Working Papers

Documents published in the IDB working paper series are of the highest academic and editorial quality and all have been peer reviewed by recognized experts in their field. They are research and survey studies that, while conforming to rigorous research standards, need not be final products as their purpose is not only to inform but to stimulate discussion. The audience for working papers is largely academic, but may also include policymakers and private sector professionals.

• A Cross-Country Analysis of the Risk Factors for Depression at the Micro and Macro Level

  Melgar, Natalia; Rossi, Maximo

  Date : Sep, 2010

  Past research has provided evidence of the role of some personal characteristics as risk factors for depression. However, few studies have examined jointly their specific impact and whether country characteristics change the probability of being depressed. In general, this is due to the use of single-country databases. The aim of this paper is to extend previous findings by employing a much larger dataset and including the country effects mentioned above. The paper estimates probit models with country effects and explores linkages between specific environmental factors and depression using data from the 2007 Gallup Public Opinion Poll. Findings indicate that depression is positively related to being a woman, adulthood, divorce, widowhood, unemployment and low income. Moreover, there is evidence of the significant positive association between inequality and depression, especially for those living in urban areas. Finally, some population’s characteristics facilitate depression (age distribution and religious affiliation).

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• What Determines Investment in the Oil Sector?

  A New Era for National and International Oil Companies

  Mercer-Blackman, Valerie Anne, Hvozdyk, Lyudmyla

  Date : Aug, 2010

  This paper discusses recent trends in investment in the oil sector, amid new challenges for national and international oil companies in an increasingly supply-constrained environment. After more than a decade of stagnant investment rates, nominal investment has picked up sharply over the three years ending in 2007, but soaring costs (including from higher tax rates and royalties) meant that investment growth was minimal in real terms. The paper performs econometric tests using the Arellano-Bond GMM technique. It finds that ‘below ground’ risks are statistically very important in deterring real investment. Companies are taking on increasingly complex geological challenges, which are putting upward pressure on production costs and are leading to greater project delays compared to the past. As many of these factors are expected to persist, supply constraints are likely to remain a dominant factor behind oil price fluctuations during the next several years.

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• Gender Earnings Gaps in the Caribbean: Evidence from Barbados and Jamaica

  Bellony, Annelle; Hoyos, Alejandro; Nopo, Hugo

  Date : Aug, 2010

  This paper analyzes gender earnings gaps in Barbados and Jamaica, using amatching comparisons approach. In both countries, as in most of the Caribbean region, females’ educational achievement is higher than that of males. Nonetheless, males’ earnings surpass those of their female peers. Depending on the set of control characteristics, males’ earnings surpass those of females by between 14 and 27 percent of average females’ wages in Barbados, and between 8 and 17 percent of average females’ wages in Jamaica. In the former, the highest earnings gaps are found among low-income workers. Results from both countries confirm a finding that has been recurrent with this matching approach: the complete elimination of gender occupational segregation in labor markets would increase rather than reduce gender earnings gaps. The evidence is mixed regarding segregation by economic sectors. Occupational experience, in the case of Barbados, and job tenure, in the case of Jamaica, help to explain existing gender earnings gaps.

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• The Role of Relative Price Volatility in the Efficiency of Investment Allocation

  Cavallo, Eduardo; Galindo, Arturo; Izquierdo, Alejandro; Leon, John Jairo

  Date : Aug, 2010

  This paper estimates the impact of relative price volatility on sector-level investment allocation using a panel of 65 countries with data for 26 manufacturing industries over the period 1985-2003. Results indicate that volatility distorts efficient investment allocation in that investment is not necessarily devoted to relatively more productive sectors, especially in emerging market economies that are highly exposed and may lack the necessary institutions to deal with it successfully. This is evidence in support of theories suggesting that relative price volatility provides incentives for entrepreneurs to adopt more “malleable” but less productive production technologies, enabling them to accommodate more easily abrupt and frequent changes in relative prices, but at the cost of using less productive technologies.

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• Component Analysis of Apparent Losses Belize

  Cathala, Corinne, 2759

  Date : Aug, 2010

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• Top Management Support

  Cathala, Corinne, 2759

  Date : Aug, 2010

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• Innovation and Productivity in the Argentine Manufacturing Sector

  Arza, Valeria; Lopez, Andres

  Date : Aug, 2010

  This paper adapts the Crepon, Duguet, and Mairesse (1998) approach to estimate the relationship between innovation and productivity and the realities of innovative activities in developing countries. Panel data for Argentina during the period 1998-2004 to estimate a structural model in which different types of firms` innovative behavior—including in-house activities and the incorporation of external technologies—feeds into the probability of achieving successful results in product and process innovation, which in turn explains labor productivity. The endogeneity of this three-stage process is controlled for. The results suggest that all types of innovative activities are relevant to explain success in product and process innovation, and both are important factors to explain labor productivity. Moreover, investing systematically in RD implies an extra payoff in labor productivity. These results suggest that investing in different types of innovative activities—and not only in RD—and doing in-house activities systematically contribute to firms` innovative and economic performance.

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• Innovation, R&D Investment and Productivity: Uruguayan Manufacturing Firms

  Cassoni, Adriana; Ramada, Magdalena

  Date : Aug, 2010

  Uruguay’s inability to sustain high levels of economic growth cannot be fully explained by external shocks, the prevailing institutional setting or the level of human capital accumulation. Instead, low investment in knowledge capital stands as a most likely explanation. This hypothesis is supported by empirical evidence analyzed in this study. Returns on innovation were found to be significant, promoting a non-negligible acceleration of labor productivity gains. However, the propensity to innovate and the intensity of the effort expended critically depend on the firm’s already having a high internal efficiency level. As firms’ behavior is differentiated depending on the type of innovation output pursued, the significantly higher frequency of processes relative to product-innovative firms is matched by the larger impact of novel processes with respect to products on labor productivity. However, the degree of novelty of process innovation is significantly inferior to that of product innovation. The research points to inadequate choices of input mixes as the underlying cause. Policy recommendations center on finding adequate channels to generate and disseminate information on the optimal input mixes depending on the type of innovation output sought.

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• Regional Integration. What is in it for CARICOM?

  INTAL Publication

  Moreira, Mauricio Mesquita, Mendoza, Eduardo

  Edited by INTAL

  Date : Aug, 2010 | ISBN: 978-950-738-262-8

  Economic and political integration have been a perennial and neuralgic issue in the Caribbean agenda. This paper draws on the literature on trade, growth and regional agreements to discuss the motivation behind the Caribbean drive for integration, the results obtained so far and what is in stock for the future. It argues, with the help of descriptive statistics, an empirical growth model and a gravity model, that the traditional, trade related gains from regional integration have been and are bound to be limited because of (1) the countries’ high openness; (2) the limited size of the "common", enlarged market; and (3) the countries’ relatively similar factor endowments. It also argues, though, that gains in the area of "non-tradables", due to economies of scale which cannot be mitigated by trade and openness, can be substantial.

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• Globalization, Product Differentiation and Wage Inequality

  Bastos, Paulo; Straume, Odd Rune

  Date : Aug, 2010

  This paper develops a two-country, general equilibrium model of oligopoly in which the degree of horizontal product differentiation is endogenously determined by rms’ strategic investments in product innovation. Consumers seek variety and product innovation is more skill intensive than production. Stronger import competition increases innovation incentives, and thereby the relative demand for skill. An intraindustry trade expansion following trade liberalization can therefore increase wage inequality between skilled and unskilled workers. In addition, since product differentiation is resource consuming, freer trade entails a potential trade-off between production and variety. The import competition effect highlighted by the model, which plays a key role in determining the general equilibrium, is consistent with panel data on Chilean manufacturing plants.

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