rafmacalaba/datause-encoder-data huggingface dataset:
Policy Research Working Paper 9939

# **Abstract**

This paper applies a top-down, macro-micro modeling framework that links a computable general equilibrium model with the survey-based global income distribution dynamics model to assess the economic and distributional effects of the implementation of the Regional Comprehensive Economic Partnership (RCEP). Reductions of tariffs and non-tariff measures, implementation of a rule of origin, together with productivity gains stemming from trade cost reductions can strengthen regional trade and value chains among Regional Comprehensive Economic Partnership members. The results of the analysis indicate that in an already deeply integrated region, tariff liberalization alone brings little benefit, with estimated real income gains of 0.21 percent relative to the baseline (without the RCEP) in 2035. With liberal rules of origin, the gains in real income could double to 0.49 percent. The biggest benefits accrue when the productivity gains are considered, increasing real income by as much as 2.5 percent for the trade bloc. In this scenario, trade among RCEP members increases by 12.3 percent in 2035 relative to the baseline. The RCEP also has the potential to lift 27 million additional people to middle-class status by 2035. It will also boost wages, with faster gains in sectors that employ larger shares of women. The aggregate effects mask large variety of outcomes across countries, with Vietnam expected to register the highest trade and income gains. Implementation of the RCEP help partially mitigate the negative economic impacts of COVID-19 in the East Asia and the Pacific region.

This paper is a product of the Macroeconomics, Trade and Investment Global Practice. 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 cestradespineyru@worldbank.org or mmaliszewska@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 of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent._ Produced by the Research Support Team
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- Maloney W., and Nuñez, J.. (2001), Measuring the impact of minimum wages. Evidence from Latin America Policy Research Working Paper No. 2597. World Bank. Washington. DC.

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5.3 Ihe model treats the residual<sup>public sector borrowing requirement and the external</sup> fundlg gap as mutually exclusive<sup>and independen. This simplifies the exposition of the model.</sup> However, the residual public sector<sup>borrowing requirement may be a component of the external</sup> financing requirement. Under<sup>this scenario, closure of the exteral gap would amount to</sup> elimination of the public sector<sup>borrowing requirement. Reality is somewhere between the two</sup> extremes, one in which the extenal<sup>gap includes the residual public sector borrowing requirement</sup> and the other in which they are<sup>completely independent. To capture this reality, a simple</sup> specification would be required<sup>to indicate the relationship between the public sector borrowing</sup> requirement and the external<sup>financing gap. The model could then solve for the interest rate</sup> and/or the exchange rate<sup>which closes the net gap.</sup>

**_5.4_** Recent economic work on Kenya<sup>recognizes the need for data on the consolidated public</sup> sector but this information<sup>is only just being gathered and coUated by the Central Government</sup> In time, this data should be<sup>used to extend the coverage of the public sector accounts in the</sup> model. Parastatal imports also need<sup>to be disaggregated from private imports and a more reliable</sup> series on government imports<sup>obtained. As progress is made in public sector investment</sup> programming, the recurrent<sup>expenditure implications of capital outlays should also be captured</sup> explicitly.

5.5 With relatively few modifications,<sup>the model could endogenize economic growth (at</sup> factor cost). At this stage<sup>however, it may be more rewarding to concentrate on refining the</sup> response functions and to widening<sup>the coverage of the public sector finances. Econometric</sup> work should also be done on<sup>the income and price elasticities of exports, the interest elasticity</sup> of private investment and the behavior<sup>of private consumpdon.</sup>
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enterprises (World Bank 1997). Anecdotal evidence additionally suggests that foreign affiliates tend to have a more meritocratic culture that makes them more appealing employers, particularly for female workers, in more traditional societies such as Japan (The Economist 2011).

# _FDI and Job Stability_

Workers tend to value stable jobs. Evidence for the United States and Indonesia suggests that multinational firms are less likely to shut down than are domestic firms. This pattern is due to their larger size and superior productivity relative to domestic firms. However, after accounting for the fact that multinationals are typically larger and more productive, they are more likely to shut down than are domestic firms. These findings are based on figures from the United States from the late 1980s and 1990s examined by Bernard and Jensen (2007) and Indonesian data covering the 1975-89 period analyzed by Bernard and Sjöholm (2003). However, more recent data from Indonesia spanning the 1988-96 period indicate that multinational firms are less likely to shut down than are comparable domestic enterprises (Harrison and Scorse 2010). Harrison and Scorse attribute the difference between their findings and the results of Bernard and Sjöholm to the fact that prior to 1990, the number of foreign-owned enterprises in Indonesia was small; consequently, a few plants could lead to large rates of entry and exit.

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_-~4_ NY -E There can be little doubt that the effects of SAPs in Africa have led to worsened conditions. Poverty has increased... The quality of life has declined as prices have risen, as infrastructure has crumbled, as services have deteriorated, and as employment opportunities have been reduced.

(Riddell, 1992: 66) However, no evidence is produced to substantiate these assertions. What, then, is the evidence?

# _Simple control group approach_

The second World Bank report on adjustment lending devoted a chapter to "Structural Adjustment and Living Conditions in Developing Countries".<sup>5</sup> The report's conclusions are a sharp contrast to those just discussed: The available evidence shows that changes in living conditions in the short run do not appear to be systematically related to adjustment lending. Short-run indicators of living conditions have not deteriorated in the early intensive lending countries, and long-run indicators have continued to improve because of past investments.

(World Bank, 1990: 26) In support of this conclusion the report presents the following data, in each case grouped by early intensive adjustment lending (gIAL), other adjustment lending (OAL) and non adjustment lending (NAL): change in a poverty incidence measure for selected countries, from which no systematic pattern emerges; growth in real per capita private consumption, which showed that ELAL countries had protected consumption most strongly in the late 1980s, to the assumed benefit of living standards (at least in the short rn); nutritional intake, from which there are improvements in all three groups over the period 1980-86 but with no systematic differences between groups; social spending share in govermment expenditure and real growth in social spending per capita, showing weak growth or declines in the early 1980s amongst adjusting countries with some recovery in the later part of the decade - in both periods this performance is worse that the average for non-adjusting countries; and 97
spending pattern at the school level is quite stable across the first and second year of the grant. Many of these items could be provided directly by parents for their children, suggesting a high potential for substitution.

# **4.3  Data**

Data on household expenditure on education was collected from a household survey that attempted to cover every household with a child in a treatment or comparison school and administer a short questionnaire on education expenditures on the concerned child during the previous school year.<sup>29</sup> Data on household spending was collected at three points in time – alongside the baseline tests for spending incurred in the pre-baseline year (Y0), during the second year of the program about spending during the first year (Y1), and after two full years of the program about spending during the second year (Y2). Data on household education spending was collected retrospectively to ensure that this reflected all spending during the school year.<sup>30</sup> The outcome data used in this paper comprise of independent learning assessments in math and language (Telugu) conducted at the beginning of the study, and at the end of each of the two years of the experiment. The baseline test (June-July, 2005) covered competencies up to that of the previous school year. At the end of the school year (March-April, 2006), schools had two rounds of tests with a gap of two weeks between them. The first test covered competencies up to that of the previous school year, while the second test covered materials from the current school year's syllabus. The same procedure was repeated at the end of the second year, with two rounds of testing. Doing two rounds of testing at the end of each year allows for the inclusion of more overlapping materials across years of testing, reduces the impact of measurement errors specific to the day of testing by having multiple tests around two weeks apart, and also reduces sample attrition due to student absence on the day of the test.

For the rest of this paper, Year 0 (Y0) refers to the baseline tests in June-July 2005; Year 1 (Y1) refers to the mean score across both rounds of tests conducted at the end of the first year of the program in March-April, 2006; and Year 2 (Y2) refers to the mean score across both rounds of tests conducted at the end of the second year of the program in March-April, 2007. All analysis is carried out with normalized test scores, where individual test scores are converted to

> 29 The data was collected from a short survey that was only based on the ―main‖ child who was being covered in the school assessments and not for other siblings or other components of household spending.

> 30 We obtained spending data from a total of 8,612 households for Y0 (no data was collected for retrospective spending on children in grade 1, because it was their first year in school), 13,572 households for Y1, and 10,189 households for Y2.

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**Table 1. Detailed regression results, RLMS 1994-2017**

|**Variables**<br>|**Pooled OL**|**FE OLS**|**BUC**|
|---|---|---|---|
|Ln household income (β)<br>|0.655***<br>_(0.011)_|0.249***<br>_(0.007)_|0.412***<br>_(0.079)_|
|<br>|-0.417***|-0.100***|-0.167***|
|Ln household size (−βea)<br>|_(0.023)_<br>|_(0.016)_<br>|_(0.034)_<br>|
||0.051***|0.012**|0.020*|
|Children# Ln household size (βb)|<br>_(0.008)_<br>|<br>_(0.005)_<br>|<br>_(0.010)_<br>|
||1.027***|0.404***|0.668***|
|Age 16-20|_(0.031)_|_(0.029)_|_(0.077)_|
|Ae 21-30|0.386***|0.178***|0.296***|
|g|_(0.021)_|_(0.021)_|_(0.057)_|
|A 3140|0.188***|0.062***|0.101***|
|ge -|_(0.019)_|_(0.014)_|_(0.036)_|
||-0.092***|-0.004|-0.006|
|Age 51-60|_(0.019)_|_(0.013)_|_(0.039)_|
||-0.009|0.057***|0.097|
|Age 61-70|_(0.025)_|_(0.019)_|_(0.065)_|
||0.103***|0.094***|0.159*|
|Age 71-80|_(0.028)_<br>|_(0.023)_<br>|_(0.083)_<br>|
||0.399***|0.330***|0.542***|
|Age 80+|_(0.038)_|_(0.030)_|_(0.086)_|
|Female|-0.027*|||
||_(0.014)_|||
|Russian nationality|-0.262***<br>_(0.024)_|||
||0.193***|-0.010|-0.014|
|Complete secondary|_0019_|_0012_|_0041_|
||_(.)_|_(.)_|_(.)_|
||0.298***|-0.043***|-0.071|
|Secondary + vocational|_(0.021)_|_(0.016)_|_(0.056)_|
||0.446***|-0.004|0.003|
|University and higher|_(0.023)_|_(0.022)_|_(0.082)_|
||-0.260***|-0.029*|-0.048|
|Single|_(0.023)_|_(0.017)_|_(0.037)_|
||-0333***|-0156***|-0263***|
|Divorced/widowed/separated|.<br>_(0.019)_|.<br>_(0.013)_|.<br>_(0.040)_|
|Unemloed/ot of labor force|-0.275***|-0.162***|-0.269***|
|pyu|_(0.015)_|_(0.009)_|_(0.030)_|
||-0.136***|-0.047***|-0.080***|
|Bad health|_(0.010)_|_(0.006)_|_(0.012)_|
||-0.075***|-0.013*|-0.022*|
|Other members with bad health|_(0.011)_|_(0.007)_|_(0.012)_|
||0.000|0.001|0.002|
|Log of per capita living space||||
||_(0.002)_|_(0.001)_|_(0.002)_|
|_Number of observations_|237,395|240,640|712,448|
|<br>_Log pseudolikelihood_|-403,224|-346,509|-263,848|
|_Number of individuals_|42,326|42,894|30,058|
|_Pseudo-R squared_|0.043|0.036|0.0285|

**Note:** Robust standard errors are in parentheses, controlling for two-way clustering (i.e., at the individual for the POL model and at the household-wave level for the FE OLS and BUC models). All regressions include year fixed effects, pooled model includes regional fixed effects (not reported).

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

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_L_<sup>_i_</sup> _D_<sup>=</sup><sup>_αD_(</sup><sup>_XD_+</sup><sup>_ID_)</sup><sup>_−_(1 +</sup><sup>_TL_)</sup><sup>_Lf_</sup> _D informal labor_ used to produce _domestic L_<sup>_i_</sup> _E_<sup>=</sup><sup>_αE_(</sup><sup>_XE_+</sup><sup>_IE_)</sup><sup>_−_(1 +</sup><sup>_TL_)</sup><sup>_Lf_</sup> _E informal labor_ used to produce _exports L_<sup>_i_</sup> _U_<sup>=</sup><sup>_αU_(</sup><sup>_XU_+</sup><sup>_IU_)</sup> _informal labor_ used to produce _untaxed KD_<sup>_i_= (1</sup><sup>_−αD_)(</sup><sup>_XD_+</sup><sup>_ID_)</sup><sup>_−_(1+</sup><sup>_TK_)</sup><sup>_K_</sup> _D_<sup>_f_</sup> _informal capital_ used to produce _domestic KE_<sup>_i_= (1</sup><sup>_−αE_)(</sup><sup>_XE_+</sup><sup>_IE_)</sup><sup>_−_(1 +</sup><sup>_TK_)</sup><sup>_K_</sup> _E_<sup>_f_</sup> _informal capital_ used to produce _exports KU_<sup>_i_= (1</sup><sup>_−αU_)(</sup><sup>_XU_+</sup><sup>_IU_)</sup> _informal capital_ used to produce _untaxed_ ̄ _K_ = _KE_<sup>_f_+</sup><sup>_K_</sup> _D_<sup>_f_+</sup><sup>_K_</sup> _E_<sup>_i_+</sup><sup>_K_</sup> _D_<sup>_i_+</sup><sup>_K_</sup> _U_<sup>_i_</sup> total capital endowment _TL_ ̄ == 1 _L._<sup>_f_</sup> _E_ 05<sup>+</sup> _L_<sup>_Lf_</sup> _D_<sup>+</sup><sup>_L_</sup> _E_<sup>_i_+</sup><sup>_Li_</sup> _D_<sup>+</sup><sup>_Li_</sup> _U_ totalendowmentlabor supplyof time Tax rates on _exports_ and _imports_ are calibrated, rather than being drawn directly from the legal tax rates: tax rate on _exports_ tax rate on _imports_ We do not observe price or quantities of goods, but we do observe the total amount of money spent on each good (values as a percentage of GDP). Following the Harberger convention we choose units of the aggregate goods such that quantities equal values. This implies that initial prices equal one. Where goods are taxed, goods units can be chosen such that either the gross of tax or net of tax price equals one. We chose units such that the agent supplying the good or factor received a price of one, with remaining prices implied by tax rates: _P_<sup>_w_</sup> _M_<sup>= 1</sup> _PI_ = 1 _PU_ = 1 _PL_ = 1 _PK_ = 1 world price of imports (and foreign exchange) price of _investment_ price of _untaxed_ wage received by labor (formal or informal); also the wage paid by producers for _informal labor_ wage received by capital (formal or informal); also the wage paid by producers for informal capital _PD_ = 1 _PE_ = 1 producer price of _domestic_ producer price of _exports_ 34
<!-- Start of picture text --> Disaster Deficit Index (DDI)<br>DDI and probable maximum loss in 100 years<br>DDI a, 2000 L 100 (US$ million), 2000<br>Peru Peru<br>Nicaragua Nicaragua<br>Derminican Rep. Dominican Rep.<br>El Salvador El Salvador<br>Jamaica Jamaica<br>Colombia Colombia<br>Ecuador Ecuador<br>Bolivia Bolivia<br>Mexico Mexico<br>Trinidad & Tobago Trinidad & Tobago<br>Chile Chile<br>Casta Rica Cesta Rica<br>Guatemala Guatemala<br>Argentina Argentina<br>0 O8 16 24 32 4 0 2,000 4,000 6,000 8,000<br><!-- End of picture text -->
B13. What is your highest academic degree?

1. ___ Ph.D. or equivalent

2. ___ M.Sc. or equivalent 3. ___ B.Sc. or equivalent B14. Your gender

- 1 __ Female

- 2 __ Male

# **VII.  LAST THOUGHTS**

L1. What other information, if any, would you like to see included in the CV scenario Plan A and B descriptions if this CV survey were conducted on a random sample of U.S. households?

L2. What do you think are the major problems in designing an SP survey of WTP for Amazon rainforest protection, to be administered in the United States?

L3. Are you aware of empirical SP (CV or CE) studies which you think would be helpful in designing an Amazon preservation project CV survey administered in the United States?

<mark>L4. In this survey we ask about WTP to</mark> **<mark>preserve</mark>** <mark>100% of the forest (under Plan A) and 88% (under Plan B). If there is</mark> no plan 70% of the current forest area will be preserved.

<mark>Instead we could have asked about WTP to</mark> **<mark>prevent losing</mark>** <mark>30% forest</mark> **<mark>(</mark>** <mark>under Plan A) and prevent losing 12% (under</mark> Plan B); compared to ”No Plan” .

<mark>Do you think that such an alternative formulation in terms of</mark> **<mark>preventing losses</mark>** <mark>(instead of</mark> **<mark>preservation</mark>** <mark>) would have</mark> made a difference for the mean and median WTP? 1) Yes 2) No 3) “Don ́t know” L5. If “yes” or “Don ́t know” to question L4: In what way would there be a difference in mean and median WTP of the <mark>U.S. population?</mark> L6. Any other comments you might have to this Delphi exercise or the planned CV and CE surveys are most welcome.

THANK YOU FOR YOUR COOPERATION!

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9 stratification component of the decomposition towards zero.

Annual per capita emissions are thus likely to gradually become more equally distributed over time. What about cumulative per capita emissions? Historical responsibility for the enhanced greenhouse effect has been a contentious topic in climate treaty discussions. Since carbon dioxide influences equilibrium concentrations in the atmosphere for roughly 100 years, the large contributions of the developed countries will continue affecting the climate system until the end of the forecasting period. Is convergence in cumulative emissions attained during the next century? Table 2 compares the Gini and its components for annual emissions in 1993 and 2100, and for cumulative emissions over the entire period. When cumulative emissions are examined, the downward trend in inequality weakens, with a Gini of 0.425, and a between group component accounting for more than half the inequality in cumulative emissions, nearly the proportion in 1993. In per capita terms, the higher income countries' cumulative emissions will continue to dominate those of lower income groups throughout the next century, and their contribution to climate change will remain well out of proportion to their populations.

# **4. The Kyoto Protocol and Other Abatement Proposals**

- _4.1. Target reductions for Annex II countries_

The need for public policy to curtail global greenhouse gas emissions if climate change is to be mitigated is widely acknowledged."<sup>2</sup> Recent experience in developing a global emissions reduction policy at COP3, COP4, and their preparatory meetings highlights the centrality of North-South distribution issues."<sup>3</sup> How should the burden of emissions reduction be shared? Should reductions be made, say, by reducing all nations' emissions by equal proportions (no redistribution), or by some distinctly targeted plan (involving redistribution)? The large between group component of the Gini 12The IPCC's First Assessment Report noted that an immediate reduction of 60-80 percent of current carbon emissions would be necessary to stabilize atmospheric concentrations at their 1990 levels (IPCC 1990).

"<sup>3</sup> For example, Welsch (1993) appliedthe Gini index to examine the inequality effects of alternative emissions scenarios for a sample of countries.