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Kinship ties and entrepreneurship in Western Africa

Author

Listed:
  • Michael Grimm
  • Flore Gubert

    (LEDa - Laboratoire d'Economie de Dauphine - IRD - Institut de Recherche pour le Développement - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique)

  • Ousman Koriko
  • Jann Lay
  • Christophe Jalil Nordman

Abstract

Small entrepreneurs in poor countries achieve relatively high marginal returns to capital but show only low re-investment rates. The literature is rather inconclusive about the possible causes. We explore whether ‘forced redistribution', i.e. abusive demands by the kin, affects the allocation of capital and labor to the household firm. We use an original data-set covering household firms in seven economic centers in Western Africa. We find some evidence that family and kinship ties within the city rather enhance labor effort and the use of capital. However, the stronger the ties to the village of origin the lower input use which is supporting the ‘forced redistribution' hypothesis. Given that such redistribution is partly the consequence of a lack of formal insurance mechanisms, these results suggest that the provision of health insurance and other insurance devices may have positive indirect effects on private sector development.

Suggested Citation

  • Michael Grimm & Flore Gubert & Ousman Koriko & Jann Lay & Christophe Jalil Nordman, 2013. "Kinship ties and entrepreneurship in Western Africa," Post-Print hal-01521952, HAL.
  • Handle: RePEc:hal:journl:hal-01521952
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01521952
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    Citations

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    Cited by:

    1. Nordman, Christophe J. & Pasquier-Doumer, Laure, 2015. "Transitions in a West African labour market: The role of family networks," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 54(C), pages 74-85.
    2. Christophe Nordman & Laure Pasquier-Doumer, 2013. "Transitions in a West African Labour Market: The Role of Social Networks," Working Papers DT/2013/12, DIAL (Développement, Institutions et Mondialisation).
    3. Nguyen Thi Thu Phuong & Laure Pasquier-Doumer, 2018. "The role of Social Networks on Household Business Performance in Vietnam: A qualitative assessment," Working Papers DT/2018/13, DIAL (Développement, Institutions et Mondialisation).
    4. Jean-Philippe Berrou & François Combarnous, 2018. "Beyond Solidarity and Accumulation Networks in Urban Informal African Economies," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 30(4), pages 652-675, September.

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