rafmacalaba/datause-encoder-data huggingface dataset:
|(1)<br>**Table 9: Impact of transition, EU acc**|(2)<br>**ession, and both**|(3)<br>**treatments**|(4)|
|---|---|---|---|
|Transition*Post-transition*Post-EU accession<br>1.453*<br>|1.092<br>|1.546*<br>|1.497*<br>|
|(0.876)|(0.880)|(0.874)|(0.901)|
|DiD Transition<br>2.053**|1.347|0.973|0.933|
|(0.931)|(0.971)|(1.024)|(1.046)|
|DiD EU accession<br>-0.239|-0.226|-0.826|-0.801|
|(0.605)|(0.599)|(0.644)|(0.653)|
|Transition<br>-3.704***|-2.265**|-2.768***|-2.578**|
|(0.861)|(1.080)|(0.960)|(1.122)|
|EU accession<br>1.378*|1.042|1.804**|1.747**|
|(0.789)|(0.828)|(0.801)|(0.874)|
|Post-transition<br>0.600|0.621|0.813|0.792|
|(0.542)|(0.537)|(0.547)|(0.551)|
|Post-EU accession<br>-0.142|-0.043|-0.026|-0.038|
|(0.543)|(0.541)|(0.549)|(0.554)|
|Always EU<br>0.749|0.610|0.536|0.564|
|(0.859)|(0.935)|(0.829)|(0.895)|
|Schooling years<br>0.070|-0.008|-0.173|-0.173|
|(0.133)|(0.140)|(0.163)|(0.169)|
|Polity index|0.114**||0.019|
||(0.049)||(0.067)|
|Trade||0.016***<br>(0.006)|0.017***<br>(0.006)|
|Constant<br>6.599***|6.282***|7.347***|7.121***|
|(1.254)|(1.293)|(1.360)|(1.411)|
|Prob > Chi2<br>0|0|0|0|
|Obs.<br>219|216|199|196|
|Groups<br>40|39|40|39|
|EU accession includes all the post-communist countries that signed their<br>(Bulgaria, Czech Republic, Hungary, Poland, Estonia, Latvia, Lithuania, R<br>European countries that joined the EU after the fall of the Soviet Bloc (Au<br>Always EU comprises the EU-12 contries (Belgium, Denmark, France, Germ<br>Portugal, Spain, and UK), namely the countries that were part of the EU pri<br>*** p<0.01, ** p<0.05, * p<0.1<br>DiD = Difference-in-Difference|association agreem<br>omania, Slovakia, a<br>stria, Finland, Swed<br>any, Greece, Irelan<br>or to the fall of the|ent to the EU betwee<br>nd Slovenia), as well<br>en, and Cyprus).<br>d, Italy, Luxembourg<br>Soviet Bloc.|n 1994 and 1999<br>as the four<br>, the Netherlands,|

Therefore, the triple interaction model allows us to conclude that neither transitioning nor EU membership affects returns on its own, both only when a country undergoes both treatments. In other words, the main channel through which the transition increased the returns to schooling was through the EU accession channel. This may be because the post-socialist countries that became EU members should be the ones that implemented the deepest trade, economic, and political transformations when compared to other post-socialist countries and to other countries that joined the EU around the same time but that were not part of the Soviet Bloc. It is worth noting that these results are in line with our previous findings. This is because the effects of being a post-socialist country that joined the EU and of trade openness in the Staggered DiD (see Table 8) and in the triple interaction model (see Table 9) have similar magnitudes and follow the same direction.

24
a measure of exchange rate volatility. Though the G-5 currencies (the US dollar, the Deutsche mark, the Japanese yen, the French franc, and the UK pound) were mainly used as candidates for potential targets for exchange rate stabilization, the SDR, ECU, and other relevant minor, regional currencies were also tried as potential targets, depending on a country's economic as well as non-economic (i.e., colonial, historical, cultural, and geographical) relationships. Using information from the "reported" exchange rate arrangements, the Australian dollar, the Indian rupee, the New Zealand dollar, the Portuguese escudo, the Singapore dollar, the South African rand, and the Spanish peseta were included in the list of potential target currencies for certain countries.<sup>7</sup> Data used were monthly average exchange rates for the sample period of January 1990 through December 1996.5 Following Frankel and Wei [1994], all the exchange rates were expressed in terms of a numeraire currency, the Swiss franc.<sup>9</sup> The underlying hypothesis is that every country attempts to stabilize its exchange rate to a basket of multiple currencies. The coefficients on the right-hand side exchange rates, pk, are interpreted as the weights in a currency basket assigned by the country's authorities. A single currency peg is a special case, where the coefficient on the target currency for exchange rate pegging should be unity, the coefficients on other currencies should all be zero, and the value of The Russian ruble was not tried as a potential nominal anchor currency due to the lack of a sufficient number of exchange rate data for the former Soviet republic countries.

8 The monthly average series of the exchange rates of G-5 currencies, a few regional currencies, SDR and ECU visA-vis the US dollar were obtained from the IFS data base (line code rf). Exchange rate data for Taiwan Province of China (POC) were obtained from the Central Bank of China, Taiwan District, Financial Statistics, various issues. To obtain meaningful regression results, data observations with values of log first differences greater than 0.1 (approximately a 10.5 percent change in both directions) were removed. This procedure was taken because countries often devalue their currencies to accommodate persistent differences in inflation rates vis-&-vis their reference-currency country. Without eliminating the effects of such discrete currency devaluations (or revaluations), the regression results could be too unstable to conclude the presence or absence of target/reference currency.

9 In other papers, Frankel and Wei [1993, 1995] use the SDR as a numeraire currency, but Kawai and Akiyama [1998] did not follow this procedure because the SDR was regarded as a potential candidate for a reference currency.

7
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# 7 Export decomposition

While the extensive margin played a role in the post-NAFTA Mexican export boom, export expansion was mostly driven by changes in the intensive margin. Entry of new exporters was important only in the immediate aftermath of the Peso devaluation. Introduction of new varieties by established exporters played only a limited role. After the introduction of NAFTA and the Peso devaluation Mexico experienced an impressive expansion of its exports, particularly those directed to the US market. While the total world exports grew by 75% between 1993 and 2002, Mexican exports increased by 300%. To shed light on the principal determinants of the Mexican export boom we decompose the export change into six components: (i) increase in exports of varieties previously exported (expansion of the intensive margin),<sup>10</sup> (ii) introduction of new export varieties by existing exporters (expansion of the extensive margin),<sup>11</sup> (iii) entry of new firms into export markets, (iv) discontinuation of exports of particular varieties (contraction of the extensive margin), (v) contraction of export volume of existing export varieties (contraction of the intensive margin), (vi) firms exiting export markets. We perform this decomposition on a the subsample of plants present in the dataset during the whole period.<sup>12</sup> As illustrated in Figure 11, the principal finding is the importance of the movement along the intensive margin. In all years considered, increases in the intensive margin accounted for most of the expansion in exports. However, changes to the extensive margin were also not negligible and appear to have been influential throughout the period, while entry of new exporters was relevant only in the post-devaluation years. It is also interesting to note that even while exports of some products were booming, exports of others were experiencing a contraction, some export products were dropped and some firms exited the export market. Even on the contraction side, the intensive margin was much more important than the extensive margin.

Next we consider the relationship between the extensive and the intensive margin at the firm level. We follow Bernard, Redding, and Schott (2006a) and examine (i) the correlation between a firm’s total exports and the number of product exported; and (ii) the link between a firm’s total exports and the average exports per exported product. More specifically, we estimate the following regressions:<sup>13</sup>

> 10Recall that the term variety refers to a firm-product combination. Thus in this context expansion of the intensive margin refers to a firm expanding the volume of exports of the variety it was exporting in the previous period

> 11Here we are referring to cases where a firm starts exporting a product it was not exporting in the previous period, though other firms may or may not have exported this product

> 12Using unbalanced panel does lead to very similar conclusions.

> 13Because firm i total export (Xi) is equal to the sum of the individual export products (xij) we can

29
# V. References

- Alderman, Harold and Salim Chishti, 1991, "Simultaneous Determination of Household and Market-oriented Activities of Women in Rural Pakistan," _Research in Population Economics,_ 7, 245-265.

Becker, Gary S., 1965, "A Theory of Allocation of Time," _Economic Journal,_ 75, 493-517

- Fafchamps, Marcel and Agnes R. Quisumbing, 1998, "Social Roles, Human Capital and the Intra household Division of Labor: Evidence from Pakistan," Department of Economics, Stanford University. Mimeograph.

- Greene, William, 1997, _Econometric Analysis,_ Prentice Hall: New Jersey. **3**<sup>**rd**</sup> Edition.

- Gronau, Reuben, 1977, "Leisure, Home Production and Work -- The Theory of the Allocation of Time Revisited," _Journal of Political Economy,_ 85, 1099-1123.

- Ilahi, Nadeem and Franque Grimard, 1997, "Public Infrastructure and Private Costs: Water Supply and Time Allocation of Women in Rural Pakistan" ," Department of Economics, McGill University. Mimeograph.

- Ilahi, Nadeem and Saqib Jafarey, 1998, "Markets, Deforestation and Female Time Allocation in Rural Pakistan," Department of Economics, McGill University. Mimeograph.

- Juster, F. Thomas and Frank P. Stafford, 1991, "The Allocation of Time: Empirical Findings, Behavioral Models, and Problems of Measurement," _Journal of Economic Literature,_ 29, 471-522.

- Khandker, Shahidur R., 1988, "Determinants of Women's Time Allocation in Rural Bangladesh," _Economic Development and Cultural Change,_ 37, 111-126.

- King, E. and Robert E. Evenson, 1983, "Time Allocation and Home Production in Philippine Rural Households," in M. Buvinic, M. A. Lycette and W. P. McGreevey, eds, _Women and Poverty in the Third World,_ Johns Hopkins University Press, Baltimore.

- Kumar, Shubh K. and D. Hotchkiss., 1988, "Consequences of Deforestation for Women's Time Allocation, Agricultural Production, and Nutrition in Hill Areas of Nepal," Research Report 69, International Food Policy Research Institute: Washington DC.

- Mason, Andrew and Julian Lampietti, 1998, "Integrating Gender into Poverty Analysis: Concepts and Methods," Working Paper, The World Bank.

- Pitt Mark M. and Mark R. Rosenzweig, 1990, "Estimating the Intrahousehold Incidence of Illness: Child Health and Gender-Inequality in the Allocation of Time," _International Economic Review,_ 31, 969-989.

- Rosenhouse, Sandra, 1989, "Identifying the Poor: Is 'headship' a useful concept?" LSMS Working Paper no. 58, The World Bank.

- Rosenzweig, Mark and Oded Stark, 1989, Consumption Smoothing, Migration and Marriage: Evidence from Rural India, _Journal of Political Economy,_ 97, 905-926.

- Singh, Inderjit, Lynn Squire and J. Strauss, eds., 1986, _Agricultural household models: Extensions, applications, and policy,_ The World Bank, Washington D.C.

23
|**Country**|**Survey(s)**|**Year(s)**|
|---|---|---|
|Ecuador|Encuesta de Condiciones de Vida|2006|
|Egypt|Household Budget Survey|2005|
|El Salvador|Encuesta de Hogares|2000-07|
|Estonia|Household Budget Survey|2000-04|
|Ethiopia|Income and Expenditure Survey|2000,04|
|Fiji|Income and Expenditure Survey|2002|
|Gambia|Integrated Household Survey|2003|
|Georgia|Household Budget Survey|2004-07|
||Surveyof Georgian Households|2000,03-04|
|Ghana|LivingStandard Survey|2005|
|Guatemala|Encuesta de Condiciones de Vida|2000,06|
|Guinea|Enquête sur le budget et l'évaluation de la<br>pauvreté|2002|
|Guinea Bissau|Inquéritopara Avaliação de Pobreza|2002|
|Guyana|Household Budget Survey|2007|
|Haiti|Enquête sur le conditions de vie|2001|
|Honduras|Encuesta de Hogares|2001-06|
|Hungary|Household Budget Survey|2000-04|
|Indonesia|Socioeconomic Survey|2000-08|
|Iran|Income and Expenditure Survey|2006|
|Iraq|Socioeconomic Survey|2006|
|Jamaica|LivingConditions Survey|2000-07|
|Jordan|Income and Expenditure Survey|2002,06|
|Kazakhstan|Household Budget Survey|2001-06|
|Kenya|Household Budget Survey|2004|
|Kiribati|Income and Expenditure Survey|2006|
|Kyrgyz Republic|Household Budget Survey|2000-07|
|Lao|Expenditure and Consumption Survey|2002,07|
|Latvia|Household Budget Survey|2000,02-04|
|Lesotho|Household Budget Survey|2002|
|Lithuania|Household Budget Survey|2000-06|
||LivingConditions Survey|2007|
|Macedonia|Household Budget Survey|2000,04,06|
||Income and Expenditure Survey|2003|
|Madagascar|Enquête auprès des ménages|2001|
|Malawi|Integrated Household Survey|2004|
|Maldives|Income and Expenditure Survey|2002|
|Mali|Enquête auprès des ménages|2003,06|
|Marshall Islands|Income and Expenditure Survey|2002|
|Mauritania|Enquête sur le conditions de vie|2000,04|
|Mauritius|Household Budget Survey|2001,06|

18
We restrict our analysis to a sample of individuals aged 7-15 that live in two parent families where all children are children of the head of the household. We restrict the sample to children of the household head due to the key role that within siblings differences play in the identification of the parameter of interest. We restrict to children aged 7 or older because some children aged 6 are still off preschool age during some survey months. We exclude children aged 16 or older for two reasons. First, by age 15 children should have completed their compulsory schooling cycle, so this appears a natural cutoff point. In addition after this age some of them (notably girls) have already moved out of their parental home and this is possibly correlated with preschool exposure.<sup>3</sup> In Table 1, we define the variables used in the paper and present a set of descriptive statistics. We have a sample of 23,042 children over five years, 90% of them attended at least one year of preschool with an average of 1.75 years of preschool. Average age is 11 while the average years of education completed after preschool is 4.56. Therefore, on average children have completed around half a year of education less than one would expect if they had all enrolled at age 6, progressed regularly and stayed on until age 15 (in which case one will expect 5 years of completed education). School attendance is in the order of 97%, not far from universal although – as shown below – this masks substantial heterogeneity across age groups. On average, mothers have completed 10 years of schooling and mean mother's age at birth is 28.5.

In Table 2, we report the proportion of children attending primary school or above and the distribution of completed school grades at each age. Children can enroll in the first grade of primary education if they become 6 before the 10<sup>th</sup> of May of the school year (March –December) they intend to start. Because the ECH is collected continuously and no information on birth date is available we concentrate on the months of January to April of the survey for the completed school grade statistics.<sup>4</sup> If entry into primary school were timely (at age 6) and transition from grade to grade were normal in Uruguay, children aged 7 during the interview months of January to April

> 3 By age 16, 1% of individuals live outside their parental home (i.e. they classified as heads, spouses, non relatives or

8
7 1991-93, annual capital inflows to Mexico averaged $27 billion.

But the nature of capital flows was quite different from earlier periods. Large commercial bank loans are clearly a thing of the past; much of the non-equity part of the inflows constitutes a process of reintermediation rather than foreigners investing in Mexican assets; and foreigners are taking a larger equity stake than ever before.

# III. The domestic impact of the Brady deal.5

In the wake of the restructuring of Mexico's external debt under the Brady deal, interest rates declined and private fixed investment growth accelerated.

the conventional view is that a reduced public sector transfer to foreign creditors frees fiscal pressures on the domestic financial system, thus lowering interest rates and fostering investment. According to the *debt overhang hypothesis" (cf. Krugman), debt relief can also foster investment by reducing expected taxes on future output. In this section, we propose an alternative hypothesis. In our view, it was reduced uncertainty (as measured by the reduced variance of the transfer to foreign creditors), not debt relief per se, what mattered most.

The Brady deal led both to a reduction of the anticipated net transfer to foreign creditors (NT) and to a reduction of the variance of the anticipated net transfer (SNT). 6 The evidence below suggests that the reduction in the net transfer (NT) played an important role in reducing country risk (as measured by the interest differential between US Treasury Bills and dollar-indexed Mexican Treasury Bills of the same maturity). However, the evidence also suggests that the reduced variance (SNT) helped reducing foreicn exchancre rate risk (as measured by the interest differential between peso-denominated and dollar-indexed Mexican Treasury Bills of the same

> **5** This section is bused **on Stijn** Ctlessens, DanieL **Oka** and Sweder van Wijnbergen (1992).

**6** See Ctaessens **et** alLi. for a description of the construction of MT **_and_** SUT.
with more developed financial institutions may process and report a larger share of remittance flows through the formal financial system. Because our remittance data come from household surveys, they are less subject to measurement error and to reverse causation. Finally, Aggarwal et al. (2006) only examine the impact of remittances on banking depth, ignoring the implications for outreach, which our paper studies.

The remainder of the paper is organized as follows. Section 2 motivates our empirical specifications with a simple model and a discussion of the factors affecting the profitability of bank branches and the use of banking services. The data are described in Section 3, the result presented in Section 4, and concluding remarks offered in Section 5.

# **2. Factors affecting bank breadth and depth**

In this section we sketch out a simple model of bank location and demand for financial services to analyze the role that remittances play in determining bank breadth and depth. The model is by no means comprehensive and is only intended to fix ideas and motivate our empirical specifications.

All of the branches in our data correspond to privately-owned banks. We therefore begin with the assumption that banks exhibit profit maximizing behavior, opening a branch in a given location only when the bank expects that branch to be profitable. Beginning from this supposition, we examine the factors that affect the demand for and use of banking services by households and household enterprises. We focus on households and small-scale enterprises, rather than larger enterprises, because the latter generally conduct banking transactions in Mexico City and in a handful of other large cities. Households and small enterprises are likely to be the determining factor in the placement of branches in smaller _municipios_ .

The expected profitability of a given branch, and hence the decision to open it, depends on the expected costs of and revenues from operating the branch. Some of the bank’s cost to open a branch will be one-time fixed costs. However, for notational simplicity, we express these costs as an annual carrying cost. We denote the sum of the up front and annual fixed operating costs as CB. Banks also pay a variable administrative cost per client, which we denote as c. Finally, banks pay interest on money deposited by account holders at a rate of rd. Though 6
Using 1960-200 panel data, they find that an increase in agricultural GDP raises non-agricultural GDP in developing countries, whereas a reverse relation exists for developed countries. The authors suggest that there exist regional differences of the positive relation in developing countries, where the effect is higher in non-Latin American and Caribbean countries.

An additional problem that arises with cross-country studies is that differences in country conditions do not allow for a general relationship between agricultural and aggregate economic growth. Factors such as openness to trade could alter the relation between agriculture and nonagriculture. Global markets can be a substitute for what Timmer (2002) calls first-order effects of agricultural growth (because they provide international capital flows and food imports). This might explain the different magnitudes of the positive relation found by Bravo-Ortega and Lederman (2005) for Latin America compared with other regions. Hence, the importance of linkages between the agricultural sector and the rest of the economy differs across countries. Some authors have tried to shed light on the importance of such linkages in different developing countries. As shown by de Janvry and Sadoulet (2009b) for China over 1980 – 2001, a 1 percent agricultural growth had an effect on aggregate growth of 0.45 percent, whereas the indirect effect through the non-agricultural sector represents half this effect. In line with Mellor‘s findings for non-agricultural employment, multipliers from agriculture to the rest of the economy have been mainly driven by consumption linkages (Thirtle et al. 2003, Tiffin and Irz 2006).

# _Agriculture and the Urban Bias_

Probably the most important contribution to development made by the agricultural sector in poor countries in the past has been to provide the savings, i.e., the surplus—extracted through various means—over and above what is required for the reproduction of agricultural producers, which allowed industrialization to take place. The tax and price policies that are necessary to bring about surplus extraction have been extensively discussed in the literature (see Sah and Stiglitz 1984, Carter 1986). They were made famous by the policy discussions between Preobazhensky and Bukharin during the 1920s about the so-called ―primitive‖ forms of socialist accumulation in the Soviet Union where farmers faced artificially low prices for their output and punitive taxation throughout the 1920s and 1930s (Conquest 1987). Consistent with these early models of agriculture as a sector generating a surplus that can be extracted for the benefit of industry, in the recent past, governments in developing countries have imposed a heavy burden 11