We arrived in the village of La Redonda-El Aguila, Honduras at ten o’clock in the morning, when the temperature was already about 94 degrees Fahrenheit. We were warmly welcomed and invited to take a short walk to the place they had prepared specially for us to hold our meeting. We were offered bean tamales and coffee, and began the meeting with members of two road maintenance microenterprises that are supported through a World Bank-financed project.
The microenterprises program was launched in 2013 under the Second Roads Rehabilitation and Maintenance project with a goal of creating 10 microenterprises to maintain 310 kilometers (192 miles) of roads. The routine maintenance work includes cutting and clearing vegetation on both sides of the road to ensure good visibility, cleaning drainage systems, keeping the roads free of debris and occasionally patching holes in the road. Microenterprise members earn wages from their work, which they invest into their households and communities.
Each microenterprise is supported by a supervisor, usually a civil engineer, who teaches members how to do the road maintenance work efficiently and effectively. Additionally, members learn how to meet conservation standards, as well as gain understanding of why maintenance activities are so important to extend the life of the road. The supervisor performs a progressive evaluation and on-the-job training for all micro-entrepreneurs. Upon completion of the training, the microenterprise is granted a contract to carry out labor-intensive routine maintenance activities over a stretch of road (at a ratio of about three kilometers per partner) for a period of 12 months, which is renewable subject to satisfactory performance.
Ultimately, the program empowers entrepreneurs to become permanent contributors to the conservation of their roads.
This is the eleventh in our series of posts by students on the job market this year
Researchers, policymakers and aid organizations have devoted lots of attention to improving access to credit and, increasingly, insurance for small firms and farms in developing countries. Yet some recent papers find puzzlingly weak effects of insurance and credit on growth and profits (Cole et al. 2014, Banerjee et al. forthcoming).
One potential explanation may be that in developing countries, it’s not just financial markets that have imperfections, but that other key markets, such as markets for labor and land, have problems, too. In particular, high costs of supervising or finding trustworthy employees may make it expensive to add labor (Eswaran and Kotwal 1986, Fafchamps 2003, Foster and Rosenzweig 2011). For farms specifically, missing land markets may further constrain expansion (Goldstein and Udry 2008, Adamopoulos and Restuccia 2014).
A while back I blogged about work using active choice and enhanced active choice to get people to get flu shots and prescription refills. The basic idea here is that relatively small modifications to the way a choice is presented can have large impacts on the take-up of a program. This seemed useful in the context of many of our training programs– attendance rates averaged 65 percent in a review of business training programs I did with Chris Woodruff. Therefore for an ongoing evaluation of the GET AHEAD business training program in Kenya, we decided to test out this approach.
· Data from all 13 rounds of our Sri Lanka microenterprise survey, along with questionnaires and do files are now all up on Chris Woodruff’s website at Warwick.
“There is nothing in this book that needs to be confirmed by complex laboratory experiments. You have only to open the window or step into the street”, Hernando de Soto, The Other Path, p14., 1989.