Beyond labor policies
F I G U R E 9. 4
A decision tree can help set policy priorities No intervention is needed.
Remove the constraints.
Step 4
Step 1
Can the constraints be removed?
What are good jobs for development?
YES
Offset the constraints.
NO
Are there enough of these jobs?
YES NO
Step 2
Can the constraints be identified? Step 3
YES NO
Can the constraints be offset?
YES NO
Step 5
Source: World Development Report 2013 team.
might materialize. If so, it is difficult to justify government interventions beyond establishing the fundamentals and adopting adequate labor policies. Misaligned incentives exist when good jobs for development are not rewarding enough to individuals or profitable enough to farms and firms. Data and analysis can be used to identify gaps between the individual and the social value of jobs. Arguably, many key areas in development economics deal with these gaps. For instance, the tools of public finance can be applied to measure the tax burden on capital and labor and to assess the extent of cross-subsidization between individuals or firms. Labor economics methods can be used to uncover gaps between the actual earnings of specific groups of workers and their potential earnings. Poverty analyses help in identifying the kinds of jobs that are more likely to provide opportunities to the poor, or the locations where job creation would have a greater impact on poverty reduction. Productivity studies can help quantify the spillovers from employment in FDI companies, in firms connected to global markets, or in functional cities. Environmental studies shed light on the carbon
footprint and pollution created by various types of jobs. And analysis of values surveys can discover which types of jobs link to networks and provide social identity. Step three: Can the constraints be identified? Understanding why the individual and social values of specific types of jobs differ is next. Gaps of this sort indicate the presence of unexploited spillovers from jobs. The gaps typically arise from market imperfections and institutional failures that cause people to work in jobs that are suboptimal from a social point of view, lead firms to create jobs that are not as good for development as they could be, or connect people less through jobs than would be socially desirable. But identifying where those constraints are is not always easy. For instance, a broad set of cultural, social, and economic forces may result in insufficient employment opportunities for women. Similarly, it may be difficult to pinpoint whether the key obstacles to making cities functional lie in the land market, or in the institutional arrangements to coordinate urban development, or in the ability to raise revenue to finance infrastructure.
Design engagement strategy.
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