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Returns to Capital in Microenterprises: Evidence from a Field Experiment

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Listed:
  • Suresh de Mel
  • David McKenzie
  • Christopher Woodruff

Abstract

Suresh de Mel, David McKenzie, and Christopher Woodruff's article in the November 2008 issue of this Journal (volume 123, number 4, pages 1329–1372) contains an error. In the abstract, the average real return to capital is 4.6–5.3 percent per month (55–63 percent per year). The corrected abstract is below.AbstractWe use randomized grants to generate shocks to capital stock for a set of Sri Lankan microenterprises. We find the average real return to capital in these enterprises is 4.6%–5.3% per month (55%–63% per year), substantially higher than market interest rates. We then examine the heterogeneity of treatment effects. Returns are found to vary with entrepreneurial ability and with household wealth, but not to vary with measures of risk aversion or uncertainty. Treatment impacts are also significantly larger for enterprises owned by males; indeed, we find no positive return in enterprises owned by females.

Suggested Citation

  • Suresh de Mel & David McKenzie & Christopher Woodruff, 2009. "Returns to Capital in Microenterprises: Evidence from a Field Experiment," The Quarterly Journal of Economics, Oxford University Press, vol. 124(1), pages 423-423.
  • Handle: RePEc:oup:qjecon:v:124:y:2009:i:1:p:423-423.
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    File URL: http://hdl.handle.net/10.1162/qjec.2009.124.1.423
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    More about this item

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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