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Self-Help Groups and Mutual Assistance: Evidence from Urban Kenya

  • Fafchamps, Marcel
  • La Ferrara, Eliana

This paper examines the incomes of individuals who have joined self-help groups in poor neighborhoods of Nairobi. Self-help groups are often advocated as a way of facilitating income pooling. We find that incomes are indeed more correlated among individuals in the same group than among individuals who belong to different groups. Using an original methodology, we test whether this correlation is due to self-selection of similar individuals into the same groups. We find that this correlation is not driven by positive assortative matching. If anything, selection works in the opposite direction: incomes from group activities would be more correlated if individuals were matched at random. These findings are consistent with the idea that self-help groups play a mutual assistance role.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8452.

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Date of creation: Jun 2011
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Handle: RePEc:cpr:ceprdp:8452
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  1. Conley, T. G., 1999. "GMM estimation with cross sectional dependence," Journal of Econometrics, Elsevier, vol. 92(1), pages 1-45, September.
  2. Stefan Dercon & Joachim De Weerdt, 2002. "Risk-sharing Networks and Insurance against illness," Economics Series Working Papers WPS/2002-16, University of Oxford, Department of Economics.
  3. Alberto Alesina & Eliana La Ferrara, . "Participation in Heterogeneous Communities," Working Papers 151, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  4. Siwan Anderson, 2000. "The Economics of Roscas and Intra-Household Resource Allocation," Econometric Society World Congress 2000 Contributed Papers 1323, Econometric Society.
  5. Fafchamps, Marcel & Gubert, Flore, 2007. "The formation of risk sharing networks," Journal of Development Economics, Elsevier, vol. 83(2), pages 326-350, July.
  6. Karlan, Dean S., 2007. "Social Connections and Group Banking," CEPR Discussion Papers 6194, C.E.P.R. Discussion Papers.
  7. La Ferrara, Eliana & Alesina, Alberto, 2000. "Participation in Heterogeneous Communities," Scholarly Articles 4551796, Harvard University Department of Economics.
  8. La Ferrara, Eliana, 2002. "Inequality and group participation: theory and evidence from rural Tanzania," Journal of Public Economics, Elsevier, vol. 85(2), pages 235-273, August.
  9. Abigail Barr & Marleen Dekker, 2008. "Risk Sharing Relations and Enforcement Mechanisms," Economics Series Working Papers WPS/2008-14, University of Oxford, Department of Economics.
  10. Topa, Giorgio, 2001. "Social Interactions, Local Spillovers and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 68(2), pages 261-95, April.
  11. Stefan Dercon & Tessa Bold, 2004. "Group-based Funeral Insurance in Ethiopia and Tanzania," Economics Series Working Papers WPS/2004-27, University of Oxford, Department of Economics.
  12. Marcel Fafchamps & Susan Lund, 2000. "Risk-Sharing Networks in Rural Philippines," Economics Series Working Papers 10, University of Oxford, Department of Economics.
  13. Arcand, Jean-Louis & Fafchamps, Marcel, 2012. "Matching in community-based organizations," Journal of Development Economics, Elsevier, vol. 98(2), pages 203-219.
  14. Anderson, K.S. & Baland, J-M., 2000. "The Economics of Roscas and Intra-Household Resource Allocation," Discussion Paper 2000-83, Tilburg University, Center for Economic Research.
  15. Miguel, Edward & Gugerty, Mary Kay, 2005. "Ethnic diversity, social sanctions, and public goods in Kenya," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2325-2368, December.
  16. Dasgupta, Partha, 1995. "An Inquiry into Well-Being and Destitution," OUP Catalogue, Oxford University Press, number 9780198288350, March.
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