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Harness economics findings to inform public policy

By , People Daily Digital
Friday, October 22nd, 2021 00:00 | 3 mins read
Situation in South Africa. Photo/Courtesy

Policymakers in poor countries ought to make it part of their duty to read the works of Nobel Prize winning economists with a view to learning what they can do to reduce inequality and improve the quality of citizens’ lives.

One reason this is important has to do with the fact that such winners work and study in an environment that offers them sufficient resources to carry out comprehensive research into critical areas of human development, such as health and education.

By extrapolation, they demonstrate how their findings can, say, improve private incomes or public outcomes from policies that affect health, education, labour and other important aspects of modern life.

What is more, their ground-breaking findings are presented in simple terms that makes it easy to understand and by showing the benefits of their application, they can form a basis for targeted government interventions.

For instance, this year’s laureates – David Card, Joshua Angrist and Guido Imbens – have over conducted research on such issues as labour and how it affects social, racial and geographical dynamics.

Card’s research, for example, has shown immigrants don’t affect the availability of jobs for citizens of countries they migrate to. 

This has been a serious problem in countries like South Africa, where Xenophobia is partly premised on a false belief that foreigners take up jobs meant for citizens.

Card’s research shows that if anything, an increase in immigrants affects those who arrived earlier more because new immigrants are likely to accept lower pay for the same job compared to those who arrived before them.

If anything, Card argues, an increase in immigrants makes it possible for citizens of host countries to go for higher quality jobs, especially if those immigrants are not fluent in the official language of their host country.

Such findings can help governments to draft policies that can address such socio-political challenges as xenophobia and racism or encourage their citizens to immigrate in search of greener pastures.

In another study, he demonstrated an increase in minimum wage doesn’t lead to a reduction in number of jobs.

The myth has been used by corporates opposed to rise in minimum wage, especially in manufacturing and agriculture.

They argue that it is better to have more workers earning less than few workers earning more.

Card turns this argument on its head, a view that labour movement leaders can do well to study with a view to improving the quality of their engagement with employers.

It can also help them challenge received wisdom and debunk myths about effects of higher pay on job opportunities.

Angrist and Imbens, who were jointly awarded the other half of the prize, have also carried out significant research into such questions as the cause and effect of spending more years in school.

Interestingly, they used natural experiments, not those they had direct control over, to arrive at their ground-breaking findings that demonstrate why it is important for learners to remain in school for at least 12 years.

Interestingly, their work has also demonstrated that even where children remain in school for the same number of years, those who attend institutions with adequate facilities – say laboratories, workshops and libraries – will earn higher pay once employed compared to those who attended schools that lacked sufficient learning resources.

In a country like Kenya, that has serious implications for ending inequality. It also explains the pressure parents and learners experience every year as they race to ensure candidates qualify for admission to national schools.

But why not end this cut-throat competition by providing sufficient resources to more schools, yet this is something that can be achieved through devolution?

Angrist’s argument that selective admission skews the field in favour of some students is a concern that education officials in Kenya ought to address because this is what perpetuates both poverty and inequality by conspiring to ensure that children from poor families encounter barriers to entry even when they qualify for admission to schools that can transform their fortunes for life.

Lessons derived from such research can be harnessed to influence public policy, at national and county levels.

Indeed, government institutions ought to put in place a think tank that interrogates such findings with a view to influencing development by various Ministries, departments and agencies.

This way, we can invest tax money in targeted interventions that are meaningful, impactful and measurable. — The writer is a Partner and the Head of Content at House of Romford—[email protected]