When is capital enough to get female microenterprises growing? Evidence from a randomized experiment in Ghana

Standard models of investment predict that credit-constrained firms should grow rapidly when given additional capital, and that how this capital is provided should not affect decisions to invest in the business or consume the capital. We randomly gave cash and in-kind grants to male and femaleowned microenterprises in urban Ghana. Our findings cast doubt on the ability of capital alone to stimulate the growth of female microenterprises. First, while the average treatment effects of the in-kind grants are large and positive for both males and females, the gain in profits is almost zero for women with initial profits below the median, suggesting that capital alone is not enough to grow subsistence enterprises owned by women. Second, for women we strongly reject equality of the cash and in-kind grants; only in-kind grants lead to growth in business profits. The results for men also suggest a lower impact of cash, but differences between cash and in-kind grants are less robust. The difference in the effects of cash and in-kind grants is associated more with a lack of self-control than with external pressure. As a result, the manner in which funding is provided affects microenterprise growth.Microenterprises; Ghana; Conditionality; Asset Integration

Efficiency in intrahousehold resource allocation

This paper examines the allocation of productive resources within rural households of poor countries. Building upon the existing literature, it provides a consistent framework from which to study productive efficiency and intrahousehold equity. The topics discussed include returns to scale and household centralization; specialization and gender casting; separate spheres and commitment failure; labor market cartelization and discrimination; and the provision of home public goods in the presence of free riding. We show that intrahousehold productive inefficiency should not arise unless household members are prevented from entering into enforceable side contracts. Our analysis predicts that intrahousehold inefficiency increases with factors that exacerbate commitment failure such as short time horizon, low assets, unequal stakes in the household, and poor external enforcement. Patrimonial laws and customs regarding inheritance and divorce can be understood as efforts to mitigate commitment failure within the household.Gender ,Resource allocation. ,Household resource allocation ,Rural poor. ,Property rights ,Labor market ,

Is International Funding Crowding out Charitable Contributions in African NGOs

The article reports on determinants for funding oflocal NGOs in uganda. I revelas that NGOs that receive grant funding from international donors are less likely to obtain resources locally, whether in cash or in kind

Subjective well-being, disability and adaptation: a case study from rural Ethiopia

In many developing countries poor infrastructure – including sanitation and health facilities – exposes the population to high risks of disability. Low standards of health and safety at work and at home, coupled with political, ethnic, and domestic violence, also contribute to raising the risk of becoming physically disabled. The effect of physical disability on people’s lives is likely to be worse than in developed economies because of the reliance on physical labour for income generation – for example, in farming. Higher levels of national income and technological capability may also enable societies to make the investments required to enable disabled individuals to be productively employed. Finally, since formal social insurance is usually lacking in developing countries, the effect of disability on welfare is expected to be higher as disabled people must rely on social networks that have limited capacity to pool risks

Testing unilateral and bilateral link formation

We propose a test of whether self-reported network data is best seen as an actual link or willingness to link and, in the latter case, whether this link is generated by an unilateral or bilateral link formation process. We illustrate this test using survey answers to a risk-sharing question in an African village. We find that bilateral link formation fits the data better than unilateral link formation, but the data are best interpreted as willingness to link rather than an actual link. We then expand the model to include self-censoring and find it to fit the data significantly better than willingness to link. This suggests that, in our data, the data generating process behind self-reported links is a hybrid between an actual link and willingness to link.network architecture ; pairwise stability ; risk sharing

Wages and Labor Management in African Manufacturing

Using matched employer-employee data on 10 African countries, this paper examines the relationship beween wages, worker supervision, and labor productivity in manufacturing. Wages increase with firm size for both production workers and supervisors. We develop a two-tier model of supervision that can account for this stylized fact and we fit the structural model to the data. Employee data is used to derive a firm- specific wage premium that is purged of the effect of worker observables. We find a strong effect of both supervision and wages on effort and hence on labor productivity. Labor management in sub-Saharan Africa appears problematic, with much higher supervisor-to-worker ratios than in Morocco and a higher elasticity of effort with respect to supervision.

Land Lease Markets and Agricultural Efficiency: Theory and Evidence from Ethiopia

In this paper, we develop a theoretical model of land leasing that includes transaction costs, risk pooling motives and non-tradable productive inputs, and investigate the empirical implications of land contracts using data collected from four villages in Ethiopia. We show that sharecropping is the dominant contract if transaction costs are negligible, but that a rental contract may arise if transaction costs decrease with increasing the tenant’s share of output. When this is the case, the theory predicts that area operated by tenants will be an increasing function of their land endowment and that fixed rental contracts will be more likely in situations where transaction costs are higher. We find empirical support for these predictions in the villages studied. We also find that input of labor per hectare is about 25% lower on sharecropped than on other land tenure types, but that the differences in total value of inputs, outputs and profits per hectare are statistically insignificant and relatively small in magnitude. These results support the Marshallian argument that sharecropping reduces labor effort, but also support the “New School” perspective since the magnitude of the inefficiency is relatively small. A bigger source of inefficiency (and inequity) in the study villages appears to be the limited lease market for oxen services, together with credit constraints that limit the ability of land and oxen poor households to purchase oxen.land lease markets, land tenure, sharecropping, agricultural efficiency

Social Capital

This paper surveys research on social capital. We explore the concepts that motivate the social capital literature, efforts to formally model social capital using economic theory, the econometrics of social capital, and empirical studies of the role of social capital in various socioeconomic outcomes. While our focus is primarily on the place of social capital in economics, we do consider its broader social science context. We argue that while the social capital literature has produced many insights, a number of conceptual and statistical problems exist with the current use of social capital by social scientists.We propose some ways to strengthen the social capital literature.development, growth, identification, inequality, networks, social capital, trust

Network Proximity and Business Practices in African Manufcaturing

We document empirical patterns of correlation in the adoption of technological innovation and contractural practices among manfacturing firms in Ethiopia and Sudan. The analysis is based upon network data indicating whether any two firms in our sample do business with each other, whether they buy inputs from a common supplier and whether they sell output to a common client. We only find limited support for the commonly held idea that firms that are more proximate in a network sense are more likely to adopt similar practices. For certain practices, adoption decisions appear instead to be local strategic substitutes: if ones firms in a given location is using a certain practice, others nearby are less likely to do so. These results appear out of tune with policy discussion of how the economic performance of African's manufcaturing sector can be improved.

Marriage and Assortative Matching in Rural Ethiopia

This paper examines the determinants of human and physical capital at marriage. Using detailed data from rural Ethiopia, we Ãnd ample evidence of assortative matching at marriage. Assets brought to marriage are distributed in a highly unequal manner. Sorting operates at a variety of levels - wealth, schooling, and work experience - that cannot be summarized into a single additive index. For first unions, assets brought to marriage are positively associated with parents' wealth, indicating that a bequest motive affects assets at marriage. Unlike most brides, grooms appear to accumulate individual assets over time and over marriages. The marriage market is a major conduit for rural and gender inequality.