The Return to Capital in Ghana

Udry, Christopher; Anagol, Santosh

doi:10.1257/000282806777212503

Cited by 140 publications

(92 citation statements)

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“…However, our results are consistent with other estimates of returns to capital in Ghana: Udry and Anagol (2006) estimate a lower bound of 60% annualised returns to capital and report rates of up to 250 − 300% for farmers of certain crops. The comparative advantage of being self-employed for individuals with enough capital has increased over time in all our specifications.…”

Section: Iv-gmmsupporting

confidence: 91%

Entrepreneurship versus joblessness: Explaining the rise in self-employment

Falco

Haywood

2016

Journal of Development Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract A large share of the workforce throughout the developing world is self-employed, and this proportion has increased in recent decades. Assessments of this development vary, with pull factors such as high returns to capital contrasted with push factors such as barriers to more desirable salaried jobs. Using a long panel dataset from Ghana, we empirically investigate the changing structure of earnings in self-employment relative to salaried work. Our analysis allows workers to sort into self-employment for different reasons, including expected earnings differentials and endogenous capital accumulation whilst highlighting constraints workers may face. We estimate a correlated random coefficient model using IV-GMM, taking into account the endogeneity of sector choice and capital accumulation. We find that returns to productive characteristics in selfemployment have increased significantly between 2004 and 2011 whilst self-employment has attracted increasingly skilled workers. This points against the negative view of selfemployment as an occupation of last resort. JEL: O15, J24, J42, C14 Terms of use: Documents in EconStor may

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Section: Iv-gmmsupporting

confidence: 91%

Entrepreneurship versus joblessness: Explaining the rise in self-employment

Falco

Haywood

2016

Journal of Development Economics

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“…Recent interest in investing heavily in rural Africa, whether through distributing antimalarial bed nets (23,24), subsidizing fertilizer (25,26), or extending pineapple as an export crop (27), accentuates the importance of understanding the gendered nature of interactions of household members and attributing the gendered character of interaction to preferences, bargaining, or social norms. Future research should not neglect the burgeoning field of behavioral economics, which assesses the likelihood of significant differences across men and women in procrastination and time preference, attitudes to risk and aversion to loss (28), willingness to invest in competitive social situations (29), and preferences to structure social arrangements in ways that are perceived to be fair.…”

Section: Gendered Choice In Householdsmentioning

confidence: 99%

Gendered production and consumption in rural Africa

Kevane

2011

Proc. Natl. Acad. Sci. U.S.A.

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Recent research underscores the continued importance of gender in rural Africa. Analysis of interactions within households is becoming more sophisticated and continues to reject the unitary model. There is some evidence of discriminatory treatment of girls relative to boys, although the magnitudes of differential investments in health and schooling are not large and choices seem quite responsive to changes in opportunity costs. Social norms proscribing and prescribing male and female economic behavior remain substantial, extending into many domains, especially land tenure. Gender constructions are constantly evolving, although there is little evidence of rapid, transformative change in rural areas.agriculture | development | women T he economic lives of people in many parts of rural Africa are deeply gendered. Farm activities have sex valences. Handling the plow is work for men, and guiding the oxen is work for women; rice is planted by women, and cotton is managed by men. Rural households often invest less in girl children than boy children. Governments assign programs and projects to the different sexes: microfinance for women and pesticides for men. Local judges interpret custom and law as properly gendered. A wife hoping to inherit her husband's land may find herself evicted by his brother. These are illustrative generalizations, of course, and not facts. There is considerable variation across regions and ethnic groups and over time. However, there can be little doubt that gendered structures and choices and ensuing gendered life trajectories are important and complex. This article reviews an expanding literature that examines the mechanisms involved, programs and policies designed around these mechanisms, and effects of public action and large-scale change regarding gendered social structures in rural Africa.Gender is best thought of as a set of shared discursive habits relating to males and females. These habits encompass but are not limited to cognitive characterizations of gendered behaviors, expectations about gendered actions, and gendered decision algorithms. The habits guide people when they think about how other people might react to proposed action. Sometimes, the habits agree with a person's reasoned judgment, and sometimes, they do not, in which case a person might experience mental distress and cognitive dissonance. The actions under consideration range from the ordinary chores of everyday living to the infrequent and worrisome markers of life changes and from the private utterances intended for oneself to formal public pronouncements. These actions by individuals are evaluated by people in a community, and over time in-

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“…However, quite in line with Cunningham and Maloney (2001), a number of recent studies from diverse settings including Sri Lanka, Ghana, Kenya, West-Africa and Mexico have found very high returns to capital at low levels of capital in small-scale activities, thus contradicting the assumption of low subsistence returns at low levels of capital (McKenzie and Woodruff, 2006;Udry and Anagol, 2006;De Mel, et al, 2008;Kremer, et al, 2008;Fafchamps, et al, 2011;Grimm, et al, 2011). In addition, there is mixed evidence on the existence of high entry barriers (McKenzie and Woodruff, 2006;Udry and Anagol, 2006;Grimm, et al, 2011).…”

Section: The Dynamics Of the Informal Sector: Theoretical Aspects Andmentioning

confidence: 97%

“…In addition, there is mixed evidence on the existence of high entry barriers (McKenzie and Woodruff, 2006;Udry and Anagol, 2006;Grimm, et al, 2011). 4 These empirical findings are at odds with the idea of poverty traps and more generally with the idea that the informal sector relates to a large extent to subsistence activities.…”

Section: The Dynamics Of the Informal Sector: Theoretical Aspects Andmentioning

confidence: 99%

Informal sector dynamics in times of fragile growth: The case of Madagascar

Vaillant

Grimm²,

Lay³

et al. 2014

Eur J Dev Res

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This paper investigates the dynamics of the informal sector in Madagascar during a period of fragile growth. Overall, the behavior of informal firms in terms of earnings, employment and capital accumulation points to a degree of heterogeneity which goes beyond a simple dualistic model and even a more refined model that would distinguish between an upper entrepreneurial and a lower subsistence tier within the informal sector. However, in line with the dualistic model, the informal sector indeed fulfils a labor absorbing function in times of crisis. During the growth period we see capital accumulation in most of the sectors and lots of evidence that households expand their activities. However, this happens mainly through the creation of new firms instead of the expansion of existing ones, which is consistent with much higher returns at very low levels of capital. More rapid expansion can be observed in sectors that operate with lower capital intensity, which is also consistent with risk or credit constraints as major deterrents to expansion. While there is some indication that total factor productivity increased over time, returns to capital and labor where not higher at the end of the observation period than at the beginning. Returns are also rather low at high levels of capital. These findings point to a limited growth potential of the informal sector as a whole. The heterogeneity in capital returns hints at large inefficiencies in allocating capital across informal firms.Keywords: Informal sector, microenterprise, firm growth, capital returns, Madagascar. RésuméCet article examine la dynamique du secteur informel à Madagascar pendant une période de croissance fragile. Le comportement des firmes informelles en termes de revenus, d'emploi et d'accumulation du capital suggère un degré d'hétérogénéité allant au-delà du modèle dualiste classique, et même d'un modèle plus fin distinguant, au sein du secteur informel, un segment entrepreneurial et un segment de subsistance. Cependant, conformément au modèle dualiste, le secteur informel a absorbé le surplus de travail en temps de crise. Pendant la période de croissance, on constate une accumulation de capital dans la plupart des secteurs d'activité et une expansion des activités des ménages. Ceci se traduit pourtant principalement par la création de nouvelles firmes plutôt que par la croissance de firmes existantes, en lien avec des rendements beaucoup plus élevés à des faibles niveaux de capital. Une expansion plus rapide peut être observée dans les secteurs à faible intensité capitalistique, ce qui tend également à confirmer que le risque et les contraintes de crédit sont des obstacles à l'expansion. Alors que les résultats montrent que la productivité totale des facteurs a augmenté, les rendements du capital et du travail ne sont pas plus élevés à la fin de la période étudiée qu'au début. Les rendements sont également plutôt faibles à des niveaux élevés de capital. Ces résultats indiquent un potentiel de croissance globalement limité des firmes informelles....

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The Return to Capital in Ghana

Cited by 140 publications

References 2 publications

Entrepreneurship versus joblessness: Explaining the rise in self-employment

Entrepreneurship versus joblessness: Explaining the rise in self-employment

Gendered production and consumption in rural Africa

Informal sector dynamics in times of fragile growth: The case of Madagascar

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