rafmacalaba/datause-encoder-data huggingface dataset:
economists are prone to argue that that there must be a flaw in the analysis because if people could have done better behaving differently (e.g. by signing these contracts), then they would already be doing so. This mainstream criticism has to be false because otherwise it would be unclear why human beings waited till the 18th century to develop the small pox vaccine, 19th century to have cars, 20th century to have computers and 21st century for Skype. This is because a new invention is, in the end, nothing but the discovery of high returns associated with new behaviors. What we need to understand is that our deficiency of knowledge can extend to strategies of action.<sup>16</sup> There are social and behavioral innovations just like technological innovations; and just as technological innovations rely on inventions and discoveries so do social and behavioral innovations. The aim of this paper is to outline new strategies that can make international lending across nations that are inter-connected, such as the current European Union nations, more efficient and robust.

Before going into the construction of the formal model, it may be useful to sketch out the argument in words. A small country, such as Cyprus, needs a loan of B from an international Bank to build a power station and promises to pay back the amount borrowed with whatever interest is agreed upon. There is however a sub-text to the promise. If the project fails, Cyprus will be unable to pay back the Bank. This could be because of a limited liability arrangement but it can also be simply a matter of the reality of not being able to enforce the debt contract. Formal limited liability is rare in international credit, which actually makes matters worse. There are analysts who have rightly called for a formal sovereign debt reduction procedure which is comparable to Chapter 11 of the US corporate bankruptcy code.<sup>17</sup> The country may be too small and poor to be able to pay this back in the event of the project failing. This introduces a standard moral hazard problem.<sup>18</sup> Suppose the

> 16As Rubinstein (2012, p. 238) argues, ”Most of the players in the economic game have only limited familiarity with the economic game and make plenty of mistakes. . . . ”Most economic players find it difficult to identify economic opportunities and respond to them. This is a problem for supporters of traditional economic thought . . . ”

> 17See, for instance, ‘IMF’s Greek apology shows a bankruptcy code is needed,’ by Komal Sri-Kumar ( **Financial Times** , June 22, 2013, p. 22).

> 18It is interesting to see the **Economist** magazine (June 15-21, 2013, p. 14) refer directly to the “moral hazard” problem in the context of Germany and the weaker nations of the Eurozone as the stumbling block

10
linkages in banking activities over the past three decades, we instrument the extent of branch networks with the strength of branch networks in geographically close countries.<sup>5</sup> This approach allows us to identify a causal link between financial development and the share of informal output in GDP.

This paper documents two main findings. First, in line with former studies, less pervasive informality is associated with greater financial development. Second, the negative impact of financial development (especially banking sector development) on informality is causal. This causal link is stronger in countries with greater trade openness and capital account openness. The findings are robust to the use of alternative indicators of informality and financial development.

As such, this paper makes two contributions to the literature: it is the first study to document a causal link between financial development and informal economic activity in a multi-country setting. The only previous studies that established such a causal link were specific to single countries and relied on microdata or sectoral data. Capasso and Jappelli (2013) use data on loan applications to show that access to finance increased formal activity in Italy; Catão, Pages, and Rosales (2009) and Moron, Salgado, and Seminario (2012) use household survey data to show that financial deepening increased formal employment in sectors that were most dependent on external finance in Brazil and Peru, respectively.

Second, this study introduces a novel instrumental variable for domestic banking sector development: banking sector development in other (neighboring) countries. We establish that cross-country banking sector links can go beyond those established for lending (K ı l ı nç, Seven, Yetkiner 2017; Bahadir and Valev 2015; Sever and Yucel 2021; Csonto et al. 2018), efficiency (Matousek et al. 2015; Nurboja and Košak 2017), interest rates (Rughoo and Sarantis 2014), or profitability (Olson and Zoubi 2017). Significant cross-country links exist even for banking system access, such as that captured by the extent of branch networks.

The next section describes the data and correlations between financial development and informality. Section 3 introduces our novel instrumental variable for domestic financial sector development and the empirical approach. Section 4 presents the main results and results from a battery of robustness tests. The conclusion summarizes our findings and offers policy recommendations and avenues for future research.

# **2. Data choices and description**

The association between financial development and informality is well established 5 In different contexts, financial development in other (neighboring) countries has been used as an instrumental variable for domestic financial development in studies such as De Haan et al. (2021) and Pleninger and Sturm (2020). Our study is the first to use this approach to establish a causal link between financial development and informality.

4
I POLICY **RESEARCH WORKING PAPER** 1622

# Summary findings

Levine and Zervos address two questions: What happens to stock market size, liquidity, volatility, and integration with world capital markets after capital controls are liberalized? And what is the relationship between those indicators of stock market development and regulations about information disclosure, accounting standards, and investor protection?

An analysis of data on stock markets in 16 developing countries suggests the following: Stock markets become larger, move liquid, more integrated internationally, and more volatile after controls on capital and dividend flows are liberalized.

* Easy access to information about firms is positively associated with the size and liquidity of stock markets.

* Countries that officially establish internationally accepted accounting standards and laws to protect investors do not have substantially better-functioning stock markets than countries that do not adopt those official standards.

- - This paper a product of the Finance and Private Sector Development Division, Policy Research Department is part of a larger effort in the department to understand the links between policy and financial development. libe study was funded by the Bank's Research Support Budget under the research project "Stock Market Development and Financial Intermediary Growth" (RPO 678-37). Copies of this paper are available free from the World Bank, 1818 H Street NW, Washington, DC 20433. Please contact Paulina Sintim-Aboagye, room N9-030, telephone 202-473-8526, fax 202-522-1155, Internet address psintimaboagye@worldbank.org. (42 pages). July 1996.

_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 used and cited accordingly. The findings, interpretations, and conclusions_ **_are_** _the authors' own and should not_ **_be_** _attributed to the World Bank, its Executive Board of Directors, or any of its member countries._ Produced by the Policy Research Dissemination Center
In India, the information management and state report card system, which was designed to provide a ‘comprehensive’ and ‘unified’ set of statistics for public schools, is an example: In the 2011/12 report card for Tamil Nadu, I counted 817 distinct pieces of information reported. But of the 817 pieces of information not a single one could be construed as a direct measure of learning of any kind...In the section called ‘Performance Indicators’ there are 24 distinct measures including the ‘per cent of schools approachable by allweather road,’ ‘per cent with boundary wall,’ ‘per cent with ramp,’ ‘Pupil teacher ratio.’ There was data on teachers...by gender, by caste, by age, by ‘per cent trained’, by formal qualification. But [a measure of] learning—of any subject, at any age, measured in any way? Not a single number. (Pritchett, 2014) India’s school system is far from alone in having succumbed to institutionalized scripts at the expense of productive activity. The primary message of the World Bank’s _World_ _Development Report 2018_ is that “schooling is not the same as learning.” Its central policy recommendation is the astoundingly simple yet deeply important recommendation that developing countries must begin to act in ways that show that “learning really matters to them” (World Bank, 2017).

Political and economic forces can create incentives to maintain inefficient institutions and _not_ take actions to produce learning. But there are also cognitive factors at play: institutional scripts shape judgments of appropriate behaviors and goals, individuals orient their actions towards the scripted goals, and this reinforces the strength and legitimacy of the institution. Societies may get stuck with institutions and systems that few people recognize are broken.

Example 4. Political reservations in India for women and gender attitudes A 1993 amendment to the Constitution of India reserved for a female, in a randomly selected one-third of village governments, the position of village council head ( _pradhan)_ . Seven years of experience of living under a woman _pradhan_ erased male villagers’ prejudice against women 24
WPS4167 <mark>I</mark> MPACT <mark>E</mark> VALUATION <mark>S</mark> ERIES <mark>N</mark> O <mark>. 13</mark>

# More Time Is Better:

# An Evaluation of the Full-Time School Program in Uruguay

## Pedro Cerdan-Infantes and Christel Vermeersch*

## Abstract

This paper estimates the impact of the full-time school program in Uruguay on standardized test scores of 6th grade students. The program lengthened the school day from a half day to a full day, and provided additional inputs to schools to make this possible, such as additional teachers and construction of classrooms. The program was not randomly placed, but targeted poor urban schools. Using propensity score matching, we construct a comparable group of schools, and show that students in very disadvantaged schools improved in their test scores by 0.07 of a standard deviation per year of participation in the full-time program in mathematics, and 0.04 in language. While the program is expensive, it may, if well targeted, help address inequalities in education in Uruguay, at an increase in cost per student not larger than the current deficit in spending between Uruguay and the rest of the region.

## World Bank Policy Research Working Paper 4167, 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_ _<u>http://econ.worldbank.org.</u>_

> *Human Development Department, Latin America and the Caribbean Region; Email: pcerdaninfantes@worldbank.org and cvermeersch@worldbank.org. We are thankful to Emiliana Vegas for her comments and guidance. The paper benefitted from the comments of Andres Peri and seminar participants in Montevideo and Washington, DC.
|**Table 8: Summary of Results (results are percentage**<br>**Initial Rent Capture Case**|**change fro**|**m initial eq**|**uilibrium, unles**<br>|**s otherwise**|**indicated)**|||Unilateral<br>|||
|---|---|---|---|---|---|---|---|---|---|---|
||||EU|||||Discrimina||**Unilateral**|
|**Scenario definition**|Benchmark|**EU FTA**|Discriminatory<br>Services|EU Tariffs|**Africa FTA**|**EU-Africa**<br>**FTA**|**Unilateral**|tory<br>Services|Unilateral<br>Tariffs|<br>**&**<br>**Domestic**|
|50%reduction of discriminatory barriers on EU services firms|No|**Yes**|Yes|No|**No**|**Yes**|**Yes**|Yes|No|**Yes**|
|50% reduction of discriminatory barriers on African services firms|No|**No**|No|No|**Yes**|**Yes**|**Yes**|Yes|No|**Yes**|
|50% reduction of discriminatory barriers on ROW services firms|No|**No**|No|No|**No**|**No**|**Yes**|Yes|No|**Yes**|
|50% reduction of regulatory barriers for all services firms|No|**No**|No|No|**No**|**No**|**No**|No|No|**Yes**|
|<br>Removal of tariffs on EU sourced goods|No|**Yes**|No|Yes|**No**|**Yes**|**Yes**|No|Yes|**Yes**|
|Removal of tariffs on ROW sourcedgoods|No|**No**|No|No|**No**|**No**|**Yes**|No|Yes|**Yes**|
|**Aggregate welfare**|||||||||||
|Welfare (EV as % of consumption)||**0.5**|0.3|0.2|**0.1**|**0.5**|**2.9**|0.9|2.0|**7.0**|
|Welfare (EV as % of GDP)||**0.4**|0.3|0.1|**0.0**|**0.5**|**2.5**|0.7|1.7|**5.9**|
|**Government budget**|||||||||||
|Tariff revenue (% of GDP)|3.6|**2.1**|2.9|2.1|**2.9**|**2.1**||2.9|||
|Tariff revenue||**-29.0**|-0.1|-28.9|**-0.1**|**-29.1**|**-100.0**|-0.4|-100.0|**-100.0**|
|**Aggregate trade**|||||||||||
|Real exchange rate||**0.9**|0.3|0.6|**0.2**|**1.1**|**4.0**|0.9|3.1|**5.5**|
|<br>Aggregate exports||**3.2**|0.1|3.1|**0.2**|**3.4**|**12.4**|0.4|11.9|**14.3**|
|**Factor Earnings**|||||||||||
|Skilled labor||**2.2**|0.7|1.5|**0.5**|**2.7**|**8.9**|2.2|6.5|**14.7**|
|Semi-skilled labor||**1.1**|0.5|0.6|**0.3**|**1.4**|**5.6**|1.5|4.1|**10.0**|
|Unskilled labor||**1.5**|0.6|0.9|**0.3**|**1.8**|**7.4**|1.9|5.3|**14.6**|
|Capital||**1.4**|0.5|0.9|**0.3**|**1.7**|**6.9**|1.6|5.1|**12.2**|
|Land||**2.5**|0.3|2.2|**0.4**|**2.9**|**7.5**|1.1|6.1|**8.5**|
|**Factor adjustments**|||||||||||
|Skilled labor||**0.6**|0.4|0.3|**0.3**|**0.9**|**2.3**|1.1|1.3|**5.0**|
|Semi-skilled labor||**0.8**|0.3|0.7|**0.2**|**0.9**|**2.5**|0.8|1.9|**4.9**|
|Unskilled labor||**0.2**|0.1|0.1|**0.1**|**0.3**|**0.8**|0.4|0.5|**2.0**|
|Capital||**0.3**|0.1|0.3|**0.1**|**0.4**|**1.4**|0.4|1.2|**2.7**|
|Land<br>Source: Authors' estimates.||**1.0**|0.4|0.7|**0.4**|**1.4**|**3.7**|1.5|2.2|**7.2**|

52
BOTSWANA’S INFRASTRUCTURE: A CONTINENTAL PERSPECTIVE

- WHO (World Health Organization) Joint Monitoring Program (JMP). 2010. ―Botswana Estimates for the Use of Improved Drinking-Water Sources.‖ www.wssinfo.org/resources/documents.html.

- ———. 2010. ―Botswana Estimates for the Use of Improved Sanitation Facilities.‖ www.wssinfo.org/resources/documents.html.

World Bank. 2009, Agreement for Advisory Services, Draft as of October 15, 2009, Washington D.C.

# Other

IMF. 2010. African Department Databse and Sub-Saharan Africa Regional Economic Outlook, April 2010.

40
us these data for 2018, 2019 and 2020 only, since a change in reporting precluded earlier years. 199 out of the 200 firms were able to be matched to this registry, with the only exception a firm that went bankrupt between applying and the program starting. The registry has fewer firms reporting sales and employment in 2019 than in 2020, which we believe may reflect the start of the pandemic in 2020 stopping some firms from doing their annual reporting for the 2019 year. Since we lack pre-program data, we control for randomization strata, and then use post-double selection lasso to select controls from our set of baseline variables.

We use these data in panels C, D and E of Table E2 to measure impacts on sales, profits, and sales per worker (a measure of labor productivity). We show results for both 2019 and 2020, in both levels and inverse hyperbolic sines, given the heterogeneity in firm size. When we measure impacts on levels, the coefficients are all negative, and more so in 2020 than 2019. The magnitudes relative to the control mean in percentage terms are for a 13 percent reduction in sales, 30 percent reduction in profits, and 18 percent reduction in sales per worker. However, the standard errors are large, and only the impact on sales in 2020 is statistically significant. The inverse hyperbolic sine transformation places more weight on smaller firms when calculating the average, and on the extensive margin of surviving (not having zero sales or profits). This results in a more mixed pattern of some positive and some negative coefficients, but with large standard errors, and none of the results are statistically significant. While the results do not preclude that the improvement in general management practices increased firm productivity, there is no strong evidence of this having occurred to date.

> fall in total production and in total factor productivity in 2019, but standard errors are large and none of the estimates are statistically significant.

59
**Figure II:** Monthly marriage and fertility rates for baseline schoolgirls

Panel A: Monthly Fertility Rates <!-- Start of picture text --> During Program Utero After Program<br>2008 2009 2010 2011 2012<br>Year<br>Control CCT<br>UCT<br>.025<br>.02<br>.015<br>.01<br>.005<br>0<br><!-- End of picture text --> Panel B: Monthly Marriage Rates <!-- Start of picture text --> D uring Program W/in 9 mos After Program<br>2008 2009 2010 2011 2012<br>Year<br>Control CCT<br>UCT<br>.025<br>.02<br>.015<br>.01<br>.005<br>0<br><!-- End of picture text --> _Notes:_ Figures illustrate the smoothed fraction of core respondents who give birth (Panel A) or get married (Panel B) in each month using retrospective information on the month of birth and marriage, respectively.

51
# **1. Introduction**

The informal sector accounts for 30 to 40 percent of total economic activity in the poorest countries, and a much higher share of employment (La Porta and Shleifer, 2014, Gollin, 2002). It is particularly pervasive in poorer African countries such as Malawi, where 93 percent of firms have not registered with the government.<sup>1</sup> One response could be to wait for development, since development has reduced the size of the informal sector in other countries (e.g. McCaig and Pavcnik, 2015). However, many governments want to jump-start this process and encourage firms to register.

There are four main reasons why governments may wish to formalize small firms. The first is to broaden the tax base (e.g. Everest-Phillips, 2008; World Bank, 2009), both as a means of raising tax revenue as well as of potentially increasing government accountability (IMF, 2011). A second reason is to enable firms to access the formal economy and spur their growth through a range of potential benefits, including that firms can bid on government contracts, access formal financial services, and engage in wider markets (e.g. through exporting). Third, by having firms recognized by the state and vice versa, the government can help increase the sense of rule of law and provide some foundational support for the rule of law (Everest-Phillips, 2008). Finally, by having firms register and provide information about themselves to the state, the government can achieve a better understanding of the structure of its economy. These data can be used both directly as a means of better targeting government programs to small businesses, as well as indirectly serve as an input into other government functions such as infrastructure planning.

However, while governments may desire firms to become formal, firms may find these reasons much less compelling. Registering for taxes will impose additional costs on businesses, lowering profits, and firms may believe they receive few public goods in return. Small firms may not be likely to need some of the purported benefits of formal status (such as bidding for government contracts or exporting) and may face other constraints that prevent them from accessing other benefits such as business banking. And individual firms are unlikely to internalize the societal benefits of their compliance with the rule of law and of their data informing government policy.

> 1 Source: 2004-05 Integrated Household Survey, which shows 93 percent of firms are not registered with the Department of the Registrar’s General (DRG).

2
**Table 8: Comparison of the policy interventions and economy structure used in the Mexico, Morocco, South Africa, and Turkey analyses**

|**Country**|**Mexico**|**Morocco**|**South Africa**|**Turkey**|
|---|---|---|---|---|
|**Inte**<br>|**rvention/Sho**<br>|**ck**<br>|||
|Rural to urban migration and water allocation<br>from rural to urban centers|√<br>|√<br>|√<br>|√|
|International trade liberalization|√<br>|√<br>|√<br>||
|Reduction of water supplyfor irrigation|√<br>|√<br>|√<br>||
|Climate Change|√|√<br>|√<br>|√|
|Trade in water within and amongsectors||√<br>|√||
|Conjunctive use of GW and SW||√|||
|World agriculturalprice shocks||||√|
|**Eco**<br>|**nomy structu**<br>|**re**<br>|||
|Rural/urban distinction|√<br>|√<br>|√|√|
|Household types|√<br>|√<br>|||
|Farm types|√<br>|√<br>|||
|Irrigation/rainfed|√<br>|√<br>|√<br>|√<br>|
|Regional differentiation|√|√|√|√|

52