1. Microfinance: It's not often that I have a plain microfinance item these days, but there are some important specifically microfinance points of interest this week. First it's the 10th anniversary edition of the Microfinance Barometer. There's an interesting piece in it on the evolution of the Barometer's coverage, and one on "digitalisation: risk or opportunity?" which I automatically like because of the framing. Also, there's an article asking whether financial inclusion and microfinance are the same thing, which I was kind of taken aback by since I mostly hear these days about whether there is a meaningful and useful difference between inclusion and health. I didn't know anyone was still equating microfinance with inclusion. But perhaps the most interesting thing is a small snippet of data on Portfolio at Risk: the trend is definitely upward toward 7% PAR30, which is well above the historic range of "good practice" microcredit. Is it a sign of MFIs learning to take more risk? Or that they are being pressured by digital entrants to be more aggressive? Or something else?
This week the European Microfinance Platform released Financial Inclusion Compass 2019, the report on their annual survey of trends in financial inclusion (note, not trends in microfinance). You'll hear more about Compass in coming weeks as the eMFP team will be taking over the faiV one week soon. In my quick initial look through the thing I found most interesting is the divergence between how MFIs and investors are rating various issues. Specifically, MFIs still put human resources issues at the top of their list of concerns--it's still a problem attracting, training and retaining staff apparently. Which should raise questions of digital security: if MFIs can't retain basic banking staff, what hope do they have of attracting and retaining cybersecurity staff? (Yes, I'm going to keep banging on this drum for a long time to come.)
Speaking of digital finance, one more thing for this week: MicroSave's full report on the state of digital credit in Kenya is full of fascinating (and scary) details. Like, "Between 2016 and 2018, "86% of loans that Kenyans took were digital in nature." Yes, indeed, it sounds like the MFIs are under significant pressure. But so you don't think I'm letting my confirmation bias run totally rampant, here's a recent blog post from MicroSave highlighting the positive trends in digital credit in Kenya, which include rising loan quality (that is, if you consider repayment rates a pure measure of loan quality; sorry, not sorry). Especially since there is also a new report from FSDKenya "evaluating the conduct and practice of digital lending" there. It includes fun stories like relatives of borrowers being threatened with being blacklisted at credit agencies if they don't compel repayment. Loan quality is definitely improving.
2. Migration: Did I mention I have a new paper with Michael Clemens on reframing the migration research agenda? Oh yes, I'm sure I did, but nevertheless, here it is again.
But there is also some brand new stuff. First, here's a look at the impact of massive out-migration from Galicia since 1860. The initial outflow lowered literacy rates for about a decade but then the trend reversed with large gains in human capital at origin that have persisted for more than a century. The mechanism: both remittances from the migrants to fund education back in Galicia and the transmission of norms about the importance of education.
There's also a new study of the impact of the end of the Bracero program which allowed Mexicans to migrate for agricultural jobs in the United States beginning during World War II. When the program ended, there was a sudden massive drop in migrants. What happened? Well, awhile ago, Michael, Ethan Lewis and Hannah Postel had a paper showing there was no effect on employment or wages for native-born workers. This new paper by Muly San explains why: large investment in technology to reduce the labor needed to harvest the crops that Bracero's had been employed harvesting (and not in other crops.)
Drawing heavily on Michael's research there's also a new special report from The Economist making the case for more migration to make the world a better place. And it doesn't even include how migrants seem to be the best defenders America's institutions have right now.
And here's a story about how the huge inflow of Venezuelan refugees into Colombia has made it the fastest growing country on the continent--and apparently about the most stable country on the continent right now.
Meanwhile, if you're wondering what's wrong with America you're not alone. Here's a partial answer that I've featured before: Americans keep setting new records for immobility.
3. Work: I'm going to resist filing these under "corrupted economy" but not at least hinting in that direction. I'm always a sucker for stories that bring historical context to modern phenomena. Here's one comparing gig work to labor conditions a century ago before there were significant labor protections and instead of celebrating "worker freedom" lot's of people worried about the huge risks these workers were taking on.
There is something new under the sun though: the workers are at even more of a disadvantage to the "bosses" because now the bosses can use sophisticated algorithms to figure out exactly how to reduce what they pay the workers while making it harder for the workers to see how their incomes are being constantly pushed downward. Amazingly that's not even worst practice. Here's a story about how an online platform defrauded colleges students with a traditional labor market scam: pay a small fee for a job that disappears. Great convergence anyone?
Again to fight the confirmation bias: here's a new report from the JP Morgan Chase Institute looking at how families, particularly men, in the US use gig work to cover income shortfalls from the loss of a job. That's good. It would be better for the income from those gig jobs was higher and more stable. It remains to be seen if that's in the choice set.
And finally, the Hamilton Project has a newish report on the potential impact of work requirements for food stamp and Medicaid eligibility, ideas that are being pushed in a number of states. They find that the people using these benefits are moving into and out of them because of a lot of employment instability--which a work requirement is simply not going to do anything about (other than, you know, deny them access to the safety net.)
4. Global Development: Time to take a break from the downbeat. In my defense, I did say this was the unfortunate events edition. Anyway, I meant to include this a few weeks ago and it just slipped my mind.
I wish there was more attention in development conversations to these instances where a particular country becomes the best at something. Now, you're probably thinking that there is a lot of economics research on Japan and Toyota, or the Asian Tigers, or the rise of China, or Silicon Valley, etc. etc. But I'm talking about when a country becomes a world beater at something obscure.
Say for instance how Egypt has become far and away the best country in the world at squash. Or did you know that Nigeria is dominant at Scrabble? Or the Finns are worldbeaters at hobby horsing?
5. Our Algorithmic Overlords: I wasn't looking to find evidence for my great convergence hypothesis on election security, but there you go. Here's a story about Niger's rapid transition to a biometric voting system and the many reasons to be concerned that it isn't going to actually deliver more democratic and secure elections.
Which it so happens is a similar problem to one the US has, though not around biometrics but simply around election security. Here's some truly frightening testimony about how incredibly insecure electronic voting machines being deployed in around the US are.
Meanwhile, India may be pressing ahead to implement a national citizenship register that critics say is a thinly veiled attempt to disenfranchise and ultimately deport a significant part of the Muslim population of the country, a process that already seems to have begun in Assam. Or maybe not?
Ever wonder what technology change looked and felt like in the early 20th century? Wonder no more. Apparently the move to dial telephones (as opposed to the operator based system) required lengthy movies to explain.
