rafmacalaba/datause-encoder-data huggingface dataset:
gender parity in education levels achieved in Sri Lanka, this result is rather surprising and indicates the potential influence of other factors such as culture and perceptions.

Age was not a significant factor in determining the usage of financial products like savings and credit. However, a significant relationship was seen between age and access to formal finance as well as in the use of digital cards, where youth seemed to be savvier when compared to older age groups. This is in line with the “generational effect” as also seen in studies by Fungacova and Weill (2015), where older people were less likely to use formal financial services given that they were less familiar with them. On the other hand, this could also be due to lower motivation of financial institutions to supply them with appropriately designed products. Studies by Allen et al. (2012) found the existence of a non-linear relation between age and formal finance, which is not tested via our model yet could possibly be present.

Education has a positive influence on financial inclusion. Significant and positive marginal effects were seen across all indicators of financial inclusion, with higher marginal effects at higher levels of education. Similar observations were made in Pakistan,<sup>25</sup> though in China<sup>26</sup> the level of education was not seen to impact formal savings. This can be attributed to the widespread use of formal savings in China across the entire population, potentially due to engrained cultural habits (Zins and Weill (2016); World Bank (2018).

We found that being formally employed was positively related to being financially included. All coefficients were positive and highly significant. Having formal employment relates most favorably to one’s ability to obtain formal credit as well as use digital cards. The latter is easily explainable since financial institutions in the local market still prefer predictable income flows evidenced by receipt of a regular salary over other forms of income.

Overall, we note that being educated and having formal employment play a significant role in being included in formal finance. For instance, a person with tertiary education has a 32 percent greater probability of obtaining formal credit and is 40 percent more likely to use digital cards

> 25 Zulfiqar et.al (2016). 26 Fungacova and Weill (2015).

16
**Table 1.  Traditional and output‐based (performance‐oriented) conditional grants**

|**Criterion**|**Traditional conditional**<br>**grant**|**Output‐based grant**|
|---|---|---|
|Grant objectives|Spending levels|Quality and access to public<br>services|
|Grant design and<br>administration|Complex|Simple and transparent|
|Eligibility|Recipient government<br>departments/agencies|Recipient government<br>provides funds to all<br>government and non‐<br>government providers|
|Conditions|Expenditures on authorized<br>functions and objects|Outputs ‐service delivery<br>results|
|Allocation criteria|Program or project<br>proposals approvals with<br>expenditure details|Demographic data on<br>potential clients|
|Compliance verification|Higher level inspections<br>and audits|Client feedback and<br>redress, Comparison of<br>baseline and post‐grant<br>data on quality and access.|
|Penalties|Audit observations on<br>financial compliance|Public censure, competitive<br>pressures, voice and exit<br>options for clients|
|Managerial flexibility|Little or none. No tolerance<br>for risk and no<br>accountability for failure.|Absolute. Rewards for risks<br>but penalties for persistent<br>failure|
|Local government<br>autonomy and budgetary<br>flexibility|Little|Absolute|
|Transparency|Little|Absolute|
|Focus|Internal|External, competition,<br>innovation and<br>benchmarking|
|Accountability|Hierarchical and to higher<br>level government, controls<br>on inputs and process with<br>little or no concern for<br>results|Results‐based, Bottom‐up,<br>client‐driven|

Source: Boadway and Shah, 2009.

31
# List of F igures and Tables in the Technical Annex

Annex Table 1 - Ratio of Pension Spending to GDP Annex Table 2 - Corrected Regression Results for Determinants of Pension Spending Share of GDP Annex Table 3 - Public Pension Reserves in Selected Countries Annex Table 4 - Real Annual Pension Fund Investment Returns, Selected Countries 1977-90 Annex Table 5 - Administrative Costs of Publicly-Mandated Pension Schemes Compared Annex Table 6 - Labor Force Pension Coverage for Selected Countries, Years between 1985 and 1992 Annex Table 7 - Private Pension Fund Assets as a Share of GDP, Selected OECD Countries 1992 Annex Table 8 - Real Annual Rates of Return to Occupational Schemes, OECD Countries 1967-90 Annex Table 9 - Total Real Annual Returns in US Dollars for Selected Stock Market Indices Annex Table 10- Growth in Labor Productivity and Returns to Capital, 1870-1984 Annex Table 11 - Mincerian Rates of Return for Selected Countries, by Source

# Appendices

Annex Appendix I Demographic Tables Annex Appendix II Data Used in Selected Figures Annex Appendix HI Income Sources of Households, Head Aged 65+ in Selected OECD Countries Annex Appendix IV Demographic Distribution of Poverty in Five Latin American Countries Annex Appendix V Cross-Reference List between STARS data diskette and the Technical Annex Annex Appendix VI Errata

# Selected Bibliography

..
Human development and financial inclusion have a strong positive correlation, while financial exclusion<sup>5</sup> is linked to social exclusion. A study by Sarma and Pais (2011) shows that countries that are low in financial inclusion also score low in overall human capital factors such as GDP per capita, income inequality, literacy, urbanization, and connectivity. As noted by the Financial Action Task Force (FATF), financial exclusion is considered a threat in the context of combatting money laundering and the prevalence of such risks can threaten the financial integrity of a country (see FATF (2011)).

While promoting financial inclusion has been a main focus for policy makers in Sri Lanka, a significant informal financial sector continues to exist in the country (Karunagoda, 2007). The popularity of informal financial services in Sri Lanka was surveyed by Adikari (2012), which found that such services were closer to rural communities due to personal relationships/family ties and ease of physical access. Such "financial dualism" (Germidis et al., 1991) is common in most developing countries, where a large informal financial sector which serves the lower end of the market co-exists alongside the formal financial system.

The World Bank defines financial inclusion as “access to and usage of appropriate financial products and services by individuals and enterprises” (World Bank, 2018). The emphasis in financial inclusion is on formal financial services supplied by regulated financial institutions. This is because when compared to informal finance, formal finance offers less restricted funding supply, better credit terms (Karunagoda, 2007; Dao, 2002), and a more regulated and secure environment with better safeguards for consumers. Beck et al. (2004) observed that financial inclusion can make stronger contributions to more efficient resource allocation (and thereby to poverty reduction) in economies where formal financial systems are better developed. Therefore, the focus of this paper is on formal financial services.

Other studies have been undertaken on financial inclusion in Sri Lanka. For example, financial literacy was recognized as a tool to improve financial inclusion in a study by Heenkenda (2014),

> 5 Several definitions exist for financial exclusion. Broadly it refers to those processes that prevent poor and disadvantaged social groups from gaining access to the financial system (Leyshon et al. (1995)). It can be seen as the inability of certain societal groups to access the financial system (Carbo et al. (2005)) or a process that prevents disadvantaged social groups from accessing the formal financial system (Conroy (2005)).

4
forecasting of future employment needs. The internet can be used to establish on-line job databases where people can post resumes and apply for jobs and the headhunters can identify appropriate candidates without geographical limitations.

Beyond these actions, the government also needs a labor-using development policy, which could include: investing in public infrastructure, such as feeder roads, water supplies, and other basic social infrastructure, especially in the Western provinces; and developing small cities and towns creating construction that will absorb access labor. However, it is also important to consider the feasibilities and the sources of livelihood for those cities and towns before they were built.

# **_III.7 Establishing Mass Retraining Programs_**

China’s drastic economic restructuring and SOEs reforms make it extremely important to carry out large nationwide labor retraining programs for the massive number of displaced and laid-off workers. From 1998 to 2000, 21.37 million people had been laid off from China’s SOEs, amounting to over 37 percent of the total work force of 57 million in this sector in 2000. 69 Most of the “Xia-gang” (laid-offs) took place in China’s old industrial centers and underdeveloped regions such as northeast provinces and middle west provinces, and concentrated in mining, textile, machinery equipment and military equipment manufacturing sectors. The majority of the laid-off workers have a very limited education background (table 14).

**Table 14.  Urban Unemployment in China by Education Background (2001, unit: 10,000 persons)**

|Total|College and above|Upper secondary|Lower secondary and<br>below|
|---|---|---|---|
|681.0|41.5|247.9|391.6|
|100%|6.1%|36.4%|57.5%|

Source: _China Labor Statistical Yearbook 2002_ , China Statistics Press, 2002, and author’s calculation.

In response to the massive unemployment problem, Chinese government has launched several retraining programs to help laid-off workers re-skill themselves and enhance their re-employability. A pilot “Reemployment Project” was initiated by Ministry of Labor and Social Security (MOLSS) in 30 municipalities in 1994 and then expanded to 200 cities in 1995-96. Following the success of this pilot project, the MOLSS again in 1998 launch another reemployment project “Ten Million in Three Years” which means to provide reemployment training and job counseling services for 10 million laid-off workers in the duration of three years. In 2001, a second round of “Ten Million in Three Years” program was launched by MOLSS for the period of 2001-03. In addition, the government also launched other programs, such as “Warmth Project”, organized by the National Association of Vocational Education of China (NAVEC).

## **Table 15. Training Results from 10 Sample Provinces (1998)**

> 69 Chinese Ministry of Labor and Social Security: China Labor Market. _http://www.lm.gov.cn/gb/content/2002-05/20/content_1383.htm_ . _China Statistical Yearbook_ 2001.

29
means that all sectors have the same coefficients on capital and labor shares, however they are allowed to have different intercepts (by means of industry dummies). We refer to this measure as TFP_POOL. In addition, we run separate TFP regressions for all 3 sectors, thus allowing each sector to have their sector-specific capital and labor shares. The estimates obtained, TFP_S, allow production technology to differ across main sectors.

Table 3 reports production function estimates obtained using pooled OLS across sectors (TFP_POOL) and OLS by sector (TFP_S), which we find to be highly correlated (correlation of 0.99). In the pooled regression, the labor and capital shares are estimated to be around 0.3 and 0.8, which seems in line with conventional wisdom. The regression is estimated with precision, with a surprisingly high R<sup>2</sup> of about 0.8. Interestingly, the manufacturing and services estimates are not significantly different from each other, while construction appears to be more capital-intensive. We also report value added TFP (TFP_VA), which we employ further on to perform robustness checks on the estimation of the impact of the credit variable (column 5).<sup>6</sup> In order to correct for the possible simultaneity bias of OLS estimation, we use two approaches. First, we use instrumental variables, which appears suitable to the structure of our dataset and the information it contains. Instruments that are correlated with the input choice but not directly with productivity are likely to perform well. Input prices are commonly used as instruments in TFP regressions (see for example, Levinsohn and Petrin (2000)). The amount spent on wages is a natural choice to instrument for (log) employment. Moreover, sampled firms report the average

> 6 We do not use value-added estimates as our baseline because the number of observations is significantly reduced when using this measure.

9
The estimation strategy addresses these issues as follows. First, in addition to reporting coefficients, I calculate the marginal effects on the bottom four steps for each of the independent variables, where variables are evaluated at the mean. ‘® Second, when comparing the effect of a covariate on welfare and power, I examine significance levels across the two regressions. Finally, assuming that ladder steps represent cardinal (rather than ordinal) rankings, I run OLS regressions on welfare and power. The estimated threshold values of the ordered probit model give an indication whether the rungs are equally spaced. OLS estimation allows me to explicitly test equality across the coefficients from welfare and power regressions. ‘ 4.2 Covariates This section explains the choice of the (2*, xe, x*, x°) vectors. The empirical analysis is obviously limited to factors that are measured in the TLSS and the village census. These surveys covered economic variables more extensively than measures of social capital. Nevertheless, it includes a number of proxies of empowerment. Since such measures are not typically covered in standard economic analysis, it is useful to review them briefly. First, important elements of empowerment are inclusion in decision making. !° Language is a key vehicle for this dimension. Timor-Leste has an ethnolinguistically diverse population, with more than 30 languages or dialects in use. Timor-Leste adopted Tetun and Portuguese as official languages. While four in five individuals speak Tetun, it is the mother tongue of just over one in ten persons. As a local indicator of social inclusion, I will include a binary variable for having the same mother tongue as the most common mother tongue spoken in the sub-district.

Other indicactors are likely to correlate with social inclusion. Speaking Porand can therefore not account both parts of Hypothesis 3 at the same time. See also Footnote 17. 16 Tn the case of binary and categorical variables, the marginal effects respond, unless otherwise indicated, to a discrete change from 0 to 1. 17 An alternative approach would be to restate Hypothesis 3 in terms of the ratio of economic and social coefficients (for example, the differential impact on welfare to power of unemployment relative to mother tongue Tetun), as this eliminates the unknown variance of the ordered probit estimation (Hoetker (2001)). 18 World Bank (2002b) identifies four key elements of empowerment: inclusion/participation, access to information, local organizational capacity, and accountability. 19 Ross and Mirowsky find evidence for the US that minority groups have less sense of control over their lives.
Figure 33: National Level Shelter Deprivation

# **AGGREGATE SHELTER DEPRIVATION -GHS AND MICS**

<!-- Start of picture text --> child child north child south child rural child urban<br>W A VE 1 W A VE 2 W A VE 3 MIC S 2016/2017 W A VE 4<br>51% 53%<br>35% 43% 43% 34% 44% 44% 36% 45% 45% 44% 32% 39% 39%<br>23% 17% 19% 15% 20% 17% 22% 23% 18% 14%<br><!-- End of picture text --> Source: Authors’ estimates based on GHS Wave 1-4 and MICS 2016/17 Note: Individuals with missing age were dropped from the analysis. Child refers to children aged 0-17.

There are noteworthy differences though across regions.

Irrespective of the survey, a higher share of children in the rural North East and North West are severely shelter deprived than in the South East and South South. The share of deprived children in the rural South West, initially second highest and at par with those in North West clearly decreased over time but is in levels still more comparable to other northers rather than southern regions. Urban shelter deprivation estimate are less than half compared to the ones in rural areas and lie around 10 percent, slightly lower according to the GHS and slightly higher according to the MICS estimates, with only the North East and North West facing higher levels of urban shelter deprivation. In terms of levels both surveys rank regions in the same order except for the MICS finding contrary to the GHS urban shelter deprivation levels in the North East exceeding that of the north West, which might be due to non-random accessibility differences of sample areas in the North East. Further, it is worth noting, that whereas over time the share of severely shelter deprived children clearly decreased in the South West, there appears to be a rising share of children shelter deprived in the urban South East and in both urban and rural North West.

44
(World Bank, 2007a).<sup>11</sup> The restrictions imposed by the barriers would also raise the cost and the availability of production inputs, which are overwhelmingly sourced from outside the location and often outside of the West Bank.<sup>12</sup> In a simple framework where firms are price-takers, these effects, by raising the costs of inputs and transport, reduce firms’ production, revenues and employment. By constantly shifting the intensity of the restrictions, the system of closures also creates uncertainty in terms of the cost and the time of the flow of goods and labor, which by itself is an extra cost to the firms. In a world of increasing returns to scale these restrictions would also force firms to operate at a less than efficient scale of production by reducing their size. These types of effects are akin to the costs of increased autarky between locations. The importance of such costs is captured in Donaldson (2010), who shows that the large welfare gains of connecting Indian districts through the railway system during the British times are fully explained by the increase in the share of goods sourced from outside of the district.

We examine in turn the way in which each of these two mechanisms affects the three main variables that define the labor market, i.e. employment status, wages and labor supply.

# _<u>Employment status</u>_

In a standard match searching model, the increase in commuting time and/or distance would make working outside one’s own location less attractive (or in certain instances not possible at all), thus potentially reducing the range of work options available to each worker (Gibbons and Machin, 2006). In addition it would also decrease the probability of finding employment by reducing the unemployed worker’s effort to look for a job as the search becomes more costly (Patacchini and Zenou 2005).

While these effects should unambiguously reduce the probability of being employed outside the worker’s own location, they do not entail clear predictions on the overall probability of being employed. If we take the extreme case of barriers impeding any mobility between locations, everyone will have to work in her own location. Other things being equal, those locations which before the restrictions enjoyed a positive net emigration rate (i.e. net exporters of labor) will experience an expansion of the labor supply following the closures (as more residents will look for a job in the location than the number of nonresidents who will not work in the

> 11 Areas in the West Bank are defined by the study into three types: Northern, Central and Southern West Bank. 12 The production inputs also include labor, whose cost and availability is also raised by the barriers. However, unlike the physical production inputs, labor in the West Bank is mainly sourced within the firm’s location.

10
- Bond, Eric W. and Constantinos Syropoulos. 1996b. “Trading Blocs and the Sustainability of InterRegional Cooperation.” In The New Transatlantic Economy, edited by Matthew Canzoneri, Wilfred Ethier, and Vittorio Grilli, 118-141. Cambridge, UK: Cambridge University Press.

- Bond, Eric. W., Constantinos Syropoulos and L. Alan Winters. 2001. “Deepening of regional integration and multilateral trade agreements.” Journal of International Economics 53(2): 335-61.

- Bown, Chad P. 2002. “The Economics of Trade Disputes, the GATT’s Article XXIII and the WTO’s Dispute Settlement Understanding.” Economics and Politics 14(3): 283-323.

- Bown, Chad P. 2004a. “Trade policy under the GATT/WTO: empirical evidence of the equal treatment rule.” Canadian Journal of Economics 37(3): 678-720.

- Bown, Chad P. 2004b. “Trade Disputes and the Implementation of Protection under the GATT: An Empirical Assessment.” Journal of International Economics 62(2): 263-294.

- Bown, Chad P. 2004c. “On the Economic Success of GATT/WTO Dispute Settlement.” Review of Economics and Statistics 86(3): 811-823.

- Bown, Chad P. 2005a. “Trade remedies and World Trade Organization dispute settlement: why are so few challenged?” Journal of Legal Studies 34(2): 515-555.

- Bown, Chad P. 2005b. “Participation in WTO dispute settlement: complainants, interested parties and free riders.” World Bank Economic Review 19(2): 287-310.

- Bown, Chad P. 2009. Self-Enforcing Trade: Developing Countries and WTO Dispute Settlement. Washington, DC: Brookings Institution Press.

- Bown, Chad P. 2010. “China’s WTO Entry: Antidumping, Safeguards, and Dispute Settlement.” In China’s Growing Role in World Trade, edited by Robert C. Feenstra and Shang-Jin Wei, 281-337. Chicago, IL: University of Chicago Press for the NBER.

- Bown, Chad P. 2011a. “Taking Stock of Antidumping, Safeguards and Countervailing Duties, 1990-2009.” The World Economy 34(12): 1955-1998.

- Bown, Chad P. 2011b. “Introduction.” In The Great Recession and Import Protection: The Role of Temporary Trade Barriers, edited by Chad P. Bown, 1-51. London, UK: CEPR and World Bank.

- Bown, Chad P. 2014. Temporary Trade Barriers Database. The World Bank. Available at http:/econ. worldbank.org/ttbd/, last accessed July 25, 2014.

- Bown, Chad P. and Meredith A. Crowley. 2006. “Policy externalities: how U.S. antidumping a¤ects Japanese exports to the EU.” European Journal of Political Economy 22(3): 696-714.

- Bown, Chad P. and Meredith A. Crowley. 2007. “Trade de‡ection and trade depression.” Journal of International Economics 72(1): 176-201.

103