Research

Study Overview

Air conditioning adoption has large implications globally for energy markets and the environment. Using unusually rich microdata we show that air conditioning adoption has accelerated, significantly exceeding predictions made just ten years ago (Davis & Gertler, 2015). We then incorporate data from additional sources to understand mechanisms.

Study Results

Neither income growth nor rising temperatures appear to be able to explain the increased air conditioning adoption. Instead, our results point to Mexico's low electricity prices as a key driver.

Study Overview

This study represents an in-depth landscape analysis of research focused on mental health in the workplace. The analysis includes 240 articles with wide geographic reach and assesses nearly 50 interventions. This project aims to examine trends in research, identify the most effective interventions and environmental factors promoting success, and illuminate opportunities for further research. Results from the analysis will be shared with California state agencies, as well as other public and private stakeholders.

Study Results

Pending

IBSI Funding Acknowledgement: Workplace Mental Health Initiative

Study Overview

This research project aims to analyze discrimination dynamics faced by international migrants when applying for loans in Colombia's informal economy. Working in collaboration with Galgo, a Fintech company operating in Latin America, the project examines how innovative scoring methods can assess credit risks for both native and immigrant populations. The project then seeks to evaluate the impact of Galgo's loan program on various outcomes, including financial behavior, repayment rates, labor market participation, income, and overall wellbeing. This research intends to contribute to the development economics literature by addressing topics such as discrimination in credit markets, economic impacts of migration, productivity of microcredit loans, and financial inclusion of underserved populations.

Study Results

Pending

Intervention: Innovative credit scoring

Research Partner: La Universidad Adolfo Ibáñez (UAI)

Intervention Partner: Galgo

Populations: Individuals, households, immigrant populations

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

We study the effects of the two most common slum policy interventions: in-situ upgrading and population relocation on (i) slum area physical characteristics, (ii) socioeconomic attributes of slum dwellers, and (iii) spillovers to nearby formal neighborhoods. To conduct our analysis we create a 20+ year novel panel dataset for the universe of slums in Chile using satellite images, census data, administrative records, construction permits, crime reports, and property tax records. Descriptively, slums tend to form on the periphery of cities, close to low-skilled labor centers. City level slum growth is linked to higher housing rental prices and improved labor markets for low-skilled workers.

Study Results

We find that both in-situ upgrading and slum relocation reduce a slum’s building footprint and the share land used for residences. However, in-situ upgrading generates long-lasting positive impacts on housing quality in slum areas and attracts higher SES (socioeconomic status) residents. In terms of spillovers to surrounding neighborhoods, in-situ upgrading dominates population relocation. Neighborhoods near in-situ upgraded slums experience a reduction in criminal activity, more housing investment, and attraction of more high SES residents. These findings are all the more impressive given that the average fiscal cost per beneficiary household for in-situ upgrading is only two-thirds of the cost of population relocation.

Research Partner: Universidad de Chile

Populations: low income households

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

This research examines how the prolonged regulatory uncertainty surrounding blockchain and digital assets relates to entrepreneurial activity. Exploiting variation in U.S. congressional voting patterns, close-call elections of crypto-friendly politicians, and spatial distribution of crypto PAC contributors, we analyze startup formation, failure rates, capital raising, and strategic pivots inferred from hiring data.

Study Results

We find that regulatory uncertainty significantly influences entrepreneurial outcomes, with increased legislative support associated with positive startup performance. Paradoxically, while the industry advocates for regulation, startups’ hiring patterns suggest reluctance to prioritize regulatory compliance. Overall, our study helps to quantify the magnitude of regulatory uncertainty’s impact on emerging technology and offer insights for policymakers seeking to balance oversight with innovation.

Intervention: Regulation

Research Partner: Emory University

Populations: Blockchain start-ups, Government regulators

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

In this review, we discuss changes resulting from both big data and non-traditional data in the financial industry. We explore ways these innovations are shaping markets and companies, but put greater focus on the consequences - both positive and negative - for end consumers. We aim to cast a wide net over offerings for both developed and emerging markets, as well as both products aimed at low-income, low-literacy individuals and those intended for more educated, wealthy, and financially savvy consumers.

Study Results

Analysis suggests there are many promises and potential risks - such as discrimination caused by bias in data used for credit scoring or consumers' behavior to game systems - related to data-driven fintech innovation. In many cases, better oversight and further research can help to address the concerns and ensure benefits are more widely distributed. As these technologies become more ubiquitous, the challenge will be for regulation and rigorous evaluation of impacts to keep pace with rising innovation.

Populations: General

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

Celsius was not a bank, but the now-bankrupt cryptocurrency network advertised and provided de facto banking services. We investigate the consequences of this collapse for Celsius's depositors. First, we summarize deposits by demographic and institutional affiliation. Then, we examine the intensive and extensive margin differences in digital assets stranded in bankruptcy.

Study Results

We find significant disparities across demographic groups, with institutions, males, and ethnic groups culturally distant from Celsius's founders doing better. Mechanism tests are consistent with more effective monitoring of risk by these groups. Finally, using a difference-in-differences approach, we analyze the influence of stranded assets on user's subsequent digital asset balances and transactions. We find significant differences in behavior, with those most impacted by the bankruptcy moving away from DeFi and NFTs toward more basic transactions (e.g., buy and hold) but also exhibiting tendencies to gamble for resurrection by holding riskier cryptocurrencies (e.g., meme coins). We conclude with a discussion of the implications for policymakers and industry participants, aiming to enhance the stability and resilience of digital asset markets.

Intervention: Cryptocurrency

Research Partner: Emory University

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

The mobile phone revolution in low-and-middle income countries has transformed the way humanitarian organizations distribute relief. In the past four years alone, personal data from mobile phones have been used to target economic relief in to individuals experiencing poverty in Togo and Afghanistan. The key insight underlying these approaches is that poorer individuals tend to use their phones differently than richer individuals; hence, when combined with survey data on poverty, techniques from supervised learning can be used to generate a machine learning model that predicts an unknown individual’s poverty status. However, conducting these surveys can be expensive, time-consuming, and oftentimes impossible during a humanitarian crisis. A promising avenue of inquiry would be to collaboratively build a machine learning model using existing data from multiple organizations in unison. However, the use of personal data from economically disadvantaged individuals — even for humanitarian applications — raises privacy concerns.

Study Results

This project will develop tools to foster provably private collaborative machine learning between organizations to support anti-poverty initiatives, and will enable the responsible use of personal data, which in turn can unlock new innovation and facilitate collaborative machine learning between humanitarian organizations.

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

Haraka leverages blockchain, local stablecoins, and community trust to reimagine micro-finance and expand financial inclusion and health of underserved populations. Savings circles are a crucial segment of last-mile financial services for the estimated 510 million individuals worldwide who have turned to informal and self-organized village savings and loan associations (VSLAs). Despite the crucial role that VSLAs play in providing services to underbanked people, especially women, savings groups remain excluded from access to formal credit. The goal of this research is to understand how access to credit for savings groups and their members might be expanded by coupling machine learning methods with data on VSLA transactions, digital records, and information on the groups’ social capital, reputation and cohesion when assessing creditworthiness. Technology is rapidly digitizing many aspects of saving groups’ functioning, including group interactions, access to information, digital record-keeping, and electronic transactions creating invaluable digital footprints. This information is then combined to build  a self-sovereign AI/ML credit score for individuals, enabling them to access financial opportunities beyond their immediate communities. Beyond traditional measures of access to credit and creditworthiness, we are also interested in possible impacts on members’ economic activities and their performance, as well as downstream impacts on wellbeing and gender empowerment.

Study Results

Pending

Intervention: Innovative credit scoring to expand access to financial services leveraging blockchain technology

Intervention Partner: Haraka

Populations: Rural, underbanked in community savings and loan associations

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

Small and medium enterprises (SMEs) are critical to job creation and global economic development. SMEs form the backbone of the African economy, representing more than 90% of businesses and employing between 60% and 70% of workers, many of whom are women and youth. The World Economic Forum estimates that Africa’s workforce will increase by a staggering 910 million people by 2050, of which 830 million will be in Sub-Saharan Africa, creating enormous pressure for jobs on SMEs, which typically account for approximately 80% of new jobs. The UC Berkeley research team developed Skills for Effective Entrepreneurship Development (SEED), a 3-week mini-MBA modeled after western business curricula adapted to the Ugandan context. In collaboration with Educate!, we are poised to launch a large field experiment featuring 10,000 Ugandan youth to foster a new and dynamic generation of entrepreneurs. Among others, the study will assess the value added of teaching digital business skills to encourage tech adoption for business management (inventory, payroll, digital payments) and leverage online market opportunities (e/s-commerce, branding, online presence etc.) 

Study Results

Pending

Intervention Partner: Educate!

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

This research explores different concepts of data rights, their current effectiveness, and privacy-enhancing technologies that can increase their effectiveness. In particular, the team evaluates various rights-based privacy approaches by collecting and analyzing numerous empirical pieces of evidence. The goal is also to assess how various data rights can affect underground data markets where customer data is traded without discretion and whether the data rights can intrinsically solve the issue regarding the underground data market.

Study Results

Pending

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

In growth markets, where an estimated 1.4 billion individuals remain unbanked, the reliable and consistent delivery of last-mile banking services remains a critical challenge despite multi-sector technological advancements. In emerging markets, neighborhood mom-and-pop store owners acting as micro-fintech agents are crucial basic banking service providers in underserved communities. However, efforts to improve access to banking services through these agents often face a significant challenge known as 'merchant dormancy'. Empowering last-mile micro-fintech agents with meaningful, actionable information on financial products and how to manage and maintain them could reduce dormancy, potentially catalyzing an estimated USD 380 billion in annual economic value and fostering local economic development. For micro-fintech agents serving the underbanked in emerging markets, the AI revolution offers an opportunity to jumpstart their productivity supported by access to personalized and timely advice. This research leverages Large Language Models (LLMs) in two ways a) Personalized recommendation (curation) with an AI virtual secretary and b) Low-cost and fast content creation through Generative AI models aimed to reduce merchant dormancy, increase access to and improve quality of financial services offered by micro-fintech agents in rural and peri-urban India.

Study Results

Pending

Intervention: AI-generated personal support for micro-fintech agents

Research Partner: Center for Growth Markets

Intervention Partner: FINO

Populations: Small, micro enterprises, unbanked households and individuals

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

News & media

Revolutionizing Financial Inclusion: AI-Powered Personalized Support for Last-Mile Banking

September 1, 2024

We’re pioneering an innovative approach that leverages the power of Large Language Models (LLMs) to democratize content personalization for small fintech merchant support, bridging the data gap that has long hindered effective service delivery.

Empowering financial inclusion in India through reliable micro-fintech agents

September 1, 2024

We have developed an AI-powered solution that offers personalized support to micro-FinTech agents in data-scarce environments. By leveraging LLMs and Generative AI, we deliver timely and relevant information that empowers agents to thrive in their roles.

Study Overview

This research investigates the impact of a trauma-informed, decolonized approach to mental health services for students with specific emphasis on historically marginalized and underserved communities. The study centers on the SC2.0 framework, which prioritizes strengths-based interventions and minimizes potential biases in traditional assessment methods. A pilot outreach campaign will be conducted to effectively engage target populations. Subsequently, a stratified randomized controlled trial will evaluate the effectiveness of the SC2.0 framework in improving mental health outcomes for these students, while also examining the impact on service utilization and overall well-being.

Study Results

Pending

Populations: University students

IBSI Funding Acknowledgement: Workplace Mental Health Initiative

Study Overview

Technologies have expanded the set of financial contracts that financial firms can use in the market for consumer loans. A notable instance is digital collateral: consumers take a loan and lenders can remotely de-activate certain goods valued by consumers when they are late on their payments. For instance, smartphones or solar home systems (SHS) can be used as such digital collateral. The typical contract currently used in practice is a PayGo contract: a payment activates the good for a period; a missed payment shuts it off for a period. One pitfall of PayGo contracts is that borrowers can be strategic: they may repay only when they need their phone or SHS and otherwise miss payments. This behavior can extend loan durations and reduce lending profitability for lenders (and thus restricting loan supply). In this project, we explore how different contract designs can help spur repayment, consumer loan take-up and consumer welfare. One particular contract we will study features automatic catch-up where payments increase as consumers miss payments.

Study Results

Pending

Intervention: Randomized variation in contract types offered (PayGo vs. Automated Catch-up)

Intervention Partner: ENGIE

Populations: low income households

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

We use a randomized controlled trial to examine the impact of a government-backed loan program for small businesses in Chile during the COVID pandemic.

Study Results

Exploiting neighborhood-level variation in lockdowns over time—which we show have significant effects on firms’ cash flows—combined with randomized variation in whether firms were offered loans and employer-employee linked administrative data, we find large effects of loans on employment for firms experiencing cash flow shocks. Firms not experiencing a cash flow shock due to their neighborhood not being in lockdown typically did not lay off workers regardless of whether they received an offer for a government-backed loan. However, firms experiencing a cash flow shock in the control group (i.e., received no loan offer) laid off workers. In contrast, firms in the treatment group did not lay off workers when experiencing a cash flow shock. Aggregating our RCT results to the macroeconomy, we estimate that Chile’s government-backed small business loan program reduced unemployment by 1.2 percentage points as of February 2021 when the unemployment rate was 10.3%. We also estimate that the cost to the government per job saved was US$488.5.

Populations: Small and medium enterprises (SME)

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

The digital economy presents a significant opportunity for youth to engage in meaningful work and microwork. Despite its rapid expansion, little research to date documents its impacts or the gendered experiences of gig work. This study seeks to understand how digital financial inclusion, training and skill development opportunities, and the gig economy impact the labor market outcomes of youth and women, and financial inclusion.

Intervention Partner: Mercy Corps

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

News & media

The Potential of Cryptocurrency for Kenya’s Youth

Feburary 16, 2022

Mercy Corps Venture's pilot uncovered clear insights into the positive impact of digital stablecoins and mobile wallets on easing frictions and reducing costs in cross-border payments for un/underemployed youth microworkers in Kenya. This is only one of innumerable use cases for stablecoins’ transformative potential. For example, Kenya hosts one of the largest refugee populations in Africa, estimated at around 520,000 refugees and asylum seekers

Study Overview

This research proposes a novel decentralized platform enabling privacy-preserving data collaboration and analytics across organizations with private data sources. The platform integrates advanced cryptographic techniques like secure multi-party computation and federated learning to facilitate secure cross-entity data analysis and machine learning for accurate financial auditing, fraud/laundering detection while ensuring data privacy. Its decentralized approach breaks data silos, empowering collaborative insights extraction without compromising privacy and security. The platform simplifies development of privacy-preserving applications, reduces costs, and promotes regulatory compliance. It has broader applications beyond finance for secure cross-organizational analytics through privacy-preserving decentralized computing.

Study Results

Pending

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

This research project examines the economic efficiency of blockchain-based public goods funding mechanisms, specifically focusing on capital allocation to blockchain infrastructure and ecosystem development. While traditional institutions rely on financial professionals to make investment decisions through ROI and cost-benefit analyses, blockchain projects often distribute funds through decentralized autonomous organizations (DAOs) using token-holder voting and prediction markets. DAOs represent a novel organizational structure that replaces hierarchical decision-making with direct participant voting via blockchain mechanisms. Proponents argue this approach leverages collective wisdom and mitigates behavioral biases in capital allocation, while blockchain transparency reduces agency costs and information asymmetries. We have partnered with Funding the Commons, a consortium connected to major blockchain organizations, including the Ethereum Foundation, Gitcoin, and Arbitrum, to analyze their historical funding decisions and conduct field experiments. During the 2021 crypto bull market, these organizations distributed over $500 million to developers. This creates an opportunity to evaluate which funding mechanisms prove most effective and inclusive. The study will examine whether this decentralized approach democratizes capital access, particularly for underserved communities and emerging market developers, while distinguishing between luck and skill in allocation decisions. However, this raises important security considerations, as blockchain's borderless nature could enable funds to flow to sanctioned entities or hostile state actors. We will analyze how DAOs navigate these compliance challenges compared to traditional institutions' due diligence processes. Finally, these insights will be benchmarked against established corporate, venture capital, and government grant-making approaches to help provide actionable insights for policymakers and similar blockchain-based organizations.

Study Results

Pending

Intervention: Observational study using historical data, but based on initial findings, there will be opportunities for field experiments.

Research Partner: Funding the Commons

Populations: Various DAOs and Foundations token holders as well as the developers allocated capital.

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

This research explores the welfare consequences of data-based targeted pricing in the consumer loan market. We develop a general model of optimal loan pricing. Intuitively, loans should be more expensive for consumers with high demands, high default risk, and with demand and default that do not significantly vary with interest rates. We first apply our model to the pricing of credit scores. We use experimental data from a large European bank to estimate how loan take-up and repayment vary across borrowers with different credit scores. This analysis allows us to better understand the shortcomings of risk-based pricing models used in the industry. We then combine machine learning and experimental data to determine the important consumer characteristics that lenders should consider when pricing loans. Our algorithm partition consumers based on characteristics estimated to maximize either firm profits or consumer welfare under a zero-profit condition. This analysis allows us to better understand which consumer characteristics matter most for predicting both demand elasticities (how demand responds to variations in interest rates) and cost elasticities (how expected repayments respond to these shocks – a measure of adverse selection). Our quantitative analysis reveals how moving from a standard risk-based pricing scheme to personalized pricing can affect lender’s profit and consumer welfare.

Study Results

Pending

Intervention: Randomized variations in interest rates for consumer loans

Populations: Middle income households

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

The global financial system remains fragmented by jurisdictional boundaries, with institutions repeatedly performing identical compliance checks on the same entities across different markets. This redundancy creates significant friction in cross-border financial flows, with estimates suggesting compliance costs account for a non-trivial portion of financial institutions' operating expenses. Blockchain technology offers a potential solution through portable, programmable compliance - where regulatory checks, once performed and cryptographically verified, could be re-used and “trusted’’ across jurisdictions. However, this vision of “verify once, use many times”' faces substantial regulatory skepticism due to concerns about systemic risk, data privacy, and national sovereignty. The tradeoff between efficiency and risk is particularly acute since policymakers often hesitate to support blockchain innovation, despite its potential efficiency gains, due to concerns about sanctions enforcement and illicit activities. Therefore, empirically examining the economic trade-offs that automated compliance systems generate will provide policymakers with an evidence-based approach to modernizing regulatory frameworks while maintaining robust security standards.Our study seeks to examine automated compliance systems by analyzing the recent initiatives that central banks and financial institutions have promoted, as they provide a unique laboratory for answering these questions. By examining the staggered adoption of automated compliance systems or initiatives aimed at such automation, we can assess portable compliance infrastructure's promised benefits and potential risks. Specifically, we ask three questions: (1) Does automated compliance technology increase financial inclusion through reduced costs and improved access? (2) Do early adopters of compliance initiatives gain competitive advantages that create barriers to entry? (3) How do different jurisdictions' approaches to automated compliance influence local business development?

Study Results

Pending

Research Partner: Emory University

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

On May 15, 2018, the European Union adopted the General Data Protection Regulation (GDPR) to protect the privacy and security of EU citizens’ data. This regulation lays out the requirements that data holders — such as researchers, humanitarian organizations, and financial institutions — must abide by when collecting, storing, and sharing data. In particular, the GDPR specifies three types of privacy risks that must be ameliorated prior to the sharing of personal information: singling-out attacks, linkage attacks, and attribute inference attacks. While differential privacy — the gold standard for privacy preserving data analysis — can provably prevent the first two attacks, it is not guaranteed to protect against attribute inference attacks.

Study Results

This project will develop new methods to protect personal data from attribute inference attacks, while also facilitating key downstream use cases.

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

This paper reviews academic and non-peer-reviewed research examining how worker ownership impacts workers and firms, with a specific focus on how worker cooperatives impact low-wage and marginalized workers.

Study Results

The review finds that ESOP participants earn higher median wages than non-employee owners, while worker-owned cooperatives in low-wage sectors (allied health, agriculture, food service) pay roughly equal wages to their competition. Wealth accumulation through retirement or investment accounts is strong within ESOPs but remains more limited in cooperatives. More research is needed to understand the wage and wealth effects of worker coops and if these ownership models can consistently be used to improve the economic inequality and work experiences of people of color, immigrants, and other historically underserved populations, particularly in low-wage sectors. Worker-owned firms showed an improved ability to mitigate staff layoffs during economic shocks. Job satisfaction increases when worker ownership is combined with high-performance work practices, such as participation in decision-making and access to training. Productivity gains are more likely when combined with participatory management practices and knowledge sharing. Findings suggest that while worker-ownership may improve job quality, firm performance, and other social and economic outcomes, it is not a complete solution for labor market challenges and does not fully resolve systemic issues of gender and racial discrimination.

Intervention: Employee ownership models

Research Partner: Institute for the Study of Employee Ownership and Profit Sharing

Populations: Low-wage workers

Working Paper: Foley, William. 2025. Literature Review on Worker Ownership

IBSI Funding Acknowledgement: Ownership Initiative

News & media

The Promote Ownership by Workers for Economic Recovery Act (AB 2849) Panel

June 13, 2023

The Promote Ownership by Workers for Economic Recovery Act (AB 2849), codified in Labor Code sections 10000-10010) establishes a panel to study the creation of an Association of Cooperative Labor Contractors, among other potential activities, to facilitate the growth of democratically-run high-road cooperative labor contractors.

Study Overview

Firms frequently fail to adopt profitable business opportunities even when they do not face informational or liquidity constraints. We explore three behavioral frictions that explain inertia among individuals—present bias, limited memory, and distrust—in a managerial setting. In partnership with a FinTech payments company in Mexico, we randomly offer 33,978 f irms the opportunity to pay a lower merchant fee. We vary whether the offer has a deadline, reminder, pre-announced reminder, and the size of the fee reduction.

Study Results

Reminders increase take-up by 15%, suggesting a role of memory. Announced reminders increase take-up by an additional 7%. Survey data reveal the likely mechanism: When the FinTech company follows through with the pre-announced reminder, firms’ trust in the offer increases. The deadline does not affect larger firms, implying limited or no present bias, but does increase take-up by 8% for smaller firms. Overall, behavioral frictions contribute significantly to explaining profit-reducing firm behavior.

Intervention: Random variation in contract terms

Populations: Small businesses

Working Paper: Gertler, Paul, Sean Higgins, Ulrike Malmendier, Waldo Ojeda. 2025. Why Small Firms Fail to Adopt Profitable Opportunities.

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

News & media

Weighing the Benefits and Drawbacks of e-Payments: Insights from Small Businesses in Mexico

June 28, 2018

For the merchants we spoke with, the benefits to accepting card payments seem to outweigh the drawbacks. Even those who we categorized as “inactive” users acknowledged that urban customers increasingly want to pay by card. Ultimately, while micro businesses may be frustrated with the commission rates and increase in registered transactions, these factors aren’t enough of a deterrent to abandon e-payment technology entirely.

Study Overview

As a growing number of employers hire contractors and staffing agencies to build and run their business, some worker rights advocates view staffing cooperatives as a strategy to advance job quality, firm performance, and social outcomes. However, with only a few staffing co-ops and limited past research, a successful strategy requires close study of cooperative labor contracting. What kinds of staffing co-op models can create quality jobs, provide quality services, and scale? This article presents original research on goals, models, and growth among staffing co-ops and “umbrella groups,” a variety of nonprofits, secondary co-ops, and other organizations that provide multiple co-ops with shared services and pooled resources. We present in-depth profiles describing goals, models, and growth for three staffing co-ops and three umbrella groups, all based in the U.S., launched within the past six years, each with fewer than 500 members.

Study Results

We found that staffing co-ops develop a competitive advantage that enables them to create or sustain quality jobs with higher wages, but struggle to secure clients and to scale. By contrast, we found that all umbrella groups create and sustain quality jobs among the co-ops they support, and demonstrate an ability to scale their business. Overall, our findings suggest that a competitive advantage is not sufficient for staffing co-ops, to scale. Umbrella groups can boost co-op scale and financial sustainability by providing shared services and enabling administrators to focus on core competencies around quality jobs and quality services. One structural limit to scale, however, remains the low value employers place on domestic work such as cleaning, home care, and related fields, where many women, people of color, immigrants, and other historically underrepresented communities find work.

Intervention: Employee ownership models

Research Partner: Institute for the Study of Employee Ownership and Profit Sharing

Populations: Low-wage workers

Working Paper: Spitzberg, Daniel and Morshed Mannan. 2025. Article 7: Analysis of Expert Interviews on Staffing Co-ops and Umbrella Groups

IBSI Funding Acknowledgement: Ownership Initiative

News & media

The Promote Ownership by Workers for Economic Recovery Act (AB 2849) Panel

June 13, 2023

The Promote Ownership by Workers for Economic Recovery Act (AB 2849), codified in Labor Code sections 10000-10010) establishes a panel to study the creation of an Association of Cooperative Labor Contractors, among other potential activities, to facilitate the growth of democratically-run high-road cooperative labor contractors.

Study Overview

This article examines the potential formation of an Association of Cooperative Labor Contractors (ACLC) in light of the goals of the California Future of Work Commission. An ACLC would give contract workers an ownership stake in the cooperative labor contractors (CLCs) that employ them. By linking the CLCs to an association that provides shared services and upholds labor standards, an ACLC could present a more equitable employment model. An ACLC also addresses specific challenges faced by both workers and firms in contract labor markets today.

Study Results

The analysis presented here finds meaningful opportunities for an ACLC to improve job conditions for contract labor. These include the opportunity to leverage competitive advantages of worker ownership in staffing; the opportunity for scale associated with shared services (such as HR management, employer of record services, capital access, and technology) provided by the association; the opportunity for workers to access profit-sharing benefits and ownership; and the overall opportunity for bold experimentation that an ACLC represents. However, significant challenges exist for CLCs. These include assuming employer liability for workers who are staffing other companies, securing market share, and competition in low-wage sectors known for labor violations. Additionally, there is tension between the need for cohesive workplaces and the reality of temporary staffing arrangements. Short-term contracts and highly mobile workforces can hinder CLCs from fully leveraging the competitive advantages of participatory, worker-owned business models.

Intervention: Employee ownership models

Research Partner: Institute for the Study of Employee Ownership and Profit Sharing

Populations: Low-wage workers

Working Paper: Scharf, Adria. 2025. Article 8: Analysis of the Association of Cooperative Labor Contractors (ACLC)

IBSI Funding Acknowledgement: Ownership Initiative

News & media

The Promote Ownership by Workers for Economic Recovery Act (AB 2849) Panel

June 13, 2023

The Promote Ownership by Workers for Economic Recovery Act (AB 2849), codified in Labor Code sections 10000-10010) establishes a panel to study the creation of an Association of Cooperative Labor Contractors, among other potential activities, to facilitate the growth of democratically-run high-road cooperative labor contractors.

Study Overview

The choice to adopt an effective healthcare product is often a joint decision between the patient and their medical professional. Many governments and payers use patient subsidies and provider incentives to increase the adoption of new health technologies. Using data from a randomized field experiment in Kenya, I estimate a structural model of patient demand and provider advice for a new contraceptive method. I then use the model to study the welfare effects to the patient from the introduction of demand and supply side incentives to adopt the new technology. This approach allows the study of channels that promote diffusion, including the roles of provider advice, financial incentives and altruism, as well as patient preferences.

Study Results

Taken together, the results suggest that changes in provider advice due to their altruism and financial incentives are key to increasing adoption of the new technology and making incentive programs effective, regardless of whether the incentive targets the patient or the provider. In fact, changes in provider advice account for 79% of the welfare benefits of a policy that reduces the price to the patient. To be effective, incentive policies need to account for the central role that the provider takes in medical decision-making.

Intervention: Diagnostic-contingent incentive contract

Intervention Partner: Maisha Meds

Working Paper: Paramo, Carlos. 2025. "Who calls the shots? Financial incentives and provider influence in the adoption of new technology"

Study Overview

California’s home care system struggles to meet its growing needs, partly due to poor job quality for frontline caregivers. It leans on historically marginalized women of color and immigrants. These dynamics put at risk not only the workers, but also those who need care. Affordability challenges for individuals have led to heavy reliance on state programs for funding. Limited state budgets for care result in low reimbursement rates, shaping market prices. Further, immigration rules and gray markets empower unscrupulous employers to exploit and abuse vulnerable workers. Of existing models, entrepreneurship and worker ownership may particularly attract immigrant care workers and others with barriers to employment because owning a business can offer a way out of exploitative employment conditions.

Study Results

Testing this hypothesis are two home care agencies that are owned and run by immigrants: COURAGE LLC and SplenDoor in Home Care LLC. Key takeaways from the analysis of these two models are: (1) State policies & practices could be modified to support worker-owned business; (2) Cooperative development remains experimental and inadequately supported, relative to more traditional small business development; (3) Financial and voice benefits are mutually important, especially for immigrant owners; (4) At current wage rates for care work, it is unclear whether worker-owned home care businesses are sustainable without external support.

Intervention: Employee ownership models

Research Partner: Institute for the Study of Employee Ownership and Profit Sharing

Populations: Low-wage workers, immigrant workers

Working Paper: Scott, K. MacKenzie. 2025. Article 3: Case Studies of Immigrant Entrepreneurship and Co-op Development in Home Care

IBSI Funding Acknowledgement: Ownership Initiative

News & media

The Promote Ownership by Workers for Economic Recovery Act (AB 2849) Panel

June 13, 2023

The Promote Ownership by Workers for Economic Recovery Act (AB 2849), codified in Labor Code sections 10000-10010) establishes a panel to study the creation of an Association of Cooperative Labor Contractors, among other potential activities, to facilitate the growth of democratically-run high-road cooperative labor contractors.

Study Overview

Converting existing businesses into cooperatives is a strategy to preserve jobs and wealth when an owner wishes to sell or close their business. Conversions typically seek higher compensation, a better working environment, and to create a democratic culture. However, little empirical research exists on the benefits and challenges for owners and workers across different models of employee ownership. This paper presents two case studies of employee ownership conversions. Proof Bakery in Los Angeles converted to a worker cooperative in 2021, while Firebrand Artisan Breads in Oakland was converted to a steward-ownership company in the form of a perpetual purpose trust in 2020.

Study Results

The paper finds that as a worker co-op, Proof Bakery experienced increased revenues, higher wages, and improved job satisfaction among its worker-owners. As a perpetual purpose trust, Firebrand maintained its social mission of hiring marginalized populations while achieving financial stability with the support of value-aligned investors. Additionally, Proof Bakery’s worker co-op model gives direct ownership and control by workers to generate specific outcomes like raising prices and tripling revenues, while Firebrand’s steward-ownership model does not give direct control to workers but operates with a similar purpose to improve wages and working environments for employees. ​​The findings suggest that both enhanced job quality and business stability through their respective ownership conversion models. Additionally, these cases offer lessons on the importance of founder vision in exploring and initiating a conversion; the considerations for company size for selecting different ownership models; and the importance of ecosystem players in enabling the conversion processes.

Intervention: Employee ownership models

Research Partner: Institute for the Study of Employee Ownership and Profit Sharing

Populations: Low-wage workers

Working Paper: Ji, Minsun. 2025. Article 6: Case Studies of Worker Ownership Conversion: Proof Bakery and Firebrand Artisan Breads

IBSI Funding Acknowledgement: Ownership Initiative

News & media

The Promote Ownership by Workers for Economic Recovery Act (AB 2849) Panel

June 13, 2023

The Promote Ownership by Workers for Economic Recovery Act (AB 2849), codified in Labor Code sections 10000-10010) establishes a panel to study the creation of an Association of Cooperative Labor Contractors, among other potential activities, to facilitate the growth of democratically-run high-road cooperative labor contractors.

Study Overview

Workers in low-wage sectors such as agriculture and allied healthcare face challenges such as labor shortages and high turnover. At the same time, a small number of staffing agencies dominate each sector and continue to generate substantial profits while labor violations continue to persist despite attempts at regulation and penalties. This paper presents two case studies of worker-owned labor contractors: California Harvesters, Inc. (CHI), a farm labor contractor with an employee-owned trust, and AlliedUP, a healthcare staffing cooperative.

Study Results

Both face similar challenges: securing market share (securing long-term clients and recruiting talented workers), managing tight business margins in competitive sectors, and engaging a supportive ecosystem of partners. While both organizations are relatively new, having launched within the last five years, their capacity for leveraging worker voice and decision-making in their respective ownership and governance models remains slow to come online as both are prioritizing stabilizing their business operations. Despite these challenges, both have demonstrated success; CHI has ensured good working conditions for workers even though pay is still at the $16 minimum wage rate, and AlliedUP increased wages for some workers but has only 15 members as of 2023. ​​The findings of this case study suggest that improving job quality through worker-owned labor contracting in competitive, low-wage sectors with tight labor markets has clear advantages but major challenges. Overcoming these challenges may gain from business assistance with securing clients and workforce partnerships to recruit workers, but more targeted support may be necessary to enable success

Intervention: Employee ownership models

Research Partner: Institute for the Study of Employee Ownership and Profit Sharing

Populations: Low-wage workers

Working Paper: Ji, Minsun. 2025. Article 4: Case Studies of Worker-Owned Labor Contracting in Agriculture and Healthcare: California Harvesters, Inc. and AlliedUP

IBSI Funding Acknowledgement: Ownership Initiative

News & media

The Promote Ownership by Workers for Economic Recovery Act (AB 2849) Panel

June 13, 2023

The Promote Ownership by Workers for Economic Recovery Act (AB 2849), codified in Labor Code sections 10000-10010) establishes a panel to study the creation of an Association of Cooperative Labor Contractors, among other potential activities, to facilitate the growth of democratically-run high-road cooperative labor contractors.

Study Overview

This case study shares the story of a road construction company in California, how it came to be 100% worker-owned, and how its Employee Stock Ownership Plan (ESOP) relates to governance, management, and work at the company.

Study Results

Key contributors to success include: (1) robust, capital-intensive markets that facilitate meaningful shared gains; (2) institutional labor protections for public contracts and tax incentives that help make competitive a high-road strategy with higher compensation for frontline workers; and (3) a shared ownership culture that helps support: internal promotions, high autonomy, and employee input and innovation. Headwinds for the company include concerns about leadership succession and buy-in of younger employees who are perceived as less oriented to building retirement wealth. This study notes that standard job quality metrics generally exclude employee ownership from consideration, but ownership can be a differentiating factor and increase shared gains within the firm. Relative to non-worker-owned peers, the firm has broader wealth-sharing in the compensation structure due to its high-performing ESOP and reportedly reduced executive compensation.

Intervention: Employee ownership models

Research Partner: Institute for the Study of Employee Ownership and Profit Sharing

Populations: Unionized workers, public infrastructure workforce

Working Paper: Scott, K. MacKenzie. 2025. Article 5: Case Study of a Unionized ESOP: Pavement Recycling Systems

IBSI Funding Acknowledgement: Ownership Initiative

News & media

The Promote Ownership by Workers for Economic Recovery Act (AB 2849) Panel

June 13, 2023

The Promote Ownership by Workers for Economic Recovery Act (AB 2849), codified in Labor Code sections 10000-10010) establishes a panel to study the creation of an Association of Cooperative Labor Contractors, among other potential activities, to facilitate the growth of democratically-run high-road cooperative labor contractors.

Study Overview

How do inaccurate beliefs about the distribution of interest rates affect search and outcomes in consumer credit markets? In collaboration with Chile’s financial regulator, we conducted a randomized controlled trial with 112,063 loan seekers where we showed treated participants a price comparison tool that we built using administrative data on the universe of consumer loans merged with borrower characteristics. The tool shows loan seekers a conditional distribution of interest rates based on similar loans obtained recently by similar borrowers.

Study Results

We find that consumers thought interest rates were lower than they actually were, and the price comparison tool caused them to increase their expectations about the interest rate they would obtain by 56%. Consumers also underestimated price dispersion, and our price comparison tool caused them to increase their estimates of dispersion by 69%. The price comparison tool did not cause people to search or apply at more institutions, but it did cause them to be 39% more likely to negotiate with their lender, to receive 13% more offers and 11% lower interest rates, and to be 5% more likely to take out a loan. We also cross-randomized whether we asked participants their beliefs about the distribution of interest rates, and find that merely asking these questions led them to search at 4% more institutions and obtain 10% lower interest rates.

Intervention: Interest rate comparison tool

Populations: Consumer loan seekers

Working Paper: Higgins, Sean & Berwart, Erik & Kulkarni, Sheisha & Truffa, Santiago. (2025). Search and Negotiation with Biased Beliefs in Consumer Credit Markets.

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

Over the next two decades, millions of small business owners will face retirement, yet the majority are unprepared–only one-third have an exit plan in place. While numerous buyers are available for many small business owners, selling to employees offers an opportunity to ensure continuity while (usually) enjoying tax advantages. However, despite its benefits, most business owners are unaware of employee ownership as a viable exit strategy. Even for those interested, determining whether an employee ownership conversion is the right fit for their business can be complex and uncertain. Employee ownership conversions require specialized expertise that most business lawyers, lenders, and advisors do not have. This report describes a chatbot designed to help business owners learn if worker ownership might be a good fit for their business.

Study Results

We find that AI chatbots can be a useful tool to advance worker ownership. First, it lowers the barriers for potential sellers to learn about selling to employees. Second, it automates the initial steps of the conversion process for those who advise on worker ownership, freeing up their time for deals likely to go through. We conclude by discussing the implications of this finding and suggestions for future research and chatbot development. While this version focuses only on selling to worker-owners, a natural extension can help any business owner identify plausible buyers such as family members, current managers, and outsiders.

Intervention: Employee ownership models

Research Partner: Institute for the Study of Employee Ownership and Profit Sharing

Populations: Low-wage workers

Working Paper: Foley, William and Drew McArthur. 2025. Article 9: Examining the Feasibility of a Worker-Ownership Conversion AI Chatbot

IBSI Funding Acknowledgement: Ownership Initiative

News & media

The Promote Ownership by Workers for Economic Recovery Act (AB 2849) Panel

June 13, 2023

The Promote Ownership by Workers for Economic Recovery Act (AB 2849), codified in Labor Code sections 10000-10010) establishes a panel to study the creation of an Association of Cooperative Labor Contractors, among other potential activities, to facilitate the growth of democratically-run high-road cooperative labor contractors.

Study Overview

This statistical analysis examines the effects of employee ownership on worker outcomes, and whether these effects are different for disadvantaged workers. While previous studies have established that ESOP firms exhibit productivity levels equal to or higher than conventional firms and that ESOP members tend to benefit from wealth building, there is limited research on worker experiences within ESOPs.

Study Results

The analysis of self-reported attitudes and perceptions in two datasets, the General Social Survey and the National ESOP Employee Survey, finds that ESOP membership is related with several outcomes: increased worker satisfaction, participation in decision-making, commitment to the firm, and less searching for alternative jobs. While the GSS data shows mixed results with only some findings remaining statistically significant after adjusting for multiple comparisons, the NEES data consistently indicates robust positive impacts of ESOP membership on job satisfaction, organizational commitment, and reduced intentions to seek new employment. However, the analysis also finds no significant evidence that these effects vary significantly between disadvantaged and non-disadvantaged workers. These findings suggest that ESOP membership can enhance job quality and employee well-being in certain measures. However, given a modest sample size, these findings have limited precision, with insufficient data to draw firm conclusions about the experiences for disadvantaged workers.

Intervention: Employee ownership models

Research Partner: Institute for the Study of Employee Ownership and Profit Sharing

Populations: Low-wage workers

Working Paper: Costa, Gonçalo Pessa and David Levine. 2025. Article 2: Statistical Analysis of ESOP Membership and Worker Outcomes

IBSI Funding Acknowledgement: Ownership Initiative

News & media

The Promote Ownership by Workers for Economic Recovery Act (AB 2849) Panel

June 13, 2023

The Promote Ownership by Workers for Economic Recovery Act (AB 2849), codified in Labor Code sections 10000-10010) establishes a panel to study the creation of an Association of Cooperative Labor Contractors, among other potential activities, to facilitate the growth of democratically-run high-road cooperative labor contractors.

Study Overview

The project addresses the global issue of rising household debt, focusing on Argentina, where inflation and interest rates are exceptionally high. In collaboration with Banco Galicia, the project aims to alleviate debt distress among low-income households through various financial interventions. The research objectives can be summarized as follows: (i) determining the most effective way for the bank to communicate new loan terms to clients; (2) exploring the factors that influence whether clients prefer fixed or variable rate contracts; (3) developing strategies for the bank to set contract terms in the face of uncertain demand.

Study Results

Within the context of this study, the team ran an experiment with the largest private bank in Argentina to enhance the marketing of their debt-refinancing program. This initiative took place while Argentina was experiencing a surge in household debt, exacerbated by high inflation and interest rates. The bank aimed to engage over 300,000 delinquent clients, primarily from lower-income households, through targeted email campaigns. The study tested if displaying monthly payments instead of the high-interest rates in emails would increase engagement. Contrary to expectations, clients were more likely to click on the link when the interest rate was displayed, with response rates varying significantly across different regions of Argentina. As interest rates started to decline, the bank launched a second, adaptive experiment. The results showed that a multi-prior approach proved effective as fewer emails were needed to achieve significant results compared to traditional randomized controlled trials. In the capital city of Buenos Aires, for instance, the experiment was stopped after 294 emails, far fewer than would be needed in traditional methods.

Intervention: Financial services

Intervention Partner: Banco Galicia

Populations: Loan recipients

Working Paper: Finan, Frederico & Pouzo, Demian. (2024). Reinforcing Rcts with Multiple Priors While Learning About External Validity. arXiv:2112.09170

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

We examine whether a diagnosis contingent incentive contract structure improves the treatment of malaria, and whether it’s best to target those incentives to patients or providers. The contract provides incentives to use rapid tests (RDTs) to diagnose patient malaria status combined with incentives to treat with antimalarial drugs (ACTs) if the patient tests positive but not if negative.

Study Results

Using data from a cluster randomized field experiment with 140 pharmacies in malaria endemic regions of Kenya, we find that both patient subsidies and provider incentives significantly increased RDT testing uptake. Absent incentives, 87% of suspected malaria patients purchase ACTs, of which as many as 66% are doing so unnecessarily because they do not have malaria. The incentives lead to an increase RDT test use by 25 pp, a 7 pp increase in the purchase of ACTs by malaria positive patients, and a 27 pp decline in the purchase of ACTs by malaria negative patients. The contract increases (decreases) ACTs for those who are malaria positive (negative) through both improved diagnostic information and incentives. Diagnosiscontingent contracts are highly cost effective, actually lowering the cost per malaria positive person being treated by reducing the unnecessary treatment of malaria negative patients.

Intervention: Diagnostic-contingent incentive contract

Intervention Partner: Maisha Meds

Working Paper: Maria Dieci & Paul Gertler & Jon Kolstad & Carlos Paramo, 2024. "Using Diagnosis Contingent Incentives to Improve Malaria Treatment"

Study Overview

Each year, people spend less time reading and more time viewing images, which are proliferating online. Images from platforms such as Google and Wikipedia are downloaded by millions every day and millions more are interacting through social media, such as Instagram and TikTok, that primarily consist of exchanging visual content. In parallel, news agencies and digital advertisers are increasingly capturing attention online through the use of images, which people process more quickly, implicitly and memorably than text. Here we show that the rise of images online significantly exacerbates gender bias, both in its statistical prevalence and its psychological impact. We examine the gender associations of 3,495 social categories (such as ‘nurse’ or ‘banker’) in more than one million images from Google, Wikipedia and Internet Movie Database (IMDb), and in billions of words from these platforms.

Study Results

We find that gender bias is consistently more prevalent in images than text for both female- and male-typed categories. We also show that the documented underrepresentation of women online is substantially worse in images than in text, public opinion and US census data. Finally, we conducted a nationally representative, preregistered experiment that shows that googling for images rather than textual descriptions of occupations amplifies gender bias in participants’ beliefs. Addressing the societal effect of this large-scale shift towards visual communication will be essential for developing a fair and inclusive future for the internet.

Journal Publication: Guilbeault, D., Delecourt, S., Hull, T., Desikan, B. S., Chu, M., & Nadler, E. (2024). Online images amplify gender bias. Nature, 626(8001), 1049-1055

IBSI Funding Acknowledgement: Center for Equity, Gender, and Leadership (EGAL)

Study Overview

For over two decades, gender differences in the propensity to negotiate have been thought to explain the gender pay gap. We ask whether a “women don’t ask” pattern holds today among working adults. We compare estimates of gender differences in negotiation propensity (Study 1) with actual patterns from master’s in business administration students (n = 1,435) and alumni (n = 1,939) from a top U.S. business school (Studies 2A and 2B). Contrary to lay beliefs, women report negotiating their salaries more (not less) often than men. We then reanalyze meta-analytic data on self-reported initiation of salary negotiations to reconcile our findings with prior work (Study 2C).

Study Results

While men reported higher negotiation propensity than women prior to the 21st century, the gender difference has grown neutral and then reversed since then. Negotiation propensity rose across time for both men and women, although to differing degrees. Finally, we explore the consequences of the now-outdated belief that “women don’t ask,” finding that it increases gender stereotyping, even on dimensions unrelated to negotiation, and it is associated with both greater system justification and weaker support for legislation addressing pay equity (Studies 3 and 4). Our research calls for an updating of beliefs about gender and the propensity to negotiate for pay.

Journal Publication: Kray, L. J., Kennedy, J. A., & Lee, M. (2024). Now, women do ask: A call to update beliefs about the gender pay gap. Academy of Management Discoveries, 10, 7-33

IBSI Funding Acknowledgement: Center for Equity, Gender, and Leadership (EGAL)

Study Overview

Across four studies (N = 816 U.S. adults), we uncovered a gender stereotype about dual pathways to social hierarchy: Men were associated with power, and women were associated with status. We detected this pattern both explicitly and implicitly in perceptions of individuals drawn from Forbes magazine’s powerful people lists in undergraduate and online samples. We examined social-cognitive implications, including prominent people’s degree of recognition by individuals and society, and the formation of men’s and women’s self-concepts.

Study Results

We found that power (status) ratings predicted greater recognition of men (women) and lesser recognition of women (men). In terms of the self-concept, we found that women internalized the stereotype associating women with status more than power implicitly and explicitly. Although men explicitly reported having less status and more power than women, men implicitly associated the self with status as much as power. No gender differences emerged in the desires for power and status.

Journal Publication: Townsend, C., Mishra, S., & Kray, L. J. (2024). Not all powerful people are created equal: An examination of gender and pathways to social hierarchy through the lens of social cognition. Psychological Science

IBSI Funding Acknowledgement: Center for Equity, Gender, and Leadership (EGAL)

Study Overview

Small businesses in the US rely on business credit cards to meet their financing needs. Using a large dataset from a credit reporting agency we document new facts on firms borrowing via business credit cards: average utilization is almost 30%, is significantly higher for smaller and riskier firms, and is correlated with delinquencies. Simultaneously, interest rates on card balances are twice as high as those on term loans. We develop a structural equilibrium model of firms' demand for credit cards, their utilization, and their default choice, accounting for correlation between ex-post utilization and default, as well as bank competition with non-banks. Our model helps rationalize firms' demand for card borrowing as a hedge against cash flow volatility, and enables us to evaluate whether the high rates charged on cards reflect a high cost of lending due to the correlation of utilization and delinquency or high markups. 

Study Results

Our estimation suggests high rates primarily reflect the latter. In counterfactual analyses, we explore the provision of business credit cards under stress scenarios featuring concurrent increases in firms credit card utilization and lenders costs. We find that absent large shocks to funding costs, lender profits increase as increased revenue through higher utilization more than offsets the accompanying increases in delinquency and lending costs. Finally, we use the model to explore the equilibrium impact of proposed bank capital rules that add a portion of undrawn credit card balances to bank risk-weighted assets. Such rules tend to reduce bank credit provision, push lending outside the regulated banking sector, while modestly decreasing firm surplus, especially among the smallest, most card-dependent firms.

Research Partner: Stanford University Graduate School of Business

Populations: Small businesses

Working Paper: Benetton, Matteo, and Greg Buchak. "Revolving Credit to SMEs: The Role of Business Credit Cards." Available at SSRN 4997456 (2024).

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

Using SASB’s materiality framework, prior research finds alpha for the portfolio of firms with improving ratings on material ESG issues. We replicate this finding and provide a fundamentals-based perspective on why the materiality portfolio outperforms. Our basic premise is that changes in material ESG issues reflect fundamental firm characteristics. More financially established firms—firms with larger size, lower growth, and higher profitability relative to their sector—are more likely to not only create material strengths but also resolve material weaknesses in their ESG scoring. This fundamental link dictates that one should comprehensively control for fundamental determinants of stock returns before attributing portfolio outperformance to improving material ESG scores.

Study Results

Indeed, we find that the materiality portfolio does not generate alpha after we account for its exposure to profitability and growth factors. Our evidence underscores the issue of correlated omitted fundamental factors in the debate of ESG alpha.

Journal Publication: Byung Hyun Ahn, Panos N. Patatoukas, George S. Skiadopoulos; Material ESG Alpha: A Fundamentals-Based Perspective. The Accounting Review 1 July 2024; 99 (4): 1–27. https://doi.org/10.2308/TAR-2022-0256

News & media

Doing Good by Doing Well? The Chicken And Egg Problem in the ESG Alpha Debate

August 18, 2024

What is the association between ESG performance and stock returns? This critical question arises as investors and firms increasingly recognize that ESG issues can materially impact corporate value creation. Our study examines this amid the rapid growth of global ESG investing, now a multi-trillion dollar sector, and a widening divide between major US asset managers facing domestic political pressure and their European counterparts engaged in ESG-focused coalitions.

Study Overview

This paper investigates how having more White coworkers influences the subsequent retention and promotion of Black women relative to other race-gender groups.

Study Results

Studying 9,037 new hires at a professional services firm, we first document large racial turnover and promotion gaps: Even after controlling for observable characteristics, Black employees are 6.7 percentage points (32%) more likely to turn over within two years and 18.7 percentage points (26%) less likely to be promoted on time than their White counterparts. The largest turnover gap is between Black and White women, at 8.9 percentage points (51%). We argue that initial assignment to project teams is conditionally random based on placebo tests and qualitative evidence. Under this assumption, we show that a one-standard-deviation (20.8 percentage points) increase in the share of White coworkers is associated with a 15.8-percentage-point increase in turnover and an 11.5-percentage-point decrease in promotion for Black women. We refer to these effects as intersectional: Black women are the only race-gender group whose turnover and promotion are negatively impacted by White coworkers. We explore potential causal pathways through which these peer effects may emerge: Black women who were initially assigned to Whiter teams are subsequently more likely to be labeled as low performers and report fewer billable hours, both of which are predictors of higher turnover and lower promotion for all employees. Our findings contribute to the literature on peer effects, intersectionality, and the practice of managing race and gender inequality in organizations.

Journal Publication: Linos, Elizabeth, Sanaz Mobasseri, and Nina Roussille. (2024). Intersectional Peer Effects at Work: The Effect of White Coworkers on Black Women’s Careers. Management Science, forthcoming.

IBSI Funding Acknowledgement: Center for Equity, Gender, and Leadership (EGAL)

Study Overview

The proliferation of mobile phones in low- and middle-income countries has suddenly and dramatically increased the extent to which the world’s poorest and most vulnerable populations can be observed and tracked by governments and corporations. Millions of historically “off the grid” individuals are now passively generating digital data; these data, in turn, are being used to make life-altering decisions about those individuals – including whether or not they receive government benefits, and if they can qualify for a consumer loan. This paper develops and tests a novel approach to implementing decisions based on private personal data, which provides formal privacy guarantees while also enabling important downstream applications. The approach adapts differential privacy to applications that require decisions about individuals, and gives decision-makers granular control over the level of privacy guaranteed to data subjects.

Study Results

We show that stronger privacy guarantees typically come at some cost, and use data from two real-world applications – an anti-poverty program in Togo and a consumer lending platform in Nigeria – to illustrate those costs. Our empirical results quantify the tradeoff between privacy and predictive accuracy, and characterize how different privacy guarantees impact overall program effectiveness. More broadly, our results demonstrate a way for humanitarian programs to responsibly use personal data, and better equip program designers to make informed decisions about data privacy.

Intervention: Development of privacy-enhancing technology to generate "provably private data" for use in humanitarian targeting applications

Working Paper: Kohli, Nitin & Blumenstock, Joshua. (2024). Enabling Humanitarian Applications with Targeted Differential Privacy. 10.48550/arXiv.2408.13424.

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

Despite the promise of FinTech lending to expand access to credit to populations without a formal credit history, FinTech lenders primarily lend to applicants with a formal credit history and rely on conventional credit bureau scores as an input to their algorithms.

Study Results

Using data from a large FinTech lender in Mexico, we show that alternative data from digital transactions through a delivery app are effective at predicting creditworthiness for borrowers with no credit history. We also show that segmenting our machine learning model by gender can improve credit allocation fairness without a substantive effect on the model’s predictive performance.

Intervention: AI model that differentiates creditworthiness between men and women

Intervention Partner: RappiCard

Populations: unbanked and underserved

Working Paper: Laura Chioda & Paul Gertler & Sean Higgins & Paolina C. Medina, 2024. "FinTech Lending to Borrowers with No Credit History," NBER Working Papers 33208, National Bureau of Economic Research, Inc.

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

News & media

There’s an easy way to make lending fairer for women. Trouble is, it’s illegal.

November 15, 2019

Preliminary results from an ongoing study funded by the UN Foundation and the World Bank are once again challenging the fairness of gender-blind credit lending. The study found that creating entirely separate creditworthiness models for men and women granted the majority of women more credit.

Gender-Differentiated Credit Scoring: A Potential Game-Changer for Women

February 27, 2020

The Alliance spoke to Sean about this research and the significant impact the model potentially could have on women’s ability to access credit.

Study Overview

This article explores Nordic countries’ and companies’ sustainability practices. It explores how nations like Denmark, Finland, and Sweden and companies such as Novo Nordisk and Ørsted achieve top sustainability rankings through their distinctive approach to stakeholder cooperation.

Study Results

It discusses the historical and cultural context that has shaped the Nordic approach, emphasizing the importance of long-term vision, stakeholder engagement, and cooperative strategies. It provides insights into how these practices contribute to achieving sustainable development goals and offers valuable lessons for global businesses seeking to integrate sustainable practices into their operations.

Journal Publication: Strand, R. (2024). Global Sustainability Frontrunners: Lessons from the Nordics. California Management Review, 66(3), 5-26. https://doi.org/10.1177/00081256241234709

IBSI Funding Acknowledgement: Center for Responsible Business (CRB)

Study Overview

Using a nationally-representative panel of consumer credit records for the US from 1999 to 2021, we document a positive correlation between child and parent homeownership. We propose a new causal mechanism behind this relationship: parents extract home equity to help finance their child’s home purchase. To identify the mechanism, we use fixed effect, event study, local projection and matching methods.

Study Results

We find that children whose parents extract equity: (i) are 60-80% more likely to become homeowners; (ii) have lower leverage at origination; and (iii) buy higher-valued homes and at a younger age. The effects are stronger when housing affordability is worse and children’s financial constraints are more likely to bind. Using a simple structural model, we find that in a counterfactual economy with no role for parental equity, intergenerational homeownership mobility increases.

Research Partner: San Francisco Fed

Populations: households

Working Paper: Benetton, Matteo and Kudlyak, Marianna and Mondragon, John, Dynastic Home Equity (December 18, 2024). Available at SSRN: https://ssrn.com/abstract=4158773 or http://dx.doi.org/10.2139/ssrn.4158773

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

Institutions are a key determinant of economic growth, but the critical junctures in which institutions can change are not precisely defined. For example, such junctures are often identified ex post, raising several methodological problems: a selection on the outcome of institutional change; an inability to study beliefs, which are central to coordination and thus the process of institutional change; and an inability to conduct experiments to identify causal effects. We argue that critical junctures are identifiable in real time as moments of deep uncertainty about future institutions.

Study Results

Consistent with this conception, the papers reviewed (a) examine changes to institutions, i.e., the fundamental rules of the game; (b) are real-time studies of plausible critical junctures; and (c) use field experiments to achieve causal identification. We also advocate for more systematic measurement of beliefs about future institutions to identify critical junctures as they happen and provide an empirical proof of concept. Such work is urgent given contemporary critical junctures arising from democratic backsliding, state fragility, climate change, and conflicts over the rights of the marginalized.

Journal Publication: Callen, Michael & Weigel, Jonathan & Yuchtman, Noam. (2024). Experiments About Institutions. Annual Review of Economics. 16. 10.1146/annurev-economics-091823-031317.

Study Overview

We examine the effect of performance monitoring in public procurement through the lens of organizational culture in a principal-agent model where the manager (principal) and buyers (agents) may have different beliefs about how much the government values efficiency. We show that the effect of performance information not only increases efficiency but is greater when the buyer’s belief is stronger than the manager’s belief. We leverage a new e-procurement system in Chile to test these ideas by randomizing monthly reports on the purchasing performance of buyers and further whether the individual performance reports were disclosed to managers.

Study Results

We find that the reports generated sizable reductions in overspending — with savings reaching a 15% reduction or 0.1% of GDP — but only when individual performance was observable to managers. This is consistent with extrinsic motivation rather than intrinsic motivation driving buyer behavior. Consistent with the theoretical model, we also find that the gain in efficiency is concentrated in procurement units where buyer belief that the government cares about efficiency is stronger than manager belief. Our results highlight the key role played by organizational culture in mediating the impact of purchasing performance information on preventing the misuse of public resources.

Intervention: E-procurement platform and performance monitoring

Populations: Government procurement officers

Working Paper: Pablo A. Celhay & Paul Gertler & Marcelo Olivares & Raimundo Undurraga, 2024. "How Managers Can Use Purchaser Performance Information to Improve Procurement Efficiency," NBER Working Papers 32141, National Bureau of Economic Research, Inc.

Study Overview

Passively collected “big” data sources are increasingly used to inform critical development policy decisions in low- and middle-income countries. While prior work highlights how such approaches may reveal sensitive information, enable surveillance, and centralize power, less is known about the corresponding privacy concerns, hopes, and fears of the people directly impacted by these policies — people sometimes referred to as experiential experts. To understand the perspectives of experiential experts, we conducted semi-structured interviews with people living in rural villages in Togo, shortly after an entirely digital cash transfer program was launched that used machine learning and mobile phone metadata to determine program eligibility.

Study Results

This paper documents participants’ privacy concerns surrounding the introduction of big data approaches in development policy. We find that the privacy concerns of our experiential experts differ from those raised by privacy and development domain experts. To facilitate a more robust and constructive account of privacy, we discuss implications for policies and designs that take seriously the privacy concerns raised by both experiential experts and domain experts.

Populations: Adult population

Working Paper: Zoe Kahn & Meyebinesso Farida Carelle Pere & Emily Aiken & Nitin Kohli & Joshua E. Blumenstock. 2024. "Expanding Perspectives on Data Privacy: Insights from Rural Togo". arXiv:2409.17578

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

A form of secured lending using “digital collateral” has recently emerged, most prominently in low- and middle-income countries. Digital collateral relies on lockout technology which allows the lender to temporarily disable the flow value of the collateral to the borrower without physically repossessing it. This research explores this form of credit in a model and a field experiment using school-fee loans digitally secured with a solar home system.

Study Results

Securing a loan with digital collateral drastically reduced default rates (by 19 percentage points) and increased the lender’s rate of return (by 49 percentage points). Using a variant of the Karlan and Zinman (2009) methodology, we decompose the total effect on repayment and find that roughly two-thirds is attributable to moral hazard, and one-third to adverse selection. In addition, access to digitally secured school-fee loans significantly increased school enrollment and school-related expenditures without detrimental effects on households’ balance sheets.

Intervention: Household loans relying on digital collateral using PayGo technology

Intervention Partner: Fenix International (now ENGIE)

Populations: low income households

Working Paper: Paul Gertler & Brett Green & Catherine Wolfram, 2021. "Digital Collateral," NBER Working Papers 28724, National Bureau of Economic Research, Inc.

Journal Publication: Paul Gertler, Brett Green, Catherine Wolfram, Digital Collateral, The Quarterly Journal of Economics, Volume 139, Issue 3, August 2024, Pages 1713–1766, https://doi.org/10.1093/qje/qjae003

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

News & media

Testing financial innovations: Increasing loan repayment using digital collateral

June 18, 2021

We argue that collateral need not be physically repossessed in order to serve a useful role in access to credit. Recent technological innovations have facilitated the use of digital collateral without the need for costly and inefficient physical repossession, where our findings help validate how securing a loan with digital collateral can lead to positive benefits for both borrower and lender.

Study Overview

Pay-as-you-go (PAYGo) financing is a novel financial contract that has recently become a popular form of credit, especially in low- and middle-income countries (LMICs). PAYGo financing relies on technology that enables the lender to cheaply and remotely disable the flow benefits of collateral when the borrower misses payments. This paper quantifies the welfare implications of PAYGo financing. We develop a dynamic structural model of consumers and estimate the model using a multi-arm, large scale pricing experiment conducted by a fintech lender that offers PAYGo financing for smartphones.

Study Results

We find that the welfare gain from access to PAYGo financing is equivalent to a 5.8% increase in income while remaining highly profitable for the lender. The welfare gains are larger for low-risk and intermediate-income consumers. Under reasonable assumptions about the repossession technology, PAYGo financing consistently outperforms traditional secured loans. For riskier consumers, an intermediate degree of lockout can be welfare maximizing.

Intervention: Randomized variations in interest rates and minimum downpayment requirement

Populations: Low and Middle Income households

Working Paper: Gertler, Paul & Green, Brett & Li, Renping & Sraer, David. (2023). The Welfare Benefits of Pay-As-You-Go Financing. SSRN Electronic Journal. 10.2139/ssrn.4641559.

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

Across four studies (N = 1544), we examined the relationship between individuals’ gender role mindsets, or beliefs about the malleability versus fixedness of traditional gender roles, and work–family conflict. We found that undergraduate women (but not men) business students holding a fixed, compared to growth, gender role mindset anticipated more work–family conflict. Next, we manipulated gender role mindset and demonstrated a causal link between women’s growth mindsets (relative to fixed mindsets and control conditions) and reduced work–family conflict.

Study Results

We showed mechanistically that growth gender role mindsets unburden women from prescriptive gender roles, reducing work–family conflict. Finally, during COVID-19, we demonstrated a similar pattern among working women in high-achieving dual-career couples. We found an indirect effect of women’s gender role mindset on job and relationship satisfaction, mediated through work–family conflict. Our preregistered studies suggest that holding the belief that gender roles can change mitigates women’s work–family conflict.

Journal Publication: Townsend, C., Kray, L. J., & Russell, A (2023). Holding the belief that gender roles can change reduces women’s work-family conflict. Personality and Social Psychology Bulletin

IBSI Funding Acknowledgement: Center for Equity, Gender, and Leadership (EGAL)

Study Overview

This white paper proposes a new paradigm for business success: becoming a 'healthcare business'. It argues that prioritizing employee health, safety, and well-being is not just beneficial but essential for overall business success.

Study Results

The modern workplace struggles with low engagement, job satisfaction, and commitment, leading to costly people-related issues. This paper introduces the 'healthcare business' model, where organizations embed health, safety, and well-being into their policies and practices across functions like HR, Risk Management, Facilities, and Finance. A cross-functional management structure is proposed to tackle barriers such as job vacancies, weak culture, and workplace injuries, creating a win-win for employees and employers by reducing costs, boosting productivity, and fostering well-being. Dr. Cristina Banks concludes that prioritizing employee health leads to stronger business performance and long-term success.

Populations: US businesses and their employees

Working Paper: Banks, Cristina.2023. Blueprint for Building Business Success by Becoming a 'Healthcare Business'

Study Overview

Despite the importance of deposit financing for lending, banks in developing countries struggle to attract deposits.

Study Results

In a randomized experiment across 110 bank branches throughout Mexico, a lottery incentive based on net monthly deposits caused a 40% increase in the number of accounts opened and a 21% increase in the number of deposits during the lottery months. Nearly all new accounts (96%) were opened by households previously unbanked at any bank. The temporary two-month incentive had a persistent 2-3 year impact on the flow of deposits and stock of savings, and increased the present value of branch profits by 6%.

Intervention: Financial incentive

Working Paper: Paul Gertler & Sean Higgins & Aisling Scott & Enrique Seira, 2023. "Using Lotteries to Attract Deposits," NBER Working Papers 31529, National Bureau of Economic Research, Inc.

News & media

Using lotteries to attract deposits: Evidence from Mexican banks

October 17, 2023

Lottery incentives attract unbanked households to open bank accounts and save in these accounts. Moreover, even a short-term lottery incentive (two months in the case of our experiment) can cause a persistent increase in the flow of deposits and the stock of savings.

Using lotteries to attract deposits: Evidence from Mexican banks

October 17, 2023

Study Overview

The precarious nature of manhood, a hard-won and easily lost social status, has been linked to negative outcomes such as aggression in men, lower well-being for men and women, and more instances of workplace harassment. We posit that precarious manhood also influences men's perceptions of social sexual behavior (SSB) directed at them by a coworker of the opposite gender, shedding light on gender asymmetries in perceptions of SSB at work.

Study Results

Across four experiments (N = 1656), we demonstrate that men are more receptive to SSB from attractive women when their manhood is threatened compared to when it is affirmed (Studies 1–2). This effect holds after controlling for short-term mating orientation, is limited to men's (as opposed to women's) perceptions of SSB from opposite-gender initiators (Study 2) and is also limited to men's perceptions of SSB from attractive (versus unattractive) women (Study 3). Additionally, we find that at baseline, men who receive SSB from attractive women experience greater feelings of masculinity, which are limited to perceptions of sexual (versus nonsexual) behavior from attractive women, ruling out the possibility that men are simply more flatterable than women (Study 4). Our findings suggest that men's insecurities about their manhood may leave them more vulnerable to potentially problematic workplace behaviors that cater to their sense of masculinity.

Journal Publication: Mishra, S., Lee, M., & Kray, L. J. (2023). Precarious manhood increases men’s receptivity to social sexual behavior from attractive women at work. Journal of Experimental Social Psychology, 104, 104409

IBSI Funding Acknowledgement: Center for Equity, Gender, and Leadership (EGAL)

Study Overview

This study examines how psychosocial needs shape university employees' perceptions of work's impact on their health. Analyzing 11,533 Norwegian faculty members, it finds that different needs influence positive and negative health in distinct ways, with notable gender differences—women's health is most affected by work engagement (positive) and autonomy (negative), while for men, meaning (positive) and social community (negative) are key factors. Although needs vary across faculty, PhD students, and staff, their overall impact is similar. The findings suggest that improving workplace health requires distinct interventions for positive and negative influences and should account for gender differences.

Study Results

The article found that different psychosocial needs influence positive and negative work-related health among university employees, with notable gender differences. For women, work engagement was the strongest predictor of positive work-related health, while autonomy had the greatest impact on negative health. For men, meaning was the most significant factor for positive health, while social community had the strongest effect on negative health. Although the levels of these needs varied among faculty, PhD students, and administrative staff, their overall influence on work-related health was similar across groups. The findings suggest that improving workplace health requires separate interventions for positive and negative influences and should consider gender differences.

Research Partner: Norwegian University of Science and Technology

Populations: University employees

Journal Publication: Innstrand, S. T., Banks, C., Maslach, C., & Lowenstein, C. (2023). Healthy universities: Exploring the relationship between psychosocial needs and work-related health among university employees. Journal of Workplace Behavioral Health, 38(2), 103–126. https://doi.org/10.1080/15555240.2023.2194026

Study Overview

The data revolution in low- and middle-income countries is quickly transforming how companies approach emerging markets. As mobile phones and mobile money proliferate, they generate new streams of data that enable innovation in consumer finance, credit, and insurance. Already, this new generation of products are being used by hundreds of millions of consumers, often to use financial services for the first time. However, the collection, analysis, and use of these data, particularly from economically disadvantaged populations, raises serious privacy concerns. This white paper describes a research agenda to advance our understanding of the problem and solution space of data privacy in emerging market fintech and financial services.

Study Results

We highlight five priority areas for research: conducting comprehensive landscape analyses; understanding local definitions of "data privacy''; documenting key sources of risk, and potential technical solutions (such as differential privacy and homomorphic encryption); improving non-technical approaches to data privacy (such as policies and practices); and understanding the tradeoffs involved in deploying privacy-enhancing solutions. Taken together, we hope this research agenda will focus attention on the multi-faceted nature of privacy in emerging markets, and catalyze efforts to develop responsible and consumer-oriented approaches to data-intensive applications.

Intervention: Privacy-enhancing technologies, policies, and practices

Working Paper: Blumenstock, Joshua E.; Kohli, Nitin (2023): Big Data Privacy in Emerging Market Fintech and Financial Services: A Research Agenda. arXiv:2310.04970

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

This white paper explores the concept of "quiet quitting" and its implications for the modern workplace. It argues that quiet quitting is fundamentally about a loss of intrinsic motivation rather than laziness or minimal effort.

Study Results

The paper examines quiet quitting as a shift in employee motivation rather than laziness, linking it to disengagement caused by inadequate workplace resources and excessive demands. It argues that the pandemic altered employee expectations, emphasizing control over work time and rejecting pre-pandemic norms of overwork. Managers are caught between organizational pressures to increase engagement and employees’ needs for support, autonomy, and better working conditions. The study suggests that businesses should focus on removing workplace barriers, enhancing intrinsic motivation, and fostering a healthier work environment to improve both engagement and productivity.

Populations: US employees and managers

Working Paper: Banks, Cristina. 2023. Quiet Quitting and a Pathway to Better Work.

Study Overview

Power-seeking women incur social penalties known as backlash, yet research has identified two motive bases for leadership: power and status. Across five studies (N = 1683) using samples of working professionals, MBA students, undergraduates, and online participants, we investigate perceptions of individuals with varying motives for power and status.

Study Results

We uncover the motive for status is more congruent with feminine stereotypes compared to the power motive (Study 1), and that women who desire status are less likely to incur backlash compared to women who desire power (Study 2). We find that women who desire power appear to have greater perceived leadership potential compared to women who desire only status. However, women who desire both power and status benefit, as they are perceived as highly leaderlike but incur less backlash than women who only desire power (Study 3). We detect support for the novel “Status Compensation Effect” in experimental (Studies 1–3) and naturalistic settings (Studies 4–5), such that the negative social consequences typically incurred by power-seeking women (i.e., backlash) are reduced for women who simultaneously desire status. The current research highlights how women's desires for power and status serve competing functions in impacting their likelihood of incurring backlash.

Journal Publication: Mishra, S., & Kray, L. J. (2022). The mitigating effect of desiring status on backlash against ambitious women. Journal of Experimental Social Psychology, 102, 104355

IBSI Funding Acknowledgement: Center for Equity, Gender, and Leadership (EGAL)

Study Overview

Public expenditures on non-contributory pensions are equivalent to at least 1 percent of GDP in several countries in Latin America and is expected to increase. We explore the effect of noncontributory pensions on the well-being of the beneficiary population by studying the Pensiones Alimentarias program established by law in Paraguay, which targets older adults living in poverty.

Study Results

Households with a beneficiary increased their level of consumption by 44 percent. The program improved subjective well-being in 0.48 standard deviations. These effects are consistent with the findings of Bando, Galiani and Gertler (2020) and Galiani, Gertler and Bando (2016) in their studies on the non-contributory pension schemes in Peru and Mexico. Thus, we conclude that the effects of non-contributory pensions on well-being in Paraguay are comparable to those found for Peru and Mexico and add to the construction of external validity.

Journal Publication: Bando, Rosangela, Sebastian Galiani, and Paul Gertler. 2022. “Another Brick on the Wall: On the Effects of Non-contributory Pensions on Material and Subjective Well Being.” Journal of Economic Behavior and Organization 195: 16–26.

Study Overview

Research on regulating emerging financial technologies ("FinTech") has been siloed to individual branches. Instead, this paper present a high-level view of various FinTech branches and analyzes the economic incentives of each. By focusing on the dynamics and parallels between the branches, the paper offers new insights for optimal regulation that balances the costs and benefits as use cases expand.

Study Results

Decentralized Finance (DeFi) which combines advances from the AI and blockchain branches, reduces the cost of coordinating complex financial services. Yet the efficiency gains intertwine with potential legal risks associated with liability, financial crime, dispute resolution, jurisdiction, and taxes. To ensure financial stability, effective regulatory solutions include adapted definitions and safe harbors, regulatory sandboxes, self-regulatory organizations, and/or policing misleading characterizations (e.g., regarding the extent of decentralization or agreed to data uses).

Intervention: Regulation

Working Paper: Grennan, Jillian, FinTech Regulation in the United States: Past, Present, and Future (August 31, 2022). Available at SSRN: https://ssrn.com/abstract=4045057

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

While bank accounts play a crucial role in everyday economic activities in high-income countries, fewer than 40% of the households in low-and middle-income countries (LMIC) have one. Instead, most poor households rely on informal, costly and risky alternatives and would benefit from access to a range of the financial services offered by formal institutions. Savings, in particular, facilitate investment in productive activities, education and household durables, and help smooth out income shocks. In light of these advantages, many LMIC governments and international organizations have set themselves the goal of improving these population groups’ access to formal financial institutions. One reason why poor households may not keep their savings in a bank account is that they do not trust that the money will be available to them when they want it. Trust is an essential element of economic transactions and an important driver of economic development.

Study Results

We randomly assigned beneficiaries of a conditional cash transfer program in Peru to attend a 3 h training session designed to build their trust in financial institutions. We find that the intervention: (a) increased trust in banks, but had no effect on financial literacy, and (b) increased savings over a ten month period. The increase in savings represents a 1.4 percentage point increase in the savings rate out of the cash transfer deposits, and a 0.4 percentage point increase in the savings rate out of household income.

Intervention: Training

Populations: low income households

Working Paper: Sebastian Galiani & Paul Gertler & Camila Navajas Ahumada, 2020. "Trust and Saving in Financial Institutions by the Poor," NBER Working Papers 26809, National Bureau of Economic Research, Inc.

Journal Publication: Galiani, Sebastian & Gertler, Paul & Navajas-Ahumada, Camila. (2022). Trust and saving in financial institutions by the poor. Journal of Development Economics. 159. 102981. 10.1016/j.jdeveco.2022.102981.

News & media

Building trust: Evidence from workshops on increasing savings in Peru

March 30, 2020

Our results suggest that trust in financial institutions is an important factor in encouraging poor households to hold their savings in bank accounts. Trust is also likely to increase the effectiveness of other interventions, such as those involving a reduction in transaction costs or increased returns, in terms of influencing savings.

Study Overview

This study examined changes in work practices and experiences during the COVID-19 pandemic using a mixed-methods approach with panel data collected twice from an insurance company in Norway.

Study Results

The article found that most employees transitioned to remote work due to infection concerns and government mandates, with many reporting greater flexibility, time savings, and improved work-life balance. Employees working from home generally had a positive outlook on digital tools and wanted more remote work opportunities in the future. However, work motivation and digital competence decreased over time, and younger employees reported greater social isolation. While home-based employees saw increased productivity, hybrid and office-based employees experienced a decline. Women and home-based workers expressed greater fear of COVID-19 infection. The findings suggest that hybrid work will remain a key aspect of the future workplace, with varying impacts depending on age, gender, and work location.

Research Partner: Norwegian University of Science and Technology

Journal Publication: Innstrand ST, Christensen M, Grødal K and Banks C (2022) Within- and between-person changes in work practice and experiences due to COVID-19: Lessons learned from employees working from home, hybrid working, and working at the office. Front. Psychol. 13:948516. doi: 10.3389/fpsyg.2022.948516

Study Overview

For decades, US housing policies have aimed to increase homeownership and reduce racial disparities, but their success has been limited. We argue that the endogenous sorting of residents in response to place-based policies and deteriorating place-based factors help explain the lack of positive outcomes.

Study Results

In the context of the 1992 GSE Act, we show that, after the introduction of targeted support for mortgage financing in specific neighborhoods, Black homeownership mildly increased in those census tracts, but white homeownership strongly decreased. The sorting effect is most prevalent in tracts where, during the same time period, mortgage financing became more accessible in nearby census tracts. Children from low-income families who remain in the targeted areas display significantly lower upward mobility. We identify declining house prices, reduced education spending, and lower school quality as plausible channels.

Intervention: 1992 Federal Housing Enterprise Financial Safety and Soundness Act

Populations: low income households

Working Paper: Kulkarni, Nirupama & Ulrike Malmendier. 2022. "Mortgage Policies and their Effects on Racial Segregation and Upward Mobility"

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

This paper provides recommendations on regulatory approaches to reduce the barriers of entry Fintech entities face in order to benefit from emerging digital finance innovations in a sustainable environment. The paper suggests topics for further research to analyze the effect of public policies for closing financial inclusion gaps in the Latin America region.

Intervention: Public policy for open data and open access

Research Partner: La Universidad Adolfo Ibáñez (UAI)

Populations: Financial technology firms

Working Paper: Finanzas abiertas y Acceso a Infraestructura financiera: Políticas públicas para promover la innovación, competencia e inclusión financiera en América Latina

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

Digital loans have exploded in popularity across low- and middle-income countries, providing short term, high interest credit via mobile phones. This paper reports the results of a randomized evaluation of a digital loan product in Nigeria. Being randomly approved for digital credit (irrespective of credit score) substantially increases subjective well-being after an average of three months. For those who are approved, being randomly offered larger loans has an insignificant effect. Neither treatment significantly impacts other measures of welfare. We rule out large short-term impacts– either positive or negative– on income and expenditures, resilience, and women’s economic empowerment.

Study Results

This project demonstrates evidence that increasing access to digital loans can improve subjective well-being among applicants, measured after an average of three months. The magnitude of this effect is similar to that of costly anti-poverty interventions, even though the digital loans do not consume government or donor resources. This result highlights how even small relaxations of constraints can substantially improve mental health. At the same time, offering applicants larger loans does not have a significant effect. Randomly allocated digital credit is not associated with large positive– and negative– effects on other dimensions of welfare, including income and expenditures, resilience, and women’s economic empowerment.

Intervention: Randomized digital loan product

Populations: New customers on a popular digital credit platform

Working Paper: Björkegren, Daniel & Blumenstock, Joshua & Folajimi-Senjobi, Omowunmi & Mauro, Jacqueline & Nair, Suraj. (2022). Instant Loans Can Lift Subjective Well-Being: A Randomized Evaluation of Digital Credit in Nigeria. 10.48550/arXiv.2202.13540.

IBSI Funding Acknowledgement: Lab for Inclusive FinTech (LIFT)

Study Overview

Six studies show that majority members misperceive diversity policies as unbeneficial to their ingroup, even when policies benefit them. Majority members perceived nonzero-sum university admission policies—policies that increase acceptance of both URM (i.e., underrepresented minority) and non-URM applicants—as harmful to their ingroup when merely framed as “diversity” policies. Even for policies lacking a diversity framing (i.e., “leadership” policies), majority members misperceived that their ingroup would not benefit when policies provided relatively greater benefit to URMs, but not when they provided relatively greater benefit to non-URMs.

Study Results

No consistent evidence emerged that these effects were driven by ideological factors: Majority members’ misperceptions occurred even when accounting for self-reported beliefs around diversity, hierarchy, race, and politics. Instead, we find that majority group membership itself predicts misperceptions, such that both Black and White participants accurately perceive nonzero-sum diversity policies as also benefiting the majority when participants are represented as members of the minority group.

Journal Publication: Brown, N. D., & Jacoby-Senghor, D. S. (2022). Majority members misperceive even “win-win” diversity policies as unbeneficial to them. Journal of Personality and Social Psychology, 122(6), 1075–1097

IBSI Funding Acknowledgement: Center for Equity, Gender, and Leadership (EGAL)

Study Overview

This paper investigates the trade-offs between local elites and state agents as tax collectors in low-capacity states. We study a randomized policy experiment assigning neighborhoods of a large Congolese city to property tax collection by city chiefs or state agents.

Study Results

Chief collection raised tax compliance by 3.2 percentage points, increasing revenue by 44 percent. Chiefs collected more bribes but did not undermine tax morale or trust in government. Results from a hybrid treatment arm in which state agents consulted with chiefs before collection suggest that chief collectors achieved higher compliance by using local information to more efficiently target households with high payment propensities, rather than by being more effective at persuading households to pay conditional on having visited them.

Journal Publication: Balán, Pablo, Augustin Bergeron, Gabriel Tourek, and Jonathan L. Weigel. 2022. "Local Elites as State Capacity: How City Chiefs Use Local Information to Increase Tax Compliance in the Democratic Republic of the Congo." American Economic Review, 112 (3): 762–97.

Study Overview

This study explores how healthy workplaces can be leveraged as a strategic benefit for organizations. It argues that prioritizing employee health and well-being not only enhances individual performance and job satisfaction but also contributes to organizational success. The paper outlines key workplace factors that impact health, such as job design, leadership, workplace culture, and work-life balance. It emphasizes that investing in employee well-being leads to higher engagement, lower turnover, and improved business outcomes, making it a competitive advantage rather than just an ethical responsibility.

Study Results

The article finds that healthy workplaces provide a strategic advantage by improving employee engagement, productivity, and retention. It highlights how factors like leadership support, positive workplace culture, and effective job design contribute to well-being. The research suggests that organizations that actively prioritize employee health see benefits such as lower healthcare costs, reduced absenteeism, and higher overall performance. The findings reinforce that investing in workplace well-being is not just a moral obligation but a smart business strategy.

Journal Publication: Banks, C.G. and Witt, L.A. (2021). Leveraging healthy workplaces as a strategic benefit. Journal of Total Rewards, Q1, 55-70.

Study Overview

We study an at-scale natural experiment in which debit cards were given to cash transfer recipients who already had a bank account.

Study Results

Using administrative account data and household surveys, we find that beneficiaries accumulated a savings stock equal to 2% of annual income after two years with the card. The increase in formal savings represents an increase in overall savings, financed by a reduction in current consumption. There are two mechanisms. First, debit cards reduce transaction costs of accessing money. Second, they reduce monitoring costs, which led beneficiaries to check their account balances frequently and build trust in the bank.

Intervention: Conditional cash transfer program with debit cards tied to savings accounts

Populations: Peri-urban households

Working Paper: Pierre Bachas & Paul Gertler & Sean Higgins & Enrique Seira, 2017. "How Debit Cards Enable the Poor to Save More," NBER Working Papers 23252, National Bureau of Economic Research, Inc.

Journal Publication: Bachas, P., Gertler, P., Higgins, S. and Seira, E. (2021), How Debit Cards Enable the Poor to Save More. The Journal of Finance, 76: 1913-1957. https://doi.org/10.1111/jofi.13021P

News & media

Digital financial services go a long way: Evidence from Mexico

June 8, 2018

Over two billion adults around the world do not have a bank account (World Bank 2017). Most poor households lack sufficient savings to deal with shocks such as drought or illness (Dercon 2002). Why is it so difficult for people to save in poor countries? Can digital financial services and fintech help?

Study Overview

We study the medium-term impacts of the Skills for Effective Entrepreneurship Development (SEED) program, an innovative in-residence 3-week mini-MBA program for high school students modeled after western business school curricula and adapted to the Ugandan context. The program featured two separate treatments: the hard-skills MBA features a mix of approximately 75% hard skills and 25% soft skills; the soft skills curriculum has the reverse mix.

Study Results

Using data on 4400 youth from a nationally representative sample in a 3-arm field experiment in Uganda, the 3.5 year follow-up demonstrated that training was effective in improving both hard and soft skills, but only soft skills were directly linked to improvements in self-efficacy, persuasion, and negotiation. The skill upgrade was rewarded in substantially higher earnings; 32.1% and 29.8% increases in earnings for those who attended hard- and soft-training, respectively, most of which, was generated through self-employment. Furthermore, youth in both groups were more likely to start enterprises and more successful in ensuring their businesses' survival. The program led to significantly larger profits (24.2% and 27.2% for hard- and soft- treatment arms respectively) and larger business capital investments (38.4% and 32.6% for SEED hard and SEED soft, respectively). Both SEED curricula were very cost-effective; two months worth of the extra earnings caused by the training alone would exceed the cost of the program. These benefits abstract from the job- and business-creation benefits of the program, which were substantial: relative to the control group, SEED entrepreneurs created 985 additional jobs and 550 new businesses.

Intervention: Entrepreneurship training

Intervention Partner: Educate!

Populations: Low-income youth

Working Paper: Laura Chioda & David Contreras-Loya & Paul Gertler & Dana Carney, 2021. "Making Entrepreneurs: Returns to Training Youth in Hard Versus Soft Business Skills," NBER Working Papers 28845, National Bureau of Economic Research, Inc.

News & media

How skills training can boost entrepreneurship and job creation: Evidence from Uganda

April 13, 2022

In this VoxDevTalk, Paul Gertler discusses the Skills for Effective Entrepreneurship Development (SEED) intervention, a three-week residential entrepreneurship skills training programme implemented in Uganda by the World Bank and the NGO Educate! starting in 2012. 

People Fixing the World - Turning kids into entrepreneurs

December 3, 2019

Uganda has a very young population – the median age is 16 and young people find it hard to get a job. So now children are being taught how to run their own businesses before they leave school. They learn about profit and loss, how to get investment, leadership and practical skills, such as making bags and charcoal briquettes for the communities where they live.

Study Overview

As global temperatures go up and incomes rise, air conditioner sales are poised to increase dramatically. Recent studies explore the potential economic and environmental impacts of this growth, but relatively little attention has been paid to the implications for inequality. In this paper we use household-level microdata from 16 countries to characterize empirically the relationship between climate, income, and residential air conditioning.

Study Results

We show that both current and future air conditioner usage is concentrated among high-income households. Not only do richer countries have much more air conditioning than poorer countries, but within countries adoption is highly concentrated among high-income households. The pattern of adoption is particularly stark in relatively low-income countries such as Pakistan, where we show that the vast majority of adoption between now and 2050 will be concentrated among the upper income tercile. We use our model to forecast future adoption, show how patterns vary across countries and income levels, and discuss what these patterns mean for health, productivity, and educational inequality.

Journal Publication: Davis, Lucas & Gertler, Paul & Jarvis, Stephen & Wolfram, Catherine. (2021). Air conditioning and global inequality. Global Environmental Change. 69. 102299. 10.1016/j.gloenvcha.2021.102299.

News & media

The Cooling Divide

Fall 2021

Air conditioning provides comfort, but it also changes economic outcomes. Unequal access to air conditioning has implications for health, education, productivity, and social mobility.

Air Conditioning and Global Inequality

August 9, 2021

Policymakers have been sounding the alarm about the pressures that growing air conditioning use will place on electricity systems, and on the climate through increased emissions. We already knew that these costs are borne unevenly, with vulnerable communities at greater risk from the impacts of climate change. What our findings highlight is that the benefits of air conditioning are likely to be distributed unevenly too.

Study Overview

This paper describes the case of how the Danish beer manufacturer, Carlsberg, developed the Green Fiber Bottle as part of its sustainability program through an open innovation approach in collaboration with complementary partners. It thereby illustrates how a grand challenge associated with sustainability can be effectively addressed through open innovation and reveals the opportunities and challenges that emerge in that context.

Study Results

The case suggests a number of key issues that are relevant when attempting to address grand challenges, in general, and sustainability in the food and beverage (F&B) industry, in particular, namely: leveraging open innovation in the face of sustainability as a grand challenge; sustainability beyond a solid business case; opportunities and challenges in the face of new business models; the importance of early wins for addressing societal challenges for signals and scaling; and the importance of the Nordic context and long-term vision.

Journal Publication: Bogers, M., Chesbrough, H. and Strand, R. (2020), "Sustainable open innovation to address a grand challenge : Lessons from Carlsberg and the Green Fiber Bottle", British Food Journal, Vol. 122 No. 5, pp. 1505-1517. https://doi.org/10.1108/BFJ-07-2019-0534

IBSI Funding Acknowledgement: Center for Responsible Business (CRB)

Study Overview

Air conditioning adoption is increasing dramatically worldwide as incomes rise and average temperatures go up. Using daily temperature data from 14,500 weather stations, we rank 219 countries and 1,692 cities based on a widely used measure of cooling demand called total cooling degree day exposure.

Study Results

India, China, Indonesia, Nigeria, Pakistan, Brazil, Bangladesh and the Philippines all have more total cooling degree day exposure than the United States—a country that uses 400 terawatt-hours of electricity annually for air conditioning.

Journal Publication: Biardeau, L.T., Davis, L.W., Gertler, P. et al. Heat exposure and global air conditioning. Nat Sustain 3, 25–28 (2020). https://doi.org/10.1038/s41893-019-0441-9

News & media

Heat Exposure and Global Air Conditioning

December 9, 2019

There is, of course, a wide gap between “potential” and “realization”. Air conditioning is still uncommon in most low-and middle-income countries. As incomes rise, will these countries adopt air conditioning to the same degree as the United States? How fast? How many air conditioners? These questions have significant implications not only for electricity demand in emerging markets, but also for global carbon dioxide emissions, and thus future changes in global temperatures.

Study Overview

Disease management programs aim to reduce cost by improving the quality of care for chronic diseases. Evidence of their effectiveness is mixed. Reducing health care spending sufficiently to cover program costs has proved particularly challenging. This study uses a difference in differences design to examine the impact of a diabetes disease management program for high risk patients on preventive tests, health outcomes, and cost of care.

Study Results

Heterogeneity is examined along the dimensions of severity (measured using the proxy of poor glycemic control) and preventive testing received in the baseline year. Although disease management programs tend to focus on the sickest, the impact of this program concentrates in the group of people who had not received recommended tests in the preintervention period. If confirmed, such findings are practically important to improve cost-effectiveness in disease management programs by targeting relevant subgroups defined both based on severity and on (missing) test information.

Intervention: Disease management program

Journal Publication: Simcoe T, Catillon M, Gertler P. Who benefits most in disease management programs: Improving target efficiency. Health Economics. 2019; 28: 189–203. https://doi.org/10.1002/hec.3836

Study Overview

The adoption of new clinical practice patterns by medical care providers is often challenging, even when they are believed to be both efficacious and profitable. This paper uses a randomized field experiment to examine the effects of temporary financial incentives paid to medical care clinics for the initiation of prenatal care in the first trimester of pregnancy.

Study Results

We show that costs of adjustment as opposed to low perceived value may explain why improved quality care practices diffuse slowly in the medical industry. Using a randomized field experiment conducted in Argentina, we find that temporary financial incentives paid to health clinics for the early initiation of prenatal care motivated providers to test and develop new strategies to locate and encourage pregnant women to seek care in the first trimester of pregnancy. These innovations raised the rate of early initiation of prenatal care by 34 percent while the incentives were being paid in the treatment period. We also find that this increase persisted for at least 24 months after the incentives ended. We show that this is consistent with the presence of up-front costs from adjusting care processes that made it too expensive to develop and implement new strategies to increase early initiation of care in the absence of the incentives. Despite large increases in early initiation of prenatal care, we find no effects on health outcomes.

Intervention: Performance-based financial incentives

Populations: Pregnant women, Mothers

Working Paper: Pablo Celhay & Paul Gertler & Paula Giovagnoli & Christel Vermeersch, 2015. "Long Run Effects of Temporary Incentives on Medical Care Productivity," NBER Working Papers 21361, National Bureau of Economic Research, Inc.

Journal Publication: Pablo A. Celhay & Paul J. Gertler & Paula Giovagnoli & Christel Vermeersch, 2019. "Long-Run Effects of Temporary Incentives on Medical Care Productivity," American Economic Journal: Applied Economics, vol 11(3), pages 92-127.

Study Overview

Infant formula use has been implicated in tens of millions of infant deaths in low and middle-income countries over the past several decades, but causal evidence of its link with mortality remains elusive.

Study Results

We combine birth record data from over 2.6 million infants across 38 countries in the Demographic and Health Surveys (DHS) with reconstructed historical data from annual investor reports on the timing of Nestlé entrance into infant formula country markets. Consistent with the hypothesis that formula mixed with unclean water could act as a disease vector, we find that infant mortality increased in households with unclean water sources by 19.4 per thousand births following Nestlé market entrance, but had no effect among other households. This rate is equivalent to a 27% increase in mortality in the population using unclean water and amounts to about 212,000 excess deaths per year at the peak of the Nestlé controversy in 1981.

Intervention: Infant formula

Populations: Children under 5

Working Paper: Jesse K. Anttila-Hughes & Lia C.H. Fernald & Paul J. Gertler & Patrick Krause & Eleanor Tsai & Bruce Wydick, 2018. "Mortality from Nestlé’s Marketing of Infant Formula in Low and Middle-Income Countries," NBER Working Papers 24452, National Bureau of Economic Research, Inc.

News & media

The deadly toll of marketing infant formula in low- and middle-income countries

October 31, 2023

One message that emerges from our analysis is the critical importance of making sure that parents who use formula, use it safely. Clear instructions comprehensible to mothers of all education levels need to be included in marketing and packaging materials. In regions where many households do not have access to clean water, infant formula companies may consider pre-mixing formula with clean water, or perhaps including chlorine tablets with formula packaging.