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

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  • Marcel Fafchamps
  • Eliana La Ferrara

Abstract

This article 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.

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File URL: http://www.jstor.org/stable/full/10.1086/665600
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Bibliographic Info

Article provided by University of Chicago Press in its journal Economic Development and Cultural Change.

Volume (Year): 60 (2012)
Issue (Month): 4 ()
Pages: 707 - 733

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Handle: RePEc:ucp:ecdecc:doi:10.1086/665600

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  1. La Ferrara, Eliana & Alesina, Alberto, 2000. "Participation in Heterogeneous Communities," Scholarly Articles 4551796, Harvard University Department of Economics.
  2. Stefan Dercon & Tessa Bold, 2004. "Group-based Funeral Insurance in Ethiopia and Tanzania," Economics Series Working Papers WPS/2004-27, University of Oxford, Department of Economics.
  3. Abigail Barr & Marleen Dekker & Marcel Fafchamps, 2008. "Risk Sharing Relations and Enforcement Mechanisms," CSAE Working Paper Series 2008-14, Centre for the Study of African Economies, University of Oxford.
  4. DeanS. Karlan, 2007. "Social connections and group banking," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 117(517), pages F52-F84, 02.
  5. Marcel Fafchamps & Flore Gubert, 2005. "The Formation of Risk Sharing Networks," Economics Series Working Papers GPRG-WPS-037, University of Oxford, Department of Economics.
  6. Stefan Dercon & Joachim de Weerdt, 2004. "Risk-Sharing Networks And Insurance Against Illness," Development and Comp Systems 0409019, EconWPA.
  7. Fafchamps, Marcel & Lund, Susan, 2003. "Risk-sharing networks in rural Philippines," Journal of Development Economics, Elsevier, Elsevier, vol. 71(2), pages 261-287, August.
  8. Siwan Anderson, 2000. "The Economics of Roscas and Intra-Household Resource Allocation," Econometric Society World Congress 2000 Contributed Papers, Econometric Society 1323, Econometric Society.
  9. Alberto Alesina & Eliana La Ferrara, . "Participation in Heterogeneous Communities," Working Papers 151, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  10. Topa, Giorgio, 1997. "Social Interactions, Local Spillovers and Unemployment," Working Papers, C.V. Starr Center for Applied Economics, New York University 97-17, C.V. Starr Center for Applied Economics, New York University.
  11. Dasgupta, Partha, 1995. "An Inquiry into Well-Being and Destitution," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780198288350, October.
  12. La Ferrara, Eliana, 2000. "Inequality And Group Participation: Theory And Evidence From Rural Tanzania," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2433, C.E.P.R. Discussion Papers.
  13. Conley, T. G., 1999. "GMM estimation with cross sectional dependence," Journal of Econometrics, Elsevier, Elsevier, vol. 92(1), pages 1-45, September.
  14. Arcand, Jean-Louis & Fafchamps, Marcel, 2012. "Matching in community-based organizations," Journal of Development Economics, Elsevier, Elsevier, vol. 98(2), pages 203-219.
  15. Miguel, Edward & Gugerty, Mary Kay, 2005. "Ethnic diversity, social sanctions, and public goods in Kenya," Journal of Public Economics, Elsevier, Elsevier, vol. 89(11-12), pages 2325-2368, December.
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