rafmacalaba/data-use-mentions-extended huggingface dataset:
_Fareed M. A. Hassan, ECSPE_ 14

# **3.2. A More Progressive, Three-Bracket System Can Raise Even More Revenue**

The main arguments made in favor of a simple system with fewer tax brackets and flat rate(s) is simplicity, revenue potential and other potential supply side incentives related to saving and investment<sup>6</sup> . Its biggest disadvantage is the lack of progressiveness. Besides the acknowledged need to generate revenue, personal income tax is also often expected to perform a redistributive function. The significant excess of the income of the rich above mean income suggests that -- on the basis of the principle of ability to pay -- it is desirable to collect substantial tax revenues from the rich 7. To explore the revenue implications of alternative, but more progressive income tax than the previously discussed flat-rate tax., I have constructed an alternative tax structures with broad, yet realistic, tax brackets derived from the 1992 income distribution. Panel c of Table 3 shows an altemative system with four brackets (including the lowest tax-free bracket, as in the flat-rate system) and four marginal rates of zero, 20 percent, 30 percent, and 40 percent. This system has the potential to raise an average 6/The analysis does not attempt to assess longer-term effects of tax policy through changes in the level of capital formation and growth. Lower flat rates have the obvious advantage of reducing disincentives to a wide range of economic activities, includiing work effort and saving and investment. Nevertheless, it is difficult to quantify these effects although there is often no question about their direction. For instance, Marsden's (1986) study uses evidence from 20 countries, spanning almost the entire spectrum of world economies, to show that those with lower taxes experienced faster economic growth and higher employment and productivity. Hall and Rabushka (1985) estimate the potential gains from their proposed simple flat wage and business tax as a 6 percent increase in output from increased total work in the US
## **3.2. Afrobarometer Surveys**

The Afrobarometer is a pan-African, independent, non-partisan research network started in 1999, which measures public attitudes on economic, political, and social matters in Africa. Seven survey rounds have been conducted as of 2020 and more than 35 African countries have been surveyed since Round 5 in 2011.

The recent Round 5 to Round 7 surveys contain some transport questions, regarding the ownership of vehicles, road surface in the start point and the last 5 kilometers in the primary sampling unit, satisfaction with local government for maintaining roads, and whether the paid transport is available in the primary sampling unit or within the easy working distance.

**Table 7. Transport questions in Afrobarometer surveys (Round 5, 6, and 7)**

|**Transportquestion**|**Available round**|
|---|---|
|Own motor vehicle/car/motorcyclepersonally?|5,6,and 7|
|The road at the start point in the PSU/EA is paved/ tarred/<br>concrete?|5, 6, and 7|
|The road at the startpoint in the PSU/EA is impassable?|7|
|How well or badly would you say your local government is<br>handlingmaintaininglocal roads?|5, 6, and 7|
|How well or badly would you say your local government is<br>handlingmaintainingroads and bridges?|5, 6, and 7|
|Is paid transport present in the PSU/EA or in easy walking<br>distance?|6 and 7|
|Road surface in the last 5 km in the PSU/EA|7|
|Road condition in the last 5 km in the PSU/EA|7|

# **4. Using Harmonized Household Surveys to Produce Stylized Facts**

The diverse design of transport questions, especially the fragmented evidence on household ownership and expenditure of transport vehicles and services across countries
included in the original sample. The follow-up interviews were carried out by a call-center in Dar es Salaam from September 3-11, 2018. Among the 730 households for which phone numbers had been obtained in 2017, 419 were reached and agreed to the follow up interview, which corresponds to a response rate of around 60%. 17% of households could not be reached, 20% were associated with a wrong number or a number no longer in service, and only 5% refused to participate in the phone interview. At the same time, data collection was complemented with the addition of 282 households to the sample. These additional households were also asked about impacts of the 2018 flood.

In total, the 701 households included in the follow-up rounds differ somewhat from the households that did not respond.<sup>6</sup> Income, for example, is 19% lower among the households that responded to the follow-up interview. In addition, households that responded to the follow-up interview seem to be located in slightly more risky areas. On average, the elevation is lower and household perception of future risk of floods is higher. These differences may affect the results in several ways: for example, the conclusions reached after comparison between affected and non-affected households could differ from the baseline in the case of the 2018 flood, since both groups are on average slightly poorer. Consequently, the data from the follow up interviews are primarily used in the analysis of vulnerability, in which comparison is primarily among the affected, and when calculating total losses of the flood in 2018.

> 5 Survey of Wellbeing via Instant and Frequent Tracking, methodology found here: <u>http://documents.worldbank.org/curated/en/591711545170814297/Survey-of-Wellbeing-via-Instant-and-FrequentTracking-SWIFT-Data-Collection-Guidelines</u>

> 6 See Table 10 in Appendix 1 for comparison between the households that responded in the follow-up interview with the ones that did not.

5
Unfortunately, the literature is not of much help regarding the link between labor market policies and currency over-valuation in developing countries. Even in studies done by or for the World Bank, different views can be found. For instance, L6pez and Riveros (1990) examined data from four Latin American countries and concluded that distortions in the formal labor market were a source of real wage rigidity, implying a low responsiveness of the real exchange rate to devaluation. But on the other hand, Horton, Kanbur and Mazumdar (1994) considered a broader set of countries and concluded that inflation was effective in reducing real wages, thus raising the real exchange rate. It is probably difficult to find more opposite views on any economic issue. Given this ambiguity of the literature, a careful analysis of labor markets in CFA countries is warranted.

# 2. Policies Affecting Wages

## a) Main features

The CFA zone is characterized by some of the heaviest labor market regulations in the world applied to some of its tiniest formal sectors. As Table I shows, employment in firms and agencies complying with regulations represents at most _5_ percent of the labor force. Furthermore, roughly half of this employment is in the public sector. Only a handful of private sector firms is therefore confronted to minimum wages, hiring and firing constraints and other labor market regulations. At a first glance, the small size of formal sector employment suggests that labor market policies and institutions are essentially irrelevant in CFA countries. However, most of the exports from these countries, as well as a key portion of the inputs used in the rest of their economies, are handled by formal sector firms. It is therefore of paramount importance to understand how these firms are affected by labor market policies and institutions.

3
# **B.- CORPORATE GOVERNANCE DIMENSIONS**

# **COMPONENT 1: OWNERSHIP AND LEGAL FRAMEWORK**

We privilege a legal framework in which companies are corporatized and subject to similar standards as other private companies. We also give priority to companies whose policies are established and monitored by a specialized government agency. The index gives higher scores to companies regulated by independent commissions or agencies and subject to the same tax obligations as any other private enterprise. The public listing of companies have a privileged score, since we assume that a company subject to the standards of the Stock Commission has better corporate governance.

<!-- Start of picture text --> Legal Soundness LEGAL SOUNDNESS<br>35<br>30<br>25<br>20<br>15<br>10<br>5<br>0<br>Source: LAC SOEs Governance Database, The World Bank, 2009. T1 T2 T3<br>THRESHOLD LEVELS<br>NUMBER OF COMPANIES<br>1<br>.8<br>.6<br>.4<br>.2<br>0<br>T1 ECU D R JAM PER ARG COL BZL PAR T2 BOL C R T T MEX URU<br><!-- End of picture text --> The Legal Soundness Index reflects the relatively good position of the majority of companies of the region. Most of government corporations have been corporatized and their functioning subject to commercial law. On the other hand, there is only one company that has been listed. SABESP in Brazil is listed both in domestic and international stock markets.

# **COMPONENT 2: BOARD AND CEO**

Our measure of the governance levels of the Board of Directors and the CEO attempts to capture the quality of both the mechanisms to appoint as well as the qualifications of the members of the Board and the CEO. It prioritizes a Board of Directors where political discretion is low, where members of the
1.3 joint trade-fiscal reform: a case study

21

1.3.3 _Data_

The empirical analysis uses a new data set extracted from unpublished customs records from Nepal for the calendar year 2008. It contains 417,715 import transactions. In addition to the date when the import shipment was processed, the data set lists the value of each import in Nepali Rupees inclusive of cost, insurance and freight (c.i.f.) and tariffs levied on that import. Customs also raise a substantial share of additional revenue at ports of entry by levying a range of domestic taxes. The main ones in Nepal are the excise duty and VAT, as well as the Agricultural Reform Fee (ARF) imposed on agricultural imports from India only. A range of other charges and taxes (para tariffs) are levied as follows: demurrage, customs service fee, fine, special fee, Road Construction Fee, and the Local Development Tax.<sup>24</sup> The data set lists applied Most Favored Nation (MFN) and preferential tariff rates set for each import at the Harmonized Commodity Description and Coding System (HS) 8-digit level.

I check for the consistency of entries and adjust the data set as follows. All import transactions worth Rs. 10,000 (approx. US$140) or less are dropped.<sup>25</sup> Goods entering the country under customs procedure codes which do not compete in the local market are dropped. These are mainly diplomatic and governmental imports that are tax-exempt. Next, I compute the applied tariff rate, applied excise duty, and applied VAT by dividing the actual amount of such taxes collected by their respective base.<sup>26</sup> Those “applied” values that abnormally deviate from the statutory

> 24 As of 2011, the local development tax, road construction fee, and special fee have been phased out.

> 25 This excludes nearly 30 percent of the observations, which accounts for 3.2
]|[0.001]|[0.003]|
|Test: payroll = account|0.171|0.000|0.000|0.000|0.000|0.000|
|Observations|40,458|40,458|24,046|40,458|40,458|40,458|
|R-squared|0.018|0.454|0.181|0.492|0.068|0.011|

Notes: The table reports treatment effect estimates on account use, based on monthly administrative data. The dependent variable is a dummy equal to one if at least one transaction was recorded in a given calendar month. The omitted group consists of observations prior to random assignment to treatment, for which all outcomes are mechanically equal to zero. Regressions control for stratification dummies. Robust standard errors, clustered at the account level, in parentheses. Sharpened q-values in brackets. * _p <_ 0.1, ** _p <_ 0.05, *** _p <_ 0.01.
middle class. We set the lower threshold of the middle class at an absolute level: a 10 percent probability of falling into poverty. Using a regression-based approach we exploit panel data to determine the amount of comparable income associated with that probability level –using income as the relative measure of vulnerability to poverty. Based on our findings from applying this methodology to three countries, we set an absolute lower bound for the middle class of 10 dollars PPP. This creates an absolute lower threshold that can be used to measure the middle class across countries over time. We, then, apply the 10-dollar PPP absolute lower threshold to cross-sectional surveys (household data from 1992 through 2008-09) to measure the size of the middle class in Chile, Mexico and Peru and analyze its evolution over the last two decades. Lastly we contrast this new absolute definition with existing absolute definitions of the middle class presented by B&D and Ravallion.

Evidence from the application of the vulnerable-to-poverty approach shows that both the proportion of middle class households and the income share appropriated by this group have significantly increased in all three countries during the period under study –in-tandem with economic growth in these countries as we should expect. We also find that the proposed lower threshold of middle class is at or above the median of the income distribution in the countries analyzed. We show that alternative absolute definitions (B&D and Ravallion) lump people who are still vulnerable to poverty into their definition of middle class, which has resulted in counter-intuitive trends in the size of the middle class –the middle class expands during economic downturns and shrinks in times of growth– a problem the vulnerability-to-poverty measure corrects.

In summary, the vulnerable-to-poverty approach defines the middle class in absolute terms as those households with income or consumption in a specific and comparable range, and it makes two important contributions to the measurement of the middle class. First, methodologically, it ensures that no lower class or poor households are being identified as middle class. Second, conceptually, it establishes a well-defined conceptual framework
teachers in Nigeria earn only 90 percent of GDP per capita. In the OECD, teachers earn about 130 percent of GDP per capita (OECD, 2011). Plotting these numbers by countries’ GDP per capita (Figure 2), we find suggestive evidence of a negative correlation between teacher monthly earnings as a ratio of GDP per capita and a country’s income level. In other words, teachers’ earnings rise as national income per capita rises, but at a slower rate than national incomes per capita.<sup>28</sup> Teachers have higher monthly earnings than other wage workers with similar educational background in ten countries in our sample (Columns 1-4, Table 4). Teachers in all countries in our sample report working significantly fewer hours per week, about 36 hours among teachers compared to 49 hours among other workers (Columns 7-8, Table 4). After scaling monthly earnings by hours worked, the results show that teachers are paid more on an hourly basis than other workers in every country except the Democratic Republic of Congo and Niger. Furthermore, teachers are more likely to have a second job in almost every country, which suggests that teachers may want (or need) to work more to make higher earnings (Table 4, last two columns).<sup>29</sup> However, we do not observe an association between reported hours worked by teachers and the propensity to take a second job (corr = 0.08, p-value = 0.77, N = 14).

Who are these other wage workers? To better understand the relationship between teacher earnings and that of other secondary and post-secondary graduates, we summarize the broad occupations of these other workers and summarize their earnings, separated into those with secondary and those with post-secondary education. We classify occupations using the International Labor Organization codes from the household surveys (ILO 2012). While there is variation, across our study countries we see that among wage workers with secondary education, only one occupation – managers
<mark>Including state trends, an interaction between state indicator variables and a continuous year variable resulted in even stronger magnitude and significance in the homicide outcome (a</mark> ppendix A, <mark>table A7)</mark> .

A placebo test using homicides and hospitalizations for traffic accidents resulted in no significant associations, suggesting that the results are not derived from economic circumstances associated with changes in the ability to treat victims (appendix A, table A8). The magnitudes are also smaller.

# **Heterogeneity Analyses**

The analysis divided the municipalities into more or less poor as determined by the median human development index for the sample in 2011 (table 4, panel a). The human development index is chosen because better health, education, and living standards are often associated with less stress and may therefore result in lower levels of conflict (Renzetti 2009; Pattavina, Socia, and Zuber 2015). The main result—a statistically significant association between the gender wage ratio and homicides—is found concentrated in municipalities with a lower human development index. Changes in wages between men and women in municipalities with higher human development indexes may not impact homicides because the stress of wages or gender norms is less binding if additional resources are available, such as better health and wealthier friends and relatives.

Because the legal and civil context may influence women’s situation at home, the analysis contrasted municipalities with and municipalities without women’s police stations in 2011 (table 4, panel b). Research has found that the establishment of women’s police stations is associated with a reduction in female homicides (Perova and Reynolds 2017). The possibility of police intervention specifically to support women may reduce male backlash as a mechanism. The hypothesis here is that the presence of women’s police stations makes an outside option, enabled by a lower wage gap, more credible, while, in municipalities without enforcement mechanisms for the legal and civil protection of women from violence, greater empowerment may trigger
One other paper is relevant here too, although it is not focused on _SP_ itself. Rather, Juarez, L. (2008) looks at a different program rolled out only in the Federal District (DF) to provide universal free health insurance in 2001. She constructs a difference-in-difference approach by comparing results with 3 neighboring states that did not have the program. The paper‘s focus is the effect on wages, but she uses the program as an instrument for participation in the formal sector so the first stage results are relevant here.

She uses quarterly individual data from Encuesta Nacional de Empleo 2000-2004 taking the subsample of unskilled 18-60 years old ―salaried‖ women outside of the government sector. She is able to control for a number of individual and household characteristics. While it is a panel data, she does not use panel estimation techniques. Rather, she pooled the cross sections and clustered the standard errors at the individual level. She finds that a woman with at most high school education in DF is 4 to 9.6 percentage points less likely to have a formal job after the policy change.

Juarez (2008) is only testing a single district, and the change is over 1 period, so it makes it harder to exclude the possibility of another trend in the DF contributing to the results. Moreover, at least part of the estimated effects could be driven by migration to covered areas. However, it is certainly suggestive that these types of effects may be at work in the larger _SP_ program.

In addition to _Seguro Popular_ , two other programs in Argentina and Colombia have been introduced and evaluated for their effects on formal employment. The programs do not share all the same features as _SP_ , but again they indicate that it is worth evaluating the potential effect they may have on incentives to work in the formal sector.

Gasparini et al. (2007) assess the impact of a poverty alleviation program, ― _Programa Jefes de Hogar_ ‖ (PJH), on labor informality in Argentina. The main
26 in such countries due to the consumption of resources by the tall sector, the _non-tall nonslum_ sector must be disproportionately affected. However, these results should be taken with caution given the lack of global data on supply and crowding in this sector.

# **6. Mechanisms: Urban-Biased Policies and Consumption Cities**

Is the “rise of consumption cities” in some countries driven by their capital/largest city? In resource-rich countries, there is evidence that governments disproportionately invest resources in their capital/largest city (Bates, 1981; World Bank, 2020). Yet, industrialization/FIRE-ization may also lead to the disproportionate growth of a country’s largest city if it requires resources found there (e.g., skilled labor or an international airport).<sup>35</sup> In addition, resource exports cause the growth of small- and medium-sized mining towns or agro-towns (Jedwab, 2013), thus decreasing urban primacy. Therefore, _a priori_ it is unclear whether urban primacy is more prevalent among MFGSERV or NRXGDP countries.

**Cross-Sectional Regressions: Country-Level.** We use model (8) to study the correlations between the primacy rate – the share of the country’s urban population that lives in the largest city (source: World Bank (2021)) – in 2020 and the variables of interest: MFGSERV (2020), NRXGDP (mean 1960-2020) and DEINDU (change 1980-2020). We control for initial conditions, i.e. primacy, MFGSERV, and NRXGDP in 1960, thus capturing _longdifference_ correlations. We control for the urban share in 2020, add the controls for area, population, small islands and urban definitions, and use populations in 2020 as weights.

As seen in Col. (1) of Table 8, only slightly higher primacy rates are observed in NRXGDP and DEINDU countries relative to MFGSERV countries. The differences are not significant.<sup>36</sup> In Col. (2), we decompose
, we find that the cash transfers increase enrollment. In the comparison between the transfers made to the mothers and the fathers (panel A), the coefficient on “treatment” can be interpreted as the impact of cash transfers given to mothers. For example, with the school-based measure in column 1, the coefficient estimates the impact of cash transfers to mothers as a 13.8 percentage point increase in enrollment. Compared to a mean of 38.3 percent of children enrolled in the control group, this corresponds to 36 percent improvement. The coefficients on the CTF indicator are negative but not significant, suggesting that the gender of the recipient did not matter much in terms of enrollment impacts. The p-values reported for “Treatment + CTF” also suggest a combined coefficient different from zero, implying that cash transfers given to father have a positive and 12