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Does entrepreneurship increase the chance of the poor?

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  • Rodriguez Torres, Omar

    (UNU-MERIT)

Abstract

This paper investigates how entrepreneurship affects the likelihood of households graduating out of poverty. It analyses the effect of entrepreneurship in the outcomes of the households enrolled in the Colombian poverty reduction programme. A contribution to the Capability Approach is proposed with the inclusion of entrepreneurship as a 'functioning' linked to overcoming poverty. Entrepreneurship presents a great potential given its multidimensional nature. In its more basic conception, it is connected to income-generation, and in its more complex conception, it is related to the concept of agency. Using the Colombian UNIDOS programme (which is a programme focused on helping poor graduating out of poverty) as a case study, we employ a Probit Regression model with sample selection to model this mechanism. The results present a positive, statistically significant impact of entrepreneurial households in their probability of graduating out of poverty. The results confirmed that entrepreneurial households show a higher likelihood of escaping from poverty.

Suggested Citation

  • Rodriguez Torres, Omar, 2021. "Does entrepreneurship increase the chance of the poor?," MERIT Working Papers 2021-018, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:unumer:2021018
    as

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    File URL: https://www.merit.unu.edu/publications/wppdf/2021/wp2021-018.pdf
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    References listed on IDEAS

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    3. Roberto Angulo & Yadira Díaz & Renata Pardo, 2016. "The Colombian Multidimensional Poverty Index: Measuring Poverty in a Public Policy Context," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(1), pages 1-38, May.
    4. Juan M. Villa & Miguel Niño-Zarazúa, 2014. "Poverty Dynamics and Programme Graduation from Social Protection: A Transitional Model for Mexico's Oportunidades Programme," WIDER Working Paper Series wp-2014-109, World Institute for Development Economic Research (UNU-WIDER).
    5. Caterina Ruggeri Laderchi, 1997. "Poverty and its many dimensions: The role of income as an indicator," Oxford Development Studies, Taylor & Francis Journals, vol. 25(3), pages 345-360.
    6. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
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    More about this item

    Keywords

    Capability approach; poverty reduction; entrepreneurship; public policy; enterprise policy;
    All these keywords.

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy

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