Rational Entrepreneurial Experimentation and Practice Reversion
RCTClinical Trial
Evidence across developing economies suggests that financial cash grants yield lower or zero profit returns for female microentrepreneurs compared to male microentrepreneurs, potentially due to household cash diversion or sector-specific constraints.
Picture this
Imagine two small business owners—one man and one woman—receiving equal cash grants. The male owner reinvests the cash directly into his business inventory. The female owner faces pressure from family members to spend part of the cash on household emergencies or child health needs, or operates in a lower-margin sub-market. As a result, cash grants often generate lower business profit increases for female-owned firms than for male-owned firms.
What the evidence says
Male tailors in the capital-only group experienced a further negative point estimate on income (-67.51 cedis, p < 0.10) relative to female tailors (-20.12 cedis), aligning with broader literature finding significant gender-based differences in microenterprise returns to capital.
- Who was studied
- 160 microenterprise tailors (57% female, 43% male) in urban Accra, Ghana.
- How
- Pooled OLS regression disaggregated by gender interactions across capital and consulting treatment arms over six follow-up survey rounds.
What to do
Design gender-sensitive capital interventions that protect grant funds from household demand leakage and address female-specific operational constraints.
From the source
"Several similar studies find considerable heterogeneity. For example, three studies find lower (often indistinguishable from zero) returns for women from enterprise grants, and positive returns for men..."
Consulting and Capital Experiments with Microenterprise Tailors in Ghana