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

2. DEFINITIONS  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)  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

3. MACRO SIMULATION MODELS GOALS RELATED TO JOBS  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).  Estimate impact on different types of jobs: skills, education level, location.  Understand impact on jobs under different macroeconomic environments and conditions.  Estimate impact on jobs under technological change and external shocks.  Estimate impact on jobs of a variety of economic policies and changes in regulation.  Dynamic models can provide estimates of job impacts over time.

4. MACRO PROJECTS UNDER LET’S WORK PILLAR 2 PartnerMethodologySectorCountry IFCInput-Output / SAM plus sector-specific linked moduleAirports Jamaica and D.R. IFCInput-Output / SAM plus sector-specific linked modulePortsMulti-country IFCImproved Input-Output / SAM model for PhilippinesPowerTurkey IFCInput-Output / SAM and Value ChainsOil & GasGhana ILOSAM-based Employment Projection Model “Green Industries” Zambia PIDGTBD; considering leveraging ILO’s model.PowerZambia WBCGE and Social Cost-Benefit Analysis toolMulti-Sector West Bank and Gaza IFCGeneral Equilibrium and System DynamicsMulti-SectorEthiopia * PIDG Irrigation in Zambia and IFC Retail in Romania & Sri Lanka, initially proposed as macro studies, were transferred to Tracer Studies.

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

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