Is globalization bad for the global poor? This study ran an experiment to find out.

Zack Beauchamp · Thursday, September 29, 2016, 11:44 am

In the past several decades, manufacturing jobs have fled the developed world for the developing world. Obviously, that’s profoundly reshaped the economies of developing countries like China and Bangladesh. But what does that mean for the ordinary people that are doing the work — often for incredibly low wages?

Answering this question can be tricky. Large-scale data — like a nation’s poverty rate or GDP — can help us give a general sense of trade’s effect on growth and the poor. The problem is it can often be tough to figure out what low-wage manufacturing, specifically, adds to a country’s economy. It's even harder to drill down and measure the impact on those employed in the factories.

Enter economists Chris Blattman of the University of Chicago and Stefan Dercon of Oxford University. They came up with an interesting way of answering this question: Run a random, controlled experiment.

Normally, economists can’t do stuff like this: You can’t exactly run a lab test on an economy. But Blattman and Dercon convinced five companies in Ethiopia to hire people at random from a group of consenting participants, and then tracked the effects on their incomes and health. That way, you could pretty clearly figure out the effects of taking a low-wage manufacturing job on actual people.

So what did they find? Basically, that these are bad jobs. They hurt people’s health and don’t actually pay more than other opportunities.

Bad jobs, but perhaps valuable ones all the same. The economists believe that the factories provide valuable employment opportunities for those who wouldn’t otherwise have them, and thus play an important role in a nation’s development.

“You have to hold two things in your head,” Blattman told me over the phone. “Yeah, it’s better to have more jobs around — but there are actually some considerable health risks here. People are taking them because they’re desperate.”

Read more

http://www.vox.com/2016/9/29/13096580/globalization-poverty-experiment-blattman-dercon