rafmacalaba/datause-encoder-data huggingface dataset:
most valuable workers. A qualified do not intervene appears to be the safest bet in labor retrenchment before privatization.

# **Bibliography**

The word "processed" describes informally reproduced works that may not be commonly available through library systems.

- Barberis, Nicholas, Maxim Boycko, Andrei Shleifer, and Natalia Tsukanova (1996). "How Does Privatization Work? Evidence from the Russian Shops." _Journal of Political Economy 104:_ 764-90.

- Bhaskar, V., and Mushtaq Khan (1995). "Privatization and Employment: A Study of the Jute Industry in Bangladesh." _American Economic Review.85(l):_ 267-73.

- Boycko, Maxim, Andrei Shleifer, and Robert Vishny (1994). "Voucher Privatization." _Journal of Financial Economics 35:_ 249-266.

- Boycko, Maxim, Andrei Shleifer, and Robert Vishny (1996). "A Theory of Privatization." _Economic Journal_ 106:309-19.

- Chong, Alberto, and Martin Rama (2001). "Do Governments Really Have to Be That Generous?" In Devarajan, Shantayanan, Lyn Squire, and Halsey Rogers, eds., _Economists 'Forum._ Washington, D.C.: World Bank.

- Dewenter, Kathryn, and Paul Malatesta (1997). "Public Offerings of State-Owned and PrivatelyOwned Enterprises: An International Comparison." _Journal of Finance 52(4):_ 1659-79.

- Diwan, Ishac (1994). "Public Sector Retrenchment and Severance Pay: Nine Propositions." In Shahid Chaudhry, Gary Reid, and Waleed Malik, eds., _Civil Service Reform in Latin America and the Caribbean: Proceedings of a Conference._ World Bank Technical Paper 259, Washington, D.C.

- Fallick, Bruce (1995). "A Review of the Recent Empirical Literature on Displaced Workers." Finance and Economics Discussion Series 95-14. Federal Reserve Board, Washington, DC.

- Freeman, Richard (1986). "Unionism Comes to the Public Sector." _Journal of Economic Literature_ 24: 41-86.

- Frydman, Roman, Cheryl Gray, Marek Hessel, and Andrzej Rapaczynski (1999). "When Does Privatization Work? The Impact of Private Ownership on Corporate Performance in Transition Economies." _Quarterly Journal of Economics_ 114(4): 1153-91.

- Galal, Ahmed, Leroy Jones, Pankaj Tandon, and Ingo Vogelsang (1994). _Welfare Consequences of Selling Public Enterprises._ Oxford: Oxford University Press.

- Hall, Robert (1995). "Lost Jobs." _Brookings Papers on Economic Activity_ 1:221-56.

- Haltiwanger, John, and Manisha Singh (1999). "Cross-Country Evidence on Public Sector Retrenchment." _World Bank Economic Review_ 13 (1): 23-66.

- Hamermesh, Daniel (1989). "What Do We Know About Worker Displacement in the U.S.?" _Industrial Relations_ 28(1): 51-59.

- Heckman, James, and Carmen Pages (2001). "Regulation and Deregulation: Lessons from Latin American Labor Markets." _Economia_ 1(1): 123-45.

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39 is the question addressed by a sequence of papers (Bagwell and Staiger, 2001 and Staiger and Sykes, 2011) which argue that efficient cooperation can be achieved through shallow integration. Note that the above classical model of trade has two main characteristics. First, the sole mechanism by which one country’s policies effect the other country is through the market-clearing world price (i.e., there is no secondary transboundary externality). Thus, with respect to international negotiations, all the foreign (exporting) country cares about is the level of market access (the world price) and the policy mix the importing countries uses to achieve that world price is irrelevant. Second, the non-cooperative set of domestic polices is globally optimal and thus the main goal of international trade cooperation over NTMs is to prevent policy substitution. What Bagwell and Staiger (2001) shows is that global efficiency can be achieved by simply negotiating over bound tariffs to achieve a globally efficient level of market access and then preventing countries from using NTMs as a secondary means of eroding these market access commitments.<sup>24</sup> Indeed, it is apparent from the first-order conditions that if the level of market access is fixed (��� �0) then countries will set globally optimal domestic policies (���/�� ). Hence, importing �� (and exporting) countries can be allowed a degree of latitude in setting domestic policy provided they meet their market access commitments. Bagwell and Staiger (2001) and Staiger and Sykes (2011) then discuss how various features of the GATT/WTO can be interpreted as providing this market access commitment device. As a result, the terms-of-trade approach to international trade agreements provides both a justification for the GATT/WTO’s long-standing concerns about policy substitution with respect to NTMs as well as support for the shallow integration approach to dealing with them in trade agreements.

# **3.2 Deep integration**

As discussed, the GATT/WTO takes a shallow integration approach to NTMs in which countries directly negotiate over and bind trade policies (i.e., tariffs and quotas) while providing countries discretion in setting domestic (behind-the-border) policies with the exception that such policies accord to rules designed to prevent policy substitution. It should be noted that the exact

> 24 DeRemer (2013) shows that similar results (and thus support for the shallow intergration approach)  hold for standard models of trade under imperfect compeititon.
We decided to allocate fewer businesses in groups 1 and 2 than in group 3 and in the control group for statistical power consideration. We were interested in estimating both the impact of the different packages of incentives on formalization and in estimating the impact of formalization on business performances. For the second question, we needed the take-up rate on formalization to be sufficiently high to have enough statistical power. The literature on the impact of business regulation reforms suggests that programs which only simplify and cut the costs of formalization have very limited impact, and we therefore anticipated a small impact on formalization in group 1. We wanted to be able to check that in the context of Benin, but we included more businesses in treatment groups offering more incentives for which we expected a higher impact on formalization.

Table 3 presents the results of balance checks of baseline characteristics across the different treatment groups and control group. Overall, it shows that all groups are relatively well balanced with respect to observable characteristics: the number of tests that are statistically significant is close to what should be expected due to chance (2 out of 15 tests for the joint tests of all coefficients are equal to zero are significant).

# **3.4. Data**

Three main sources of data are used for this study: administrative data on formalization and program implementation, in-person quantitative surveys with business owners, and qualitative data with study participants and implementing agencies.

Our main measure of formalization is based on monthly administrative data on business registration provided by the GUFE. This database includes the complete list of all newly registered businesses for all legal entities. We matched this list with the list of business owners who participated to the program. Two important features characterize this measure of formalization:

- Formalization rate is captured for all legal entities: Most businesses in the control group were not aware of the new _entreprenant_ status, so they were probably more likely to choose another legal status if they wanted to formalize. For this reason we choose to define formalization as registered at the chamber of commerce and not to only focus on the _entreprenant_ status.

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are roughly cut in half. Results are similar for repayment by the due date (columns 1-3), with the exception of the regression for “Balance, Sept. 30” where the linear interaction term and the interaction term with quartile 1 of predicted repayment remain statistically significant at the 5% and 10% levels, respectively. Even in this latter cases, however, the coefficient magnitudes are reduced substantially vis-à-vis the corresponding estimates in Online Appendix Table 4.

All told, we view these results as providing no strong support for the idea that a reduction in ex-post moral hazard – increases in repayment even conditional on amount borrowed and agricultural profits – is also an important contributor to the increased repayment we observe among fingerprinted farmers in the lowest predicted-repayment quintile.

# **6.3 Test of the Positive Correlation Property**

Following several recent articles that use data from insurance markets to test for the presence of asymmetric information (Chiappori and Salanié, 2003; Chiappori, Jullien, Salanié and Salanié, 2006), the predictions of the theoretical model of Section 3 can be used to perform a similar test. In the insurance market context, many models of adverse selection and possibly moral hazard that assume competitive insurance markets predict a positive correlation between coverage and the probability of the event insured, conditioning on the information available to the insurer. In our context, the test involves a positive correlation between loan size and default.

In order to test this prediction, multiple loan contracts must coexist in equilibrium, but according to the model (see Appendix Figure 3), all agents should borrow the high amount _bH_ when dynamic incentives cannot be used, and so there should be no correlation. With dynamic incentives however, both high and low loan sizes ( _bL_ and _bH_ ) will be taken and so the correlation can be tested. Using data on the loan size and default at maturity date, we find, as expected, no correlation for borrowers in the control group (t-stat = 1.13), but find a strong positive correlation in the treatment group (t-stat=3.30). In the treatment group, a MK1,000 increase in the loan amount is associated with a decrease in the probability of default (not being fully paid at the loan due date) of roughly 3 percentage points.

# **7. Benefit-Cost Analysis**

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# **A change in the benchmark for the foreign currency debt: The case of Chile**

Chile has a benchmark of 80% local currency and 20% foreign currency in the government debt portfolio, but there is no quantitative target for the currency composition of the FX debt. In addition to the mix between local and foreign currency debt, the strategy focuses on increasing the share of nominal instruments versus inflation linkers. Linkers currently represent 65% of the local currency debt and the target is to bring their share down to 50%.

**Figure 11: Debt composition by currency (millions USD)**

<!-- Start of picture text --> 100%<br>90%<br>80%<br>70%<br>60%<br>50%<br>40%<br>30%<br>20%<br>10%<br>0%<br>2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015<br>USD UF (Chile inflation‐adjusted) CLP JPY EUR Other<br><!-- End of picture text --> Source: Ministry of Finance, Public Debt Office, Historical Debt Composition Statistics FX debt had been traditionally denominated in USD until December 2014, when a decision was made to diversify the FX debt by currency. This decision was based on four factors: (i) The correlation of different currencies with copper prices; (ii) market depth and externalities for the private sector; (iii) optical effect of low coupons; and (iv) financing costs compared to USD.

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1.4 related issues in tariff reform 37

mal rearing, mining, forestry) and basic manufacturing industries. Change in the level of protection as well as tariff revenues is also less severe than in the case when no product is shielded from tariff cuts.

# 1.4.2 _Collected and Statutory Rates_

Pritchett & Sethi (1994) found for some developing countries<sup>36</sup> that collected (applied) tariff rates are only weakly correlated with statutory rates and that the former decrease non-linearly as the latter rise. This reflects the problem of granting tariff exemptions discretionarily, and opening up opportunities for graft. Revisiting Nepal’s import data for 2008, I find that the issue of a discrepancy between statutory and collected tariff rates is less important for Nepal. This is perhaps the effect of the sustained tariff reforms over the past 20 years that have focused on lowering the average rates as well as reducing the number of tariff bands through policy reforms supported by international organizations like the World Bank, IMF, and the World Trade Organization (WTO).

Table 14 lists the mean rate of collected tariff and its dispersion at selected statutory rates. However, except at the highest rate of 80 percent, applied tariff rates are only marginally less than statutory rates, indicating a high degree of compliance on average. When individual import transactions are parsed, however, the degree of discrepancy appears wider. Figure 4 depicts this graphically where 23 percent of import transactions (out of 256,971) paid tariffs that did not match the statutory tariff rate. If the collected tariff rate is less than the statutory rate, it could mean either of the following: i) tariffs were legally sacrificed as part of a conscious government decision, such as import duty rebates as part of an export promotion strategy, ii) other para-tariffs have been introduced in lieu of, or on top of, tariffs, such as the Agricultural Reform Fee, or iii) there is malpractice in the customs administration where authorities exercise improper discretion and exempt certain 36 Their data are for Jamaica (1991), Kenya (1987) and Pakistan (1991).
46 in the last decade will carry large and long-term costs. An emerging lesson is that retirement systems are not well-suited to solve unemployment problems.

Many developing countries need to computerize retirement system data on workers and retirees. Systems are also required to computerize financial data, track fund Inflows, outflows, investment retums, and so forth. Development agencies can help with this task, installing computers and creating software to track eamings and payroll taxes paid, as well as benefit eligibility and benefit payouts, along the way offering technical assistance on accounting and administrative efficiency standards.

Many industrializing economies are in need of improved financial systems which development agencies are in the process of providing. It will be importan **t** o incorporate retirement system reforms in the course of formulating technical assistance plans, since in many cases a perceived need for private pension plans will interact with capital market development strategies.

Along with assistance establishing better financial systems, developing countries are finding it necessary to codify law and property rights so as to clarify conditions of capital ownership. It is crucial to include retirement savings instruments in the process, so that individuals, companies, and the government will better understand the risk/retum characteristics of different retirement savings components.

# Research Needs

A fundamental obstacle to better retirement policy is the lack of data on the economic effects of retirement systems on labor and capitil markets. Greatly needed in the developing countries are household living surveys indicating the economic activity and well-being of workers and retired persons. Perhaps even more critical is the need for employer-side surveys which can illustrate how retirement system taxes and benefits affect labor demand. Sample surveys will probably be required to fill both objectives. Finally, but equally important, better databases should be developed on the institutional features of and interactions within multiple-pillar retirement systems, and the ways in which the private and public systems interact. Information of this type will be of great help to policymakers
# **2.2 The Gravity Model**

The Gravity model has been extensively used in international economics. It was first proposed in order to account for the factors that explained the size of trade flows between two countries. These factors were of three types: one type includes the factors related to the total potential supply of the exporting country. A second type includes the factors related to the total potential demand of the importing country. And a third set of factors was the resistance to trade, be it natural or artificial trade resistance (SÁ PORTO 2002, p.8). These three types of factors are represented in the original gravity model, proposed independently by Tinbergen and Pöyhönen, and later refined by Linnemann (SÁ PORTO, 2002): where Xij is the dollar value of exports from country i to country j; Yi is the nominal value of country i's Gross Domestic Product (GDP); Yj is the nominal value of country j's GDP; Ni is the population of country i; Nj is the population of country j; Distij is the distance between the commercial centers of the two countries, and is used as a proxy for the trade resistance variables; Pref is a dummy variable which equals to 1 if both countries belong to a specific preferential trade area and zero otherwise; and eij is the error term. The coefficients a0 through a6 are to be estimated by the regression.

The gravity equation has been very successful in explaining trade empirically; the estimation of the equation above applied to the trade of 80 countries, explained some 80 percent of the variance of the data (SÁ PORTO 2002, p.10). It has also been used pervasively in models that try to assess the welfare effects of economic integration (such as Aitken 1973, Soloaga and Winters 2001, Reis et al. 2014, among many others). Some studies have tried to evaluate the impacts of economic integration on the different regions of participating countries, such as Bröcker (1988), Sá Porto (2002), Sá Porto and Canuto (2002), Sá Porto and Canuto (2004), Sá Porto and Azzoni (2007), among others.<sup>1</sup> With respect to the use of gravity models on trade facilitation issues, there have been many contributions using computable general equilibrium (CGE) models and gravity models. Several studies have estimated the potential effects of trade facilitation on the well-being of countries, using CGE models. One such example is APEC (1999), which used a dynamic version of the GTAP model (Global Trade Analysis Project) for

> 1 For a wider literature review on the gravity model and on the regional impacts of preferential trade arrangements, see Reis et al.(2014), Cardamone (2007) and Sá Porto and Azzoni (2007).

6
31 stipends to poor students at all levels of education. In this regard, Meernan (1979) and Chernichovsky and Meesook (1985) look at the indirect costs--uniforms, transportation, foregone labor earnings and other expenses--of schooling that can become a relatively high share of income for low-income households and deter school attendance.<sup>2 4</sup> a5 Health Govenmment health expenditures total roughly 5 percent of government expenditures in developing countries (de Ferranti, 1985). While these expenditures are only a small portion of total spending, there has been considerable interest in recent proposals for increased user fees, improved efficiency of health care providers, and reallocation of resources from curative to preventive care. Distributional questions have played a central role in this debate, both because health care costs can be large relative to the incomes of the poor, and because of what Musgrave termed "merit goods arguments" in favor of universal health care.<sup>2 6</sup> Recent benefit incidence calculations for public health spending in developing countries include Sahota (1977) for Panama; Meerman (1979) for Malaysia; Selowsky (1979) for Colombia; Foxley et al. (1979) for Chile; Meldau (1980) for Colombia; Meesook (1984) and van der Wallc (1992) for Indonesia; Bahl et al. (1986) for South Korea; Petri (1987) for five Central or South American countries; and Riboud (1990) for Costa Rica. These studies employ a wide variety of methods for estimating expenditures and for allocating the expenditures on govenmment health programs to households.<sup>27</sup> Incidence simulations based on wilingness to pay have also been performed by Gertler et al. (1988) for Peru. Finally, recent studies that provide a wealth of distribution-related data, but do not provide formal benefit incidence analyses include Griffim (1990) for Asia and Castenada (1989) for Chile.

There are a large number and variety of govenmment health programs in many developing countries and each has very different distributional implications. It follows that the best benefit incidence studies rely on survey data of household utilization of specific health services (e.g., Meermian, 1979; Hanmmer et al., 1992; Selowsky, 1979; and Foxley, 1979; Meesook, 1984; van de Walle, 1992; Riboud, 1990). In all cases, care must be taken to account for both monetary and nonmonetary costs of the household of utilization, especially since' fees often vary with
mining whether the skilled labor wage bill increases or not), this tends to extend unemployment and reduces welfare among the uneducated.

Note that Bhagwati and Hamada (1974), as well as McCulloch and Yellen (1977), take into account the incentive e¤ects of the brain drain on education decisions, with the increase in the expected-wage for skilled workers stimulating human capital investments; they also raise a number of questions regarding optimal public ...nancing of education in such a context, an issue that we will deal with in Section 4.

Modern theories of endogenous growth have considerably renewed the analysis of the relations between education, migration and growth. Unsurprisingly, the ...rst models to address the issue of the brain drain in an endogenous growth framework also emphasized its negative e¤ects (e.g., Miyagiwa, 1991, Haque and Kim, 1995). At the same time, a series of studies have tried to promote the simple idea that one should also look at how a given stock of human capital is built up. In particular, it is likely that in the presence of huge inter-country wage di¤erentials, as is the case between developing and developed countries, the prospect for migration deeply modi...es the incentive structure faced by developing countries’ residents when making their education decisions. When migration is temporary or when the education decision is made in a context of uncertainty regarding future migration opportunities, a bene...cial brain drain or a brain gain may result for the source country.

# 3.3 Temporary migration

Let us ...rst introduce return migration and temporary visas. As documented in international reports (e.g., OECD, 1998), most receiving countries have recently made admission conditions for candidate immigrants more restrictive. On the one hand, as detailed in the introduction, selective procedures have been put in place; on the other hand, most new speci...c immigration programs targeting the educated and skilled are designed for temporary immigrants, the general trend being towards an increase in the share of temporary visas relatively to permanent visas. Assume, therefore, that candidate immigrants are allowed to spend only a fraction ° of their working life in the destination economy. Substituting temporary for permanent visas reinforces self-selection among migrants: the expected return to education being lowered, fewer people will invest in education and only those at the upper-end of the ability distribution will ...nd it bene...cial to do so. Obviously, the exact impact on those who would have invested in education would visas had been permanent visas, depends on the length of the migration period. In terms of our notations, the lifetime income for 18