Supporters of the anti-globalization movement argue that "globalization has dramatically increased inequality between and within nations" (Mazur, 2000), and in particular that it has marginalized the poor in developing countries and left behind the poorest countries. Meanwhile, more moderate mainstream politicians argue that the poor must invest in education to take advantage of globalization (Clinton, 2000).
Such views are difficult to reconcile with a standard Heckscher-Ohlin trade model with two countries, two goods, and two factors (skilled and unskilled labor, or alternatively capital and labor). Under a simple model, globalization should benefit the poor in poor countries and reduce inequality in poor countries, and within the developing world the poorest countries and least educated workers should have the greatest opportunity to benefit from globalization.
Restrictions on migration of low-skilled workers to richer countries are arguably the
largest distortion in the world economy and the most costly to the world’s poor. Yet rich
countries seem unlikely to eliminate these restrictions due to concerns about the impact
of migration on inequality among natives, public finances, and native culture. A rapidly
growing new type of migration may not be subject to these concerns. Many "new rich"
countries issue special visas for foreigners, women in particular, to work as private
household workers. "Old rich" countries often choose low levels of enforcement against
illegal immigrants working in this sector. We argue that by allowing high-skilled native
women to increase market labor supply, this type of immigration increases the wages of
low-skilled natives and provides a fiscal benefit by correcting tax distortions toward
home production. Calibration suggests welfare gains to natives from a program, such as
Hong Kong’s or Singapore’s, under which roughly 7% of the labor force are foreign
private household workers, may increase the ratio of native low-skilled workers by 3.9%
and increase native welfare by 1.2% of income, roughly 100 times the level estimated by
Borjas and increases the relative wages of native low-skilled to high-skilled by 3.9%.
Paradoxically, however, even if these programs are pareto improving, they may conflict
with ethical norms requiring stronger social obligations to long-term residents than to
other foreigners. Short-term programs may be more acceptable.
Water-related diseases, particularly diarrhea in young children, kill two million people
annually. To address this problem, donors and governments often provide infrastructure such as
communal standpipes, wells, and protected springs in rural areas, where piping water into homes
is infeasible. We study the impact of source water quality improvements achieved via spring
protection in rural Kenya using a randomized evaluation. Spring protection leads to large
improvements in source water quality as measured by the fecal indicator bacteria E. coli. Water
quality gains at the home are smaller on average, but this finding depends critically on
households’ water source choices. At households that only used the sample spring at baseline,
71% of the spring water quality benefits are translated into home water gains, suggesting that recontamination
in transport and storage may be less of a concern than is sometimes claimed.
Consistent with this view, the home water quality gains from spring protection are no larger for
households with better baseline sanitation or hygiene knowledge. Changes in household water
source choices after spring protection are used to derive revealed preference estimates of the
willingness to pay for improved water quality using a travel cost approach. The average
willingness to pay for the moderate gains in home water quality due to spring protection is at
least US$3.27 per household per year. We find no significant child health effects of spring
protection.
The 2003 United Nations Global Report on Human Settlements estimates that 924 million people, or 31.6% of the world’s urban population, lived in slums in 2001. Although forecasts are difficult, it is generally agreed that this number could greatly increase in coming years in the absence of strong policy interventions. These trends underscore the importance of slum upgrading strategies for addressing the growing problems of urban poverty.
Upgrading projects focus on providing basic services to improve the well-being of low income communities, including a range of infrastructure interventions frequently undertaken in conjunction with social interventions, such as the regularization of areas with insecure tenure. Other infrastructure improvements include water, sanitation, waste collection, housing, access roads, footpaths, storm drainage, lighting, public telephones, schools, health posts and community centers. Social improvements can include better provision of health and education services, day care, training, and social protection programs. With the projected increases in slum population, the demand for urban upgrading interventions is expected to grow.
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