rafmacalaba/datause-encoder-data huggingface dataset:
was taken due to the public sector’s limited size, and in order to exploit what was perceived to be existing excess capacity in non-public schools, where student-teacher ratios were believed to be relatively low because parents could not afford to consistently send children to school. In addition, in areas where schools were already full, it was expected that the tuition waiver incentive would trigger a supply response by private actors, encouraging them to build or expand non-public schools.

Participation in the TWP is subject to several conditions, aimed at improving the learning environment and grade-for-age accordance. First, in order to qualify, schools need to have a permit to operate from the Ministry of Education. Second, only children entering grade 1 for the first time, between the ages of 6-8, are eligible for the subsidy.<sup>4</sup> Each entering grade 1 cohort is then supported for the subsequent years through grade 6, subject to compliance with the program rules. Third, in addition to not charging parents any fees, schools are required to provide students with at least three school textbooks. Finally, there is a limit of 45 children per class, and a maximum of two classes per grade that can benefit from the program per school. Compliance with these conditions has been verified annually by independent organizations hired by the Ministry to do so. While the majority of schools have largely complied, the verification reports find that most fail to fully comply with at least one of the conditions. However, the Ministry has taken little to no action to enforce compliance (either by encouraging it or by sanctioning non-compliance).

The amount of the subsidy was set at $90 per student in 2007, above the estimated average school tuition to account for the extra costs associated with providing textbooks and limiting class size. The subsidy amount has not changed since. Funds are managed by School Management Committees (SMCs), constituted by the school director, the president of the parents’ committee, and representatives of teachers. Funds are transferred to dedicated bank accounts opened in the name of the SMCs, with signing authority given to both the school director and the president of the SMC. The money can be used for any of ten purposes outlined in the operational manual, including paying teacher salaries, small rehabilitation projects, and school feeding programs.

> 4 This is a potentially binding constraint in many cases, as the average age of a new 1st grader is nearly 8 years old (based on data from the 2012 DHS).

5
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42 the initial redistribution and expansion have to be dismantled. By late 1987, growth was petering out and inflation, brought about by external constraints, bottlenecks and the adjustment of severe price distortions, was exploding.

To understand what went wrong it helps to return to the basic philosophy of the program which is fully documented in a book, El Peru Heterodoxo: Un Modelo Economico, the economic architects of the program published in July, 1987.29 The most striking revelation of this book is the extraordinary extent to which policy makers in the Garcia administration diverged from accepted economics. Thus we learn (p.<sup>75</sup> -<sup>76</sup> ) that "An examination of the Peruvian record reveals that periods of moderate inflation are associated with expansionary fiscal policies. And periods of major inflation are associated with fiscal restraint. Thus, the record shows exactly the opposite of what is predicted by a theory which explains inflation by fiscal deficits." And, to dispel any doubts:(p.82) 'If it were necessary to summarize in two words the economic strategy adopted by the government starting in August 1985 they are control (meaning control of prices and costs and recognizing that this could be done only temporarily for the first twelve month) and spend, transferring resources to the poorest so that they increase consumption and create a demand for increased output, thus 'justifying' that idle capacity be put to use. It is necessary to spend, even at the cost of a fiscal deficit, because, if this deficit transfers public resources to increased consumption of the poorest they demand more goods and this will bring about a reduction in unit costs. Thus the deficit is not 29See D.Carbonetto, I.de Cabellos, O.Dancourt, C.Ferrari, D.Martinez, J.Mezzera, G.Saberbein, J.Tantalean, and P.Vigier El Peru Heterodoxo. Un Modelo Economico, National Planning Institute, Lima, 1987.
Table 4: Assumptions on travel times

|Average traveling times by type of road||
|---|---|
|regional|60kmh|
|primary|50kmh|
|tertiary|30kmh|
|residential|20kmh|
|track|10kmh|
|Israeli only|0kmh|
|Roadblocks, earthmounds, barrier gates,<br>separation wall (planned and under construction)|infnite|
|Checkpoints|15min|

_Notes:_ Source for average travel times by type of road: Van Der Weide et al. (2018). Source for checkpoint travel time: PCBS, Eklund and Martensson (2012), and Van Der Weide et al. (2018).

# **4 Model**

Consider a static model with _J_ sectors and _O_ localities. Workers live and work in the same location. We allow for intersectoral and interregional trade linkages. We allow industries to differ across a number of dimensions: location-specific exogenous productivity and production technology, consumption shares, elasticity to trade costs. Workers can freely move between locations and between industries.

## **4.1 Households**

Workers have Cobb-Douglas preferences over consumption goods, with shares _αs_ . Preferences are homothetic of degree 1, so<sup>�</sup> _j_<sup>_αj_= 1.</sup> Utility over a consumption basket in location _n_ is given by: where _c_<sup>_j_</sup> _n_<sup>istheconsumptionoffinalgood,boughtatprices</sup><sup>_P j_</sup> _n_<sup>.</sup> Workers supply inelastically one unit of labor and they receive wage _wn_ regardless of the industry in which they are employed. We do not have information on the trade imbalances between locations in the West Bank. As a result, we assume trade to be always balanced. Land is rented locally and receipts _rn_ are distributed equally across the workers in location _n_ . Total local income is: where _Ln_ is the number of people living in _n_ , and _Hn_ is the amount of land available.

15
**Table 4: Concentration and Kakwani coefficients, in Mongolia (2016)**

|||**CONCENTRATION**<br>**COEFFICIENTS**||**KAKWANI CO**|**EFFICIENTS**||
|---|---|---|---|---|---|---|
|**market income**|||Market Incom|e Disposable Income|Consumable Incom|e Final Income|
||PIT deductions|0.35|0.101|‐0.039|‐0.029|‐0.058|
||income taxes|0.53|0.078|0.218|0.208|0.238|
||social securitycontributions|0.49|0.035|0.175|0.166|0.195|
|**taxable income**|||||||
||statepensions|‐0.31|0.769|0.629|0.639|0.609|
||child money|‐0.04|0.492|0.352|0.362|0.332|
||other social assistance|‐0.23|0.682|0.542|0.552|0.523|
|**disposable income**|||||||
||VAT|0.19|‐0.262|‐0.122|‐0.131|‐0.102|
||excise taxes|0.15|‐0.310|‐0.170|‐0.180|‐0.150|
||Mortgage interest subsidy|0.60|‐0.146|‐0.286|‐0.276|‐0.306|
||ElectricitySubsidy|0.13|0.325|0.185|0.195|0.166|
||HeatingSubsidy|0.42|0.034|‐0.106|‐0.097|‐0.126|
|**consumable income**|||||||
||In‐Kind Education||||||
||pre‐school|‐0.03|0.482|0.342|0.351|0.322|
||primary& secondary|‐0.08|0.531|0.391|0.400|0.371|
||tertiary|0.17|0.284|0.144|0.154|0.125|
||In‐Kind Health|‐0.05|0.504|0.364|0.374|0.344|
|**final income**|||||||

<u>Source: Authors elaboration using HSES 2016</u> <u>Note: The concentration coefficient measures the cumulative proportion of benefits (or taxes) received by each group</u> of the population ranked by level of income (or some other wellbeing indicator). A negative concentration coefficient means that poorer members of the population receive a proportion of taxes (or benefits) larger than their share of the population. The Kakwani coefficient, a measure of progressivity, is computed as the difference between income Gini coefficient of a given income definition (e.g. market income, disposable income) and the concentration coefficient of benefits (the reverse in the case of taxes). A positive Kakwani index means the tax (benefit) is progressive (regressive).

**Table 5: Redistributive and Poverty effect of taxes and transfers in Mongolia (2016)**

||Market Income|Net Market Income|Disposable Income|Consumable<br>Income|Final<br>Income|
|---|---|---|---|---|---|
||||||(5) = (4) +|
||(1)|(2) = (1) - Direct<br>Taxes - SSC (EE)|(3) = (2) + direct<br>transfers|(4) = (3) -<br>indirect taxes|<br>inkind<br>transfers|
|**Inequality**||||||
|Gini index|**0.4183**|**0.4096**|**0.3626**|**0.3752**|**0.3507**|
|Theil index|0.3220|0.3118|0.2434|0.2581|0.2257|
|90/10|7.8513|6.8426|5.1933|5.7006|4.9468|
|**Poverty headcount**|**47.31%**|**54.20%**|**37.84%**|**38.88%**|**31.96%**|
|**Poverty gap**|25.34%|28.25%|13.22%|14.42%|10.34%|
|**Poverty severity**|18.76%|20.16%|6.72%|7.70%|5.00%|

<u>Source: Authors elaboration using HSES 2016 Note: Poverty indexes use income as welfare aggregate (differ from official estimates, which use consumption as</u> welfare aggregate).

30 MONGOLIA Distributional impact of taxes and transfers / November 2018
# **Discussion**

The rate of return patterns found in previous updates are upheld and reinforced. Regarding efficiency in the use of resources, spending on human capital is a good investment. For example, in the United States the long-term 1966 to 2015 average return on stocks and bonds is 2.4 percent (Damodaran 2016) versus a 10.5 percent overall private return to investment in education in our database for education.

Recent research indicates that the social rates of return reported above are under-estimates of the true returns because of the omission of externalities (Munich and Psacharopoulos 2017). Taking just one externality into account, the social rate of return to investment in education could be 50% higher than the one traditionally estimated. Monetizing the value of just one externality of education - reduced mortality - Pradhan et al. (2018) found that the social rate of return to investment in one extra year of schooling in low-income countries is 16%, relative to 11% based solely on earnings differentials.

In allocating an education budget among different levels of schooling, priority should be given to the lower levels of education in countries that have not yet achieved universal primary.

In countries with disparities between male and female enrollment, priority should be given to the education of girls.

The size of the private returns to education and difference between private and social rates calls for selective cost recovery in higher education.

The overall 10 percent private return to one year of schooling has marginally declined since first estimated over half a century ago (see, for example, Becker 1964).

When making education decisions, it is very tempting to use estimates as those presented above for countries that lack such information. We emphasize that there is no substitute for a countryspecific study.

In such case, we recommend using the full discounting method as it is more appropriate relative to the Mincerian method.

Future updates will attempt to include estimates of the returns to school quality. Although there are plenty of macro studies in this respect, micro studies on the returns to investing in specific school quality inputs are emerging.

14
23 Prices for water rights are left to the buyers and sellers. In a study covering over 700 shares of water in four river valleys in Chile, Hearne and Easter (1995) found that for both intraand inter-sectoral transactions, "market transfer of water-use rights does produce substantial economic gains-from-trade," in the two valleys were transactions were numerous. In the Elqui Valley, for example, annual net gains from trade were calculated (Hearne and Easter 1995) to be in the range of US$5.99 and US$1642.00, with an average of US$826.00 per share of water traded, depending on the type of trading sectors. In the Limari valley the net gains-from-trade were calculated to be in the range of US$1.65 and US$2.85 with an average of US$2.40 per cubic meter. In the Limari Valley I share equals, on the average, 4880 m<sup>3</sup> /year, so that the average gains from trade in the Limari Valley are US$11,700 per share.

# _Drought Water (Market) Bank in California_

A water bank is an institution that offers to buy and sell water under some set of rules regarding prices and quantities, in a given service area. Water banks can mark up water prices to cover transaction costs and can also use it to compensate the area of origin. There are several examples of efficient and equitable transfer of water by water banks (Howe and Goodman 1995). We will present here the California drought water bank of 1991-92.

After five years of continuous drought, an emergency drought water bank (DWB) was set in California, following appropriate legislation (to allow for transfer of water rightsand minimize environmental degradation). The aim of the DWB was to enable transfer of water from agriculture in northern California to urban, municipal, and agricultural sectors in southern California. The principles of the DWB were:

- Voluntary transfers

- Protection of fish and wildlife

- Protection of ground water basins

- Efficient use of water in receiving areas

- Protection of present water right holders.
Subsidizing connectivity directly would, however, be more expensive. As noted above, improving export opportunities will disproportionately benefit manufacturing.

A second way that the government can affect agglomeration is through telecom facilitation. Modern telecommunications are important for job growth and can facilitate productivity and rural-urban migration (Harrison and others, 2013; Lu and others, 2013). This suggests that the government can set up a policy and regulatory environment to facilitate the development of the telecom sector to overcome potential coordination problems.

A third way is urbanization policy. Our findings suggest that urban population is less important for job growth than the share of the urban population living in large rather than small cities. This is consistent with some recent studies. For example, World Bank (2008) emphasizes the benefits of agglomeration in large cities and Au and Henderson (2006) present systematic evidence that Chinese cities tend to be too small to achieve all of the benefits of development.

In contrast, few business environment variables were consistently and robustly correlated with job growth. An exception was related to labor markets. Reducing the burden of labor regulation, and especially reducing firing costs, might accelerate job growth in both manufacturing and service firms. Perhaps more importantly, stringent labor regulation could retard the growth of the formal sector and prevent firms from growing into large firms, and therefore have a secondary effect by reducing capacity agglomeration. This would further hinder employment growth (as shown in this paper) and productivity (Li and others, 2013).

17
co-financing requirement is around 20%, local governments will need to contribute about 0.5 percent of GDP for projects to utilize the structural funds.

The question that Hungary should resolve in the inter-government finance thus has several levels. First the central government needs to reconsider incentives, particularly with respect to the mechanism of budgetary transfers to local governments. Second, the central government needs to improve the mechanism for allocating investment funds to local governments. Third, the central government needs to improve its monitoring of financial management (including asset management) of local governments. And finally, after these steps are completed, the central government should reconsider how to regulate the access of local governments to the financial markets and possibly increase the local government borrowing cap. While any obligations of local governments increase the fiscal risk vis-a-vis the central government, too low a cap on local government borrowing may produce sub-optimal results as well, particularly in during the EU accession process.

## **THE HEALTH FINANCING LIABILITY**

# **An open-ended state guarantee**

As many other European countries, Hungary provides an unlimited state guarantee that all citizens have access to adequate health care. The central government explicitly guarantees that health services are provided even if revenues of the health fund fall behind the planned anount.1<sup>7</sup> Data in table 3.6 indicate that in every year since 1992 actual expenditures and the deficit have been above budgeted levels. The guarantee, however, generates moral hazard in the health system, reduces incentives toward costreduction and efficiency, and is a source of persistent financial imbalance in the health system.

This problem arises particularly because the shift from tax-based to health insurance-based financing has not been completed, the mechanism for health investment decisions is not transparent, and many structural problems in the health system remain unresolved. Moreover, health care cost is expected to increase rapidly with the political pressure to apply state-of-the-art technology and new medications, and, similarly to pensions, with population aging in the next fifty years. The benefit package guaranteed by the state appears increasingly non-affordable. Coupled with budgetary constraints, financial tensions appear both at the macro and the micro level.

The national Health Fund has continuously run higher-than-expected deficits since its establishment in 1992 and has year after year drawn on additional budgetary resources. On a regular basis, revenues have been falling short of and, more significantly, expenditures have been surpassing the planned amounts. The expenditures of the Health Fund have been mainly driven by higher than expected disability and sick pay 17 Act 80/1997 on Eligibility of Social Security Services and Private Pension, and Their Financing 34
_Capital inflows:_

- FDI: net inflows of foreign direction investment, in current US dollars, from the World Development Indicators for the period from 1970 to 2013. Net FDI inflows equal new investment inflows less disinvestment in the reporting economy from foreign investors.

- Aid: net official development assistance and official aid received (ODA), in current US dollars, from the World Development Indicators, for the period from 1970 to 2012. Net ODA consists of disbursements of loans made on concessional terms (net of repayments of principal) and grants by official agencies of the members of the Development Assistance Committee (DAC), by multilateral institutions, and by non-DAC countries to promote economic development and welfare in countries and territories in the DAC list of ODA recipients.

- Public debt flows: Net flows on external debt, public and publicly guaranteed debt in current US dollars, from the International Debt Statistics of the World Bank, for the period from 1970 to 2012. Net flows (or net lending or net disbursements) received by the borrower during the year are disbursements minus principal repayments. <mark>Public and publicly guaranteed debt comprises long-term external obligations of public debtors, including the national government, political subdivisions (or an agency of either), and autonomous public bodies, and external obligations of private debtors that are guaranteed for repayment by a public entity. They do not include ODA. Figure 1 shows that they much smaller than ODA.</mark>

- All three types of capital inflows are divided by population and deflated by the U.S. consumer price index to obtain real per capita capital inflows in 2010 US dollars. Population and the U.S. CPI are also from the World Development Indicators.  The idea is that we would like to examine the relationship between per capita output growth, and per capita capital inflows.

7