rafmacalaba/datause-encoder-data huggingface dataset:
was helpful in shedding light on how environmental policies “trickle-down” from the national level to the county and district levels. The majority of interviews were conducted with local officials from Development and Reform Commissions (DRC), Environmental Protection Bureaus (EPB), Economic Commissions, Construction Bureaus, Forestry/Gardening Bureaus, Water Resource Bureaus, Finance Bureaus, and Statistical Bureaus, as well as a small number of enterprise managers. Interviews were semi-structured and highlighted the discrepancy between assigned green targets and realized outcomes at the local level and the continuing significance of growth vs. environment trade-offs. In addition to interviews, the analysis draws from government policy documents and media reports and available secondary sources.

# _1.3 Analytical Framework_

While national policy makers have started impressive efforts to switch to a more green and low carbon growth path, many elements of Beijing’s green agenda fall to local governments for delivery. Despite numerous incentives for local cadres to abide by Beijing’s directives woven into the cadre management system and provision of additional resources for green projects, a substantial environmental policy implementation gap exists.

_Figure 1_ gives an overview of the analytical framework, which aims to explain the main reasons for the persisting environmental implementation gap at the local level. Section 3 of this paper will look at institutional barriers at the local level and can be divided into four subcategories: the Chinese environmental planning system, the economic and political incentives provided to local implementers, public and private participation and interests, as well as financial, technical, and political capacities of implementing agencies. In addition to institutional factors, behavioral and sociocultural factors also help to explain why there is often insufficient motivation for effective environmental governance at the local level in China (Section 4). The analysis from the behavioral and sociocultural perspective will analyze how personal preferences, values, norms, and social pressures influence individual behavior and thus contribute to the environmental implementation gap.

4
Table 3.2. Inequality between Poor and Nonpoor in Guinea in 1994

|Aversion|Within|Between|Shareof<br>between|Overall|
|---|---|---|---|---|
|1.00|0.00|0.00|0.00|0.00|
|1.50|0.15|0.13|0.46|0.28|
|2.00|0.17|0.23|0.58|0.40|
|2.50|0.16|0.31|0.66|0.47|
|3.00|0.15|0.37|0.71<br>|0.52<br>|
|3.50|0.13|0.42|0.76|0.55<br>|
|4.00|0.12|0.46|0.79|0.58<br>|
|4.50|0.11|0.48|0.80|0.60|
|5.00|0.11|0.51|0.84|0.61<br>|
|5.50|0.10|0.52|0.83<br>|0.63<br>|
|6.00|0.10|0.54|0.84|0.64|

Data Source: 1994 Integrated Household Survey Suppose that a population has been divided into m subgroups<sup>indexedbyk.</sup> Consider any two groups j and k. The overlapping of group k by<sup>group jreflectsthefact</sup> that some individuals from group k have a standard of living that<sup>falls withintherangeof</sup> the distribution of the living standard within group j. The extent<sup>of thisoverlappingcan</sup> be measured by the _covariance_ between the level of the living<sup>standardin groupk and the</sup> relative rank the members of k would receive, had they been considered<sup>asmembersof</sup> group j. In this context, relative ranks are measured by the relevant<sup>cumulative</sup> distributions.

To see more clearly what is involved, let F(x) and **Fk(x)** stand respectively<sup>forthe</sup> overall CDF and the CDF within group k. Also let **Fj(x)** be the relative rank that members of k would get had they been considered as belonging<sup>to j.By definitionof the</sup> CDF, if all observations in k have a value that is less than or<sup>equalto theminimumin the</sup> range of group j, **Fk,(x)** would be equal to zero. If all values<sup>ingroupk aregreateror</sup> equal to the maximnum in j, F,(x)=1. In either one of these extreme cases, **covk[x,** F,j(x)]=O. This is the covariance between the values of x in<sup>groupkandtheirrelative</sup> rank in j. The covariance is calculated using the distribution k<sup>(Yitzhaki1994b:149).A</sup> non-zero value of this covariance reflects some overlapping of<sup>groupkby groupj.A</sup> normalized overlapping index is given by the following expression.

The index has the following properties: (1) It is greater or equal<sup>tozeroandlessthan or</sup> equal to 2; (2) It is equal to one if the distribution of group j<sup>is</sup> identical<sup>to the distribution</sup> of group k; (3) for a given segment of distribution j that<sup>fallswithintherangeof</sup> distribution k, the closer the observations of j are to the mean of k, the higher<sup>Oki.</sup> 19
# Field and Natural Experiments in Migration<sup>∗</sup>

David McKenzie<sup>1</sup> and Dean Yang<sup>2</sup>

> 1Development Economics Research Group, World Bank

> 2Department of Economics, University of Michigan

_JEL Classification: F22, J61, O15, C93, C23, C26 Keywords:_ Experimental Methods, Difference-in-Differences, Instrumental Variables, Regression Discontinuity, Natural Experiment, Migration

> ∗We thank the editors, Kirill Borusyak, Peter Hull and Xavier Jaravel for helpful comments. Ryan McWay and Laston Manja provided excellent research assistance.
the sense that the only taxes levied are those of the host country. The polar opposite case is that of ‘worldwide’ taxation, meaning—in its purest form—that the parent country will top up any taxes paid in the host country to the level applied by the country in which it resides, applying a credit for any taxes paid to the host country. The implication is that the tax paid to the host country is less relevant for inward FAI when the parent resides in a country applying worldwide taxation, because the final tax paid will be that of the residence country. In practice, for reasons touched on in a moment, the distinction between territorial and worldwide systems is not as sharp as this sounds. Nevertheless, a meaningful distinction of this kind can be made, and we do so by constructing a list of territorial corporate tax system using PWC World Tax Summaries.<sup>44</sup> Table 5 reports results allowing tax effects to differ according to the regime applied by the parent country.

In column (1), the coefficient of the rate differential is large and highly significant whether the parent is from a worldwide or a territorial country—but somewhat smaller (and less significant), as the considerations above would suggest, in the worldwide case. A similar story emerges in column (2), where the rate differential is split into its host and non-host components and the effects of each allowed to differ according to the regime applied by the residence country. There the effect of the host rate is both smaller and less significant when the parent is from a worldwide country. That it is not zero is consistent with two respects on which worldwide taxation in practice differs from its textbook form. One is that application of residence country taxation can often be avoided, not least by deferring repatriation of profits to the parent: this has been common practice, for instance, among US multinationals. The other is that host country tax remains final if it is above the tax due under residence country rules: no refund is paid to offset the excess.<sup>45</sup> The important point, however, is that the impact of the rate differential remains large and significant for FAI from parents in worldwide countries, and that host and non-host components continue

> 44Which countries we designate as having territorial or worldwide systems is indicated in Supplementary Appendix Tables C.2 and C.3.

> 45Some sign of this effect is at work emerges on comparing results across subsamples with positive and negative rate differentials (indicating host rates below and above that in the ultimate parent respectively): the effect of the rate differential is lager in the former case: see Supplementary Appendix Figures C.1 and C.2.

26
# B. FISCAL SOLVENCY ASSESSMENTS

> We next explore debt sustainability. First, we attempt to mimic debt sustainability

> exercises on the basis of growth expectations formed using the infonnation available in each year. These exercises, reported in Table 4.3, reveal that declining future growth projections (influenced by the deflationary adjustment under the hard peg) may have been even more important than implicit public debt interest rate increases in shaping perceptions about fiscal sustainability. Indeed, assuming that markets assessed long-term growth potential based on a (3 and 5-year) moving average of past growth, the simulations indicate that by the year 2000, and certainly by 2001, debt sustainability was

> clearly open to question, in the sense that the required primary balance of the consolidated government approached or even exceeded 4% of GDP, a figure that looked

> unlikely given Argentine fiscal history and institutions. In practice, although fiscal

> discipline had been a concern for years, it is fair to say that most analysts in investment banks and elsewhere began to seriously question fiscal solvency in these years and not

> before. It should be pointed out, however, that Argentine economists centered the debate in the electoral year of 1999 on the need for further fiscal adjustment and that the Fiscal Responsibility Law was enacted in mid 1999 as a means to guarantee fiscal solvency. Non-compliance with its goals in the run up to the election and afterwards contributed to undermine confidence in solvency.

**Table 4.3. Indicators of Fiscal Sustainability**

||**Average**<br>**Growth**<br>**Rate**|**Implicit**<br>**InterestRate**<br>**onGov. Debt**|**Consolidated**<br>**Gov. Primary**<br>**Balance**|**Sustainable**<br>**Balance**<br>**(a)**|**Sustainable**<br>**Balance**<br>**(b)**|
|---|---|---|---|---|---|
||(threepreceding<br>yearaverage)|||(av.growth rate<br>basedonlast3<br>yearobservations)|(av.growthrate<br>basedonlast5<br>yearobservations)|
||Percentage|Percentage|Percentageof<br>GDP|Percentageof<br>GDP|Percentageof<br>GDP|
|**1991**|0.7|8.6|-0.4|2.7|2.8|
|**1992**|5.7|6.2|1.4|0.1|**1.4**|
|**1993**|7.3|5.0|1.2|n.s.p.|0.5|
|**1994**|6.5|5.1|-0.1|n.s.p.|n.s.p.|
|**1995**|2.6|5.4|-1.0|0.8|0.1|
|**1996**|2.8|5.6|-1.3|0.9|0.4|
|**1997**|3.6|6.1|0.2|0.9|**0.6**|
|**1998**|5.8|6.4|0.6|0.2|0.9|
|**1999**|2.9|7.1|-1.6|**1.7**|2.0|
|**2000**|**-0.1**|8.0|0.3|3.9|2.5|
|**2001**|-2.9|8.7|-1.4|6.0|4.0|

**Note:**

n.s.p. means no sustainability problem.

**Source:** Estimates based on IMF and Ministerio de Economia **de la** Repuiblica Argentina data.

> The protracted deflationary adjustment to the external shocks imposed by the hard peg to the dollar (as discussed above) had thus a major effect on debt sustainability

36
The above cited chart shows that domestic debt increased from 13 percent in 1985 to almost 30 percent of GDP in 1995.

The real interest rate is a major variable in all debt sustainability exercises. The following presents the ratio of the interest rate bill to the stock of debt.

Chart 10 **Costa Rica: Ratio of Interest Payments to Domestic Debt** <!-- Start of picture text --> 0.18<br>0.16 -<br>0.14-<br>0.12.<br>0.10<br>0.08<br>0.06.<br>85 86 87 88 89 90 91 92 93 94 95<br>- CRINTVDDi<br><!-- End of picture text --> Source: IMF Chart 10 shows that the real interest rate has become a major factor in determining the probability of sustaining the current stock of debt in Costa Rica. In this chart 1992 and 1993 appear to be outliers. These were years of operational surpluses, which were followed by years of significant deficits.

The following illustration exhibits the huge interest rate burden for the Costa Rican Treasury. In 1995 interest payments represented almost 20 percent of Treasury's tax revenues.

28
||||**Ta**<br>**H**|**ble 6. Girls’ **<br>**ealth**|**and boys’ ou**|**tcomes**||**Educ**|**ation**||
|---|---|---|---|---|---|---|---|---|---|---|
|||**Girls**|||**Boys**||**Gi**|**rls**|**B**|**oys**|
||(1)|(2)|(3)|(4)|(5)|(6)|(7)|(8)|(9)|(10)|
||Stunted|Wasted|Received<br>all four<br>vaccinati<br>ons|Stunted|Wasted|Received all<br>four<br>vaccinations|Max<br>years of<br>schooling<br>among<br>girls (6-<br>15years)|Proportion<br>enroll in<br>school (6-<br>15 years)|Max<br>years of<br>schooling<br>among<br>boys (6-<br>15)|Proportion<br>of boys<br>enroll in<br>school<br>among (6-<br>15)|
|W gives herself more power|-0.047***|-0.004|0.054***|-0.033***|-0.012**|0.067***|0.343***|0.048***|0.226***|0.067***|
|than H gives her [A]|(0.01)|(0.01)|(0.01)|(0.01)|(0.01)|(0.01)|(0.04)|(0.01)|(0.04)|(0.01)|
|H gives W more power than she|-0.023***|0.002|0.034***|-0.031***|-0.009|0.042***|0.328***|0.044***|0.250***|0.062***|
|gives herself [B]|(0.01)|(0.01)|(0.01)|(0.01)|(0.01)|(0.01)|(0.04)|(0.01)|(0.04)|(0.01)|
|W and H agree she is main/joint|-0.054***|-0.007|0.074***|-0.047***|-0.020***|0.077***|0.457***|0.065***|0.369***|0.080***|
|DM [C]|(0.01)|(0.01)|(0.01)|(0.01)|(0.01)|(0.01)|(0.04)|(0.01)|(0.04)|(0.01)|
|Constant|0.468***|0.152***|0.504***|0.486***|0.166***|0.493***|2.933***|0.454***|3.512***|0.776***|
||(0.02)|(0.01)|(0.02)|(0.02)|(0.01)|(0.02)|(0.09)|(0.01)|(0.09)|(0.01)|
|_Controls_|||||||||||
|Individual/Household-level<br>characteristics|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|
|CountryFixed Effects|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|Yes|
|Observations|28,203|28,203|28,203|28,495|28,495|28,495|28,961|32,366|28,539|29,866|
|Adjusted R-squared|0.06|0.03|0.15|0.06|0.03|0.15|0.13|0.19|0.10|0.20|
|<br>MeanControl|0.10|0.12|0.55|0.43|0.15|0.54|2.22|0.37|2.47|0.64|
|P-value A=B|0.00|0.24|0.01|0.82|0.58|0.00|0.71|0.47|0.54|0.37|
|P-value A=C|0.35|0.45|0.02|0.08|0.07|0.20|0.00|0.00|0.00|0.01|
|P-value B=C|0.00|0.05|0.00|0.05|0.02|0.00|0.00|0.00|0.00|0.00|
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6 Bulgaria face major macro-imbalances. Internal disequilibrium appears to be relatively larger in the former but the burden of foreign debt is much lower, especially if account is taken of substantial gold reserves.' Hungary has the largest external debt per capita and persistent inflation of about 20 percent, but a relatively small budget deficit. With low foreign debt and probably only moderata domestic imbalances, Czechoslovakia appears to be in the best macro situation. East Germany is, of course, a special case because it has been reformed out of existence, in a process involving the underwriting of foreign debts and any monetary overhang by the Federal Republic.

The extent and type of macro imbalance prevailing before reform has an important bearing on the potential speed and design of structural reform programs. Although it can be one of the ways to eliminate a monetary overhang, the inflation that will accompany liberalization from a position of repressed excess demand is likely to cause serious economic and political difficulties for reform. Although the elimination of the monetary overhang should in principle be possible with a one-time change in the price level, rising prices may even accentuate the flow disequilibrium by worsening the

- 9/ In March 1990 the USSR published a list of its debtors and identified overall international assets of $145 billion, of whic, $74 billion was owed by CMEA members and $ 71 billion by developing countries: Ox_ord Analytica. 7126/90. It is not clear to what extent these debts are collectible, but on paper at least the USSR has thus developed a substantial net international credit position, which could give it some leeway in adjusting its external accounts. Bulgaria has also extended credit to developing countries, notably in the Middle Eart. Reform of the CMEA system will probably be to the advantage of the USSR but adverse for Bulgaria.
|Variables|Obs|mean|St Dev|min|median|max|
|---|---|---|---|---|---|---|
|Z-Score|117209|51.406|80.964|0.003|24.640|518.494|
|RC/RWA|112559|18.322|9.735|0.010|15.790|100.000|
|Equity/TA|144116|12.209|10.107|0.000|9.888|81.818|
|RC/RWA - Equity/TA|112497|7.273|6.046|-4.054|5.957|35.518|
|T1C/TC|95711|90.280|9.212|0.521|92.518|100.000|
|RWA/TA|93078|64.203|15.856|0.007|65.363|100.000|
|size|144451|6.115|1.971|2.304|5.793|15.203|
|ROA|144100|0.718|2.511|-97.328|0.707|8.333|
|ShortFunds/TA|142766|9.143|13.530|0.000|3.575|70.990|
|Loans/TA|142845|59.011|18.569|0.000|61.465|92.130|
|Liquid A/TA|143980|17.158|16.326|0.000|11.888|85.586|

The results are reported in Table 2 below. We find that both regulatory capital and simple leverage reduce bank risk (columns 1 and 2). However, when we run a horse race between the two capital ratios (column 3), we find that only the simple leverage ratio retains its significance in reducing bank risk. In other words, after controlling for simple leverage, regulatory capital ratios do not have explanatory power for bank risk. In the last column (column 4), we examine how the gap between regulatory capital and simple leverage ratios (RC/RWA - Equity/TA) is related to bank risk. We find that after controlling for regulatory capital, bank risk increases with the gap. That is, the higher the gap, the higher becomes the banks’ risk.

**Table 2: Relationship Between Bank risk and Capital Ratios (developing ECA)**

|VARIABLES|(1)<br>Z-Score|(2)<br>Z-Score|(3)<br>Z-Score|(4)<br>Z-Score|
|---|---|---|---|---|
|size|-0.417|0.025|0.083|0.038|
||(0.724)|(0.712)|(0.716)|(0.704)|
|ROA|0.261|0.093|0.091|0.090|
||(0.285)|(0.301)|(0.303)|(0.301)|
|ShortFunds/TA|<br>-0.205***|<br>-0.185***|<br>-0.189***|<br>-0.189***|
||(0.061)|(0.059)|(0.060)|(0.061)|
|Loans/TA|-0.001|-0.045|-0.026|-0.027|
||(0.087)|(0.090)|(0.087)|(0.088)|
|Liquid A/TA|<br>-0.172**|<br>-0.136|<br>-0.146*|<br>-0.135|
||(0.087)|(0.088)|(0.087)|(0.087)|
|RC/RWA|<br>0.422***||<br>0.161|<br>0.687***|
||(0.137)||(0.151)|(0.158)|
|Equity/TA||0.655***|<br>0.510***||
|||(0.175)|(0.183)||
|RC/RWA - Equity/TA||||-0.668***<br>(0.239)|
|Constant|30.077***|27.661***|25.234***|<br>25.973***|

14
foreign inputs. Thus, the cost structure of multinationals differs from national only service providers. Multinationals incur costs related to both imported primary inputs and Armenian primary factors, in addition to intermediate factor inputs. Foreign provision of services differs from foreign provision of goods, since the service providers use Armenian primary inputs. Domestic service providers do not import the specialized primary factors available to the multinationals. Hence, domestic service firms incur primary factor costs related to Armenian labor and capital only. These services are characterized by firm-level product differentiation. For multinational firms, the barriers to foreign direct investment affect their profitability and entry. Reduction in the constraints on foreign direct investment will induce foreign entry that will typically lead to productivity gains because when more varieties of service providers are available, buyers can obtain varieties that more closely fit their demands and needs (the DixitStiglitz variety effect).

# **Trade facilitation and border costs**

According to the World Bank Logistics Performance Index of 2010, Armenia ranks 111<sup>th</sup> in the world out of 155 countries.<sup>9</sup> This is an improvement from 131<sup>st</sup> in the world in 2007,<sup>10</sup> but still leaves considerable room for improvement. Given the focus of the EU on institutional development for trade facilitation, a deep and comprehensive free trade agreement with the EU is likely to reduce these costs for exports to the EU. We therefore assume that the costs of exporting to the EU from Armenia will fall and the costs of importing into Armenia from the EU will also fall. Moreover, improved institutional development for trade facilitation is likely to reduce trade facilitation costs for imports from and exports to all regions. If customs is more efficient in processing imports from the EU, these procedures will generally facilitate trade with all regions. For example, if trucks with imports from the EU can pass through Armenian borders more quickly, trucks with imports from other countries are also likely to see reduced delays. Given that the EU will monitor trade with the EU much more carefully, it is possible that not all institutional reforms in trade facilitation will transmit to trade with non-EU countries. So we shall assume that the border costs of exporting to or importing from non-EU countries will fall by a smaller percentage.

> 9 See: http://info.worldbank.org/etools/tradesurvey/mode1b.asp.

> 10 See http://siteresources.worldbank.org/INTTLF/Resources/lpireport.pdf.

13
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34