a return of 1.4 percent, compared with 2.5 percent among wage workers. This means that the average increase in earnings that one additional year of experience generates among the self-employed is half that generated among wage workers (refer to figure 4.4). This pattern can be observed in cross-sectional data in which the wages of workers with different levels of experience are compared. It may also be observed in panel data on Brazil, China, and India when the same individuals are followed as they switch between wage work and self-employment (refer to box 4.2). Human Capital Accumulation at Work 81 FIGURE 4.4 Returns to experience are lower among the self-employed than among wage workers 75 50 25 0 10 20 30 Sources: Original figure for this publication, based on data of GLD (Global Labor Database Repository), World Bank, https://worldbank.github.io/gld/README.html; I2D2 (International Income Distribution Database) (internal database, discontinued in 2020), World Bank; SEDLAC (Socio-Economic Database for Latin America and the Caribbean), https://www .cedlas.econo.unlp.edu .ar/wp/estadisticas/sedlac/. Note: The figure shows estimated experience–wage profiles for working-age men grouped by potential experience. Hourly wages are total labor earnings, divided by hours worked. Returns are calculated in five-year experience bins, following Jedwab et al. (2023), using population weights. The results exclude high-income countries. For data by region and country, refer to the interactive figures online at https://humancapital.worldbank.org/en/building-human-capital-where-it-matters. BOX 4.2 Labor income grows more slowly during periods of self-employment or during work at small firms Convincingly estimating the causal returns to work experience across various sorts of jobs is difficult because of selection. Workers with distinct skills, both observed and unobserved, may select into different kinds of jobs. Under these circumstances, it is not clear whether any observed differences in the returns to experience are driven by worker selection into jobs or by more learning in some types of jobs relative to others. The best evidence on the amount of on-the-job learning that occurs across workplaces is supplied by data on the same workers as they change jobs over time. (Box continues on next page) Wage workersSelf-employedWage increase (%)Experience (years) 82 Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces BOX 4.2 Labor income grows more slowly during periods of self-employment or during work at small firms (continued) This is most convincing because, in following the same workers, the associated estimates control for all fixed (time-invariant) characteristics that make some workers more productive than others. Drawing on panel household surveys from China and India that repeatedly interview the same individuals, we estimate the wage returns to self-employment versus wage employment. Adapting Jedwab et al. (2023), we regress log hourly earnings on experience bins after partitioning each worker’s potential experience into three mutually exclusive elements: years accumulated before the worker first appears in the panel (unobserved experience), tenure in wage jobs observed during the panel period, and tenure in self-employment observed during the panel period. By including the unobserved component alongside year fixed effects and education controls, the specification cleanly identifies the returns to additional time spent in wage employment relative to self-employment. In both countries we consider all employed workers (without occupational or sectoral restrictions) for whom we can trace experience—either as self-employed or wage worker—over time and classify them as self-employed or wage workers. In both countries, the returns to experience during self-employment are substantially lower than those from wage work, controlling for year fixed effects, educational attainment, and unobserved experience (refer to figure B4.2.1). For wage work in India, the annualized returns to experience after 5 years are 6.5 percent. For the self-employed, the experience premium is roughly half as large, a 3.8 percent annualized return. In China, the annualized return to wage employment in the first 5 years is 5.5 percent, compared to 2.2 percent among the self-employed. The same logic can be used to study how much on-the-job learning occurs if wage employees are employed in large firms, rather than small firms. Matched employer- employee data on Brazil shows that wages increase by twice as much if a worker is employed in a large firm rather than a small firm, but it also shows that moving from a small to a large firm leads to an immediate 10.5 percent wage gain. Thereafter, wages increase more rapidly for workers who moved, at an annual average rate of 3.3 percent, compared to 1.8 percent among workers who stayed in a small firm during the entire period. (Box continues on next page) Human Capital Accumulation at Work 83 BOX 4.2 Labor income grows more slowly during periods of self-employment or during work at small firms (continued) FIGURE B4.2.1 Panel data confirm low returns to experience during self-employment in China and India a. China b. India Wage increase (%) 60 Wage increase (%) 50 50 40 30 20 10 0 1 2 4 5 7 3 Experience (years) 6 40 30 20 10 8 9 10 0 1 2 4 3 5 7 Experience (years) 6 8 9 10 Sources: Original figure for this publication, based on data of CFPS (China Family Panel Studies) (dashboard), Institute of Social Science Survey, Peking University, https://www.isss.pku.edu.cn/cfps/en/; CPHS (Consumer Pyramids Household Survey) (dashboard), Consumer Pyramidsdx, Centre for Monitoring Indian Economy, https://consumerpyramidsdx.cmie.com/. These patterns reflect a broader reality. Opportunities for learning through more complex tasks and from peers are limited because self-employed individuals often work in isolation, and, in low- and middle-income countries, most engage in low-skilled manual tasks. These constraints reduce the ability of the self- employed to convert learning into innovation and productivity gains, especially if business expansion is required to apply new skills. Among wage workers in low- and middle-income countries, returns are lowest in microfirms, where most workers are employed, and highest in large firms. On average, the wage premium for experience in medium and large firms is twice as high as it is in small firms and self-employment (refer to figure 4.5). Relative to a job at a smaller firm, a job at a larger firm offers higher wages, more performance- enhancing experience, and more opportunities to apply the skills that are learned. Larger firms are more likely to adopt technology conducive to learning because they have greater access to lenders and investors, are able to access growth capital, and can compete for government contracts.15 Wage workersSelf-employed 84 Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces FIGURE 4.5 Returns to experience are lower for the self-employed and wage workers in small firms than for wage workers in medium and large firms Sources: Original figure for this publication, based on data of GLD (Global Labor Database Repository), World Bank, https://worldbank.github.io/gld/README .html; I2D2 (International Income Distribution Database) (internal database, discontinued in 2020), World Bank; SEDLAC (Socio-Economic Database for Latin America and the Caribbean), https://www .cedlas.econo.unlp.edu.ar/wp / estadisticas/sedlac/. Firms provide few explicit training opportunities In addition to the limited learning opportunities afforded by type of job and type of firm, explicit training opportunities are scarce in low- and middle-income countries. Only a small share of smallholder farmers have access to extension services, and, in most countries, the share of self-employed workers who have access to formal training is low.16 Training is also infrequent among workers in small businesses. In practice, even among wage workers, any explicit training provided by firms is often limited in low- and middle-income countries. In low- income countries, only around 4.5 percent of firms provide training, while 9.3 percent of wage workers report that they receive such training. Comparable shares in middle-income countries are 18.2 percent and 30.3 percent.17 Overall, in low- and middle-income countries, only 17 percent of workers receive explicit training provided by their firms. Many women and young people are neither working nor studying Note: The figure shows average wage differentials across seven experience bins for country subgroups, following Jedwab et al. (2023). It compares the experience profiles of workers in firms with more than 10 employees with the experience profiles in smaller firms and among the self-employed. The results exclude high-income countries. For data by region and country, refer to the interactive figures online at https://humancapital .worldbank.org/en/building-human-capital-where-it-matters. A high share of youth are NEET and therefore not accumulating human capital either in education or at the workplace. From a human capital perspective, this untapped potential represents approximately 20 percent of all individuals ages 15–24. In high-income countries, this share is around 10 percent (refer to figure 4.6, panel a). Regional disparities are significant; in some regions, such as the Middle East and North Africa, NEET rates reach nearly 29 percent. Men and women NEETs face different challenges. While most women NEETs are out of the labor force (that is, not looking for work), men NEETs are more evenly split between nonparticipants in the labor force and the unemployed (that is, looking for work, but not in a job) (refer to figure 4.6, panel a). Systemic barriers limit the human capital accumulation that young people in low- and middle- income countries acquire at work. Some relate to individual factors, for example, low-quality education and a lack of skills that render individuals difficult to 1020300255075Wage increase (%)Experience (years)Medium and large firmsSelf-employed + small firms Human Capital Accumulation at Work 85 FIGURE 4.6 Population not accumulating human capital through work a. Youth NEETs, ages 15–24 (%) b. Adults not employed, ages 25–54 (%) LIC MIC Women Men 12 28 4 4 LIC Women 35 4 Men 10 3 Women 21 4 Men 5 6 MIC Women 40 4 Men 6 3 LMIC UMIC Women 25 3 Men 4 6 LMIC Women 54 4 Men 7 3 Women 15 5 Men 6 6 Women 27 5 UMIC Men 6 4 HIC Women Men 5 4 5 6 HIC Women 21 4 Men 9 4 Source: Original figure for this publication, based on labor statistics of ILOSTAT (dashboard), International Labour Organization, https://ilostat.ilo.org/. Note: NEETs refers to youth not in education, employment (paid work or self-employment), or training. HIC = high-income country; LIC = low-income country; LMIC = lower-middle-income country; MIC = middle-income country; UMIC = upper-middle-income country. For data by region and country, refer to the interactive figures online at https://humancapital.worldbank.org/en/building-human-capital -where-it-matters. employ until they gain experience. Others relate to regulations, for instance, labor protections favoring older workers. Yet others relate to economic conditions generally, for example, the availability of few good-quality jobs. Another source of untapped potential is adult women. Approximately 50 percent of working-age women in low- and lower-middle-income countries are not participating in the labor force, compared with 7 percent of men. In high-income countries, these shares are 21 percent and 9 percent, respectively (refer to figure 4.6, panel b). The regional levels vary considerably. In particular, the share of women out of the labor force is as high as 79 percent in the Middle East and North Africa and 63 percent in South Asia. Preferences may contribute to the lower labor force participation of women, but the evidence suggests that institutional constraints are a major factor, including limited access to childcare, employer discrimination, and legal or regulatory restrictions, as are cultural factors and security concerns, including restrictive gender norms, unequal care responsibilities at home, and harassment during Not participatingUnemployed 86 Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces commuting or at work, and economic barriers, such as gaps in education and skills and a lack of good job opportunities.18 Overall, the sum of evidence suggests that, while people may accumulate significant human capital at the workplace, few do so in low- and middle-income countries. Relatively few women are in paid employment. Many young people are neither studying nor working, and, among those young people who do work, a large share of employment is concentrated in low-quality jobs where little learning occurs. Most workers are in small-scale agriculture or low-quality self- employment, and, even among wage workers, most are in small firms that operate with low technology and minimal organizational capital and that rarely offer formal on-the-job training opportunities. Policy recommendations Traditionally, the workplace is considered a setting in which human capital is used. But under appropriate circumstances, it is also a place where a great deal of human capital is built through on-the-job learning and training. This chapter presented evidence that most people in low- and middle-income countries work in jobs that require little human capital, and, even if structural transformation creates more jobs with strong potential for learning at work, transitions take time. In the short and medium term, it is important to maximize the human capital potential of current jobs. How can learning on the job become a more powerful engine of human capital accumulation? Which policies promote more learning at work? The chapter also showed that a substantial share of people in low- and middle-income countries are not in the labor force, particularly women and young people who are NEETs. How can these populations join the labor force to start building their human capital at work? More learning on the job Governments spend billions of dollars every year on traditional forms of training provided by training institutions. Meta-analyses indicate that these programs yield positive, but only modest results. Employment gains are on the order of 2 to 4 percentage points. Returns are even lower among many large-scale government- run programs.19 Instead of taking responsibility for the provision of training programs, governments can offer incentives to firms to invest in job training, leaving the organization and management of the training to the firms themselves (refer to table 4.3). For example, in Colombia, firms received training subsidies and regulatory incentives. There were training quotas linked to firm size, and options to reduce workers’ wages during training or pay a fee to opt out of training.20 Yet, global evidence shows that, even when they are offered generous wage subsidies, firms may still choose not to invest in on-the-job learning if they face challenges associated with Human Capital Accumulation at Work 87 TABLE 4.3 Evidence on policies that promote more learning on the job Incentivize firms to invest in job training. On-the-job training could focus on practical, problem-solving, and communication skills. Estimates of impact on human capital: High Strength of evidence: Medium Summary: Increases skills and productivity among workers, promotes business growth among entrepreneurs. Implementation challenges: Firms viewing training as a cost center (not a profitable investment) may resist adoption. Smaller businesses may lack supportive organizational structures, information flows, and management practices and thus require the collaboration and involvement of business associations. Initial incentives may be costly. Experimentation is needed. Still to learn: What is the best method to incentivize firms? To standardize provision? To mobilize business networks? Promote farmer-to-farmer learning and the use of social and business networks to support learning. Encourage peer-to-peer learning at work. Estimates of impact on human capital: Medium Strength of evidence: Low Summary: Enhances skill diffusion, knowledge sharing, and the adoption of better practices, especially if formal training is limited; stronger impact if combined with supportive culture and management practices. Implementation challenges: Effectiveness depends on selecting and supporting appropriate peer leaders. Requires trust, motivation, and a conducive workplace or community culture. Social norms, weak management capacity, and weak incentives can limit take-up. Networks may not reach the least connected. Still to learn: Best ways to sustain engagement, structure peer selection, and design incentives. How to scale across sectors and integrate peer learning into broader management and training systems? Promote the effective use of technology. Promote the use of digital technologies in training. Estimates of impact on human capital: Medium Strength of evidence: Medium Summary: Digital tools reduce training costs and expand access. Implementation challenges: Technology adoption requires up-front investment, skills, and access to capital—often lacking in smaller firms. Many firms lack internal capacity to integrate new tools effectively. Still to learn: What combinations of technology, management support, and delivery channels work best across sectors and firm types. How to reach smaller or informal firms that have limited infrastructure. Source: Original table for this publication. Note: The strength of evidence is high if there are multiple meta-analyses focused on experimental or quasi-experimental evidence. At least one meta-analysis must include studies in low- and middle-income countries that find a significant average size in the effects. It is medium if there are more than five experimental or quasi-experimental studies in low- and middle-income countries. It is low if there are fewer than five studies in low- and middle-income countries or if all evidence is limited to high- income contexts. matching frictions or worker retention.21 Without mechanisms such as retention incentives and strong certification systems, firms’ investment in broad-based training may remain limited.22 In Burundi, for instance, a retention guarantee made employers 50 percentage points more likely to invest in training, increasing adoption of new techniques and profits.23 Public incentives can also focus on general rather than task-specific skills, which have higher returns, but may require additional support because firms fear losing trained workers. In Brazil, for example, around 80 percent of job training 88 Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces is provided by the training arm of the National Confederation of Industry. This training is occupation-specific, but not task-specific, and has high wage returns for workers and firms.24 In Togo, a psychology-based personal initiative program targeting small business entrepreneurs that was designed to develop proactive entrepreneurial thinking led to a 30 percent increase in profits. This impact is three times that of traditional training, and the effects lasted more than eight years.25 And in India, a workplace on-the-job soft skills training for garment workers that focused on communication, time management, problem solving, decision-making, and effective teamwork raised productivity among those who received training by more than 13 percent. Through positive knowledge spillover, it also raised the productivity of other workers on the same production line by almost 12 percent although they had not received the training (refer to figure 4.7). In some cases, more specialized training is needed. In India, management consultants diagnosed operational inefficiencies and provided coaching to manufacturing firms on core management practices, including monitoring, target setting, and incentive systems. This led to increased productivity, lower defect rates, and substantial improvements in firm learning and management practices that persisted.26 And in Mexico, Nigeria, and Uganda, consulting for microenterprises and small firms helped them expand paid employment and improve business practices.27 FIGURE 4.7 Soft skills training on the job raises productivity among trained workers and has knowledge spillovers to untrained coworkers Source: Adapted from Adhvaryu et al. 2023. Some garment workersreceive guidance at workon communication,problem solving, andstress management skills.The productivity of theseworkers increases by morethan 13 percent.The productivity of theircoworkers also increasesby almost 12 percent. Human Capital Accumulation at Work 89 Another avenue by which governments might promote on-the-job learning is through support for technology adoption. Technology is an important driver of on-the-job learning (refer to table 4.3). Digital tools, for example, can reduce the cost and complexity of finding information, managing workflows, and staying connected. In six African countries, evidence shows that firms with better internet connectivity are more likely to provide on-the-job training. They also export and sell more.28 In India, access to government-sponsored call centers increased adoption of high-yielding seeds.29 In Bangladesh, the distribution of flood-resilient seeds among many farmers to conduct small-scale demonstrations doubled the adoption of the seeds within a year relative to one centralized demonstration plot.30 More people in jobs Many youth who are NEET and women are not participating in the workforce and thus cannot build human capital at work. This subsection focuses on supply-side barriers specific to youth and women. When the demand for the labor of these populations is absent, broader reforms that address structural barriers may be required. Youth For youth, first jobs are often hard to access. Yet, they play a crucial role in building experience and, evidence shows, they shape careers in the long term. Policies should focus on upskilling these soon-to-be labor market entrants, matching them with jobs and removing barriers to better allocation. In most low- and middle-income countries, formal education systems do not adequately provide youth with the skills needed for jobs, including technical and soft skills. Apprenticeships have been an important way to provide these skills to youth and to facilitate matching. Traditionally, apprenticeships entail on-the-job training with a master craftsperson. They are sometimes combined with center- based vocational training. Large-scale interventions to improve apprenticeships have shown promising results in Côte d’Ivoire, Ghana, Nigeria, and Uganda, including gains in youth earnings and skills.31 These interventions shifted away from traditional, unpaid models, whereby families pay to place youth as helpers with a master craftsperson, toward more formal 12- to 24-month apprenticeships in which apprentices receive subsidies, are placed in firms with vacancies, receive general (not firm-specific) skills training from local institutions, and receive certification upon completion. Strong results were also achieved in Latin America, where apprenticeship programs combined technical and behavioral training by private providers, workplace-based learning, small stipends, and job placement services. Effects on employment have been positive and long lasting (refer to table 4.4 later in this chapter).32 90 Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces Women Women face additional constraints in participating in the labor market because of the dominant role they tend to play in care activities in the home. Evidence on Brazil, China, Mexico, and other contexts demonstrates that access to public childcare significantly increases female labor force participation. However, global evidence shows that success is not guaranteed. Challenges related to cost and quality, registration barriers, and a lack of equivalence between childcare hours and working hours can undermine their positive impact (refer to box 4.3).33 BOX 4.3 Childcare and women’s labor force participation Chapter 2, which focuses on human capital accumulation in the home, emphasizes the importance of care at home for human capital formation throughout childhood and adolescence. While care responsibilities do not fall solely on women, global data show that women spend more time involved in childcare than men.a This chapter focuses on human capital accumulation at work and makes the economic case for reducing barriers to women’s labor force participation. These two objectives can be in tension. Policies that raise female labor force participation may expand household resources and support women’s skill development at work, but they may also reduce the quality or availability of care at home. This tension between women’s labor force participation and the need for childcare is typically used to explain the child penalty, that is, the larger employment and earnings effects of parenthood on women relative to men. A recent global examination of the child penalty finds that there is considerable heterogeneity within and across countries and that the child penalty in employment is more pronounced in higher-income countries. Moreover, the extant evidence consistently shows a positive impact of center-based childcare interventions—day care, preschool, and kindergarten—on the labor force participation of mothers in low- and middle-income countries and even in rural areas.b For example, because of high demand and limited availability, authorities in Rio de Janeiro used a citywide lottery to allocate day-care slots. Winning the lottery led to a 21 percentage point increase in the likelihood that grandparents, particularly grandmothers, entered the workforce, resulting in a 55 percent rise in the incomes of the households in which the grandparents resided.c Similarly, the probability (Box continues on next page) Human Capital Accumulation at Work 91 BOX 4.3 Childcare and women’s labor force participation (continued) that siblings worked, especially sisters, rose by 16 percentage points, with a corresponding 51 percent boost in income. More caregiver time away from home did not negatively affect children. Instead, it enhanced the nutritional status and cognitive development of the children. Meanwhile, research in China indicates that access to kindergarten significantly raises the likelihood that rural mothers will engage in nonagricultural employment and that their working hours will expand in the relevant sectors.d This shift is primarily attributable to a reduction in the time spent on agricultural tasks and unpaid domestic duties. By contrast, the research finds no substantial impact on the employment of urban mothers, possibly because of the greater availability of private childcare options in urban areas. The positive effects on rural mothers are more pronounced among low-income households, nuclear families, and households that adhere closely to traditional gender norms. The research also indicates that kindergarten eligibility enhances nonagricultural employment opportunities among grandmothers in rural settings who reside in the households. Other studies have also found positive effects on female labor force participation.e Yet, there is widespread concern that the labor force participation of mothers is detrimental to children. Nearly 60 percent of World Value Survey respondents agree or strongly agree that a preschool child suffers if the mother is working (refer to figure B4.3.1), a trend common across both men and women respondents. The concern is greatest in the regions with the lowest female labor force participation, that is, the Middle East and North Africa and South Asia. This raises a critical question: While expanding access to childcare increases female labor force participation, does it also benefit the human capital of children? A review of 71 studies of center-based childcare interventions in low- and middle-income countries finds that most—93 percent of the studies and 81 percent of the estimates—show positive effects on children. Girls tend to benefit more than boys, but poorer children do not consistently benefit more or less than wealthier children. These results hold across experimental and quasi- experimental studies.f (Box continues on next page) 92 Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces BOX 4.3 Childcare and women’s labor force participation (continued) FIGURE B4.3.1 Survey response: Do you agree that a preschooler suffers if the mother is working? Weighted average (%) a. Men 61.3 56.0 51.3 49.1 38.7 44.0 48.7 50.9 24.9 23.4 75.1 76.6 100 90 80 70 60 50 40 30 20 10 0 Europe and Central Asia Sub-Saharan Africa East Asia and Pacific Latin America and the Caribbean Middle East and North Africa South Asia Weighted average (%) Yes No b. Women 100 90 80 70 60 50 40 30 20 10 0 64.6 56.1 50.1 45.7 35.4 43.9 49.9 54.3 28.6 28.3 71.4 71.7 Europe and Central Asia Sub-Saharan Africa East Asia and Pacific Latin America and the Caribbean Middle East and North Africa South Asia Yes No Source: Data of WVS (World Values Survey), Wave 7 (2017–2022) (dashboard), King’s College, https:// www.worldvaluessurvey.org/WVSDocumentationWV7.jsp. (Box continues on next page) Human Capital Accumulation at Work 93 BOX 4.3 Childcare and women’s labor force participation (continued) An expansion in good-quality childcare interventions might help resolve the tension between an increase in women’s work outside the home and the care needs of young children. The policy challenge lies in guaranteeing quality, while overcoming the perception that the care for children will be undermined if mothers participate in the labor force.g a. ILO (2018); World Bank (2011). b. For a review of the evidence, refer to Evans et al. (2021); Halim et al. (2023). c. Attanasio et al. (2022). d. Fang and Miao (2024). e. Havnes and Mogstad (2011); Kleven et al. (2019); Olivetti and Petrongolo (2017). f. Refer to Evans et al. (2024) for a review of the evidence. g. Bendini and Devercelli (2022); Devercelli and Beaton-Day (2020). Importantly, childcare provision alone may not be sufficient if gender perceptions at home or at work impede women’s labor force participation (refer to box 4.4). Even when the barriers to employment confronting youth and women are removed, matching with employers needs to occur for employment to materialize. Such matching can be harder for some groups of people. Inexperienced workers, for instance, may not know how to search effectively or signal their skills. In fragmented and informal labor markets, job-seekers may lack information about vacancies and face challenges in accessing the pool of job openings, while employers may struggle in identifying the abilities of candidates. BOX 4.4 Shifting gender perceptions and addressing security concerns Evidence shows that perceptions about the role of women in the household and at work affect female labor force participation, but that these can shift. In workplaces, through exposure, norms can change. For instance, a field experiment in 24 large garment factories in Bangladesh explored how to overcome the underrepresentation of women in supervisory roles, despite women’s dominance in other areas of garment production. The study identified men and women candidates for line supervisor positions and randomly assigned them to manage production lines. While women supervisors initially faced lower productivity among their teams and received poorer (Box continues on next page) 94 Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces BOX 4.4 Shifting gender perceptions and addressing security concerns (continued) evaluations (largely because of the negative perceptions of workers about women in leadership), the gaps disappeared within four to six months.a At home, correcting misperceptions is critical. For example, in Saudi Arabia, men underestimated how many other men supported women working outside the home. When exposed to accurate information, men became significantly more likely to support women’s activity on job-matching apps.b Another important barrier to female labor force participation is sexual harassment in public places. This may limit women’s mobility, education choices, and workforce participation. Policies such as women-only subway cars and buses, as through Mexico City’s Viajemos Seguras program, create safer spaces and reduce harassment during peak travel hours. Evidence from Rio de Janeiro showed that reserving spaces for women on trains reduced physical harassment by 50 percent. However, the take-up of these safe spaces was concentrated among women who experienced more frequent harassment and who perceived strong social stigma against using mixed-gender spaces, highlighting how social norms shape both exposure to risk and the use of protective measures. Complementary enforcement approaches are also important. Police patrols, such as India’s Safety, Health, and Environment Police Units (SHE Teams), have been effective in reducing street harassment by boosting officer presence in known hot spots.c Commuting interventions, such as fare subsidies or woman-only transport, may have limited effects on employment if they are not paired with access to desirable jobs among women. Evidence from New Delhi shows that the addition of transit stations triggered the opening of businesses nearby, creating economic hubs in peripheral neighborhoods. The new businesses—mostly retail and service stores—were precisely the types that employ more women. This underscores the role of transit-oriented development and mixed-use zoning around stations in bringing employment opportunities closer to underrepresented workers.d a. Macchiavello et al. (2020). b. Bursztyn et al. (2020). c. For evidence on Mexico, India, and Brazil, respectively, refer to Aguilar et al. (2021); Amaral et al. (2025); Kondylis et al. (2025). d. Kovvuri and Sharma (2025). Human Capital Accumulation at Work 95 Effective job placement services can close these information gaps, equip job- seekers with strategies and incentives for an efficient and effective worker-job match, and reduce reliance on informal job search based on a person’s connections, which are normally weaker among poorer job-seekers. Modernizing public employment services by investing in staff training, digital platforms, and outreach to employers can enhance job placement outcomes through improved employer engagement and tailored support for job-seekers (refer to table 4.4).34 TABLE 4.4 Evidence on policies that remove barriers to the participation of women and youth in the labor markets Expand access to quality childcare. Subsidized access to daycare and childcare Estimates of impact on human capital: High Strength of evidence: High Summary: Increases labor force participation among women. Implementation challenges: Ensuring quality at low cost; low participation because of a lack of information on the program or difficult registration process, and misalignment with working hours. Still to learn: Who should be subsidized and how? How to increase take-up? Promote apprenticeships. First job opportunities, combining on-the-job training with instruction, governed by a contract and leading to certification Estimates of impact on human capital: High Strength of evidence: High Summary: Increase earnings and skills. Implementation challenges: Effectiveness may be limited if hiring is weak, or apprentices replace existing workers. At scale, positions may be scarce. Without targeting, low-skill youth may be left out. Limited monitoring, weak certification systems, and inadequate public-private coordination may hinder implementation. Still to learn: Which workers should be targeted? How to ensure strong skill development, early employer involvement, collaboration with training providers, and effective certification and quality assurance? Support employability and inclusion programs. Job placement, soft skills, and mentoring Estimates of impact on human capital: Medium Strength of evidence: Medium Summary: Increase employment, but not necessarily wages. Economic inclusion (or graduation) programs for the poor that have an important training component have been rigorously evaluated and show sustainable impacts up to 15 years after treatment. Implementation challenges: Cost-effective, but impact limited if formal vacancies are scarce (for instance, informal markets, recessions). Difficult to integrate low-skill workers in formal placement services; incentive systems are difficult to design. Good evidence for soft skills and mentoring in high-income countries; limited in low-income countries. Still to learn: How to establish effective public-private partnerships for placement services? Is the role of government to create the digital platform and then focus on complementary services? What works in reaching and supporting low-skill, disadvantaged workers? How to design effective performance incentives for providers? What are scalable models for soft skills and mentoring in low-income contexts? Source: Original table for this publication. Note: The strength of evidence is high if there are multiple meta-analyses focused on experimental or quasi-experimental evidence. At least one meta-analysis must include studies in low- and middle-income countries that find a significant average size in the effects. It is medium if there are more than five experimental or quasi-experimental studies in low- and middle-income countries. 96 Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces More jobs with stronger learning potential While it is not the role of government to create jobs, government functions are fundamental to sustained job creation. In an ideal scenario, schools would equip young people with the relevant skills needed for work and life; labor markets would be inclusive and adaptable; and firms would be dynamic, grow, and generate more high– human capital jobs. Much of this chapter focuses on supply-side interventions aimed at enhancing human capital within existing jobs under the prevailing economic structure, the distribution of jobs between rural and urban areas, the distribution of firm size, and the share of workers in self-employment versus wage employment. But these policy efforts need to be complemented with demand-side policies. As shown earlier in this chapter, workers build more human capital in wage employment than in self-employment, especially wage employment in medium and large firms. Removing disincentives for firm growth should therefore be a priority. Tax breaks or regulatory exemptions tied to firm size can inadvertently incentivize firms to remain small, resulting in labor misallocation, less human capital accumulation in the workplace, and reduced aggregate productivity.35 Importantly, policies that promote firm growth can also serve as human capital policies. For example, governments can improve access to finance and to research and development (R&D), particularly among young, innovative firms. These firms are often the most dynamic, capable of driving radical innovation and creating jobs that demand skilled labor.36 Well-targeted R&D credits can have lasting effects on long- term human capital and productivity.37 Reducing financial frictions that constrain firm entry, growth, and innovation is also important, as shown by evidence on the Republic of Korea and the United States.38 In other contexts, targeted policies have addressed bottlenecks, with enterprise support programs in Colombia and Nigeria encouraging innovation and improving employment and sales, and export promotion in the Arab Republic of Egypt fostering learning by exporting and raising firm productivity.39 To support the growth of firms in which human capital is built, countries must also invest in foundational education. Skills gained during early childhood and through basic education are essential building blocks for skill development in adulthood. Job readiness begins early and continues to evolve through work experience. The distribution of skills in the workforce can affect the type of firms that are born and whether they grow over the life cycle.40 Well-educated people are likely to underpin high-quality entrepreneurship and determine whether firms can populate management and professional positions and accumulate firm-specific knowledge.41 This type of organizational capital allows workers within firms to take on roles as middle technicians and supervisors. This dynamic is evident in numerous sectors. For instance, in agriculture, skilled labor is needed not only in farming, but also for value added functions, from processing, packaging, and marketing to tasks performed by scientists and engineers. In garments and electronics, firm competitiveness hinges on capabilities in design, production, logistics, and sales, functions that rely on a pipeline of medium- and high-skill workers.42 Human Capital Accumulation at Work 97 The distribution of skills in the workforce affects the ability of firms to innovate and the nature of technological change (refer to box 4.5). When human capital is abundant, technological adoption is more likely to reward skills.43 Over time, a virtuous cycle may emerge. As more firms are created and grow, they demand skilled workers, offer better pay, and invest in training. In turn, these rewards incentivize people to invest in their own education and skills, raising the stock of human capital in the next generation. BOX 4.5 Expanding the focus of human capital policy to the workplace is critical for jobs In a well-functioning economy, the bulk of jobs are created by the private sector. The human capital of the workforce affects the ability of firms to grow and innovate. Firms are embedded in particular markets, and the distribution of skills shapes the type of firms that are born and whether they grow over their life cycle.a A higher overall stock of human capital promotes firm creation and growth of better firms. The creation and growth of high–human capital firms can then generate a virtuous cycle in which productive firms demand highly skilled workers, pay them more, and provide incentives for investment in human capital in homes and neighborhoods (refer to figure B4.5.1). FIGURE B4.5.1 The virtuous cycle of more human capital and better jobs MORE HUMAN CAPITAL FIRM GROWS AND INNOVATES GREATER INCENTIVE TO INVEST IN HUMAN CAPITAL HOME NEIGHBORHOOD WORKPLACE Source: Original figure for this publication. a. Moreira et al. (2025); Queiró (2022). More demand for skillsMore and better jobsMore income andnurturing careStronger localeconomyMore skill developmentat work 98 Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces In sum, the distribution of skills in the workforce affects firm dynamics. Economies that complement supply-side investments with demand-side policies—thereby fostering firm dynamism, improving market conditions, and supporting innovation—will not only raise productivity, but also build human capital across generations (refer to table 4.5). TABLE 4.5 Evidence on policies to create more high human capital jobs Remove tax breaks or regulatory exemptions tied to firm size and distortions in labor regulations that discourage hiring. Remove barriers to firm growth. Estimates of impact on human capital: Medium Strength of evidence: Low Summary: Policies supporting small and medium enterprises may unintentionally discourage firm growth and formal hiring, limiting learning opportunities and productivity gains associated with larger firm size. Implementation challenges: Political economy resistance from firms benefiting from distortions; difficult to reform without transitional support. Still to learn: How changes in firm-size–linked distortions affect skill use? Facilitate access to credit and R&D. Support access to finance, markets, and R&D for young firms. Estimates of impact on human capital: Medium Strength of evidence: High Summary: Support for firm growth, especially among young, high-potential firms, raises demand for skilled labor and fosters learning-by- doing. Improved access to finance, markets, and R&D enables innovation, productivity, and job quality upgrades. Implementation challenges: Targeting is difficult. Most small firms stay small, while high-growth firms are rare and difficult to identify ex ante. Risk of misallocation if support is not linked to performance. Still to learn: What mix of financing, R&D incentives, and market access drives sustained skill-intensive growth? How can firm–growth support be integrated with requirements for broader on-the-job training, for example, through technology subsidies, combined with soft- skills training for workers? Invest in public goods and in education in particular. Expand education to develop the skilled talent for firm growth, the entrepreneurs for new firm entry, and the innovators to accelerate technology adoption. Estimates of impact on human capital: Medium Strength of evidence: Low Summary: Expanding post–basic education can expand the supply of skilled workers and entrepreneurs. Implementation challenges: Lag between education reforms and firm-level effects. Still to learn: Should firm and education policies be jointly targeted, combining expansions in education with support for firms and entrepreneurs to absorb the new skilled workforce? Source: Original table for this publication. Note: The strength of evidence is high if there are multiple meta-analyses focused on experimental or quasi-experimental evidence. At least one meta-analysis must include studies in low- and middle-income countries that find a significant average size in the effects. It is medium if there are more than five experimental or quasi-experimental studies in low- and middle-income countries. It is low if there are fewer than five studies in low- and middle-income countries or if all evidence is limited to high-income contexts. R&D = research and development. Human Capital Accumulation at Work 99 Conclusion: Putting it all together Although the potential for human capital accumulation in the workplace is substantial, too little of it occurs in low- and middle-income countries. A first major reason for this limited human capital is that the composition of employment—the dominance of self-employment, agricultural labor, and small firms—is not conducive to high learning on the job. In these jobs, there is little incentive and funding for investment in explicit training, nor is there much opportunity to learn from peers or from the use of technology. A second reason is the low labor force participation among women and youth. It is impossible to acquire human capital at work without working. Remedying this will require reforms that increase labor force participation and employment, and create more high human capital jobs that encourage both learning on the job (through practice, exposure to technology, interactions with peers and managers, and training), and investments in education. Seizing these opportunities to encourage more human capital accumulation at work will also serve to create a virtuous cycle in which greater human capital accumulation spurs the growth of good jobs, which then increase human capital accumulation at work and the returns to investment in human capital at home and in the neighborhood. Notes 1. Jedwab et al. (2023). 2. Amodio and Martinez-Carrasco (2018); Bandiera et al. (2010, 2013). 3. Caicedo et al. (2022); Donovan et al. (2023). 4. Akerman et al. (2015); Bartel and Sicherman (1998); Brynjolfsson et al. (2025). 5. Bloom et al. (2014). 6. Hsieh et al. (2019). 7. Chiplunkar and Goldberg (2024). 8. Gollin (2002, 2008). 9. Eslava et al. (2021). 10. Bento and Restuccia (2017); Fattal Jaef (2022); Poschke (2018). 11. Bonnet et al. (2019). 12. To illustrate, Kenya and the Republic of Korea possess similar populations, yet the number of Korean firms with five or more workers surpasses the number of comparable firms in Kenya by a factor of three (Cruz et al. 2025). 13. Refer to Cruz et al. (2025). It is also well established that, in the United States, new businesses tend to start small and grow as they age, whereas they have lower size at entry and grow less over the life cycle in low- and middle-income economies (Dunne et al. 1989; Haltiwanger et al. 2013; Hsieh and Klenow 2014). 14. Schultz (1961). 100 Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces 15. Cusolito et al. (2021). 16. Ma et al. (2024) document that self-employment is associated with low rates of formal training in low- income economies. Data on Ethiopia, Malawi, Tanzania, and Uganda indicate that access to public agricultural extension services among smallholder farmers (less than two hectares) is limited, at approximately 14 percent. Refer to LSMS-ISA (Living Standards Measurement Study: Integrated Surveys on Agriculture) (dashboard), World Bank, https://www.worldbank.org/en/programs/lsms /initiatives/lsms-ISA. 17. Calculations based on data of WBES (World Bank Enterprise Surveys) (dashboard), World Bank, https://www.enterprisesurveys.org/en/enterprisesurveys. 18. Macchiavello et al. (2020) show that gender bias constrains women’s advancement, though workplace norms may shift through exposure to the presence of women at the workplace. The World Bank report Women, Business and the Law 2024 (World Bank 2024) documents the legal barriers to female labor force participation. Devoto et al. (2024) find that, while social norms deter women’s work, suitable job opportunities increase participation. 19. Agarwal and Mani (2025); Carranza and McKenzie (2024). 20. Caicedo et al. (2022). 21. Carranza and McKenzie (2024). 22. Alfonsi et al. (2020). 23. Cefalà et al. (2024). 24. Bastos et al. (2016); Blyde et al. (2023); Silva et al. (2015). 25. Campos et al. (2017). Now implemented in over a dozen countries, such programs require skilled facilitation, a potential constraint on scalability in many contexts. Refer to McKenzie et al. (2023). 26. Bloom et al. (2013). 27. For evidence on Nigeria, Uganda, and Mexico, respectively, refer to Anderson and McKenzie (2022); Anderson et al. (2021); Bruhn et al. (2018). 28. Hjort and Poulsen (2019). 29. Gupta et al. (2024). 30. Kondylis et al. (2023). 31. Alfonsi et al. (2020); Crawford et al. (2021); Crépon and Premand (2025); Hardy and McCasland (2023). 32. Refer to Fazio et al. (2016) for a review of evidence on lessons from long-established systems in Australia, Austria, Germany, and the United Kingdom that are comparable with systems in Latin America. Refer to Attanasio et al. (2011) and Kugler et al. (2022) on Colombia; Corseuil et al. (2019) and Da Mata et al. (2025) on Brazil. 33. Attanasio et al. (2022); Fang and Miao (2024); Talamas Marcos (2023). 34. An innovative example to facilitate better matches between job-seekers and employers is the modernization of the Public Employment Service in France. The service brings job-seekers and employers together, thereby relieving small and medium enterprises from the burden of prescreening job applicants. It has increased relevant vacancy announcements by 21 percent and hiring by 7 percent. Such services can clearly have an active role in linking job-seekers to firms where human capital accumulation is more likely (Algan et al. 2020). 35. Bachas et al. (2019); Garicano et al. (2016); Guner et al. (2008). 36. 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Talamas Marcos, Miguel Ángel. 2023. “Grandmothers and the Gender Gap in the Mexican Labor Market.” Journal of Development Economics 162 (May): 103013. Verhoogen, Eric A. 2008. “Trade, Quality Upgrading, and Wage Inequality in the Mexican Manufacturing Sector.” Quarterly Journal of Economics 123 (2): 489–530. World Bank. 2011. World Development Report 2012: Gender Equality and Development. World Bank. World Bank. 2024. Women, Business and the Law 2024. World Bank. Chapter 5 Implementing a Settings Approach in Policy Alaka Holla, Norbert Schady, and Joana Silva Summary Many global challenges—malnutrition, low reading proficiency, youth unemployment—require action in the key settings of human capital accumulation described in this volume: the home, the neighborhood, and the workplace. This chapter focuses on broader reforms that would enable governments to design policies that effectively activate these settings to foster human capital formation. Foundational human development outcomes, such as healthy nutrition, reading proficiency, and on-the-job skill acquisition require a settings-based perspective to identify areas for investment. The chapter highlights critical reforms to establish a policy architecture that supports the cross-sectoral collaboration needed to integrate investments within each setting, including partnerships with the private sector. It also describes the national and global data agenda required to track progress in human capital accumulation in the home, the neighborhood, and the workplace. The policy agenda, together with the associated measurements, is essential to achieving progress in key areas that have remained stagnant in many low- and middle-income countries. A reproducibility package is available for this book in the Reproducible Research Repository at https://reproducibility.worldbank.org/catalog/461. 108 Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces Human capital enables people to contribute to the productivity of society. It is essential in securing a good job and higher income. Investments in human capital spur economic growth and can reduce inequality.1 Despite these well-recognized benefits, trends in global human capital accumulation over the last two decades paint a picture of stagnation. In many low- and lower-middle- income countries, the situation has gotten worse rather than better (refer to chapter 1). The lack of progress in human capital will constrain improvements in productivity and stymie economic growth in these countries, ultimately stifling any progress toward reducing poverty and increasing shared prosperity. This report draws on existing research and new evidence that demonstrate that human capital accumulation can accelerate if policies reach beyond schools, clinics, and job training centers—the settings in which governments typically invest in human capital—to include the home, the neighborhood, and the workplace. Skill gaps emerge before children start school, when they have spent most of their time at home, and do not close in subsequent periods of childhood and adolescence (refer to chapter 2). The care environment, which is not a usual focus of policy, turns out to be crucial in providing young people with the means to achieve success at school and in the labor market. The characteristics of the neighborhood, such as low-quality schools and primary health centers, poor sanitation, pollution, and exposure to violence, can hold back foundational human capital outcomes such as good health and learning (refer to chapter 3). The workplace, where people spend far more time than they did in school, accounts for around half of lifetime skill development (refer to chapter 4). Yet, most jobs in low- and middle-income countries, such as employment in small-scale agriculture, low-quality self-employment, and microfirms, offer few opportunities for learning. Women’s low participation in paid employment and the persistently high rates of youth who are in neither education nor employment restrict the acquisition of skills at work. Chapters 1 through 4 highlight policies that have improved the care environments of children and adolescents at home; engaged more sectors, such as infrastructure, sanitation, and social development, in neighborhoods to achieve better human capital outcomes; and increased public and private investment in on-the-job learning, while creating incentives for firms to invest in the workplace in ways that foster skill development. This chapter examines broader reforms that enable governments to design policies that activate the home, the neighborhood, and the workplace to promote human capital accumulation more effectively. It first shows how a settings-based perspective is critical to identifying areas for investment in human development, such as nutrition, reading and mathematics proficiency, and on-the-job skill acquisition. The chapter next highlights investments and strategies that have been successful in integrating the initiatives of various sectors in homes, neighborhoods, and the workplace. The chapter then articulates a global and national data agenda to track progress in each setting and identifies open questions for future work. Implementing a Settings Approach in Policy 109 A settings lens to solve human development challenges More than 150 million children under age 5 (more than one in five) were stunted in 2024. Another 35 million children (around 6 percent) were overweight, a growing concern worldwide. Under- and overnutrition not only affect cognitive development,2 they also increase the risk of chronic diseases that reduce labor productivity in adulthood.3 To understand the value of a settings lens, consider all that needs to occur in the home, in the neighborhood, and in the workplace to avoid malnutrition (refer to figure 5.1). At home, families need sufficient resources to purchase and prepare nutritious food. Research shows that other dimensions of care, such as early stimulation and good sanitation and hygiene, contribute to healthy physical growth because children must be protected from contaminated water so that they can absorb the nutrients in the food they consume.4 In neighborhoods, nutritious food needs to be available and affordable for purchase. Health services should help parents monitor and assess their children’s growth, and local utilities should provide access to clean water and sanitation. Parents and other caregivers need to be active in good jobs so that they can purchase the inputs required to provide a healthy diet and protection from nutrient-depleting pathogens. Tackling malnutrition therefore requires coordinated action across the three settings and across multiple sectors, including health care, social protection, agriculture, transport, water, sanitation, and labor, alongside regulation of the private sector and support for local food markets. A similar logic applies to skills for work. Low skill levels among the workforce are another global challenge confronting low- and middle-income countries, and a settings-based approach can help identify areas that require greater investment. Homes provide the first learning environment for cognitive skills, such as early literacy and mathematics, and for social-emotional skills, such as perseverance and impulse control, both of which contribute to higher earnings in adulthood.5 Parents provide direct care that promotes this skill development—for example, by reading with a child. They also model behaviors.6 For older children and youth, parents often pay school tuition and must cover the costs of learning materials and transportation. Neighborhoods directly influence skill development through the availability and quality of local schools and through environmental attributes, such as pollution and violence, that can impede the acquisition of skills.7 Disadvantaged neighborhoods expose children to peers with lower levels of skills, which can depress learning.8 Likewise, workplaces directly and indirectly shape skills. For the employed, firm size, job type (salaried work versus self- employment), sector, access to technology, and distance from public transportation affect whether an individual works and how much an individual can learn on the job.9 The existence of a job or entrepreneurship opportunity can modify perceived and actual returns to education and thus influence aspirations and educational attainment.10 110 Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces FIGURE 5.1 What needs to happen in the home, in the neighborhood, and in the workplace to avoid malnutrition HOME Parents need to provide a healthy diet, early stimulation, and adequate sanitation and hygiene. NEIGHBORHOOD A transport network must deliver affordable, healthy food, and the health care system must monitor children's growth, while public utilities supply clean drinking water. WORKPLACE Parents must be in jobs that offer sufficient income for the purchase of inputs such as nutritious food. Source: Original figure for this publication. Implementing a Settings Approach in Policy 111 Reforms aimed at settings can spur gains in human capital A settings lens uncovers multiple investments required across the home, the neighborhood, and the workplace to solve some of the main global challenges in human development. These investments, however, span multiple actors, including private firms with limited experience working together in a coordinated way. Yet some programs have achieved successful integration through convergence designs that tackle numerous constraints across homes and neighborhoods together. National programs in Indonesia and Peru have reduced the prevalence of stunting through such an approach (refer to box 5.1). BOX 5.1 Reducing malnutrition in Indonesia and Peru In both Indonesia and Peru, success in combatting stunting resulted from a combination of long-term political commitment, cross-sectoral collaboration, results-based financing, strong technical support, and measurement systems that informed decision-making. Indonesia The government of Indonesia launched the National Strategy to Accelerate Stunting Reduction (StraNas Stunting) in 2018, formalized by Presidential Regulation 72/2021, to provide a package of high-impact nutrition-specific services, to pregnant women and to children during their first 1,000 days of life. These included (a) maternal and child health services; (b) integrated nutrition counseling; (c) water, sanitation, and hygiene services; (d) social protection and food assistance; and (e) early childhood education and development services. The strategy operated at scale. Early implementation focused on the 100 districts with the highest prevalence of stunting, before expanding nationwide. By 2024, the initiative covered more than 75,000 villages across all districts. Convergence was at the heart of the strategy. Resource allocation, planning, and service delivery were coordinated across 23 ministries across districts and down to the village level. A dedicated human development worker in each village connected households to services and monitored delivery of the integrated package. Because the districts were primarily responsible for the delivery of basic services, the government introduced a set of convergence actions to be implemented by district governments to promote a coordinated, multisectoral approach to the planning, (Box continues on next page) 112 Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces BOX 5.1 Reducing malnutrition in Indonesia and Peru (continued) budgeting, and implementation of priority interventions. Financing mechanisms, including intergovernmental transfers to districts for convergence in stunting interventions and allocations of transfers to villages, reinforced multisectoral coordination. Findings from an impact evaluation that has followed the program’s phased rollout indicate that the reductions in stunting reached up to 10 percentage points among the earliest cohort targeted in high-prevalence locations. The country’s overall stunting rate fell from 30.8 percent to 19.8 percent in 2018–24, an 11 percentage point reduction that exceeded the 6.2-point decline that had been observed during the previous five years.a Peru Peru implemented a multisectoral national strategy to reduce stunting. In 2006, 10 presidential candidates endorsed the 5-by-5-in-5 commitment, a pledge to reduce stunting among children under age 5 by 5 percentage points in 5 years. By 2016, the strategy had expanded to all regions and more than 1,800 municipalities, with initial efforts concentrated in the poorest districts with the highest prevalence. The government prioritized a core group of evidence-based interventions, including micronutrient supplementation; maternal health and prenatal care; infant and young child feeding counseling; growth monitoring and promotion; expansion of water, sanitation, and hygiene services; and community health outreach. These were delivered through health posts, community agents, family support programs, and municipal governments. Multiple ministries—development and social inclusion, economy and finance, and health—worked with municipal and regional governments responsible for front-line implementation. Results-based budgeting linked public resources to specific outcomes in child nutrition, health, and early development. Regions and institutions received allocations tied to the achievement of measurable targets, while inefficient or duplicative programs were restructured or closed.b Stunting declined from 28 percent to 13 percent in 2005–16, a 15 percentage point reduction in about a decade. The largest improvements occurred in historically lagging regions. a. Suhenda (2025). b. Marini and Rokx (2017). Implementing a Settings Approach in Policy 113 The convergence approach does not require the delivery of numerous services from multiple sources through one large program. Indeed, one unit or department can take the lead and coordinate the participation of other entities. For instance, Chile’s Nadie es Perfecto (No one is perfect) is a nationwide parenting program delivered through the national health system but also supported by local nurses, psychologists, educators, and social workers. Parents attend eight weekly sessions. A randomized controlled trial shows progress in children’s cognition that can be observed three years later.11 Likewise, the Integrated Child Development Services scheme in India— which operates through more than 1.4 million community centers, making it the largest public early childhood program in the world—is implemented by the Ministry for Women and Child Development, which coordinates with other ministries to provide services, including supplementary nutrition, nutrition and health education, immunization, health checkups, referral services, and preprimary education. Similarly, in programs targeting households, such as cash transfers, additional services can be layered on for subsets of beneficiaries. Cash plus programs combine regular cash transfers with complementary services, such as nutrition counseling, parenting support, health services, and training. The combinations have been numerous, but positive effects on human capital beyond the cash are evident in packages that include high-quality nutrition and health counseling or sustained coaching.12 For example, evidence from northern Nigeria shows that the combination of cash transfers, asset transfers, and health counseling among mothers resulted in a 10 percent increase in household expenditures and a 6 percentage point reduction in stunting even two years after the intervention had ended.13 Variants of these programs have been implemented in Bangladesh, India, and several countries in Sub-Saharan Africa.14 Tools for integration The task of integrating or coordinating activities across multiple sectors in different settings can be facilitated through investments in data architecture and processes for delivering programs, such as social registries, single-window entry points, and case management. Social registries A social registry is an information system that aggregates socioeconomic information on individuals or households and that can be used to identify and reach populations eligible for social programs (refer to figure 5.2). As of June 2025, 62 countries had social registries, covering approximately 1.1 billion people. Nearly half of the countries with operational social registries (29 of 62) use them in social protection programs and to support labor market programs, health care, education, subsidy allocation and monitoring, and other services.15 114 Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces FIGURE 5.2 Profile of a social registry Program eligibility spreadsheet Person Location Household size Income Eligible programs ID# 53102 Municipality 1 ID# 28761 Municipality 2 ID# 84097 Municipality 3 5 4 3 500 2,000 1,000 Source: Original figure for this publication. Free preschool Job training Short-duration wage salary Utility subsidy Parenting Job training Cash transfers Job training Parenting Utility subsidy By consolidating data across ministries on program eligibility and participation, these registries help governments make informed decisions on program coordination or consolidation (refer to box 5.2). The data they aggregate support the selection of households for programs, help identify needs and gaps that can be addressed through case management, and enable joint targeting across programs. Institutions can reuse and update registry data instead of conducting separate data collection exercises, thus reducing duplication, administrative costs, and fragmentation, while enhancing coordination. This also lessens the burden on potential beneficiaries, who no longer need to apply separately for each benefit and service. BOX 5.2 A social registry as a tool for integration Brazil Cadastro Único, Brazil’s social registry, contains data that allow the identification of low-income families and that records their socioeconomic condition and the assistance they receive through programs.a It is used to target a broad suite of interventions (currently more than 60), including housing, utilities, (Box continues on next page) Implementing a Settings Approach in Policy 115 BOX 5.2 A social registry as a tool for integration (continued) and vocational training. Covering 94.5 million people, the registry is fully interoperable with other government databases and can therefore support coordinated service delivery across sectors beyond social protection. Rwanda Imibereho, the social registry in Rwanda, serves as a national platform for data-driven targeting across social protection and health programs.b Before its introduction, the government relied on a community-based classification system to identify beneficiaries. This system suffered from significant errors of inclusion and exclusion, that is, they provided benefits to households that should not have qualified and left out many that needed support. To address this challenge, the government designed Imibereho as a digital registry that allows real-time updates and uses up-to-date data to deliver support. The registry uses national IDs and is interoperable with more than 10 government databases, including civil registration and land records. Today, Imibereho covers 13.8 million people and informs eligibility decisions for programs such as the Vision Umurenge Program (the flagship social protection program) and Mutuelle de Santé (the community-based health insurance scheme). a. Cadastro Único (dashboard), Ministério do Desenvolvimento Social, Assistência, Família e Combate à Fome (Ministry of Social Development and Assistance, Family, and Fight against Hunger), https://www .gov.br/mds/pt-br/acoes-e-programas/cadastro-unico. b. Imibereho (Imibereho Dynamic Social Registry), Ministry of Local Government, https://www .minaloc .gov.rw/services. Single-window entry points Social assistance centers can serve as single-window entry points that connect individuals and households to the benefits and services for which they are eligible. In Brazil, for instance, municipal social assistance centers (centros de referência de assistência social) help identify vulnerable households, facilitate enrollment in social assistance programs, and link families to a range of services. These single-window entry points can coordinate the delivery of services, cash transfers, and other benefits and play a major role in integrating programs in neighborhoods. Preschools can also serve as single-window entry points. Teachers can be trained to recognize neglect or abuse and make referrals to social services. Children can receive health screenings at school, and their families can receive health or employment services. For example, Head Start, a nationwide program in the 116 Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces United States, offers free early childhood services and preschool to disadvantaged households but also provides home visits and mental health and employment counseling among parents. In addition to improving children’s early learning and progression through school, Head Start has also benefited children’s health.16 As adults, children who had participated in the program were more likely to be employed and less likely to be living below the poverty line.17 Case management Case management is an important tool in implementing the settings approach. Through case management, a trained professional works closely with a household to identify the specific constraints the household faces, develop a tailored plan, and coordinate access to the services needed. Because it begins with an assessment of needs across domains, including care responsibilities, health and mental health difficulties, disability, food insecurity, and housing instability, case management can be an instrument in integrating support in the home so that interventions are not delivered in isolation but are sequenced and combined in ways that reflect the household’s needs and capacity to absorb solutions. Examples of case management can be found across contexts. In Jamaica, it supports vocational training, mental health services, and domestic violence interventions. In Mozambique, case management is used in the child subsidy (Subsídio para a Criança) program and is being progressively extended.18 Guaranteed minimum income schemes in the European Union increasingly incorporate case management, including tailored inclusion plans, multidimensional needs assessments, and single points of contact for service referrals.19 A recent randomized evaluation in the United States illustrates the potential of case management. It found that a program combining individualized case management, regular coaching, service referrals, and flexible financial assistance led to improvements in labor market outcomes.20 Engaging with the private sector In addition to program convergence and better coordination across public sector implementers, adopting a settings approach to human capital requires engaging with numerous stakeholders, including parents in homes (chapter 2), local and state governments and community members in neighborhoods (chapter 3), and firms and entrepreneurs in the workplace (chapter 4). For instance, to achieve improvements in educational outcomes in violent contexts, parents are crucial agents in the home, while local community members, such as school tutors, mentors, and staff at local nongovernmental organizations, are critical in neighborhoods. These actors deliver school-based group counseling, mentoring, and cognitive behavioral therapy in contexts as diverse as Chicago, Monrovia, and San Salvador.21 This does not mean Implementing a Settings Approach in Policy 117 public financing should be reduced or replaced with the contributions of parents, communities, or the private sector, nor does it necessarily diminish the importance of high-quality public services. Rather, the settings lens underscores the need to integrate the home, the neighborhood, and the workplace into policy design. The input of these locations should be identified and encouraged, and the role of parents, communities, and the private sector as critical agents in making sectoral investments in schools, health facilities, and job centers effective should be recognized and promoted. The private sector plays an important role in human capital accumulation. In homes, for example, private food producers and distributors strongly influence the nutrition that households can access and afford. Their marketing strategies and market penetration influence household choices, underscoring the need for governments to regulate practices, such as the marketing of breast milk substitutes or the advertising of low-nutrition food and beverages to children.22 The private sector is important in addressing gaps in childcare and preprimary education services in neighborhoods. The private sector is also an important and, in some cases, the biggest provider of primary health and basic education in countries. The key challenge facing public policy in these circumstances is how to regulate and ensure quality. Most learning in the workplace occurs in private firms. Firms often underinvest in training, however, because they cannot capture its full benefits. Workers may leave and apply their new skills in other jobs. Governments can shrink the gap between social and private returns to skill acquisition on the job by providing firms and entrepreneurs with wage subsidies, training vouchers, or cofinancing schemes as incentives to undertake training. If well designed, such incentives tend to raise the training provision of firms and the participation of workers, with positive effects on skills, wages, and productivity. Market imperfections—limited credit, lack of certification, inadequate management capacity—can also hold back skill investment in private firms. In these cases, governments can subsidize access to professional services, in effect supporting access to external human capital through the market. In Nigeria, government subsidies that enabled small and medium enterprises to insource or outsource specialized functions, such as marketing and finance, led to substantial improvements in business practices, increases in product innovation, and, in the case of outsourcing, higher sales and profits.23 These impacts were markedly larger than those from training among business owners alone. Similarly, in the Republic of Yemen, matching grants allowed small and medium firms to pay for consulting services in accounting, marketing, and business training, leading to large increases in new product development and the adoption of better business practices.24 118 Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces Tracking progress: A national and global data agenda Tracking progress in human capital investment across homes, neighborhoods, and workplaces requires clear metrics of success. Given current data availability, this will require a more ambitious national and global data agenda. It is possible to increase inputs, such as school enrollment, and still have near total stagnation in outcomes, such as learning. More direct proxies of human capital are therefore needed to measure the effectiveness of policies or programs and to monitor real progress in human capital accumulation. The indicators would ideally lend themselves to frequent measurement at scale. Monitoring and adjusting policy in response are difficult if data are produced and disseminated only in cycles of 10 years. Table 5.1 lists these types of outcome indicators with suggestions for the mode and frequency of measurement. Many of these indicators are already a part of the World Bank Group Scorecard, which tracks progress toward the World Bank’s mission across 22 indicators.25 For example, at home, measuring children’s heights and weights, which would permit the calculation of the prevalence of both stunting and obesity, provides a direct measurement of children’s nutritional status. Likewise, early vocabulary would help measure the extent to which children are learning skills at home that will prepare them to learn once they attend school. Deficits in these early skills predict skill shortfalls throughout school age and in adolescence when children are at school. To understand whether neighborhood attributes are holding back human capital accumulation, tracking variation across neighborhoods is important. Typically, household surveys are not representative at this level. Identifying whether there are neighborhoods in which human capital outcomes are especially poor and why this may be so will thus require investments in the production, processing, and use of administrative data. Because an individual needs to be employed to acquire human capital on the job, tracking employment is a way to monitor whether there are sufficient opportunities to build human capital at work, particularly among groups underrepresented in the workforce, such as women and youth. If workers are paid according to their contributions to output (that is, if they are paid their marginal product), then tracking earnings as the workers gain experience should provide an indication of whether the workers are gaining job-relevant skills at work. Distinguishing among occupations, such as own farmwork, small business, and office work, will be useful in identifying whether there are segments of the workforce that may not be acquiring sufficient human capital at work. Implementing a Settings Approach in Policy 119 TABLE 5.1 Outcome measures to track progress in human capital accumulation Example indicators Mode Frequency Stunting prevalence, children under age 5a Vocabulary Reading proficiency at end-of-primary school agea Prevalence of mental health disorders HOME Household survey Three times in 10 years Administrative data Ongoing Household survey Three times in 10 years Household survey Three times in 10 years National assessment Annual Household survey Three times in 10 years Administrative data Ongoing NEIGHBORHOOD Stunting prevalence, children under age 5a, by neighborhood Reading proficiency at end-of-primary school agea, by neighborhood Administrative data Ongoing National assessment Annual Mortality, by neighborhood Vital statistics Ongoing Employment, by gender, occupation, and firm size Youth not in education, employment, or traininga Labor earnings or profits, by tenure and occupation Worker productivity (value added per worker) Source: Original table for this publication. WORKPLACE Labor force survey Annual Household survey Three times in 10 years Labor force survey Annual Administrative data Annual Administrative data Three times in 10 years a. Indicators on the World Bank Group Scorecard, which tracks progress toward the World Bank’s mission across 22 indicators. The home, the neighborhood, and the workplace are important settings for building human capital either because some investments take place in these settings, such as the purchase of children’s books, or because these locations moderate exposure, such as exposure to particulate matter in the air. In addition to measures of outcomes, it will also be important to measure the inputs associated with the home, the neighborhood, and the workplace (refer to table 5.2). 120 Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces TABLE 5.2 Input measures to track progress in human capital accumulation Example indicators Mode Frequency School enrollment, ages 4–24 HOME Household survey Three times in 10 years Administrative data Ongoing Children’s books at home Household survey Three times in 10 years Severe violent punishment at home Household survey Three times in 10 years Number of health and education facilities available in the neighborhood Administrative data Annual NEIGHBORHOOD School enrollment, ages 4–24, by neighborhood High-school graduation and dropout, by neighborhood Administrative data Once in 10 years (population census and (population census), annual school census) (school census) Administrative data Once in 10 years (population census and (population census), annual school census) (school census) Percentage of people exposed to crime, Crime monitoring (for by neighborhood example, homicides) Ongoing Percentage of people exposed to hazardous air qualitya, by neighborhood Air quality monitors Ongoing WORKPLACE Percentage of employed total and by occupation and gendera Labor force survey Annual Firm size Enterprise survey Three times in 10 years Number of organizational layers in a firm Enterprise survey Three times in 10 years On-the-job training provided to own workers in a firm Source: Original table for this publication. Enterprise survey Three times in 10 years a. Indicators on the World Bank Group Scorecard, which tracks progress toward the World Bank’s mission across 22 indicators. While not exhaustive, these outcome and input indicators should provide a snapshot of how well homes, neighborhoods, and workplaces are contributing to human capital accumulation. The progression toward a data system covering these indicators may start with household-based surveys, population censuses, and enterprise surveys that generate the core indicators needed to understand human capital outcomes. As a country’s data architecture becomes more Implementing a Settings Approach in Policy 121 sophisticated, administrative data—particularly civil registries, vital statistics, education system data, social protection system data, and firm registries—will provide more frequent high-quality data. A fully developed data system would produce, process, and use these core indicators to support planning, prioritization, and targeting in human capital investment (refer to figure 5.3).26 Linked to this data agenda must be a research agenda to identify cost-effective and scalable implementation approaches to improve human capital formation in the home, the neighborhood, and the workplace (refer to box 5.3). While substantial research exists on individual programs, key questions remain. For instance, relatively less is known about whether complementarities exist across programs, that is, whether programs should be undertaken in combination or in a certain sequence, or how implementation might be adapted if an entire population requires the intervention, for example, populations in fragile and conflict-affected contexts with limited capacity or populations with high rates of extreme poverty. FIGURE 5.3 The progression toward a fully developed data system TIER 1: FULLY DEVELOPED DATA SYSTEM Survey and administrative data are regularly used for planning, prioritizing, and targeting human capital investments. TIER 2: ADMINISTRATIVE DATA AND SURVEYS Civil registries and vital statistics, data from health and education management information systems, social registries, and firm registries would be complemented by survey data. TIER 3: SURVEYS ONLY Household-based population censuses and surveys and enterprise-based surveys. Source: Original figure for this publication. 122 Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces BOX 5.3 A research agenda The research for this report addressed three questions on each setting: (a) In which ways does the setting matter in human capital accumulation? (b) Why are investments low in low- and middle-income countries in these settings? and (c) Which policies can help? For each setting, the report identifies a set of policies to promote human capital, along with broader reforms that would enable governments to activate these settings for human capital accumulation. For each policy, chapters 2 through 4 also report on the strength of the evidence; whether impacts estimated in research have been low, medium, or high; and what remains to be learned. These policy unknowns suggest the following research agenda. The home This report advocates for policies that ensure households have more resources and that governments deploy programs targeting the care environment of children and adolescents. New research could provide insights into issues of implementation and scale. For cash transfers, which are one method to increase household resources among the poorest, future research could help establish the combination of transfer duration, value, employment support, and targeted population that translates most effectively into improvements in human capital. For parenting programs, there is little evidence of success at scale. Key questions on the design of these programs relate to the targeting criteria (for example, age of the child, poverty status, maternal education, or child development measures), the qualifications and remuneration of front-line staff, and effective complementary programs (for instance, mental health counseling for parents). Likewise, relatively little is known about the effectiveness of additional components in augmenting the impacts of preschool, such as health or child protection services for children or job training and employment services for parents. The neighborhood This report advocates for engaging more sectors, such as infrastructure, sanitation, and social development, in neighborhoods to achieve better human capital outcomes. New research could shed light on how these sectors can be integrated most effectively. (Box continues on next page) Implementing a Settings Approach in Policy 123 BOX 5.3 A research agenda (continued) There is also a great deal to be learned on how communities can best become involved without elite capture, how schools and health facilities could be used as entry points for integrated interventions at the local level, and what combination of policies yields the largest sustained human capital returns per dollar in low- resource neighborhoods.a Understanding when local general equilibrium effects are important should also be a priority.b Situations of fragility, conflict, and violence and other situations in which capacity is limited present particular implementation challenges, and research on how best to implement policies to raise human capital in these fragile settings would be valuable. The workplace This report advocates for increased public and private investment in on-the-job learning and for establishing incentives for firms to invest in workplace attributes that foster skill development. Topics that would particularly benefit from more research revolve around issues of effectiveness. Here, too, there are clear implementation challenges that have received less attention. Limited monitoring, weak certification systems, and inadequate public-private coordination may hinder effective implementation. In terms of creating more high–human capital jobs, research is needed to understand the mix of financing, research and development incentives, and market access that can drive sustained skill-intensive growth. Another question is whether firm and education policies should be jointly targeted, combining expansions in education with support for firms and entrepreneurs to absorb the newly skilled workforce. a. Elite capture is the diversion for private gain by powerful individuals or groups (the elite) of public resources, development assistance, or policy or political plans or programs intended to benefit the general population. b. Local general equilibrium effects are the adjustments in prices, wages, consumption, or investments that follow localized economic shocks, such as policy changes, cash transfers, or a crisis or a disaster. 124 Building Human Capital Where It Matters: Homes, Neighborhoods, and Workplaces Conclusion Human capital is essential for people to obtain good jobs and earn higher incomes. Despite tremendous progress in expanding access to education, health care, and social services, improvements in critical outcomes have stagnated or declined in many low- and middle-income countries. This report proposes an approach to tackle this lack of progress. First, a settings lens is appropriate for identifying the investments required to address the global challenges to human development. A narrow focus on solutions based on facilities provides an incomplete picture of the underlying causes of the challenges. Substantial evidence shows that human capital accumulates in places beyond schools, clinics, and job training centers. For example, skill gaps emerge before children start school and do not narrow in childhood or during adolescence. Shortages in nurturing care at home explain a large share of the disadvantage. Similarly, good outcomes in nutrition and learning are held back by adverse neighborhood characteristics, such as poor sanitation, pollution, and exposure to violence. Because people spend more time in jobs than in schools, the workplace is responsible for around half of lifetime skill development. The interactions and dynamics in these settings lead directly to the deficits observed in workplaces. Second, reforms that integrate the efforts of sectoral actors and stakeholders in homes, neighborhoods, and workplaces are needed to activate these settings for greater human capital accumulation. Implementing multisectoral policies presents two key challenges. First, sectoral actors have distinct mandates, and, second, homes, neighborhoods, and workplaces are not the settings in which most line ministries typically operate. Addressing these challenges requires aligning sectors around a shared goal, such as reducing malnutrition, poverty in learning, or deficits in skills, and establishing mechanisms that integrate services across these settings. It also entails combining interventions targeted by location and complementary actions at the national level, such as regulatory reform. A convergence orientation that tackles the constraints in homes and neighborhoods simultaneously can help overcome the barriers. Social registries, single-window service platforms, case management, and other tools have proven especially effective in supporting this type of integration. The settings approach also requires engaging with many stakeholders, including parents in the home, community associations in the neighborhood, private firms and entrepreneurs in the workplace, and local and state governments. Third, tracking progress in homes, neighborhoods, and workplaces will require more ambitious national and global data agendas. Data on core inputs and outputs in each setting are missing or out-of-date in many low- and middle-income countries; administrative data systems are often weak, and the data that are collected are often not used to plan, prioritize, or target investments. Implementing a Settings Approach in Policy 125 The three components of a solution—the settings lens, tools for integrating services in settings, and an ambitious data agenda for tracking progress—can turn today’s human capital stagnation into tomorrow’s acceleration to drive economic growth and more widespread opportunities among people. Notes 1. Galor and Moav (2004); Goldin and Katz (2007); Hendricks and Schoellman (2018); Khanna (2023). 2. Barham et al. (2013); Black et al. (2007). 3. Aizer and Currie (2014); Weil (2007). 4. Gertler et al. (2014); Spears (2013); Walker et al. (1991). 5. Attanasio et al. (2020); Borghans et al. (2008); Gensowski et al. (2024); Heckman et al. (2013). 6. Gensowski et al. (2024). 7. Arceo-Gomez et al. (2016); Melnikov et al. (2020); Sviatschi (2022a), (2022b); Tanaka et al. (2022). 8. Chetty and Hendren (2018); Lavy et al. (2012); Sacerdote (2011). 9. Atkin (2016); La Porta and Shleifer (2014); Tsivanidis (2019). 10. Crépon and Premand (2025); de Mel et al. (2008); McKenzie (2017). 11. Carneiro et al. (2024). 12. Hidrobo et al. (2020); Sedlmayr et al. (2020). 13. Carneiro et al. (2021). 14. Banerjee et al. (2021). 15. Guven et al. (2025). 16. Bailey et al. (2021); Carneiro and Ginja (2014); Kline and Walters (2016). 17. Bailey et al. (2021). 18. Refer to Case Compass (dashboard), World Bank, https://www.case-compass.org/. 19. Marzi et al. (2024). 20. Evans et al. (2025). 21. Blattman et al. (2023); Dinarte-Díaz and Egaña del Sol (2024); Heller et al. (2017). 22. Cairns et al. (2013). 23. Anderson and McKenzie (2022). 24. McKenzie et al. (2017). 25. Refer to the World Bank Group Scorecard (dashboard), World Bank, https://scorecard.worldbank .org /en/home. 26. These functions are part of the integrated national data system described in World Bank (2021). 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Yet, progress has stalled, and there have even been reversals in human capital accumulation over the last 15 years. Two-thirds of low- and middle- income countries experienced declines in nutrition, learning, or workforce skill development between 2010 and 2025. Building Human Capital Where It Matters argues that, to accelerate human capital development and accumulation, the focus of policy needs to be expanded beyond schools and clinics to include other key settings where human capital is built: the home, the neighborhood, and the workplace. This settings approach provides an understanding of some of the crucial drivers of human capital accumulation, such as care for children and adolescents in the home, the social dynamics and the quality of the environment in neighborhoods, and job attributes that foster learning at work. It also makes evident the benefits of collaboration across various departments of governments and between the public and private sectors and the need for a more ambitious data agenda that tracks progress in human capital in the home, the neighborhood, and the workplace. worldbank.org/humancapitalreport Reproducible Research Repository https://reproducibility.worldbank.org A reproducibility package is available for this book in the Reproducible Research Repository at https://reproducibility.worldbank.org/catalog/461. ISBN 978-1-4648-2277-3 SKU 212277