Specifications Phase III Call for Proposals · creation (for example through public work programs), public employment services, employment subsidies, and labor market training. ALMPs

Application deadline October 29 2013, 16.00 CET

Specifications

Phase III

Call for Proposals

Phase III IZA/DFID GLM | LIC Programme 2 | 20

Contents

Contents .......................................................................................................................................................................... 2 1. SUMMARY OF THE PROGRAM ................................................................................................................................ 3

1.1 GLM | LIC ........................................................................................................................................................ 3 1.2 Background .................................................................................................................................................... 3 1.3 Target Region ................................................................................................................................................. 3 1.4 Capacity Building and Research Uptake ......................................................................................................... 4 1.5 Program Value................................................................................................................................................ 4

2. SCOPE OF THE CALL ................................................................................................................................................ 4 2.1 Phase III Research Areas ................................................................................................................................ 4

2.1.1 RA 1: Growth and Labor Market Outcomes .......................................................................................... 5 2.1.2 RA 2: Active Labor Market Policies ........................................................................................................ 5 2.1.3 RA 3: Labor Market Institutions ............................................................................................................ 6 2.1.4 RA 4: Migration and Labor Markets ...................................................................................................... 7 2.1.5 RA 5: Gender ......................................................................................................................................... 7 2.1.6 RA 6: Data for Labor Market Analysis .................................................................................................... 8 2.1.7 Matching, pooling and learning: an urban advantage for labor? .......................................................... 8

2.2 Project Value and Limitations ........................................................................................................................ 9 2.3 Field Work and Data Collection...................................................................................................................... 9 2.4 Research Uptake ............................................................................................................................................ 9 2.5 Capacity Building ............................................................................................................................................ 9

3. ELIGIBILITY AND APPLICATION PROCESS ................................................................................................................ 9 3.1 Procedure ....................................................................................................................................................... 9 3.2 Eligibility ....................................................................................................................................................... 10 3.3 Resubmission of Rejected Proposals............................................................................................................ 10 3.4 Consortia and Partner Institutions ............................................................................................................... 10 3.5 Chosen Research Area ................................................................................................................................. 11 3.6 Evaluation .................................................................................................................................................... 11 3.7 Important Dates ........................................................................................................................................... 11 3.8 Cost of Application ....................................................................................................................................... 12 3.9 Language ...................................................................................................................................................... 12

4. SUPPORTING DOCUMENTATION .......................................................................................................................... 12 4.1 Overview ...................................................................................................................................................... 12 4.2 Applicant/Partner Statement Forms ............................................................................................................ 13 4.3 Proof of Commercial Registration/Legal Existence ...................................................................................... 13 4.4 Statement of Honor ..................................................................................................................................... 13

5. CONTRACTING & REPORTING ............................................................................................................................... 14 5.1 Grant agreement .......................................................................................................................................... 14 5.2 Interim Reports ............................................................................................................................................ 14 5.3 Final Report .................................................................................................................................................. 14 5.4 Impact Report .............................................................................................................................................. 15 5.5 Financial reports .......................................................................................................................................... 15

6. CALL RELEVANT INFORMATION ............................................................................................................................ 15 6.1 Institution Details ......................................................................................................................................... 15 6.2 Call Basis ....................................................................................................................................................... 15 6.3 Legal Nature of the Call ................................................................................................................................ 15 6.4 Assistance and Support ................................................................................................................................ 16

Annex I .................................................................................................................................................................. 17


1. SUMMARY OF THE PROGRAM

1.1 GLM | LIC

The Institute for the Study of Labor (IZA) and the United Kingdom Government Department for International Development (DFID) joined to create the IZA/DFID Growth and Labour Markets in Low Income Countries Programme (GLM | LIC) in 2011. Through the funding of scientific research and the organization of research uptake activities and capacity building activities, the program aims at improving worldwide knowledge on labor market issues in low-income countries (LICs) and providing a solid basis for the development of future policies.

1.2 Background

To date, research on growth and labor markets has mainly been confined to developed and middle-income countries. Research on labor markets in these more advanced economies is not necessarily applicable to LICs for various reasons, including the differing stages in economic development, the particular structure of the economies, and the importance and size of the informal sector in these countries. More research with particular focus on LICs is therefore needed.

Promising research projects will be selected for funding with the overall objective of delivering a significant new body of evidence on growth and labor markets that will help shape labor market policies in LICs. The program aims at including theoretical work as well as applied macro- and microeconomic studies of a representative group of countries. Though the focus will be on quantitative research, qualitative research and case studies, or combinations of those, are eligible for funding as well. While new data collection, especially longitudinal or panel data at the firm or individual level, is necessary in some areas, proposals for projects using existing data are also invited.

Besides high-quality research, research uptake and capacity building are important components of the program. Planned uptake and capacity building activities organized under GLM | LIC include more than 10 workshops and conferences, as well as various publications and at least one collected volume of results. Moreover, applications for research projects must specify an impact plan, including early engagement of policy makers and other stakeholders, as well as uptake and dissemination activities. Capacity building through involvement of researchers based in LICs will be an important evaluation criterion in the selection of research projects.

1.3 Target Region

Research projects must be relevant to labor market policies in low-income countries (LICs). Research in other countries may be funded, but only if the applicant justifies the reasons for doing so and explicitly describes the process by which the results extend to LICs and are relevant for policy making in LICs. The list of countries defined by DFID as LICs can be found on the GLM | LIC web site.


1.4 Capacity Building and Research Uptake

The program would like to encourage the development of north-south and south-south research and policy networks and consortia. In particular, where northern researchers are the principal investigator, we will be looking for them to identify southern researchers as team members and LIC policy counterparts, and effectively demonstrate how researchers and policy makers from both developed and low-income countries will be brought together through the project.

GLM | LIC anticipates these networks and consortia having positive impacts on the relevance of the research, capacity building, as well as research uptake and impact. The research proposal will therefore include separate impact plan and capacity building sections.

1.5 Program Value

The GLM | LIC program has a total budget of €10.07 million (£8.9 million) to be allocated to research. It is expected that up to 30 grants will be awarded for research projects of institutions around the globe, with a substantial proportion of funds routed to research activities and capacity building in LICs. The funds are allocated in three phases. Descriptions of projects funded under Phase I and II can be found at http://glm-lic.iza.org/?page=110. For this third and final call it is expected that 10 to 12 projects will be funded.

2. SCOPE OF THE CALL

2.1 Phase III Research Areas

The Phase III Call for proposals includes six research areas (RAs) within the program’s focus on growth and labor markets in low-income countries. Five of these are substantive research areas, while the sixth focuses on improving data and data access. The research areas are: RA 1: Growth and labor market outcomes RA 2: Active labor market policies RA 3: Labor market institutions RA 4: Migration and labor markets RA 5: Gender RA 6: Data for labor market analysis

In addition, GLM | LIC has a special interest in urbanization and would like to encourage proposals under the growth and migration themes (RA1 and RA4) that respond to this agenda. A short description is included below, together with a more detailed description in Annex I, to offer three potential avenues for research – we welcome proposals on urbanization/agglomeration and labor that go beyond this.

http://glm-lic.iza.org/?page=110


The following description of the research areas are intended to provide direction for applicants. Where specific research questions are formulated, these are to be considered as examples. Proposals that focus on different questions are invited as well, but all proposals must address at least one of the specified research areas.

2.1.1 RA 1: Growth and Labor Market Outcomes

The first research area covers the overarching theme of economic growth and labor market outcomes in low-income countries. Currently, relatively little is known about the link between growth and the labor market in these countries. We therefore invite research on this broad issue, including the relationship with trade and the informal sector. There is particular need for research in the following three areas.

Determinants of labor intensive growth and higher quality employment growth

o Disentangling labor demand and supply factors as constraints to growth and structural change.

o What are the critical factors for stimulating employment-inducing growth in LICs? o Which jobs make a greater contribution to earnings growth and poverty reduction? o How can the relationship between growth, employment, and poverty be improved?

Functioning of labor markets

o Analysis of the labor market decisions of people in low income countries. o How do labor markets function in the informal sector? o Are there opportunities for recreating features of formal employment in the informal

sector to improve conditions? o How do youth make decisions in the labor market, and what is the role of informal labor

markets in aspirations in school-to-work-transition? Employment and productivity growth

o Improving our understanding of the relation between labor market changes, worker reallocation (structural change), trade, and aggregate productivity growth. A lot has been done in Latin American countries but much less in LICs.

o Short and medium term tensions between maximizing job creation and encouraging productivity increases.

o The impact of trade and globalization on labor markets in LICs. o Determinants of employment and productivity growth in non-agricultural export sectors,

in agriculture and the rural non-farm sectors, and in the services sectors. o Determinants of innovation and growth in large enterprises, especially in Africa.

Specifically by collecting new data looking at firm and employee dynamics, measuring employers’ investment in human capital and innovation/technology adoption and adaptation.

o Determinants of successful entrepreneurship, with particular focus on employment generation. Are there barriers that prevent the self-employed from hiring workers?

o Analysis of cross-country differences in management practices, social determinants of effort, and interventions to improve management.

2.1.2 RA 2: Active Labor Market Policies

The second research area focuses on active labor market policies (ALMPs). These include direct job creation (for example through public work programs), public employment services, employment subsidies, and labor market training. ALMPs have mainly been examined in the context of developed and middle-income countries. There is a clear need to improve our understanding of


ALPMs in LICs. In general, this includes the development of conceptual frameworks for analysis of ALMPs that account for the particular institutional settings of LICs, the large informal sector and importance of micro-enterprises, etc. There is also interest in the role of donors’ labor market interventions, including what donors can or should do and how effective they are. Further, we envisage research projects addressing the following issues:

Profiling

o What are the main constraints to employability of the most vulnerable in LICs, and which constraints are most binding?

Program design, implementation, and targeting

o How to ensure effectiveness in LIC context? What is the relative efficiency of different types of interventions and how does this vary by gender?

o What is the efficiency of interventions in transitioning people from informal to formal employment, and/or from less to more productive sectors?

o How can programs be incentive compatible in contexts of large informality and low enforcement?

o Which components of programs matter, in what combination, and what exposure is necessary? What do existing programs actually deliver?

o In the context of fragile and conflict-affected states, how effective are public works programs and jobs-related programs with demobilized combatants and their home communities?

o What are the effects of cost-sharing on, for example, financial sustainability, accountability, targeting, and attendance?

2.1.3 RA 3: Labor Market Institutions

Research under the third research area will focus on labor market institutions, such as labor market regulation, social protection programs, and social insurance. Research on low-income countries can build on a vast body of existing research. For example, it has been well established that employment protection legislation can hinder employment growth. However, it is not well understood how factors such as economic structure, institutional quality, and labor market segmentation affect this link. New research is needed to identify cases of complementarity between protection and efficiency and the conditions under which this occurs.

Impact on employment and growth

o What is the impact of employment protection regulation on employment? o What is the impact of income protection policies and labor regulation on innovation

and productivity growth? How is this relationship affected by labor market imperfections?

o How do social protection programs affect labor market outcomes? o How do the effects of labor regulation depend on other markets (such as capital and

land markets)? Effectiveness, coverage, and enforcement

o Do labor market regulations and institutions play an important role in LICs? o What are the most effective labor regulations in LICs and how can they be improved? o Should coverage of income protection systems be expanded, and how could this be

achieved? o What is the role of the quality of enforcement?


2.1.4 RA 4: Migration and Labor Markets

The fourth research area focuses on migration in relation to LIC labor markets. Migration can have large effects on people’s labor market outcomes and on the functioning of labor markets. Internal migration, including rural-rural, rural-urban, and urban-urban migration, can have important effects on earnings and employment of individuals, on the overall labor market, and on economic growth. International migration can also have significant microeconomic and macroeconomic consequences, including potential effects on sending country human capital. Migration, both internal and international, can also play an important role in responses to natural disasters, political conflict, and climate change, with large labor market consequences.

Internal migration

o What role does seasonal migration play in LIC labor markets? o Are levels of inter-regional migration and rural-urban migration inefficiently high or

low? Do potential migrants have good information about employment and wage opportunities in other locations? Are credit constraints a barrier to migration?

o What are the labor market outcomes of new migrants? o What is the impact of migration and remittances on left-behind relatives, including

their human capital and labor market outcomes? o How does urbanization and agglomeration affect LIC labor markets?

International migration and LIC labor markets

o What types of people are most likely to leave low-income countries? How are local labor markets affected by out-migration?

o How does migration affect left-behind relatives? What is the impact of international remittances on labor markets and human capital?

o How does return migration affect labor markets? o What is the labor market impact of migration associated with natural disasters,

political conflict, and climate change? o What are the returns to foreign education? How does foreign education affect skills

and skill mismatches in LICs? o What kinds of policies can enhance the positive effects of out-migration, return

migration, or remittances?

2.1.5 RA 5: Gender

The fifth research area addresses the need to better understand the labour market position of women in LICs. Little is known about the aggregate trends of female labor participation in these countries, about the determinants and consequences of women’s participation, and how to support women to engage in more productive sectors with better earnings potential.

What are the main determinants of female labor force participation and female

underemployment in LICs and how do these vary with the level of development and other economic and social factors?

What are the causes of gender gaps in earnings and productivity? Which models can help us understand barriers and constraints to improved labor market

outcomes for women, in relation to: markets, household dynamics, formal institutions (laws and regulations), and informal institutions (social norms and obligations).

How can we improve measures of non-market productivity and the value of non-market work? How will better measures of non-market work affect estimates of women’s labor supply?

What is the relationship between women’s unpaid work and entry into paid work?


How does female labor force participation affect women’s position within the household and within their communities?

What combinations of policies, practices and institutions are effective in tackling discrimination and enabling women to engage in more productive sectors with better security and earnings potential?

How does female labor force participation affect child labor? How do men and women differ in terms of job security and employment conditions,

especially in informal enterprises, but also in the formal sector? How do gender inequalities in education and skills impact on gender gaps in labor force

participation, on entry into more highly remunerated occupations, and on earnings? What is the gendered impact of global downturns on employment, and what works to protect

women from economic volatility in different contexts?

2.1.6 RA 6: Data for Labor Market Analysis

There is a need for more data, better data, and more accessible data for analyzing labor markets in LICs. Some countries have household surveys and firm-level surveys that may be valuable for research, but which are not accessible to researchers or which are in need of substantial cleaning and data management before they can be effectively used. Other countries have administrative data that is potentially useful for research but which requires careful treatment of confidentiality issues. This research area, which has been newly added for Phase III, has the goal of encouraging projects that will lead to the availability of new data resources for research on labor markets in LICS. This research area is not primarily intended for the support of new data collection projects, which will in general be more appropriate for proposals submitted under one of the first five research areas. The goal is to support projects that take existing data and make it useable for labor market research and/or make it available to a wider group of researchers. Projects that produce data for dissemination to the full community of researchers will be given the highest priority. Our goal is to fund at least one project in this area, using evaluation criteria that will be appropriate to the objectives. Examples of projects include: Work with statistical agencies in one or more countries to make existing data useable and

accessible for researchers doing labor market research. This could include household surveys, firm surveys, and administrative data.

Development of resources that would give researchers access to labor market data that cannot be publicly disseminated. This could include web-based resources or restricted data enclaves.

Matching household or firm data with data from other sources to create richer data for analyzing LIC labor markets.

2.1.7 Matching, pooling and learning: an urban advantage for labor? The positive link between urbanization and income growth is an empirical regularity in economics as well as a topic that has occupied theorists since Adam Smith. In high-income countries it has been estimated that a doubling of employment density increases labor productivity by about 5%. But are these effects as strong in low-income settings, and in the informal sector? Do they benefit the poorest? And from this perspective, is the rate of urbanization in low-income countries sub-optimal, and why? There is no separate Research Area covering urbanization and labor markets, but proposals under the growth and migration themes (RA1 and RA4) that address these and related questions are encouraged. See Annex I for further details.


2.2 Project Value and Limitations

In total, the program aims to fund approximately 30 projects for a total value of €10.07 million. It is expected that 10 to 12 projects will be selected for funding in Phase III. Applications are invited for projects of different values and duration, but with a value of at least €100,000. Projects should start in June 2014 and be completed By the end of June 2017 at the latest..

2.3 Field Work and Data Collection

Researchers proposing to do fieldwork and data collection must include a discussion about the protection of human subjects, including reference to ethics review boards that will be used to evaluate and certify the proposed research. Researchers collecting data will be expected to provide open access to their data, with appropriate confidentiality protections, to the larger research community. Proposals to collect data should include funding to prepare the data for open access dissemination and must include a data-sharing plan in the proposal, with a time table for public release (within one year of project completion, at the latest). IZA’s International Data Service Center will be available to projects as a resource for dissemination of data.

2.4 Research Uptake

All project proposals must include an impact plan that outlines by whom results will be used and how these users are involved throughout the project. Especially early engagement of stakeholders, in design and implementation phases of the projects, is considered to be important. The impact plan is evaluated as an integral part of the research proposal.

2.5 Capacity Building

Capacity building in low-income countries is an important objective of the program and will be one of the proposal evaluation criteria. This can be addressed through the composition of the research team or other types of north-south or south-south interaction through the project. Involvement of researchers in low-income countries is particularly encouraged.

3. ELIGIBILITY AND APPLICATION PROCESS

3.1 Procedure

Applicants must follow the application procedure as outlined in this call and the supporting documents, including the GLM | LIC Instructions for Applicants. Applications submitted through other channels will not be considered.


Only one application per applicant per research area will be accepted. A person can serve as Principal Investigator in one application at most.

3.2 Eligibility

This call is open to researchers based in institutions and organizations from all over the world, subject to the condition that the institutions are not in any of the situations listed under section 4.4. To start the application process, institutions need to register at http://www.iza.org/glm-lic/eap (institutions that already registered during Phase I or Phase II do not need to register again). Institutions and organizations must be legal entities, or a group of legal entities, as recognized by the European Union.

Natural persons are not eligible to receive funding under GLM | LIC. Applications are tied to the institution by which they are submitted.

It is the applicant’s responsibility to ensure that proposed research is in line with this call. Any inquiry relating to this will not be processed. The decision, whether a proposed project is in line with the aims and objectives of the call, rests solely with the selection bodies within GLM | LIC.

3.3 Resubmission of Rejected Proposals

Please contact [email protected] in case you consider resubmitting a rejected proposal. A revised proposal can only be resubmitted with prior approval of the GLM | LIC Program Director. Without prior approval, a resubmitted application will not be considered. GLM | LIC cannot guarantee that a resubmitted proposal will be successful.

Proposals must be resubmitted through the Electronic Applicant Portal and must use the application materials of the Phase III Call and follow the Phase III Call Specifications.

3.4 Consortia and Partner Institutions

Applicants may apply in cooperation with other institutions and organizations, thereby forming a consortium. Consortium members must have signed a cooperation agreement, either for permanent cooperation in a relevant field of activities or for cooperation with the sole purpose of applying for funding under and providing services for GLM | LIC. IZA may at any time during the application process request delivery of a consortium agreement signed by all partners.

Consortia must appoint one Principal Investigator. The institution hosting the Principal Investigator will be lead partner, and will be the sole point of contact with GLM | LIC administrative officers and will be responsible for providing all required information in connection with the application.

The lead partner will also be required to enter into a contract with IZA for and on behalf of all consortium members in case of successful application.

http://www.iza.org/glm-lic/eap


Institutions hosting experts who will take part in the proposed research but are not the Principal Investigator do not need to be identified as partners (Please refer to the online FAQ and the Instructions for Applicants).

3.5 Chosen Research Area

Applicants must choose one research area under which their proposal is submitted. In case the proposal covers more than one research area, the applicant should choose the one deemed most relevant.

3.6 Evaluation

Eligible proposals are evaluated by peer-reviewers. Peer-reviewers assign scores to proposals and comment on the following criteria:

Quality of the research proposal, including research design and relevance to policies in LICs.

Quality and composition of the research team.

Quality of the impact plan and capacity building component of the project.

Quality of the project management, including quality assurance mechanisms, resource allocation and value for money, and project feasibility.

The Independent Oversight Committee of GLM | LIC discusses all proposals based on the peer-reviews, and selects a shortlist of projects to be funded. The shortlist is subject to a final review by the Programme Management Group (PMG).

3.7 Important Dates

Deadline for proposals 16.00 CET, 29th October 2013

Communication of award decisions April/May 2014

Start of projects June 2014

Completion of projects June 2017 at the latest

Proposals must be valid until August 31st 2014.


http://glm-lic.iza.org/files/GLM_LIC_Step-by-Step.pdf


3.8 Cost of Application

Applicants will bear all cost of the application. Cost incurred by applicants during the application stage will not be reimbursed.

3.9 Language

The language of all application documents, including the project proposal and CVs, is English. Proposals written entirely or partially in another language shall not be considered.

4. SUPPORTING DOCUMENTATION

4.1 Overview

Applicants are required to submit a number of documents via the Electronic Applicant Portal. Therefore registration on the EAP is mandatory. In the case of a consortium, the lead partner will submit all documents and shall be responsible for collecting und uploading documentation for the partners. Partner Institutions do not need to register on the EAP.

Required documents are:

Applicant Statement

Proof of Commercial Registration/Legal Existence

Statement of Honor

List of researchers

Summary, max 1500 words

Abstract, max 300 words

Project Proposal (including a 12 page research proposal and other components, see template)

Budget

In addition, in the case of a consortium, the following documents need to be provided for all partners:

Partner Statement

Proof of Commercial Registration/Legal Existence

Statement of Honor

Templates for all documents, where applicable, can be found at http://glm-lic.iza.org/?page=92.



Applicants will need to upload scans of signed forms. IZA may request originals of these documents at any stage in the application process.

4.2 Applicant/Partner Statement Forms

Statement Forms are required by all applicant institutions. Single institutions and consortium leader institutions are required to submit the Applicant Statement Form. Consortium Partners should submit the Partner Form.

The forms may not be changed or altered - electronically or otherwise. Consortium partners are required to authorize the lead partner to sign an agreement with IZA which obligates their institution to provide the services described in the proposal.

4.3 Proof of Commercial Registration/Legal Existence

Applicants will need to show that they are eligible to participate in this call by providing proof of their legal existence. Preferably, applicants will provide a copy of or an excerpt from the commercial register showing their registration, address, full legal status and authorized representatives. This is the only document which may be written in a language other than English (in which case an accompanying working translation should also be provided).

In addition, applicants will need to show that they are economically capable of fulfilling the tasks of the contract entered into in case of funding. For this reason, applicants will be required to provide balance sheets or excerpts from balance sheets and profit and loss accounts for the last two years for which accounts have been closed. These documents need to be provided to IZA within 14 days following a request by IZA to do so. Failure to meet this deadline will result in expiry of the funding offer. Applicants are therefore advised – but are not required – to provide these documents before or shortly after the application deadline.

4.4 Statement of Honor

Applicants are required to submit a Statement of Honor in which they declare that:

they are not bankrupt or being wound up, are not having their affairs administered by the courts, have not entered into an arrangement with their creditors and have not suspended their business;

they have not been convicted of an offence concerning their professional conduct;

they do not have a record of professional misconduct;

they have not been convicted for fraud, corruption, involvement in criminal organizations or any other activity which may have e negative effect on their participation in the GLM | LIC program;


they have fulfilled their tax and social security obligations;

they do not have a record of mistreatment of employees;

they are not citizen of a state that is not diplomatically recognized by the international community due to human rights abuses;

they are not employed by IZA;

their participation would not cause a conflict of interest;

Besides the statement of Honor, further proof may be requested prior to contracting. The Statement of Honor form can be downloaded from the GLM | LIC website

5. CONTRACTING & REPORTING

Applicants will be notified of the final selection results. Applicants can request additional information concerning the outcomes of the review process after notification of the results. Decisions made by the GLM | LIC decision making bodies are final and cannot be contested.

5.1 Grant agreement

Successful applicants will be expected to sign a grant agreement with IZA covering the details of service provision and funding. Consortium leaders will enter into a contract with IZA on behalf of the entire consortium. IZA may at any time request a consortium agreement signed by all partners covering the details of the cooperation.

In special circumstances and in cases where a substantial portion of the work is to be done by a consortium partner, IZA may request that the partners accede to the contract signed by the leader.

An example version of the standard GLM | LIC grant agreement is available on the GLM | LIC homepage. Applicants are encouraged to familiarize themselves with the grant agreement before preparing their application. The provisions of the standard grant agreement are fixed and non-negotiable.

5.2 Interim Reports

During the course of their research, all award holders will be required to submit activity statements and progress reports to IZA. The acceptance of interim reports by IZA may be a condition for continued payment of the grant.

5.3 Final Report

Award holders will be required to submit an End of Award final report. The final report should provide a clear picture of the project, the research conducted and the outcomes of the project.


5.4 Impact Report

Award holders will be required to submit an Impact report to IZA within one year after the grant end date. The Impact Report should cover scientific, economic and societal impacts. Acceptance of the final and impact report will be a condition for complete payment of the grant.

5.5 Financial reports

Award holders will be required to submit audited project specific financial statements showing how the funds provided for GLM | LIC have been spent. At least one final audited statement will be required but usually award holders will need to submit one mid-project financial statement and one final financial statement.

6. CALL RELEVANT INFORMATION

6.1 Institution Details

Contracting Institution: Forschungsinstitut zur Zukunft der Arbeit GmbH IZA (Institute for the Study of Labor) Address: Schaumburg-Lippe-Straße 5 -7 53113 Bonn Germany

Program website: http://glm-lic.iza.org Contact person: Sven Kleinert [email protected]

6.2 Call Basis

This call and any subsequent contracting is part of the joint IZA/DFID Growth and Labour Markets in Low Income Countries Programme (GLM | LIC). All activities relating to this call or subsequent activities are governed by the agreement between IZA and DFID.

6.3 Legal Nature of the Call

This call for proposals is not a legal offer and does not establish contractual obligations toward participants. The call should be considered as an invitation to submit offers.


6.4 Assistance and Support

Applicants may request assistance by the GLM | LIC administration by email ([email protected]) only. Assistance may not be rendered if requests are received less than six working days before the submission deadline.

mailto:[email protected]


Annex I

Urban Theme Matching, pooling and learning: an urban advantage for labor?

Motivation The positive link between urbanization and income growth is an empirical regularity in economics as well as a topic that has occupied theorists since Adam Smith. Some of the agglomeration economies thought to drive this process operate through the labor market and certainly the relationship can be observed in labor market outcomes: in high-income countries it has been estimated that a doubling of employment density increases labor productivity by about 5%1.

Moreover, urbanization happens early in the development process. The average country reaches 50% urban population by the time its per capita GDP is about $2,500; a country at the $1,000 LIC/LMIC threshold has typically reached 40%, while the average LIC (income $550) is 30% urban. Many of GLM-LIC’s focus countries therefore are at a stage where the urbanization process is at its most rapid, offering a window of opportunity for study as well as creating demand amongst policymakers for analysis and guidance.

However, there is a dearth of studies on urbanization in low-income settings with a particularly thin empirical literature.

Urbanization economies and labor (under RA1) One of the key urbanization economies that may operate through the labor market relates to the accumulation of human capital: “urban areas can be thought of as schools in which managers and workers can continually add to their skills.”2 Research in high-income settings has found that workers earn higher wages in large cities, with an urban wage premium of about 20% after controlling for selection (the fact that migrants to the city might themselves be more productive anyway)3. Moreover, long-time residents earn a premium over new arrivals, which is suggestive of learning (or at least, some dynamic process that increases productivity). A peer-to-peer learning process among workers is also consistent with evidence that firms in a city are 5% more productive for every extra

1 Ciccone, A., & Hall, R. E. (1996). Productivity and the density of economic activity (No. w4313). National Bureau of Economic Research, Ciccone, A. (2002). Agglomeration effects in Europe. European Economic Review, 46(2), 213-227 2 Rosenthal, S. S., & Strange, W. C. (2004). Evidence on the nature and sources of agglomeration economies. Handbook of regional and urban economics, 4, 2119-2171 3 Glaeser, E. (2001). Mare, D., 2001, Cities and Skills. J. LAB. ECON., 19, 316.


year of education of workers in other industries in the city4. Further evidence suggests particularly strong spillovers from highly educated workers5.

The view that cities add to workers’ human capital is supplemented by the idea that they might elicit greater effort from workers. For professionals at least, urbanization is associated with longer work hours6. While this may be partly a question of selection - the most industrious choose to go and work in cities - the fact that individuals work longer in locations the more workers of the same occupation are present indicates that it is not simply a question of workers revealing their type – it seems the concentration of activity in the city may sharpen the incentives for hard work.

A third candidate source of agglomeration economies is the improved matching that can be achieved in a large labor pool. There are two main notions of what constitutes a good “match” and the advantages of a labor pool. The older idea, going back to Smith, is that a larger market should accommodate a greater degree of specialization – i.e. better matching refers to a higher degree of specialization amongst workers with complementary skills facing firms with specific needs. Evidence that doctors are more specialized in cities supports this view7.

Another view focuses on mitigating risk for workers and firms. The idea is that both firms and workers face the risk of termination of their employment contract. In a large labor pool it should be easier both for the worker to find a new firm and vice-versa as long as risk is largely idiosyncratic i.e. affects individuals differently. (The pool can’t help with shocks common to everyone in the city as e.g. all firms would try to expand/contract employment simultaneously.) More formally: “establishments prefer locations where their productivity shocks get ironed out rather than heavily reflected in local wages”8.

These are some of the micro-foundations i.e. the specific processes that could explain the macro picture of agglomeration economies. However, the empirical studies comparing, say, labor productivity and employment density that make up the bulk of the literature have little to say

4 Moretti, E. (1999). Workers' Education, Externalities and Technology Adoption: Evidence from Plant-Level Production Functions. Center for Labor Economics, University of California, Berkeley . The final journal paper does not repeat this finding: Moretti, E. (2004). Workers' education, spillovers, and productivity: evidence from plant-level production functions. American Economic Review, 656-690. See also Rauch, James E. 1993. “Productivity gains from geographic concentration of human capital: evidence from the cities”. Journal of Urban Economics 34(3):380–400. 5 Moretti, E. (2004). Estimating the social return to higher education: evidence from longitudinal and repeated cross-sectional data. Journal of econometrics, 121(1), 175-212. See also Glaeser, E. L., & Resseger, M. G. (2010). The complementarity between cities and skills*. Journal of Regional Science, 50(1), 221-244. For a broader review of the empirics of human capital effects in cities see: Duranton, Gilles. "Human capital externalities in cities: Identification and policy issues." A Companion to Urban Economics. Oxford: Blackwell Publishing Ltd (2006) 6 Rosenthal, Stuart S., and William C. Strange. "The urban rat race." Syracuse University Working (2002). 7 Baumgartner, J. R. (1988), "Physicians' services and the division of labor across local markets," Journal of Political Economy 96(5): 948-982. 8 Overman, Henry G., and Diego Puga. "Labor pooling as a source of agglomeration: An empirical investigation." Agglomeration Economics. University of Chicago Press, 2010. 133-150


about which mechanisms are most important. This is because, at this level of analysis, all the alternative mechanisms would manifest themselves in the same way – a positive correlation between density and productivity.

While these studies can be interpreted as providing evidence for particular microfoundations, there is a need to supplement this with more direct evidence on the processes at work. A number of studies attempt to measure and compare the strength of the alternative mechanisms, tending to find the strongest evidence for the labor pooling effect9.

In addition, these effects can interact with some of the traditional concerns of the wider literature. For example, in the context of enterprise productivity, emerging evidence examines the relative strength of agglomeration effects in the formal and informal sectors, concluding: “Cities generate agglomeration benefits in the informal sector, perhaps more so than for the formal sector”10. It would be useful to understand if this is true for labor, and why.

The key research questions under this topic are:

1. Do agglomeration externalities operate in the labor markets of low-income countries? Are they as strong as in HICs?

2. What is the relative strength and scope of these economies? (where scope may refer to the physical space, time or economic sector across which the economies take place)

3. In particular: how does the strength of these economies vary across the formal and informal sectors and by employment vs. self-employment?

Please submit proposals responding to these questions under research area 1: growth and labor market outcomes.

Migration and city formation (under RA4) One suggestion from recent empirical work is that urbanization in low-income countries, and particularly in sub-Saharan Africa, has not been as strongly associated with growth as it has in other parts of the world11. This is the set of issues addressed above.

However, in addition Africa is simply less urbanized than any other continent in the world. The theory indicates that a lot of growth gains could be realized simply by facilitating the process of city formation.

9 Rosenthal and Strange (2001), Dumais et al (1997). A contrasting view, where labour pooling emerges as the least significant factor can be found in Duranton et al (2012) 10 Ejaz Ghani; Ravi Kanbur, “Urbanization and (In)Formalization” World Bank Working Paper (2013) 11 Gollin, Douglas, Remi Jedwab, and Dietrich Vollrath. "Urbanization with and without Industrialization." Unpublished manuscript, Oxford University Department of International Development (2013).


In China, the Hukou system of controlling internal migration is thought to account for the fact that nearly half of Chinese cities seem to be undersized i.e. labor productivity would be maximized in a larger city12.

Such formal controls of this sort may be unique to China, but many rural-urban migrants in other parts of the world can expect a hostile reception in their adopted homelands, with persecution of informal enterprise and destruction of informal settlements a common response of city authorities to increased arrivals of migrants13.

The key research question under this topic is:

1. What is the cost of migration restrictions, implicit and explicit, in terms of output forfeited due to failure to realize agglomeration economies?

Please submit proposals responding to these questions under research area 4: migration and labour markets.

Capturing the gains: welfare and poverty (under RA1) While an urban wage premium does not necessarily imply that productivity is increased through labor market effects, by the same token agglomeration economies that do operate through the labor market will not necessarily be captured by workers14.

Key research questions under this final theme are:

1. Do low-skilled workers benefit from agglomerations to the same extent as high-skilled workers? 2. Are urban labor productivity gains an important route for exiting poverty? 3. How do benefits differ between employees and self-employed workers, and between formal

and informal sector employees?

Please submit proposals responding to these questions under research area 1: growth and labor market outcomes.

12 Au, Chun-Chung, and J. Vernon Henderson. "Are Chinese cities too small?." The Review of Economic Studies 73.3 (2006): 549-576 13 See for example: De Haan, Arjan. "Migrants, livelihoods and rights: the relevance of migration in development policies." (2000) and Michael Alexander “Local policies toward migrants as an expression of Host-Stranger relations: A proposed typology” (2003), Journal of Ethnic and Migration Studies, 29:3, 411-430 14 Overman and Puga (2010) op. cit.

Documents

Specifications Phase III Call for Proposals · creation (for example through public work programs), public employment services, employment subsidies, and labor market training. ALMPs