rafmacalaba/datause-encoder-data huggingface dataset:
Only a completely exogenous movement of workers across borders would allow estimation of wage gains without selection and without “natural” forces determining who is willing and able to move. We do not present (or desire!) such an experiment. Instead, we triangulate using five distinct methods to place estimated bounds on selection and natural barriers—drawing on theory and various empirical literatures. These independent calculations yield the remarkably consistent result that selection of migrants on unobservable wage determinants results in an observed US-to-foreign wage ratio for observably equivalent workers ( _Ro_ ) of around 1.25 times the true ratio for equalproductivity workers on average across countries, and that the combined effect of selection and natural barriers produces observed ratios about 1.5 times the true ratio for equal-productivity workers willing and able to move ( _Re_ ).

Even after this correction, wage gaps across borders remain extremely large. Given our median observed ratio _Ro_ of about 3.9, the median ratio purged of selection on unobservable wage determinants and the effects of “natural” barriers—wage ratios of equally productive workers willing to move ( _Re_ )—is roughly 2.6 (=3.9/1.5). Even this conservative estimate of _Re_ is above 3 for many countries—including India, Vietnam, Indonesia, Ghana, Yemen, Egypt, Haiti, and Nigeria. In other words, a worker from one of these countries can expect at the margin his or her wages to triple or more, solely due to stepping across the US border.

This wage gap is a “marginal” effect in two distinct senses: It is the effect on the wage of the next person who would arrive after a small relaxation of the migration barrier— _not_ the effect on the typical person in the sending country—and it is the marginal effect given a small change in current levels of migration— _not_ the general equilibrium wage under fully open borders.

The final section relates our results to the three separate literatures on wage discrimination, border-induced price wedges, and the marginal impacts of antipoverty policies. Researchers measuring each of these would do well to pay much more attention to restrictions on migration; the wage gaps we measure constitute one of the largest known forms of all three. Empirical estimates in these other literatures are comparable to ours because they, too, are measured at the margin.

# **2 Baseline estimates**

It is obvious that there are large wage differences across countries; the question is the source of those wage differences. Some of the difference might be due to sector of employment or occupational composition across countries (e.g. more lawyers in the US and more small farmers in India). But previous researchers have documented that wage gaps across countries are enormous even for workers in the same sector, such as manufacturing, or in the same narrowly defined low-skill occupations, such as carpenters, laborers, or bus drivers (World Bank (1995)). Table 1 gives a sampling of these estimates 3
- 26 -

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anti-Suharto and pro-democracy forces in Indonesia, leading to his ouster in 1998 and to the emergence of a democratic order which has culminated in the recent political defeat of Sukarno’s daughter Megawati Sukarnoputri.<sup>10</sup> Along with democracy has come a concerted effort to decentralize the political and fiscal authority of state and district governments. At the village level, this has had several implications for SPGs. The authority of the _kepala desas_ and _lurahs_ is increasingly questioned. But, as recent survey data demonstrate, the spirit of _gotong royong_ has by no means disappeared. Rather, it has been so deeply institutionalized that not abiding by it is sensed by people as a violation of a communitarian ethic, which remains even now part of the foundation of what it means to be a good Indonesian. A recent survey shows that levels of participation in public goods construction remains high at 47 percent, and 59 percent of respondents say that they participate primarily because of “tradition” or “obligation.” This has real consequences – 37 percent of the cost of village public goods are contributed by the community, with 60 percent coming from the government.<sup>11</sup> However, life is far less dictatorial now, and other important political players have emerged to compete with state authority. Much of this can be seen in the profusion of mosques all over the countryside – some with shiny stainless steel domes, others painted blue or white, some with particularly large loudspeakers attached to their minarets,<sup>12</sup> others, more traditional, made of stone and brick with large tree-lined courtyards. As Hefner (2000) shows, much of the resistance to Suharto was led by Islamic groups – in particular by NU and the Mohamediya. To compete with these movements, Suharto attempted to create a “regimist Islam” with state-funded mosques staffed by government employees belonging to the Ministry of Religion. Often, all three types – NU mosques, Mohamediya mosques and “Golkar”<sup>13</sup> mosques – exist in Indonesian villages, with competing spheres of authority. In addition, immigrants to Malaysia or the Gulf signal their new-found wealth by building their own mosques. And neighborhoods get together

> 10 Her first name was given her by an Indian—Biju Patnaik a close friend of Sukarno. Patnaik had participated in Indonesia’s war of independence as a fighter pilot, and went on to become one of India’s most prominent, and colorful, politicians.

> 11 All data from UPP2 Evaluation baseline survey 2004.

> 12 Some Imams are particularly proud of their loudspeakers.  I went to interview one in an empty but large mosque in the middle of the afternoon.  The Imam insisted on conducting the entire interview – which was mainly about the role of the mosque in local development activities –  speaking directly into the live microphone, presumably to demonstrate to the neighborhood that he was important enough to be interviewed by a World Bank official.

> 13 Golkar was Suharto’s political party. It remains an important force in Indonesia.

15
transacting solely in cash, in contrast, there may be information asymmetries between farmers and markets, resulting in farmers selling their goods for less than their market value, resulting in lower incomes and higher risk. Digital financial services can help address this by improving transparency about market prices across agricultural value chains, allowing farmers to reduce their dependence on intermediaries and experience shorter transaction times (GSMA, 2019). Digital financial services also make it easier to access more complex financial products like index insurance, which allow farmers to mitigate risk and smooth consumption when faced with income shocks (Delavallade et al., 2015).

As it relates to productivity, digitalizing agricultural payments can positively impact crop yields and investment. A study in Malawi found that farmers who received wages into an account rather than in cash spent 13 percent more on farming equipment and saw a 15 percent increase in crop value (Brune et al., 2016). Similarly, in Kenya, mobile money users purchased more inputs, including fertilizer, labor, and pesticides, and sold a higher percentage of their harvest (Kikulwe, Fischer, Qaim, 2014).

As for efficiency gains, evidence from a coffee-buyer in Uganda suggests that digitalizing payments saves time and money and reduces risk (Kvaran and Peters, 2017). In Tanzania, an agricultural exporting company found that switching from cash payments to digital payments reduced time and financial costs for farmers; the savings totaled 6,000 hours and $8,000 for the 300 affected farmers (Seetharam and Johnson, 2015). Another coffee farming study in Uganda found that farmers who use mobile money received 5 percent higher prices on average for their coffee than non-users, because they were able to access higher-value markets and rely less on local traders (Sekabira and Qaim, 2017). Finally, a 2017 study in Cote d’Ivoire found that farmers with mobile wallets saved more and were 50 percent less likely to face difficulty feeding their families (Lonie et al., 2018; IFC, 2019).

# **4.4 The benefits of digitalizing remittance payments**

In 2021, approximately 125 million unbanked and 150 banked adults in developing economies sent or received domestic remittances exclusively in cash (Global Findex 2021). Remittances can be a crucial tool for reducing poverty, especially for rural households, where more than half of remittances are sent (IFAD, 2022), as they tend to be poorer and have fewer economic opportunities than households in more urban areas. Crucially, digital financial services reduce 12
4 developing countries the share of environmentally sensitive goods increased slightly from 18 to 19% in total exports. The uniform decline in industrial countries suggests tha. this is likely to be due to expansion of non-sensitive goods in world trade, and increased specialization rather than a loss of advantage in these goods. The most substantial decline in the share of environmentally sensitive goods in total exports occurred in Japan and Norway. Jn Norway this reflects the increase of oil in total exports. As many of the enmironmentally sensitive goods are resource-intensive, it would be natural for the resource-poor Japan to specialize in ofther goods. With the exception of Japan and Norway the share in imports of these products also declined. In Japan and Norway the share of the sensitive goods in total imports increased slightly during the twenty-year period.

Worid market shares in environmentally sensitive goods have not changed dramatically over the past two decades, despite the introduction of higher environmental standards ir mnost industrial countries. The trends in trade shares (see T'able 2) indicate that there has been no across-the-board decline in the market shares of environmentally sensitive goods in the higher standard industrial countries. Measured as shares in world exports the share of industrial countries sh-re was about the same in 1970 as in 1990. Measured by world imports the share of industrial countries declined slightly between 1970 and 1990.' The bulk of world exports of environmentally sensitive goods continue to originate in industrial countries - over 70%. **6**

> **Data** on world **import.** of environmentally sensitiv- goods captures better the share of developing countries in **world** trade. TMis **is** because many developing countries have not reported data to the **UN** trade data bank, which underestimates their **share** in world exporta. Compared to earlier versions of the study **based** on world export **data,** this paper **uses** world imports for the world **and** developing country totals in the calculations. Export **data** underestimates the **share** of developing countries by about 5-10%.

> **As a large** part of the **sample** of environmentally sensitive goods especially from developing countries **are** commodities, **especia"y** oil, **the trade shares are** Ukely to **be** very ensitive to developments ni conunodity prices. Further **resrch** on **the** impact of price changes in **these** trade flows would be useful.
# **Box 5.1: Financial Openness Index**

This index is based on information contained in the IMF Annual Report on Exchange Arrangements and Exchange Restrictions (1998), and distinguishes between 27 individual transactions, classified into five groups, as shown below.

_I. Imports and Import Payment_ Foreign exchange budget Financing requirements for imports Documentation requirements for release of foreign exchange for imports Import licenses and other non-tariff measures Import taxes and/or tariffs State import monopoly _II. Exports and Export Proceeds_ Repatriation requirements Financing requirements Documentation requirements Export licenses Export taxes _III. Payments for Invisible Transactions and Current Transfers_ Controls on these payments _IV. Proceeds from Invisible Transactions and Current Transfers_ Repatriation requirements Restrictions on use of funds _V. Capital Account Transactions_ Capital market securities Money market instruments Collective investment securities Derivatives and other instruments Commercial credits Financial credits Guarantees, sureties, and financial backup facilities Direct investment Liquidation of direct investment Real estate transactions Personal capital movements Commercial banks and other credit institutions Institutional investors 10
> - 35

The behavior of the dealers, merchants, banks, investment companies, and the Kuwaiti and Gulf shareholding companies was also influential. While the recession may explain a shift in preference from real to financial assets, the degree of speculation and disregard for the law reflects badly on the long-establishe **d** ealers and merchants who formed the new companies and traded in them, setting the pattern for other participants. This same group looked to the government to take the downside risk of its investment strategy.

The banks and investment companies not only lent heavily into an inflated market, but shifted the structure of their assets toward both larger and more speculative borrowers 4.V . This was primarily the responsibility of the Boards of Directors, particularly their lending committees. Management did not develop lending opportunities in the international market, nor did it examine the risks of domestic lending. Management accounting systems for accruing income on loans and overdrafts by increasing the credit facilities even when no payments were received by the borrowers artificially boosted the profits of the banks and reinforced their behavior.

During the stock market crisis the financial institutions that owned the clearing company had detailed positions of all the participants. These institutions unfortunately made no effort to analyze the information. Nor did they protect their creditor status in the laws that were passed. For example, the clearing company made payments on behalf of the Guarantee Fund to dealers even though the dealers owed money to the banks. The banks also discounted the bonds for clients, many of whom withdrew the cash and later applied for the DCSFP. (The procedure was later changed at the prompting of the Settlement Organization so that the dealers had to clear all commitments in the clearing system and the banks before receiving any cash.) Although some Kuwaiti and Gulf shareholding companies had inexperienced management. their boards of directors had the fiduciary responsibility, and most of them either lent or traded company funds on the market and exposed their shareholders to great risk. Even established Kuwaiti companies suffered from weak management and interference from board members. Companies that could have remained profitable and strong were weakened by high leverage, technical mismanagement, a recessionary environment, and speculative assets that had little to do with the company's business.

# RESTRUCTURING.

A government study of 37 Kuwaiti shareholding companies (nine of which were listed:KSCCs formed before 1981) identified a number of shortand long-run problems. The Kuwait Investment Authority (responsible for the government's investment portfolio) was asked to set up a supervision system to address the long-term problems. The availability of qualified i2J Figures available for commercial banks loans in March 1985 show that 0.4 percent of borrowers accounted for 60 percent of the loans.
Nellor, David. "Shaping East Asia's recovery:<sup>post-crisisreform of the international</sup> financial system." Reform and Recovery in<sup>East Asia.Ed.Peter Drysdale.London:</sup> Routledge, 2000. 328-350.

"A New Framework for Enhanced Asian Regional<sup>Cooperationto Promote Financial</sup> Stability." Meeting of Asian Finance and<sup>CentralBank Deputies.AgreedSummaryof</sup> Discussions. Manila, Philippines,<sup>18-19 November1997.</sup> Noble, Gregory W. and Ravenhill, John. "Causes<sup>andConsequencesof the Asian</sup> Financial Crisis." The Asian Financial<sup>Crisis andtheArchitectureof GlobalFinance.</sup> Eds. Gregory W. Noble and John Ravenhill.<sup>Cambridge:CambridgeUniversityPress,</sup> 2000. 1-35.

OECD (Organisation for Economic Co-operation<sup>and Development).ForeignDirect</sup> Investment for Development: Maximising<sup>Benefits.Minimising Costs. Paris:OECD,</sup> 2002.

Ogawa, E. and T. Ito. "On the Desirability<sup>of aRegionalBasket CurrencyArrangement."</sup> March 2000. mimeo.

Ozawa, Terutomo. "Pacific economic integration<sup>and the'flying geese'paradigm."</sup> Deepening Integration in the Pacific Economies:<sup>CorporateAlliances.Contestable</sup> Markets and Free Trade. A.M. Rugman<sup>and G. Boyd, Eds.Cheltenham, UK:Edward</sup> Elgar, 1999.

Panagariya, Arvind. Regionalism in Trade Policy:<sup>Essayson PreferentialTrading.</sup> Singapore, London: World Scientific, 1999.

Pangestu, Mari and Manggi Habir. "The<sup>boom,bust andrestructuring of Indonesian</sup> banks." Financial Markets and Policies<sup>in East Asia.Ed.G.de Brouwer. London:</sup> Routledge, 2002. 122-156.

Park, Yoon-Shik. "Development of Asian<sup>Bond Markets."RegionalFinancial</sup> Arrangements in East Asia. Ed. Yoon Hyung<sup>Kimand YunjongWang.Seoul: KIEP,</sup> 2001. 53-73.

Park, Yung Chul, Chae-Shick Chung, and Yunjong<sup>Wang. "Fear of Floating:Korea's</sup> Exchange Rate Policy after the Crisis." Journal of<sup>theJapaneseand International</sup> Economies 15 (2001): 225-251.

Petri, Peter A. "The East Asian Trading Bloc:<sup>AnAnalyticalHistory." Regionalismand</sup> Rivalry: Japan and the United States in Pacific<sup>Asia.Eds.J.A.Frankeland M.Kahler.</sup> NBER. Chicago: University of Chicago Press,<sup>1993.21-52.</sup> Radelet, Steven and Jeffrey Sachs. "What<sup>HaveWe Learned,So Far, From the Asian</sup> Financial Crisis?" January 1999.

142
global demand shock on the global variables, and assume that the structural shocks are ordered so that the first element, say, of �� corresponds to demand shocks. Given the particular identification matrix �, in equation (2) we replace the reduced form shock **v** _t_ with ��� and trace the dynamic response of the system to a sequence of shocks �� ��1,0,0,0�′ and �� ��0,0,0,0�′ for all ��1.

In addition to impulse responses, we will be interested also in the contribution of the different identified shocks to the variability of the observable global variables, as well as that of domestic GDP growth. Because the structural shocks are mutually orthogonal, we can unambiguously decompose the variance of the forecast errors of each variable of interest due to each of the identified structural shocks. We report the decomposition of the variances of the forecast errors at different horizons.<sup>14</sup> As in the case of impulse responses, we obtain as many variance decompositions as identified models. We report the average variance decomposition across all identified models.

# **4. Empirical results**

Before getting to the estimation results, we briefly review the facts regarding growth volatility. Figure 1 plots the standard deviation of real GDP growth over 1971-2010. It shows considerable variation across developing countries, from a low of 2 percent in Pakistan and Colombia, to a high of 10 percent in Iran and Gabon. On the whole, poorer countries tend to exhibit higher volatility, although both Iran and Gabon run counter this rule. Natural-resource exporters are abundantly represented among the most volatile countries; indeed, the top three are oil exporters.

> 14 The actual expressions for the variance decompositions can be found in Lutkepohl (2007).

14
**Table 1: International large‐scale assessments, 1995‐2016**

|Assessment|Sponsor|Years|Frequency|Grades/Age|Subjects|
|---|---|---|---|---|---|
|TIMSS|IEA|1995‐2015|4‐year cycle|Grade 4<br>Grade 8|Mathematics<br>Science|
|PIRLS|IEA|2001‐2016|4‐year cycle|Grade 4|Reading|
|PISA|OECD|2000‐2015|3‐year cycle|15‐year olds|Mathematics<br>Science<br>Reading|
|ERCE|LLECE|1997‐2013|No fixed cycle|Grade 3<br>Grade 6|Mathematics<br>Reading<br>Writing<br>Science|
|SACMEQ|SACMEQ|1995‐2014|No fixed cycle|Grade 6|Mathematics<br>Reading|
|PASEC|CONFEMEN|2012‐|4‐year cycle|Grade 2<br>Grade 6<br>End of basic|Curriculum<br>based|

The number of education systems<sup>2</sup> that have participated in one or more of these international or regional large-scale assessments has grown dramatically over the past decades, for example:

- TIMSS, from 42 in 1995 to 60 in 2015

- PISA, from 42 in 2000/2001 to 73 in 2015, with an additional 7 countries participating in PISA for Development

- SACMEQ from 7 in 1995-1999 to 15 in 2012-14

- ERCE from 13 in 1997 to 15 in 2013

What accounts for this increase?

Many explanations for the spread of large-scale assessments have been offered. The number of countries participating in any large-scale assessments could increase along with the globalization of education, generally, and of assessment specifically (Kamens 2013; Meyer & Benavot 2013). The number of countries participating in ILSAs, in particular, could increase as the worldwide technical capacity for undertaking large-scale assessments increases, fueled in part by previous international, regional or national assessments (Lockheed 2010; Greaney and Kellaghan 2009). And more countries could decide to participate in ILSAs to benefit from the information that international comparative measures provide; this demand for information could be fueled both by the concerns of educators and by the analytic interests of macro-economists for

> 2 All ILSAs report results for “education systems”, which may include cities, states or provinces, or other sub-national units. The numbers in the bulleted points refer to education systems, whereas the remainder of this paper focuses on economies as defined by the World Bank.

3