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The article evaluates the contribution of inequality of opportunity to earnings inequality in Egypt and analyzes its evolution across three time periods and different population groups. It provides parametric and nonparametric estimates of a lower bound for the degree of inequality of opportunity for wage and salary workers. On average, the contribution of opportunity-shaping circumstances to earnings inequality declined from 22 percent in 1988 to 15 percent in 2006. Levels of inequality of opportunity were fairly stable while earnings differentials widened markedly, leading to a decline in the share of inequality attributable to opportunities. Father's background and geographic origins had the largest effect on earnings, although the impact of mother's education has risen in recent years. The degree of inequality of opportunity did not differ significantly by gender or rural–urban area, although the incidence was lower for men and for rural areas. The results indicate an increase in inequality of opportunity across age groups, but there is some evidence that opportunity differentials have been declining for the oldest generation. Copyright 2012, Oxford University Press.

This paper examines the relationship between the type of senior high school attended by Indonesian youth and their subsequent labor market outcomes. This topic is timely in light of a recent policy shift that aims to dramatically expand vocational education. The analysis controls for an unusually rich set of predetermined characteristics, and exploits longitudinal data spanning fourteen years to separately identify cohort and age effects. There are four main findings. First, the estimated wage premium for vocational graduates, relative to general graduates, is greater for women than men. Second, the returns to public vocational school for men have plummeted for the most recent cohort, and male vocational graduates now face a large wage penalty. Third, the generally favorable outcomes of public school graduates can be partly explained by non-random sorting of students with higher test scores and better-educated parents into public schools. Finally, these peer effects appear to be particularly important for students with above-average test scores, as men with high scores earn a surprisingly small premium from graduating from vocational or private general school. These small returns for high-scoring men, as well as the dramatic fall in the earnings premium for all male vocational graduates, raise important concerns about the current expansion of public vocational education and the relevance of the male vocational curriculum in an increasingly service-oriented economy. Copyright , Oxford University Press.

What is the impact of male migration on the labor market behavior of women in Nepal? The instrumental variable full information maximum likelihood method is applied to data from the 2004 Nepal Household Survey to account for unobserved factors that could simultaneously affect men's decision to migrate and women's decision to participate in the labor market. The results indicate that male migration has a negative impact on the level of the labor market participation by women in the migrant-sending household. There is evidence of substantial heterogeneity (based on both observable and unobservable characteristics) in the impact of male migration. The findings highlight the important gender dimension of the impact of predominantly male migration on the well-being of sending households. Strategies for economic development in Nepal should take into account such gender aspects of the migration dynamics. Copyright The Author 2009. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / the world bank . All rights reserved. For permissions, please e-mail: journals.permissions@oxfordjournals.org, Oxford University Press.

A rich panel data set from Mexico is used to study the patterns of entry, exit, and growth of microenterprises and to compare these with the findings of the mainstream theoretical and empirical work on firm dynamics. The Mexican self-employment sector is much larger than its counterpart in the United States, which is reflected in higher unconditional rates of entry into the sector. The evidence for Mexico points to the significant presence of well-performing salaried workers among the likely entrants into self-employment, as opposed to the higher incidence of poorer wageworkers among the entrants into the U.S. self-employment sector. Despite these differences, however, the patterns of entry, survival, and growth with respect to age, education, and many other covariates are very similar in Mexico and the United States. These strong similarities suggest that mainstream models of worker decisions and firm behavior are useful guides for policymaking for the developing-country microenterprise sector. Furthermore, they suggest that, as a first approximation, the developing-country microenterprise should probably be viewed as they are in the advanced countries as offering potentially desirable job opportunities to low-productivity workers.

Child labors effect on academic achievement is estimated using unique data on third and fourth graders in nine Latin American countries. Cross country variation in truancy regulations provides an exogenous shift in the ages of children normally in these grades, providing exogenous variation in the opportunity cost of children's time. Least squares estimates suggest that child labor lowers test scores, but those estimates are biased toward zero. Corrected estimates are still negative and statistically significant. Children working 1 standard deviation above the mean have average scores that are 16 percent lower on mathematics examinations and 11 percent lower on language examinations, consistent with the estimates of the adverse impact of child labor on returns to schooling.

Cross-country panel data are used to assess the effect of free-trade agreements on flows of Foreign Direct Investment (FDI). Free-trade agreements are found to have a significant positive effect on FDI flows, and free-trade agreements are found to matter more for the smaller members of the agreement. For example, the North American Free-Trade Agreement's (NAFTA) effect on FDI flows into Mexico is much larger than its effect on flows into the United States. These cross country results are used to assess NAFTA's effect on FDI flows into Mexico. After controlling for a set of other factors such as an increase in worldwide FDI flows the trade agreement is found to generate FDI flows nearly 60 percent higher than they would have been without the agreement.

This article analyzes three criteria for labor market integration between Mexico and the United States (U.S.) before and since the North American Free Trade Agreement (NAFTA): the responsiveness of Mexican wages to US wage shocks, the speed at which relative wages return to a long-run differential, and changes in the rate of convergence of absolute wages. Tests for increased integration using these three criteria generate mixed results, which are then explored by directly incorporating trade, foreign direct investment (FDI), and migration. The results suggest that trade and FDI did in fact positively contribute to integration but that the increase in border enforcement depressed Mexican wages, masking the positive benefits.

Part of the rationale for the North American Free Trade Agreement (NAFTA) was that it will increase trade and foreign direct investment (FDI) flows, creating jobs and reducing migration to the United States (U.S.). Since poor data on illegal migration to the United States make direct measurement difficult, data on migration within Mexico, where census data permit careful analysis, are used instead to evaluate the mechanism behind predictions on migration to the United States. Specifications are provided for migration within Mexico, incorporating measures of cost of living, amenities, and networks. Contrary to much of the literature, labor market variables enter very significantly and as predicted once possible credit constraint effects are controlled for. Greater exposure to FDI and trade deters outmigration, with the effects working partly through the labor market. Finally, some tentative inferences are presented about the impact of increased FDI on Mexico- U.S. migration. On average, a doubling of FDI inflows leads to a 1.5 to 2 percent drop in migration.

A limitation of most empirical cross-country studies that focus on determinants of gross domestic product (GDP) is that they fail to distinguish explicitly between inputs used in production and conditions that facilitate production. For example, physical capital, human capital, and labor are production inputs, whereas the quality of institutions, macroeconomic stability, and market quality are conditions that facilitate production. This article takes this distinction seriously and uses a stochastic frontier approach to study factors affecting economic performance. A panel data set of 71 countries for the 1980-98 periods is used to estimate a production frontier with physical capital, human capital, and labor as inputs. The article also analyzes what drives productive efficiency, using the institutional framework, macroeconomic stability, market quality, and urbanization as possible explanatory factors. Urbanization turns out to be an important determinant, with the rule of law, inflation rate, and market quality also affecting productive efficiency.

Moving beyond the simple comparisons of averages typical of most analyses of household income shocks, this article employs quantile analysis to generate a complete distribution of such shocks by type of household during the 1995 crisis in Mexico. It compares the distributions across normal and crisis periods to see whether observed differences were due to the crisis or are intrinsic to the household types. Alternatively, it asks whether the distribution of shocks during normal periods was a reasonable predictor of vulnerability to income shocks during crises. It finds large differences in the distribution of shocks by household types both before and during the crisis but little change in their relative positions during the crisis. The impact appears to have been spread fairly evenly. Households headed by people with less education (poor), single mothers, or people working in the informal sector do not appear to experience disproportionate income drops either in normal times or during crises.

The article assesses the impact of Argentina's main social policy response to the severe economic crisis of 2002. The program was intended to provide direct income support for families with dependent sand whose head had become unemployed because of the crisis. Counter factual comparisons are based on a matched subset of applicants not yet receiving program assistance. Panel data spanning the crisis are also used. The program reduced aggregate unemployment, though it attracted as many people into the workforce from inactivity as it did people who otherwise would have been unemployed. Although there was substantial leakage to formally ineligible families and incomplete coverage of those who were eligible, the program did partially compensate many losers from the crisis and reduced extreme poverty.

Industry affiliation provides an important channel through which trade liberalization can affect worker earnings and wage inequality between skilled and unskilled workers. This empirical study of the impact of the 1988-94 trade liberalization in Brazil on the industry wage structure suggests that although industry affiliation is an important component of worker earnings, the structure of industry wage premiums is relatively stable over time. There is no statistical association between changes in industry wage premiums and changes in trade policy or between industry-specific skill premiums to university graduates and trade policy. Thus trade liberalization in Brazil did not significantly contribute to increased wage inequality between skilled and unskilled workers through changes in industry wage premiums. The difference between these results and those obtained for other countries (such as Colombia and Mexico) provides fruitful ground for studying the conditions under which trade reforms do not have an adverse effect on industry wage differentials

How are resources allocated within extended families in developing economies? This question is investigated using a unique social experiment: the South African pension program. Under that program the elderly receive a cash transfer equal to roughly twice the per capita income of Africans in South Africa. The study examines how this transfer affects the labor supply of prime-age individuals living with these elderly in extended families. It finds a sharp drop in the working hours of prime-age individuals in these households when women turn 60 years old or men turn 65, the ages at which they become eligible for pensions. It also finds that the drop in labor supply is much larger when the pensioner is a woman, suggesting an imperfect pooling of resources. The allocation of resources among prime-age individuals depends strongly on their absolute age and gender as well as on their relative age. The oldest son in the household reduces his working hours more than any other prime-age household member.

In 1981 Chile replaced a mature government-run social security system that operated on a pay-as-you-go basis with a privately managed system based on individual retirement accounts. The new system is more fiscally sustainable because pension benefits are defined by contributions. The minimum pension guaranteed to beneficiaries with at least 20 years is funded from general taxes, preserving the tight matching between contributions and benefits. The new system also eliminates several cross-subsidies. Men and women with less than secondary education gain under the new system, but single women with more education lose. Comparison of the old and the new systems reveals a complex set of factors that cause gender effects given constant behavior or change behavior across genders.

This article uses survey data from Ecuador to examine the effects of women's employment on the allocation of paid and unpaid labor within the household. The reader compares a region with high demand for female labor with a similar region in which demand for female labor is low. The comparison suggests that market labor opportunities for women have no effect on women's total time in labor but increase men's time in unpaid labor. The increase in men's time in unpaid work reflects women's increased bargaining power in the home.

Using cross-country and panel regressions, this article investigates how gender inequality in education affects long-term economic growth. Such inequality is found to have an effect on economic growth that is robust to changes in specifications and controls for potential endogeneities. The results suggest that gender inequality in education directly affects economic growth by lowering the average level of human capital. In addition, growth is indirectly affected through the impact of gender inequality on investment and population growth. Some 0.4-0.9 percentage points of differences in annual per capita growth rates between East Asia and Sub-Saharan Africa, South Asia, and the Middle East can be accounted for by differences in gender gaps in education between these regions.