rafmacalaba/datause-encoder-data huggingface dataset:
44 We estimate 44% of rural Malawians cannot afford the adequate diet in the market _even_ at the lower bound and _if spending all their resources on food_ . At current food spending, 62% of rural Malawian households cannot afford a nutrient-adequate diet, as the lower bound cost exceeds current food expenditure. Recalling that households already spend an average 74% of their resources on food, increasing food budgets without increasing incomes would be nearimpossible for many. At the other extreme the shared diet is feasible and affordable to 20% of households within their current food budgets. That leaves 80% of households who cannot afford to completely share meals, either because it is infeasible or costs more than current food spending, and 69.5% for whom it is infeasible or costs more than all available resources.

As discussed above, there are some limitations to the food price and nutrient composition data and that may be consequential to our results. However, several factors lend confidence to the data quality and our ability to draw meaningful conclusions for Malawi from this demonstration case of the household least-cost diets methodology. First, the list of food items includes all items that accounted for at least 0.02% of household expenditure in 2010 (including own-produced goods), indicating prices are monitored for the vast majority of foods households choose to consume. For comparison, the household survey included 129 items that we could identify, convert to kilograms, and match to food composition data, reflecting a total of 93% of all reported item-source observations. We estimate approximately 90% of household expenditure is spent on items that are present in the food item list. At the nutrient level, 94% of all energy and macronutrients is consumed from items in the market price list and for micronutrients at most 22% of consumption comes from items _not_ in the market price list (see Supplementary Table F). Second, missing data are common in agricultural price series, and we cannot assume that lack of a price observation indicates the item was not available in that market-month, though often
Table 3. Estimates of the average accuracy of homeowner self-assessed rents based on matching estimators, Metropolitan Lima and rural areas, by year, 2003–17

||_Kern_<br>|_el_<br>|_Metropolita_<br>_Nearest-n_<br>|_n Lima_<br>_eighbor_<br>|_Radi_<br>|_us_<br>|_Kern_<br>|_el_<br>|_Rural a_<br>_Nearest-n_<br>|_reas_<br>_eighbor_<br>|_Rad_<br>|_ius_<br>|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
||_Difference_|_P-value_|_Difference_|_P-value_|_Difference_|_P-value_|_Difference_|_P-value_|_Difference_|_P-value_|_Difference_|_P-value_|
|2003|−1326|0.328|−4793|0.072|−1363|0.370|−27|0.649|2|0.989|−31|0.462|
|2004|−628|0.479|76|0.976|−643|0.522|−73|0.301|−29|0.758|−76|0.209|
|2005|677|0.277|1840|0.141|696|0.158|59|0.226|84|0.279|11|0.737|
|2006|245|0.769|927|0.610|461|0.627|−22|0.828|88|0.558|−183|0.237|
|2007|461|0.652|2809|0.240|568|0.617|27|0.654|97|0.271|82|0.039|
|2008|−73|0.905|1073|0.499|39|0.952|70|0.379|156|0.109|75|0.134|
|2009|437|0.597|1196|0.549|714|0.376|−123|0.281|−26|0.859|−135|0.085|
|2010|−818|0.269|−2006|0.239|−799|0.200|−11|0.911|−70|0.527|−42|0.561|
|2011|290|0.593|2399|0.203|222|0.687|55|0.525|−17|0.869|−1|0.992|
|2012|−207|0.712|−1416|0.426|−118|0.858|−16|0.936|−94|0.833|185|0.044|
|2013|−594|0.510|716|0.830|−796|0.437|86|0.333|−135|0.216|−22|0.800|
|2014|−342|0.617|−2608|0.227|−335|0.628|−542|0.011|−723|0.038|−374|0.054|
|2015|−40|0.966|−1554|0.535|−172|0.824|−307|0.033|−237|0.164|−276|0.041|
|2016|−1890|0.034|−1806|0.588|−1954|0.052|−325|0.003|−220|0.143|−251|0.007|
|2017|−2191|0.001|−1657|0.532|−1891|0.008|−419|0.001|−297|0.116|−368|0.000|

_Source:_ Based on National Household Survey data.

Note: Kernel matching is performed using the Epanechnikov Kernel and a bandwidth of 0.06. Nearest neighbor matching is performed on the closest neighbor with replacement. Radius matching imposes a caliper of 0.001. Standard errors are bootstrapped with 100 replications.

19
ESTIMATES OF COSTS AND BENEFITS 89 FLgure 5.7: Cost Benefit Me.sureo by Sector

- (f) Unlike some previous studies (Malpezzi, 1986), net benefits calculated for the single Tenement Sector Indigenous Sector "representative consumer" are soo____ reasonably close to the sample median of benefits calculated 1 **1** ± separately for each household. **100**

- (g) The "transfer efficiency" **' I** (ratio of benefVts to costs) _ is therefore low. If Ep--l (the most "favorable" assumption in terms of controls' efficiency), the 5 **mO, ma** P.O C.[ D **i ..** I **b(,** PPQe **cO.** CM M. I a.. **,** efficiency is 40-50 percent. Tenants receive net benefits

- which are less than half the static cost to landlords. If the price elasticity is on the order of -0.5, net benefits to most tenants is negative; both landlords and (most) tenants are made worse off by controls.

- (h) While costs and benefits are large relative to rents paid, they are small relative to income. The cost of the subsidy is usually on the order 5f 2-3 percent of consumption. Net tenant benefits are, at best, negligible compared to total consumption.

- (i) These estimates of PmQm are smaller than those taken directly from the cross country model (above), but are of the same order of magnitude. This is not surprising, since we also used the cross country estimates to "calibrate" our estimates of uncontrolled rents due to biases discussed above. While the exact results here would change given different cross country estimates, the qualitative results presented would not change.

Figure 5.8: Changes in Consumers Surplus With these results we can put some for **Typical Tenants** numbers on the graphs from the previous **Price** Per Unit **of** Housing Services theoretical chapter. Figure 5.8 presents such a diagram. Normalizing the market price per unit of housing services at one, we estimate that the typical tenement household would consume 1040 3 units of housing services in the absence of controls and other market 2\ imperfections. In fact we observe households consuming 574 units, butt ' spending only 300 (i.e. the price per . 0 _A_ A unit of housing services is 300/574 - o 250 5 750 1.000 1,250 1,500 1.750 2.000 .52, or about half the market price). **QUantily** of Housing services Two demand curves are drawn, representing the two alternative assumed price elasticities of -1 and -0.5, respectively. As with any normal good, if unconstrained this typical household would like to
Government expenditures in private goods (non-social subsidies), by contrast, often finance assets that could equally well be financed directly by private entrepreneurs. Even more important, as argued above these government subsidies go to the wealthy, who already face generally no constraints to invest at optimal levels (who are likely to face no liquidity constraints or other types of market imperfections). As shown below, the effect of these subsidies is almost always detrimental for economic efficiency and, far from contributing to promote private investment, the subsidies tend to crowd it out and to increase the consumption of the wealthy instead.<sup>12</sup> Thus, we have another important contrast that justifies the emphasis on the public/private goods dichotomy: While increasing public goods is likely to promote economic growth directly (as factors of production) and indirectly (through its positive effect on private investment), increasing subsidies is more often than not deleterious for growth and private investment.

_Crowding-out and agricultural performance._ Government provision of private goods or subsidies causes three forms of crowding-out with negative efficiency and equity effects: (i) Subsidies crowd out the supply of public goods through the government _budget, human, and institutional_ constraints. The budget crowding-out is obvious: government-provided subsidies compete with the provision of public goods, not only for government’s financial resources but also for other public resources that also tend to be scarce. The administration of subsidy programs often absorbs a large share of the limited availability of the government’s human capital. Scarce institutional capital is also usually preferentially allocated to subsidy programs.

Governments forego investments in public goods that, according to many studies, have extremely large rates of return. The survey by Alston et al. (2000), for example, reviews hundreds of studies around the world estimating rates of return to agriculture R&D revealing extremely high and non-declining rates. Psacharopoulos’s (1994) survey does the same for studies measuring returns to education over many countries, also showing very high rates. Also, a study by Fan, Hazell, and Thorat (2000) found unusually high returns to a variety of public infrastructure investment in agriculture in India and China. The World Bank (2000) has gathered evidence also pointing to very high rates of return to certain investments in protecting the

> 12 Subsidies may, however, be directed in some cases to mitigate market imperfections and externalities that otherwise may prevent even wealthy entrepreneurs from optimally investing.  The evidence available, however, seems to indicate that subsidies that can be justified in this way are rarely implemented.

6
# Mashup Indices of Development

## Martin Ravallion<sup>1</sup>

_Development Research Group, World Bank 1818 H Street NW, Washington DC, 20433, USA_

> 1    For helpful comments the author is grateful to Sabina Alkire, Kathleen Beegle, Rui Manuel Coutinho, Asli Demirguc-Kunt, Quy-Toan Do, Francisco Ferreira, Garance Genicot, Carolin Geginat, Stephan Klasen, Steve Knack, Aart Kraay, Will Martin, Branko Milanovic, Kalle Moene, Dominique van de Walle, Roy Van der Weide and Hassan Zaman. These are the views of the author, and need not reflect those of the World Bank or any affiliated organization.
Therefore, we conduct a series of robustness checks using alternative measures of informality, including the survey-based share of self-employed in total employment, the MIMIC measure of informality, and a DGE-based measure of informality that is benchmarked to survey-based estimates of self-employment. The survey-based share of self-employment does not rely on strong assumptions but is more tenuously linked to credit than output-based measures. It is available for 160 economies over 2000-18. The MIMIC-based estimates cover a wider range of indicators associated with informality but include a measure of financial size in its construction. Estimates are taken from Medina and Schneider (2019) and are available for 155 economies over the period 2000-17. The model of Elgin and Oztunali (2012) benchmarked to survey-based estimates of selfemployment is decoupled from MIMIC-based estimates of informality and does not require ad-hoc assumptions regarding the relationship between formal and informal productivity.<sup>12</sup> It is available for up to 155 economies during 2000-18.

Table 10 shows that the baseline results are largely robust to the use of alternative informality measures. All regressions that instrument the informal economy with commercial bank branches in the region or with distance-discounted commercial bank branches continue to indicate that greater financial development reduces the share of the informal economy.

# **5. Conclusion**

It is well-established in the literature that widespread informal economic activity is associated with underdeveloped financial systems through a wide range of mechanisms. What has not been well-established is the direction of causality, at least in a multi-country setting. In this paper, we use an instrumental variable approach to establish such a causal link. Using a novel instrument— financial sector development in other (neighboring) countries— we show that greater financial sector development, here proxied by access to banking services, reduces the share of informal output to GDP. The impact is stronger in countries with greater trade openness and capital account openness. These findings are robust to the use of alternative informality measures and various indicators for financial development.

Confidence in a causal effect of financial development supplies policy makers with the information needed to direct policy action. It suggests that efforts to broaden access to the financial system can help reduce informal activity. This is likely to be particularly helpful when combined with other policies.

12 See the Appendix for details regarding calibrating the model of Elgin and Oztunali (2012) to survey-based estimates of self-employment.

13
- Organization of American States (OAS) (2001) _Bogota Manual: Standardization of Technological Innovation in Latin American and Caribbean Countries_ , Organization of American States.

- OECD (2005) _Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data, Third Edition._ OECD, Paris.

- Romer, Paul (1990) “Endogenous technological change”, _Journal of Political Economy_ 98 : 71-102.

- Schumpeter, Joseph A. 1934. _The Theory of Economic Development_ . Cambridge: Harvard University Press.

- 25 -
The 2003 PODES for the first time included a section on politics, conflict and crime (see Annex 2). Sub-district level statistical agents ( _mantri statistik)_ , who work for BPS, implement the survey. Information is typically derived from the _kepala desa_ (village heads) and _lurah_ (neighborhood heads) about the occurrence of conflict in the previous year. If conflict was reported, the survey asked for the type of conflict, whether it was longstanding, and the impacts of the conflict (fatalities, injuries, and material damage). Finally, the survey also asked if the conflict was resolved, and if so, by whom (citizens, village apparatus, or security apparatus).

# _Levels and Types of Conflict_

Just over 7 percent of villages and neighborhoods reported local conflict during the previous year (a total of 4,872 incidents) (Table 2). The incidence of local conflict is higher in urban areas (8.8 versus 6.7 percent). The relative incidence of conflicts appears to be somewhat higher off-Java than on Java. However, this difference is largely explained by the high incidence of conflict in Aceh (23.4 percent of jurisdictions). Omitting Aceh, the reported rates of conflict incidence for Java and off-Java are more similar (5.4 versus 5.7 percent). Figure 1 reports conflict incidence at the district ( _kabupaten_ and _kota_ ) level, mapping the share of communities in each district reporting conflict. The map highlights that conflict incidence is spread throughout the archipelago.

Almost a quarter of reported conflicts were alleged to have involved fatalities, about half injuries, and about a third material damage. Total fatalities arising from conflict were reported to be 4,869. Reported injuries amounted to 9,823 injuries and material damages of 771 billion rupiah (est. 91.4 million USD).

The majority of conflicts on Java (72 percent) were reported to be new. At first blush, less than half of all conflicts off-Java (3.9 versus 8.0 percent incidence) were new. However, the 13
- 95 -

issue is being addressed in some Latin American countries (Ducci, 1987). While this ro.te may not be integrated into the se_;vices previded by national systems, it should be addressed in broader analysis and planning for training development.

# Middle Income Countries In Earlier Stakes of Development

6.62 Experience suggests that these countries, as well as larger low income countries (such as India and Pakistan), can use the experiences of countries further along in the development of VET systems as a guide to i .vestment.

6.03 Given the complexity of the task, and the importance of employment demand, strong enterprise management and good implementation capacity, careful sector analysis will be essential to effective investment. These analyses should give close attention to the nature of effective employment demand. More reliance should be placed on labor market surveys, vacancy unemployment rates, and other indicators of short term demand, rather than on global manpower forecasting. The development of labor market monitoring mechanisms should be of high priority.

6.64 Management capacity is of crucial importance, and should receive considerable emphasis in sector analysis. This should extend beyond management in the VET system to include enterprise management capacity. The latter is crucially important tc linkage development and, over the longer term, to enterprise provision of training. Decentralization policies in larger countries must be based on through assessment of the needs for management development at lower levels of the system.

6.65 In addressing system quality, emphasis should be given to the balanced development of key elements -- testing, curricula, staffing, and students. Sector analysis should address the extent to wllich these elements are in place, and are functioning well together.

6.66 On the policy level, a major issue is the structural separation of vocational training from vocational education. Implementation of this policy has encountered resistance from the education sector in the past, and is likely to continue to do so. Important to the resolution of the issue will be a reconsideration of the proper role of secondary education vis a vis employment. While it is the case the secondary vocational schools can be effective when they acquire characteristics of nonformal training, it is not clear that this is a cost-effective way to meet training needs. As noted, new thinking on the best contribution of secondary education to employment is needed. Ministries of Education may be positive about relinquishing vocational education if the general role of secondary education in preparation for work can be strengthened at low cost.

6.67 A second important policy issue is financing. Experience demonstrates the value of payroll tax levies in providing a stable source of financing for systems development. While not representing
<!-- Start of picture text --> 700,000<br>600,000<br>£ 500,000<br>3<br>a3© 400,000<br>=° 300,000<br>Fy<br>2§ 200,000<br>(¢)<br>2004 2005 2006 2007 2008 2009 2010 2011 ##+.2012 «2013 2014 #+$.2015 2016 2017<br>gw Lima Metropolitana Overall Country except Lima<br><!-- End of picture text -->
To our knowledge, the relationships between capital controls and stock market size, liquidity, and volatility have not been the focus of previous analysis. To conduct this study, we measure market size as the ratio of market capitalization to Gross Domestic Product (GDP). We use two measures for market liquidity: the ratio of total value traded to GDP (value traded ratio) and the ratio of total value traded to market capitalization (turnover ratio). Although these measures of "liquidity" do not directly quantify trading costs or the uncertainty associated with market prices, settlement, etc., these indicators do quantify the level of trading relative to the size of the economy and the size of the market, and are directly motivated by theoretical models of stock market liquidity (Levine (1991) and Bencivenga, Smith, and Starr (1995)). To measure the volatility of stock returns, we use an adjusted twelve-month rolling standard deviation of returns based on Schwert (1989). We find that stock markets tend to become larger, more liquid, and more volatile following the liberalization of restrictions on international portfolio flows.

Tlhis paper also contributes to the large literature on international capital control liberalization and world capital market integration. Unlike previous work on integration which focuses on testing whether world capital markets are perfectly integrated or have a fixed degree of segmentation, our study examines the effect of specific liberalizations on capital market integration.<sup>2</sup> We use the International Capital Asset Pricing Model (ICAPM) and the International Arbitrage Pricing Model (IAPM) to compute monthly measures of integration using Korajczyk and Viallet's (1989) estimation procedure. We then analyze the time-series behavior of these integration measures before and after policy changes. We find that 10 out of 16 national markets exhibit significant signs of becoming more integrated internationally following the liberalization of investment and repatriation restrictions.

2For studies which empirically evaluate asset pricing models that assume that world equity markets are perfectly integrated, see Campbell and Hamao (1992), Cho, Eun, and Senbet (1986), Ferson and Harvey (1993), Harvey (1991, 1995), Jorion and Schwartz (1986), Solnik (1974), Stehle (1977), and Wheatley (1988). In contrast, Errunza and Losq (1985) evaluate an asset pricing model with a fixed level of market segmentation. Errunza and Losq (1985), Errunza, Losq, and Padmanabhan (1992), Gultekin, Gultekin, and Penati (1989), and Korajczyk and Viallet (1989) find that the degree of international integration is negatively associated with official restrictions on international investment.

2
Dell’Ariccia, G., Igan, D., Laeven, L., 2008. “Credit booms and lending standards: evidence from the subprime mortgage market.” IMF working paper 08/106.

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Demirgüç-Kunt, A., Laeven, L., Levine, R., 2004. “Regulations, market structure, institutions and the cost of financial intermediation.” _Journal of Money, Credit and Banking_ 36, 593622.

- Erel, I., 2011. “The effect of bank mergers on loan prices: Evidence from the United States.” _Review of Financial Studies_ , 24(4), 1068-1101.

Farazi, S., Feyen, E., Rocha, R., 2011. “Bank ownership and performance in the Middle East and North Africa Region.” The World Bank Policy Research Working Paper 5620, April.

- Fernandez de Guevara, J., Maudos, J, Perez, F., (2005). “Market Power in European Banking Sectors.” _Journal of Financial Services Research_ 27, 109-137.

- Fernandez de Guevara, J., Maudos, J, Perez, F., (2007). “Integration and Competition in the European Financial Markets,” _Journal of International Money and Finance_ 26, 26-45.

- Fischer, K-H., 2000. “Acquisition of information in loan markets and bank market power An empirical investigation.” Working Paper, Goethe University, Frankfurt.

- Hauswald, R., Marquez, R., 2006. “Competition and strategic information acquisition in credit markets.” _Review of Financial Studies_ 19(3), 967-1000.

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- Lerner, A., 1934. “The concept of monopoly and the measurement of monopoly power.” _Review of Economic Studies_ 1, 157–175.

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17