rafmacalaba/datause-encoder-data huggingface dataset:
43 Showing that education is not a sufficient condition for growth does not mean it may not be a necessary condition or lessen its importance, but rather raises the importance of identifying and undertaking those complementary reforms in the non-education sector that will lead education to pay off. In some sense this paper only highlights what is acknowledged in the World Bank's policy paper on education, that the payoff to education is conditional not absolute"<sup>6</sup> .

Second, as indicated above, evidence suggests schooling has a large number of direct beneficial effects beyond raising economic output. In particular a large amount of evidence suggests that infant mortality falls significantly with the education of mothers.

Third, education had a large non-economic component and is often privately valued for its own sake. Fifty percent of (non-education) university students in Saudi Arabia in 1988 were studying 'Humanities, Religion, and Theology" (UNESCO, 1990). That this field of study may not raise economic output per worker is both obvious and obviously of no concern to those so engaged (but may well have implications for government subsidies)<sup>5</sup> ".

Fourth, many, if not most, societies believe that at least basic education is a merit good so that its provision is not, and need not be, justified on economic grounds at all.

Fifth, perhaps very little in this paper is of direct relevance to government decisions about educational investment. But, in my defense, it has more relevance than most of the previous literature which relied on micro data. Most of this literature justified _governmenwt_ investment in education using data which showed the _pnvate_ rate of return to education was higher than the _social_ rate of return, which is, of course, the definition of activities that should have larger taxes (or have their fees raised, since the difference in this case is due to a subsidy to education investment), not have its subsidy increased. Of course, those authors that present these social and private returns do not really mean what they say and in 56 In the first paragraph of the Executive Summary: "Education at all levels increwes growth, but education alone wil not generate growth. Growth requires not only investment in human capital but also in physical capital; _both types of inwstmen twnib7a mos to growth in open, cmpative economies that are in macroecononic balance.'_ (My italics) World Bank, 1994b.

5 One esdmate of the returns to higher education by field in the United States suggested that advance training in theology had a negative private rate of return of 17 percent (I can't now remember the reference, but it did keep me out of divinity school).
-2-

true cost of capital is correctly and fu'ly measured from the beginning, the cash flow tax falls on economic rents: the profit generated over and beyond the user cost of parts, services, factors of production and risk. And with cost deducted upfront, the form of finance does not come into the equation, and the tax thus also avoids the pro-debt bias of income taxes that does not allow the imputed cost of equity financing to be deducted from the base.

Notwithstanding the econ-mic argument for this novel form of taxation, it is noteworthy that as many major tax reports that have been produced over the last two decades have supported its adoption as those that have rejected it, preferring instead to stay within the income-tax approach merely seeking to perfect it. Thus, both the U.S. Treasury Report of 1977 and the U.K. Meade Report of 1978 considered worth exploring the adoption of cash-flow taxation as a form of real tax. In contrast, the 1967 Royal Commission on Taxation in Canada (the Carter Report) and the U.S. Treasury Report of 1984 argued in favor of different streamlined variants of the company tax levied on equity income<sup>2</sup> --in the second case advocating its partial integration for both domestic and foreign owners plus its full indexation for inflation.

Although most countries use equity income as the tax base, in practice the fiscal definition of income rarely resembles true equity income earned by the shareowners. For example, replacement-cost depreciation is generally not deductible from the tax base--instead depreciation is based on the original price of the asset. Interest, unadjusted for inflation, is (almost always) deductible from the tax base, even though it is now widely recognized that it is only its real component
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Policy Research Working Paper 8301

# **Abstract**

One-fifth of the world’s population lives in countries affected by fragility, violence and conflict, impeding long-term economic growth. However, little is known about how firms respond to local changes in security, partly because of the difficulty of measuring firm activity in these settings. This paper presents a novel methodology for observing private sector activity using mobile phone metadata. Using Afghanistan as the empirical setting, the analysis combines mobile phone data from over 2,300 firms with data from several other sources to develop and validate measures of firm location, size, and economic activity. Combining these new measures of firm activity with geocoded data on violent events, the paper investigates how the private sector in Afghanistan responds to insecurity. The findings indicate that firms reduce presence in districts following major increases in violence, that these effects persist for up to six months, and that larger firms are more responsive to violence. The paper concludes with a discussion of potential mechanisms, firms’ strategic adaptations, and implications for policymakers.

This paper is a product of the Office of the Chief Economist, South Asia Region and the Macroeconomics, Trade and Investment Global Practice 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 corresponding author may be contacted at tghani@wustl.edu.

_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
Table 5: Summary Cost-Benefit Analysis of School Buildings Internal Rates <u>of Return*</u>

||||Transpor<br>Co<br>|tation Di<br>st Escalat<br>|fficulties:<br>ion<br>|
|---|---|---|---|---|---|
|Material|Full Maintenance|Half Maintenance|10%|20%|30%|
|Concrete element|6%|9%|7%|5%|2%|
|Stone|8%|11%|10%|8%|6%|
|Brick|5%|12%|10%|6%|3%|
|Hollow Concrete Block|<br>17%|23%|19%|14%|8%|
|_Chika_|(base case)|(base case)|(base)|(base)|(base)|

Note: Since the estimates of the life span of school buildings is arbitrary, then it is assumed that concrete, stone, brick and concrete block buildings last for 40 years. Since stone is not transported, but only the concrete necessary, the transportation cost increases are reduced to 5, 10 and 15 percent

* Internal rate of return calculations based on savings due to selection of material versus _chika_

However, maintenance is an issue in Ethiopia. Experience shows that school buildings are not well maintained in Ethiopia. _Chika_ requires heavy maintenance. There is no indication that this will take place. Therefore, the assumption of full maintenance is not realistic. For this reason, a sensitivity analysis considers the more realistic case that maintenance will be less than adequate. For simplicity’s sake, half of the required maintenance is assumed to take place. Effectively, this makes all alternative technologies preferable to _chika_ construction. Given the fact that parents and communities are more likely to get involved in the maintenance of element schools, then the returns to switching to an alternative technology are likely underestimated here. With the more realistic assumption of half maintenance, brick and stone, and possibly concrete element, are good investments.

The choice of technology of course depends also on the availability of local materials. It may simply not be possible to transport certain materials to remote areas. For many rural areas there will be impossible transportation problems. In such cases there is no alternative other than building with _chika_ . In less severe cases there may be roads, but the cost of transporting 32
In sum, a coherent development policy able to boost output and employment at the same time will require the determination of those actions necessary to move agriculture from subsistence to value added production, to foster the development of the 'missing link' between agriculture and industrial manufacturing and to set the pre-conditions for industrial manufacturing growth. In order to tackle these issues, economic reforms will have to shift from cost saving to investment. Investment in people via public administration reforms able to attract the best and the brightest and investments in agricultural and industrial policies.

# **References**

Alexeev, M. and Pyle, W. (2003): A Note on Measuring the Unofficial Economy in the Former Soviet Republics, _Economics of Transition_ , 11/1, p.1-23.

Aun, L. H. (2001) _"Industrial Development and Equity Distribution in Malaysian Manufacturing: Institutional Perspectives_ " University of Malaya, FEA Working Papers No. 2001-12 Betley, M. (2003) _"Public Expenditure in the CIS-7"_ , background paper to the CIS-7 Lucerne Conference, January 2003, www.cis7.org De Melo et Al. (1997) _"Circumstance and Choice: The Role of Initial Conditions and Policies in Transition Economies"_ World Bank Policy Research Working Paper No. 1866 Hanousek and Palda (2004) _'Mission Implausible II: Measuring the Informal Sector in a Transition Economy Using Macro Methods',_ http://econwpa.wustl.edu/eps/pe/papers/0404/0404002.pdf Haslam, M. and Hassan, A. A. G. (2003) _"Development Planning and Regional Imbalances in Malaysia"_ , University of Malaya, FEA Working Papers No. 2003-5. See Also Kaufmann, D. and Kaliberda, A. (1996) _'Integrating the unofficial economy into the dynamics of post socialist economies: A framework of analyses and evidence'_ , in: B.Kaminski (ed.), _Economic Transition in Russia and the New States of Eurasia_ , London: M.E. Sharpe, pp.81-120.

IMF and WB (2002) ' _Poverty Reduction, Growth and Debt Sustainability in Low-Income CIS Countries'_ , mimeo,www.cis7.org Interstate Statistical Committee of the Commonwealth of Independent States (1998) _"Labor Markets in the CIS Countries"_ , Statistical Abstract, Moscow Interstate Statistical Committee of the Commonwealth of Independent States (2004) _"Labor Markets in the CIS Countries"_ , Statistical Abstract, Moscow Johnson, S., Kaufman, D., and Shleifer, A. (1997) _'The unofficial economy in transition'_ , Brookings Papers on Economic Activity 2, 159--221.

Lackó M. (2000) 'Hidden Economy – An Unknown Quantity: Comparative Analysis of Hidden Economics in Transition Countries 1989-95', _Economics of Transition_ 8/1, pp.117-149.

37
_log (X/(VE+X)) / (X/(VE+X)-1)×sE._ (4) The synthetic ‘market comparable’ measure follows Falkenheim and Pennachi (2003). We use publicly traded banks to identify a statistical relationship between accounting variables (which are available for all banks) and the two key variables that feed into the structural credit risk calculation of the Merton model, namely, market leverage and volatility of asset returns. We then use these statistical relationships and the accounting information to compute market leverage and asset return volatility for all non-publicly traded banks. The key assumption of this methodology is that non-public banks would have on average the same credit risk profiles conditional on observable accounting variables as publicly listed banks. Appendix 1 provides a detailed explanation of the methodology. This approach has two limitations. First, there could be a selection bias in the estimation of credit risk for non-publicly traded banks. Since publicly traded banks can be significantly different than non-publicly traded banks along a number of dimensions, the relationship between credit risk and observable accounting variables may not be the same for non-traded banks. Second, we are interested in correlations and use weekly estimates of credit risk for subsidiary banks and their parents. There may not be enough timeseries variation in the weekly coefficient estimates from cross-sectional regressions of publicly traded banks and the observable accounting variables.

_3.2. Estimating the size and determinants of the correlation between parents and subsidiaries_ To examine the correlation between the foreign bank parents’ and their subsidiaries’ changes in distance to default, we estimate equation (5) below: 11
# **Unobserved country and occupation characteristics**

It is also possible that the results are biased because of the presence of unobserved country and/or occupation characteristics that are correlated with the regression variables. Also the dataset is highly unbalanced, in the sense that countries report gender gaps for different occupations in different years, and countries report often only for a subset of years. As a consequence the results may also suffer from a sample selection bias. We therefore also exploit the panel data structure of the ILO October Inquiry by including country by occupation dummies in the regressions (Table 9). The inclusion of these dummies implies that the impact of the trade and FDI variables is solely based on _changes_ in trade and FDI intensity _within a given occupation for a given country over time._ Hence, the regressions are unaffected by time-invariant (observed and unobserved) country and occupation characteristics, and also controls (to some extent) for sample selection bias. The disadvantage of this procedure is, however, that the results become more sensitive to measurement error and therefore are more likely to suffer from attenuation bias.

Table 9 reports the results of the time-series analysis. First we simply estimate a linear trend on the occupational gender wage gap, and do find a negative trend (columns 1 and 6). The coefficients are imprecisely estimated, however, and only approaching 10% significance for the richer countries (p-value 0.14). A coefficient of –0.001 implies a 0.1% point narrowing of the occupational gender wage gap each year.

The positive coefficients for GDP per capita for poorer countries in the crosssection analysis (see Table 6) are no longer significant and even negative in three out of four cases, confirming the pattern observed in Figure 2. Also three of the coefficients for GDP per capita for richer countries (Table 6) become significantly negative after the inclusion of country by occupation dummies. Only if we use sectoral trade measures we still find positive coefficients on the GDP per capita variable, but they are insignificant. Therefore we conclude that the gender gap has a tendency to fall within a given country with economic development, as suggested by figure 2.

In Table 8 we have included controls for wage-setting institutions, intra-country trade, horizontal and vertical occupational sex segregation and wage inequality, but the 29
confidence interval of the true poverty rate estimated from the actual consumption data for 2009/10. Put differently, these estimates are not statistically significantly different from the true poverty rate of 29.9 percent. The exception is Specification 5 where the imputation-based estimate is half a percentage point outside this confidence interval, which can be due to either model overfitting or smaller sample sizes with both the base and target surveys. Estimation results using the random effects probit model (row 2) are broadly similar, with estimates from Specifications 2 to 4 falling within the 95 percent confidence interval of the true poverty rate.

Thus for our purpose of finding a good model specification to impute poverty in the 2009/10 round, assuming consumption data in this round were not available, Specifications 1 to 4 with the normal linear regression models and Specifications 2 to 4 with the random effects probit models can all be employed. But among these specifications, our preferred specifications for interpretation are Specification 2 with the normal linear regressions and Specifications 3 and 4 with the random effects probit model since these three specifications provide better estimates that are within one standard error of the true rate.

It is useful to note that the standard errors for the imputation-based estimates are progressively smaller in the normal linear regression models and random effects probit models than that of the design-based poverty estimate. This is consistent with our earlier discussion since assuming the specification is correct, a good model fit can help bring down the standard errors. Similarly, the random effects probit models make a stricter (modelling) assumption on the error term than the linear random effects models, thus their standard errors are consequently smaller.

As a further check on the model specification, we provide a decomposition test of the changes in poverty due to the changes in the household characteristics and the estimated coefficients in Table 2 based on equation (3). (Note that we are now working with consumption data in both 14
8 A third ordering, associated with John Rawls, is the ordering which maximizes the minimum value of the objective in the population; I will write: We see that the equal-opportunity ethic lies ‘between’ utilitarianism and the Rawlsian difference principle; it is less extreme than the Rawlsian formulation, in that it maximizes an _average_ of minima across effort levels. Actually, my naming of (6) as the Rawlsian view is not quite fair, for Rawls wrote that the difference principle should apply to ‘social groups,’ not individuals. If we take the different types to be the relevant social groups, then, at least in the special case where (4) holds, the equal-opportunity ethic maximizes the minimum objective value over social groups, and hence possesses a Rawlsian ancestry.

In the general case, however, if the distribution functions cross, the solution of (3) does not entail maximizing the average value of the most disadvantaged type, but rather, maximizing the area above the left-hand envelope of the distribution functions of the types, and bounded by the horizontal line of height one.

To summarize, we have provided an ordering of policies with respect to the equalopportunity ethic. That ordering takes as data a particular social view of personal responsibility, summarized in a set of circumstances and an implied typology – a partition of the population – and a policy space. The objective for which opportunities are to be equalized is typically some measurable and interpersonally comparable kind of advantage, the kind of thing a ministry in a government might be concerned with, such as income, health, life expectancy, or educational achievement.
The effect on women’s personal income is positive and small at only about 225 Taka or 2% of the comparison group mean. In addition, for normal goods, any income effect would imply a (weak) increase in expenditures if income increases. This is not what I observe with the significant decrease of men’s expenditures in Table 6.

I further investigate whether exposure to new female supervisors could have affected the attitudes or beliefs of the women working under these new female managers, see Table 7. The effects on the overall index and all individual components are small, except for the women’s negotiation behavior. For this variable, I find a positive effect of 0.17 SD, with a marginally insignificant p-value of 0.11. This outcome is an index derived from vignettes that present the women with a specific situation where a female character meets resistance from her husband against her plans (e.g. going to evening school to earn a school-leaving certificate). The respondent is then asked to describe how the character should respond to the husband to achieve her goals for each vignette, which is coded according to its sophistication and summarized in a standardized index following Anderson (2008) and O’Brien (1984). I interpret this outcome as capturing the women’s willingness and ability to put herself forward in intra-household negotiations. Though this evidence can only be considered tentative, the large point estimate for this outcome suggests that the role model of a female supervisor in the workplace might have given the exposed women the ability or the confidence to get more involved in decision-making in the household.

# **6 Conclusion**

This paper exploited a quasi-experiment in the Bangladeshi garment industry to analyze the direct and indirect impact of women’s promotions on bargaining in the household. Women who participated in the promotion program, when compared to the short-listed runners-up, were more involved in decision-making in the household, at least initially. They were also able to translate this increased decision-making power into an increase in expenditures on assignable goods for women and girls as well as on remittances to family members who take care of the couple’s children. The magnitudes of the effects suggest that the participation in the promotion program allowed women both to appropriate any additional income they may have earned as a result of the promotion as well as to reallocate income they would have earned in the absence of the program towards their own purposes.

These direct effects are amplified by indirect effects on women working under the new female managers, as compared to women working on male-supervised comparison lines. Women exposed to a female role model also report being more involved in decision-making in the household, and there are some suggestions that they can translate this into a reallocation of expenditures away from male goods. Overall, I find suggestive evidence that the findings for both the direct and indirect 30