rafmacalaba/data-use-mentions-extended huggingface dataset:
# **Estimating the Impact of Trade and Offshoring on American Workers**

**Using the Current Population Surveys**<sup>*****</sup>

Avraham Ebenstein Hebrew University of Jerusalem Ann Harrison World Bank, UC Berkeley and NBER Margaret McMillan Tufts University and NBER Shannon Phillips Boston College May 2011 Abstract: We link industry-level data on trade and offshoring with individual-level worker data from the Current Population Surveys. We find that occupational exposure to globalization is associated with larger wage effects than industry exposure. This effect has been overlooked because it operates between rather than within sectors of the economy. We also find that globalization is associated with a reallocation of workers across sectors and occupations. We estimate wage losses of 2 to 4 percent among workers leaving manufacturing and 4 to 11 percent among workers who also switch occupations. These effects are most pronounced for workers who perform routine tasks.

> * Corresponding author: <u>aharrison2@worldbank.org. We would like to thank Rajeev Dehejia, Gene Grossman, Gordon</u> Hanson, James Harrigan and John McLaren for helpful comments on earlier versions of the manuscript. We also thank seminar participants at the University of Maryland, the University of Virginia and Yale University for helpful comments. Special thanks to David Autor, Robert Feenstra, Wayne Gray, and Lawrence Edwards for providing data critical to our analysis. Excellent research assistance was provided by Catherine Almirall, Revital Bar, Joan Fang, and Michael Freedman.
concern in mind. We study the effects of the distant water fuel subsidy policy between 2016 and 2020 because that policy features numerous thresholds at which fuel subsidies discontinuously increase with vessel size (Ministry of Agriculture, 2016). Distant water fuel subsidy policies between 2006 and 2015, and from 2021 onward, do not feature discontinuities according to vessel size (Department of Industrial Policy and Regulation, Ministry of Agriculture, 2021; Ministry of Agriculture 3 2006 was the first year of the 11th Five-Year Plan. There have been four iterations of distant water fuel subsidies so far: 2006 to 2010, 2011 to 2015, 2016 to 2020, and 2021 to 2025, corresponding to China’s 11th, 12th, 13th, and 14th Five-Year Plan periods.

> 4In 2011, the most recent year in which EEZ fuel subsidies data are available, fuel subsidies to vessels that fish in China’s EEZ totaled $3.2 billion, 20.63 billion yuan (Bureau of Fisheries, 2012; China Foreign Exchange Trade System, 2021). By comparison, total distant water fuel subsidies in 2011 were $415 million, or 2.68 billion yuan (Bureau of Fisheries, 2012; China Foreign Exchange Trade System, 2021).

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retirement burden. Indeed, the potential for fast "catch-up" growth may be reduced, the possibility to raise contribution rates will be exhausted, and the relative number of contributors will start to fall as Polish demography begins to look like the Western one: fewer births and longer life expectancy. Moreover, the number of unemployed-still held to zero in the 1980s-now adds to the number of retirees as a burden for the budget and a loss of productive capacity.

The distribution of early retirement by age is difficult to assess. There is a lack of data disaggregated by age. Labor force participation is of the order of 65 percent for the age group 45-54 and 25 percent for the age group older than 55 (GUS, Rocznik 1994, p.49, table 4 and p.<sup>1</sup> 13, table 5). The average retirement age was estimated to be 55 years, while the statutory rate was 65 for men and 60 for women. It should be safe to tighten the rules. Limiting access is more efficient and possibly more equitable than reducing pensions, especially the low ones. Cross-country comparisons made by Fakin and de Crombrugghe (1996) suggest that pension expenditure is affected by the generosity of pensions, but that the number of pensioners is not. Accessibility rules are then a more important determinant of the number of people involved than the attractiveness of the benefits, which may then be higher if the number is low.

Information on the number of pensioners (retirees or invalids) earning labor income in addition to their pensions is also very scarce. The number of people involved may be relatively large, however. A comparison of a labor force survey (GUS "Aktywnosc Zawodowa i Bezrobocie w Polsce" 12/1993 p. 142) with data on registered pensioners (GUS Rocznik Statystyczny), in 1993, showed 1 million more registered pension earners (8,730 thousand) than persons out of the labor force who had worked previously (7,729 thousand).

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is an event that lowers oil prices amid falling oil output and industrial production. A positive speculative demand shock (such as the residual in Figure 2.F) is identified as one that raises oil inventories, increases prices and oil production, and reduces industrial production.

**_Elasticity restrictions._** Restrictions are imposed on the short-run price elasticity of oil demand. The impact price elasticity of demand is assumed to be non-positive; the median draw in the range -0.2 to -0.1 is used, in line with estimates of the elasticity since the 1980s in Baumeister and Peersman (2013).

**_Data_** . The exercise set uses monthly data from January 1980 to April 2020. Global industrial production is the production-weighted average of industrial production in 31 advanced economies and 47 EMDEs, in an unbalanced sample depending on data availability. Data for industrial production in April is estimated as the level predicted by the global manufacturing purchasing managers’ index. Global oil production is from the International Energy Agency (IEA) from 19872020 and the U.S. Energy Information Administration (EIA) from 1980-86. Oil prices are the unweighted average of Brent, West Texas Intermediate, and Dubai crude oil prices from the World Bank’s Pink Sheet, measured in U.S. dollars. OECD inventories use IEA data from 1991-2020 and EIA data from 1987-1990. In April 2020 and prior to 1987, percent changes in U.S. inventories, which account for about one-third of OECD inventories,  are used to proxy for changes in OECD inventories.

# **2.3 Results**

The oil price plunge in 2020 has been mostly demand-driven, although supply factors have also played a role. The SVAR decomposition suggests that two-thirds of the price decline in the six months ending in April 2020 has been due to falling demand.<sup>4</sup> The demand and supply factors surrounding the recent plunge in oil prices are discussed below.

**_Demand decline resulting from lockdowns
k) = β(k)<sup>V[g(c)]</sup> ~~.~~ However, V[ĝ(c)] because we know the margin of error of the estimate of governance based on the representative data V[g(c)] sources, we can use this to estimate the ratio and then use this to adjust the slope coefficient to V[ĝ(c)] obtain a consistent estimate β̂̂(k) = β̂(k)<sup>V[g(c)]</sup> . Finally, with this adjusted estimate of β(k) in hand, V[g(c)] we can obtain estimates of α(k) and σ(k) as the mean and standard deviation of y(c, k) −β̂̂(k)ĝ(c) .

These two steps give us estimates of the parameters of the UCM for all data sources. We then insert these estimates into Equations (2) and (3) to obtain our final estimates and standard deviations of governance for each country. These estimates by construction have a mean and standard deviation close to zero and one, respectively. For ease of interpretation, as a final step we standardize the indicators and standard errors so that the reported estimates of governance have exactly mean zero and standard deviation of one across countries in every time period.

> 23 This is equivalent to maximum likelihood estimation of a principal components model.  In fact, we implement the calculations in Stata using the command for estimation of principal components models.  Details can be found in the reproducibility package for the WGI available here.

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, the 2018 database uses a variety of different surveys, albeit still, for the most part, highly standardized surveys from a few multicountry programs. For the MDG-era health service coverage and health outcome indicators, the DHS accounts for the majority of datapoints, but the MICS and the WHS are also important sources, contributing over 30% of the MDG-era service coverage datapoints. For the SDG-era health service coverage and health outcome indicators, the DHS is also an important source, but other sources are also important. These include the STEPS and the WHS, as well as the European Community Household Panel (ECHP), the International Social Survey Program (ISSP), the Eurobarometer, and
assumed (e.g., Eaton and Gersovitz 1981, Aguiar and Gopinath 2006, Arellano 2008, Broner, Martin, and Ventura 2010).

Finally, our study is the first to offer a 200-year perspective of sovereign bond pricing. Compared with Mauro, Sussman, and Yafeh (2002), for example, we add 60 years of data pre-1870, as well as the entire spell before, during, and after WW1 and WW2, when co-movement in sovereign bond prices was higher than in the relatively tranquil pre-1913 spell. Our 200-year dataset has a monthly frequency and can be explored at the global, country, and bond levels.

The paper proceeds as follows. In the next section, we review the related literature, especially work measuring sovereign haircuts and investor returns. Section 3 describes credit events and investor losses (haircuts) on external sovereign debt across two centuries, while Section 4 moves beyond defaults and documents the history of sovereign bond prices and returns over the very long run. Section 5 explores the behavior of returns around debt crises to understand investors’ recoveries in this market. Section 6 focuses on risk-return comparisons across asset classes. Section 7 concludes and lays a path for future research.

# **2. Previous studies: Sovereign debt returns and haircuts**

The related literature can be broadly grouped into two categories: papers that quantify rates of return on sovereign debt or related emerging market investments and a literature that provides estimates of haircuts and recovery rates for sovereign credit events. By and large, our results on bond returns and haircuts turn out to be similar to the existing body of work, whenever meaningful comparisons are possible. The main contribution is to provide a much more comprehensive picture, covering all countries for which external bond data were available and spanning the complete 200-year picture.

In the literature on investor returns, several earlier papers calculate internal rates of return (IRRs) to assess how creditors have fared in sovereign debt markets (i.e., until the bond is extinguished).
expenditures. In every third year, re-capitalization payments of 20-30 million pesos would more than double the typical 1996 deficit. Even under the assumption that the province manages the residual entity as poorly as possible, the savings from privatization (257 million pesos) would amount to a third of yearly government expenditures and could fulalice 1996 deficits for over twelve years. 9 In short, the potential fiscal savings associated with privatization are large, eveni with counter-factual re-capitalization estimates designed to be conservative. Had we used a discount factor of 5%, for example, the discounted re-capitalization stream would hiave been 4.2 _billion_ pesos -- six years of provincial expenditures, enough to finance the equivalent of a 20 million peso deficit (in 1996) for some two hundred years.

One might argue that public provincial bank quality has improved, or that the remaining banks are of higher quality than those that have already privatized, and thus the 9% loss rate in NW/TL overstates future losses. If the remaining public provincial banks are better ones (and thius have lower loss rates), their quality should be reflected in a smaller residual entity.20 Their discounted re-capitalization payments may be smaller than for the early privatizers but, because these payments are offset by the liabilities of a much smaller residual entity, privatization wi ll also make sense for them -- unless, of course, these banks are of such high quality tilat thley experience no losses in the future. The data on net worth and NW/TL, and that presented in Section IV on operating income and costs, however, make that proposition especially dubious.<sup>21</sup>

> 19 The comparisons with 1996 deficits are for illustrative purposes only. Deficits were, however, relatively small in that year. The average 1995 deficit for privatizers was 140 million pesos; in 1994 it was 84 million. It is unclear to us whether the 1996 deficits or those from prior years are better estimates of future deficits.

- 20 See regression in Section IV
# 4. Results

In this section, we briefly describe the data from the 2024 update of the WGI, emphasizing how to interpret the units of the governance indicator, as well as how to interpret cross-country and over-time differences in estimates of governance given the associated margins of error. For reasons of space, we focus only on a few graphs and indicators here. Users can visit <u>www.govindicators.org</u> for full access to the aggregate and individual indicators for all countries. In addition, more technically oriented users of the WGI can find the full set of parameter estimates for the UCM, a tool to reproduce the WGI calculations in Excel, and a full reproducibility package at www.govindicators.org.

## 4.1 Cross Country Comparisons

The WGI aggregate measures are reported in two ways: (a) in their natural underlying standard normal units, ranging from approximately -2.5 to 2.5, and (b) in percentile rank terms ranging from 0 to 100.<sup>15</sup> Figure 1 reports the data in these two ways, for two of the six aggregate indicators, Government Effectiveness and Control of Corruption. In each panel of the graph, countries are ordered in ascending order of their estimates of governance, and the figures plot the percentile rank (on the horizontal axis) against the natural units (on the vertical axis). The point estimate of governance is shown as a solid dot, and the thin vertical lines show the associated 90 percent confidence interval for governance, i.e. the estimate of governance (Equation (2)) plus or minus 1.64 times the standard deviation of governance (Equation (3)). In the WGI data available online, we also report the 90 percent confidence interval in percentile rank terms, i.e. we report the percentile rank (among all country estimates of governance) of the upper and lower bounds of the 90 percent confidence interval for each country
conclude therefore that the profiles are assigned randomly and that the samples of auditors in each script is balanced.

# **5. Data**

We use data from 4 different sources. First, the questionnaire filled by auditors after each visit which covers various aspects of the visit, including its length, the products offered and their features. Second, the printed materials that the staff handed to the auditor, consisting of either brochures about the product or, less frequently, personalized amortization tables when credit was requested. The third data source comes from a survey of a sample of credit officers that serviced the auditors. The survey was conducted in Peru and Ghana after the audit study was completed and asked about basic socio-economic characteristics, financial literacy, the marketing of financial products and bonus schemes offered by their employers. The fourth and final data source is what we refer to as the market products dataset containing the terms of all the savings and credit products offered by the institutions in the study at the time of the visits. This dataset is assembled using various sources including the web, market surveys and conversations with the regulatory authorities and staff of the financial institutions. The dataset only includes credit products with loan sizes in the range requested by the auditors, and savings products that can be contracted with the initial deposit amount mentioned. The construction of this dataset proved challenging, especially in Ghana and to a lesser extent in Mexico, for two reasons. First, the authorities in charge of collecting market information only require the average of certain terms for the institutions they supervise. As a result, they did not have detailed data on all the terms for all credit and savings products of supervised institutions and they lacked all product data for unsupervised institutions. The web was therefore used to fill in missing information but since many of the terms were not available online either, they had to be requested directly from the institutions. The other problem was that financial institutions were not always willing to disclose their product portfolio.<sup>24<
Policy Research Working Paper 9008

# **Abstract**

This paper discusses the evolution of the Egyptian banking sector and the main trends in financial development in the Arab Republic of Egypt. The paper examines empirically the relationship between the development of the financial sector and economic growth in Egypt between 1980 and 2016. It draws comparisons based on critical financial indicators between Egypt and selected emerging markets and developing economies, using a new data set of financial development indexes released by the International Monetary Fund. Econometric time-series modeling of bivariate regressions for real growth per capita and measures of financial development, to assess the relationship between financial development and economic growth in Egypt, yields three specific findings. First; there is a strong association between real growth per capita and financial development measured. Second; access to and the efficiency of banking services are not associated with real per capita income. Third, the Financial Markets Access Index—which compiles data on market capitalization outside the top 10 largest companies and the number of corporate issuers of debt—indicates that there is a robust association with real per capita gross domestic product. The main policy implications suggest that there should be a stronger focus on promoting a more proactive role for the financial services industry in Egypt. There is an especially critical role for bank financing to support the private sector to maintain an inclusive growth momentum. Further development of the capital market will promote the sustainability of such economic growth.

This paper is a product of the Office of the Senior Vice President for The 2030 Development Agenda, United Nations Relations and Partnerships. It is part of a larger effort by the World Bank to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://www.worldbank.org/prwp. The authors may be contacted at arostom@worldbank.org.

_The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective
# EXECUTIVE SUMMARY

1. The link between financial services and development is by now broadly acknowledged in economic literature.  Over the past years, the World Bank has explored the theme of access to financial services in various countries in Latin America, including Colombia.  The present report provides an initial overview of the state of financial access in Colombia, drawing on the limited available information to date.

2. Access to financial services has been declining in Colombia, as illustrated by decreasing levels of financial depth and intermediation and decreasing availability of basic financial services in relation to population size. In addition, a household survey in Bogotá finds that 61% of the adult population lacks access to any form of formal financial services, such as checking or savings accounts, payment services or loans.

3. An overall decline in financial intermediation, especially following the banking and fiscal crisis in the second half of the 1990s offers a partial explanation for the low level of financial access in Colombia. The level of intermediation was at 85% in 2003, down from 116% in 1998. the number of current and savings accounts per inhabitant has also been decreasing in the last four years. In light of lower risk investment opportunities in form of government bonds, Colombia’s main financial intermediaries, private banks, have limited incentives to increase their level of intermediation and provide services to low income clients. With the recovery of the financial system, the challenge today is to increase intermediation overall, and especially, intermediation to the poor.

4. A brief supply side analysis shows that Colombia’s banks provide costly services mainly catered towards high income clients. Existing fees and costs of checking, savings and loan services average 5-10% of a monthly minimum wage, making them hard to afford for low income clients. In addition, high minimum balance requirements create strong barriers to access even for basic financial services such as savings accounts. The situation is exacerbated by multiple documentation requirements resulting from strict anti-money laundering regulation which reduces the eligibility of low income clients for formal
936<br>2,162<br>1,798<br>1,437<br>1,548<br>1,226<br>1,082 918<br>Education Funds (US$ millions) 665<br>271 519 68 44 274 5 170 121 School-age refugees (Thousands)<br><!-- End of picture text -->

# _Source: REFD (2024)_

countries, with donor financing far exceeding costs in some countries Sixty-nine LICs and MICs were recipients of ODA for refugee and host community education in 2021,<sup>22</sup> with additional ODA allocated to a host of regional and international organizations. Figure K shows the number of school-age refugees in each country and the sum of ODA for refugee education for the 25 largest refugee hosting LICs and MICs. As this Figure shows, there

> 21 education systems. The provision of education through parallel systems is likely to face higher costs. 22 The OECD (2023) dataset records the first implementing partner only, and so the final destination of aid delivered to multilateral organizations by donors is unknown.

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unbiased impact of electrification on outcomes affected by electricity. Descriptive analysis was done for both the urban and rural samples; however, for the empirical analysis, we used only the 2005 IHDS rural household-level data, consisting of more than 24,000 households, which were available after the data cleaning.

As expected, the extent of household electrification in India’s rural regions—nearly 60 percent on average—is significantly less than in urban areas (more than 94 percent). The highest rates of rural electrification are found in the south and north, while eastern and plains regions exhibit the lowest rates for rural areas and India overall (Table 1). The great variation in rural electrification rates—from only about 40 percent in eastern regions to nearly 88 percent in the north—allows us to empirically investigate the drivers of rural household demand for electricity and the impact of household electrification status on outcomes of interest.

# **5. Energy Use and Electricity Demand in Rural India**

Despite rapid urbanization, about three-quarters of India’s population still reside in rural areas. Most rural people continue to rely predominantly on traditional biomass fuels to meet most of their energy needs. This is true even for households with electricity. For cooking, most rural households use fuelwood, crop residue, and dung, while some use kerosene. For lighting, kerosene is the primary energy source for households without electricity. Even among households with electricity, kerosene is an important backup lighting source. Thus, it is not surprising that kerosene is used by the vast majority of rural households (Table 2).

India’s rural households spend about 10 percent of their monthly income on basic fuel and energy services, which are used primarily for cooking, lighting, and heating activities (ESMAP 2002b). But in urban areas, electricity is the most commonly used fuel, followed by liquefied petroleum gas (LPG), and kerosene. As Table 2 indicates, more than one-third of urban 10