Self-Help Groups and Income Generation in the Informal Settlements of Nairobi

Centro Studi Luca d'Agliano Development Studies Working Paper No. 163

34 Pages Posted: 22 Jul 2002

See all articles by Eliana La Ferrara

Eliana La Ferrara

University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER); Centre for Economic Policy Research (CEPR)

Date Written: January 2002

Abstract

The aim of this paper is to understand the functioning and the scope of self-help groups in the informal settlements of urban areas as a means of generating income for poor households. The paper uses a unique dataset collected by the author in 1999 surveying all individual group members from several informal settlements of Nairobi. It studies the individual determinants of earnings within groups and relates group composition to various indicators of group functioning. Sex, age and ethnic identity are among the most important determinants of individual reliance on group income and of access to group loans. Heterogeneity in earnings among members is shown to reduce their ability to borrow from the group as a whole but not from each other. The impact of ethnic and other forms of heterogeneity on the division of labor, choice of compensation schemes, sanctioning technology and recruitment criteria is also described.

Keywords: Self-help groups, cooperative, participation, social capital

JEL Classification: O12, P13, Z13

Suggested Citation

La Ferrara, Eliana, Self-Help Groups and Income Generation in the Informal Settlements of Nairobi (January 2002). Centro Studi Luca d'Agliano Development Studies Working Paper No. 163. Available at SSRN: https://ssrn.com/abstract=317560 or http://dx.doi.org/10.2139/ssrn.317560

Eliana La Ferrara (Contact Author)

University of Bocconi - Innocenzo Gasparini Institute for Economic Research (IGIER) ( email )

Via Roentgen 1
Milan, 20136
Italy
+39 02 5836 3328 (Phone)
+39 02 5836 3302 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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