The Unassuming Economist

Source: VoxEU CEPR

The informal sector, which accounts for nearly one-third of the GDP and employment in emerging and developing economies (EMDEs), has not only been the worst affected by the Covid-19 pandemic but is now also threatening to dampen economic recovery. Three features of the informal sector have compounded the damage of Covid-19 on activity: (i) their predominant presence in the service sector, (ii) limited savings and access to social safety nets, and (iii) the lack of effective policy support (Ohnsorge and Yu 2021).

This column assesses the impact of the pandemic on job losses in the informal sector of both manufacturing and service sectors of EMDEs and the impact of support policies rolled out by governments. Thus, recommendations call for facilitating access to finance for small firms, adopting cash transfer programs in the short run for countries with larger poor populations (Furceri, Loungani, Ostry, and Pizzuto, 2020), and using technology to reach the poor and informal workers.

Source: VoxEU CEPR

“The servicification of economic activity occurring across Africa has implications for the continent’s future. Using per capita nightlight luminosity as a proxy for economic development, this column finds a strong positive association between higher-skill services and economic growth that varies according to geography, institutions, technology, and market conditions. Data on the structure of employment in African economies reveal significant shifts in the composition of employment towards services across and within countries, and towards growth in service-related occupations across all sectors of the economy.”

The authors present new data on the composition of jobs in the services sector at the sub-national level in a sample of 13 African countries, describe how this has changed over time, and explain how employment in services correlates with indicators of economic development commonly used in the literature. Throughout their sample, they find that the share of agriculture in total employment declined through the decades but was offset by an equivalent increase in the share of services. They go on to dig deeper into aspects like characteristics of service sector employees and differing capacities of different services in supporting workers’ productivity.

Source: CESifo

In a new paper (2022), economists Davide Furceri, Prakash Loungani, Jonathan D. Ostry, and Pietro Pizzuto write about the challenges of ensuring sustainable levels of debt in the face of threats of rising inequality, low growth, and high unemployment, posed by the COVID-19 crisis.

Studying five major epidemics since the 2000s, they demonstrate that real GDP falls in the aftermath of a pandemic while inequality (as measured by the Gini coefficient) shoots up (Figure 1). Subsequently, they discuss the role of fiscal policy in managing inequality and the need to avoid hastening or prolonging generous support beyond need using appropriate policy measures.

By: Vrinda Saxena

‘I think we know very little about the changing lives of young women in India because we have stopped studying them for who they are. We know the heroines- the ones who fought against all odds and became leaders, and we know the victims. But the real change is taking place in between- the ordinary women who are dressing differently, who are spending more hours in school than ever before, who are reshaping the rules at home in their marriages, in their relationships with peers, in their relationships with their in-laws and their relationships with the working world.’

– Yamini Aiyar, President, Centre for Policy Research

                                                                         For the book ‘Desperately Seeking Sharukh’ (2021)

Jostling between datasets and academic theories, summary measures and aggregates, the journey to tap into the elusive story of gender and deprivation in India has not been an easy task for economists through the ages. Perhaps, in what could be loosely referred to as a case of inferential statistics, author and World Bank economist Shrayana Bhattacharya has captured stories of diverse women across various social and economic strata of the country to paint a larger picture of the state of affairs in her book, Desperately Seeking Sharukh: India’s Lonely Young Women and the Search for Intimacy and Independence.

In Bhattacharya’s own words, the book uses the “construct” of the Hindi film actor, Shahrukh Khan, as a research device to closely peer into the personal lives of migrant women, domestic workers, corporate and public servants, and even urban non-working women. For nearly 14 arduous years from 2006 onwards, she broached conversations with her research respondents, acquaintances, and strangers on mutual love for the actor, realizing over time how each discussion was deeper than just a description of his work and off-stage persona but a close peek into women’s own aspirations and changing beliefs. The reader gets an up-close glimpse into how Indian women perceive work, wages, social mobility, economic aspirations, employment, and other seemingly personal issues, like intimacy, loneliness, bargaining power within families, dignity, etc.  

As a case in point, the book’s first composite character- an upper-class working woman residing in an Indian metro, with a fine education and a well-paying job- peruses over the perils of succeeding in a predominantly male corporate setup, building one’s own fortune in the absence of land and generational wealth like a true “middle class”, and the freedom and perils of not pegging one’s identity to men or marriage. Brilliantly putting it into context, Bhattacharya equips the reader with 6 frameworks within which “middle class” has been defined by economists and how deep the income and wealth inequality fault lines run in the country. Where women’s access to education and employment are as strongly guarded as their ability to access public spaces and even entertainment- in that India she follows the lives of some women who managed to break through from a few shackles but get held back on others. The “hidden tax”, as economist Sendhil Mullainathan terms it, by refusing to acknowledge women’s economic successes or social ostracization forms the underlying theme of many such stories. One is left to ponder then if all the loneliness and unrequited emotional labor women perform in their personal relationships are not personal misgivings but the gift of a structurally unequal society!  Besides, not only does this inequality maim women’s minds and bodies but spills over to numbers and data that economists love most. Bhattacharya takes the reader on a very thought-provoking journey into the lives of women who are majorly, if not solely, invested severely into performing unpaid care work for families but are ironically never accounted for in the economy. This and other ways official data upholds patriarchal dominance by neglecting home-based workers and informal laborers hits you hard each time the same data is invoked as the sole basis on which an understanding of deprivation hinges.

Shahrukh- the superstar who publicly claimed his rags to riches story, publicly admitted to building from scratch and battling feelings like loneliness and anxiety, and also publicly acknowledged the important role women played in his real-life aside from the reel life where his romances are categorized as more ‘interactive’ than of all others, is the combining glue for this oeuvre. Female fans who were interviewed displayed analogous revolutions in their own lives- from sacrificing traditional marriages and roles of damsels in distress for the joys and trials of independent economic life, reclaiming their right over consumption of entertainment and education, or even something that may seem as trivial as making a ‘pilgrimage’ to their icon’s bungalow without male company (yes, in India that is a big deal!).

Thus, in “seeking” Shahrukh, the many women who feature in this book show how with the help of technology, the economic liberalization of India in the 1990s, and the advent of social media India’s young women are slowly departing from the idea of marrying their Shahrukh(s) to becoming their own Shahrukh(s).

Discussions on cultural beliefs, aspirations, norms, and the things that catch the fancy of communities elude very many narratives of the development and evolution of emerging markets. This book fits right in to bandage that void. From the way urban, working women mirrored their fantasies of companionship that is more emotionally and financially equal to rural and immigrant women’s windows into the world outside, this book communicates the changing everyday dynamics of women’s engagement in economies by deconstructing a superstar’s fandom. Pardon me if my review does not appear academic enough- for even the book is not. It steers clear of any dry statement of facts and figures but rather attempts to put them into perspective and uncover the three-dimensional story behind.

Source: VoxEU CEPR

“Education, then, beyond all other devices of human origin, is the great equalizer of the conditions of men, the balance wheel of the social machinery.”

-Horace Mann, 1848

Quite ironically, however, the pandemic-induced school closures and other aspects of remote education pose the threat of deep and long-lasting inequalities. This column argues that channels operating through schools, peer effects, and parental investments have all contributed to massively growing educational inequality during the Covid-19 crisis. Among 9th graders, children from low-income neighborhoods in the US are predicted to suffer a learning loss equivalent to almost half a point on the four-point GPA scale, whereas children from high-income neighborhoods remain unscathed.