Labor Drops : Experimental Evidence on the Return to Additional Labor in Microenterprises

de Mel, Suresh ; McKenzie, David ; Woodruff, Christopher

World Bank, Washington, DC

关键词: microenterprises;    labor market;    field experiment;    wage subsidies;    labor market friction;   

DOI  :  10.1596/1813-9450-7924
RP-ID  :  WPS7924

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The majority of enterprises in manydeveloping countries have no paid workers. This paperreports on a field experiment conducted in Sri Lanka thatprovided wage subsidies to randomly chosen microenterprisesto test whether hiring additional labor would benefit suchfirms. In the presence of labor market frictions, ashort-term subsidy could have a lasting impact on firmemployment. Using 12 rounds of surveys to track dynamicsfour years after the end of the subsidy, the study findsthat firms increased employment during the subsidy period,but there was no lasting impact on employment,profitability, or sales. Two supplementary interventions andtreatment heterogeneity suggest the lack of impact is notdue to complementarities with capital or management skills,and detailed survey data help rule out a number oftheoretical mechanisms that could result in sub-optimallylow employment. The study concludes that the urban labormarket facing microenterprises does not have large frictionsthat would prevent own-account workers from becoming employers.