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Research Insights: How Does Debt Affect Corporate Investment in Periods of High Uncertainty?
No full textInvestment rates are substantially reduced for firms with higher leverage and higher risk of default. For firms with low risk, higher leverage does not reduce investment; in fact, in these cases we find that higher debt may be associated with higher investment. Economic crises provoke the most problematic debt-overhang problems, and low investment rates can persist for two to three years after the recession has ended
Measuring the Influence of IDB Knowledge to Promote Development Effectiveness
Get PDFThis technical note discusses a framework and methodology for building an index to measure the impact of knowledge produced and disseminated by the Inter-American Development Bank, known as the knowledge influence score. This index seeks to measure what happens after the product reaches the target audience and how it contributes to larger IDB business goals through three dimensions: reputation, policy landscape, and operations. The note contains proposals for possible metrics that could make up the index, as well as a proof of concept and an outline for possible actions to build a more robust measurement
Re-thinking Social Protection: From Poverty Alleviation to Building Resilience in Middle-Income Households
Get PDFWe exploit an expansion in social protection to middle-income households to provide evidence on how middle-income households cope with economic shocks and how to build their resilience. We use a regression discontinuity design around the eligibility cutoff for a program that delivered monthly cash transfers mainly through bank accounts in Colombia. We find no impacts on food security, education, and health outcomes--the target outcomes of antipoverty programs. In contrast, program eligibility increases non-food consumption and reduces debt for routine expenses. Bank account ownership increases by 16%, and beneficiaries are more likely to borrow from formal lenders. Amid systemic and idiosyncratic shocks, the program prevents middle-income households from reducing non-food spending and acquiring debt for routine expenses. Moreover, when hit by severe shocks, beneficiary households substitute away from predatory loans. The results suggest that middle-income households are constrained by lack of insurance and that social protection can build middle-income households\u27 resilience to shocks through both cash transfers and by integrating beneficiaries into formal credit markets
Digital Innovation Hubs: Insights from European Experience in Supporting Business Digitalization
No full textDigital technologies can boost regional and sectoral productivity, yet firms in Latin American and Caribbean (LAC) countries are experiencing shortfalls in digital uptake and innovation. This is partly due to a scarcity of knowledge suppliers able to respond to the region\u27s or countries\u27 diverse needs. Digital innovation hubs (DIHs) can offer a collaborative, location-based approach and address these gaps. This study analyzes data from over 300 DIHs in Europe, revealing that university-affiliated DIHs offer sophisticated services, such as collaborative research and testing facilities, while industry-affiliated DIHs focus on activities closer to the market, including mentoring and ecosystem building. Three case studies show that establishing a DIH is not achieved overnight but is instead a learning and improvement process; that a DIH evolves in response to regional needs and assets; and that DIHs require reliable funding for their development, particularly public financing, in their early stages. Hence, LAC policymakers should take in to account the need for a context-sensitive, context-adaptive strategy when promoting DIHs as a tool for public policy. Voucher programs and regional policies for productive development, such as smart specialization strategies, could also refine and mobilize the demand for specific digital technologies, facilitating the establishment of DIH-type initiatives
Measuring Labor Market Discrimination against LGTBQ+ in the Case of Ecuador: A Field Experiment
Get PDFThis paper presents the findings of an artifactual field experiment conducted in urban Ecuador to investigate discrimination against LGBTQ (here restricted to individuals self-identified as gay or lesbian) job seekers in the labor market. Focusing on occupations and sectors where LGBTQ and non-LGBTQ individuals commonly apply, the study employed fictitious job applications evaluated by 394 human resource analysts. The results indicate that, on average, LGBTQ candidates did not face discrimination in terms of hiring recommendations, job fit assessments, or wage offers. However, a closer analysis reveals a gender-based differential treatment. Female LGBTQ candidates received positive discrimination, were more likely to be selected and offered higher wages compared to their heterosexual counterparts. In contrast, male LGBTQ candidates experienced negative discrimination and no wage differences with a lower likelihood of selection. The study found an influential role of female recruiters in driving these discriminatory behaviors. These findings contribute to our understanding of the complex dynamics of discrimination towards LGBTQ workers in the labor market and its interaction with gender
Willing but Unable to Pay?: The Role of Gender in Tax Compliance
Get PDFThe existing literature shows that women are more likely to pay taxes than men. Yet, there is less consensus on the gendered responses to interventions aimed at boosting tax compliance among non-payers. In this study, we exploit a field experiment designed to increase property tax compliance to investigate this gender disparity. Our findings reaffirm that women are typically more diligent in paying their taxes than men. Interestingly, while the receipt of a deterrence letter prompts women to pay earlier, it does not necessarily augment their overall compliance. Conversely, men, upon receiving a deterrence letter, show a marked improvement in overall compliance. We also find that the size of the tax bill influences women\u27s compliance behavior (the likelihood of paying\u27increases substantially for small bills), but not men\u27s. To unpack this intriguing finding, we examine survey data to uncover the differing motivations and resources between genders. This analysis suggests that, although women may be more motivated to pay, they might encounter significant liquidity constraints. Our observations are consistent with a simple analytical model that correlates compliance to tax morale, risk aversion, and budget constraints. This research underscores the potential for tax policies and enforcement procedures to exacerbate income inequality between genders, especially in low tax-enforcement contexts where tax evasion is substantial
Can Online Platforms Promote Women-Led Exporting Firms?
Get PDFHow can policymakers promote women-led exporting firms? In this paper, we study the role of online business platforms to reduce informational barriers to exporting for women entrepreneurs. We hypothesize that, if the costs associated with accessing digital platforms are more symmetric across gender than traditional trade costs, digital trade platforms can play an important role in making trade more gender equal. To assess this hypothesis, we combine information on firms\u27 participation in ConnectAmericas , a free and purely informational online platform, and detailed firm level export data of a developing country over a long period. We find that participation in this platform is associated with a significantly larger increase in exports for women entrepreneurs than for men managed firms in otherwise identical products and destinations. Given existing evidence on the role of women managed businesses in reducing gender earnings inequality, these results suggest that policies which encourage women participation in online environments to reduce the informational barriers associated with operating in foreign markets have the capacity to promote gender equality more broadly
Inter-American Development Bank Quarterly Business Review: Second Quarter 2023
No full textThe 2023 second quarter edition of the Quarterly Business Review (QBR) provides management with a status of the Bank\u27s performance. The QBR reports on outputs, lending program priorities and organizational indicators on a quarterly basis to allow management to monitor progress in achieving corporate results. This periodic monitoring supports evidence-based decision making and allows for timely identification of deviations from targets and enables effective implementation of measures to address them. Also, the QBR provides an overview of the IDB\u27s performance on sovereign-guaranteed outputs and lending program priorities. It identifies trend deviations from IDB portfolio targets to support Bank management efforts to identify and implement corrective measures. This edition compiles data for the second quarter of 2023
Do Behavioral Drivers Matter for Healthcare Decision-making in Times of Crisis?: A study of Low-Income Women in El Salvador During the COVID-19 Pandemic
Get PDFUnderstanding health-seeking behaviors and their drivers is key for governments to manage health policies. There is a growing literature on the role of cognitive biases and heuristics in health and care-seeking behaviors, but little is known of how they might be influenced during a context of heightened anxiety and uncertainty. This study analyzes the relationship between four behavioral predictors the internal locus of control, impatience, optimism bias, and aspirations and healthcare decisions among low-income women in El Salvador. We find positive associations between internal locus of control and preventive health behaviors during the COVID-19 pandemic (use of masks, distance, hand washing, and COVID-19 vaccination) and in general (prenatal checkups, iron-rich diets for children and hypertension tests). Measures of impatience negatively correlate with COVID-19 prevention behaviors and mothers micronutrient treatment adherence for children, and optimism bias and educational aspirations with healthcare-seeking behaviors during the COVID-19 pandemic. Some associations were more robust during the pandemic, suggesting that feelings of uncertainty and stress could enhance behavioral drivers influence on health-related behaviors, a novel and relevant finding in the literature relevant for the design of policy responses for future shocks
Voters’ Preferences over the Composition of Fiscal Adjustment: Experimental Evidence from Latin America
Get PDFDespite the regularity with which governments confront the need to make fiscal adjustments, voter attitudes toward competing consolidation strategies are still not well understood. For example, an influential literature finds that voters prefer public spending cuts to tax increases, but little is known about how these preferences depend on the particular taxes and spending categories that politicians choose or on voter characteristics such as income, ideology and trust. Our analysis of experimental data from 8,000 survey respondents across Brazil, Colombia, Costa Rica, and Peru confirms that, at the aggregate level, individuals prefer spending-based to tax-based fiscal adjustments. However, these preferences change dramatically depending on which tax and spending adjustments individuals are asked to make. Respondents strongly oppose increases in the personal income tax, but they support or are indifferent toward higher corporate income or value-added taxes. They strongly support public employment cuts but oppose cuts in social assistance. Responses also indicate that a wide range of voter motivations, beyond their pecuniary interests, shape their preferences over fiscal adjustment strategies. Their support not only varies with income, but significantly depends on such non-pecuniary characteristics as ideology and trust in government