empirical foundation on which to base key decisions) but any determination, especially of marginal cases, must also be grounded in a correspondingly comprehensive theory of change. Similarly, the optimal response to the second issue may appear to be importing technical and rigorously verified ('best practice') solutions, but in fact it is more likely to require a qualitatively different strategy, one able to experiment with alternative design specifications and adapt in real time to changing contextual realities (thereby iterating towards customized 'best fit' solutions). To this end, an alternative approach to the theory, measurement and practice of engaging with fragile states is outlined, in the spirit of rising concerns across the development community that prevailing strategies have demonstrably reached the limits of their effectiveness.
  • Topic: Security, Development, Conflict, State, Institutions
  • Political Geography: Global Focus, United States of America