rafmacalaba/datause-encoder-data huggingface dataset:
# **Subjective Well-Being across the Lifespan in Europe and Central Asia**

# **1. Introduction**

A large body of literature on the relation between age and subjective well-being has emerged in the past few years. This new field of research has been strongly influenced by the seminal paper of Blanchflower and Oswald (2008), which documents a U-shaped relation for well-being over the lifespan (with a minimum at around middle age) in most of the approximately 74 countries included in the analysis. Yet some controversy still remains over this U-shaped relation with as many papers refuting it (e.g., Frijters and Beatton, 2012; Kassenboehmer and Haisken-DeNew, 2012; Baetschmann, 2014) as supporting it (e.g., Clark, 2007; Van Landegham, 2008, 2012; Blanchflower and Oswald, 2011; Weiss _et al._ , 2012).<sup>2</sup> Most notably, Fischer (2009), using an OECD sub-sample of the World Values Survey (WVS), concludes that an S-shape with a cubic functional form in which well-being decreases in old age is a more accurate description of the well-being pattern across the lifecycle. Much of the ensuing literature also focuses almost exclusively on large-scale panel data in high-income countries; for example, the British Household Panel, the German Socioeconomic Panel, and the Household Income Labour Dynamics in Australia.

Deaton (2008) expands this focus to include developing countries, arguing that the wellbeing/age relation may be mediated by culture. In his analysis of cross-sectional data from the 2006 Gallup World Poll, he reveals that the age profiles of self-reported life satisfaction differ significantly from country to country. Although this analysis does not control for covariates, his use of World Gallup Poll data facilitates cross-country comparisons and encompasses nationally representative samples of individuals from over 130 countries. Based on his observation of general life satisfaction among individuals from different age groups, Deaton (2008) argues that the U-shaped relation is present only in rich English-speaking countries. Similar results are obtained by a subsequent analysis of the World Gallup Poll; the age pattern of multiple well-being measures shows substantial differences between high-income Englishspeaking countries; countries in Sub-Saharan Africa; countries in Latin America and the Caribbean; and countries from the former Soviet Union and Eastern Europe. The U-shape is only present in the high-income English-speaking group, while well-being seems to decline with age in the last group (Steptoe _et al._ , 2015).

Our study examines the relation between age and subjective well-being in a region that to date has received relatively scarce attention in the literature: the Europe and Central Asia (ECA)

> 2 See Lopez Ulloa _et al._ (2013) for a recent literature review.

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**Table 6 OECD questionnaire for conduct regulation in the professions**<sup>**a**</sup>

|Weights<br>by theme|Question<br>weights|Score|Question|
|---|---|---|---|
|0.38|||**_Regulations on prices and fees_**|
||1||**Are the fees or prices that a profession charges regulated in any**<br>**way (by government or self-regulated)?**|
|||6|Minimum prices on all services|
|||5|Minimum prices on some services|
|||4|Maximum prices on all services|
|||3|Maximum prices on some services|
|||2|Non-binding recommended prices on all services|
|||1|Non-binding recommended prices on some services|
|||0|No regulation|
|0.23|||**_Regulations on advertizing_**|
||1||**Is advertising and marketing by the profession regulated in any**<br>**way?**|
|||6|Advertising is prohibited|
|||3|Advertising is regulated|
|||0|No specific regulations|
|0.19|||**_Regulations on form of business_**|
||1||**Is the legal form of business restricted to a particular type?**|
|||6|Sole practitioner only|
|||5|Incorporation forbidden|
|||2|Partnership and some incorporation allowed|
|||0|No restrictions|
|0.19|||**_Quotas and economic needs tests_**|
||1||**Is cooperation between professionals restricted?**|
|||6|Generally forbidden|
|||4.5|Only allowed with comparable professions|
|||3|Generally allowed|
|||0|All forms allowed|

> **a** The indicator for each profession is calculated as the simple average of the indicators of entry (Table 4) and conduct (Ttable 5) regulation.

Source: OECD (2005a).

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that should not be affected by the program (sex and age of head of the household). This clearly invalidates the underlying assumption necessary to perform a regression discontinuity design given that individuals would be different in some observables around the threshold.

Summary statistics for the final matched dataset (electoral census + SIFA + SISBEN) are reported in Table 1. Panel A reports statistics for the sample at the individual level, which is used for the analysis on registration to vote. Approximately 46% of the individuals in the sample are eligible to benefit from FA but around 42% of the eligible (19.6%) actually participate in the program.<sup>10</sup> 93.2% of individuals are registered to vote in the elections, which is similar to the rate calculated using a political survey done in Colombia, _LAPOP_ , 90%. 28.3% people in our sample registered to vote after the onset of FA on the municipality. The average person is 38 years old and has seven years of education at the moment they were interviewed for the _SISBEN_ ; more than half (58.8%) of individuals in the sample are women. Panel B, reports individual level statistics but restricting the data to females due to the fact that mothers are the direct recipients of the transfer. In total we have over 2 million women, with 25.5% eligible for FA and 95.5% registered to vote. Overall, the characteristics of this group are similar to those reported in Panel A for the complete sample.

Panel C of Table 1 in turn presents descriptive statistics for the booth-level sample used to estimate the effects of FA on voter turnout and choice. People registered to vote in urban centers were assigned to 103,367 voting booths, each of them with an average of 420 individuals. Turnout rates at the booth level for both Presidential elections (first round and runoff) were close to 60 percent.<sup>11</sup> Finally, the average fraction of votes for the incumbent party candidate was 38% and 51% in the first round and runoff respectively, with a margin of victory at the booth level of 15 (first round) and 28 (runoff) percentage points.

> 10FA program administrators estimate that the overall take up rate in 2010 was around 65 percent. However, take up rates have been found to be much lower in urban areas.

> 11These turnout rates are higher than the national level ones (46% for 2010) because they are calculated for urban areas and at the booth level.

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The results in table 2 show a significant relationship between telecommunications performance and firm productivity in downstream manufacturing sectors. The relationship is significant at the 1% level for both the total factor productivities estimated using ordinary least squares as well as the semi-parametric estimator. Good access to telecommunications inputs (expressed by a low value on our measure) is associated with higher performance of manufacturing firms.

With respect to the covariates, we also find foreign-owned companies to be significantly more productive than domestically-owned ones, which is in line with the literature on foreign direct investment (see Arnold and Javorcik 2006 for a comprehensive treatment of this issue for the case of Indonesia).<sup>4</sup> Table 2: Total Factor Productivity and Telecommunications

|TFP estimation procedure:|OLS|Olley/Pakes|
|---|---|---|
|Days required to get a phone line|-0.002<sup>***</sup><br>[0.001]|-0.002<sup>**</sup><br>[0.001]|
|Exporter|-0.004<br>[0.044]|0.073<br>[0.052]|
|Age of the firm|0.002<br>[0.019]|0.017<br>[0.024]|
|Size of the firm|-0.009<br>[0.049]|-0.009<br>[0.059]|
|Foreign owned|0.167<sup>***</sup><br>[0.051]|0.152<sup>**</sup><br>[0.059]|
|Location in Capital Region|0.094|0.056|
||[0.045]|[0.053]|
|Country dummies|Yes|Yes|
|Industry dummies|Yes|Yes|
|Observations|1186|1074|
|Adjusted R-squared|0.24|0.40|
|Robust standard errors in parentheses.<br>statistical significance at the 10%, 5%<br>respectively. The services related varia<br>averages.|*, **, *** in<br>and 1% leve<br>bles are used|dicate<br>ls,<br>in regional|

It is not straightforward to interpret the order of magnitude of our estimated coefficients. However, some interesting counterfactuals are possible. For example, one can ask what would happen if a country like Zambia, situated at the lower middle of the distribution of telecommunications performance, were to move to the level of performance of South Africa, the best performer in our sample. The productivity improvement associated with such a shift would amount to 13.2 %, based on the results in column II of table 2.

# **Electric Power**

> 4 None of the results presented in this paper is sensitive to the inclusion of export status and foreign ownership in the regressions. We tested all the estimations presented in this paper for robustness with respect to excluding these two. The estimated services coefficients and standard errors were so similar to the ones presented here that we refrained from presenting these results. They are available upon request from the authors.

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in the developing world reporting long series (since 1984) of individual wage data on a monthly basis. Interestingly, we find that controlling for observable characteristics of the employed population over the business cycle makes little difference to the estimates of real wage cyclicality.

The Brazilian data also allow us to examine real wage adjustments for the whole economy and to contrast them with those found in the manufacturing sector. The declining cyclicality found in the manufacturing sector is broadly consistent with what we find for the whole economy, suggesting that our results are likely to extend to the rest of the economy.

The rest of the paper is organized as follows: Section 2 describes the data and econometric strategy. Section 3 summarizes the main results. Section 4 assesses the robustness of the results with respect to both changes in the composition of the labor force over the business cycle and differences in the cyclical behavior of wages across sectors. Section 5 concludes.

# 2 Data and Econometric Approach

## 2.1 Data

We use quarterly data for Brazil, Chile, Colombia and Mexico. The key variables are real consumer wages, employment and volume of industrial production index. All of these variables are obtained from national sources, as described in Appendix A. The indicator of real wage is the average hourly wage in the manufacturing sector, deflated by the consumer price index (CPI). As Abraham and Haltiwanger (1995) and Messina, Strozzi and Turunen (2009) have shown, the choice of the deflator is not innocuous. Consumer wages (those deflated with the CPI) tend to be more procyclical than producer wages (those deflated with producer price indices).

We focus on consumer wages because this is the best measure to approximate worker’s welfare. Naturally, the employment measure we use is the number of employees in the manufacturing sector. This omits from the analysis the intensive margin of labor market adjustment, because long series of hours worked for these countries are not available.

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# **4. RESULTS**

- **4.1. HAS CORPORATE MARKET POWER INCREASED AT THE AGGREGATE LEVEL? HOW DO AGGREGATE TRENDS DIFFER ACROSS SECTORS? IS THERE A GROUP OF FIRMS DRIVING THE OVERALL TREND?**

**Results show that the average markup in Romania increased by around 15 percent during 2008–17.** However, this expansion was marked by an uneven trend. Figure 1, panel a, displays the evolution of the (sales-weighted) aggregate markup for the 2008–17 period for the whole economy (aggregating manufacturing, services, and mining). At aggregate level, average markups experienced a 15 percent aggregate increase from 2008 to 2017. However, three alternating trends are detected in this whole period: a sharp increase of more than 15 percent during 2008–09; a strong decline after 2009, when markups fell by 23 percent from 2009 to 2012; and a consistent increase of 21.5 percent from 2012 to 2017.

**Figure 1. Evolution of (sales‐weighted) average markup by sector, 2008–17 a. All sectors b. Manufacturing**

<!-- Start of picture text --> Manufacturing<br>2008 2009 2010 2011 2012 2013 2014 2015 2016 2017<br>Year<br>c. Services d. Mining<br>Services Mining<br>2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017<br>Year Year<br>1.02<br>1<br>.98<br>.96<br>Mark-up index (2008 = 1)<br>.94<br>.92<br>2.5<br>1.4<br>1.3 2<br>1.2 1.5<br>Mark-up index (2008 = 1) 1.1 Mark-up index (2008 = 1) 1<br>1<br>.5<br><!-- End of picture text --> _Source:_ World Bank staff calculations based on SBS data set.

**Because aggregate numbers mask a lot of heterogeneity, it is not surprising to see**

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15 thus no effect on growth. This model makes the strong prediction that taxing investment (through a general income or output tax) lowers growth, while taxing consumption does not.” The implication that investment taxes harm growth while consumption taxes do not could also be examined with cross-country data on the price of investment goods and consumption goods from Summers and Heston (1988), since prices can be assumed to reflect implicit taxes. De Long and Summers (1990) have put the relative price of producers’ durables into a cross-section growth regression. Their finding that a low price of producers’ durables is associated with high growth is suggestive. We suggest exploring these results further with disaggregated data on relative prices of different types of investment goods, and by separating out the effects of investment prices and consumption prices.

### b. Monetary policy

Monetary policy in developing countries is often driven by the financing needs created by the public sector deficit.?7 The inflation created by monetary growth operates as a tax on holdings of money. It is reasonable to suppose that money is used to purchase investment goods, and money must be held for some minimum period to make the transaction. Inflation will thus act like an output tax on investment purchases, and the effects on growth will be essentially equivalent to those described for the output tax in the previous section: (5) 8 = (A(1+87)-6-p)/o where z is the inflation rate and 8 is a parameter reflecting the average length of time that money must be held in advance of investment transactions. Thus we have the strong prediction that there is a negative relationship between growth and inflation.” This representation of the long-run growth effects of monetary policy as equivalent to a marginal tax is no doubt too simple. As we will examine in the next section, inflation may cause resources to shift between sectors. In addition, the effect of monetary policy will depend on fiscal policy decisions, so that it is impossible to treat them separately. With both income taxes and the inflation rate, the growth relationship becomes

## (6)

# — ACi-t)(1+Ba) -p-d g= o

> of the2\Thetraditional relative meritneoclassicalof consumptionmodel (see andAtkinson income andtaxesStiglitz has been(1980)extensivelyfor a discussion). debated in theNote publicthat financethe strongliteratureconclusion withinofthe no contextgrowth effect of consumption taxes would be overturned if labor supply were highly responsive to real wages and the revenues from the consumption tax were completely transferred back to taxpayers. Our hypothesis depends on the joint probability of these two conditions being low. The consistency reiation between government revenue, spending, borrowing, growth and the inflation tax is stressed by Anand and van Wijnbergen (1989) and van Wijnbergen (1989). This is analogous to results obtained for the neoclassical model by Stockman (1981). Sce also Mino (1990).
We caution against taking the baseline parameter assumptions and later simulation results too literally. For one thing, direct estimates of external costs and behavioral responses to transportation policies for the Mexico City region are sparse. Therefore, often we need to extrapolate evidence from other countries (notably the United States). While providing reasonable first-pass estimates, ideally these measures need to be checked against future empirical studies employing data on local factors. Another caveat is that we have less confidence in the marginal welfare effects of price changes at price levels that are very different from those currently prevailing, due to uncertainty over functional form relationships. Thus, our results from our base case parameter assumptions are meant to provide only a ballpark sense of optimal policies and the appropriate direction of policy reform. The implications of alternative parameter values are illustrated in a later sensitivity analysis.

# **3.1. Basic Data for the Transport Network**

Most of this data comes from the Millennium Cities Database for Sustainable Transport (IAPT, 2001). In 2005, the per capita passenger mileage aggregated across all modes was 5,588 miles. 67 percent of this mileage was by private auto (and taxi), 19 percent by microbus, 7 percent by larger public buses, and 8 percent by subway. Vehicle occupancies are 1.6 people for autos, 8 for microbuses, 31 for public buses, and 174 for trains (which pull several cars). All these figures are for the entire metropolitan area of Mexico City, including the suburbs. (For the downtown core alone, the share of mileage by the three mass transit modes, as well as vehicle occupancies, would be larger.) Average vehicle fuel economy for autos is 17.4 miles per gallon. The baseline fuel economy for microbuses and public buses is approximately one-half and one-quarter of that for autos. However, when expressed in terms of passenger miles rather than vehicle miles, fuel economy is far greater for buses than for autos, due to their much larger passenger occupancies. Overall gasoline consumption per capita is 149 gallons, with 88 percent of this used by autos and 12 percent by microbus.

The excise tax on gasoline was 17 cents per gallon in 2005, when retail fuel prices were $2.21 per gallon. Thus the tax was less than 8 percent of the price. This tax rate is very low relative to rates typically levied in European countries (Parry et al. 2007, Figure 2), and even in the United Sates where the (federal and state) tax is currently 40 cents per gallon. In fact the tax 20
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For comparison, FSB (2019) finds that the Basel III effects on SME financing in G20 countries are, on average, weak and short-lived. However, FSB (2019) examines the _relative_ effect—that is, whether the SMEs in countries with more binding capital positions are more affected that the SMEs in countries with less binding capital positions. In contrast, we investigate the absolute effect of Basel III, by comparing impacts across countries that have implemented the Basel III package versus countries that have not implemented it. In addition, we consider the varying gestation lags in the Basel III effect—that is, the difference between the year of Basel III implementation and the year of the Enterprise Survey data, when the effect is estimated—while the FSB (2019) study does not consider possible gestation lags, perhaps because these would be less varying in their case.

During the Basel III implementation period, firms with initially more employees and a larger share of foreign ownership perceived their constraints in accessing finance as easing across all the countries in our sample. Our result that greater firm size eases access to finance accords with the relevant literature (Beck, Levine, and Loayza 2000; Cetorelli and Strahan 2006; Beck and Demirgüc-Kunt 2006; Arraiz, Meléndez, and Stucchi 2014; Beck et al. 2006; Ferrando and Griesshaber 2011). In contrast, firms with initially larger (and perhaps overheated) sales experienced subsequent worsening of access to finance constraints. There is also some evidence that older firms may have benefited from better access to finance.

Firms facing banking systems that were initially less competitive (as captured by a higher Lerner index), more profitable, and more plagued with nonperforming loans experienced growing constraints in accessing finance. The result that the lack of competition undermines access to financing corresponds with that of Beck, Demirgüç-Kunt, and Levine (2010).

Interestingly, capital adequacy levels did not have an effect across all the countries—perhaps because banks in EMDEs were initially well-capitalized relative to banks in the advanced economies. In general, SMEs in countries with functioning contract enforcement frameworks experienced a significantly greater improvement in access to finance. In contrast, firms in countries hit by the financial crisis saw their access to finance worsen significantly during the studied period. We observe that improving liquidity positions by banks (perhaps in some cases even hoarding of 30