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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 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 …nd 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 IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University in its series Working Papers with number 401.

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Date of creation: 2011
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Handle: RePEc:igi:igierp:401

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  1. Marcel Fafchamps & Susan Lund, . "Risk Sharing Networks in Rural Philippines," Working Papers, Stanford University, Department of Economics 97014, Stanford University, Department of Economics.
  2. La Ferrara, Eliana & Alesina, Alberto, 2000. "Participation in Heterogeneous Communities," Scholarly Articles 4551796, Harvard University Department of Economics.
  3. Fafchamps, Marcel & Gubert, Flore, 2007. "The formation of risk sharing networks," Journal of Development Economics, Elsevier, vol. 83(2), pages 326-350, July.
  4. De Weerdt, Joachim & Dercon, Stefan, 2006. "Risk-sharing networks and insurance against illness," Journal of Development Economics, Elsevier, vol. 81(2), pages 337-356, December.
  5. Eliana La Ferrara, 2000. "Inequality and Group Participation: Theory and Evidence from Rural Tanzania," Development Working Papers 138, Centro Studi Luca d\'Agliano, University of Milano.
  6. Arcand, Jean-Louis & Fafchamps, Marcel, 2012. "Matching in community-based organizations," Journal of Development Economics, Elsevier, vol. 98(2), pages 203-219.
  7. Alberto Alesina & Eliana La Ferrara, 1999. "Participation in Heterogeneous Communities," NBER Working Papers 7155, National Bureau of Economic Research, Inc.
  8. 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.
  9. Stefan Dercon & Tessa Bold & Joachim De Weerdt & Alula Pankhurst, 2004. "Group-based Funeral Insurance in Ethiopia and Tanzania," CSAE Working Paper Series 2004-27, Centre for the Study of African Economies, University of Oxford.
  10. DeanS. Karlan, 2007. "Social connections and group banking," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 117(517), pages F52-F84, 02.
  11. Dasgupta, Partha, 1995. "An Inquiry into Well-Being and Destitution," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780198288350, October.
  12. Abigail Barr & Marleen Dekker, 2008. "Risk Sharing Relations and Enforcement Mechanisms," Economics Series Working Papers WPS/2008-14, University of Oxford, Department of Economics.
  13. Conley, T. G., 1999. "GMM estimation with cross sectional dependence," Journal of Econometrics, Elsevier, Elsevier, vol. 92(1), pages 1-45, September.
  14. Siwan Anderson & Jean-Marie Baland, 2002. "The Economics Of Roscas And Intrahousehold Resource Allocation," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 117(3), pages 963-995, August.
  15. Miguel, Edward & Gugerty, Mary Kay, 2005. "Ethnic diversity, social sanctions, and public goods in Kenya," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2325-2368, December.
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