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Are Women More Credit Constrained? Experimental Evidence on Gender and Microenterprise Returns

  • Suresh de Mel
  • David McKenzie
  • Christopher Woodruff

We report on a field experiment providing random grants to microenterprise owners. The grants generated large profit increases for male owners but not for female owners. We show that the gender gap does not simply mask differences in ability, risk aversion, entrepreneurial attitudes, or differences in reporting behavior, but there is some evidence that the gender gap is larger in female-dominated industries. The data are not consistent with a unitary household model, and imply an inefficiency of resource allocation within households. We show evidence that this inefficiency is reduced in more cooperative households. (JEL D13, D14, J16, L25, L26, O12, O16)

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Article provided by American Economic Association in its journal American Economic Journal: Applied Economics.

Volume (Year): 1 (2009)
Issue (Month): 3 (July)
Pages: 1-32

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Handle: RePEc:aea:aejapp:v:1:y:2009:i:3:p:1-32
Note: DOI: 10.1257/app.1.3.1
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  1. repec:oup:qjecon:v:123:y:2008:i:4:p:1329-1372 is not listed on IDEAS
  2. Esther Duflo, 2003. "Grandmothers and Granddaughters: Old-Age Pensions and Intrahousehold Allocation in South Africa," World Bank Economic Review, World Bank Group, vol. 17(1), pages 1-25, June.
  3. Mead, Donald C. & Liedholm, Carl, 1998. "The dynamics of micro and small enterprises in developing countries," World Development, Elsevier, vol. 26(1), pages 61-74, January.
  4. Simeon Djankov & Edward Miguel & Yingyi Qian & Gerard Roland & Ekaterina Zhuravskaya, 2005. "Who are Russia’s entrepreneurs?," Working Papers w0048, Center for Economic and Financial Research (CEFIR).
  5. Kevane, Michael & Wydick, Bruce, 2001. "Microenterprise Lending to Female Entrepreneurs: Sacrificing Economic Growth for Poverty Alleviation?," World Development, Elsevier, vol. 29(7), pages 1225-1236, July.
  6. Fajnzylber, Pablo & Maloney, William F. & Montes-Rojas, Gabriel V., 2009. "Does Formality Improve Micro-Firm Performance? Quasi-Experimental Evidence from the Brazilian SIMPLES Program," IZA Discussion Papers 4531, Institute for the Study of Labor (IZA).
  7. Markus Goldstein & Christopher Udry, 2008. "The Profits of Power: Land Rights and Agricultural Investment in Ghana," Journal of Political Economy, University of Chicago Press, vol. 116(6), pages 981-1022, December.
  8. Christopher R. Udry & Esther Duflo, 2004. "Intrahousehold Resource Allocation in Cote D'Ivoire: Social Norms, Separate Accounts and Consumption Choices," Yale School of Management Working Papers ysm407, Yale School of Management.
  9. David McKenzie & Christopher Woodruff, 2008. "Experimental Evidence on Returns to Capital and Access to Finance in Mexico," World Bank Economic Review, World Bank Group, vol. 22(3), pages 457-482, November.
  10. Shahidur R. Khandker, 1998. "Using Microcredit to Advance Women," World Bank Other Operational Studies 11523, The World Bank.
  11. Jonathan Morduch, 1999. "The Microfinance Promise," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1569-1614, December.
  12. Akresh, Richard, 2005. "Understanding Pareto Inefficient Intrahousehold Allocations," IZA Discussion Papers 1858, Institute for the Study of Labor (IZA).
  13. Annamaria Lusardi & Olivia S. Mitchell, 2005. "Financial Literacy and Planning: Implications for Retirement Wellbeing," CeRP Working Papers 46, Center for Research on Pensions and Welfare Policies, Turin (Italy).
  14. McPherson, Michael A., 1996. "Growth of micro and small enterprises in southern Africa," Journal of Development Economics, Elsevier, vol. 48(2), pages 253-277, March.
  15. McKenzie, David J & Woodruff, Christopher, 2006. "Do Entry Costs Provide an Empirical Basis for Poverty Traps? Evidence from Mexican Microenterprises," Economic Development and Cultural Change, University of Chicago Press, vol. 55(1), pages 3-42, October.
  16. Udry, Christopher, 1996. "Gender, Agricultural Production, and the Theory of the Household," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 1010-46, October.
  17. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2007. "Measuring microenterprise profits : don't ask how the sausage is made," Policy Research Working Paper Series 4229, The World Bank.
  18. de Mel, Suresh & McKenzie, David J. & Woodruff, Christopher, 2009. "Measuring microenterprise profits: Must we ask how the sausage is made?," Journal of Development Economics, Elsevier, vol. 88(1), pages 19-31, January.
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