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Estimating the Demand for Business Training : Evidence from Jamaica

Author

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  • Maffioli,Alessandro
  • Mckenzie,David J.
  • Ubfal,Diego Javier

Abstract

Business training programs are typically offered for free. Charging for training providespotential benefits including financial sustainability, but little is known about how price affects the demand fortraining. This study conducted two experiments in Jamaica using the Becker-DeGroot-Marschak mechanism andtake-it-or-leave-it offers to estimate the demand for training. Most entrepreneurs have a positive willingness topay for training, but demand falls sharply as price increases: in the Becker-DeGroot-Marschak experiment, 76percent of the entrepreneurs attend training when it is free, but only 43 percent attend when they are chargedone-quarter of the cost, and only 11 percent when charged the full cost. Providing a credit option did not increasewillingness to pay. Higher prices screen out poorer, older, and more risk-averse business owners, and those who expectto benefit less from training and have a low value of sales. However, charging a higher price increases attendance amongthose who pay, suggesting a psychological effect where paying for training makes firms value it more.

Suggested Citation

  • Maffioli,Alessandro & Mckenzie,David J. & Ubfal,Diego Javier, 2020. "Estimating the Demand for Business Training : Evidence from Jamaica," Policy Research Working Paper Series 9415, The World Bank.
    • Handle: RePEc:wbk:wbrwps:9415
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    3. Burchardi, Konrad B. & de Quidt, Jonathan & Gulesci, Selim & Lerva, Benedetta & Tripodi, Stefano, 2021. "Testing willingness to pay elicitation mechanisms in the field: Evidence from Uganda," Journal of Development Economics, Elsevier, vol. 152(C).
    4. Aramburu,Julian & Goicoechea,Ana & Mobarak,Ahmed Mushfiq, 2021. "Coding Bootcamps for Female Digital Employment : Evidence from an RCT in Argentina and Colombia," Policy Research Working Paper Series 9721, The World Bank.

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