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ECA Academy

The ECA Academy is organized annually by the Office of the ECA Chief Economist. The ECA Academy competition identifies the best new policy-relevant research from across the World Bank Group on topics of interest to the ECA region. The papers are evaluated based on technical quality, originality, and operational relevance. They represent the best new research relevant to ECA from across the World Bank Group, and they combine a high degree of technical rigor with a commitment to identifying relevant policy advice for Bank clients.

The winners of 2024 ECA Academy

characterizes credit allocation distortions in capital markets across state and private-owned enterprises, by implementing Whited and Zhao (2021)¡¯s methodology on a novel firm-level database from 2010-2016. It reveals that state-owned enterprises (SOEs) get subsidized access to debt and equity compared to private firms in the same country and narrow industry but cautions that eliminating SOEs could harm overall productivity due to their technical efficiency. However, targeted reforms that only shut down poor performing SOEs could boost total factor productivity by up to 15% in every country studied.

The authors:
Ana Paula Cusolito, Europe and Central Asia Chief Economist's Office, World Bank
Roberto N. Fattal-Jaef, DECRG - Macroeconomics & Growth, World Bank
Fausto Patino Pena, Macroeconomics, Trade and Investment Global Practice - Latin America and Caribbean, World Bank
Akshat V. Singh, International Monetary Fund

The implicit contract in most primary healthcare provision has been the responsiveness of providers to signals of ill-health by patients. However, optimal care requires accurate identification of health issues, either by the patient or through effective screening by physicians. examines the impacts of physicians and patients writing an explicit contract for more holistic primary care moving away from episodic curative care. The results show changes in physician activities towards greater screening, diagnosis and treatment of underlying health issues. For mild-risk patients, the authors observe reductions in overall mortality of a third.

The authors:
Kevin Croke, Harvard T.H. Chan School of Public Health
Benjamin Daniels, Georgetown University
Robert Lipinski, Development Impact Evaluation Unit, World Bank
Daniel Rogger, Development Impact Evaluation Unit, World Bank

 

investigates the impact of information provision on household behavior in connection with indoor and outdoor air pollution in Tbilisi, Georgia. The findings show that while the pamphlet with general information alone did not lead to behavioral change, daily text messages significantly enhanced knowledge about pollution, led to increased avoidance behaviors, and improved health outcomes. The study also found that indoor air pollution is usually worse than outdoor, and that how people behave significantly affects pollution infiltration rates.

The authors:
Sandra Baquie, Middle East and North Africa - Poverty and Equity, World Bank
Patrick Behrer, DEC - Sustainability & Infrastructure, World Bank
Xinming Du, The National University of Singapore
Alan Fuchs, Middle East and North Africa - Poverty and Equity, World Bank
Natsuko K. Nozaki, Europe and Central Asia - Poverty and Equity, World Bank

 

          

The winners of 2023 ECA Academy

evaluates the impact of an employment subsidy scheme covering employers¡¯ social contribution costs on registered employment in small firms in Turkey. It utilizes a rich, firm-level administrative data set with monthly frequency, which allows for closely following the dynamics of registered employment in firms before and after the implementation of the subsidy. The empirical approach utilizes the geographically targeted implementation of the subsidy to estimate its effects using a difference-in-difference specification. The paper finds that the subsidy scheme had a sizable and positive impact on registered employment in small firms. The results are robust across specifications and to the choice of the control group. Positive effects on formal employment are also fairly constant and sustained over time. Corroborative evidence suggests that the positive effects on registered employment are mainly driven by the formalization of existing workers as opposed to new job creation. Therefore, the results indicate that social security contribution subsidies in small firms can be effective in reducing informality in contexts where informal employment remains common.

Authors:
Gunes A. Asik, TOBB University of Economics and Technology
Laurent Bossavie, Social Protection & Jobs Global Practice, ECA
Jochen Kluve, KFW Development Bank, IZA, Humboldt University
Efsan Nas-Ozen, Social Protection & Jobs Global Practice, ECA
Metin Nebiler, Poverty & Equity Global Practice, ECA
Ana Maria Oviedo, Poverty & Equity Global Practice, AFR

studies the impact of a large payroll tax cut for older workers in Hungary. Motivated by the predictions of a standard equilibrium job search model, the paper examines the heterogeneous impact of the policy. Employment increases most at low-productivity firms offering low-wage jobs, which tend to hire from unemployment, while the effects are more muted for high-productivity firms offering high-wage jobs. At the same time, wages only increase at high-productivity firms. These results point to important heterogeneity in the incidence of payroll tax cuts across firms and highlight that payroll taxes have a significant impact on the composition of jobs in the labor market.

Authors: 
Anik¨® Bir¨®, Centre for Economic and Regional Studies
R¨¦ka Branyiczki, Central European University and T¨¢rki
Attila Lindner, University College London
Lili M¨¢rk, Central European University
D¨¢niel Prinz, Health, Nutrition & Population, ECA

The limited market size of many small emerging economies is a key constraint to the growth of innovative small and medium enterprises. Exporting offers a potential solution, but firms may struggle to locate and appeal to foreign buyers. A six-country randomized experiment was conducted with 225 firms in the Western Balkans to test the effectiveness of 30 hours of live group-based training and 5 hours of one-on-one remote consulting in overcoming these constraints. Treated firms used techniques such as search engine optimization and improved Facebook content to increase their digital presence and better reach foreign customers. A year later, positive and significant impacts are found on the number of customers, and a significant intensive margin increase in export sales. Qualitative interviews suggest this improvement came from a combination of sector-specific advice on market expansion, and through an encouragement effect which gave entrepreneurs the confidence to try new sales strategies.

Authors:
Ana Paula Cusolito, Finance, Competitiveness and Innovation Global Practice, Markets, Competition & Technology Unit
Ornella Darova, University of Pennsylvania
David McKenzie, Development Economics Research Group

studies how firms respond to differential, size-based tax rates using administrative tax data in Lithuania. Exploiting a notch in the tax schedule faced by corporations, it documents strong behavioral responses to tax incentives¡ª revenue elasticity is estimated at 0.35 and cost elasticity at ?1.3, implying a large total profit elasticity of 7.4. It then leverages the panel structure of the data to provide insights on the dynamic effects of these tax incentives. Firms located close to but below the notch report systematically lower revenue growth in the short term, but the effects dissipate over time.

Authors:
Thiago Scot, Development Impact Evaluation
Pablo Garriga, Latin America and the Caribbean Chief Economist Office