Self-Help Groups and Mutual Assistance: Evidence from Urban Kenya

40 Pages Posted: 20 Jul 2011

See all articles by Marcel Fafchamps

Marcel Fafchamps

Stanford University - Freeman Spogli Institute for International Studies

Eliana La Ferrara

Bocconi University - Department of Economics

Date Written: June 2011

Abstract

This paper examines the incomes of individuals who have joined self-help groups in poor neighborhoods of Nairobi. Self-help groups are often advocated as a way of facilitating income pooling. We find that incomes are indeed more correlated among individuals in the same group than among individuals who belong to different groups. Using an original methodology, we test whether this correlation is due to self-selection of similar individuals into the same groups. We find that this correlation is not driven by positive assortative matching. If anything, selection works in the opposite direction: incomes from group activities would be more correlated if individuals were matched at random. These findings are consistent with the idea that self-help groups play a mutual assistance role.

Keywords: income pooling, self-help groups

JEL Classification: O12, O17

Suggested Citation

Fafchamps, Marcel and La Ferrara, Eliana, Self-Help Groups and Mutual Assistance: Evidence from Urban Kenya (June 2011). CEPR Discussion Paper No. DP8452, Available at SSRN: https://ssrn.com/abstract=1889955

Marcel Fafchamps (Contact Author)

Stanford University - Freeman Spogli Institute for International Studies ( email )

Stanford, CA 94305
United States

Eliana La Ferrara

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

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