rafmacalaba/datause-encoder-data huggingface dataset:
44 percent of non-account-holders in that country cite cost as a reason for not having a formal account. Analysis finds a significant relationship between cost as a self-reported barrier and an objective measure of costs.

But fixed fees and high costs of opening and maintaining accounts also often reflect lack of competition and underdeveloped physical or institutional infrastructure. These issues seem to be particularly important in Sub-Saharan Africa and Latin America and the Caribbean, where improvements that reduce costs could potentially increase the share of adults with a formal account by up to 24 percentage points.<sup>17</sup> Lack of trust in banks can be a difficult barrier to overcome. This distrust can stem from cultural norms, discrimination against certain population groups, past episodes of government expropriation of banks, or economic crises and uncertainty. In Europe and Central Asia 31 percent of non-account-holders cite lack of trust in banks as a reason for not having an account—a share almost three times that in other regions on average.<sup>18</sup> Religious reasons for not having a formal account are most commonly cited in the Middle East and North Africa and South Asia. In these regions, developing financial products compatible with religious beliefs (Islamic finance) could pay off—potentially increasing the share of adults with a formal account by up to 10 percentage points in the Middle East and North Africa and by up to 5 percentage points in South Asia.

Global Findex data suggest that indirect use of an account is most common in South Asia: 34 percent of adults in the region without a formal account cite another family member already having one as a reason, compared with a global average of 23 percent. Women tend to be more likely to be indirect users as well: in South Asia and the Middle East and North Africa there is a gender gap of about 10 percentage points in citing this reason. A recent study shows that lack of account ownership (and personal asset accumulation) limits women’s ability to pursue self-employment opportunities.<sup>19</sup> Such voluntary exclusion may be linked to individual preferences or cultural norms, or it may indicate a lack of awareness of financial products or lack of financial literacy more generally.<sup>20</sup>

# **How—and how often—are accounts accessed?**

Beyond the simple ownership of formal accounts, how frequently people access those accounts, and the methods they use to do so, mark a stark difference in the use of financial services between high-income and developing economies.

## DEPOSITS AND WITHDRAWALS

In developing economies 10 percent of adults with a formal account—more than 150 million people—maintain what can be considered an inactive account: they make neither withdrawals from nor deposits into their account in a typical month (although they may keep a positive balance). In high-income economies only 2 percent of account holders have an inactive account.

**21**

MEASURING FINANCIAL INCLUSION
# **5.1.1 Syntax**

The `icio` syntax for the different export flows is the following:

# 1. **GVC participation in total exports of a country:**

- a) GVC participation in **total aggregate exports** :

- `icio, exporter(` _country_ _~~c~~ ode_ `) [` _output_ _~~g~~ vc_ `] [` _origin_ _~~d~~ estination_ `] [` _standard_ _~~o~~ ptions_ `]`

- b) GVC participation in **total sectoral exports** :

- `icio, exporter(` _country_ _~~c~~ ode_ `[,` _sector_ _~~c~~ ode_ `]) [` _output_ _~~g~~ vc_ `]`

- `[` _origin_ _~~d~~ estination_ `] [` _standard_ _~~o~~ ptions_ `]`

# 2. **GVC participation in bilateral exports:**

- a) GVC participation in **bilateral aggregate exports** :

- `icio, exporter(` _country_ _~~c~~ ode_ `) importer(` _country_ _~~c~~ ode_ `) [` _output_ _~~g~~ vc_ `] [` _origin_ _~~d~~ estination_ `] [` _standard_ _~~o~~ ptions_ `]`

- b) GVC participation in **bilateral sectoral exports** :

- `icio, exporter(` _country_ _~~c~~ ode_ `[,` _sector_ _~~c~~ ode_ `]) importer(` _country_ _~~c~~ ode_ `) [` _output_ _~~g~~ vc_ `] [` _origin_ _~~d~~ estination_ `] [` _standard_ _~~o~~ ptions_ `]`

The `output()` option, i.e. `[` _output_ _~~g~~ vc_ `]` in the reported syntax, allows to get different measures of GVC-related trade by specifying `gvc` , `gvcb` and `gvcf` as arguments for total, backward and forward GVC indicators, respectively. As can be noted from the `icio` results reported in Section 4.1.3, GVC-related indicators are routinely reported as part of the detailed output, when an export flow-at any level of aggregation-is specified.

Also for GVC indicators it is possible to single out the country/sector where the goods/services were originally produced by specifying the `origin(` _country_ _~~-~~ code_ `[,` _sector_ _~~c~~ ode_ `])` option, as well as the market/sector where the goods/services are absorbed in final demand by specifying the `destination(` _country_ _~~c~~ ode_ `[,` _sector_ _~~-~~ code_ `])` option.

# **5.1.2 Examples: GVC-related exports**

Figure 1.13 of the World Bank WDR 2020, here reported as Figure 2, is based on EORA MRIO 1990 and 2015 data and shows the GVC-related trade in agriculture (sectors 1 and 2 in EORA) and agri-food sectors (sector 4 in EORA). For instance, in the case of Tanzania, one of the Sub-Saharan African countries that experienced 29
vastly different approaches to taxing small businesses, even though there are somewhat similar economic circumstances, and this contributes to variation in inequality across countries. While existing studies have shown how STRs have been shown to produce regressive outcomes in high-income countries (Aghion _et al._ (2024)), this paper is among the first (along with Tourek (2022)) to show inequitable outcomes of an STR in lower-income settings. These inequitable outcomes manifest in three ways: minimum thresholds that are not binding in practice, taxpayers’ responses to changes in taxation contribute to inequality, and efforts to simplify the tax paying process only increase tax payments made by taxpayers below the median of the distribution.

This paper is organized as follows. Section 2 provides a comprehensive overview of STRs, describing three key design features and how they vary across Sub-Saharan African countries. Section 3 provides details about the TOT regime in Kenya and the tax administrative and survey data that this study draws on. Section 4 presents the findings of the analysis of taxpayer behavior in Kenya, including the results of an event study and randomized experiment. Section 5 discusses the implications of this analysis of the trade-offs faced by policy makers when designing STRs.

# **2 Review of Simplified Tax Regimes**

## **2.1 Design Features of Simplified Tax Regimes**

When designing an STR, policy makers will first need to determine the regime’s objectives. These objectives typically involve revenue collection, simplicity, and equity while minimizing real distortions. They can be, however, in conflict with one another. For example, a more progressive (i.e., vertically equitable) tax regime is typically less simple, and too high a tax burden may undermine the functioning of a simplified tax regime, resulting in inequitable outcomes. The key design features of STRs that influence the trade-offs between equity, simplicity, and revenue collection can roughly be divided into three categories: i) the level of eligibility thresholds; ii) whether a set fee or a percentage of turnover is required to be paid, and; iii) the size of tax obligations.

7
discussions share the same distributional concerns as those found in the welfare analysis and opposed to National Accounts, Price Indices and Purchasing Power Parities whose aim is to create an aggregate housing estimate.

Theoretically, net imputed rents<sup>36</sup> should be included in a comprehensive income tax base in order to obtain fully neutral taxation of owner-occupation (IMF, 2009; Pellegrino et al., 2012). This would be similar to the equilibrium where renting-costs equal owning-costs (Ceriani et al., 2011, Poterba, 1992). However, home ownership benefits of particularly favorable treatments in reality. Imputed rental income on the principal home is almost never included in the income tax base<sup>37</sup> ; and mortgage interests cost, as well as major renovation expenses, are usually deductible (Bourassa et al., 2013).

This advantageous fiscal treatment of home ownership determines higher returns for investing in real estates than in other forms of savings (Dougherty VanOrder, 1982). Consequently, this could produce excess investments in housing with respect to alternative assets, like stock and bonds (Sierminska et al., 2008, Arnold et al., 2011). This over-investing in real-estate may generate efficiency distortions such as potential co-factors in trigging the housing bubble as well as significant budgetary costs (see Ceriani et al., 2011 for the case of the United States, and Pellegrino et al., 2012 for the case of Italy).

Even in the few cases where imputed rental income is subject to income tax, the corresponding value is either drawn from outdated administrative records or calculated as a flat percentage of the capital value of housing after operating and interest costs deduction (Yates, 1994). As a result, imputed rent is much lower than free market rents (Andrews et al., 2011, Pellegrino et al., 2012).

> 36 Calculated as the difference between imputed rents and the sum of mortgage interest payments, maintenance costs and depreciation cost. 37 Few exceptions are found in Poland, the Netherlands and Switzerland.

19
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<u>Table A14. PSM – Matching Statistics (Kernel pair matching with replacement)</u>

|||**(a) All r**<br>Matched|**egions**||
|---|---|---|---|---|
|Treatment: GVC1|Yes|No|Total|Bandwidth|
|Treated|16232|865|17097|0.0002875|
|Untreated|64300|2552|66852|0.0001005|
|Combined|80532|3417|83949||
|Treatment: GVC4|||||
|Treated|1747|95|1842|0.0002037|
|Untreated|72133|9974|82107|0.0002|
|Combined|73880|10069|83949||
|||**(b) MEN**<br>Matched<br>|**A region**<br>||
|Treatment: GVC1|Yes|No|Total|Bandwidth|
|Treated|2087|108|2195|0.0012|
|Untreated|8741|778|9519|0.0008998|
|Combined|10828|886|11714||
|Treatment: GVC4|||||
|Treated|178|9|187|0.0002743|
|Untreated|9869|1658|11527|0.001471|
|Combined|10047|1667|11714||

# Table A15. GVCs and Female Non-Production Workers – PSM

# <u>(Kernel Pair Matching with Replacement)</u>

||(a)All r|egions|
|---|---|---|
||GVC1|GVC4|
|ATE|0.243***<br>(0.019)|0.491***<br>(0.118)|
|ATT|0.206***<br>(0.022)|0.406***<br>(0.039)|
|Observations|41,356|41,356|
||(b) MEN|A region|
||GVC1|GVC4|
|ATE|0.188***<br>(0.047)|0.341<br>(0.295)|
|ATT|0.252***|0.317***|
||(0.052)|(0.146)|
|Observations|6,864|6,864|

Standard errors in parentheses *** p<0.01, ** p<0.05, * p<0.1 Note: All the regressions include country, year and sector dummies.

42
<!-- Start of picture text --> Exhibit 1<br>Real GDP in 3 SARS Affected Economies<br>(Seasonally adjusted; Index 2002:Q1 = 1)<br>Hong Kong<br>Singapore<br>1.08<br>Taiwan (China)<br>1.04<br>1.00<br>2002Q1 2002Q2 2002Q3 2002Q4 2003Q1 2003Q2 2003Q3 2003Q4<br><!-- End of picture text --> There is of course no one right answer about the size of the economic losses exacted by SARS. Much will depend on the underlying economic model that is applied, and the assumptions made about the conditions and policies that would have prevailed in a counterfactual scenario. The point here is merely to stress that a number of different analytical approaches all point to economic losses in the main SARS affected economies that are much larger than any that would have been suggested by the standard cost of illness approach: the estimated GDP losses in 2003 for the four economies discussed amount to on the order of $13 billion, despite there being only somewhat over 7000 possible cases and a little over 700 fatalities in the 4 economies combined.

The fact that the standard costs of illness were relatively unimportant in the SARS and Surat events should not be read to suggest that they are unimportant in general. Illness and death of course remain much the most important facts about infectious diseases. That, after all, is why people take protective action against such diseases in the first place. A potential human influenza pandemic is an example where both types of effects or costs would likely be important. This is a case where there could be both severe initial demand shocks arising from protective actions taken by individuals, as well as substantial costs of illness arising from morbidity and death on a large scale. Recent efforts to model the economic impacts of an influenza pandemic (for example Mckibbin and Sidorenko 2006, World Bank 2006a) therefore address both these sets of issues.

# **3.  The Economic Epidemiology Approach – and Possible Embellishments**

Work in economic epidemiology over the last decade or so may provide a useful theoretical model for analyzing events such as the Surat or SARS outbreaks, or a potential influenza pandemic.<sup>4</sup> Such a framework aims in principle to bring out the links between the epidemiology and dynamics of a disease, the purposive behavioral responses of people in reaction to the disease and the economic consequences that follow from these behavioral responses as well as from illness and death (the latter being the ground covered by the cost of illness model).

> 4 For example Geoffard and Philipson (1996), Kremer (1996), Philipson (2000), and Gersovitz and Hammer (2001, 2003).

8
Table E1: Descriptive Statistics - Ecuador

||Mean|Std. Dev.|
|---|---|---|
||**Panel **|**A: Worker panel**|
|**_Outcomes_**|||
|Months worked per year (2004-2007)|10.9|2.6|
|Monthly real wages (2004-2007, in local currency)|957.1|2,132.7|
|Average months worked per year (2009 onward)|9.6|3.7|
|Average monthly real wages (2009 onward)|1.6|2.4|
|**_Firm shock_**|||
|Firm shock in 2008 (negative of growth in GDP of destinations)|-3.0|2.5|
|Total number of worker-year observations||794,948|
|Total number of unique worker IDs||89,385|
|Total number of unique frm IDs||887|
|Share of observations with 0 months worked per year||12.9%|
||**Pane**|**l B: Firm panel**|
|**_Outcomes_**|||
|Total employment (log)|3.8|1.6|
|Total real wages (log)|10.5|1.8|
|Avg. wages (log)|6.7|0.6|
|Net revenues (log)|12.0|2.1|
|Materials (log)|14.3|1.9|
|Materials per worker|10.4|1.5|
|Capital (log)|13.7|2.1|
|Capital per worker|9.3|1.4|
|Labor productivity|10.3|0.9|
|Proft rate|0.3|0.2|
|**_Firm shock_**|||
|Firm shock in 2008 (negative of growth in GDP of destinations)|-1.0|2.2|
|Total number of frm-year observations||24,094|
|Total number of unique frm IDs||2,859|

_Note:_ The worker-level statistics are based on the sample of workers in firms with a non-missing GFC firm shock measure in 2008 used in the regressions. Real wages are expressed in USD in 2010 prices. The firm-level statistics are based on all firms with non-missing GFC shock measure in 2008 used in the main regressions. All statistics for which a time period is not shown in parentheses cover the 2009-2017 period.

58
<!-- Start of picture text --> 5<br>4 eeaoO importsiGDP<br>3) Deer TTR\\\\\ \ woe ees ie<br>\<br>\% Import decl. allocated to red channel<br>2 ———<br>ee—<br>a<br>— a<br>‘l eee= a a<br>% Import decl. taking more than 1 dayto clear ~~<br>a<br>2007 2008 2009 2010 2011 2012<br><!-- End of picture text -->
25

**32. Policy measures taken by central banks in emerging and mature economies in recent months (especially by the ECB) are believed to have improved funding conditions markedly, but lending conditions still remain weak.** The slowdown in the associated deterioration of lending conditions in the first quarter of 2012 seems most pronounced in CEE, which has the tightest funding links with the European banks. Nonetheless, while improving, credit conditions continue to remain tight, reflecting economic uncertainty in the local and advanced country economies. In fact, a number of CEE, Asian, and Latin American subsidiaries of European and U.S. banks have seen their credit ratings downgraded following rating actions on the parent banks, including BBVA, Citigroup, Goldman Sachs, HSBC, KBC, Santander, and Unicredit (see appendix table A.3).

**Figure 19. Emerging Market Lending Conditions and Drivers**

<!-- Start of picture text --> a. EM Banking Lending Condition Indices b. IIF Data Index–Global Conditions by<br>Category<br>70 2009:Q4–2012:Q1 75 2009:Q4–2012:Q1<br>70<br>65<br>65<br>60<br>60<br>55 55<br>50 50<br>45<br>45<br>40<br>40<br>35<br>35 30<br>Credit Standards Demand for Loans Funding Conditions<br>GLOBAL AFME LATAM EUROPE ASIA Nonperforming Loans Trade Finance<br>Diffusion Index (50 = neutral)<br>Diffusion Index (50 = neutral)<br>Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012<br><!-- End of picture text --> Source: International Institute of Finance, Emerging Market Lending Survey.

**33. Host country banking systems may also be vulnerable to parent bank attempts to cut back their host operations and transfer resources from subsidiaries.** In addition to affecting local credit conditions, such attempts may trigger mutually harmful policy responses from host authorities, hurting the banking group in turn—a source of tension that requires close coordination and cooperation between home–host regulatory and supervisory authorities:

- As noted, some European banks have been withdrawing, to varying degrees, from CEE, Latin America, Asia, and the Middle East: for example, by cutting back on capitalintensive activities; reducing jobs; and withdrawing from jurisdictions with less profitable operations and higher dollar funding costs to focus on ―core‖ markets, including the home market as well as strategically important host markets (see appendix table A.3). While ―home bias‖ has emerged, in part, as a result of the need to shrink balance sheets
of cane are typically of uniform density due to mechanized planting and the irrigated nature of sugarcane that requires fields to be encompassed with water canals. The worker’s day is standardized with plantation trucks collecting workers from their village and delivering them to the field sites to be cut each day, and transporting them back to their village at the end of the day. This standardized work day ensures that for each cane cutter the number of hours of work is fixed across all workers in a work group and alleviates concerns about trade-offs between work hours and effort.

Cane cutters are paid a piece rate of 2.04 naira for every measured “rod” of cane cut, where a “rod” (approximately two meters in length) is a physical standard carried by every work group supervisor. At the end of each day, the worker’s output for that day is entered on his personal ‘blue card’ and is signed off by both the supervisor and worker. The plantation thus keeps records of the daily output (quantity cut), the days worked, and the total earnings for each worker. Workers are paid monthly and they often keep track of their daily output by maintaining their own separate ledger. Disagreement between cutters and management over output amounts are rare. The work tends to be lucrative and an average day of cane cutting pays 1,156 naira, or approximately 7 USD. This daily wage is substantially higher than most local alternatives. With the poverty rate in the surrounding Nigerian state at 74.3% (measured at $1 USD per day) (Nigeria National Bureau of Statistics, 2012), sugarcane cutter positions are in high demand in the local communities.

We supplement the daily productivity information with data from worker interviews covering socio-demographic, work history, and self-reported health information. We also collect blood samples during the interview to test for malaria. The study design permits estimation of the within-worker effect of malaria testing and treatment by comparing a worker’s physical activity before and after ‘treatment’ which allows us to control for time invariant worker characteristics such as human capital or other worker unobservable characteristics that may also affect productivity independently of health (in equation 2). During the study period, the plantation was unexpectedly closed for cutting in weeks five and six of the eight-week study period due to an operational breakdown at the processing plant, after our sub-sample of workers had been fitted with accelerometers. This reduces the statistical power of our estimates, as we do not observe as 9
North, D. Acemoglu, D. Fukuyama, F. Dani Rodrik “ _Governance, Growth, Development and Decision Making”_ , (2008) World Bank Olowu, Dele. " _Bureaucracy and Democratic Reform_ " In African Perspectives on Governance, Trenton, NJ: Africa World Press. (2000).

Olsen, Kirsten (1999) _Daily life in 18th century_ , Greenwood press.

Persson, Torsten and Tabellini, Guido, “Political Economics: Explaining Economic Policy”, Massachusetts Institute of Technology, 2000.

Plumb, J. H. (1967) “ _The Growth of Political Stability in England: 1675-1725_ ”, Macmillan. Poundstone, William “ _Prisoner’s Dilemma”_ , 1992, Doubleday Prenzler, T. “ _Police Corruption: Preventing Misconduct & Maintaining Integrity”,_ 2009, London: Taylor & Francis.

Rodrik, D. “ _Getting Institutions Right_ ”, 2004, Harvard University Rose-Ackerman, S. (Ed), “ _International Handbook on the Economics of Corruption”_ , 2006, Edward Elgar Publishing Limited.

Rothstein, B. “ _Anti-Corruption – A Big Bang Theory_ ”, QoG Working Paper Series, 2007, The Quality of Government Institute, University of Gothenburg Rothstein, B. Teorell, J. “ _What is Quality of Government: The Theory of Impartial Government_ _Institutions_ ” 2007, The Quality of Government Institute, Gothenburg University Rothstein, B. Uslaner, E. “ _All for All: Equality, Corruption and Social Trust_ ”, 2005, World Politics Rothstein, B. “ _Preventing Markets from Self-Destruction: The Quality of Government Factor_ ”, 2009, QoG Working Paper Series, University of Gothenburg.

Rousseau, Jean Jacques (1762) _The Social Contract or Principles of Political Rights_ .

Samuelson, Paul A., “The Theory of Public Expenditure”, 1954, Review of Economics and Statistics 36, pp. 386–389 Simpson, A. W. B. (1979) “The Horwitz Thesis and the History of Contracts”, The University of Chicago Law Review.

Stiglitz, Joseph, “Economics of the Public Sector”, New York, Norton, 1988.

Thompson, E. P. (reprint 1991) The Making of the English Working Class, Penguin World Bank Global Report “Enhancing Government Effectiveness and Transparency: The Fight Against Corruption”, 2020.

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|**Table 10: Pass-Through Coeffic**<br>In Local C<br>|**ients for Gaso**<br>urrency<br>|**line and Diesel**<br>|
|---|---|---|
|_Country_|_Gasolina_|_Diesel_|
|Reference industrial countries (6)*|1.13|0.96|
|Developing countries – (31)|1.03|0.88|
|Non-SSA countries (20)|0.92|0.73|
|SSA countries (11)|1.22|1.16|
|Cameroon|0.91|0.98|
|Ethiopia|0.48|0.64|
|Ghana|1.33|1.21|
|Kenya|0.97|0.79|
|Madagascar|1.46|1.55|
|Malawi|1.14|1.22|
|Mozambique|1.10|1.01|
|Rwanda|0.98|0.76|
|Tanzania|1.57|1.52|
|Uganda|1.23|1.14|
|Zambia|2.20|1.93|
|*Figures in parentheses are number of cou|ntries.||
|Source: Bacon and Kojima (2006).|||

**_Exchange rate regimes._** Unlike the past, countries with flexible exchange regimes now account for about 76 percent of Africa’s GDP and 68 percent of the region’s population. In recent years, and during the current oil price shock, these countries have also tended to grow better than the regional average and better than countries with fixed exchange rates (table 2).   In franc zone countries, a strong currency tied to the euro is bringing about concerns regarding real exchange rate appreciation and its impact on export competitiveness (box 2).

30