Poor entrepreneurs must frequently choose between business investment and children's education. To examine this trade-off, we exploit experimental variation in short-run microenterprise growth among a sample of Indian households and track schooling and business out-comes over eleven years. Treated households, who experience higher initial microenterprise growth, are on average one-third more likely to send children to college. However, educational investment and schooling gains are concentrated among literate-parent households, whose enterprises eventually stagnate. In contrast, illiterate-parent households experience long-run business gains but declines in children's education. Our findings suggest that microenterprise growth has the potential to reduce relative intergenerational educational mobility.
Multiple field experiments report positive financial returns to capital shocks for male and not female microentrepreneurs. But these analyses overlook the fact that female entrepreneurs often reside with male entrepreneurs. Using data from experiments in India, Sri Lanka, and Ghana, we show that the observed gender gap in microenterprise responses does not reflect lower returns on investment, when measured at the household level. Instead, the absence of a profit response among female-run enterprises reflects the fact that women's capital is typically invested into their husband's enterprise. We cannot reject equivalence of household-level income gains for male and female capital shock recipients.
Multiple field experiments report positive financial returns to capital shocks for male and not female microentrepreneurs. But these analyses overlook the fact that female entrepreneurs often reside with male entrepreneurs. Using data from experiments in India, Sri Lanka, and Ghana, we show that the observed gender gap in microenterprise responses does not reflect lower returns on investment, when measured at the household level. Instead, the absence of a profit response among female-run enterprises reflects the fact that women's capital is typically invested into their husband's enterprise. We cannot reject equivalence of household-level income gains for male and female capital shock recipients.