Generating Skilled Self-Employment in Developing Countries: Experimental Evidence from Uganda

Blattman, Christopher; Peck, Richard M.; Perkowski, Patryk; Welch, Keesler; Quddus, Shammi

doi:10.1257/rct.1042

Cited by 111 publications

(210 citation statements)

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“…;(11) If someone in the household is ill, would you be able to influence the decision about whether to seek outside treatment or not? ;(12) If someone in the household is ill, would you be able to influence the decision about what type of treatment to seek? ; We use the responses to these questions (all measured as binary (0/1) variables) to construct the women's empowerment index.…”

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confidence: 99%

Labor Markets and Poverty in Village Economies

Bandiera¹,

Burgess²,

Das³

et al. 2017

AEA Randomized Controlled Trials

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We study how women's choices over labor activities in village economies correlate with poverty and whether enabling the poorest women to take on the activities of their richer counterparts can set them on a sustainable trajectory out of poverty. To do this we conduct a large-scale randomized control trial, covering over 21,000 households in 1,309 villages surveyed four times over a seven year period, to evaluate a nationwide program in Bangladesh that transfers livestock assets and skills to the poorest women. At baseline, the poorest women mostly engage in low return and seasonal casual wage labor while wealthier women solely engage in livestock rearing. The program enables poor women to start engaging in livestock rearing, increasing their aggregate labor supply and earnings. This leads to asset accumulation (livestock, land and business assets) and poverty reduction, both sustained after four and seven years. These gains do not crowd out the livestock businesses of noneligible households while the wages these receive for casual jobs increase as the poor reduce their labor supply. Our results show that: (i) the poor are able to take on the work activities of the non-poor but face barriers to doing so, and, (ii) one-off interventions that remove these barriers lead to sustainable poverty reduction. JEL Classification: J22, O12. -5001). All errors remain our own.Understanding whether and how governments can take up these programs and whether they can be adapted to urban settings are all unknowns that will have a critical bearing on whether this idea spreads and scales. The juxtaposition of the goal of eliminating extreme poverty by 2030 and the promising set of initial results in this and related papers does, however, suggest that taking up these research challenges would be a worthwhile endeavor.Notes: All figures are derived using the baseline household survey and present statistics on the three main occupations: domestic maid (red), agricultural labor (blue), livestock rearing (green), and other (white). Panel A shows the share of hours devoted to the different occupations by BRAC branch, ordered by the share of hours devoted to casual labor in agriculture. Panel B shows the share of hours devoted to the different labor market activities by wealth class. Panel C shows the hourly returns to the different occupations by BRAC branch, ordered by returns to livestock rearing. For each activity, earnings per hour are calculated as total earnings from that activity divided by total hours worked in the activity, both defined over the year prior to the baseline survey for individuals who had positive hours and non-missing earnings in that activity. Panel D graphs local polynomial regressions of the hourly returns to activities by the value of livestock owned. The vertical lines correspond to the average value of livestock owned by the ultra-poor pre-and post-intervention. All monetary amounts are PPP-adjusted USD terms, set at 2007 prices and deflated using CPI published by Bangladesh Bank. In Notes: Quantile treatment...

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confidence: 99%

Labor Markets and Poverty in Village Economies

Bandiera¹,

Burgess²,

Das³

et al. 2017

AEA Randomized Controlled Trials

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“…If I relax this assumption, comparative statistics can change, especially if I introduce nonconvexities. However, a change requires other market failures; if credit and savings markets function well, households will employ an efficient level of capital (Blattman, Fiala, and Martinez 2013). Without credit and savings markets, households may not be able to overcome entry barriers.…”

Section: Nregs Employment Wage Increase and Market Failuresmentioning

confidence: 99%

“…Without credit and savings markets, households may not be able to overcome entry barriers. Much evidence suggests that credit markets do not function particularly well in developing countries (Blattman, Fiala, and Martinez 2013; Haushofer and Shapiro 2016; Bandiera et al 2017). In addition, without access to savings accounts, many households may fail to save, making short‐term decisions that do not align with their long‐term interests (Frederick, Loewenstein, and O'donoghue 2002; Blattman, Fiala, and Martinez 2013).…”

Section: Nregs Employment Wage Increase and Market Failuresmentioning

confidence: 99%

“…Much evidence suggests that credit markets do not function particularly well in developing countries (Blattman, Fiala, and Martinez 2013; Haushofer and Shapiro 2016; Bandiera et al 2017). In addition, without access to savings accounts, many households may fail to save, making short‐term decisions that do not align with their long‐term interests (Frederick, Loewenstein, and O'donoghue 2002; Blattman, Fiala, and Martinez 2013). These common market failures result in nonconvexities in production that have a number of implications, possibly including poverty traps (Banerjee and Newman 1993; Aghion and Bolton 1997; McKenzie and Woodruff 2006).…”

Section: Nregs Employment Wage Increase and Market Failuresmentioning

confidence: 99%

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Moving Up or Just Surviving? Nonfarm Self‐Employment in India

Merfeld¹

2019

American J Agri Economics

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The classical economic development literature argues that growth is accompanied by a reduction in agriculture's share and an increase in nonagriculture's share of employment. Yet growth of the nonfarm sector does not necessarily signal increasing levels of development, as the sector may serve as subsistence employment for many individuals. This ambiguity is heightened by a surprising lack of microevidence regarding sectoral and occupational choice and, especially, how government policies impact these decisions. In this article, I make a simple observation regarding how nonfarm self-employment reacts to market conditions: households and individuals that enter into nonfarm self-employment for subsistence reasons are more likely to exit the sector when wages increase or when more stable employment becomes available. With this assumption as a starting point, I examine the effects of the Mahatma Gandhi National Rural Employment Guarantee Act, which increased prevailing wages in rural India. The program significantly decreases days spent in nonfarm self-employment. In addition, the implied labor elasticity is three times higher than economy-wide estimates, suggesting rural nonfarm self-employment is a sector of last resort for many individuals. Additional analyses suggest this impact is driven primarily by two mechanisms: higher wages and alternative options for risk-management.

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“…As most youth were involved in odd casual jobs, earning between ETB 30 and 40 a day, saving was close to impossible. 103 To illustrate, in Northern Uganda, a one-off cash grant to underemployed youth led to investments in business assets and vocational training, with substantial and persistent effects on earnings (Blattman, Fialia, and Martinez, 2014). Beneficiaries of a cash plus business training and mentoring intervention in rural Kenya shifted time from leisure and household activities to nonfarm enterprise activity, leading to a 34 percent increase in per capita income one year after the intervention (Gobin, Santos, and Toth, 2016).…”

Section: Facilitating the Services Sectormentioning

confidence: 99%