rafmacalaba/datause-encoder-data huggingface dataset:
-Teachers-Non-teachers Pay Differences 13-

selected all primary school teachers in the sample and pooled them with a subsample of non-teacher employees with 6 to 15 years of education -- the range of education corresponding to that of primary school teachers --who, hence, provide a meaningful control group. The results in the first line of Table 5 show that a salary premium for primary school teachers exists mainly in the public sector and that it disappears when total earnings are considered. In line with our earlier argument about teachers with less than 10 years of education, we also show the results for primary school teachers with 10 to 15 years of education. As in Table 4, the results suggest that the base salary premium is not significantly different between the two groups of teachers. Again, there is no evidence that primary school teachers receive rents when total remuneration is considered. (The lack of sufficient observations unfortunately did not allow to repeat this analysis for the other types of teachers.) Table V Regression Coefficients of Teacher Dummy Variables For Primary School Teachers

|(1)<br>Dependent Variable<br>Base<br>Salaries<br>Sample<br>(All)<br>----------------------------------------------------------------|(2)<br>Base<br> <br>Salaries<br>(Govt)|(3)<br>Total<br> <br>Salaries<br>(All)<br>__-|(4)<br>Totcl<br> <br>Salaries<br>(Govt)<br>----------__|
|---|---|---|---|
|6-15 Years of Education<br>0.1037<br>(0.76)|0.2378*<br>(1.91)|-0.1358<br>(-0.95)|0.0166<br>(0.13)|
|10-15 Years of Education<br>0.0786|0.3032*|-0.1711|0.0753|
|(0.45)<br>T-values between parentheses.<br>*indicates a statistically significan|(2.07)<br>t regression c|(-0.94)<br>oefficient.|(0.52)|
The e¤ects of ...scal policy, thus, show up immediately in interest rates and other ...nancial variables. Thus, it is argued that such models su¤er from the inability to recover the ‘true’structural shock given the absence of news on future government spending. This has been termed the ‘anticipation’or ‘non fundamentalness problem’.<sup>15</sup> As a consequence it can be the case that the estimated innovations of a VAR are such only with respect to the information set of the practitioner, but not of the private sector. The implication being that government spending shocks may be misestimated. One way in which this problem could be overcome is by including observations on the present value of government spending forecasts directly in the speci...cation. Such data is currently lacking for Malaysia. However, Perotti (2011) has shown how even without the exclusion of an expectations term the estimates from structural models need not be unduly biased.

Perotti (2005), based on data for a group of OECD countries, has shown that the identi...cation scheme and choice of variables in the speci...cation outlined should provide unpredictable government spending shocks. It is worth pointing out that whether ...scal shocks are truly anticipated or not matter only if anticipated and unanticipated ...scal policy actions have di¤erent e¤ects. There is currently little agreement on this issue. Anticipation e¤ects are unlikely to undermine the central point of this paper, which is to examine the size of the changes in ...scal multipliers given shifts in economic conditions. That being whilst anticipated ...scal policy might bias the estimated impulse response functions, it is not clear whether and why such e¤ects change over the cycle.

In addition to the three baseline variables - government spending, taxes and output - in the ...scal policy literature real private consumption and an interest rate measure are also included in the model. The inclusion of consumption is based on the ongoing discussion on the crowding out e¤ects of government spending on private consumption.<sup>16</sup> The impact of ...scal policy on interest rates is among the most debated issues in macroeconomics, and a key issue in times of high de...cits (Perotti, 2005a). The treasury bill rate is used as the interest rate measure in the model. This also has the added advantage of being an information variable. Numerous studies have documented the superior predictive power of the term structure for real activity and in‡ation relative to a single measure of short-term

> 15See Perotti (2011).

> 16See Galí, Lopéz and Vallés (2007), Ramey (2009) and Corsetti, Meier and Müller (2010).

10
region. Exhibit 15 also indicates that the share of citations by inventors in an East Asian economy to patents granted to other inventors in the same economy (referred to as “compatriot citations”) is also rising, reaching 3.3 percent on average in 2002-04.

<!-- Start of picture text --> 0.60<br>1992-94<br>0.50<br>2002-04<br>0.40<br>0.30<br>0.20<br>0.10<br>0.00<br>Own Other<br>East Asia<br><!-- End of picture text --> <!-- Start of picture text --> 1992-94<br>2002-04<br><!-- End of picture text --> <!-- Start of picture text --> Own Economy<br>Other East Asia<br><!-- End of picture text --> <!-- Start of picture text --> 0.10<br><!-- End of picture text --> <!-- Start of picture text --> Malaysia<br>2002-04 1992-94 2002-04<br><!-- End of picture text --> <!-- Start of picture text --> 0.02<br>-0.02<br>Hong<br>Kong<br>1992-94<br><!-- End of picture text --> <!-- Start of picture text --> Korea<br>2002-04 1992-94 2002-04<br><!-- End of picture text --> <!-- Start of picture text --> 2002-04 1992-94 2002-04<br><!-- End of picture text --> <!-- Start of picture text --> 1992-94 2002-04 1992-94<br><!-- End of picture text --> Source: USPTO and Hu (2006).

Exhibit 16 provides a closer look at the rise of intra-regional and compatriot knowledge flows for individual East Asian economies. The share of citations to other East Asian economies (typically to Korean and Taiwan (China) patents) is highest – around 7-8 percent - in China, Hong Kong, Malaysia and Singapore. The share of ‘own’ or ‘compatriot’ patents is highest in Korea (around 6 percent) and Taiwan (China), where it is already over 10 percent.

Such raw citation shares provide useful information on the gross flows of knowledge between economies, but say little about the _intensity_ of knowledge relationships. It is not surprising that East Asian economies should have large shares of citations to US patents, simply because the US is by far the largest generator of patents worldwide, and thus of potential citations. Even Japan, which produces almost as many patents per capita as the US, still has over 40 percent of its citations to the US. Researchers have therefore developed a _citation frequency_ measure of how intensively patents in one country cite patents from another after controlling for the size of the potential pool of citations between the two.<sup>31</sup> In simple terms, it is the number of citations from country A to country B divided by the product of the potential number of citing patents in country A and potential number of citable patents in country B.

Exhibit 17 shows patent citation frequencies between the US, Japan, Korea and Taiwan (China) in the electrical and electronics technology field. There are several striking features. Each of these four economies cites compatriot patents from the same economy much more

> 31 For further detail see Jaffe and Trajtenberg (2002) and Hu (2006).

28
about local interactions is important for understanding the patterns of equity returns across countries and over time.

The estimated models do a good job at accounting for the cross-sectional dependence of equity returns highlighted in Table 2. For all three models, the CD test statistic shown at the bottom of Table 3 reveals little evidence of residual cross-sectional correlation. The exponent of cross-sectional dependence is in all cases under 0.5, likewise suggesting that the residuals exhibit no strong cross-sectional dependence.

Results using the advanced-country sample are shown in the bottom panel of Table 3. For the most part, the estimates follow the same sign and significance patterns of the full-country estimates. There are some differences, however. Credit growth now carries an insignificant coefficient. This result is consistent with the idea that among advanced countries financial frictions are less pervasive than in other countries, and therefore the interest rate suffices to summarize financial conditions. Also, the GDP growth parameter estimate is much larger than in the full sample, indicating that in advanced economies equity returns track growth fluctuations more closely than in the rest. Finally, the estimated spatial effects are consistently larger, in absolute value, than in the full sample, likely reflecting the deeper real and financial linkages among advanced countries relative to the rest. Still, the residuals seem to exhibit some traces of weak cross-sectional dependence, as the CD statistics border on statistical significance and the exponents of cross-sectional dependence lie around .7, well above the value of their full-sample counterparts.

Despite its simplicity, the model does a good job at tracking equity returns, as summarized by the _R_<sup>2</sup> shown in Table 3.<sup>22</sup> . The model accounts for close to 60 percent of the variation of the dependent variable in the full sample, and over 70 percent in the advanced-country sample, with the highest value corresponding in both cases to the bilateral trade specification of the weight matrix.

Table 4 further reports the _R_<sup>2</sup> by country for all the specifications estimated in Table 3. They range from over .8 (even .9 in the advanced-country sample) for a handful of – – advanced countries France, Germany, the Netherlands, Sweden and the U.S. to less than .1 for Colombia and .2 for Indonesia. In the full sample, the median _R_<sup>2</sup> is just under .7, and only 8 countries exhibit values under 0.5, while in the advanced-country subsample the median exceeds .75 and only two countries show values consistently below .5.

> 22 _R_ 2 is measured by the square of the correlation between the actual and predicted values of the dependent variable; see Elhorst (2014).

14
_16_

**Implications of Raising the Retirement Age** (from 55 to 60; all figures in percent of salary)

|Real Return|Real Wage|_Replaceme_|_nt Rate with_|_Contribution_|_Neededfor_|
|---|---|---|---|---|---|
|on Investment|Growth (%)|_5. 7% Cont_|_ribution/ a_|_a 50% Repl_|_acement/ a_|
|||Retire at 55|Retire at 60|Retire at 55|Retire at 60|
|%||(A)|(B)|(C)|(D)|
|0|0|9|13|31|22|
||2|7|9|37|32|
||4|5|7|57|44|
|2|0|17|23|17|12|
||2|12|16|25|18|
||4|8|11|34|26|
|4|0|30|44|10|7|
||2|20|28|14|10|
||4|14|19|20|15|

Notes: a. Contributions start at age 20. Sources: World Bank staff calculations.

As is evident from the table above, the effects of a relatively small increase in the retirement age, from 55 to 60, are indeed very large. From the workers' point of view, the resulting increase in the replacement rates (from column A to column B) is be about 40 percent, without any increase in contributions. The cost of financing the plan would also be lower. As shown in columns C and D, the higher retirement age would reduce the cost of funding significantly. The rate of contribution necessary to achieve a 50 percent replacement rate would fall by about one third on average.

# **Regulations of Employer-Sponsored Plans**

**_Benefit Policy_** Retirement benefits vary from one firm to another. Of particular importance are those set by the government and public enterprises, which, by virtue of being the largest employers, tend to influence benefit policies in the private sector. Today the retirement benefits promised by public enterprises are very generous in relation to pay. A major element of the benefits is the post-retirement health care granted throughout the public sector.

Liberal retirement benefits among public enterprises can be illustrated by the case of Pt. Telkom, whose information was made available in an initial public offering (IPO) in November, 1995. Telkom's retirement obligations as of 1994 were estimated to be Rph. 1.4 trillion (US$ 630 million). Only about 13 percent of the obligations were funded. If the benefit obligations at the time were to be fully funded (and thus segregated from the company's assets), Telkom's net worth would decline by more than 25 percent.
# **Public Services and Expenditure Need Equalization: Reflections on Principles and Worldwide Comparative Practices**

_Anwar Shah, World Bank_<sup>_1_</sup> (shah.anwar@gmail.com)

## **1. Introduction**

Fiscal equalization transfers are conceptually justified on fiscal efficiency and regional fiscal equity grounds. Political imperatives to have a shared sense of political and economic union, paves the way for instituting such transfers in most large especially federal countries. There is also a common consensus that conceptually such transfers should equalize to a specified standard both the fiscal capacities and fiscal needs. In practice, implementing such a comprehensive system of equalization transfers represents a difficult challenge especially the difficulties posed by the objective measurement of expenditure needs. This paper reviews the conceptual challenges as well as lessons from worldwide experiences in implementing public services and expenditure need compensation in fiscal equalization transfers with a view to developing guidance for practitioners.

This paper concludes that while in theory a strong case for a comprehensive fiscal equalization can be made, in practice fiscal need equalization as part of a comprehensive equalization program introduces significant complexity which works against the simplicity, transparency and general acceptability of the program. This does not imply that fiscal need equalization should be abandoned in the interest of simplicity and transparency. Instead simplicity, transparency and local autonomy are preserved by having fiscal need equalization through public service oriented (specific purpose block transfers) output based fiscal transfers that impose no spending requirements for any functions or objects of expenditures. Such transfers contrast with traditional earmarked transfers, which impose conditions on spending for specific purpose or object of expenditure and subsequent verification/certification of such expenditures. Such output-based block transfers would further enhance citizens‘ based accountability for results and thereby offering potential for enhancing public confidence and trust in government operations.

The rest of the paper is organized as follows. Section 2 presents conceptual justification of equalization transfers. Section 3 discusses practical considerations in designing fiscal need equalization transfers. Section 4 provides a brief survey of international practices in fiscal needs equalization. Section 5 discusses practical difficulties in equalizing expenditure

> 1  Paper  presented  at the International Conference on  ̳Service Standards and Financial Equalization in Decentralized Countries: International Evidence and Perspectives for Italy, July1, 2010, Bocconi University, Milan, Italy. This is a revised and expanded  version of an earlier paper that was presented at the 2007 Copenhagen Workshop on Measuring Local Government Expenditure Needs. The views expressed in this paper are those of the author alone and should not be attributed to the World Bank. Comments may please be addressed to:   shah.anwar@gmail.com

2
Table 4. Marginal Probabilities for Likelihood of Employment, Nepal DHS, 1996-2006

||_All W_|_omen_|_Women with Hu_|_sbands Migrated_|_Widow/Sep_|_/Div/HH Head_|
|---|---|---|---|---|---|---|
||_Employed_|_Self-Employed_|_Employed_|_Self-Employed_|_Employed_|_Self-Employed_|
|Interaction Terms (reference=conflict_|1996)<br>||||||
|Conflict_2001|0.098<sup>**</sup>|0.063<sup>***</sup>|0.134<sup>**</sup>|0.001|0.099<sup>**</sup>|0.149<sup>***</sup>|
||(0.032)|(0.010)|(0.032)|(0.018)|(0.023)|(0.012)|
|Conflict_2006|0.095<sup>***</sup>|0.046<sup>***</sup>|0.136<sup>***</sup>|-0.013|0.079<sup>*</sup>|0.090<sup>*</sup>|
||(0.016)|(0.012)|(0.017)|(0.020)|(0.029)|(0.031)|
|Education (reference=no schooling)|||||||
|Some or all primary school|-0.024<sup>***</sup>|0.025<sup>***</sup>|-0.041<sup>**</sup>|0.034<sup>***</sup>|-0.016|0.079<sup>***</sup>|
||(0.009)|(0.008)|(0.017)|(0.009)|(0.031)|(0.020)|
|Some secondary school|-0.054<sup>***</sup>|0.013|-0.063<sup>**</sup>|0.020<sup>*</sup>|-0.031|-0.062|
||(0.013)|(0.012)|(0.028)|(0.010)|(0.039)|(0.061)|
|Completed secondary school+|-0.076<sup>***</sup>|-0.325<sup>***</sup>|-0.153<sup>***</sup>|-0.365<sup>***</sup>|-0.052|-0.043|
||(0.021)|(0.043)|(0.049)|(0.054)|(0.048)|(0.078)|
|Age (reference=age<=20)|||||||
|20<age<=35|0.109<sup>***</sup>|0.004|0.086<sup>***</sup>|0.005|0.108<sup>**</sup>|0.069<sup>**</sup>|
||(0.016)|(0.011)|(0.027)|(0.012)|(0.047)|(0.032)|
|age>35|0.146<sup>***</sup>|0.038<sup>***</sup>|0.128<sup>***</sup>|0.016|0.110<sup>*</sup>|0.134<sup>***</sup>|
||(0.019)|(0.011)|(0.026)|(0.016)|(0.072)|(0.045)|
|Socioeconomic status|YES|YES|YES|YES|YES|YES|
|Household composition|YES|YES|YES|YES|YES|YES|
|Year and sub-region dummies|YES|YES|YES|YES|YES|YES|
|Pseudo R<sup>2</sup>|0.194|0.207|0.236|0.275|0.174|0.202|
|N|25,724|21,807|5,253|4,430|1,404|1,282|

Notes: Weighted to national level with weights provided by the Nepal DHS in each year. Standard errors, in parentheses, are clustered by regionyear. The notation<sup>***</sup> is p<0.01,<sup>**</sup> is p<0.05,<sup>*</sup> is p<0.10. In each regression the key difference-in-difference terms are the binary variable for moreor less-forested interacted with the year dummies. The Widow/Sep/Div/HH Head sub-sample excludes women whose husbands have migrated. Source: Authors‟ calculations based on MHP/NE/MI (2007), MH/NE/ORC (2002), and Pradhan _et al._ (1997).

38
- 9 -

15. Three connectivity variables are constructed using spatial software based on road user costs and maritime transport costs: The first is transport costs to bring goods to Moroni, denoted by _COSTMORONI_ . This measures the accessibility to the primary market. The second variable is transport costs to bring goods to a large city with a population of 7,500 or more ( _COSTCITY_ ). Major towns in each island are taken into account.<sup>3</sup> This is expected to represent the market accessibility at a more local level within each island.

16. Finally, the Market Access Index ( _MAI_ ) is computed as an integral measure of all kinds of market accessibility. Formally, it is often defined by the average market size inversely weighted by transport difficulties. The idea basically follows Tobler’s first law of geography: “everything is related to everything else, but near things are more related than distant things (Tobler 1970).” where _Ym_ represents the size of market at _m_ , which is measured by the population that does not engage in agricultural production.<sup>4</sup> _dim_ measures transportation costs between location _i_ and destination _m_ . The index is normalized to zero to one. It is clear that Moheli is particularly disconnected from the rest of the country, while Grande Comore, especially around Moroni, has relatively good market accessibility ( **Figure 11** ). Not surprisingly, poverty is highly correlated with the MAI: The poor tend to be less connected to the markets ( **Figure 12** ).

> 3 Twenty-one cities and towns were identified among a total of 302 populated areas: Adda Daoueni, Barakani, Bazimini, Dindri, Domoni, Fomboni, Iconi, Jimlime, Koni Djodjo, Mbeni, Mirontsi, Moroni, Moya, Mremani, Mutsamudu, Ngadzale, Ongodjou, Ouani, Ounkazi, Sima and Tsembehou.

> 4 It is estimated by the population multiplied by the share of non-agricultural households, which is calculated by subregion, using the same household survey.
**Figure 1: Two Indexed inputs to Port Efficiency**

<!-- Start of picture text --> South Asia<br>OECD<br>Middle East Air transport (higher is<br>better)<br>Latin America and Caribbean Inland w aterw ays (higher<br>global<br>is better)<br>Europe and Central Asia average<br>East Asia<br>Africa<br>0.000 0.200 0.400 0.600 0.800 1.000<br><!-- End of picture text --> Source: Authors’ calculation based on Global Competitiveness Report 2001-2002.

**Figure 2: Two Indexed inputs to customs environment**

<!-- Start of picture text --> South Asia<br>OECD<br>Hidden import barriers<br>Middle East<br>(higher is few er barriers)<br>Latin America and Caribbean Bribery (higher is few er)<br>global<br>Europe and Central Asia average<br>East Asia<br>Africa<br>0.000 0.200 0.400 0.600 0.800 1.000<br><!-- End of picture text --> Source: Authors’ calculation based on Global Competitiveness Report 2001-2002.

29
# **<<B>>** Household Surveys (Primary Data)

The target populations in both the baseline and follow-up household surveys were women aged between 15 and 49 who had experienced a pregnancy or birth during the 12 months prior to the survey as well as men of similar age group whose partner was pregnant or had given birth over the same period. Two visits were made to each village. The purpose of the first visit was to seek the cooperation of the local council chair in generating a list of households in which a pregnancy or birth had occurred in the previous 12 months and to take global positioning system (GPS) coordinates to ensure that all the villages were within the prescribed geographical location. During the second visit, a survey was administered to all women living in those households meeting the inclusion criteria. A total of 2,266 women and 177 men participated in the baseline survey, and another 2,313 women and 582 men participated in the follow-up survey.

In both surveys, respondents provided information on household assets and amenities, health-related household arrangements, food security, household expenditures on goods and services, individual background characteristics (age, education level, religious affiliation, and marital and employment status), general health status and health care utilization, childbearing experiences and intentions, family planning knowledge and use, trust and social cohesion in the community, and awareness, use, and perceptions regarding vouchers. Also sought were men’s perceptions regarding the importance and timing of ANC, delivery care, and PNC for their partners, and their willingness to pay (WTP) for such services. However, findings from the men’s WTP questions are not presented here. In 2008 women were asked detailed questions about their two most recent births, including the use of ANC, delivery care, and PNC, and experiences and management of any complications. In the follow-up survey, women provided detailed information on all births in the five years prior to the survey. Table A1 in the appendix presents the distribution of participants in the surveys (i.e., the 2008 baseline survey and 2010–11 follow-up survey) by various background characteristics.

Written informed consent was obtained from participants in both surveys, and the Institutional Review Boards of the Population Council and Mbarara University granted ethical clearance for the surveys.

14
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