This week we featured research on teachers, fiscal tightening, shadow banks and more!
In this week’s episode of Ideas in Development, we are joined by Astrid Haas to discuss why African cities are so fiscally constrained, what reforms have worked elsewhere, and what it would take to unlock the finance that fast-growing African cities urgently need. And in this week’s episode of VoxDevTalks, Adriana Lleras-Muney discusses the link between poverty and health, what drives that relationship, and what, if anything, policymakers can do about it.
Hany Abdel-Latif, Khalil Bechchani, Antonio David, and Thibault Lemaire show that fiscal tightening in sub-Saharan Africa can be significantly more contractionary than previously estimated, especially when it takes place during downturns, relies heavily on spending cuts, or occurs in a context of scarce external financing.
In India, shadow banks do not compete with traditional banks through a single mechanism – fintech lenders use superior data technology to reach underserved borrowers in unsecured markets, while non-fintech shadow banks exploit lighter regulatory constraints in secured lending. Policymakers should treat these as distinct phenomena, since technology-driven credit expansion offers durable inclusion benefits, while regulation-driven growth may prove fragile as oversight tightens. Kim Fe Cramer, Pulak Ghosh, Nirupama Kulkarni, and Nishant Vats discuss.
Policymakers typically address staffing problems at schools by offering financial incentives to attract teachers. However, salary increases are costly and their effects tend to be modest. To complement these efforts, Nicolás Ajzenman, Gregory Elacqua, Luana Marotta, and Anne Sofie Westh Olsen propose a low-cost behavioural intervention aimed at reducing the sorting of candidates across teaching vacancies in Ecuador. They find strong impacts on the final allocation of candidates.
In Mexico, María Padilla-Romo and Cecilia Peluffo find that children in safe areas suffer lasting academic harm when peers who fled local violence transfer to their schools – even though they were never directly exposed to that violence themselves. This hidden cost of violence is especially pronounced for girls, highlighting the need for support in receiving schools, not just those in conflict-affected areas.
Mathilde Le Moigne, Simon Lepot, Marcos Ritel, and Dora Simon study how climate policies affect countries differently and quantify the transfers required to compensate those bearing the highest costs – typically low- and middle-income economies. A key feature of their analysis is that it accounts for the global nature of production and trade: by changing relative prices, climate policy reshapes patterns of specialisation, consumption, and supply chains, leading to varying economic impacts. Their findings reveal a stark asymmetry: even though low- and middle-income countries have contributed relatively little to historical emissions and are expected to suffer the most from climate change, they bear a disproportionate share of the costs of climate action.
Guilherme Lichand, Nina Cunha, Ricardo A. Madeira, and Eric Bettinger study the mechanisms behind the impacts of an informational intervention to school parents in Brazil, experimentally comparing messages that provide child-specific information with messages that merely make school attendance salient. While receiving child-specific information significantly improved several educational outcomes, salience messages improved outcomes by nearly the same amount – even though they contained no child-specific information.
Elsewhere in development, some opportunities:
- Admissions for the Africa Urban Lab’s Professional Diploma in Urban Development are now open!
- The Development Innovation Lab is hiring for key roles in policy, research, and operations to help create development impact at scale.
- Coefficient Giving's Global Aid Policy team is hiring an Associate Program Officer, based in Washington, D.C.
To read:
- Global Leaders from Government, Finance, Business, Civil Society Appointed to Coalition to Rethink Development Cooperation.
- On JPAL, by Nicola Limodo, Tommaso Porzio, Awa Ambra Seck, Emmanuel Yimfor and Anne Kersting, Where international finance meets development: The role of currency risk.
- Eeshani Kandpal has two great blogs - When Does Cash Affect Prices? A Framework for the Potential Price Effects of Cash Transfers & Why Health Taxes Alone Won't Fix Malnutrition in Poor Countries.
And on the impacts of the Iran War:
- By Tim Dobermann on IGC - The long shadow of a commodity crisis
- On a similar theme on IFPRI by Charlotte Hebebrand, Joseph Glauber, Rob Vos, and Brendan Rice: The Iran war’s impacts on global fertilizer markets and food production.
- The Iran War Oil Shock Will Hit the Hungry Hardest—Cash Should Be Part of the Response by Lee Crawfurd and Eeshani Kandpal.