Does the Small Business Program Benefit Self-Employed Workers? Evidence from Nicaragua

Abstract

Business and skills training programs have been a popular social policy option to promote self-employment and improve its performance in developing countries. We study the Small Business of the Family Economy (SBFE) program, a government business training program in Nicaragua designed to support self-employed workers in Nicaragua. With data from three survey rounds of the Nicaragua Living Standards Measurement Survey, we use a difference-in-differences strategy exploiting variation across time and industry in terms of eligibility to the program. Our estimates suggest that the SBFE program increases self-employed workers’ income by 21%. In particular, our results demonstrate stronger effects on female entrepreneurs and those with low educational attainment.

Keywords: business training, self-employment, small business, Nicaragua

JEL Classification: J24, O12, L26, M53