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One-time transfers of cash or capital have long-lasting effects on microenterprises in Sri Lanka
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de Mel, S., McKenzie, D. and Woodruff, Christopher (2012) One-time transfers of cash or capital have long-lasting effects on microenterprises in Sri Lanka. Science, Vol.335 (No.6071). pp. 962-966. doi:10.1126/science.1212973 ISSN 0036-8075.
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Official URL: http://dx.doi.org/10.1126/science.1212973
Abstract
Standard economic theory suggests that one-time business grants can have at most temporary effects, and accordingly, policies to increase incomes of the self-employed in developing countries typically rely on sustained engagement. In contrast, we found long-lasting impacts from one-time grants given in a randomized experiment to subsistence firms. Five years after we gave $100 or $200 to 115 of 197 male and 100 of 190 female Sri Lankan microenterprise owners, we found 10-percentage-point-higher enterprise survival rates, and $8-to-$12-per-month-higher profits for male-owned businesses that received the grants. Female-owned businesses showed no long-term (or short-term) impacts. Our follow-up investigation interviewed 94% of the original sample and collected survivorship data from the remaining 6%, demonstrating that tracking long-term outcomes is both feasible and worthwhile. The results suggest that one-off grants may have lasting impacts on some types of subsistence firms, challenging the view that sustained engagement is always required.
Item Type: | Journal Article | ||||
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Subjects: | H Social Sciences > HB Economic Theory | ||||
Divisions: | Faculty of Social Sciences > Economics | ||||
Journal or Publication Title: | Science | ||||
Publisher: | American Association for the Advancement of Science | ||||
ISSN: | 0036-8075 | ||||
Official Date: | 24 February 2012 | ||||
Dates: |
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Volume: | Vol.335 | ||||
Number: | No.6071 | ||||
Page Range: | pp. 962-966 | ||||
DOI: | 10.1126/science.1212973 | ||||
Status: | Peer Reviewed | ||||
Publication Status: | Published | ||||
Access rights to Published version: | Restricted or Subscription Access |
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