rafmacalaba/datause-encoder-data huggingface dataset:
policy debate over labor reforms. The effects of rigid labor regulations on worker flows (hires and fires), which is the novelty of the current paper, is also of crucial importance both for understanding the effects of the reforms and for understanding why pro-market labor reforms are often met with such opposition.

This paper is the first that analyzes directly the effects of labor-market regulations on worker flows in Latin America.<sup>3</sup> Indeed, the descriptive statistics show that making labor regulations more flexible would have a larger impact on worker flows than on job flows. Since opposition to labor reforms likely stems from individuals who are afraid of being displaced, the focus on worker flows may be particularly relevant for policy. An individual worker fearing dismissal as a result of a labor reform would likely oppose the reform even if his or her firm would increase its total employment as a result of the reform.

Although I do not examine productivity in this paper, it is important to stress that these reallocations have clear productivity effects. Krizan et. al. (2006) find that, for the U.S. retail industry, virtually all of the labor productivity growth in the retail trade sector is accounted for by more productive entering establishments displacing much less productive exiting establishments. Autor et. al. (2007) find that employment protection laws have negatively affected productivity in the U.S. Foster et. al. (forthcoming) show that exiting plants are less productive than incumbent plants and that entering plants are more productive. Eslava et. al. (2005) show that the factor-market frictions in Colombia that restrict the reallocations of inputs substantially affect aggregate productivity. Bartelsman et. al. (2004) study data from 24 countries and confirm the importance of these reallocations in explaining aggregate productivity.

# 3 Data and Methodology

This paper uses data from 14 Latin American countries. The 14 countries are Argentina, Bolivia, Chile, Colombia, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, and Uruguay. The data can be accessed at www.enterprisesurveys.org. These countries were chosen for two reasons. First, the enterprise surveys data sets for these countries have weights that can be used to make the statistics representative of the population of non-agricultural and non-financial sector firms. Second, the surveys applied to these 14 countries contain the main questions that will be used to generate all job- and worker-flow statistics used in the paper.

> 3 Almeida and Carneiro (2008) study hires and fires separately, but their strongest results are for aggregate employment. They also study the enforcement of regulations rather than the regulations themselves.

5
# Table <u>5c. Association of ECED timing and duration and test scores in primary school</u>

|||**Duratio**|**n**|
|---|---|---|---|
||Language|Maths|Cognitive Skills|
||(1)|(2)|(3)|
|**Timing**(Base: No ECED [I])||||
|Playgroup (3-4) then primary [II]|-0.122*|-0.0119|-0.0158|
||(0.0633)|(0.0659)|(0.0762)|
|Kindergarten (5-6) then primary [III]|0.216**|0.0822|0.0116|
||(0.0968)|(0.109)|(0.124)|
|Playgroup (3-4) then kindergarten (5-6) then primary [IV]|0.277**|0.238**|0.0387|
||(0.108)|(0.119)|(0.138)|
|Other combination [V]|0.399**|0.247|0.0668|
||(0.175)|(0.198)|(0.246)|
|Playgroup (5-6) then primary [VI]|-0.115*|-0.0135|-0.0664|
||(0.0601)|(0.0631)|(0.0745)|
|Playgroup (5) then kindergarten (6) then primary [VII]|0.231*|0.167|0.000588|
||(0.126)|(0.134)|(0.157)|
|**Duration**(Base: 1- 2 years)||||
|Playgroup: < 1 year|-0.114**|-0.0405|-0.0444|
||(0.0552)|(0.058)|(0.0693)|
|Playgroup: ≥ 2 years|0.140***|0.128***|0.0553|
||(0.0324)|(0.0319)|(0.0379)|
|Kindergarten: < 1 year|0.0198|-0.102|-0.0999|
||(0.0962)|(0.109)|(0.123)|
|Kindergarten: ≥ 2 years|0.0925***|0.0857***|0.0511*|
||(0.0219)|(0.022)|(0.0274)|
|Constant|-0.461***|-0.366***|-0.206|
||(0.114)|(0.125)|(0.144)|
|Observations|12,710|12,710|12,710|
|R-squared|0.284|0.235|0.109|
|Timing:||||
|[II] - [I]|-0.122*|-0.0119|-0.0158|
|[VI] - [II]|0.00669|-0.00153|-0.0506|
|[III] - [II]|0.338***|0.0941|0.0273|
|[IV] - [III]|0.0609|0.156***|0.0271|
|[VII] - [IV]|-0.0452|-0.071|-0.0381|

Note: Robust standard errors clustered at the village level in parentheses. All regressions include child characteristics (age, grade, gender, and stunting), family characteristics (household wealth, mother’s education, parenting practices), ECED characteristics (average quality, average fees), and district fixed effects.

*** p<0.01, ** p<0.05, * p<0.1

32
# **Predicting the Poverty Impacts of Trade Liberalization: A Survey**

# **I.  Introduction and Motivation**

International trade is arguably the most direct economic means by which rich countries influence poor countries. Exports of manufactures by developing countries have increased rapidly over the last 30 years, due in part to falling tariffs in OECD as well as developing countries, declining transport costs, increased specialization, and sustained economic growth. This has benefited many developing countries, helping them make the transition out of agriculture, and lifting many out of poverty (Hertel and Martin, 2000). However, the poorest developing countries have gained relatively less from increased manufactures trade. Potential exports of labor intensive products such as wearing apparel are hampered by long-standing rich country protection. Furthermore, farming remains a key source of employment and exports in many of the poorest countries, yet OECD protection of this sector remains very high. The problem is exacerbated by massive subsidies provided to OECD farmers by their governments.

Examination of the distribution of poverty in the poorest countries underscores why these developed-country policies are so influential. A majority of the poor are concentrated in rural areas, where agriculture is often the main source of economic activity (World Bank Development Prospects Group, 2004). Furthermore, in the poorest developing countries, a large share of the households depend on self-employment in agriculture for virtually all of their income, and these agriculturedependent households are often amongst the poorest in the entire country (Hertel et al., 2004b).

The Doha negotiations, sponsored by the World Trade Organization, experienced a severe blow in Cancun, Mexico, precisely over the question of rich country agricultural support and the potential impacts on poverty in developing countries. The WTO negotiations are now emphasizing the need to better understand the linkages between trade policies – particularly in rich countries – and poverty in the developing world. As well, poverty reduction has become a central focus of development efforts at the World Bank and other development institutions. For example, under the “Millennium Development Goals” the international community has committed to halve poverty by 2015, and several key targets relate to international trade.

1
called “mass privatization” in which ownership rights were widely dispersed, may lead to “bad ownership structures” and therefore reduce the potential gains from privatization. We evaluate this argument in the third sub-section (2.3).

In the final sub-section (2.4), we consider factors likely to influence the selection of firms for privatization. The theoretical and empirical evidence indicates that firms were not chosen to participate in the privatization process at random. Hence empirical estimates that fail to take account of this phenomenon will be biased. The prevalence of selection bias leads us to apply stricter criteria than previous surveys with respect to econometric methods when we evaluate the findings from the empirical literature in the final section of the paper.

# _2.1 Policies in Transition Economies_

Privatization in the transition economies occurred in the context of broader systemic change. In almost all these economies, but not China (see Lawrence Lau, Yingyi Qian, Gerard Roland, 2000), governments plunged ahead with what Svejnar (2002) calls _Type I_ reforms, namely macro stabilization, price liberalization and dismantling of the institutions of the communist system. Most countries also opened up rapidly to international trade, thus inducing a more efficient allocation of resources based on world market prices, and quickly reduced direct subsidies to SOEs.

Svejnar’s _Type II_ reforms involved the development and enforcement of laws, regulations and institutions that would ensure a successful functioning of a marketoriented economy. These reforms included privatization and the establishment and enforcement of a market-oriented legal system and accompanying institutions able to create well-defined property rights, permit the enforcement of contracts, and limit corruption.

According to the EBRD’s Transition Indicators (EBRD, various years) progress in developing a market-supporting legal system was everywhere slow, although the pace was more rapid in CEE than CIS in limiting corruption and establishing a functioning legal framework and institutions. An important impetus for implementing legal and institutional reforms in most countries in Central Europe, the Balkans and the Baltic, has 7
||_page_|
|---|---|
|_B. SensdvityAnalysis of the Model ......................._|_58_|
|_1. Sns_<br>_y ...._<br>_......................_|_._<br>_58_|
|_ZTools of Estumnaon_<br>_......................._|_60_|
|_3. Results ......................_|.<br>_60_|
|_a Parameter Sensisity_<br>_......................._<br> <br>|_61_|
|_b. M_<br>_ultiplie.s_<br>_......._<br>_,_|_64_|
|_V. CONCLUSIONS_<br>_......................_|_69_|
|_REFERENCES_<br>_......................_|_71_|
|_APFENDJXA. Effects of Selected Shodcs in MULTIMOD, 1988-93: Tables Al -A8 ...._<br>_._<br>|_......_<br>_74_|
|_APPENDIX B: Parameter Pefuwbation of Money Demand Equations: Tables Bl - B2 ...._|_......_<br>_82_|

The author is grateful to the Research Department of IMF and S. Symansky in particular for having made a software copy of MULTIMOD available to IECAP Division of the World bank, and for his helpful comments. I would like !o thank Bela Balassa, P. Armington, A. Dhareshwar, S. Fardoust, D. McCarthy, M. Prywes, and C. Petersen for their encouragement and useful comments.

The simulation experiments are aU carried out by the author and he is solely responsible "or the results and any errors. The model used in this paper is based on an earlier version (1988) of MULTIMOD.

- _ii_ -
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- <mark>Gelbach, Jonah B. "Public schooling for young children and maternal labor supply."</mark> _<mark>American Economic Review</mark>_ <mark>92, no. 1 (2002): 307-322.</mark>

- <mark>Goldin, Claudia, and T. P. Schultz. "The U-Shaped Female Labor Force Function in Economic Development and Economic History."</mark> _<mark>Investment in Women’s Human Capital and Economic Development</mark>_ <mark>(1995).</mark>

- <mark>Goux, Dominique, and Eric Maurin. "Public school availability for two-year olds and mothers' labour supply."</mark> _<mark>Labour Economics</mark>_ <mark>17, no. 6 (2010): 951-962.</mark>

- <mark>Havnes, Tarjei, and Magne Mogstad. "Is universal child care leveling the playing field?."</mark> _<mark>Journal of Public Economics</mark>_ <mark>127 (2015): 100-114.</mark>

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- <mark>Havnes, Tarjei, and Magne Mogstad. "No child left behind: Subsidized child care and children's long-run outcomes."</mark> _<mark>American Economic Journal: Economic Policy</mark>_ <mark>3, no. 2 (2011b): 97129.</mark>

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32
specific business regulations are too micro to have a significant macro effect. We further test if large changes in DTF do matter for per capita growth. We divide ∆DTFit into quartiles where D1 includes the countries with lowest numbers (often negative) and D4 includes the countries with the highest positive change. Under this specification we find that moving from the worst quartile (D1) to the best quartile (D4) is linked to an increase in annual GDP per capita growth of around 0.8 percentage points. This is a significant amount given that the average GDP per capita growth is 2.7 percent. This shows that large changes in business regulations do matter for growth, although small changes may have a negligible impact.

We investigate further this result by looking at different combinations of the regulatory variables. Table 8 shows the results for the legal indicators. An improvement in 1 percentage point in the DTF for the indicators measuring the strength of legal institutions is associated with an increase of 0.09 percentage points in annual growth rate. Table 9 shows a similar picture for the entry and exit indicators. In this case a 10 percentage point improvements in DTF for entry and exit is associated with a 0.5 percentage points increase in annual growth rate. Finally table 10 shows the results for the indicators that relate to credit markets (getting credit, resolving insolvency and enforcing contracts). An improvement in 1 percentage point in the DTF for the indicators relating to credit markets is associated with an increase of around 0.13 percentage points in annual growth rate. The magnitude of this coefficient highlights the importance of sound credit market regulations and enforcing legal institutions for growth. These results are robust to the inclusion of different controls.

# **5. Conclusion**

Using 10 years of panel data we test the link between business regulations, firm creation and GDP per capita growth. We find strong evidence for the role of business regulations in enabling firm creation. Having an overall sound business regulatory system is associated with higher levels of new business entry. This result also holds when analyzing different types of regulations.

After establishing the link to new firm creation we go to the next step and test the link to GDP per capita growth. This is a harder link to establish because there are many aspects than can affect growth and the business regulations measured in Doing Business are very micro and narrow in scope by design. However, the results indicate that these variables are good proxies for business regulations overall. In fact, the results show that although small changes in the overall level of business regulations may have a negligible link to growth, actually moving from the lowest quartile of improvement in business regulations to the highest quartile is associated with significant increases in annual per capita growth. Furthermore the results highlight the importance of sound entry and exit regulations and sound credit market regulations and enforcement for growth.

9
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