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Experimental tests of microcredit programs have consistently failed to find effects on business and household income. Does the current microfinance model and targeting of clients miss important effects from finance? I present results of a randomized experiment with microenterprise owners in Uganda that sought to expand access to finance for men and women who generally did not qualify for finance under normal circumstances with the goal of inceasing business profits and employment. Participants were offered either capital with repayment (subsidized loans) or without (grants) and were randomly chosen to receive or not receive business skills training in conjunction with the capital. Consistent with existing literature, I find no effect for female enterprises from either form of capital or the training. However, I find large effects for men with access to loans combined with training. There is no effect for men or women from the grants, suggesting repayment requirements can increase the l...
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Working Paper
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December 01, 2015
English
For policy purposes, it is important to understand the relative efficacy of various methods to target the poor. Recently, participatory methods have received particular attention. We examine the effectiveness of a hybrid two-step process that combines a participatory wealth ranking and a verification household survey, relative to two proxy means tests (the Progress out of Poverty Index and a housing index), in Honduras and Peru. The methods we examine perform similarly by various metrics. They all identify most accurately the poorest and the wealthiest households but perform with mixed results among households in the middle of the distribution. Ultimately, given similar performance, the analysis suggests that costs should be the driving consideration in choosing across methods.
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Published Paper
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December 01, 2015
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Journals, research funders and research groups such as Innovations for Poverty Action are increasingly recognizing the value of research transparency. Research transparency includes pre-registering studies and sharing materials such as data and code to allow others to re-analyze the reported results. Proper data and code management during a project are essential for transparency after a project’s completion. They are also important for internal use, as projects often run for multiple years, with several staff members working on them sequentially. This guide outlines best practices in data and code management. The scope of the guide is to cover the principles of organizing and documenting materials at all steps of the project lifecycle with the goal of making research reproducible. The guide does not cover best practices in designing surveys, cleaning data or conducting data analysis. In each section, we explain the “what,” “why” and “how” of each recommended practice.
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Research Resource
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November 30, 2015
Spanish
Las PyMEs son las mayores creadoras de empleo a nivel mundial, proporcionando—en promedio—más del 66 por ciento de todos los trabajos. Además, se cree que las PyMEs impulsan la innovación, la movilidad social, y la productividad. Sin embargo, las empresas en los países en desarrollo crecen menos que aquellas en países desarrollados debido a los obstáculos que las primeras enfrentan. Entre estos obstáculos se encuentran el escaso acceso al financiamiento, bajos niveles de capital humano y el limitado acceso a mercados. Estas restricciones limitan la contribución del sector a la creación de empleos y al desarrollo económico, lo que ha llevado a gobiernos, organizaciones sin fines de lucro y organismos internacionales a destinar miles de millones de dólares cada año en programas orientados a superar estas barreras. Desafortunadamente, aún existe poca evidencia sobre la capacidad de estos programas para destapar el potencial de crecimiento de las PyMEs. Read this brief in English here. 
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Brief
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November 27, 2015
English
To explain persistent gender gaps in market outcomes, a lab experimental literature explores whether women and men have innate differences in ability (or attitudes or preferences), and a separate field-based literature studies discrimination against women in market settings. We posit that even if women have innate ability that is comparable to that of men, their relative performance may suffer in the market if the task requires them to interact with others in society, and they are subject to discrimination in those interactions. We test these ideas using a large-scale field experiment in 142 Malawian villages where men or women were randomly assigned the task of learning about a new agricultural technology, and then communicating it to others to convince them to adopt. Even though female communicators learn and retain the new information better, and those taught by women experience higher farm yields, the women are not as successful at teaching or convincing others to adopt. Micro-data...
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Working Paper
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November 18, 2015
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Financial access is critical for the growth of small and medium-size enterprises (SMEs). It allows entrepreneurs to innovate, improve efficiency, expand to new markets, and provide millions of jobs. Yet, in developing countries, the majority of SMEs are unable to acquire the financing they need to reach their potential. Financing SMEs in the developing world can be risky and expensive for lenders, leading to an estimated financing gap of one trillion USD (International Finance Corporation, 2011). To reduce the credit gap, financial institutions, governments, and donors invest in lending products and policies designed to provide SMEs with the financing they need to grow and innovate. However, the extent to which such programs effectively reduce the barriers to SME financing has generally not been rigorously measured. The SME Program at Innovations for Poverty Action (IPA) rigorously evaluates potential solutions and promotes the most efficient and cost-effective ways to expand access to...
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Brief
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November 17, 2015
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Significant income gains from migrating from poorer to richer countries have motivated unilateral (source-country) policies facilitating labor emigration. However, their effectiveness is unknown. We conducted a large-scale randomized experiment in the Philippines testing the impact of unilaterally facilitating international labor migration. Our most intensive treatment doubled the rate of job offers but had no identifiable effect on international labor migration. Even the highest overseas job-search rate we induced (22%) falls far short of the share initially expressing interest in migrating (34%). We conclude that unilateral migration facilitation will at most induce a trickle, not a flood, of additional emigration.
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Published Paper
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November 10, 2015
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In recent years, the influx of available consumer data has presented corporate firms, non-profit organizations, and governments alike with an opportunity to increase the efficacy and targeting of their products and services. The key to identifying what works is to build experimentation through randomized controlled trials (RCTs) into the process of designing new products and services. Running RCTs, however, is not always straightforward: there are a multitude of technical, analytical, and logistical hurdles that arise during the course of designing and implementing an RCT.  To this end, the US Finance Initiative at Innovations for Poverty Action has compiled best practices gleaned from years of experience running RCTs in the finance sector into a toolkit. The toolkit assumes a certain amount of technical knowledge and is intended for researchers, but details the often-neglected “softer” skills of managing an RCT, including the logistics of implementation and the interaction between the...
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November 10, 2015
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Almost all firms in developing countries have fewer than 10 workers, with a modal size of one. Are there potential high-growth entrepreneurs, and can public policy help identify them and facilitate their growth? A large-scale national business plan competition in Nigeria provides evidence on these questions. Random assignment of US$36 million in grants provided each winner with approximately US$50,000. Surveys tracking applicants over three years show that winning leads to greater firm entry, more survival, higher profits and sales, and higher employment, including increases of over 20 percentage points in the likelihood of a firm having 10 or more workers.
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Working Paper
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October 28, 2015
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IPA’s Messaging Replication Project builds on prior evidence that low-cost messages can improve financial behavior through increased savings deposits or on-time loan payments. The project works with banks and communication providers in multiple sites to rigorously evaluate the impact of client messaging that uses behavioral insights as content cues. This brief highlights the project's mission and goals.
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Brief
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October 15, 2015
English
IPA is all about leverage. 2014 was focused on bringing in more talented people and more extraordinary partners to leverage existing resources for more impact on the world. Together with our partners, IPA has designed and evaluated more than 275 potential solutions to poverty problems, and has over 245 studies in progress. This performance is a testament to the dedication of IPA staff, both on the ground in the field and in our headquarters, our implementing partners and researchers, the decision-makers who help put our findings to work, and our funders.  Browse an online version of the report here: annualreport.poverty-action.org/2014annualreport/  
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Annual Report
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October 01, 2015
English
This paper measures the economic impacts of social pressures to share income with kin and neighbors in rural Kenyan villages. We conduct a lab experiment in which we randomly vary the observability of investment returns to test whether subjects reduce their income in order to keep it hidden. We find that women adopt an investment strategy that conceals the size of their initial endowment in the experiment, though that strategy reduces their expected earnings. This effect is largest among women with relatives attending the experiment. Parameter estimates suggest that women anticipate that observable income will be “taxed” at a rate above four percent; this effective tax rate nearly doubles when kin can observe income directly. At the village level, we find an association between willingness to forgo expected return to keep income hidden in the laboratory experiment and worse economic outcomes outside the laboratory.
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Published Paper
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September 17, 2015
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A multifaceted livelihood program that provided ultra-poor households with a productive asset, training, regular coaching, access to savings, and consumption support led to large and lasting impacts on their standard of living across a diverse set of contexts and implementing partners.
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Brief
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September 08, 2015
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Scholars have long speculated about education’s political impacts, variously arguing that it promotes modern or pro-democratic attitudes; that it instills acceptance of existing authority; and that it empowers the disadvantaged to challenge authority. This paper studies the political and social impacts of increased education. To address the potential threat of bias from selection into human capital investment, we utilize a randomized girls’ merit scholarship incentive program in Kenya that raised test scores and secondary schooling. We find little evidence for modernization theory. Consistent with the empowerment view, young women in program schools were less likely to accept domestic violence. Moreover, the program increased objective political knowledge, and reduced acceptance of political authority. However, this rejection of the status quo did not translate into greater perceived political efficacy, community participation, or voting intentions. Instead, there is suggestive evidenc...
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Working Paper
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September 01, 2015
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The Financial Services for the Poor Initiative supports research on innovations that help low-income households in the developing world access and benefit from formal financial services. We address outstanding questions on how to design and scale innovations to bring affordable and effective services within the reach of previously unbanked and underserved clients.
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Brief
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September 01, 2015
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Firms in the developing world exhibit much flatter life-cycle dynamics compared to firms in developed countries. While the existing literature has done well to highlight several of the supply-side factors that impede firm growth, demand constraints have received much less attention. This paper examines the role of demand constraints in limiting the growth of small and medium firms in Brazil. In particular, we test whether firms that win government procurement contracts grow more compared to firms that compete for these contracts but do not win. We assemble a comprehensive data set combining matched employer-employee data for the universe of formal firms in Brazil with the universe of federal government procurement contracts over the period of 2004 to 2010. Exploiting a quasi-experimental design, we find that winning at least one contract in a given quarter increases firm growth by 2.2 percentage points over that quarter, with 93% of the new hires coming from either unemployment or the...
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Working Paper
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September 01, 2015
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A seven-year randomized evaluation suggests education subsidies reduce adolescent girls’ dropout, pregnancy, and marriage but not sexually transmitted infection (STI). The government’s HIV curriculum, which stresses abstinence until marriage, does not reduce pregnancy or STI. Both programs combined reduce STI more, but cut dropout and pregnancy less, than education subsidies alone. These results are inconsistent with a model of schooling and sexual behavior in which both pregnancy and STI are determined by one factor (unprotected sex), but consistent with a two-factor model in which choices between committed and casual relationships also affect these outcomes.
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Published Paper
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September 01, 2015
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The results are in for the Community Health Assistant (CHA) incentives evaluation: increases in the productivity of CHAs that were recruited via career (versus social) incentives are mirrored by significantly improved health outcomes at the household level.
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August 31, 2015
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Conditional Cash Transfers (CCTs) have been shown to increase human capital investments, but their standard features make them expensive. We use a large randomized experiment in Morocco to estimate an alternative government-run program, a “labeled cash transfer” (LCT): a small cash transfer made to fathers of school-aged children in poor rural communities, not conditional on school attendance but explicitly labeled as an education support program. We document large gains in school participation. Adding conditionality and targeting mothers made almost no difference in our context. The program increased parents’ belief that education was a worthwhile investment, a likely pathway for the results.
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Published Paper
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August 01, 2015
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We examine whether returns to capital are higher for farmers who borrow than for those who do not, a direct implication of many credit market models. We measure the difference in returns through a two‐stage loan and grant experiment. We find large positive investment responses and returns to grants for a random (representative) sample of farmers, showing that liquidity constraints bind. However, we find zero returns to grants for a sample of farmers who endogenously did not borrow. Thus we find important heterogeneity, even conditional on a wide range of observed characteristics, which has critical implications for theory and policy.
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Working Paper
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August 01, 2015

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