81201 enGender Impact: The World Bank’s Gender Impact Evaluation Database Are Women More Credit Constrained? Experimental Evidence on Gender and Microenterprise Returns Author(s) Suresh De Mel, David McKenzie, and Christopher Woodruff Contact dmckenzie@worldbank.org Country Sri Lanka Organizing Economic Opportunities and Access to Assets Theme Status Completed Intervention Cash Transfer Category Sector Finance and Private Sector Development 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 Abstract 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. Gender Gender Informed Analysis Connection Gender Women's labor force participation, productivity, access to credit Outcomes IE Design Randomized Control Trial Firms from the survey were randomly selected to receive an influx of capital. There were four possible grants, one of approximately $100 equipment, $200 equipment, $100 cash or $200 in cash. The $100 treatment is equivalent to Intervention approximately 3 months profit or 55% of the median invested capital. Cash treatments were given without restriction. For the in-kind treatments, research assistants accompanied the owner to the market to purchase business items. Enterprises could supplement the in-kind funds with their own money. Intervention The investments were provided once during the time period 2005-2007 Period To identify microenterprises, a door-to-door screening survey was conducted in 3 districts in South and Southwest Sri Lanka. The survey went door-to-door and collected information on 3361 households. Through the survey, 408 individuals were identified that were self-employed workers outside of agriculture, transportation, fishing and professional services, Sample between the age of 20-65, and had no paid employees. 203 firms were in retail sector while 205 firms were in population manufacturing and services. There were 2 additional follow up surveys in June 2010 (348 of 387 firms), and December 2010 (356 out of 387 firms). The sample was not stratified by gender but the sample size is large enough to separate out the analysis by gender. Comparison The comparison group also participated in the survey, but did not receive the cash transfer conditions Unit of Firm level analysis Evaluation Participants were interviewed quarterly for the first 2 years and semi-annually for a third year Period Last updated: 14 August 2013 1 enGender Impact: The World Bank’s Gender Impact Evaluation Database This paper investigates the gender differences in positive capital shocks to microenterprises extending DeMel, McKenzie and Woodruff (2008). Treated males work an additional 1.8 hours a week while females work an additional .3 hours. For both treatments, males experience a large positive increase in profits (i.e. 8% per month for smaller treatment) while females do not experience any increase in profit. For the smaller treatment, males invested 138% of the capital shock Results while females invested approximately nothing. For the larger capital shock, males invested 60% while females invested 85% of the treatment. Women do not divert their capital to household or family consumption. Additionally, entrepreneurial ability do not explain low returns to investment for females. The authors posit that low returns to investment for females may be the result of inefficient intra-household bargaining and spouse transfer. There is some weak evidence that measures of female empowerment are positively correlated with female profits. Primary study limitations Funding Gender Action Plan, NSF Grant SES-0523167, and SES-0617424 Source De Mel, S., McKenzie, D., & Woodruff, C. (2009). Are women more credit constrained? Experimental evidence on Reference(s) gender and microenterprise returns. American Economic Journal: Applied Economics, 1-32. Link to http://www.jstor.org/discover/10.2307/25760169?uid=41914&uid=16804272&uid=3739584&uid=2&uid= Studies 41908&uid=3&uid=67&uid=62&uid=3739256&uid=16744216&uid=5912280&sid=21102524532971 Microdata http://microdata.worldbank.org/index.php/catalog/1243http://microdata.worldbank.org/index.php/catalog/1243 Last updated: 14 August 2013 2