rafmacalaba/datause-encoder-data huggingface dataset:
Sergio Firpo and Alysson Portella. Decline in Wage Inequality in Brazil: A Survey of educated workers. Nonetheless, we caution that there is a small number of studies on this topic, which should deserve more attention, both in Brazil and Latin America in general.

# **4 Changes in Institutions: Minimum Wages and Formality**

Apart from changes in the educational composition of labor supply, Brazil’s labor markets experienced important institutional changes in the first decade of the 21st century. As we discussed in the introduction, the minimum wage more than doubled in real terms between 1994 and 2013, with a real increase of almost 60% after 2003. At the same time there was a considerable formalization in labor markets, with the share of informal jobs decreasing from half the working force to 38% between 2000 and 2012. Simultaneously, differences in wages between workers employed under these circumstances also decreased. These movements were followed by changes in enforcement of labor legislation and a significant decrease in unemployment, which raised workers’ bargaining power. Finally, although the dispersion of wages for both formal and informal workers decreased in the 2000s, the dispersion of wages of workers in the formal sector remained smaller than that of workers in informal sectors. These changes are all expected to affect the earnings distribution, reducing wage inequalities.

## **4.1 Minimum wage**

Overall, studies in Brazil have not found negative employment responses to the minimum wage, nor large displacement to the informal sector, but they do find compression in wages (Lemos, 2009; Corseuil et al., 2015; Saltiel and Urz ́ua, 2018). These results may be due to concomitant economic growth. For example, Saltiel and Urz ́ua (2018) find larger negative effects of the minimum wage on employment in regions less exposed to commodities booms. Besides the overall economic situation, the effect of the minimum wage may also depend on its bite, as measured for instance by its size relative to median income. Messina and Silva (2017) document wide variations in the ratio between minimum and median wages across Latin American countries. For Brazil, it has increased from around 0.4 in 1994 to nearly 0.6 in 2014. For Uruguay, these figures were respectively 0.2 and 0.4, whereas for Peru both figures were around 0.8. These differences are related to compliance to the minimum wage. On one hand, around 40% of the population makes less than the minimum wage in Peru, since it is so high that it has no practical effects on wage distribution. On the other hand, in Uruguay the minimum wage is so low 23
Assessment of the Mexican Universal Health Insurance Programme.” _The Lancet_ 373, no. 9673 (2009): 1447-1454.

Koch, Thomas. “All Internal in the Family? Measuring Spillovers from Public Health Insurance.” _Journal of Human Resources._ (2015): 959-979.

Levine, David, Rachel Polimeni, and Ian Ramage. “Insuring Health or Insuring Wealth?

An Experimental Evaluation of Health Insurance in Rural Cambodia.” _Journal of Development Economics_ . 119 (2016): 1-15.

- Magnoni, Barbara, N. Natilson, and George Bolaños. 2005. _Estudio de Factibilidad de la Incorporación del Sector Laboral Independiente en el Seguro Facultativo de Salud del INSS._ Original feasibility study submitted by the Banking on Health Project to the INSS on September 28, 2005

Newacheck, Paul W., Jeffrey J. Stoddard, Dana C. Hughes, and Michelle Pearl. “Health Insurance and Access to Primary Care for Children.” _New England Journal of Medicine_ 338, no. 8 (1998): 513-519.

Newacheck, Paul W., Dana C. Hughes, and Jeffrey J. Stoddard. “Children's Access to Primary Care: Differences by Race, Income, and Insurance Status.” _Pediatrics_ 97.1 (1996): 26-32.

Newhouse, Joseph P. and Rand Corporation. Insurance Experiment Group. _Free for all?:_

- _Lessons from the RAND Health Insurance Experiment_ . Harvard University Press, 1993.

Olson, Lynn M., Suk-fong Tang, and Paul W. Newacheck. “Children in the United States with Discontinuous Health Insurance Coverage.” _New England Journal of Medicine_ . 353 no. 4 (2005): 382-391.

22
38 Table 17. Vehicle kilometers of travel in selected countries (in billions of vehicle-km)

||Cars|Buses|Two wheeler|Goods<br>Vehicle|Avg. Annual<br>Increase in<br>Total VKT<br>(Percent)|
|---|---|---|---|---|---|
|OECD Countries||||||
|USA (1987)|2183.7|8.57|15.86|888.10|4|
|Canada (1987)|135.7|n.a.|n.a.|6.90|_5_|
|Japan (1987)|308.1|6.63|n.a.|234.15|_5_|
|France (1988)|305.0|4.00|9.00|90.00|5|
|Germany, Fed.Rep.(1988)|376.5|3.50|7.00|36.50|4|
|Portugal (1985)|22.5|0.24|0.74|5.20|n.a.|
|Sweden (1988)|53.0|n.a.|n.a.|6.00|n.a.|
|Turkey (1988)|10.3|2.15|n.a.|9.92|gb|
|<br>U.K. (1988)|270.0|3.60|4.60|53.90|5|
|Asia||||||
|T-hailand (1987)|10.62|5.65|n.a.|15.44|10|
|Jordan (1987)|4.94|0.17|0.11|2.32|5|
|Korea, Rep. of (1988)|8.85|3.71|n.a.|13.00|15|
|Hong Kong (1988)|3.66|7.17|0.16|2.37|_5_|
|Yemen A. Rep. (1988)|2.92|0.01|n.a.|4.18|28|
|Africa||||||
|Tunisia (1988)|12.30|7.82|0.017|0.06|n.a.|
|South Africa (1987)|47.56|5.67|2.951|27.01|7|
|Latin**America**||||||
|Colombia (1986)|12.29|2.65|n.a.|5.60|3|
|Chile (1987)|12.21|0.41|n.a.|1.89|30|
|Argentina (1986)|32.10|1.95|n.a.|15.97|1|

' = Since 1984

**b** = Since 1986

n. a. = not available Source: [IRF 89]
# **_5.2 Firm Financing Patterns (Capital Structure Choice)_**

An extensive theoretical literature in corporate finance shows that an optimal choice of securities and contracts can be used to mitigate agency conflicts<sup>20</sup> Further, this optimal choice depends on the information available to investors and their ability to monitor the firm and enforce their legal rights.<sup>21</sup> Since accounting standards and information available to investors and investor protection rights vary across countries and, one should expect firms‟ financial structures to differ systematically across countries as well. The first generation of papers on capital structure choices across developing countries relied mainly on large publicly traded firms and was focused on explaining a firm‟s leverage choices. With the availability of firm-level survey data across small, medium, and large firms in developing countries on their financing choices, the second generation literature was able to study firm financing patterns more broadly. We review both streams of literature below.

Demirguc-Kunt and Maksimovic (1999) were the first to establish systematic differences in debt maturity choices of firms in developed versus developing countries. Examining 30 countries between 1980-1991, they find that firms in developed countries had more long term debt, regardless of firm size. They then explore whether these differences can be accounted for by firm and institutional characteristics.<sup>22</sup> They find that large firms in countries with effective legal systems substitute long-term debt for short-term debt while small firms do not. As for institutional factors, they find limited evidence that both large and small firms in countries with a common-law tradition use less long-term debt, relative to their assets, than firms in countries with a civil-law tradition. They also find that stock market activity influences the debt levels of large firms but not small firms (large firms have more long-term debt in countries with active stock markets) whereas size of the banking sector influences debt levels of small firms but not large firms (small firms have less short term debt and more long term debt in countries with large banking sectors).

> 20 See Jensen and Meckling (1976), Myers(1977), Myers and Majluf (1984).

> 21 See Diamond (1991, 1993), Rajan (1992), Hart and Moore (1995), Bolton and Scharfstein (1993), and Harris and Raviv (1990)

> 22 Jong, Kabir, and Nguyen (2008) find that country-specific factors also influence the roles of firm-specific determinants of leverage.

38
yields biased estimates.<sup>23</sup> In the estimation, we instrument for the lagged growth rate, ∆ _xciht−_ 1, with the second lag of the log level of exports, _ln_ ( _xciht−_ 2) if _xciht−_ 2 _>_ 1 and a value of zero if the second lag of the level of exports is less than 1.<sup>24</sup> By utilizing 6-digit HS product fixed effects in (5) we control for changes in production costs or technology that imply that a particular good _h_ will have a growth rate for exports that is higher or lower than average. Note that commodities with very high average growth rates also tend to be those most likely to be targeted for antidumping measures. As in equations (2) and (3) we use year dummies to control for all aggregate variation in China and country _i_ over time.

For estimating equation (5), we calculate annual export growth of China’s exports to 38 different countries _i_ listed in table 1, excluding the U.S., EU and India.

# **5.2 Instrumental variables estimates of trade deflection and trade depression**

Table 10 presents our estimates of trade deflection and trade depression from a panel of Chinese exports to 38 countries. Our finding of a chilling effect of U.S. antidumping duties from the differencein-difference equation (2) discussed in section 4.1 appears to be robust across models. Although we find no evidence of chilling in specification (14) which regresses the growth of the volume of Chinese trade on only the _contemporaneous_ initiation of antidumping cases that resulted in changes in U.S. and EU antidumping duties, when we include two lags of each change in a duty in specification (15), we find that a 1% increase in the U.S. antidumping duty against Chinese exports is associated with a 0.127% reduction in the growth of exports in the following year. For the conditional mean U.S. antidumping duty on China’s exports in the sample of 125%, this implies a 15.9 percentage point fall in the growth of Chinese exports to an alternative market. When we redefine the dependent variable to be the _value_ of exports (16), we estimate a chilling effect that is similar in magnitude but which is not statistically significant at standard confidence levels. Part of the explanation for this result is the additional observations added to the sample when we switch to values from volumes, as the COMTRADE data reports many observations for Chinese export values that do not include a volume counterpart.

> 23An alternative approach such as the Arellano and Bond (1991) GMM estimator which utilizes multiple lags of the level of the dependent variable as an instrument for the lagged growth rate is not computationally feasible in our estimation because of the large number of parameters in (5).

> 24Because the bias associated with using a weak instrument may be large, we test the quality of our instrument. First-stage restricted and unrestricted regressions are reported in table A-1 for our baseline specification. For all specifications, the F-statistics of roughly 312,000 are far larger than the 99% critical _χ_<sup>2</sup> (1) of 6.63. We conclude that the second lag of the log level of exports is a strong instrument for the lagged growth rate.

20
In sample? ina] Yes , | No | | Not<sup>inresults</sup>

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Elbers _et al._ (2001) demonstrate a methodology to impute a measure of consumption, as defined in the PPV household survey, into the much large PNAD household survey. The purpose of this exercise was to estimate measures of welfare, such as poverty and inequality, defined in terms of consumption. Furthermore, the paper shed light on the question of whether the analysis of poverty and inequality based on the PNAD income indicator yields different conclusions than an analysis based on consumption. The findings show that poverty and inequality, estimated on the basis of consumption in the PNAD, tend to be much lower than estimates based on the income concept, which is not necessarily an indictment of income based analysis, however, as the two concepts of welfare are different and should not be expected to yield the same quantitative estimates. The authors demonstrates however, that differences in estimates of poverty and inequality between the PNAD and the PPV are not attributable to non-comparability of these two surveys and the PNAD consumption-based estimates are very close to those which obtain with the PPV. The paper pursued the comparability of income and consumption-based results further by examining whether there are important qualitative differences in the geographic profile of welfare across the two approaches. The paper indicate that the two reach broadly similar findings.

# **2.2. Poverty measures and lines**

Poverty measures are designed to count the poor and to diagnose the extent and distribution of poverty, while social welfare functions are guides to policy<sup>6</sup> . Hence, it is worth keeping in mind that poverty measures are not necessarily an adequate guide to policy. Three commonly used measures of absolute poverty are discussed and they are applied in the following sub-sections.

The poverty measures proposed by Foster, Greer, and Thorbecke (1984) are the headcount ratio (P<sup>0</sup> ), poverty gap (P<sup>1</sup> ), and the squared poverty gap (P<sup>2</sup> ). The former is a measure of the magnitude of poverty and the latter two poverty measures assess both magnitude and intensity.

The headcount ratio is defined as the proportion of people below the poverty line. One concern applying the P<sup>0</sup> measure is that each individual below the poverty line is

> 6 Poverty measures are not Pareto-consistent since they do not consider the welfare of the non-poor.

6
WD, (1971), "The Place of DMr in Operation against MNlaria and Other Ver.law-borne Diseases," Official Records, World Hbalth organizaticn, DOcument No. 190:176-182, Gbneva.

MD, (1986b), "The WM Reccmue3ide Classification of Peticides by Hazard and GUidelinesJto Classification 1986-87," Document No. VBC/86.1 Rev. 1, World Health organization, Geneva.

BrOOk3, J.E. and F.P. Rowe, (1979), "ommm-sal Rodent Ccmtrol," Document No. WH/VBC/79.726, World Health organdzation, Geneva.

World Bank, (1985), '"Qldelines for the Selection and Use of Pesicides in Bank FinaWed Project.s and Their Procurment When Finawx ed by the Bank," OFN ll.O1.A - Agriculture, World Bank, Washirgtmn D.C.

WMD, (1986c), "Specificaticns for Pesticides Used in Public Health,"I Sixth edition, World Health Organizaticn, Geneva.

WID, (1967), "Safe Use of Pesticides in Public Health," 16th Report of the lMD Expert Cmuuittee on Irnecticides, Tech. Report. No. 356, World Health Organization, Geneva. WHD, (1979b), "Safe Use of Pesticides," 3rd Report of the MMD EXpert Qmnittee on Vector Biology arld Qitr0l, Tech. Report. No. 634, World Health Organization, Gbreva.
|(0.868)|(0.900)|(0.969)|(0.961)|(0.954)|(0.954)|
|---|---|---|---|---|---|
|Female Ownership Y:1 N:0|6.213***|6.036***|5.981***|6.010***|6.028***|
||(0.622)|(0.652)|(0.653)|(0.652)|(0.652)|
|Skills Obstacle (0-4)|0.576**|0.627**|0.608**|0.624**|0.626**|
||(0.231)|(0.268)|(0.269)|(0.267)|(0.267)|
|How Much Of An Obstacle:|-0.015|0.009|-0.014|-0.019|-0.029|
|Transport?|(0.195)|(0.208)|(0.208)|(0.208)|(0.209)|
|Firm Purchased Fixed Assets Y:1|-1.001*|-1.016*|-0.991*|-0.924*|-0.923*|
|N:0|(0.526)|(0.558)|(0.557)|(0.557)|(0.557)|
|Power Outages (days)||-0.161**|-0.146**|-0.148**|-0.146**|
|||(0.069)|(0.067)|(0.067)|(0.067)|
|Crime Losses Y:1 N:0||-0.606|-0.659|-0.650|-0.665|
|||(0.669)|(0.671)|(0.672)|(0.673)|
|Firm Inspected Y:1 N:0||-0.753|-0.799|-0.770|-0.764|
|||(0.601)|(0.600)|(0.595)|(0.596)|
|How Much Of An Obstacle: Tax||-0.245|-0.270|-0.276|-0.284|
|Rates||(0.227)|(0.227)|(0.227)|(0.227)|
|How Much Of An Obstacle: Labor||0.041|0.053|0.040|0.039|
|Regulations?||(0.299)|(0.300)|(0.299)|(0.298)|
|Population (logs)|||-38.727***|-37.235***|-36.871***|
||||(10.834)|(10.889)|(10.963)|
|Urbanization (%)|||1.787***|1.711***|1.704***|
||||(0.382)|(0.383)|(0.378)|
|WBL Index|||14.329*|14.724*|24.534**|
||||(8.108)|(8.125)|(11.212)|
|Ratio of Female to Male|||3.289***|3.293***|3.301***|
|Population|||(0.682)|(0.682)|(0.705)|
|Fertility Rate|||-14.080***|-14.013***|-13.892***|
||||(2.943)|(2.952)|(2.966)|
|Inflation (%)|||0.054|0.057|0.059|
||||(0.060)|(0.060)|(0.062)|

88
25 Agarwal, Gubitz and Nunnenkamp (1990)). As the general perception of the German investment community is that the latter is particularly risk averse this result was somewhat u%nexpected. The explanation for this finding is, however, rather obvious as a high share of new investments to developing countries is covered by a guarantee.

In order to investigate this argument in some more detail a regression equation relating gross FDI outflows to developing countries (FDM) with exchange rates (EXDM), nominal GNP (GDM), country credit rating (II) and new approved guarantees relative to GNP (GARNEW) was estimated (general notation as before; data sources see Annex I). As the amount of new approved guarantees increases with country risk, it is corrected for this effect by weighting it with the country's credit rating, i.e. the higher the credit worthiness the higher the weight of the actual amount of new approved guarantees.14 For the country credit rating the annual average of the index of the Institutional Investor was used, i.e. a higher country risk is associated with a lower credit rating. Data on approved guarantees was available for 17 countries and the panel covers the years 1980 to 1988.15 140n the other hand, one could argue that an increasing country risk (i.e. a decreasing II) is related a higher risk premium of expected rates of return of the investment. Thus the potential subsidy on the fee charged (which is the same across countries) is higher and a greater additionality effect is therefore associated with guarantees in countries with a higher risk rating. In the empirical equation this means that the elasticity of new approved guarantees would inversely depend on II. The empirical results, however, change little when this effect is taken into account.

"These countries are Argentina, Brazil, Chile, Colombia, C6te d'Ivoire, Egypt, India, Indonesia, Korea (South), Malaysia, Mexico, Morocco, Nigeria, Peru, Singapore, Thailand, and Tunisia. The II-index is not available before 1980.
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on better terms.<sup>6</sup> Ge and Qiu (2005) provide survey evidence indicating that non-state-owned firms received more trade credit than state-owned firms and were more likely to use that funding to support investment, which likely helped those firms to grow. Thus, the bargaining dynamics and growth-supporting aspects of trade credit arrangements found in advanced economies were also evident in China during this period, at least among private firms.

Absent reliable courts and other institutions to support contracting, trade credit among private firms was supported by personal relationships between suppliers and customers as in other contexts. This was also true of relatively well-established private firms as late as the mid2010s. For example, using a sample of Chinese firms listed on both the Shanghai and Shenzhen securities exchanges from 2007 to 2016, Kong et al. (2020) provide evidence that CEOs’ ‘hometown connections’ with suppliers exerted a strong influence on their firms’ access to trade credit. Using the shares of inputs that listed firms purchased from suppliers in their CEOs’ home province as their measure of connections, they show that its positive relationship with use of trade credit is stronger for non-state-owned firms located in provinces with less developed financial institutions, in regions with stronger informal institutions such as merchant guilds, and for firms whose CEOs held an important position in their hometown chamber of commerce. For suppliers facing high levels of information opacity about customers and low levels of social trust at the provincial level, the positive relationship between CEOs’ hometown connections and trade credit was also stronger, which the authors interpret as further evidence that these connections eased credit risks by providing information about customers and a higher degree of social trust in them stemming from homophily – the sociological principle that individuals tend to associate and interact with others who have similar backgrounds and characteristics (Granovetter, 2005).

This lack of arms-length contracting could also help explain why some authors have concluded that trade credit was not a first-best method of funding private firms, but a workaround that was not a key driver of China’s explosive growth during this period (Cull, Xu, and Zhu, 2009).

> 6 Note that Fabbri and Klapper (2016) used a smaller cross-section of firms for which market power and bargaining dynamics may have been especially important influences on trade credit dynamics. Cull, Xu, and Zhu (2009) used a much larger sample of firms over multiple years but lacked good proxies for the relative market/bargaining power of suppliers and customers. Neither paper was therefore able to test adequately the bargaining power and equity stake hypotheses in the same regressions, as in Dass et al. (2015) for U.S. firms, though we suspect that both affected trade credit extended by private firms in China during this time.

21