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Abstract

This paper 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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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8452.

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Date of creation: Jun 2011
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Handle: RePEc:cpr:ceprdp:8452

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Related research

Keywords: income pooling; self-help groups;

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Find related papers by JEL classification:

• O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
• O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

This paper has been announced in the following NEP Reports:

• NEP-AFR-2011-07-13 (Africa)
• NEP-ALL-2011-07-13 (All new papers)
• NEP-DEV-2011-07-13 (Development)
• NEP-MFD-2011-07-13 (Microfinance)
• NEP-SOC-2011-07-13 (Social Norms & Social Capital)

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