rafmacalaba/datause-encoder-data huggingface dataset:
Interestingly, the problem of non-employment is more severe among men than women.<sup>3</sup> Only 71 percent of prime-age men are employed, against 75 percent of primeage women. This is a reversed pattern compared with that prevailing in OECD countries, where the employment ratio among the prime age men is much higher than among women (93 percent and 68 percent, respectively). Thus it is the non-employment of men in Moldova which is the particularly acute problem: over 20 percent of prime age men who are able to work are lacking jobs. This is the most telling indicator of the underutilization of labor resources and the labor market slack in Moldova.

However the actual labor market conditions are still worse. Many of existing jobs are _non-regular_ and add little to the national output. Such menial, low-value-added jobs account for over one-quarter of all jobs.<sup>4</sup> Examples include casual, short-term or parttime jobs; jobs performed within the household; and non-paid family help, etc. These low-productivity jobs generate low earnings and thus often do not bring the individuals and their families out of poverty.

In addition, many _regular_ jobs are associated with low productivity and underemployment, too. This is caused by two factors. First, many firms in Moldova are struggling to survive and are on the brink of collapse. Second, many firms, especially large ones with some form of state ownership, are still overstaffed. For example, 20 percent of joint stock companies (which as a rule are privatized SOEs) report overstaffing, employing redundant workers who by definition contribute little if anything to the firm’s output (ProEra Group, 2003).

The phenomenon of “struggling” or non-viable firms is significant, too. As much as 13 percent of all Moldovan firms, which employ 7 percent of workers, were inactive during at least one month during 2001. One of every 10 workers was on forced unpaid leave in 2001 and the average duration of such leave was three months. As a result of this low and irregular level of firm economic activity, actual hours of work are very low.

> 3 Similar pattern of higher employment rates among men than women was observed in Bulgaria (Rutkowski, 2003b).

> 4 According to the LFS 2002, the incidence of non-regular jobs among persons aged 15-64 is 27 percent.  Individuals having non-regular jobs are identified as those who (a) reported _no_ paid-job, and (b) reported performing some work as self-employed, on household plot or farm, or (c) had an casual or occasional job in the reporting week, including unpaid job such as helping a family member in the household, store, or enterprise.

3
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- Simonovska, I. (2013): “Income Differences and Prices of Tradables,” Unpub. paper, UC Davis.

- Stock, J. H., and M. Yogo (2005): “Testing for Weak Instruments in Linear IV Regression,” in _Identification and Inference for Econometric Models: A Festschrift in Honor of Thomas J. Rothenberg_ . Cambridge UK: Cambridge University Press.

- Sutton, J. (2007): “Quality, Trade and the Moving Window: The Globalization Process,” _Economic Journal_ , 117, F469–F498.

- Van Biesebroeck, J. (2005): “Exporting Raises productivity in Sub-Saharan African Manufacturing Firms,” _Journal of International Economics_ , 67(2), 373–391.

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19
32 since it was not possible to estimate the probit equation when this variable is incorporated. The sign of the income distribution variable indicates<sup>trhat</sup> the debt of countries with historically worse income distribution is traded<sup>at</sup> lower discounts in the secondary market (this is in contrast to the<sup>finding of</sup> Berg and Sachs (1988)).

Table 4 is a further variation of Model 1. The basic finding that the concentration of debt is negatively related to the magnitude of the discounts continues to hold. Investment-to-GNP ratio and the share of the agriculture sector in GDP are incorporated in Model 1, both in the estimation of the probit equation and in second stage equation. An increase in the magnitude of either of the variables is found to decrease the probability of trading in the secondary market. Share of agriculture is also found to decrease the magnitude of discounts.

Tables 5 and 6 are exposited the same way as Tables 3 and 4, except that the basic underlying structure is that of Model 2. The main finding continued to hold: debt concentration is found to have a negative impact on the magnitude of discounts in the secondary market and this finding is robust to alternative definitions of the concentration variable as well as to the incorporation of bank exposure and capital variables. In addition, these tables indicate that GNP per capita and inflation rates continue to hold the same signs as in Tables 3-4 and they remain important determinants of trading. Higher reserves-to-GNP, higher imports-to-GNP, higher debt-service-paymentsto-exports ratio all reduce the likelihood of trading. Estimated probabilities from all these specifications also seem reasonable in that actual no-trading countries are assigned quite low probabilities of being traded, in contrast to the remaining countries. As in Model 1, worse income
worker as our proxy for productivity and is our preferred specification. The second column uses TFP estimated by means of the Solow method, while the third column uses TFP estimated by means of the ACF procedure. Note that using TFP leads to a substantial reduction in sample size, especially when we use the ACF estimates (inter alia because TFP can only be computed for firms for whom we have information on their current and lagged capital stock).

The results are consistent with the descriptive statistics presented in the previous section and other studies of firm survival in developing countries and this dataset (see Bernard and Sjoholm 2003, Frazer, 2005, Söderbom and Teal, 2006); size, age, and productivity all increase the probability of survival. Interestingly, foreign owned firms are less likely to exit while exporters are more likely to exit, ceteris paribus.

However, these effects are not stable over time. Starting with the result of focal interest, the conditional correlation between productivity and crisis seems to be attenuated by the crisis; the crisis-productivity interaction term is always positive and significant at the 1% level, regardless of which productivity proxy we use. This is not consistent with cleansing; while more productive firms remain less likely to exit the protective impact of productivity is significantly weaker than it was pre-crisis. On the bright side, the attenuation effect did not last; post-crisis the conditional correlation between productivity and survival is not significantly different from what it had been before the crisis; the protective impact of productivity is restored post-crisis.

Young and small firms were especially vulnerable to the crisis. By contrast, exporting firms did relatively well, perhaps because they benefited from increased international competitiveness due to the depreciation of the rupiah; although exporting was associated with a higher propensity to exit during other periods, exporters were not ceteris paribus more likely to exit during the crisis. During the recovery, some of these effects were reversed; firm-age was even less strongly correlated with exit than it had been before the crisis, while exports were once again more likely to exit than non-exporters ceteris paribus.

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# **Figure 13. Gravity Model of Russia’s Services Exports, 2009–11**

<!-- Start of picture text --> 13<br>USA<br>8 TUR UKR CHN GBRDEU<br>KORJPN NLDFRA<br>IDNGEOZAFSVNBGRINDLTUESTROMLVAGRCHUNLUXCZEIRLAUTESPPOLBELDNKSWEFINITA<br>MYSTHA<br>3 BRAPRT<br>PHL<br>COL<br>NGA<br>URY<br>-2<br>-7<br>-12<br>-10 -5 0 5 10 15<br>log of predicted services expots, FE(09-11)<br>log of actual services exports (09-11)<br><!-- End of picture text --> Source: World Development Indicators, TIS, STRI, and CEPII.

Note: Bilateral trade between Russia and EU countries is given in blue; other countries with whom Russia trades are in red. East and South‐East Asian countries, such as Japan, China, Korea, and Indonesia, are in yellow 37
_Figure 21: Comparing envisioned education premiums estimated by ministry of finance and ministry of education officials._ <!-- Start of picture text --> University vs. secondary<br>TVET vs. secondary<br>Secondary vs. primary<br>0% 20% 40% 60% 80% 100% 120% 140% 160%<br>Expected premium between levels of education<br>MOF MOE<br><!-- End of picture text --> Source: CGD–World Bank 2022 survey for envisioned premiums.

_Why do officials tend to overvalue tertiary education and undervalue primary and TVET?_ One reason is likely that these officials themselves have completed tertiary education, and so are biased in favor of the value of tertiary education. Higher education is often associated with prestige and may command more attention than other levels of education such as primary and TVET. There is also some uncertainty on the actual returns; the available data are almost a decade old, and focus on formal employment, so likely differ from returns to education in today’s economies.

- 6.7 Gaps between expected and actual returns differ widely by gender and levels of education as well.

The gap between officials’ estimates and actual education premiums differs substantially from one country to another, by gender and level of education (Figure 22). As shown earlier, expectations surpass actual premiums at the tertiary level, for both gender and in all countries by large margins, except for the tertiary premium for males in Lao PDR. The gender divide is not uniform. In all countries apart from Indonesia, the premiums for secondary are underestimated more (or overestimated less) for females than for males. In the Philippines, the returns to secondary education for females are underestimated by large margins. The same pattern is observed at the tertiary level, where returns to tertiary are overestimated much more for males than for females in that country. But higher expectations for male education returns are not a common pattern of the region. In both Vietnam and Lao PDR, tertiary premiums for females are overestimated even more for women than for men.

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# **1 Introduction**

While the returns to credit and other benefits of financial inclusion have been of central interest in academia and policy, relatively less attention has been paid to the limits of private sector incentives to achieve financial inclusion. In deciding whether to issue credit to a new borrower, a profit-maximizing lender must consider the costs of screening the borrower and issuing the loan, how much debt the borrower can reliably service, and how long the borrower will remain a customer. This final consideration is typically framed based on whether a borrower will eventually join a competing lender after the initial lender has incurred the cost of establishing her reliability (e.g. Petersen and Rajan, 1995), but in principle this form of competition could occur even before the first loan is issued. If lenders are more likely to approve borrowers already approved by their competitors, then lenders that incur the cost of evaluating new or underserved borrowers may not reap the resulting benefits. This phenomenon whereby lenders free ride on the screening efforts of their competitors reduces the incentive to expand credit access and financial inclusion and might warrant policy intervention.

We demonstrate that free riding in loan approvals has a large impact on market outcomes. Specifically, we worked with a large Peruvian bank interested in expanding credit access to small and medium enterprises (SMEs). Our partner bank adopted a new screening technology and determined which SMEs to lend to based on a scoring rule with a strict threshold. Borrowers above the threshold were automatically granted a loan, whereas borrowers below the threshold were offered a loan only if a loan officer deemed it appropriate. Borrowers above the threshold also received more attractive loan terms. Exploiting this threshold along with administrative data from our partner bank and credit registry data from Equifax Peru, we document several findings.

While applicants _without_ prior credit histories who score above the threshold were more likely to receive a loan than those who score below it, three-quarters of the additional loans were issued by competing financial institutions rather than from our partner bank. Because the only differences between borrowers on either side of the threshold are whether they were approved for a loan from our partner bank and the resulting loan terms, this is evidence of free riding in loan approvals. We document that free riding in loan approvals is concentrated among non-bank financial institutions and is higher in regions of Peru in 2
32 DAT NNEX The data series used in the econometric<sup>estimatior,</sup> cf the basic model are given in the Annex, and are<sup>all taken from World Bank sources. The GDP series</sup> used is the n series with the base of 1984/85.

Bangladesh's Annual Development<sup>Program (ADP) expenditure reported in the</sup> budget, proxies capital<sup>expenditure. This expenditure category consists</sup> predominantly of projects involving<sup>fixed investment. Budget data on current</sup> expenditure proxy goverrnent<sup>consumption. Data on Bangladesh's "actual"</sup> government expenditure is not<sup>available prior to 1980/81. Only "revised budget"</sup> figures are available for the<sup>entire period of 1972/73 to 1989/90. Revised</sup> budget figures are government's<sup>estimates of "actual" revenue and expenditure</sup> made provisionally after eleven<sup>months of the relevant fiscal year has elapsed.</sup> It is announced at the time<sup>of each budget for the previous fiscal year. This</sup> is thus the only consistent series<sup>for the period available for our exercise that</sup> is closest to "actual" public<sup>expenditures.</sup> The measures of real exchange<sup>rates were computed specifizally for this</sup> paper. The available estimates<sup>are those that are most commonly used by monetary</sup> authorities, but are far from ideal in terms<sup>of both concept and coverage as an</sup> indicator of relative price<sup>of tradables facing Bangladeshi producers. Though</sup> the available data on price indices<sup>makes it difficult to compute or estimate the</sup> "correct" empirical equivalent<sup>of the real exchange rate concept, it is possible</sup> to improve on the available measure<sup>of real exchange rate by using a better proxy</sup> for tradable prices. In any<sup>case, given the problems of measurement, a number</sup>
ratio, mature firms are more dependent on internal finance than dynamic firms. This is again consistent with the predictions of the managerial approach and counter to the informationtheoretic approach.

On balance therefore, when firms are divided on the basis of size, exchange listing, and R and D to sales ratio, the evidence turns out to be more favorable for the managerial approach compared to the information-theoretic approach. In other words, the observed reliance of the firm's capital expenditure decisions on internal finance is indeed driven by managerial rather than information-theoretic considerations. Therefore, the evidence in this paper is broadly consistent with the results of Blanchard et al. (1994) who adopt a somewhat different approach to distinguish between the perfect capital markets model, asymmetric information model, and the agency model of managerial behavior and find the evidence as favoring the agency model.

It is important to emphasize that these findings connote an important departure from the findings in the literature following the Fazzari et al. (1988) study. In these studies, the firm's observed reliance on internal finance for investment decisions has been attributed to informationtheoretic considerations. However, as argued in this paper, this reliance on internal finance could and in fact does stem from managerial-theoreti **c** onsiderations. As discussed before, the principal shortcoming of the information-theoretic literature is its reliance on dividend practices as the decisive criterion for studying firm heterogeneity. However, this approach is flawed because, as shown in the present paper, dividend practices are incapable of distinguishing between managerial and information-theoretic approaches, since both approaches predict a negative relationship between dividend pay-out ratios and capital expenditures. On the other hand, variables such as size, exchange listing, and R and D to sales ratio are adequate to 20
all stimuli from a set of available choices taking into consideration their multiple attributes on multiple dimensions (Bernartzi and Thaler 2007). As a shortcut to overcome this challenge, individuals focus on selected features of their choice environment, ignoring many others. This makes choices sensitive to the salient features of the environment (salience effect) and particularly to where the attention is directed (local construal). Limited computational ability in turn refers to the limited cognitive power of the human brain which makes the act of choice a challenging task (choice overload). Biased reasoning arises in situations in which the human brain evaluates events of a statistical or probabilistic nature. In such situations they often tend to show persistent biases in decision making, particularly on choices involving ambiguity and risk. In short, evidence abounds in the literature showing that due to imperfect optimization, individuals make systematic errors in decision making in their attempt to maximize utility, by resorting to crude rules of thumb based on heuristics and biases.

# **2.1.2 Bounded Self-Control**

Bounded self-control challenges the traditional economics view that not only do people know what they want but also that they are able to act on these interests by implementing their choices. In other words, neoclassical models assume that the choices people make are time consistent, and they can _ex-post_ implement exactly what they had planned _ex-ante_ . However, studies in psychology and behavioral economics have shown that people exhibit failures in self-control and often are time inconsistent, showing a bias of present over future consumption (Laibson, 2015). These bounded self-control issues manifest themselves as procrastination or succumbing to immediate temptation, both of which can result in suboptimal outcomes. Many psychological studies have found that small changes in the choice architecture or environment can substantially change the observed gap between choices and actions ( <mark>Münscher, Vetter and Schuerle, 2016) .</mark> These ‘choice features’ or ‘channel factors’ as they are known in psychology, show that small interventions or minor modifications can channel the actions of people towards or further away from their instinctive choices. The success of the introduction of default options in employer provided insurance programs or 401K plans are good examples of the use of channel effects in policy interventions as shown by Bernheim et al (2015). Further, the ability of individuals to exert selfcontrol also depends on the state of the mind of the decision maker, or the conditions under which decisions are made (Mullainathan and Shafir, 2013), which calls for consideration of the context when designing choice architecture for decision makers.

7
**_Table_** _13 . Resources_ **_needed to achieve universal primary education in_** _2015 (1999 $_ **_millions)_**

||NoPolicy<br>Change|Improvements<br>inEducation<br>Quality<br>(a)|Improvementsin<br>EducationQuality+<br>Teacher Salary<br>Adjustments(b)|ImprovementsinEducation<br>Quality+Teacher Salary<br>Adjustments+Ensuring<br>appropriatepublicbudgetsupport<br>forEducation (c)|
|---|---|---|---|---|
|CountryA|||||
|LevelofSpendingin2015|225|291|186|186|
|PublicResourcesin2015|91|91|91|117|
|FinancingGapin2015|134|200|95|69|
|Yearly average2000-2015||||49|
|CountryB|||||
|LevelofSpendingin2015|58|67|88|88|
|PublicResourcesin2015|35|35|35|38|
|FinancingGapin2015|23|32|53|50|
|Yearlyaverage 2000-2015||||39|
|CountryC|||||
|LevelofSpendingin2015|252|238|131|131|
|PublicResourcesin2015|76|76|76|85|
|FinancingGapin2015|176|162|55|46|
|Yearly average2000-2015||||41|
|Country**D**|||||
|LevelofSpendingin2015|335|470|372|372|
|PublicResourcesin2015|181|181|181|279|
|FinancingGapin2015|154|289|191|93|
|Yearlyaverage2000-2015||||62|
|Total|||||
|LevelofSpendingin2015|870|1066|777|777|
|Public Resourcesin2015|383|383|383|519|
|FinancingGap in2015|487|683|394|258|
|Yearly average2000-2015||||191|

(a) Improvement in primary education quality: The following elements are considered to lead to a reasonable setting for the operation of education : i) Teachers recruited with 10 years of general education plus 1 year of pre-service training, ii) Pupil teacher ratio set to 45:1, iii) Resources beyond teacher salaries (admninistrative and support services, textbooks for pupils and teaching guides for the teachers, in service training activities, student assessment) to represent 40 % of the teacher salary bill. These improvements in conjunction with direct measures to reduce repetition (use of sub-cycles of study with non repetition within each sub-cycles) are expected to bring repetitions rates below 10 % in 2010.

(b) Recruitment of new teachers according to a salary scale in which teacher remuneration to represent about 4 times the country's per capita GDP.

(c) The modeling used the assumptions on the likely overage rate of economic growth The country is supposed to i) to increase its allocation of resources to the sector (in particular by using at least 40% of its HIPC resources, but possibly beyond if the country was initially allocating too little to education), and ii) to allocate at least 50 % of its budget for education to primary schooling (this amount is assumed both to materialize a clear priority for primary education while ensuring that enough resources are secured for post-primary educational investments (lower and upper secondary, technical and vocational education and higher education).

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