rafmacalaba/datause-encoder-data huggingface dataset:
the World Bank’s enterprise surveys, the Doing Business report and industry studies are used for evidence on tax compliance costs for business.

Despite some reform effort over the past decade, South Asian tax systems remain complex with different regulations for different industries and types of firms. South Asian governments have introduced a number of changes to their tax laws in an effort to simplify tax systems and improve revenue collection. Corporate income tax rates were reduced throughout the region. India replaced an old fashioned sales tax that did not offer input credit with VAT; Pakistan made some progress in reducing the number of VAT exemptions; Sri Lanka unified the VAT rate at 12%;<sup>3</sup> and Bangladesh is working towards introduction of new VAT legislation, which will be in line with international standards. Nevertheless, a number of distortions remain – tax rates differ by type of industry, product and firm. This policy results in misallocation of resources, creates an unfair tax burden on firms that do not benefit from special schemes, and provides disincentives for firm formalization. It also increases the costs of tax administration, creates opportunities for corruption and results in public revenue losses.

The rest of this paper is organized as follows: section II discusses corporate tax regime in the region, section III outlines key weaknesses in the design of consumption taxes; section IV describes the main challenges in tax administration; and section V offers conclusions and suggestions for policy actions.

# **II. Corporate Income Taxes**

Corporate income tax rates in South Asia are higher than in other developing regions. The average corporate income tax rate for Bangladesh, India, Pakistan and Sri Lanka is 32% compared to the global average of 24%<sup>4</sup> (Figure 1 below). Corporate income tax rates have gone down in all regions over the past decade. While South Asian countries have followed the trend, they started with higher initial rates and reduced them by a smaller percentage than elsewhere in the world. Over the past decade, corporate income tax rates went down by 11% in the four South Asian countries compared to 20% globally (Table 1 below).

One reason why tax rates are relatively high is a narrow tax base. A number of sectors, economic activities and types of firms are exempt from taxation or enjoy reduced rates. To maintain macroeconomic stability and compensate for revenue losses associated with tax incentives, governments need a higher tax rate than what would have been required if all firms were subject to the same tax regulations.

> 3To be reduced to 11% in 2015 budget

> 4 KPMG. 2014. Corporate Tax Rates Table  https://www.kpmg.com/GLOBAL/EN/SERVICES/TAX/TAX‐TOOLS‐AND‐ <u>RESOURCES/Pages/corporate‐tax‐rates‐table.aspx , accessed on November 15, 2014</u>

5
# **1 Introduction**

In this paper, we use a data set covering more than 460,000 firms located in six Central and Eastern European countries to test whether politically connected firms have easier access to finance. Our findings are consistent with the idea that political connections distort capital allocation and may have large welfare costs.

Our paper is related to a vast literature on the benefits enjoyed by politically connected firms (see, among others, Stigler (1971), de Soto Polar (1989), Faccio (2006)) and to Shleifer and Vishny’s (1994) work on the incentive structure of state-owned enterprises and private enterprises subject to political influence. Fisman (2001) looks at stock market returns of politically connected firms during the Indonesian crisis of 1997 and shows that most of the value of the firms linked to President Suharto was driven by their political connections with the president and his family.

Our focus on the links between political connections and credit constraints is closely related to a series of papers showing that connected firms tend to have better access to finance. Existing work has focused on Brazil (Claessens, Feijen, and Laeven (2008)), Malaysia (Bliss and Gul (2012)), Indonesia (Leuz and Oberholzer-Gee (2006)), Italy (Sapienza (2004)), and Pakistan (Khwaja and Mian (2005)). There is also a large literature that focuses on China and shows that political connections and affiliation with the communist party give greater access to loans, especially from state-owned banks (see, among others, Li, Meng, Wang, and Zhou (2008), Chen, Shen, and Lin (2014), and Peng, Zhang, and Zhu (2017)).

The role of political connections might be particularly important in the formerly planned economies of Central and Eastern Europe. Faccio’s (2006) study of the correlation between the presence of political connections and corruption finds that Russian firms have the highest degree of political connections (in her sample, politically connected firms represent more than 85% of market capitalization).<sup>1</sup> There is, however, limited research on the links between political connections and access to credit in this group of countries. To the best of our knowledge, the only paper that studies the link between political connections in Central and Eastern Europe is Hasan, Jackowicz, Kowalewski, and Koz�lowski’s (2017). The study finds that politically connected Polish firms had easier access to credit in the aftermath of the 2007 financial crisis.

> 1For surveys on the literature on corruption see Bardhan (1997), Rose-Ackerman and Palifka (1999) and Svensson (2005).

2
# **B.  Labor Force Participation Rate, 2002**

<!-- Start of picture text --> 90<br>80<br>70<br>60<br>50 Men<br>40 Women<br>30<br>20<br>10<br>0<br>CEE EU15<br>percent<br><!-- End of picture text -->

## **C.  Unemployment rate by gender, 2002**

<!-- Start of picture text --> 90<br>80<br>70<br>60<br>50 Men<br>40 Women<br>30<br>20<br>10<br>0<br>CEE EU15<br>percent<br><!-- End of picture text --> This is not surprising, however, as the female labor force participation rate, and correspondingly the employment rate, is lower than that of men in virtually all societies, and the transition economies are no exception to this regularity. For example in the EU15, the gap between the male and female labor force participation rate is 17 percentage points, compared with 12 percentage points in CEE. So, the gap between the male and female labor force participation rate is significantly smaller in CEE countries than in the EU15. Given that the female labor force participation rate in CEE is the same as in the EU15 (on average 61 percent), and the employment rates are pretty similar, there is no sign of the underutilization of female labor in CEE. The picture is different, however, in the low-income CIS countries, where female labor force participation rate has been traditionally lower.

Where CEE countries differ from the EU15 countries is not female but male employment. It is male labor resources that are underutilized. In CEE both the male labor force participation rate and the employment rate are much lower than in EU15, which is in stark contrast with the female rates. To illustrate, there is a 6 percentage points gap in the male labor force participation rate between the EU15 and CEE (no such gap in the case of the female labor force participation rate). Given that male unemployment is much higher in CEE than in EU, this translates into an even bigger difference in the male employment rate: 64 percent in CEE compared with 73 10
- Rural Poverty in Ecuador A Qualitative Assessment

_Jesko Hentschel, Willian F Wiers and Anna Kathryn kmdever Wbb'_

# 1. Introduction

With the Ecuador Rural Qualitative Assessment (RQA), we tied to learn about the views of rural households on poverty.<sup>2</sup> The World Bank started in April of 1994 a Poverty Assessment for Ecuador (World Bank 1995) and one of its main objectives was to exanine the causes of poverty in rural and urban areas. As part of this poverty analysis, we w-anted to complement statistica] analysis from household surveys with qualitative information on how households themselves view theil living conditions. Little such information exists for rural areas so that we concentrated tae qualitative assessment on poverty in rural Ecuador.

The Rural Qualitative Assessment has three main objectives with which the rural analy-sis under the Poverty Assessment is complemented: First, it aims to assess what poverty means to marginalized rural famnilies. Second, it tries to determine what kind of survival strategies fatmilies employ in times of hardship. Third, it strives to learn what these households believe is necesszry ic' alleviate poverty.

Several key messages evolve from the Rural Qualitative Assessment presented ir, this Paper

- First, rural communities with the same characteristics like area, soil quality and ethnic background are actually very heterogeneous. This holds with respect to their command of land resources, definition of well-being, the range of economic activities carried oui in the communities and their recommendations for what is necessary to overcome poverty

- D Second, almost all families interviewed state that the recent years have been very hard for them and they have increasingly complemented income from traditional sources (like subsistence agriculture and small animal husbandry) with earnings from new activities. Besides migration, which plays a pivotal role in all communities, pieceork and weaving in the Sierra, small businesses in the Costa and increased cash crop production in the Oriente have taken their role in income generation. Families have also reduced expenditures tbr clothing, fiestas and food -- the latter being quite alarming as malnutrition rates in rural Ecuador are already very high.

- Third, poor rural families express very practical solutions to overcome their poverty. Demands are not directed at sweeping changes like expropriaLion of large farmers.

World Bank, the George Washington University Center for International Health, and international consultant, respectively.

2 We especially want to thank the Ecuadoran reserach teams fi r their excellent field wrk. They vvre comprised of Carlos Arcos, Silvia Arguello, Monica Baez, Maria Gloria Barreiro, Fernando Gaomia, Rosario Jacome, Nelson Nartinez, Hugo Vinueza. We gratefully acknowledge financing for the Ecuador Rural Qualitative Assessment by the Government of the Netherlands.

1
Anas, A., Timilsina, G., and Zheng, S., 2009.An Analysis of Various Policy Instruments to Reduce Congestion, Fuel Consumption and CO2 Emissions in Beijing. World Bank Policy Research Working Paper 5068.Washington, DC: The World Bank.

Anas, A. and Timilsina, G., 2009b. Impacts of Policy Instruments to Reduce Congestion and Emissions from Urban Transportation: The Case of Sao Paulo, Brazil. World Bank Policy Research Working Paper 5099. Washington, DC: The World Bank.

Anas, A. and Timilsina, G., 2015. “Offsetting the CO2 Locked-In by Roads: Suburban Transit and Core Densification as Antidotes”, _Economics of Transportation_ , Vol 4, pp. 37-49 Arnott, R., 2013. “A Bathtub Model of Downtown Traffic Congestion”, _Journal of Urban Economics_ , Vol. 76, pp. 110-121.

BankMed, 2014. “Analysis of Lebanon’s Real Estate Sector”, August edition Chalak, A., Al-Naghi, H., Irani, A., Abou-Zeid, M., 2016. “Commuters’ Behavior Towards Upgraded Bus Services in Greater Beirut: Implications for Greenhouse Gas Emissions, Social Welfare and Transport Policy”, _Transportation Research Part A_ , Vol. 88, pp. 265-285.

Diab, D. and Obeid, M., 2012. Traffic Congestion on the Northern Entrance into Beirut, Lebanon: Evaluation and Recommendation. HBS Independent Project. Unpublished Document.

Danaf, M., Abou-Zeid, M., and Kaysi, I., 2014. “Modeling Travel Choices of Students at a Private, Urban University: Insight and Policy Implications _”, Case Studies on Transportation Policy_ , Vol. 2, pp. 142-152.

DMJM & Harris and IBI Group. (2003). Beirut Suburban Mass Transit Corridor Feasibility Study. Unpublished Report Submitted to the Ministry of Public Works and Transport, Lebanon.

Gilbert, A. 2008.” Bus Rapid Transit: Is Transmilenio a Miracle Cure?”, _Transport Reviews_ , Vol. 28, pp. 439-467.

Habib, O (2015). IMF calls for increasing VAT, cutting EDL subsidies. The Daily Star Newspaper - Lebanon. Retrieved 22 June 2016, from http://www.dailystar.com.lb/Business/Local/2015/May <u>14/297871-imf-calls-for-increasing-vat-cutting-edl-subsidies.ashx.</u> IBI Group, and TEAM International. (2009). Study for the Revitalization of the Public and Freight Transport Industry in Lebanon. Unpublished Report Submitted to the Ministry of Public Works and Transport, Lebanon.

Indra, D., 2014. “Choice of Residence Location and Mode of Commuting: A Cross-Sectional Analysis of 275 US Metropolitan Areas” (working paper).

Meignan, D., Simonin, O., and Koukam, A., 2007. “Simulation and Evaluation of Urban BusNetworks Using a Multi-Agent Approach”, _Simulation Modelling Practice and Theory_ , Vol. 15, pp. 659-671.

47
with the exception of the GSOEP, do not typically allow to observe completed migration spells and the timing of returns. In addition, they may miss part of the temporary migrant population as temporary migrants can be left out of traditional survey sampling frames.

# **3 Labor supply**

The first and foremost impact of temporary migration and return is on the labor market, especially on labor supply in the origin country. First, past migration overseas may affect incentives to participate in the labor force (extensive margin) or the quantity of labor supplied (intensive margin) by temporary migrants upon return. Second, temporary migration and the remittances sent by migrants can impact the labor supply of household members left behind, by increasing household income and possibly reducing domestic labor supply at the household level through an income effect. Finally, temporary migration, by acting as a negative labor supply shock in the domestic economy, may have general equilibrium effects on the labor supply of non-migrant households in the origin country. This subsection summarizes the evidence on the impact of temporary migration on the labor supply of return migrants, household members in migrant households, and non-migrant households.

## **3.1 Labor supply of temporary migrants after return**

The sign of the impact of past migration overseas on the labor supply of temporary migrants after return is theoretically ambiguous. On the one hand, past migration may decrease the labor supply of return migrants. Higher earnings and savings overseas may raise reservation wages and reduce incentives to find employment back home among returnees, especially among older individuals who are close to retirement age. In addition, at least in the short run, return migrants may want to allocate more time for leisure after spending several years away from their families, as part of their life cycle optimization plan (Dustmann and Kirchkamp 2002). Third, if the human capital and experience accumulated overseas do not match labor demand in home labor markets, job search frictions may lead to higher unemployment among return migrants (Lucas 2005). On the other hand, past migration overseas may raise workers’ human and financial capital as discussed in later sections, which can increase workers’ productivity and earnings potential back home and thus incentives for labor force participation.

Somewhat surprisingly, evidence on the impact of past migration on the labor supply of return migrants is scarce and restricted to descriptive analysis. Return migrants have been shown to be less likely to engage in economic activities in the few years that follow their 17
# **Table 7: Government Ownership of Banking Sector and Access to Finance**

Regressions are estimated via OLS at country level for the year 2001 to 2009. Robust t statistics are in brackets.

***, ** and * represent significance at 1, 5 and 10% level respectively.

||1<br>|2<br>**De**<br>|3<br>**posit Accou**<br>|4<br>**ntsper 1,00**<br>|5<br>**0 Adults**<br>|6<br>|
|---|---|---|---|---|---|---|
|Asset Share of State Banks|**-2.87**|**-2.3**|**-5.44**|**-4.34**|**-2.72**|**-2.36**|
||[2.21]**|[6.40]***|[4.35]***|[8.43]***|[14.13]***|[11.35]***|
|Log GDP per capita||**176.35**|**392.37**||**593.96**|**556.87**|
|||[1.24]|[4.72]***||[9.85]***|[7.39]***|
|Urban population % of Total Population||**6.12**|**7.28**||**2.1**|**1.21**|
|||[1.05]|[1.88]*||[0.47]|[0.27]|
|Branches per 100,000 Adults|||**-22.38**<br>[2.79]***|||**7.12**<br>[1.91]*|
|Country Dummies|No|No|No|Yes|Yes|Yes|
|Observations|31|31|31|31|31|31|
|R-squared|0.13|0.91|0.94|0.99|1|1|
|Countries|9|9|9|9|9|9|

# **Table 8: Credit Growth of Public and Private Banks**

Average growth rates for government owned banks and private banks for 2007 to 2009.

|||2007|2008|2009|
|---|---|---|---|---|
|Egypt|Share of Public Banks Credit to Total Credit|67%|63%|62%|
||Total Credit Growth|20%|17%|2%|
||Private Banks Credit Growth|49%|33%|4%|
||Public Banks Credit Growth|9%|9%|1%|
|Morocco|Share of Public Banks Credit to Total Credit|43%|44%|46%|
||Total Credit Growth|45%|20%|15%|
||Private Banks Credit Growth|40%|16%|13%|
||Public Banks Credit Growth|51%|26%|19%|
|Tunisia|Share of Public Banks Credit to Total Credit|48%|49%|46%|
||Total Credit Growth|15%|6%|7%|
||Private Banks Credit Growth|14%|5%|14%|
||Public Banks Credit Growth|17%|7%|-0.04%|

42
The analysis sample includes pregnant women who were beneficiaries of Plan Nacer at the time of their first prenatal visit.<sup>16</sup> While information on prenatal care utilization is available for the full sample period, information related to birth outcomes is only available for women who gave birth in a public hospital through 2011, i.e. women who became pregnant before May 2011.

# **4.2 MEASUREMENT OF WEEKS PREGNANT AT 1**<sup>**ST**</sup> **PRENATAL VISIT**

We construct the number of weeks of pregnancy at the time of the first prenatal visit as the difference between the date of the first visit and the last menstrual date (LMD). The LMD is routinely collected at the time of the visit to calculate the estimated date of delivery (EDD) and both are routinely recorded in the patient’s medical record at the clinic.<sup>17</sup> One potential problem is that medical personnel in treatment facilities might misreport the date of late first visit as occurring before week 13 so that they could bill to the program. We think this is unlikely for the following reasons. First, the week of visit is constructed from the date of the first prenatal visit and the LMD, both of which along with the EDD are recorded in real time in the medical record. In order to falsely report that a first visit occurred in the first 12 weeks, the provider would have to alter the date of the first visit relative to either the LMD or the EDD in the medical record. This would require some effort if done in real time and would be noticeable by auditors if altered ex post. Second, Plan Nacer uses external auditors to verify the accuracy of clinic billing. The auditors compare the detailed clinical records to the billing requests to find inconsistencies and the latter can lead to substantial financial penalties for the provinces. Finally, clinical records are legal documents in Argentina and practitioners could lose their medical license if caught systematically misreporting for financial gain.

To corroborate our belief that false reporting in the clinic records is unlikely, we empirically test whether there is any evidence of systematic misreporting using data from an alternative source. Specifically, we use gestational age at birth measured by physical examination obtained from hospital records to construct a second estimate of the LMD and weeks pregnant at the time of the first prenatal visit. The hospital personnel that attend the birth do not have any incentive to misreport hospital records. We then compare the estimated week of first visit based on gestational age at birth to the

> 16 We excluded non‐beneficiaries because most of them have private health insurance and as such are likely to receive some of care and deliver at private facilities. Since we do not have data from private facilities, the outcomes of most of these observations are censored.

> 17 For 10% of the sample LDM was not recorded. For those cases, we use the EDD to recover the LMD.

10
- 35

4.24 With regard to solid waste collection, the private sector has been shown to be substantially more efficient than the municipal collection service. Based on detailed nationwide studies carried out in the United States, Canada, Switzerland, and Japan, as well as regional studies undertaken in Connecticut, California, and the midwestern United States, contract collection is about 35 percent less costly than municipal collection for comparable services.y Taking into account taxes paid by the private supplier, which support various local services, the true cost to the resident for contract service can be as much as 58 percent lower than that for the municipal service.5 Further, a study in 20 cities with similar urban conditions revealed that the cost of contract street sweeping, with the same frequency and quality of service in each city, was 43 percent less per curb mile than the cost of municipal sweeping.v 4.25 Although there are limited available data on the performance of private sector solid waste services in developing countries, experience in Brazil and Turkey corroborates the findings in the industrialized countries. According to one study,2' for a comparable level of service, taxpayers in Rio de Janeiro, where a municipal enterprise provides solid waste services, pay at least twice the amount per metric ton of refuse collected as taxpayers in Sao Paulo, where private firms are contracted to perform solid waste services. The higher productivity and efficiency of the private sector in Sao Paulo can be attributed largely to the higher labor and vehicle use efficiency of the private firms. Contributing factors are the high cost of maintaining the ancient collection fleet in Rio de Janeiro and the difficulty in replacing vehicles due to a government policy restricting access to credit to parastatals for equipment renewal. The three firms that operate the street sweeping and refuse collection service in Sao Paulo report to the Regional Administrations (bodies that administer the city's districts), which are responsible for authorizing payments and monitoring contract performance in accordance with measurable variables. The city's waste management department is responsible for overseeing competitive bidding, hiring contractors, and supervising the private services. A key factor in the success of this arrangement is the ability of the waste management department to negociate contract conditions with private firms on the basis of its broad knowledge of unit costs and performance standards.

4.26 In Adana, Turkey, the municipality hires two private firms to collect 75 percent of the city's wastes. The municipality works in one part of the city while the private contractors operate in a different area. Despite the reported

- ij/ Emanuel S. Savas, Privatization. (Chatham, New Jersey: Chatham House Publishers, Inc., 1987), p. 124.

- / ~Ibid., p. 125.

- j/ Ibid., p. 131.

- 2/ Luiz Costa Leite, "Private and Public Services: Different Approaches to Solid Waste Management in Sao Paulo and Rio de Janeiro," unpublished INURD paper, May 1989.