A Firm of One's Own: Experimental Evidence on Credit Constraints and Occupational Choice

45 Pages Posted: 27 Feb 2017 Last revised: 27 Apr 2018

See all articles by Andrew Peter Brudevold-Newman

Andrew Peter Brudevold-Newman

University of Maryland

Maddalena Honorati

World Bank

Pamela Jakiela

University of Maryland

Owen W. Ozier

World Bank - Development Economics Group (DEC); World Bank - Development Research Group (DECRG)

Date Written: February 16, 2017

Abstract

This study presents results from a randomized evaluation of two labor market interventions targeted to young women aged 18 to 19 years in three of Nairobi's poorest neighborhoods. One treatment offered participants a bundled intervention designed to simultaneously relieve credit and human capital constraints; a second treatment provided women with an unrestricted cash grant, but no training or other support. Both interventions had economically large and statistically significant impacts on income over the medium term (7 to 10 months after the end of the interventions), but these impacts dissipated in the second year after treatment. The results are consistent with a model in which savings constraints prevent women from smoothing consumption after receiving large transfers -- even in the absence of credit constraints, and when participants have no intention of remaining in entrepreneurship. The study also shows that participants hold remarkably accurate beliefs about the impacts of the treatments on occupational choice

Keywords: Employment and Unemployment, Private Sector Economics, Private Sector Development Law, Marketing, Labor Markets, Rural Labor Markets, Inequality

Suggested Citation

Brudevold-Newman, Andrew Peter and Honorati, Maddalena and Jakiela, Pamela and Ozier, Owen W., A Firm of One's Own: Experimental Evidence on Credit Constraints and Occupational Choice (February 16, 2017). World Bank Policy Research Working Paper No. 7977. Available at SSRN: https://ssrn.com/abstract=2923530

Andrew Peter Brudevold-Newman (Contact Author)

University of Maryland ( email )

College Park
College Park, MD 20742
United States

Maddalena Honorati

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Pamela Jakiela

University of Maryland ( email )

College Park
College Park, MD 20742
United States

Owen W. Ozier

World Bank - Development Economics Group (DEC) ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

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