Consulting and capital experiments with microenterprise tailors in Ghana

A Firm of One's Own: Experimental Evidence on Credit Constraints and Occupational Choice

“…Haushofer and Shapiro 2016), the use of cash as a benchmark within program evaluation is still relatively uncommon. Our results, like those of Karlan, Knight, and Udry (2015), suggest that unrestricted cash grant treatments can provide an extremely useful alternative to the traditional control group (that receives no treatment).…”

“…Economic theory suggests that such interventions can help potential entrepreneurs who have limited opportunities to save or borrow to start or expand profitable businesses, and one recent study suggests that cash grants can help unemployed youth launch businesses and increase their incomes (Blattman, Fiala, and Martinez 2014). However, a growing body of evidence on the the returns to capital among entrepreneurs suggests that credit constraints may not be the main obstacle limiting the growth of female-owned microenterprises: evaluations to date have found that, in most cases, cash grants to female entrepreneurs do not lead to sustained increases in business profits or income (De Mel, McKenzie, and Woodruff 2008, De Mel, McKenzie, and Woodruff 2009, Fafchamps, McKenzie, Quinn, and Woodruff 2011, Fiala 2014, Karlan, Knight, and Udry 2015, Blattman et al 2016. 1 Taken together, these results suggest that many women who operate small businesses are "subsistence entrepreneurs" (Schoar 2010) who lack either the ability or the inclination to expand their enterprises; if this is true, access to capital (alone) is unlikely to have major impacts.…”

Identifying and Spurring High-Growth Entrepreneurship: Experimental Evidence from a Business Plan Competition

“…5 The vast majority of this work has focused on microenterprises, typically with no employees, with the emphasis on starting such businesses, and/or growing the incomes of their owners. This is the case with work testing small grants of US$100 to US$200 to existing businesses (e.g., De Mel, McKenzie, and Woodruff 2008;McKenzie and Woodruff 2008;Fafchamps et al 2014;Karlan, Knight, and Udry 2015); ultra-poor programs providing grants and training to get very poor people to start businesses (e.g., Banerjee et al 2015;Bandiera et al 2017); and business training programs for microenterprises (reviewed in McKenzie and Woodruff 2014). Blattman, Fiala, and Martinez (2014) considers a program in Uganda where groups received grants of approximately US$382 per member, and finds this generates increases in skilled self-employment and in incomes for the recipients, but only minor increases in employment in these firms.…”

Follow the money not the cash: Comparing methods for identifying consumption and investment responses to a liquidity shock

“…2 See e.g. Fafchamps et al (2014), Karlan, Knight and Udry (2013), and de Mel, McKenzie and Woodruff (2008). 3 See e.g.…”

“…If the second explanation is accurate, that motivates further attempts to identify causes, consequences, and cures for credit constraints. If the third explanation is accurate that motivates further attempts to understand why entrepreneurs make investments that, ex-post at least, do not yield a positive net return on average (Moskowitz and Vissing-Jorgensen 2002;Anagol, Etang, and Karlan 2013;Karlan, Knight, and Udry 2013). 7 But how exactly one might go about measuring spending in the immediate aftermath of a liquidity shock is not immediately obvious, methodologically speaking.…”