MACRO SIMULATION MODELS PILLAR 2 LETS WORK WASHINGTON

MACRO SIMULATION MODELS PILLAR 2 – LET’S WORK WASHINGTON, D. C. Camilo Mondragon-Velez April 18, 2016

DEFINITIONS v For the Let’s Work initiative, macro simulation models are intended as a tool for ex-ante jobs estimation, that explore a range of outputs throughout the economy, resulting from investments in a given sector(s) v Macro Simulation Models includes methodologies of varied levels of complexity: o Macro-econometric models Regression-based estimations of elasticities and multipliers across macro indicators time series. o Input-Output and SAM models Static estimation of multipliers based on fixed transactional relationships across sectors of the economy at a point in time, usually focused on the impact of interventions from a single sector. o Structural macroeconomic models Comprehensive representation of the economy’s structure, agents (households, industry sectors, government and the external sector) and markets (goods and services, labor, capital), which includes pricing adjustments in estimates of impact. Includes computable general equilibrium (CGE) and dynamic structural models. o Other macro-economic approaches Include combined approaches of the above with other methodologies, like Value Chains and Tracer Studies

MACRO SIMULATION MODELS GOALS RELATED TO JOBS v Estimate jobs impact of investments coming from investments or growth in one or multiple sectors, throughout the economy (including direct, indirect through the supply chain and induced job creation). v Estimate impact on different types of jobs: skills, education level, location. v Understand impact on jobs under different macroeconomic environments and conditions. v Estimate impact on jobs under technological change and external shocks. v Estimate impact on jobs of a variety of economic policies and changes in regulation. v Dynamic models can provide estimates of job impacts over time.

MACRO PROJECTS UNDER LET’S WORK PILLAR 2 Partner Methodology Sector Country IFC Input-Output / SAM plus sector-specific linked module Airports Jamaica and D. R. IFC Input-Output / SAM plus sector-specific linked module Ports Multi-country IFC Improved Input-Output / SAM model for Philippines Power Turkey IFC Input-Output / SAM and Value Chains Oil & Gas Ghana ILO SAM-based Employment Projection Model “Green Industries” Zambia PIDG TBD; considering leveraging ILO’s model. Power Zambia WB CGE and Social Cost-Benefit Analysis tool Multi-Sector West Bank and Gaza IFC General Equilibrium and System Dynamics Multi-Sector Ethiopia * PIDG Irrigation in Zambia and IFC Retail in Romania & Sri Lanka, initially proposed as macro studies, were transferred to Tracer Studies.

UPDATE ON MACRO PROJECTS UNDER LET’S WORK PILLAR 2 Technical Feasibility (MMWG) * Concept Note (LW) IFC Airports IFC Power Project Current Status / Implementation Expected Delivery Estimated Cost (USD) • Consultant selected • Inception report being revised Jul / 2016 $ 180 K • Consultant selected • Inception report under review Jul / 2016 $150 K • Consultant and reviewers selected • Expecting Inception report Jul / 2016 $ 150 K • Assessing data availability from client for VC analysis and availability of additional funding Aug / 2016 $ 125 K • ILO supporting Zambia to build updated I/O Dec / 2016 $ 100 K • CGE consultant selection and CBA tool design under way Nov / 2016 $ 200 K • Initial data collection and empirical analysis under way Nov / 2016 $140 K IFC Oil & Gas ILO Zambia PIDG Power Zambia MMWG advised discussion with ILO WB West Bank and Gaza IFC Ethiopia • PIDG to re-submit proposal based on dialogue with ILO.

MACRO MODELS WORKING GROUP MEMBERS • Marek Harsdorff, ILO • Massimiliano La Marca, ILO • Alex Mac. Gillivray, CDC • Camilo Mondragon–Velez, IFC • Ann Muir, PIDG • Emelly Mutambatsere, Af. DB • Martyn Shannon, DFID • Evgenia Shumilkina, IFC • Christopher Weiss, EIB