4D.14 Regression: Developmental challenges and DGE-based output informality in EMDEs

TABLE 4D.14 Regression: Developmental challenges and DGE-based output informality in EMDEs

Dependent variable = SDG global index rank

Extreme poverty headcount (2000, percent of population) Extreme poverty headcount (latest, percent of population) Agriculture sector (value added, percent of GDP) Agriculture sector (employment, percent of employment) Finance constraint (percent of firms) Bank finance (percent of firms) Internal finance (percent of investment) Basic training

Business infrastructure

Physical infrastructure

Adeq. of social insurance program (percent household income) Coverage of unemployment benefits (percent of population) GDP per capita (logs) Access to credit (percent of GDP) Human capital (years of schooling) Trade openness (percent of GDP) Labor productivity (in thousands of 2010 U.S. dollars) Per capita income of bottom 40 percent (2011 PPP$ per day) Per capita income growth of bottom 40 percent (2011 PPP$ per day)

Lowest quartile (Q1) 2nd quartile (Q2) -Q1 3rd quartile (Q3) -Q1

Highest quartile

(Q4) -Q1 Obs R-sq

(1) (2) (3) (4) (5) (6)

84.500*** 3.638 28.017*** 20.362** 117 0.088 (6.380) (9.165) (9.973) (9.837) 13.140** 13.760 29.560** 40.310** 17 0.298 (5.439) (17.815) (13.628) (18.508) 7.336*** 1.418 23.579*** 12.435** 111 0.199 (1.908) (3.204) (5.318) (4.925) 4.846*** 3.589** 14.358*** 15.348*** 157 0.298 (1.074) (1.705) (2.281) (2.288) 10.366*** 10.350*** 32.082*** 34.126*** 157 0.360 (2.372) (3.907) (4.433) (3.939) 24.295*** 5.775* 14.365*** 8.257* 109 0.108 (2.325) (3.371) (3.958) (4.201) 28.650*** -0.276 -8.426** -10.278*** 109 0.126 (2.406) (3.482) (3.324) (3.367) 68.843*** -1.446 6.834** 5.311* 109 0.086 (2.015) (3.152) (2.775) (3.165) 1.937*** 0.128 -0.076 -0.028 68 0.041 (0.102) (0.127) (0.149) (0.123) 2.941*** -0.001 -0.053 -0.081 68 0.019 (0.075) (0.085) (0.104) (0.094) 3.675*** -0.201 -0.296** -0.230 68 0.070 (0.088) (0.129) (0.121) (0.157) 36.281*** -6.164 -10.095* -6.798 93 0.050 (3.530) (4.372) (5.335) (4.811) 6.519*** 0.326 -2.290 -3.653* 59 0.092 (1.823) (2.399) (2.069) (2.025) 8.769*** -0.697** -1.645*** -1.317*** 121 0.263 (0.220) (0.293) (0.296) (0.274) 44.818*** -9.466 -23.791*** -18.603*** 122 0.139 (4.988) (6.533) (5.731) (6.649) 7.253*** -0.524 -1.432* -1.270** 99 0.055 (0.363) (0.573) (0.747) (0.594) 83.269*** -8.021 -7.312 -9.606 119 0.013 (6.215) (8.878) (8.266) (8.375) 27.342*** -15.96*** -20.522*** -20.254*** 116 0.235 (5.092) (5.338) (5.270) (5.328) 6.344*** -1.911* -2.426** -2.044* 58 0.095 (0.790) (1.054) (1.206) (1.107) 3.215*** 0.307 -1.581* -2.270** 58 0.132 (0.702) (1.178) (0.841) (1.071)

TABLE 4D.14 Regression: Developmental challenges and DGE-based

output informality in EMDEs (continued)

Dependent variable =

Government revenues

Lowest quartile (Q1) 2nd quartile (Q2) -Q1 3rd quartile (Q3) -Q1

Highest quartile

(Q4) -Q1 Obs R-sq

(1) (2) (3) (4) (5) (6)

26.745*** -1.311 -4.068 -4.735* 83 0.050

(percent of GDP) Tax revenues (overall, percent of GDP)

Tax revenues (income, percent of GDP) (1.678) (2.704) (2.459) (2.578) 15.655*** -0.020 -0.730 -1.706 83 0.016

(1.297) (1.705) (1.892) (1.605) 5.517*** -0.929 -1.075 -1.212 83 0.035 (0.677) (0.825) (0.906) (0.815)

Tax revenues (imports, percent of GDP) Government expenditures (overall, percent of GDP) 0.968* 0.152 0.317 0.023 69 0.008 (0.492) (0.593) (0.546) (0.549) 28.156*** 0.071 -3.477 -5.270** 83 0.075 (1.755) (2.685) (2.357) (2.520)

Government expenditures (education, percent of GDP) 4.332*** -0.233 -0.085 -0.610* 118 0.025 (0.247) (0.391) (0.373) (0.365)

Government expenditures (health, percent of GDP) 3.240*** -0.372 -1.090*** -0.838** 122 0.076 (0.287) (0.417) (0.345) (0.407)

Pupil - teacher ratio (primary education) Trained teachers in primary edu (percent of teachers) 21.369*** 4.821* 14.413*** 12.430*** 120 0.162 (1.489) (2.561) (3.008) (3.584) 86.299*** 0.438 -12.399** -0.440 103 0.100 (3.034) (3.891) (4.954) (4.589)

Undernourishment (percent of population) Stunting (percent of population) Agricultural productivity (tons per hectare) Maternal mortality (per 10,000 births) 8.738*** 0.830 6.340** 10.087*** 113 0.119 (1.667) (2.137) (2.797) (3.440) 15.486*** 3.293 11.487*** 9.455*** 118 0.121 (2.390) (3.288) (3.493) (3.197) 4.778*** -1.697* -2.550*** -1.726 119 0.074 (0.812) (0.876) (0.841) (1.175) 82.677*** 50.356 206.452*** 198.189*** 122 0.146 (20.641) (38.247) (50.318) (58.552)

Under 5 mortality (per 1,000 births) Death rate from pollution (per 100,000 persons) 19.368*** 7.919 28.871*** 23.192*** 122 0.156 (3.040) (5.157) (6.358) (7.116) 75.419*** 11.181 70.000*** 46.281*** 122 0.155 (9.292) (14.843) (15.546) (17.098)

Life expectancy at birth (years)

72.871*** -0.784 -6.739*** -5.198*** 122 0.169 (1.098) (1.491) (1.593) (1.767) Net primary school enrollment 91.268*** -1.443 -6.683** -3.401 117 0.053 (1.448) (2.238) (3.163) (2.312)

Literacy rate (percent of people aged 15-24) Female years of schooling (percent of male schooling) Family planning (percent of women with needs) 96.585*** -3.306 -14.395*** -10.544*** 118 0.142 (0.942) (2.093) (3.562) (3.538) 8.497*** -0.930 -2.210*** -1.313** 122 0.083 (0.400) (0.587) (0.735) (0.624) 69.000*** -8.123* -16.607*** -11.750** 121 0.094 (2.709) (4.642) (4.304) (4.902)

TABLE 4D.14 Regression: Developmental challenges and DGE-based

output informality in EMDEs (continued)

Dependent variable = Lowest quartile (Q1) 2nd quartile (Q2) -Q1 3rd quartile (Q3) -Q1

Highest quartile

(Q4) -Q1 Obs R-sq

(1) (2) (3) (4) (5) (6)

Female informal workers (percent of female workers) 60.138*** 11.028 19.612** 17.188** 67 0.112 (4.865) (7.157) (8.026) (6.939)

Doing Business score

Cost of business start-up procedures (percent of GNI per capita) 62.683*** -4.368* -9.435*** -8.453*** 122 0.133 (1.253) (2.258) (2.099) (2.481) 17.574*** 18.013** 70.237*** 78.590*** 122 0.153 (4.245) (8.728) (17.750) (22.164)

Bureaucracy quality

Control of corruption

2.271*** -0.340* -0.927*** -0.824*** 95 0.279 (0.105) (0.184) (0.173) (0.148) 2.808*** -0.394** -0.550*** -0.640*** 95 0.183 (0.108) (0.151) (0.142) (0.166) Law and order 4.029*** -0.746*** -1.147*** -1.050*** 95 0.230 (0.171) (0.255) (0.220) (0.255) Quality of overall infrastructure 4.295*** -0.576** -1.158*** -0.936*** 108 0.246 (0.152) (0.227) (0.201) (0.211)

Access to sanitation services (percent of population) 83.694*** -4.642 -27.935*** -25.588*** 122 0.179 (3.702) (5.880) (6.741) (6.561)

Access to drinking water services (percent of population) 93.046*** -4.307 -15.721*** -14.017*** 122 0.157 (1.952) (3.300) (3.660) (3.886)

Access to electricity (percent of population)

Access to clean fuels (percent of population) 92.750*** -3.920 -28.945*** -19.955*** 122 0.176 (2.817) (4.544) (6.764) (6.152) 82.268*** -14.314* -43.833*** -37.288*** 120 0.225 (4.393) (7.399) (8.216) (8.000)

Access to internet (percent of population)

Access to mobile broadband (percent of population) 65.353*** -9.966* -32.517*** -26.623*** 122 0.245 (4.137) (5.811) (6.151) (5.780) 83.712*** -18.885* -42.583*** -33.104*** 122 0.182 (8.220) (9.981) (9.599) (10.050)

Paved road (percent of total roads)

Road project unit costs (all, U.S. dollars per km, millions) 40.100*** -1.265 -19.772** -29.360*** 45 0.247 (8.154) (12.626) (9.118) (8.416) 0.389*** -0.085 0.156 0.209 67 0.037 (0.108) (0.124) (0.254) (0.186)

Road project unit costs (reconstruction, U.S. dollars per km, millions) 0.441*** -0.149 0.184 -0.094 31 0.044 (0.157) (0.188) (0.412) (0.223)

Source: World Bank. Note: See the notes to figures 4.1-4.8 for detailed definitions and data sources for various dependent variables. Development outcomes are regressed against a set of dummies that categorize emerging market and developing economies (EMDEs) into quantiles of shares of informality using DGE-based estimates on informal output in percent of official GDP. The constant from the regression results show the development outcomes for the lowest quartile; coefficients show the difference between the corresponding quartile and the lowest quartile. All regressions are cross-sectional, with variables averaged during (up to) 1990-2018 (or otherwise specified period or latest year available). DGE = dynamic general equilibrium model; PPP = purchasing power parity; SDG = Sustainable Development Goal. Robust standard errors in parentheses. *** p<0.01, ** p<0.05, * p<0.1