rafmacalaba/datause-encoder-data huggingface dataset:
welfare from WTO accession. In addition, we find that in the Russian context, liberalization of barriers to FDI are quantitatively more important than tariff liberalization. In part, this reflects the starting point of the analysis, in which we assess that Russia has done more to lower it tariffs on goods than it has to liberalize its barriers to FDI in services sectors. But it is also explained by the economic geography literature that suggests that access to a diverse set of service providers is crucial for growth.

Regional results in our central scenario differ mainly due to inherited FDI, where more existing FDI allows a region to more easily attract new FDI when barriers against FDI are relaxed. In our sensitivity analysis, we show that a better investment potential of a region will also lead to larger gains for a region. So creating a good investment climate can help a region gain more from WTO accession.

# **References**

Brown, Drusilla and Robert Stern (2001), “Measurement and Modeling of the Economic Effects of Trade and Investment Barriers in Services,” _Review of International Economics_ , 9(2): 262-286.

- Caballero, R. and R. Lyons (1992), “The Case for External Economies,” in A. Cukierman, Z. Hercowitz and L. Leiderman, eds., Political Economy, Growth and Business Cycles, Cambridge, Massachusetts: MIT Press.

- Chinitz, B. (1961), “Contrast in agglomeration: New York and Pittsburgh,” _American Economic Review_ , Papers and Proceedings, 51:279-89.

- Ciccone, A. and R. Hall (1996), “Productivity and the Density of Economic Activity,” American Economic Review, 86(1):54-70.

- Dee, Philippa, Kevin Hanslow and Tien Phamduc (2003), “Measuring the Costs of Barriers to Trade in Services,” in Takatoshi Ito and Anne Krueger (eds.), Trade in Services in the Asia-Pacific Region, Chicago: University of Chicago Press.

- Dixit, A. and J. Stiglitz (1977), “Monopolistic Competition and Optimum Product Diversity,” American Economic Review, 76(1):297-308.

- Ethier, W.J. (1982), “National and International Returns to Scale in the Modern Theory of International Trade,” American Economic Review, 72(2):389-405.

- Findlay, Christopher and Tony Warren (eds), Impediments to Trade in Services: Measurement and Policy Implications, (London: Routledge), 2000.

- Fujita, Masahisa, Paul Krugman and Anthony J. Venables (1999), The Spatial Economy: Cities, Regions, and International Trade, Cambridge: MIT Press.

- Harrison, Glenn, Thomas Rutherford and David Tarr (1997), “Quantifying the Uruguay Round,” _Economic Journal_ .

25
# **Contents**

|**1**|**Intr**|**oduction**|**3**|
|---|---|---|---|
|**2**|**Ide**|**ntifying Successful Interventions**|**5**|
||2.1|How to identify large interventions?<br>. . . . . . . . . . . . . . . . . . . .|. . . . .<br>6|
||2.2|CPIA History and Methodology . . . . . . . . . . . . . . . . . . . . . . .|. . . . .<br>6|
||2.3|Strengths of CPIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|. . . . .<br>7|
|**3**|**Me**|**thodology**|**9**|
||3.1|Regression Methods with Dynamic Panel Data Models . . . . . . . . . .|. . . . .<br>9|
||3.2|Comparative Case Studies with Synthetic Control Methods . . . . . . .|. . . . .<br>10|
|||3.2.1<br>Motivating Model: Technical Details . . . . . . . . . . . . . . . .|. . . . .<br>11|
||3.3|Feasibility of Synthentic Control Case Studies . . . . . . . . . . . . . . .|. . . . .<br>12|
||3.4|Intervention Selection Methodology . . . . . . . . . . . . . . . . . . . . .|. . . . .<br>13|
||3.5|Factor Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|. . . . .<br>14|
|**4**|**Nig**|**eria’s March towards Stronger Economic Management**|**16**|
||4.1|Nigeria before the Reforms<br>. . . . . . . . . . . . . . . . . . . . . . . . .|. . . . .<br>16|
||4.2|Nigeria’s Reforms since 2003<br>. . . . . . . . . . . . . . . . . . . . . . . .|. . . . .<br>17|
||4.3|Nigeria’s Growth Performance post-reforms . . . . . . . . . . . . . . . .|. . . . .<br>17|
||4.4|Running Synthetic Controls . . . . . . . . . . . . . . . . . . . . . . . . .|. . . . .<br>18|
||4.5|Placebo Tests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|. . . . .<br>19|
||4.6|Robustness Checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .|. . . . .<br>20|
||4.7|Beyond Average Income Per Capita . . . . . . . . . . . . . . . . . . . . .|. . . . .<br>21|
|**5**|**Con**|**clusions**|**22**|
|**Li**|**st of **|**Figures**|**25**|
|**Li**|**st of **|**Tables**|**26**|

2
WPS4163

# **A Ricardian Analysis of the Impact of Climate Change on Latin American Farms**<sup>1</sup>

Niggol Seo University of Aberdeen Business School, UK and Robert Mendelsohn School of Forestry and Environmental Studies, Yale University, USA

## Abstract

This study estimates the vulnerability of Latin American agriculture to climate change using a Ricardian analysis of both land values and net revenues. Examining a sample of over 2200 farms, the results indicate both land value and net revenue are sensitive to climate. Both small farms and large farms have a hill-shaped relationship with temperature. Estimating separate regressions for rainfed and irrigated farms reveals that rainfed farms are more sensitive to temperature but irrigated farms are more sensitive to precipitation. Examining the impacts from future climate change scenarios reveals that severe scenarios could reduce farm earnings by as much as 62% by 2100 whereas more moderate scenarios could reduce earnings by about 15%. Small and large farms are equally sensitive to global warming. Land value and net revenue analyses produce quite similar results.

### World Bank Policy Research Working Paper 4163, March 2007

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of _the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Policy Research Working Papers are available online at http://econ.worldbank.org._

> 1 We thank Alfredo Albin, Irma Baquero, Luis José María Irias, Jorge González, Jorge Granados, Flavio Játiva, Bruno Llanfranco, Jorge Lozanoff, Raphael Pachico, and Roberto Velasco for their contribution to this project.  We would also like to thank Emilio Ruz, Ariel Dinar and Flavio Avila for their support and leadership throughout this project.  We also thank Bruce Dixon for his detailed and constructive advice. This project was funded by the Research Committee of the World Bank under the study 'Climate Change and Rural Development' that was tasked managed by Ariel Dinar.
rates. The results presented in <u>Table 5</u> are based on a smaller sample of observations because of the limitations of the KLEMS data set and should therefore be interpreted with caution.

# **7. Conclusions**

This paper analyzes the evolution of job tenure in Europe from 1995 to 2020. We use data from the EU-LFS to document general trends in job tenure. We then apply a series of age-period-cohort decompositions to analyze the evolution of job tenure for specific cohorts and time periods. This decomposition analysis shows that job tenure has shrunk for the younger generations, and this cannot be accounted for only by the increased prevalence of temporary jobs among the young, as job tenure has also declined for those who hold permanent contracts. To account for compositional changes in groups, we model tenure at the individual level in a second step. We estimate the probability of having short, medium, or long job tenure, conditional on a set of individual characteristics (such as age, gender, and education) and employment-related characteristics (such as occupation and firm size). The results show that after controlling for individual and employment characteristics, the probability of having a medium- or long-term job declined, and having a shortterm job increased over time.

We also assess the impact of changes in the levels of job protection, trade openness, and technological change on tenure decline. We find that stricter job protection legislation is associated with decreases in the probability of having short-term jobs, and trade openness is associated with a significant increase in that probability. We also find a positive correlation between increases in ICT use and short-term tenure, although these results are less conclusive, given the smaller sample size.

But what is the impact of these changes in job tenure and job stability on workers? For example, when we document that technological change and increased trade openness reduce job tenure, is that a good thing or a bad thing? As mentioned in the introduction, efficiency and equity arguments matter for answering this question. In terms of efficiency, on the one hand, good job matches should last longer, so declining job stability could mean deteriorating job match quality (e.g., Altonji and <u>Williams 2005). On the other hand, some evidence indicates that job reallocation can be productive (Newmark 2002). To resolve this, future research should link the results of this paper with a detailed</u> analysis of changes in earnings profiles. In addition, to fully understand the effects of tenure trends on the wellbeing of workers, one should account for potential disparities in impacts. While at the 23
- 15 -

The main reason the countries have increasingly adjusted their domestic prices is that electricity production costs increased significantly due to high international commodity prices of coal, oil and natural gas and soaring import prices of electricity. One of the major energy markets in Europe, European Energy Exchange (EEX) in Germany, has exhibited considerable increases in electricity prices since 2000 (Figure 10). The average baseload spot price exceeded 60 euros in 2006, and after some fluctuation, reached 70 euros in 2008. The Balkan states have to pay some additional transmission fees to this, which varies from several to 15 euros reflecting the available transmission capacity and its market prices.<sup>14</sup> Figure 8. Nonresidential average electricity price <!-- Start of picture text --> 18 1999-00<br>16 2004 1/<br>2007<br>14 2009 Q2<br>12<br>10<br>8<br>6<br>4<br>2<br>0<br>1/ 2006 for Serbia.<br>(U.S. cents/kWh)<br>Non-residential electricity price<br>Albania Bulgaria Croatia Romania Serbia<br>Bosnia & Herzegovina Macedonia<br><!-- End of picture text --> Source: ERRA database.

> 14 For instance, because of the transmission bottleneck between Albania and Montenegro, the transmission capacity right between Podgorica and Albania at the Montenegrian power system was priced at as high as 8 to 9 euros per MW with a maximum of 15 euros in 2007.
<!-- Start of picture text --> Figure 1. Governance and per Capita Incomes in Latin America and the Caribbeana<br>(continued)<br>Government Effectiveness<br>25<br>y 0 6815x -5 3762 0<br>2 R 2 = 0 6666 * .<br>15 *<br>1 CHL "<br>205<br>'U~ ~ ~ ~ ~ ~~L<br>0<br>CD 6 6 9 9 5 10<br>0 P<br>* PRY<br>-15 Q<br>-2<br>-25<br>-3<br>In(Real Per Capita GDP at PPP, 1996)<br>Regulatory Quality<br>3<br>2 y =0 4846x - 3 7531<br>R=0 4677<br>1 * o O* w**U#<br>0~~~~~~~~~~4<br>_ 5 ! 5 i 6. _5 ~~~~n wy 8 . 5 * EN 9 5 10<br>E *U * . * * SUR<br>a9 E2 -1 * * * HTI<br>-2<br>-4-<br>In(Real Per Capita GDP at PPP, 1996)<br><!-- End of picture text --> Source: Authors' calculations as described in text.

a. The governance ratings on the vertical axis are based on subjective assessments from a variety of sources and are subject to margins of error.

40
problem partly to their lack of bargaining power _vis a vis_ Walmex. While it is true that the rate of inflation in value-added prices has been below industry norms in all years except one since 1999, this has not translated into lower gross profit margins for SDS and cosmetics producers overall. As figure 2 demonstrates, the opposite has been the case:

# **Figure 2**

# **Gross Margins: All Chemicals versus SDS and Cosmetics**

<!-- Start of picture text --> 0.4<br>0.3<br>all chemicals<br>0.2<br>SDS & C<br>0.1<br>0<br>1999 2000 2001 2002 2003 2004<br><!-- End of picture text --> Source: INEGI (2005) Rising gross margins have been possible because the industry has expanded production without a corresponding expansion in employment. While real value-added has expanded relatively rapidly for SDS and Cosmetics producers, employment has actually gone down substantially since 1999 (see Figures 3 and 4). The initial decline in employment was caused by the Tequila Crisis hit in 1994. But as output growth resumed in 1996 and thereafter, employment did not rebound. By 2004, real value-added had grown 50 percent and employment had shrunken more than 20 period, implying a 11
35

- Cowell, F.A. (1995): _Measuring Inequality_ , 2nd edition, (Hemel Hempstead: Harvester Wheatsheaf).

- Cowell, F.A. and S.P. Jenkins (1995): "How much inequality can we explain? A methodology and an application to the USA", _Economic Journal_ , **105,** pp.421-430 **.**

- Datt, G., and M. Ravallion (1992): “Growth and Redistribution Components of Changes in Poverty Measures: A Decomposition with Applications to Brazil and India in the 1980s.” _Journal of Development Economics,_ **38** (2), pp.275–95.

- Datt, G. and M. Ravallion (1998): “Farm Productivity and Rural Poverty in India”, _Journal of Development Studies_ , **34** , pp.62-85.

- De Ferranti, D., G. Perry, F. H. G. Ferreira and M. Walton (2004): _Inequality in Latin America?: Breaking with History?_ (Washington, DC: The World Bank).

- Delgado, G and J.C. Cardoso Jr. (2000): _A Universalização de Direitos Sociais no Brasil: a Previdência Rural nos Anos 90_ , (Brasília: IPEA).

- DiNardo, J., N. Fortin and T. Lemieux (1996): “Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semi-Parametric Approach”, _Econometrica_ , **64** (5), pp.1001-1044.

- Easterly, W. and S. Fischer (2001): “Inflation and the Poor”, _Journal of Money, Credit and Banking_ , **33** (2), pp.160-178.

- Ellery Jr., R. and P.C. Ferreira (1994): “Crescimento Econômico e Convergência entre as Rendas dos Estados Brasileiros”, _Anais do XVI_<sup>_o_</sup> _Encontro Brasileiro de Econometria (SBE)_ , pp.264-286.

- Fava, V.L. (1984): "Urbanização, Custo de Vida e Pobreza no Brasil" _,_ Instituto de Pesquisa Economica Aplicada (Rio de Janeiro)/ University of São Paulo, mimeo.

- Ferreira, A. (2000): “Convergence in Brazil: recent trends and long-run prospects”, _Applied Economics_ , **32** , pp.479-489.

- Ferreira, F.H.G. and P. Lanjouw (2001): "Rural Nonfarm Activities and Poverty in the Brazilian Northeast", _World Development,_ **29** , 3, pp.509-528.

- Ferreira, F.H.G., P. Lanjouw and M.C. Neri (2003): “A Robust Poverty Profile for Brazil using Multiple Data Sources”, _Revista Brasileira de Economia_ , **57** (1), pp.59-92.

- Ferreira, F.H.G. and J.A. Litchfield (2000): "Desigualdade, Pobreza e Bem-Estar Social no Brasil: 1981/95", Ch. 2 in R. Henriques (ed.): _Desigualdade e Pobreza no Brasil_ (Rio de Janeiro, IPEA).
of the CCMA. The CCMA is very visible in the media and widely used with about 120,000 cases per year, of which about 70% are about unfair dismissal (Bhorat et al. (2009)). Undocumented immigrants are significantly less likely to know about the CCMA (62.8% vs. 78.9%) and less willing to take their employer to court (57.7% vs. 70.1%) than documented immigrants.<sup>24</sup> Table 4: Domestic Worker Phone Survey Results, Cape Town

||N||Sample|Means|||p-v|alues||
|---|---|---|---|---|---|---|---|---|---|
|||Pooled|SA|D|U|S=F|S=D|S=U.|D=U|
|Age (yrs.)|206|32.102|38.2|31.1|29.6|0|0|0|.098|
|Education (yrs.)|201|11.06|10.46|11.45|11.01|.013|.001|.091|.071|
|Max hours willing to work|202|40.9|41.5|41.2|40.4|.588|.897|.531|.526|
|Wage, daily (ZAR)|191|181.3|179.4|181.2|182.3|.704|.816|.694|.867|
|Wage, hour (ZAR, imputed)|189|23.11|23.97|22.57|23.15|.479|.336|.567|.636|
|Reservation wage, daily|200|185.9|185.6|185.5|186.5|.975|.981|.903|.878|
|Contract|197|.228|.333|.213|.188|.084|.173|.091|.691|
|Treated well: 0=Never..3=Always|197|2.59|2.71|2.58|2.57|.257|.25|.338|.834|
|How not treated well?||||||||||
|.... lower pay than agreed|208|.038|0|.052|.047|.004|.044|.044|.887|
|.....employer rude|208|.077|.043|.091|.082|.329|.292|.364|.848|
|.....had to work more hours|208|.048|.022|.078|.035|.286|.138|.648|.248|
|Can ask for time of|192|.958|.949|.96|.962|.741|.79|.76|.961|
|Paid overtime|198|.47|.476|.432|.5|.924|.653|.804|.401|
|Heard about CCMA|197|.756|.93|.789|.628|0|.023|0|.027|
|Take employer to CCMA|176|.705|.947|.701|.577|0|0|0|.131|
|Know about minwage law|197|.33|.395|.355|.269|.285|.669|.167|.252|
|Should earn minwage|168|.792|.846|.8|.75|.277|.55|.232|.5|
|Ever negotiated wage|196|.464|.524|.453|.443|.376|.469|.402|.899|
|N|||46|77|85|||||

Notes: The table reports means of responses from a phone surveys, divided by legal and immigrant status. P-values report tests of equal means between South Africans (S), Foreigners (F), Documented (D) and Undocumented (U).

Interestingly, this lower bargaining power does not translate into lower actual daily or hourly wages. It is also notable that undocumented and documented immigrants do not report to be treated differently by employers. And while immigrants are more likely than South Africans to report incidents of lower than agreed payments and rude behavior from employers they report positive overall treatment by employers (2.5 on a 0-3 scale), low prevalences of maltreatment (5-10%), and feel comfortable to ask for time off if sick (96%).

However differences in bargaining power cannot explain the overall preference for South Africans.

> 24It is unclear whether undocumented immigrants have access to the CCMA. The case of Discovery Health Ltd v CCMA & others sided with an immigrant whose work permit renewal process was pending.

19
- 44 -

# The Practice of Tax Earmarking

180. Most countries in the Region have an established practice of earmarking revenues to be spent for pre-determined activities or institutions in pre-determined ways. Costa Rica has the most extensive earmarking system, where about 100 individual taxes are -- partly or wholly--earmarked. Major taxes, including income, payroll, salos, and export taxes, are all earmarked. Some earmarked taxes accrue solely to the Central Government, some are shared by the Central Government and other entities and some are collected by entities outside the Central Government. Many of the taxes have multiple beneficiaries. In the rest of the Region, a certain percentage of current revenues are earmarked for universities as well as the Supreme Court of Justice (i.e. 6Z of current revenues in Costa Rica).

181. The practice of earmarking has led to various distortions and problems. It reduced governments' discretionary spending powers, aid their ability to set expenditure priorities and fund new and better programs. It also decreased fiscal discipline and encouraged expenditure growth through perpetuating programs, some of which may have outlived their usefulness. Since revenue increases are immediately converted into expenditures, they also contribute to the fiscal deficit.

182. Conclusions. Over the years, vested interests have developed to maintain and even expand this practice. Especially in Costa Rica, virtually all new taxes introduced since 1980 were, partly or wholly, earmarked. Thus, any change in the direction of eliminating or even reducing earmarking will prove to be politically very difficult in the short-term. Within the context of its medium-term program, Costa Rica agreed not to introduce any new earmarking. However, it is important for all the countries to move in the direction of phasing out the practice of earmarking, with the pace dictated by the political realities in each country.

# 6. Tax Administration

183. Tax administration is weak in all the countries in Central America. As a result, it is believed that large evasion exists in almost all taxes. Obviously, it does not make sense to continually revise tax rates without a corresponding effort being made to improve collection through reforming the tax administration.

184. Large evasion in most taxes results from a number of factors. First, penalty payments are not called for in case of delinquencies. Second, both the number and training of tax inspectors are inadequate. The renumeration of tax administrators is widely believed not to be adequate to induce them to work honestly. Third, the enforcement effort spread over a number of taxpayers and enterprises dilutes the tax effort. Fourth, a unified tax registry does not exist. Fifth, collectinn lags are high, leading to reduced revenues in real terms, especially in high inflation countries. Collection lags are usual for about six months for some taxes in El Salvador. Sixth, various taxes are collected by different entities. Lack of coordination among these entities (i.e. customs administration for taxes on trade and internal revenue service for domestic transaction taxes
_IV.2 Inequality, poverty and growth_ Second, it has been argued that inequality, coupled with credit constraints, reduce physical and human capital accumulation (see, for example, Galor and Zeira, 1993). As shown by Perry et al 2006 and Lopez and Serven, 2006, this is really an argument about why poverty (rather than inequality) can be a drag on growth. Lopez and Serven, 2006 show, indeed, that when poverty is included in cross country panel regressions as an additional independent variable it has a significant negative effect on growth and the negative effect of inequality losses its statistical significance. Further, they show that, as proposed by theory, such an effect takes place mostly through a negative effect on investment in countries with low financial deepening (see Table 2). As high inequality leads to higher poverty levels –for the same level of average income per capita-, this should be seen as an _indirect_ negative effect of high inequality on growth.

**Table 2: The impact of poverty on investment**

||**Mod**|**el 1**|**Mod**|**el 2**|
|---|---|---|---|---|
||**GFCF**|**GCF**|**GFCF**|**GCF**|
||**(1)**|**(2)**|**(3)**|**(4)**|
|Investment (t-1)|0.658|0.652|0.721|0.653|
|_t-stat_|_11.15_|_19.05_|_16.36_|_24.34_|
|Income (in logs) (t-1)|-0.009|-0.012|-0.005|-0.005|
|_t-stat_|_-1.58_|_-2.29_|_-1.55_|_-1.61_|
|Growth (t)|0.539|0.550|0.524|0.620|
|_t-stat_|_8.87_|_9.28_|_14.59_|_14.39_|
|PPP (t-1)|-0.010|-0.014|-0.004|0.000|
|_t-stat_|_-1.66_|_-1.84_|_-0.81_|_-0.06_|
|Terms of Trade (t)|0.064|0.132|0.079|0.071|
|_t-stat_|_1.60_|_3.02_|_3.97_|_3.02_|
|P0($2) (t-1)|-0.079|-0.105|||
|_t-stat_|_-1.88_|_-2.74_|||
|P0<br>HFD($2) (t-1)|||0.031|0.016|
|_t-stat_|||_0.90_|_0.47_|
|P0<br>LFD($2) (t-1)|||-0.055|-0.057|
|_t-stat_|||_-2.03_|_-2.52_|
|# Observations|338|345|308|311|
|# Countries|108|108|103|103|
|Hansen Test<br>p-value|0.29|0.34|0.47|0.28|
|AR(2)<br>p-value|0.33|0.30|0.36|0.43|

Notes: The table reports regression results with investment (i.e., gross fixed capital formation –GFCF- or gross capital formation –GCF-) as dependent variable; and lagged investment, the lagged per capita income (in logs), the income growth rate, a lagged measure of market distortion (given by the price of investment goods), the terms of trade, and headcount poverty (US$2 poverty line). The models in columns (3) and (4) use the same controls but separate the poverty data according to whether the country in question has a high 23