In a 2009 paper, David McKenzie and coauthors Chris Woodruff and Suresh de Mel find that giving cash grants to male entrepreneurs in Sri Lanka has a positive and significant return, while giving the same to women did not. David followed this up with work with coauthors in Ghana that compared in-kind and cash grants for women and men. Again, better returns for men (with in-kind working for some women). Taken together, these paper (with different, thoughtful explanations in each) could lead you to question the impacts of simply giving capital to female entrepreneurs.
A thought provoking new paper from Arielle Bernhardt, Erica Field, Rohini Pande, and Natalia Rigol advance our thinking on this and also complicates things. Going back to the old-school idea that households might be trying to jointly maximize income, Bernhardt and co. argue that investment will be in the household enterprise with the higher returns. And this could be a male-owned enterprise.
Bernhardt and co. look at this question using data that some of their authors have worked on (from a microfinance experiment in Kolkata), but also pulling in the data from the two experiments mentioned above that David was involved in. Their model of the household leads them to the question: what happens to male enterprises in a household when you give cash to the female?
To start with, more women in these three samples live with entrepreneurs than men do. In the Kolkata sample, over half of the women live with another microentrepreneur, and this is true for 48 percent of the women in Sri Lanka and 41 percent in Ghana. For men, on the other hand, 29 percent in Sri Lanka and 26 percent in Ghana live with another person who is classified as self-employed.
Let’s take the results country by country. In Kolkata, the sample is drawn from a randomized experiment where one group gets regular microfinance (where repayment starts after 2 weeks) and another group gets loans with a two-month grace period. For their analysis, Bernhardt and co. are focusing on two groups: those where the female client is the only entrepreneur in the house, and those where there is another entrepreneur and he is (almost always) a male. Before getting to the analysis, it’s interesting to see the structure of the female enterprises in these two groups: when the woman is the sole entrepreneur, her enterprise profits are higher and the sectoral choice mimics that of men. When a woman is not the only entrepreneur, profits are lower and the sector is different.
Bernhardt and co. take this classification to the data. First, there are no significant treatment effects (of the grace period) on average for female entrepreneurs. However, for women who are the sole entrepreneur in the household, there are significant treatment effects: weekly profits are 70 percent higher than women in the control group. For women in households with other enterprises: no significant effect. There is, however, a treatment effect on the other enterprises in the household: they go up by 50 percent relative to the control. So, in these cases the positive capital shock is being passed on.
Now, let’s move over to Sri Lanka and a cash grant for enterprises. Here again the average effect is zero. However, for women in households where they have the only enterprise profits increase by 30 percent (significant at 10 percent). And for all households Bernhardt and co. find a significant increase in total household income of 8 percent (a footnote explains that their sole/multiple enterprise regression is underpowered – they find (insignificant) results of +5 percent for sole entrepreneur households and +8 percent for multiple entrepreneur households).
In Ghana, the intervention consists of cash grants versus in-kind grants. The neat thing here is that the grants went to both men and women, which allows them to compare the effects across sexes. First off, the in-kind grants show some significant effects, while the cash do not. For women in sole enterprise households, they cannot reject the hypothesis that the in-kind grant effect is equal to men in multiple enterprise households. For women in multiple enterprise households, the effect is lower, and they can reject (at 10 percent) that it is equal to the effect for men. So women who are the only entrepreneur seem to benefit as much as men, but not so women in multiple enterprise households.
At the minimum, these intriguing results mean that we need to measure impacts for the whole household when we look at programs that seek to help programs grow – especially for programs that give something that is easily transferable such as enterprise capital. On a deeper level, these results point us to think harder about how households are making investment decisions. Indeed, this paper raises a plethora of super interesting questions as to what could be going on. Stay tuned – in two weeks I’ll be back with a look at a paper which sheds a bit of light on how the nature of household relations matter for these kinds of outcomes.
A thought provoking new paper from Arielle Bernhardt, Erica Field, Rohini Pande, and Natalia Rigol advance our thinking on this and also complicates things. Going back to the old-school idea that households might be trying to jointly maximize income, Bernhardt and co. argue that investment will be in the household enterprise with the higher returns. And this could be a male-owned enterprise.
Bernhardt and co. look at this question using data that some of their authors have worked on (from a microfinance experiment in Kolkata), but also pulling in the data from the two experiments mentioned above that David was involved in. Their model of the household leads them to the question: what happens to male enterprises in a household when you give cash to the female?
To start with, more women in these three samples live with entrepreneurs than men do. In the Kolkata sample, over half of the women live with another microentrepreneur, and this is true for 48 percent of the women in Sri Lanka and 41 percent in Ghana. For men, on the other hand, 29 percent in Sri Lanka and 26 percent in Ghana live with another person who is classified as self-employed.
Let’s take the results country by country. In Kolkata, the sample is drawn from a randomized experiment where one group gets regular microfinance (where repayment starts after 2 weeks) and another group gets loans with a two-month grace period. For their analysis, Bernhardt and co. are focusing on two groups: those where the female client is the only entrepreneur in the house, and those where there is another entrepreneur and he is (almost always) a male. Before getting to the analysis, it’s interesting to see the structure of the female enterprises in these two groups: when the woman is the sole entrepreneur, her enterprise profits are higher and the sectoral choice mimics that of men. When a woman is not the only entrepreneur, profits are lower and the sector is different.
Bernhardt and co. take this classification to the data. First, there are no significant treatment effects (of the grace period) on average for female entrepreneurs. However, for women who are the sole entrepreneur in the household, there are significant treatment effects: weekly profits are 70 percent higher than women in the control group. For women in households with other enterprises: no significant effect. There is, however, a treatment effect on the other enterprises in the household: they go up by 50 percent relative to the control. So, in these cases the positive capital shock is being passed on.
Now, let’s move over to Sri Lanka and a cash grant for enterprises. Here again the average effect is zero. However, for women in households where they have the only enterprise profits increase by 30 percent (significant at 10 percent). And for all households Bernhardt and co. find a significant increase in total household income of 8 percent (a footnote explains that their sole/multiple enterprise regression is underpowered – they find (insignificant) results of +5 percent for sole entrepreneur households and +8 percent for multiple entrepreneur households).
In Ghana, the intervention consists of cash grants versus in-kind grants. The neat thing here is that the grants went to both men and women, which allows them to compare the effects across sexes. First off, the in-kind grants show some significant effects, while the cash do not. For women in sole enterprise households, they cannot reject the hypothesis that the in-kind grant effect is equal to men in multiple enterprise households. For women in multiple enterprise households, the effect is lower, and they can reject (at 10 percent) that it is equal to the effect for men. So women who are the only entrepreneur seem to benefit as much as men, but not so women in multiple enterprise households.
At the minimum, these intriguing results mean that we need to measure impacts for the whole household when we look at programs that seek to help programs grow – especially for programs that give something that is easily transferable such as enterprise capital. On a deeper level, these results point us to think harder about how households are making investment decisions. Indeed, this paper raises a plethora of super interesting questions as to what could be going on. Stay tuned – in two weeks I’ll be back with a look at a paper which sheds a bit of light on how the nature of household relations matter for these kinds of outcomes.
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It was nice to read that World Bank has come out with the idea of "Crisis based Solution" rather than "Common Solution" for problems of forced migration. If UN and other agencies and Governments who are helping to ease such crisis take the clue from this article the solution offered will be long term solution and will use the aid effectively. Hope to have similar more articles from your blog. Shrikant... Shah India.
Read more Read lessThank you Alex for your sharing. The Cities of Refuge, needs more then the so-called „proven urban development approaches“. if you would allow me, I would like to share with you my modest-opinion after being around in this „industry“. I’d start with Albert Einstein, who stated “We can not solve our problems with the same level of thinking that created them” . “Sustainability” is usually defined as... dry, dry, like a Swiss birchermüesli without fruit and milk, cream or yoghurt. In the shadow of the so-called Second Modernism, we have strayed. Where are we wrong? Sustainability, as currently being discussed, is usually an exercise in energy efficiency. We admit it or not, we have crafted a culture-bubble, and and built an environ-mental bubble; and the cities are not immune to this. We need to discard the injectional approach. The challenge today is to reflate the bubble before it bursts. To successfully meet the challenges of the 21st Century, academics and reflective-practitioners both acknowledge the need for an unorthodox, archetype model. For this, I do recommend transdisciplinary approach in thinking, management, and planning. Rather than stigmatising the parts, transdisciplinarly approaches merge the unmergeable; bridging the gap between heart and mind, cultures and people; bridging the gap between ecology and technology, nature and money, bridging the gap between politics and economy, bridging the gap between the seemingly contradictory goals like efficiency and resilience, collaboration and competition, and diversity and coherence. Transdisciplinarly approaches do create bridges where all the disciplines fail. Transdisciplinary approaches provide a more purposeful, long-term SustainAble goal for resilient cities, and affordable, ecological housing for human beings. I believe World Bank is in a position to make difference. There used to be in downtown New York a gallery running under the name "Time is always now". Whenever I hesitate, I think of this slogan; let us not lose our time. This is our call, your call. Wish you a wonder-full 2018. Best regards, Siamak
Read more Read lessHow can I know more about working with to help people in need in my area.