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Do Micro-Entrepreneurship Programs Increase Wage-Work? Evidence from Chile

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  • Claudia Martinez A.
  • Esteban Puentes
  • Jaime Ruiz-Tagle

Abstract

Using a randomized controlled trial of a large-scale, publicly run micro-entrepreneurship program in Chile, we assess the effectiveness of business training and asset transfers to the poor. Using survey and monthly administrative data we study the effects of the program over a period of 46 months. We find that the program significantly increases employment by 15.3 and 6.8 percentages points 9 and 33 months after implementation, respectively. There is also a significant increase in labor income. The employment increase in the short run is through self-employment, while in the long run wage work also increases. In the long run, total labor increases mostly due to an increase in wage income. This is consistent with the hypothesis that skills taught during the training lessons are also useful for wage work. We also find that the quality of the intervention matter, especially in the long run. Finally, comparing two levels of asset transfers, different employment paths emerge: those who receive a low level of transfers mostly end up with salaried work whereas those who receive a high level of transfers tend to be self-employed.

Suggested Citation

  • Claudia Martinez A. & Esteban Puentes & Jaime Ruiz-Tagle, 2015. "Do Micro-Entrepreneurship Programs Increase Wage-Work? Evidence from Chile," Working Papers wp407, University of Chile, Department of Economics.
    • Handle: RePEc:udc:wpaper:wp407
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    References listed on IDEAS

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    1. Robert W. Fairlie & Dean Karlan & Jonathan Zinman, 2015. "Behind the GATE Experiment: Evidence on Effects of and Rationales for Subsidized Entrepreneurship Training," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 125-161, May.
    2. Valdivia, Martín, 2015. "Business training plus for female entrepreneurship? Short and medium-term experimental evidence from Peru," Journal of Development Economics, Elsevier, vol. 113(C), pages 33-51.
    3. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2014. "Business training and female enterprise start-up, growth, and dynamics: Experimental evidence from Sri Lanka," Journal of Development Economics, Elsevier, vol. 106(C), pages 199-210.
    4. Alejandro Drexler & Greg Fischer & Antoinette Schoar, 2014. "Keeping It Simple: Financial Literacy and Rules of Thumb," American Economic Journal: Applied Economics, American Economic Association, vol. 6(2), pages 1-31, April.
    5. David McKenzie & Christopher Woodruff, 2014. "What Are We Learning from Business Training and Entrepreneurship Evaluations around the Developing World?," The World Bank Research Observer, World Bank, vol. 29(1), pages 48-82.
    6. David S. Lee, 2009. "Training, Wages, and Sample Selection: Estimating Sharp Bounds on Treatment Effects," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 76(3), pages 1071-1102.
    7. Claudia Martínez A. & Esteban Puentes & Jaime Ruiz-Tagle, 2013. "Micro-Entrepreneurship Training and Asset Transfers: Short Term Impacts on the Poor," Working Papers wp380, University of Chile, Department of Economics.
    8. Abhijit Banerjee & Dean Karlan & Jonathan Zinman, 2015. "Six Randomized Evaluations of Microcredit: Introduction and Further Steps," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 1-21, January.
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    Cited by:

    1. Claudia Martínez A. & Esteban Puentes, 2018. "Micro-entrepreneurship Debt Level and Access to Credit: Short-Term Impacts of a Financial Literacy Program," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 30(4), pages 613-629, September.
    2. Pignatti Clemente & Van Belle Eva, 2021. "Better together: Active and passive labor market policies in developed and developing economies," IZA Journal of Development and Migration, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 12(1), pages 1-27, January.

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    More about this item

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training

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