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Who benefits from promoting small and medium scale enterprises ? some empirical evidence from Ethiopia

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Author Info

  • Rijkers, Bob
  • Laderchi, Caterina Ruggeri
  • Teal, Francis

Abstract

The Addis Ababa Integrated Housing Development Program aims to tackle the housing shortage and unemployment that prevail in Addis Ababa by deploying and supporting small and medium scale enterprises to construct low-cost housing using technologies novel for Ethiopia. The motivation for such support is predicated on the view that small firms create more jobs per unit of investment by virtue of being more labor intensive and that the jobs so created are concentrated among the low-skilled and hence the poor. To assess whether the program has succeeded in biasing technology adoption in favor of labor and thereby contributed to poverty reduction, the impact of the program on technology usage, labor intensity, and earnings is investigated using a unique matched workers-firms dataset, the Addis Ababa Construction Enterprise Survey. The data are representative of all registered construction firms in Addis and were collected specifically for the purpose of analyzing the impact of the program. The authors find that program firms do not adopt different technologies and are not more labor intensive than non-program firms. There is an earnings premium for program participants, who tend to be relatively well-educated, which is heterogeneous and highest for those at the bottom of the earnings distribution.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4629.

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Date of creation: 01 May 2008
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Handle: RePEc:wbk:wbrwps:4629

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Keywords: Labor Markets; Access to Finance; Economic Theory&Research; Microfinance; Labor Policies;

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References

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  1. Arne Bigsten & Mulu Gebreeyesus, 2007. "The Small, the Young, and the Productive: Determinants of Manufacturing Firm Growth in Ethiopia," Economic Development and Cultural Change, University of Chicago Press, vol. 55, pages 813-840.
  2. Fretwell, David H. & Benus, Jacob & O'Leary, Christopher J., 1999. "Evaluating the impact of active labor programs : results of cross country studies in Europe and Central Asia," Social Protection Discussion Papers 20131, The World Bank.
  3. Lee, Lung-Fei, 1983. "Generalized Econometric Models with Selectivity," Econometrica, Econometric Society, vol. 51(2), pages 507-12, March.
  4. Blundell, Richard & Costa Dias, Monica, 2008. "Alternative Approaches to Evaluation in Empirical Microeconomics," IZA Discussion Papers 3800, Institute for the Study of Labor (IZA).
  5. M�ns Söderbom & Francis Teal & Anthony Wambugu & Godius Kahyarara, 2006. "The Dynamics of Returns to Education in Kenyan and Tanzanian Manufacturing," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(3), pages 261-288, 06.
  6. François Bourguignon & Martin Fournier & Marc Gurgand, 2002. "Selection Bias Correction Based on the Multinomial Logit Model," Working Papers 2002-04, Centre de Recherche en Economie et Statistique.
  7. Ackerberg, Daniel & Caves, Kevin & Frazer, Garth, 2006. "Structural identification of production functions," MPRA Paper 38349, University Library of Munich, Germany.
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Cited by:
  1. Wim Naudé, 2011. "Foreign Aid for Innovation: The Missing Ingredient in Private Sector Development?," Working Papers 2011/35, Maastricht School of Management.

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