rafmacalaba/datause-encoder-data huggingface dataset:
# **2. Model Specification and Methodology**

Numerous studies in the past decade have shown that reallocation of resources including labor plays an important role in driving productivity growth (see Griliches and Regev (1995), Olley and Pakes (1996), Foster et al. (2001), and Bartelsman et al. (2004)). EPL can stifle labor reallocation by raising hiring costs. In this paper, I argue that obstructing the reallocation of labor has negative impact on firms’ decisions to participate in foreign markets.

The analysis that I present in this study is based on two studies by Melitz (2003) and Helpman and Itskhoki (2009). Melitz (2003) presents a model with heterogeneous firms where efficient firms self-select themselves into export markets. Efficient firms who earn the highest profits are the only ones who can compensate the sunk costs of exporting. Helpman and Itskhoki (2009) construct a two-country model of international trade allowing labor markets to be subject to search and matching frictions and wage bargaining. They introduce Diamond-MortensenPissarides type frictions into an economy with heterogeneous producers as in Melitz (2003). With this setup, they allow firms to exercise market power in the product market on one hand and bargain with workers over wages on the other. In their structural model, they analytically show how labor market frictions impact trade. The rigidities in labor markets increase the costs of hiring workers which results in lower operating profits. In a sense, these increases in hiring costs are similar to a proportional reduction in the productivity of firms. In order to make exporting profitable, the disadvantage created by high hiring costs must be compensated with high productivity levels which cause an increase in the productivity cutoff for exporting. Higher cutoff value leads to lower fraction of exporters<sup>8</sup> .

The uncertainties about a firm’s potential performance and its competitiveness in foreign markets might contribute to its decision of not participating in export markets. Using data from different regions and countries, Besedes and Prusa (2008) show that 30 to 40 percent of firms fail in exporting within their first two years of service. Brenton, Saborowski, and Uexkull (2009) also find low survival rates in export markets especially in developing countries. Facing these uncertainties and lower level of competitiveness due to stringent EPL will make firms reluctant to participate in foreign markets.

Analysis performed in this study uses data from manufacturing and service sectors. Both the models in Melitz (2003) and Helpman and Itskhoki (2009) are constructed for manufacturing

> 8 See Lemma 1 in Helpman and Itskhoki (2009) for a formal proof of this relation.

5
**Table 1: Intra‐regional and Inter‐regional GVC Exports by World Regions, 2014**

||EAS|ECS|LCN|MEA|NAC|SAS|SSA|**TOTAL**<br>**EXPORTS**<br>**TO WORLD**|**Share of**<br>**Intra-**<br>**regional**<br>**Exports**|
|---|---|---|---|---|---|---|---|---|---|
|**EAS**|1,075,978,952|474,335,837|143,021,550|130,619,247|486,532,118|42,936,299|26,784,769|**2,380,208,771**|**45.21%**|
|**ECS**|194,117,092|1,089,232,823|32,573,074|59,777,946|122,634,530|8,244,524|14,606,305|**1,521,186,294**|**71.60%**|
|**LCN**|21,503,510|14,951,564|38,284,980|2,983,838|174,925,302|603,375|822,606|**254,075,175**|**15.07%**|
|**MEA**|7,569,285|23,102,775|1,042,778|5,179,186|6,185,266|660,376|2,006,774|**45,746,440**|**11.32%**|
|**NAC**|113,982,654|71,438,613|67,012,934|22,313,441|139,233,998|3,327,694|4,302,435|**421,611,770**|**33.02%**|
|**SAS**|12,605,948|52,758,792|5,311,764|8,442,381|22,675,566|2,476,840|3,481,360|**107,752,650**|**2.30%**|
|**SSA**|1,790,727|4,786,724|293,392|660,364|2,827,158|152,286|6,415,645|**16,926,297**|**37.90%**|
|**TOTAL**<br>**MIRRORED**<br>**IMPORTS**|**1,427,548,168**|**1,730,607,126**|**287,540,473**|**229,976,404**|**955,013,937**|**58,401,395**|**58,419,894**|**4,747,507,396**||
|**Share of**<br>**Intra-**<br>**regional**<br>**mirroed**<br>**Imports**|**75.37%**|**62.94%**|**13.31%**|**2.25%**|**14.58%**|**4.24%**|**10.98%**|||

<u>Notes: Values expressed in thousand current US$ and calculated on the total number of 256 countries/geographies with available data on GVC Exports in at least some years of</u> the period 1988‐2014 (HS 1988/92 nomenclature, six‐digits, mirror data). All trade data is drawn from Comtrade on WITS, and data on countries' region and income group in each year comes from WB classifications.

<u>Source: Trade: World Bank MC‐GVC database (http://wits.worldbank.org/WITS/WITS/AdvanceQuery/GVC/GVCQueryDefination.aspx?Page=GVCIndicator).</u> 23
The projected rise in developing countries' saving rate is underpinned by projected stronger growth in these countries. Substantial empirical evidence supports a positive relationship between growth and saving-a virtuous circle whereby higher growth raises the saving rate which helps finance the increased investment associated with higher growth.<sup>4</sup> Subject to continued progress on economic reforms, and given the improved external environment marked by buoyant world trade, average growth in developing countries is currently projected by the World Bank to rise from 2.1 percent annually in the last ten years to close to 5 percent in the next (Chart 6). The projected acceleration in developing countries' average growth appears less sharp if the transition countries, many of which experienced large output declines in the late 1980s and early 1990s, are excluded. For developing countries excluding this group, the projected acceleration is from 4.0 to 5.2 percent, smaller but still significant.

Saving rates in developing countries should be boosted also by favorable demographic developments. Because of a falling share in the population of those below the working age, the average dependency ratio in developing countries is expected to decline continuously for at least the next 20-25 years. Between 1995 and 2015, for example, the average dependency ratio could decline from around 90 percent to 70 percent (Chart 7).5 An additional boost to saving could come from further fiscal adjustment. Average developing country central government deficits fell from 5-6 percent of GDP in the latter half of the 1980s to 3-4 percent in the early 1990s. Continuing adjustment policies in many countries are expected to produce furtier gains in the

> 4 For some recent studies, see Edwards (1995), IMF (1995b), Schmidt-Hebbel _et al._ (1994), and Bosworth (1993). 5 IMF (1995a). See also Lam and Teh (1995) for prospective trends in dependency ratios in East Asia and their likely impact on saving.

10
39 TABLE 5 RESULTS FOR THE FIXED EFFECTS MJODEL (EOUATION 10) Dependent variable - PitHK

|Independent<br>Variables|Coefficient|t Statistic|
|---|---|---|
|Constant|-14.3210<br>(8. 2786)|-1.7299b|
|Di|-4.3106<br>(3.5604)|1.2107|
|D2|5.0287<br>(4.7184)|1.0658|
|D3|4.3467<br>(3.7622)|1.1554|
|D4|5.5429<br>(1.9846)|2.7930a|
|D5|1.7295<br>(2.2062)|0.7839|
|D5|2.3468<br>(3.7679)|0.6229|
|D7|--5.0124<br>(3.9417)|-1.2716|
|'D8|4.9452<br>(4.3505)|1.1367|
|Dq|-2.3575<br>(4.5728)|-0.5155|
|PitS<br>us0.8482|(0.31293)|6 <sup>.</sup>5593<sup>a</sup>|
|Hit|0.2167<br>(0.2163)|1.0023|
|Uit|0.0506<br>(0.00145)|3.4898a|
|Vit|0.1732 x 10-7<br>(0.2506 x 10-7|0.6910|

R2 - 0.9588, Adjusted R<sup>2</sup> - 0.9500 Number of observations - 75

* Standard errors are in brackets beneath the estimates of the parameters.

a Significant at the 1 per cent level.

b Significant at the 10 per cent level.

# Result of hvRothesis-testing:

t-statistic for test of HO:P'-l vs Hl:p'<I: t - -1.1742 reject the null hypothesis at the 20 per cent level. F-statistic for test of F - 3.9824 reject the null hypothesis at the 1 per cent level.
<mark>(2009) define</mark> _<mark>adaptive capacity</mark>_ <mark>as the ability to deploy social risk management strategies for reduction of risk and human vulnerability associated with climate change.</mark> <mark>Even though resilience and adaptive capacity have been the subject of increasing research in recent years (Adger, 2006; Smit and Wandel, 2006) it is not well understood how it varies across countries, regions of countries, and sectors and how it can best be strengthened. The drivers of adaptive capacity include physical, financial, human, and social capital. Adaptive capacity is unequally distributed: it varies systematically along existing fault lines for inequality and social exclusion such as gender, ethnicity, and socio-economic status (e.g., Ribot, 2010). Therefore, the poor are not only the most exposed to the impacts of climate change, they are also the least equipped to adapt to it. Adger et al (2009) argue that the constraints to adaptation often are rooted in belief systems and social structures. For example, all cultures have different traditions for how, and what sources of climate knowledge, they use--traditions that are vitally important for how weather forecasts are used or whether early disaster warnings are heeded. The roots of maladaptation can thus be cognitive just as much as they can be rooted in financial constraints or flawed engineering. However, much remains to be learned about how these insights might translate into better adaptation interventions on the ground in different contexts.</mark>

# **<mark>3. Data and methodology</mark>**

<mark>This section describes how the concepts of exposure, sensitivity, adaptive capacity, and vulnerability were translated into numerical indices; what variables were used; how variables were aggregated into sub-indices and sub-indices into a composite vulnerability index; and how sub-national geographical areas were determined.</mark>

# **<mark>Conceptual approach</mark>**

<mark>Our measure of vulnerability to climate change takes as its starting point the IPCC working definition of vulnerability as a function of exposure, sensitivity, and adaptive capacity (IPCC, 2001) and incorporates social, economic, and natural science indicators. We construct the index of vulnerability as the simple average of three sub-indices: exposure, sensitivity, and adaptive capacity. In line with previous literature (e.g., Polsky et al., 2007), we include a range of climatic, economic, social, and institutional variables as the drivers of vulnerability and focus on vulnerability to current climate variability. One advantage of this approach is the reduction in dependence on climate models and projections which despite recent advances are still presented at too coarse a scale with too high degrees of uncertainty to be useful for regional analysis (Hahn, Riederer and Foster 2009).</mark> <mark>We improve upon the approaches used by previous studies by covering all areas of the country, both rural and urban, and by carefully exploiting a host of available survey, census, and meteorological data. We use indicators of past climate variability to assess</mark> <mark>5</mark>
16 The short-term comparative static multipliers of DES and CDC under conditions **i)** to iii) are reported in !able 1: Table 1: Short-Term Impact Effects of DES and CDC lt

||Changes in|Endogenou|s Variables|
|---|---|---|---|
||**1**<br>**!**|Y||
|DES|+|+ 2/|+|
|CDC<br>|n|+3/|+3/|

- Notes: 1/ Assuming that initially the system is in a steady state where n, y, and X are zero (note that X equal zero is consistent with g < 1). The comparative static results are based on equations (12)-(13), that is, VDR implemented at beginning of period prices.

- 2/ A sufficient condition for this is that i be larger or equal than r or alternatively that sf is initially small. To obtain this comparative static result note that condition iii) implies that:

- -sff*Wf/sf(.) = f*g/(lr-t/f), and that the steady state price of debt is gs - (t/f)/(i - r + t/f).

- 3/ Recalling that g9s = (t/f)/(i - r + t/f) and condition ii). Note from (13) and gss that t/f falls with CDC since

- ft - i*gs5 *6fJ/[f - 6f] < t/f.
Our main outcome of interest is women’s labor force participation. However, we do not wish to conflate gender differences in labor market participation with structural factors that impact labor force participation among both men and women. To rule out this possibility, we include specifications where the outcome variable is the gender difference in labor supply, i.e. women’s labor force participation minus men’s labor force participation.<sup>17</sup> We also examine two other outcome variables related to gender norms: women’s educational attainment and gender attitudes. As discussed above, data on women’s educational attainment comes from the Barro-Lee data set, and is available for 142 countries (Barro and Lee 2013). Our analysis of educational outcomes parallels our analysis of labor force participation. We examine rates of primary and secondary school completion among women and differences between women’s and men’s completion rates. Data on gender attitudes comes from the World Values Survey (WVS) and is available for 56 countries. In our main analysis, we construct an index of gender attitudes by taking the first principal component of the eight WVS questions on gender roles. Since we are considering attitudes rather than behaviors, we do not report gender differences; instead we compare attitudes by gender to test whether grammatical gender shapes the views of traditional gender roles among both men and women.

# **4.2 Labor Force Participation**

Figure 2 summarizes female labor force participation in the 178 countries for which data is available. The figure highlights the fact that women’s participation in economic life varies tremendously across countries: the women’s labor force participation rate ranges from 9 percent in the Republic of Yemen to 87 percent in Madagascar. Gender gaps in labor force participation also vary across countries: in Afghanistan, women are 71 percentage points less likely to be in the labor force than men; women are more likely to be in the labor force than men in Burundi and Mozambique. Figure 2 suggests a negative relationship between the prevalence of gender languages and women’s involvement in the labor force.

> 17As a robustness check, we report specifications that use the ratio of women’s labor force participation to men’s labor force participation as the outcome variable (see Online Appendix Table A1).

18
- 3 -

Performance-based contracting is a useful instrument to ensure sustainability of road maintenance. The literature has long been discussing an incentive problem in transport projects: About 90 percent of transport projects experienced significant cost overruns (Flyvbjerg et al., 2002). Africa’s road projects were delayed by 10 months on average (Alexeeva et al., 2008). And each year of delay would likely cost on average US$4.6 million for a US$100 million transport infrastructure project (Flyvbjerg et al., 2004). In theory, output- and performance-based road contracts (OPRC) can tighten contractors’ incentives to avoid cost overruns, while delivering outputs as agreed.<sup>1</sup> Under the OPRC framework, contractors are responsible for initial rehabilitation works and following maintenance works for an agreed period of time. Their performance is normally not measured by used inputs, such as bitumen and concrete, but by certain performance criteria, such as surface degradation and road user comfort.

Despite the fact that OPRC are being used widely, there is little evidence showing their effectiveness. On the cost implication side of OPRC, Lancelot (2010) shows that performance-based contracts were 20-35 percent cheaper than traditionally procured projects in Brazil. In Europe, it is found that the cost of public-private partnerships, which is relevant to but more advanced than OPRC, is 24 percent higher in the road sector. This is possible because of the risk premium of anticipated cost overruns (Blanc-Brude et al., 2009).

To the best of our knowledge, the current paper is one of the first attempts to examine the impacts of OPRC on the user side. Using data from a rural road project in Zambia, it will examine the possible impacts of OPRC on agricultural production. The following sections are organized as follows: Section II provides an overview of the road sector in Zambia. Section III develops our empirical strategy, and Section IV describes our data. Section V presents main results and discusses policy implications. And Section VI concludes.

> 1 Theoretically, Bajari and Tadelis (2001) show that the incentive mechanism can be strengthened to improve the performance of contractors, while minimizing public procurement costs.
uniqueness of our measure of undervaluation relative to valuation advice, it is of interest to examine its distribution across import declarations in Madagascar. Figure 2 shows that undervaluation is rife. This evidence reinforces the relevance of our assessment of remedial measures to address undervaluation and tax evasion in this context.

# **4. The returns to valuation advice**

## **4.1. Econometric strategy**

To examine the impact of the provision of third-party valuation advice information on inspector actions and customs outcomes, the following regression is estimated: actions and customs outcomes, the following regression is estimated: V V V V h **(1)** dd VV dd XX dd VV ff VV ppVV dd YYwhere = ββ is one of the outcome variables for declaration nn AAddAAVVA + ββ XX + μμ + AA + ππ + φφ _d_ from importing firm + ττ + εε _f_ handled by inspector dd _i_ in port _p_ in month _t_ . As discussed in Section 3, these outcome variables include YY upgrading, scanning, clearance time, detection of fraud, adjustments in import value, and adjustments in taxes. V V V V is an indicator variable for declarations receiving valuation advice, is the vector of characteristics of the declaration used as control variables dd nn AAddAAVVA (listed in Section 3) , dd is a vector of inspector fixed effects, is a vector of importer fixed XX effects, is a vector of country of origin dummies, VV h is a vector of HS 2-digit product ff μμ AA dummies, VV is a vector of port-month fixed effects, and is an error term. Standard errors are ππ φφ clustered by inspector. Q-values are calculated following Benjamini et al. (2006). ppVV dd ττ εε Valuation advice is not provided randomly by the service provider, but rather is typically assigned to declarations for which potential tax revenue losses are largest as is shown in Table 1, which presents descriptive statistics for declarations for which valuation advice was issued, as well as declarations for which it was not. Declarations for which valuation advice is issued have significantly higher risk scores, are subject to significantly higher taxes, are significantly more advice, the reported prices by other importers, the price included in the extensive comments, and a price obtained based on mirror export data from COMTRADE. The sample of declarations for which all these prices are comparable is small as it requires them to include a single HS 6-digit product, receive valuation advice and extensive comments in the RCT and have mirror export price for that HS 6-digit product available. The correlations among all these prices is shown in Appendix Table 2 and are all positive and significant at the 95 percent confidence level. But most of the correlations are less than 0.5.

17
integration. Nemoto and Goto (2004) estimate that the cost efficiency gain from vertical integration in the case of 9 Japanese utilities varies from 0.2% to about 3%. Jara-Diaz et al (2004) based on the sample of Spanish electricity utilities conclude that about 7% of costs can be saved from joint generation and distribution. Despite providing useful insights, these studies are not really relevant to developing countries, however, because of the large differences in economic conditions between advanced and developing countries.

**_Two recent studies expand the available empirical analysis of vertical unbundling_** .  Arocena et al (2009) studied the economies of integration (economies of scale and of scope) for a group of 116 investor owned power utilities in the United States based on data for the year 2001.  The results provided a reference for the expected cost of unbundling.  They concluded that vertical integration provided a substantial and significant cost saving relative to vertical unbundling, and also that horizontal integration in the generation sector provided a further – but smaller – cost saving relative to horizontal unbundling.  Taken together, global savings from integration amount to as much as 12.5% of costs for the sample average firm.  This level indicates a level of anticipated gains needed to justify unbundling.  Meyer (2010) applied a frontier benchmarking approach to measure the economies of scope between the vertical stages of electricity supply in the U.S. electric industry.  The study concluded that the costs of separating the generation stage from networks and retail stages compared to integration is strongly related to the size of the utility.  For the larger utilities in the sample, this type of separation lowers their overall costs because the gains exceed synergy losses, whereas for the smaller utilities this type of separation increases their overall costs.  The threshold size that divides utilities whose costs decrease from those that increase is about 10,000 to 12,000 GWh of annual generation and distribution.

**_There is also some published evidence about the links between integrated power systems and country-level corruption for the EU._** Both for the EU-15 member states and the NMS-10 member states, the more corrupt the countries the more likely they are to choose a weak unbundling regime, even though the results are stronger in the case of EU-15 member states (van Koten and Ortmann _,_ 2007).

# **1.3 What do we know about the taxonomy of market structures?**

**_The distinction between integration and unbundling of power supply arrangements is not clear cut in practice, as several different structures exist around the world_ :**

- vertical unbundling without horizontal unbundling (but not the reverse);

- partial vertical unbundling (generation and transmission separated from distribution, generation separated from transmission and distribution, etc);

- full vertical and horizontal unbundling in generation (and integration of transmission & distribution);

- vertical unbundling in lesser forms than ownership unbundling, such as accounting, management, legal (holding company) unbundling;

4