rafmacalaba/datause-encoder-data huggingface dataset:
Policy Research Working Paper 8050

# **Abstract**

This paper uses a unique dataset of both public and private sector primary school teachers and their students to present among the first estimates in a low-income country of (a) teacher effectiveness; (b) teacher value added (TVA) and its correlates; and (c) the link between TVA and teacher wages. Teachers are highly effective in our setting: Moving a student from the 5th to the 95th percentile in the public school TVA distribution would increase mean student test scores by 0.54 standard deviations. Although the first two years of experience, as well as content knowledge, are associated with TVA, all observed teacher characteristics explain no more than 5 percent of the variation in TVA. Finally, there is no correlation between TVA and wages in the public sector (although there is in the private sector), and a policy change that shifted public hiring from permanent to temporary contracts, reducing wages by 35 percent, had no adverse impact on TVA, either immediately or after 4 years. The study confirms the importance of teachers in low income countries, extends previous experimental results on teacher contracts to a large-scale policy change, and provides striking evidence of significant misallocation between pay and productivity in the public sector.

This paper is a product of the Human Development and Public Services Team, Development Research Group. 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://econ.worldbank.org. The authors may be contacted at jdas1@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
||(1)|(2)|(3)|(4)|(5)|(6)|(7)|
|---|---|---|---|---|---|---|---|
|VARIABLES|||weig|ht-for-age z-sc|ores|||
|Observations|2,490|2,490|2,490|2,502|2,502|2,502|2,502|
|R-squared|0.046|0.066|0.069|0.063|0.053|0.090|0.070|

Source: Authors’ calculations. Note: Robust standard errors in parentheses. *** p<0.01, ** p<0.05, * p<0.1 Per capita kcal is the per capita caloric availability, 1-SSR is the share of calories derived from non-starchy staple food, 1-SSEXR is the expenditure share of non-starchy staple food in the total food expenditure, FCS is the food consumption score and DDS is the household level dietary diversity score, PC consumption is the per capita consumption, and Food share is the share of food expenditure on total expenditure.

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# _Real Vulnerabilities_

Tables 6 and 7 test whether vulnerabilities on the real side might prevent the country from sustaining undervaluation Real vulnerabilities are measured by the degree of: (a) output concentration —as measured by the Herfindahl index of sector value added based on the one-digit ISIC code of economic activity, and (b) export concentration as approximated by the Herfindahl index of export values using the COMTRADE database. In addition, to test whether the effect of openness depend upon the diversification of economic activity in the country, we interacted our trade openness ratio with both measures of concentration. The results reported in Table 6 show that we fail to find a significant effect from trade openness and concentration. These results suggest that the trade patterns of specialization do not matter in determining the probability of RER undervaluation. Table 7 reports our results for RER undervaluations constructed from PMG estimates of our RER equation. This table shows robustly a positive and significant effect of trade openness and a negative and significant effect for liability dollarization. However, we should point out that countries with either output or export concentration fail to have any significant differing impact on the likelihood of undervaluations. The flexibility of exchange rate regimes has a positive and significant effect while either intervention or fiscal discipline is not significant.

# _Sensitivity Analysis_

Tables 8 through 13 replicates the results reported in Tables 2 through 7 for different thresholds of RER undervaluation. In the first two columns of these Tables we report the baseline results for a RER undervaluation greater than 5%. Then, we present the results where the dependent variable is the occurrence of a RER undervaluation taking place as defined by higher thresholds –say, 10, 20 and 25 percent.

With RER misalignments measured using our Johansen estimates we find that (as opposed to the results found with undervaluations beyond 5%) capital controls have a positive and significant effect for undervaluations greater than 10, 20 or 25%. This implies that capital controls may be successfully used to sustain larger undervaluations. Since higher values indicate high intensity of capital controls, the positive coefficient estimate implies that capital controls may help to maintain the real exchange rate undervalued —say, by either avoiding further appreciation that what 20
issuing firms. The negative and statistically significant inter-decile tests (Table 4) show that this growth differential for issuers relative to non-issuers declines monotonically with firm size. In fact, as indicated by the interacted coefficients (Table 3), at the 9<sup>th</sup> decile the differences in growth rates between issuing and non-issuing firms are no longer statistically significant.

The previous estimations of the FSD do not distinguish firms by country (they pool all the observations), because for most countries very few firms issue securities and the FSD cannot be estimated at the country level. But to assess whether the patterns we find are driven by country-specific effects (in particular, by countries growing at different rates), we estimate cross-sectional regressions of firm aggregate growth between 2003 and 2010 on country fixed effects and a dummy variable that captures whether the firm is an issuer (Table 5). Analogous to the estimations in Table 3, we split firms into deciles according to their size in 2003 and estimate standard linear regressions using the observations within each decile. The results are consistent with the findings in Table 3. Issuing firms grew faster between 2003 and 2010 than non-issuing firms. Moreover, the estimated coefficients for the issuing dummy are typically larger at the lower deciles than at the upper deciles, indicating convergence in size among issuing firms over time.

We next assess whether growth rises at the time of issuance. Because the estimations in Tables 3 and 5 show results for the entire 2003-2010 period, they do not show what happens in the year when firms actually issue. To do so, we first conduct an event study, computing the growth rate of issuers versus non-issuers in each year (+/- 3 years) around the time of issuance, grouping firms by the year of their first issuance. The results show that while issuers grow faster than non-issuers before and after they issue, the growth rate at the time of issuance increases significantly (Figure 5).

We then pool the groups of firms issuing in different years and estimate panel regressions. On average, the assets of issuing firms continuously rise over the 7-year window around a capital raising issue (Table 6, Panel A). Moreover, the average asset growth of issuers is higher than that of non19
on the impact of a CCT program for schooling on age at first marriage, childbearing, frequency of sexual activity, and risky sexual behaviors in Sub-Saharan Africa.

The remainder of this paper is structured as follows. Section 2 provides a brief review of the literature on conditional cash transfer programs and on the relationship between schooling, sexual behavior and HIV risk. Section 3 describes the survey setting and why this study is particularly pertinent for Malawi, while Section 4 details the research design and the intervention. Section 5 describes the impact of the program and Section 6 concludes.

# **2. Literature Review**

CCT programs are utilized around the world with two main objectives: to provide poor households with a minimum threshold of income (reduce poverty in the very shortrun) and to improve the accumulation of human capital for the next generation (reduce poverty in the longer-run). There is a large body of evidence supporting the success of CCTs throughout most of the developing world, particularly in relationship to schooling (de Janvry and Sadoulet, 2004; Schultz, 2004).<sup>5</sup> Moreover, several evaluations show that these programs are both technically feasible (i.e. the stated goals of the program are actually met in practice) and are politically acceptable in that successive governments are willing to continue and even expand program coverage (Das, Do, Özler, 2005).

CCTs targeted at education generally consist of giving cash to poor parents under the condition that they send their children to school. Households are generally targeted using means testing based on observable characteristics. In Mexico’s Progresa, for example, cash transfers were offered to poor mothers in rural communities conditional on

> 5 See World Bank (2009) for a recent and thorough examination of CCT programs.

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26 Table 3: ESTIMATES OF THE PRICE EQUATION 1/ (Equation 7)

||Argentina*|Colombia|Chile*|Uruguay|
|---|---|---|---|---|
|CO (Constant)|1.686<br>(2.390)|0.931<br>(15.018)|80.932<br>(0.734)|0.478<br>(17.910)|
|Cl (ln w)|0.267<br>(0.504)|0.076<br>(1.429)|-0.059<br>(-0.866)|0.262<br>(3.564)|
|C2 (ln mw)|0.121<br>(0.342)|0.014<br>(0.442)|0.106<br>(1.918)|0.070<br>(1.181)|
|C3 (ln Wu)|-0.876<br>(-1.144)|0.044<br>(0.586)|0.228<br>(2.175)|-0.005<br>(-0.125)|
|C4 (ln E/PT)|-0.183<br>(-1.961)|0.079<br>(1.583)|0.060<br>(1.993)|0.191<br>(9.133)|
|R2|0.93|0.96|0.94|0.98|
|DW|2.4|2.2|2.3|0.99|

- 1! The sample period is 1960-85 for Argentina, Chile, and Colombia, and 1965-85 for Uruguay.

- corrected for first-order autocorrelation.

Notes: Numbers in parentheses are t-statistics.
# A FRAMEWORK FOR TIIE AGRICULTURAL TRANSITION'

Initial Condtions at the Outset of the Transition The countries of Eastern and Central Europe comprise a large and diverse agricultural region even if the Soviet Union is excluded. In the northern tier, in Poland, the Czech and Slovak Federal Republic, and the former GDR grains (except for maize), roots, and specialty crops dominate the field crops, and imports augment domestic production of feed to sustain a large livestock industry. In Hungary, Romania, and northern Yugoslavia moisture and warmth are adequate for maize ard oilseeds, and mixed grain/livestock farming predominates. Farther south in Yugoslavia and Bulgaria irrigation becomes more important, as do viticulture, orchards, and tobacco production. If the Soviet Union is included, the agroclimatic range of Eastern and Central Europe is replicated, and augmented by the largest area of irrigated agriculture in the world, in Soviet Central Asia.

The countries of the region operated under a common ideology in the past, but within bounds set by that ideology, exhibited significant differences in agricultural policv and farm organization. The greatest difference is between those that collectivized (GDR, Czechoslovakia, Hungary, Romania, Bulgaria, Albania, the USSR) and those that did not (Po IvnA, Yugoslavia). Each faces a unique set ot tasks and constraints during the transition. In order to draw lessons that transcend the particularities of the individual countries, we create in the following paragraphs a stylized country with the general fea ures of each, but the particular uniqueness of none. We take the stylized country I This section draws on material in Brooks et al., JEP, 1991.
settlements of migrants were more prosperous, less violent, had a different sector composition, or had larger government presence before the conflict induced the large forced migration wave. We account for all of these possibilities by including controls for interactions of year dummy fixed effects and i) armed attacks by illegal armed groups in 1995, ii) fatal victims of attacks in 1995, iii) homicide rates 1995, iv) public expenditures in 1995, v) central government transfers to health, education, and other expenditures in 1995, vi) number of financial institutions in 1995, vii) number of tax collection offices in 1995, viii) 2000 GDP share in agriculture, services, and industry, ix) municipal tax income in 1995, and x) night light density in 1995. We also include controls for department and year fixed effects to account for any regional time trends affecting firm behavior. All our estimates are robust to the inclusion of these controls.<sup>15</sup>

# **V Effects of IDP on Formal Firm’s Decisions**

We estimate equations (1) and (2) for firm production, prices, and input demands using the Annual Manufacturing Survey. The survey only includes information on formal firms that comply with government regulations. The results presented in this section, consequently, describe the effects of IDP inflows only on the Colombian formal sector. We expand our analysis to the effects of IDP in the informal sector in the next section.

## **V.1 Effects on production**

First, we explore the impacts of IDP inflows on the intensive and extensive margin of production. The estimates of equations (1) and (2) using several proxies for the intensive margin of firm production are presented in Table I.<sup>16</sup> We find negative effects of IDP inflows on all proxies of firm production. Our most preferred estimates are presented in panel C column (3) and include fixed

> 15We also re-estimate all of our specifications scaling IDP inflows and our measure of _Predicted Inflows_ by total population instead of working age population. The results of these exercises are extremely similar to our main estimates. We do not include them in the manuscript due to space concerns, but they are available upon request.

> 16The combination of controls presented in the columns that are multiples of three are our preferred estimates as they seem to pose the stronger test in the validity of our estimates.

16
monthly average drops in export and import values, respectively, according to Arenas et al. (2022). We closely follow the two studies with a focus on Indonesia and in turn make three contributions to this literature.

Our first contribution is that our paper incorporates non-tariff measures (NTMs) in the analysis, allowing the paper more policy relevance. This is highly relevant for Indonesia, as NTM incidence is among the highest in the region, and their use was prevalent in the pre-COVID period (Cal`ı & Montfaucon, 2021). The novel feature of this contribution is the use of the most updated time-varying data on non-tariff measures, an area in trade policy that has not received much attention in this literature, especially due to the lack of reliable data on NTMs. This allows us to link to the timeline of the pandemic and assess how various lockdown policies differently affected import trade of products subject to specific NTMs.

Our second contribution is methodological. We employ an event-study in our study. This approach is preferred over impact-evaluation estimators such as the difference-in-differences (DiD) and Propensity Score Matching (PSM), and a gravity-model. The event-study approach addresses concerns of lockdown anticipation. Since East Asia was the first epicenter of COVID-19, most countries in the region started imposing restrictions earlier than the rest of the world (Arenas et al., 2022), which could have triggered the reaction of exporters and importers in Indonesia in anticipation of the imposition of lockdowns in partner countries. The event study also enables us to observe the reaction of international trade to lockdown policies at high frequency (months), which often changed depending on the spread/wave of the virus in a country.

Finally, we add to the literature on COVID-19’s impact on trade in a country case study by using more recent and more detailed trade data in a comprehensive analysis of trade for Indonesia, separating impacts of domestic and external lockdowns on trade. This is unlike other studies on Indonesia such as Eschachasthi (2022), Ing and Vadila (2022), and Olivia et al. (2020). Also existing studies on Indonesia, we assess lockdowns in the context of trade by sea and air. Lockdowns disrupted both maritime shipping, which is the main mode 4
reductions in household income per capita. Migrant sending households also appear to have fewer durable assets and livestock, and are less likely to have access to banking services, such as ATM cards. The impacts on individual level outcomes are imprecise, with sizeable point estimates accompanied by large standard errors in many cases. Adults in migrantsending households are less likely to be obese, although the significance of this result is not robust to corrections for multiple hypothesis testing.

Overall, our findings give a less rosy picture of the (immediate) impact of migration on the incomes and wealth of household members left behind than is provided by much of the existing literature. We show that the failure to account for both the selection of households into migration and the decision among migrant households whether to send a subset of members or to migrate en masse leads to estimates which incorrectly indicate that PAC migration has increased income and wealth among Tongan households. This result suggests that nearly all previous papers in this large literature should be viewed with some suspicion since it is nearly impossible to control for both sources of migrant self-selection in observational studies.

It is worth emphasizing that we are only examining short-run impacts. While this has the advantage that we are not mixing together households with different lengths of time in the receiving country, as some papers in the literature appear to do, it is possible that the impacts will differ in the long-run. For example, there are a number of significant costs that emigrants face in moving to New Zealand, so it is possible that their remaining family in Tonga will receive greater remittances in the future, once the migrants have repaid their moving costs. However, there is no guarantee of this occurring, and, in fact, expectations questions that we ask of both migrants and their remaining family members suggest that remittances will decline over time.

Finally, it must be noted that the treatment studied in this paper is the combination of emigration and restriction on which family members can accompany the principal migrant. Other research with PINZMS data shows that those who move to New Zealand experience large gains in income (McKenzie et al., 2009) and improvements in mental health (Stillman et al., 2009). These positive impacts would likely extend to the remaining family if they were also allowed to move with the migrant. Since almost all migrant-destination countries impose age and relationship rules blocking certain family members from accompanying migrants, there may be millions of migrant-sending households in the developing world whose remaining members become worse off. The methodological comparisons in our current paper 28
# **3. Migration and Female Labor Force Participation in Nepal**

Work-related migration has become a major factor affecting the economic development of Nepal during the last two decades. In 2004, close to a million Nepali migrants were working in India, countries of the Arab Gulf, South Asia, Western Europe, and North America. According to official sources, the amount of remittances received by Nepali households from abroad reached $1 billion, overflowing foreign exchange reserves and affecting the exchange rate and inflation. The amount of remittances coming through unofficial channels could be at least as large.

Thirty-two percent of households in Nepal had working migrants and received remittances in 2004 (World Bank 2005). An average amount of remittances received by households during the year prior to the survey amounted to about NPR 24,000, or 16 percent of mean household yearly consumption. Almost all (97 percent) of Nepali migrants are males, age 15 to 44, and the majority of migrants are either husbands or sons of household members receiving the remittances<sup>3</sup> . Most of the migrants come from rural areas. Only 13 percent of households based in the capital city of Katmandu have working migrants; the proportion of such households in rural areas of Nepal is twice as high. The propensity to migrate is higher among members of large households<sup>4</sup> . The proportion of households with migrants is the lowest among households of Newar and Janajati castes. On average, the amount of remittances received by households in Katmandu and other urban areas is double the amount received by rural households in Nepal.

The formal sector in Nepal accounts for less than 8 percent of total female employment. Over 70 percent of women workers are self-employed or confined to lowwage activities in the informal sector. In the urban areas, women are employed in a range of cottage industries such as carpet-weaving, textiles and handicrafts, as well as in occupations like vending, petty trade, brewing, and vegetable selling (UNDP 2004). In rural Nepal, women often work as hired agricultural labor or manual labor in construction

> 3 The Nepal Foreign Employment Act of 1985 placed some restrictions on foreign work migration by women. It limited the overseas travel of single women and women under 35 years of age. The Act prohibits the foreign employment of women without special permission from the Government (Sanghera and Kapur 2000).

> 4 All variables constructed using the household size for households with migrants are adjusted for the presence of would-be-migrants.

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