rafmacalaba/datause-encoder-data huggingface dataset:
This provides the result. For example, if the system is initially at a steady state with a high tariff that is expected to continue permanently, and then the tariff is suddenly removed never to be restored, then the system will move toward the new steady state each period, attaining it only in the limit.

Gradual labor-market adjustment to external shocks and policy changes, and the persistent wage differentials that they imply, have been documented empirically by, among others, Topel (1986), Blanchard & Katz (1992) and Rappaport (2000). They appear in the model of Davidson and Matusz (2004), due to re-training and search delays and exogenous rates of individual job separation. They can also be rationalized by convex training costs for labor (as in Karp and Paul (1994) or Dehejia (1997), in analogy with convex adjustment costs for capital as in Mussa (1978)). Here, they result from the presence of time-varying idiosyncratic shocks to workers (even though those shocks are serially uncorrelated). Even if a worker is suffering low wages as a result of loss of protection to that worker’s sector, it will often be in that worker’s interest to wait until her personal moving costs are sufficiently low before leaving the sector.

# **4.3 Anticipatory Adjustment to Pre-announced Changes**

Another feature of the model’s dynamics is anticipatory adjustment. Suppose the economy is in an initial steady state with a tariff on imported good _Y_ , and a domestic price of _p_<sup>_Y_</sup> = _p_<sup>_′_</sup> . At time _t_ = 0, the government announces a surprise policy change—elimination of the tariff—starting at some date _t_<sup>_∗_</sup> _>_ 0. At that date and thenceforth, the domestic price of _Y_ will be equal to the world price, _p_<sup>_′′_</sup> _< p_<sup>_′_</sup> . We will see that anticipatory net outflows of labor from sector _Y_ will begin immediately from the time of the announcement.

Although the environment is no longer stationary as in the previous sections, the logic of Proposition 6 still applies, and the perfect-foresight equilibrium still solves the planner’s problem (10) with _p_<sup>_Y_</sup> = _p_<sup>_′_</sup> for _t_ = 0 _, . . . , t_<sup>_∗_</sup> and _p_<sup>_Y_</sup> = _p_<sup>_′′_</sup> for _t > t_<sup>_∗_</sup> . The value function will, however, depend on the date as well as the current labor allocation, and it is useful to write it as _W_<sup>_t_</sup> ( _LX_ ; _p_<sup>_′_</sup> _, p_<sup>_′′_</sup> _, t_<sup>_∗_</sup> ) to keep track of the parameters of the problem.

23
Finally, the average number of sessions attended by compliers was 5.68 sessions in NEP-B and 7.89 sessions in NEP-I. Therefore, the estimated impact on participants reported in tables 5 and 6 can be interpreted as the average impact of these number of sessions in each treatment arm.

5.2.2 Impact on program participants Table 5 shows the IV estimates corresponding to equation (4). Participation in NEP-I improves receptive language performance by 0.432 SD and socio-emotional development by 0.540 SD, and NEP-B improves receptive language by 0.418 SD and socio-emotional development by 0.315 SD. However, only the former estimates are robust to multiple hypotheses testing. There are no statistically significant impacts on the remaining variables in the table, and the point estimates are also smaller in magnitude than those for language and socio-emotional. These results consistently mirror the ITT analysis that shows no significant changes in other child outcomes.<sup>11</sup> As we discussed above, our estimates indicate that the program was remarkably effective in improving language and socio-emotional outcomes of children in the medium term, given its low cost and low intensity. The estimates are striking both because of their size, and because the endline was collected so long after participants stopped participating in the program. As in the case of ITT estimates, when we add more controls in the 2SLS estimation, the coefficients for child outcomes remain fairly stable, and standard errors hardly change either (Table A7 in Appendix 2).

11 These impacts are subject to the accuracy of the administrative data of participation rates. When a second source of participation based on survey records (from the endline) is considered, participation is significantly higher: 44% in NEP-B and 50% in NEP-I. Administrative records are usually judged to be superior to survey answers, but they might still have some degree of under-reporting if for example the facilitators at the health center fail to register some sessions electronically. Household surveys might overreport participation because they are subject to recall and desirability. Using self-reported participation records we get lower IV estimates of 0.2 SD in the intensive arm.

18
# **IX. Conclusion**

This paper attempts to better understand the determinants of households’ choice of senior secondary schools in Indonesia and the labor market consequences of attending different types of schools. This is the first paper to our knowledge from a developing country that distinguishes between public and privately provided vocational education. Another key contribution is carefully examining heterogeneity in effects. We examine effects separately by age, cohort, parental education, and entering test score. The use of longitudinal data allows for cohort effects to be distinguished from age effects. Finally, the estimation utilizes an unusually rich set of predetermined control variables. While the possibility of bias due to unobserved characteristics cannot be dismissed, it is reassuring that for the youngest cohort, the inclusion of test scores – the most important determinant of school type – does not significantly alter the results.

The two most important observed determinants of school choice are test scores and parental education. Students with high test scores are most likely to attend public schools, particularly public general school. In contrast, the children of highly educated parents tend to select general schools, particularly private general, rather than vocational schools. Private vocational school is a last resort, serving students with the lowest test scores and the least educated parents.

With regard to labor market outcomes, the most striking distinction is between publicly and privately schooled men. Male private school graduates, compared to their public school counterparts, suffer an average wage penalty of approximately 20 percent. This large wage penalty is robust to median regression.

The labor market advantages enjoyed by public vocational graduates, compared to public general graduates, are at most small. For the full sample of men, attending public vocational school attendance has a mild, positive, and statistically insignificant effect on wages, and the estimates are sufficiently precise to rule out wage effects greater than 12 percent. Public vocational schools increase the probability of obtaining a formal job, as defined by the Indonesian Bureau of Statistics, by 3 percentage points for men. This premium, however, has disappeared for the youngest cohort. For women, median regressions suggest a positive effect of public vocational public vocational education. The OLS specification, however, includes additional controls for district of lower secondary school. In these estimates, public vocational attendance has a weaker and statistically insignificant association 31
# **Contents**

|**1**<br>**Intr**|**oducti**|**on**|**4**|
|---|---|---|---|
|**2**<br>**Me**|**thodol**|**ogy**|**7**|
|**3**<br>**Pro**|**duct **|**Market Regulations**|**9**|
|3.1|How D|o Product Market Regulations Afect Workers? . . . . . . . . . . . . . .|. . . .<br>9|
|3.2|Promo|ting Contestable Markets . . . . . . . . . . . . . . . . . . . . . . . . . . .|. . . .<br>13|
||3.2.1|Pro-competitive Product Market Regulation in General<br>. . . . . . . . .|. . . .<br>13|
||3.2.2|Lowering Entry Barriers and Delicensing . . . . . . . . . . . . . . . . . .|. . . .<br>18|
||3.2.3|Liberalizing Markets to Trade and Foreign Participation . . . . . . . . .|. . . .<br>21|
||3.2.4|Distortionary Governmental Policies and Practices . . . . . . . . . . . .|. . . .<br>24|
||3.2.5|Antitrust Law and its Enforcement . . . . . . . . . . . . . . . . . . . . .|. . . .<br>25|
||3.2.6|Synthesis of PMR Promoting Contestable Markets . . . . . . . . . . . .|. . . .<br>26|
|3.3|Libera|lizing Firm Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|. . . .<br>27|
||3.3.1|The Special Role of Upstream Sector Regulations . . . . . . . . . . . . .|. . . .<br>29|
||3.3.2|Regulations Afecting Firm Ownership Structures . . . . . . . . . . . . .|. . . .<br>31|
||3.3.3|Distortionary Product Market Regulations<br>. . . . . . . . . . . . . . . .|. . . .<br>32|
||3.3.4|Synthesis of PMR Liberalizing Firm Operation . . . . . . . . . . . . . .|. . . .<br>35|
|**4**<br>**Lab**|**or Ma**|**rket Regulations**|**35**|
|4.1|How D|o Labor Market Regulations Afect Workers?<br>. . . . . . . . . . . . . . .|. . . .<br>35|
|4.2|Minim|um Wage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|. . . .<br>38|
||4.2.1|Minimum Wage: Impact on Living Standards . . . . . . . . . . . . . . .|. . . .<br>39|
||4.2.2|Minimum Wage: Impact on Productivity<br>. . . . . . . . . . . . . . . . .|. . . .<br>48|
||4.2.3|Minimum Wage: Impact on Social Cohesion . . . . . . . . . . . . . . . .|. . . .<br>49|
|4.3|Emplo|yment Protection Legislation . . . . . . . . . . . . . . . . . . . . . . . . .|. . . .<br>50|
||4.3.1|Employment Protection Legislation: Impact on Living Standards . . . .|. . . .<br>52|
||4.3.2|Employment Protection Legislation: Impact on Productivity<br>. . . . . .|. . . .<br>54|
|4.4|Union|s and Collective Bargaining . . . . . . . . . . . . . . . . . . . . . . . . . .|. . . .<br>55|
||4.4.1|Unions and Collective Bargaining: Impact on Living Standards . . . . .|. . . .<br>58|
||4.4.2|Unions and Collective Bargaining: Impact on Social Cohesion . . . . . .|. . . .<br>60|
|4.5|Mand|ated Benefts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|. . . .<br>62|

2
The paper is structured as follows: section 2 discusses the evolution of mobile money service offerings in Korea; section 3 discusses the evolution of mobile money services in Uganda; section 4 provides some conclusions from these experiences.

# **2. The Republic of Korea**

# **Economic and Financial Development**

Korea is a high-income country with relatively equal income distribution.<sup>3</sup> Korea has achieved rapid economic growth over the past four decades to become a high-tech, strong industrialized economy. In the 1960s, GDP per capita was comparable with levels in the poorer countries of Africa and Asia. In 2004, Korea joined the trillion dollar club of world economies, and currently is among the world’s 20 largest economies.

During the industrialization period, the government encouraged financial market development and promoted financial inclusion with a view to foster economic development and to reduce inequality.<sup>4</sup> A specialized bank—Housing and Commercial Bank, later merged to Kookmin Bank in 2001—was established in 1967 to serve the low-income segment of the population. The government strategy also promoted a saving culture among the population and the intermediation of those savings towards productive investments through the financial sector.

Currently, virtually everyone, including the poorer, has easy access to financial institutions nearby. According to the Bank of Korea there were 190 million bank accounts at end June 2011, about 3.8 accounts per person. There is a wide network of ATMs (two per person in 2009, among the highest in the world) that facilitate access to the accounts. ATM transactions reached 40 percent of the total deposit and withdrawal transactions. Bill payment has been enabled on ATMs since 2003. Automatic transfer or direct debit has been widely adopted for many financial transactions including utilities (electricity, water, gas, etc.), tax, national pension and health

> 3 GNI per capita reached 22,670 US$ in 2012. Gini index of 2011 is 0.31. According to the National Statistics Office , 15 percent of the total population is below the national poverty line.

> 4  Kim and Yoon (2005).

3
10 data were available at the time, for the years 1946-47 to 1970-71.<sup>7</sup> The Lloyd/BAE series and the PC series use essentially the same methods. Commodities are designated as either export or import-competing and then direct estimates of the implicit price changes to producers resulting from agricultural assistance are made and expressed as a percentage of the export or (in the case of tobacco and cotton pre-1970) the import parity price.

The two series report estimates for one year in common, 1970-71. This common year provides a check on the comparability of the two series. It turns out that the estimates for that year are very close with the exceptions of tobacco and eggs.<sup>8</sup> In blending the two series of estimates, the PC’s are used from 1970-71 (see Table 2).

For the industries covered by the Commission but not by Lloyd, ‘guesstimates’ have been made for the years before 1970, based on the policy descriptions in Edwards (2006) and the references cited therein. The only guesstimate of significant size is for wine grapes, whose NRA is assumed to equal that estimated by Lloyd for dried vine fruit 7 For milk prior to 1970-71, we took a simple average of the Lloyd/BAE estimates for Butter and Cheese to get the milk NRA shown below in Table 2 for those years. The Lloyd/BAE and the PC series for the main distorted commodities are reported by individual commodity and year in the Appendix to Anderson et al. (2007).

8 For tobacco the differences are explained by differences in the source of imports used to establish the import parity price. Imports of tobacco leaf used in the manufacture of tobacco products in Australia varies greatly in quality and price by source. The choice of source to establish the import parity price is discussed at length in reports by the Industries Assistance Commission (1981, Appendix 5; 1983a, chapter 6.4; and 1983b, Section 4.2). For eggs, it is not clear why the Lloyd/BAE and the PC series give such widely different estimates of the level of assistance, as they cover the same forms of assistance and use similar methods. That industry has a very small weight in the sectoral aggregate, however, so it does not affect the average NRA for the sector as a whole.
# **Economic Growth in European Union NUTS-3 Regions**<sup>*****</sup>

## Austin Kilroy<sup>**</sup>

World Bank Group 1818 H St NW, Washington, DC 20433, USA E-mail: akilroy@worldbank.org

## Roberto Ganau

Department of Economics and Management “Marco Fanno”, University of Padova Via del Santo 33, 35123 Padova, Italy E-mail: roberto.ganau@unipd.it Department of Geography and Environment, London School of Economics and Political Science Houghton Street, London WC2A 2AE, United Kingdom E-mail: r.ganau1@lse.ac.uk

### **KEYWORDS**

Economic Growth; Development Policy; NUTS-3 Regions; European Union.

### **JEL CODES**

R11; R58.

> * We are grateful to Chiara Burlina for exhaustive work to assemble data from _Regio_ (Eurostat) and _fDi Markets_ (Financial Times) databases, and to Lewis Dijkstra for having shared long time series of data from the _Regio_ database. We thank Anwar Aridi and Todor Milchevski, who worked on a previous version of the paper. The paper has benefitted from guidance by Natasha Kapil and Ilias Skamnelos, and from comments on an earlier version of the paper by Paulo Correa, Thomas Farole, Soraya Goga, John Nasir, and Paula Restrepo Cadavid as well as participants to the Regional Studies Association Conference in Cluj-Napoca (September 2017). The paper was commissioned as part of the World Bank Group’s work on lagging regions in the European Union. The content of this paper does not reflect the official opinion of the World Bank Group. Responsibility for the information and views expressed therein lies entirely with the authors.

> ** Corresponding Author.
# VII. **Conclusion**

This paper examines the effect of decision-making rules on resource allocation outcomes. Using data from 250 villages in Afghanistan, we compare the allocation outcomes under direct democracy with outcomes under consultative procedures. Our findings indicate that direct democracy limits elite influence over allocation outcomes, while consultative processes are susceptible to elite control. Elite control over selection outcomes is found to worsen perceptions of local governance and of the local capture, which implies that such influence is contrary to the interests of the general population and thereby reflects elite capture, rather than more benign forms of elite influence. Direct democracy in contrast, increases public satisfaction both by increasing alignment of outcomes with public preferences and as a result of increased acceptance of the process by villagers.

The findings of the study are especially noteworthy given the context in which they occurred. While direct democracy is almost unheard of in rural Afghanistan, the consultation meeting procedure employed by the experiment approximated the method by which public decisions are traditionally made, with a council of tribal elders and other local notables convening an open discussion among community members with an aim of reaching decision by consensus. Such procedures command great legitimacy in Afghan society owing to their long history of use and accordance with practices prescribed by the Holy Qur‘an. That these procedures proved susceptible to elite capture in the experiment thus suggests that direct democracy can serve a valuable role in improving the equity of public goods provision even in societies that lack democratic traditions.

The study is also noteworthy in that it replicates the field experiment of Olken (2010) and, given the difference in the results of the two studies, demonstrates how the context of an intervention can affect outcomes. Whereas Olken (2010) observes a limited effect of direct democracy on the type of projects selected within a context of a repeated series of project selections and multi-hamlet Indonesian villages, we find that a similar intervention can influence the type of projects selected in a one-off event in single Afghan hamlets. The difference between the two programmatic contexts in the possibility for inter-temporal trade between interest groups and the difference in geographic context in the relative salience of location and project type in selection outcomes is considered to explain the contrasting results of the two studies. The combined results thus demonstrate how a comparison of the results of field experiments conducted across different contexts can provide important information on the mechanisms of effects.

17
Policy Research Working Paper 6944

# **Abstract**

Little research currently exists on a vulnerability line that distinguishes the poor population from the population that is not poor but that still faces significant risk of falling back into poverty. This paper attempts to fill this gap by proposing vulnerability lines that can be straightforwardly estimated with panel or cross-sectional household survey data, in rich- and poor-country settings. These vulnerability lines offer a means to broaden traditional poverty analysis and can also assist with the identification of the middle class or resilient population groups. Empirical illustrations are provided using panel data from the United States (Panel Study of Income Dynamics) and Vietnam (Vietnam Household Living Standards Survey) for the period 2004–2008 and cross-sectional data from India (National Sample Survey) for the period 2004–2009. The estimation results indicate that in Vietnam and India during this time period, the population living in poverty and the middle class have been falling and expanding, respectively, while the opposite has been occurring in the United States.

This paper is a product of the Poverty and Inequality Team, Development Research 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 authors may be contacted at hdang@worldbank.org or planjouw@worldbank.org.

_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
EC-12 has expanded from 6% of the CDP in i960 to 13.8% in 1990. At the same time, trade with the rest of the world has remained unchanged at 8.7% of the GDP in the case of exports. Most recently, the "Europe 1992" movement for a "Single European Market' has had the undesirable side effect of promoting the "fortress" ;nentality in the region. This was illustraLed graphically by the recent remark made by the EC Commissioner for Foreign Relations Willy de Clerq, "We are not building a single market in order to tumn it over to hungry foreigners."<sup>2</sup> In the Americas, the United States' conmitment to the GATT process has weakened. At the same time, other countries in the region have lost confidence in the GATT's ability to maintain an open world trading system. The result has been an upsurge of interest in regional arrangements leading to the Canada-U.S. Free Trade Agreement and the signing of the NAFTA among Canada, Mexico and the United States. The Bush administration even launched the Enterprise of Americas Initiative under which the United States may negotiate FTAs with groups of Latin American countries. Latin American countries are, in turn, eager to enter regional pacts with the United States to secure future market access for their exports. In the medium to long run, a Western Hemispheric FTA cannot be ruled out.

Yet another disturbing development from the viewpoint of East Asia is the rise of "aggressive unilateralism" in the United States. Large and persistent current account deficits and a steady decline in the U.S. competitiveness in manufacturing have led to an increasing acceptance of the view in the U.S. that a partial solution to America's trade problems lies in threatening Japan with increased tarriers to its exports to United States unless it meets prespecified targets for imports from the latter.

2See Winters (1993).

2