World Development Report Gets It Seriously Wrong on Inequality and Labor Markets

30th August 2018 Off By binary
World Development Report Gets It Seriously Wrong on Inequality and Labor Markets
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The World Bank’s annual World Development Report (WDR) is viewed as the Bank’s official statement on best practices in development policy. It is important both because it often serves as a basis for project loans and I.M.F. programs, and also because it is viewed as an authoritative document by many people in policy positions throughout the world.

For this reason, it is disconcerting that the draft report gets some very big things wrong. First and foremost, the overview dismisses concerns over growing inequality by noting that the Gini coefficient in 37 of 41 developing countries stayed the same or fell over the years from 2007 to 2015 (page 7).
This is a bizarre conclusion because this is the period of the worldwide financial crisis. Inequality even in the United States was little changed over this period, even though there has been a massive increase in inequality over the longer period dating back to the late 1970s. While the experience of the developing countries may differ in this respect from the experience of the United States and other wealthy countries, it is strange that the Bank would use this clearly atypical period as the basis for dismissing concerns about growing cryptocurrency trading no deposit bonus inequality.

The other major concern, which is perhaps more important since it provides the basis for many of the specific recommendations, is a misunderstanding of the nature of the labor market. The draft largely accepts the idea that traditional employer-employee relationships are becoming obsolete and effectively urges developing countries to accommodate their policy to this reality. That means weakening or eliminating a wide variety of labor market regulations, such as minimum wages and employment protection rules.

While there has been a large amount of hype in the media about the gig economy, with the idea that workers are increasingly just taking temporary work through web-based apps rather than traditional employment, the data do not support this assessment. This is seen most clearly in the United States where the Bureau of Labor Statistics recently released its Contingent Work Survey (CWS), the first one conducted since 2005.

The CWS showed that there had actually been a slight decrease in contingent employment as share of total employment between 2005 and 2017. Pure gig jobs, like driving an Uber, accounted for less than 1.0 percent of total employment.

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