Development Analytics Research Paper Series

Meltem A. Aran, Nazlı Aktakke, Martin C. Evans

July 2016

Fuel subsidies lead to environmental damage through inefficiencies in energy use, they are a burden for public budget and moreover, they are regressive, benefiting the already better off households. Despite, these negative qualities, energy subsidies are still implemented throughout the World. Post-tax energy subsidies in the World are estimated to be 5.3 trillion USD while fuel subsidies alone, are estimated to be 1.5 trillion USD, making up 1.8 percent of the global GDP in 2015. Although fuel subsidies are regressive, fuel subsidy reforms impact the poor the hardest. Previous experience with fuel subsidy reforms around the World shows that poverty increases as a result of fuel subsidy removal if it is not mitigated with redistribution efforts like cash transfers.

In Madagascar, the government decided to eliminate fuel subsidies gradually in June 2014. Yet, price control mechanism has not been dropped yet. Given the sharp fall in international oil prices in the last year, a window of opportunity has opened for Madagascar and countries alike to adopt a liberalized pricing system and abolish fuel subsidies.

Using ENSOMD 2012 data set, we show that in Madagascar, fuel subsidies are highly regressive. Gasoline and diesel consumption is very rare in the households in the bottom 60 percent while kerosene is commonly consumed by households from all income groups. We find that poor households are affected the least if kerosene price remains unchanged. Nevertheless, different price increase scenarios including a change in the price of kerosene do not increase poverty by more than 1 percentage points. Instead of reallocating the gains from the fuel subsidy reform to children aged 0-4 or 0-14 uniformly is found to decrease poverty rates between 2.4 to 4.6 percentage points.


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Women's Invisible Contribution: Quantifying the Economic Value of Women's Unpaid Care Activities in Turkey and Policy Options to Reduce Women's Care Burden

Meltem A. Aran, Nazlı Aktakke

June 2016

Women, whether in employment or not, spend a significant amount of time in Turkey occupied in unpaid home-based care activities, providing care for children and the elderly in their families. Among the OECD countries, the country ranks second in terms of the amount of time women spend on unpaid household chores and activities. This paper estimates the economic value of time women allocate in Turkey to direct care activities at home by using two main methodologies: (i) the opportunity cost method estimates the value of time using each woman’s potential earnings in the labor market, and (ii) the proxy good method calculates the value of time taking into account a constant fixed value of hourly earnings (either the minimum wage or the average wage of a social worker). The value of direct care, which constitutes a lower-bound for overall care activities of women, is estimated to be around 1.37-3.34 percent of GDP as of 2011. Using the opportunity cost of earnings methodology, the paper estimates the economic value of refocusing the time spent on care activities to employment to be 1.5 billion USD for working women and 4.8 billion USD for non-working women.


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Maternal and Child Health in Turkey Through the Health Transformation Program

Meltem A. Aran, Nazlı Aktakke, İpek Gürol, Rıfat Atun

December 2015

Improving maternal and child health outcomes is a major development objective. Targets related to these outcomes were included in the United Nation’s Millennium Development Goals and they continue to galvanize global support through the Sustainable Development Goals (under Goal 3 health targets). Turkey is among the few successful middle-income countries that have significantly reduced the under-5 mortality rate below the MDG 2015 target levels. This study analyses improved demand-side (health insurance, conditional cash transfers) and supply-side inputs (expanded health services) in Turkey’s health system as part of the Health Transition Program (HTP), as well as contextual improvements (such as improved economic well-being and increased maternal educational attainment), to identify how these input factors have advanced health outcomes. The results show that while demand-side measures, such as universal health coverage through extension of health insurance to low-income families (Green Card program), improved health utilisation variables, the main impact of on maternal and child health was through supply-side improvements which expanded for all women access to free antenatal and midwifery care, regardless of health insurance status.


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Socioeconomic Impact of Mining Activity: Effects of Gold Mining on Local Communities in Tanzania and Mali

Beyza Polat, Nazlı Aktakke, Meltem A. Aran, Andrew Dabalen, Punam Chuhan-Pole, Aly Sanoh

October 2014

The effect of extractive activity on economic growth and development is a long-debated issue in the economics literature. While most of the existing literature focuses on the macroeconomic impacts of natural resource abundance, there is a rather limited but growing strand of literature that studies the local economic impact of extractive activity using microdata. This paper aims to contribute to this literature by providing new evidence on the effects of gold mining in two resource-rich African countries: Tanzania and Mali. We utilize a rich data set collected from various sources and apply a differences-in-differences estimation strategy to see whether individuals/households geographically close to mines are affected differently from the opening of mines. We look at a number of outcome variables including various measures of children’s health indicators, households’ access to facilities, and women and men’s employment status. The first part of the analysis is at the household/individual level where the data is kept and treatment is defined at. As a second attempt, we aggregate the data up to the district level by using the appropriate poverty mapping techniques and apply Abadie et al. (2010)’s Synthetic Control Group method to study whether mining districts behave differently from non-mining districts after mines start operation. We reach different conclusions for the two case countries. In the case of Tanzania, we show that households in the immediate mining catchment area are negatively affected by extractive activity whereas this effect becomes positive when we consider households that are located in neighbouring and further away catchment areas. In the case of Mali, any significant positive impact of mining activity is on those households who are located closer to the mines. Those households, who are still in the catchment area but further away from the mine, are either not affected or negatively affected by mining activity.


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Can Child Care Vouchers Get Turkish Mothers Back to Work? Estimating the Employment and Redistributionary Impact of a Demand Side Child Care Subsidy in Turkey

Meltem A. Aran, Herwig Immervoll, Cristobal Ridao-Cano


Lack of access to affordable and quality child care is one of the impediments to increasing female labour force participation rates in Turkey. With less than one-third of working age women active in the labour market, the Turkish government has been considering options for expanding female labour force participation by providing a demand-side subsidy conditional on employment (or activation). To achieve this, utilization of child care is being considered as a policy option. This paper considers the labour supply impact and cost-effectiveness of such a demand-side subsidy by evaluating the labour supply model of women in Turkey under the current conditions and simulates -- under various targeting scenarios and for different benefit levels of the subsidy - (i) the number of women that would join the labour force or become formally employed; (ii) the budgetary implications and cost-effectiveness of the subsidy; and (iii) the potential benefits accrued by the bottom quintiles of society.

Given the constrained supply of existing services, the paper finds that the immediate employment impact of such a demand-side intervention is likely to be low, and the distribution regressive in the short term. A targeted subsidy based on welfare level and employability of the woman is likely to be most cost-effective in the medium term when supply-side constraints on child care are addressed and concurrent policies to expand the supply of child care have been implemented. In the short term, when the subsidy is provided conditional on child care utilization (and there is no targeting of the poor) the benefits are likely to be highly regressive, with only 3 percent of benefits accruing to the bottom quintile of the population. The formal employment impact of the program is also estimated to below: we find that in the short term the number of women activated through the program would range from 2,800 to 43,000 women (entering formal employment) at a cost varying from 1.4 million TL to 37 million TL per month (not including administrative costs of running the program) if the benefits are fixed at 50 % of the net minimum wage. In the medium term, when the supply of ECEC is assumed to be more flexible and supply of services is not a constraint, the demand side transfer is expected to activate into the formal sector an upper bound estimate of 187,600 women, constituting a less than 1 percentage point change in female labour force participation -- at a cost of about 138 million TL per month.


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Early Childhood Health and Education Outcomes and Children's Exposure to Multiple Risks in Turkey

Meltem A. Aran, Cristobal Ridao-Cano


This paper considers changes in children's early health and education opportunities and outcomes in Turkey. The study aims to look at changes in health utilization, nutrition, access to early childhood education and school enrolment rates for children between 2003 and 2008. The findings suggest that health utilization has improved over time in these years and access to health care has increasingly become delinked from initial circumstances of children in the household, in parallel to Turkey's expansion of the Health Transformation Program. On the other hand, nutrition outcomes remained correlated with maternal education and household wealth status. Access to early childhood education and care programs also came out to be highly regressive, with only households and children in the top quintile having access to childcare programs outside the home. The paper also considers later educational attainment outcomes for older children, by circumstance groups and finds that while some progress has been made in enrolment in basic education in these years, variables that define gender, mother tongue spoken at home and parental education remain significant determinants of early dropouts as of 2008. In the final section, the paper investigates exposure of a certain small group of children in Turkey to multiple risk factors at the same time and evaluates the incidence by circumstance group the probability of facing overlapping risks in early childhood. The paper argues that children in these circumstance groups, and that have exposure to multiple risk factors, should be the primary target of social protection and early childhood intervention programs.


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Inequality of Opportunity in Access to Basic Services Among Egyptian Children

Meltem A. Aran, Lire Ersado


This paper estimates inequality of opportunities among Egyptian children over time between the years 2000 and 2008 using Egypt Demographic and Health Surveys. The Human Opportunity Index (HOI) is calculated across four categories of access to services, including health utilization, nutrition, basic infrastructure services and school enrolment. Over these years, Egypt implemented several policies in the health and education sectors that improved the access of children to services through the nation-wide Family Health Model (FHM), as well as through a social marketing campaign to promote iodized salt. This paper finds improvements in the Human Opportunity Index linked to such policies, with HOI increasing from 38.8 to 67.7 for instance for the probability of blood sample being taken from the mother during pregnancy, and from 37.6 to 63.4 for births taking place in public or private health facilities. Increases in overall coverage of health services were responsible for improvements in the HOI. However, in terms of malnutrition, indicators have deteriorated during this time period, with HOI for not being stunted decreasing from 78.2 to 74. The decomposition of the HOI finds that the probability of malnutrition among Egyptian children is not closely linked to family circumstances, contrary to what one might expect, calling for more supply-side (and less targeted) efforts to reduce malnutrition for all Egyptian children.


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📖 Read our Article "Child Development Indicators in the Egyptian Context"

A Methodology Note on the Employment and Welfare Impacts of the 2007-08 Financial Crisis

Mohamed Ihsan Ajwad, Meltem A. Aran, Mehtabul Azam, Jesko Hentschel


The welfare impacts of economic downturns generally have to be estimated using simulation tools because of delays in conducting detailed household surveys. This note documents a methodology with which social impacts of an economic slowdown, through its impact on the sources of household income, can be simulated using a simple partial equilibrium model. The simulated impacts are direct, short-run impacts, and do not take into account general equilibrium effects. The methodology has the advantage that it can be implemented in a relatively short time and the data requirements for the analysis are household surveys, which are now generally available in most countries around the world. The methodology was implemented by The World Bank in Turkey and Latvia in early 2009. The main purpose of the work was to help policymakers estimate the scale of the welfare impact on households. This type of information can be crucial to drawing attention to the “human impact” of an economic slowdown, but also to help simulate the strength of safety nets needed to avert erosion in human capital. This note will focus on the Latvia and Turkey cases to illustrate the ease with which the model can be adapted to estimating the distributional impacts of economic shocks. Simulations show that both countries will experience a sharp rise in poverty, widening poverty gap, and a rise in income inequality. With an 18 percent GDP contraction in 2009 and the above employment projections, poverty will increase from 14.4 percent to 20.2 percent of the population in Latvia. In Turkey, simulations indicate that estimated GDP contractions of 5 percent and 1 percent in 2009 and 2010 respectively, in the absence of policy changes, will increase poverty headcount from a predicted 17.4 percent (2008) to 21.7 percent


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Welfare Impact of the Global Economic Crisis of 2008-2009 on Turkish Households: Evidence from a Specialized Monitoring Survey in 7 Provinces

Meltem A. Aran


This paper looks at how the macro shock from the 2008 financial crisis has translated into income and welfare shocks in the form of reduced earnings and consumption at the household level in Turkey. Using a specialized household level Welfare Monitoring Survey implemented in May-June 2009 in 7 provinces of Turkey, the paper estimates the impact of the macro-shock on food, education and health-related expenditures. The paper first establishes a link between the macro level shock in the financial sector in the province and the changes in earnings at the household level and then using an instrumental variables strategy, establishes the link between the earnings shock and changes in consumption. The main findings in the paper are that the informally employed workers and those with lower levels of education (lower than university level) were more likely to be hurt by the Crisis in the provinces where the survey was collected. Food expenditures acted as the main adjustment mechanism in the face of the income shock, while education and health expenditures remained relatively stable. The probability of reducing food consumption (and the amount of food provided to children) was highest among the poor that initially had low levels of household assets.

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Agricultural Technology Diffusion in a Post-Conflict Setting: Evidence from an Experimental Study in Eastern Turkey

Meltem A. Aran


This paper considers the impact of an agricultural extension program, The Özyeğin Rural Development Program, implemented in eastern Turkey, on rates of agricultural technology adoption. Using a uniquely designed experimental panel survey collected in treatment and control villages before and after program implementation, the paper analyses the heterogeneous impact of this agricultural extension program, on the adoption rates of different groups in the villages. The main results in the paper are consistent with the predictions of the model presented, whereby in the early stages of adoption, the existence of the agricultural extension program increases the adoption rates in the villages significantly for all households: treatment is associated with an increase in the rate of adoption of inoculation of fruit trees by 26.2-31.4 percentage points depending on the empirical specification. The paper also finds evidence for the "inclusiveness'' of the NGOs efforts by looking at the heterogeneous impact of the program on adoption rates of the "excluded" groups using various economic and political exclusion criteria. the paper also considers the role of social networks in access to information and rates of adoption of new technologies and finds that even in the presence of inclusive policies that reach out to economically or politically vulnerable sub-sections in the villages, those who do not have many social interactions with the rest of the village community may remain excluded from the benefits of the program.


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