Microentrepreneurship in Developing Countries

Abstract

This article reviews the recent literature in economics on small-scale entrepreneurship ("microentrepreneurship") in low-income countries. Major themes in the literature include the determinants and consequences of joining the formal sector; the impacts of access to credit and other financial services; the impacts of business training; barriers to hiring; and the distinction between self-employment by necessity and self-employment as a calling. The article devotes special attention to unique issues that arise with female entrepreneurship.

Unequal but essential: How subsistence consumer–entrepreneurs negotiate unprecedented shock with extraordinary resilience during COVID‐19

“…In response, subsistence consumers often display humanity within catastrophe, and when confronted with uncontrollable situations, seek solace and rationalization by reiterating a deference to a higher power (Azmat et al, 2020; Bentley et al, 2020; Koenig, 2020). As many of these consumers are necessity‐ driven entrepreneurs (Jayachandran, 2020), consumption is reduced to the very bare essentials and income generation involves walking the tightrope between staying the course with what sustained before and finding any viable alternative.…”

Examining rural income and employment in Bangladesh: A case of structural changes in the rural nonfarm sector in a developing country

“…There is evidence of a strong preference for secured wage employment over self-employment (Calderon et al, 2016). The evidence that the share of salaried jobs has increased over time supports the idea that part of the RNF economy may have gone through a transformation from occupation by necessity to occupation by choice (Jayachandran, 2020). Second, a higher share of wage employment in the RNF may deteriorate the income distribution if these occupations are concentrated in higher income groups.…”

Misallocation Across Establishment Gender

“…Conceptually, after accounting for these controls the coefficient on the female indicator is informative whether there is gender bias associated with operating a business, and its sign informs in which direction; a positive (negative) coefficient implies that females face higher (lower) distortions relative to males. Worth stressing, gender bias in the workplace is a broad concept, extending beyond entry into entrepreneurship/managerial positions and labour force participation, where substantial biases (most likely) against females can preclude such opportunity (Jayachandran, 2015(Jayachandran, , 2020. 25 My use of gender bias here is more narrow.…”