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Most academic and development policy discussions about microentrepreneurs focus on credit constraints and assume that subject to those constraints, the entrepreneurs manage their business optimally. Yet the self-employed poor rarely have any formal training in business skills. A growing number of microfinance organizations are attempting to build the human capital of microentrepreneurs in order to improve the livelihood of their clients and help further their mission of poverty alleviation. Using a randomized control trial, we measure the marginal impact of adding business training to a Peruvian group lending program for female microentrepreneurs. Treatment groups received thirty- to sixty-minute entrepreneurship training sessions during their normal weekly or monthly banking meeting over a period of one to two years. Control groups remained as they were before, meeting at the same frequency but solely for making loan and savings payments. We find little or no evidence of changes in ke...
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Published Paper
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May 01, 2011
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Using a student level randomization, we compare three education-based conditional cash transfers designs: a standard design, a design where part of the monthly transfers are postponed until children have to re-enroll in school, and a design that lowers the reward for attendance but incentivizes graduation and tertiary enrollment. The two nonstandard designs significantly increase enrollment rates at both the secondary and tertiary levels while delivering the same attendance gains as the standard design. Postponing some of the attendance transfers to the time of re-enrollment appears particularly effective for the most at-risk children
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Published Paper
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April 03, 2011
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Charging small fees dramatically reduces access to important products for the poor.
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Brief
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April 01, 2011
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In this paper we test whether procrastination and planning problems affect the performance, compensation and work satisfaction among employees. We conducted a randomized controlled experiment with a bank in Colombia to change the frequency and intensity with which employees received reminders about goal achievements. We also provided small in-kind prizes every week to remind employees of their goal achievement. Loan officers in the treatment group showed strong improvements in their goal achievements, better work load distribution, and higher monthly compensation (not including the value of the small prizes). The intervention also improved worker satisfaction and reduced stress levels, without affecting the quality of the loan officers’ portfolios. We show that including branch managers (the supervisors of the loan officers) in the intervention was central in achieving these results, since they played a key role in reinforcing the reminders and helping employees with planning problems....
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Working Paper
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April 01, 2011
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Many effective health products and behaviors available through the private market are not widely adopted in less developed countries. For example, fewer than 10% of households in our Kenyan study area treat their water with dilute chlorine. Using a suite of randomized evaluations, we find that information and marketing interventions do little to boost use of chlorine. However, chlorine take-up is highly sensitive to price, convenience and social context, with more than half of households using chlorine when an individually-packaged supply is delivered free to the home. The highest sustained take-up is achieved by combining free, convenient, salient, and public access through a point-of-collection chlorine dispenser system and a local promoter. More than half of households treat their water and this use continues 30 months later even though promoters are paid only for the first six months. The estimated long-run costs of this intervention at scale, including administrative costs, are be...
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Working Paper
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April 01, 2011
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We use data from a survey of young Kenyan adults who participated in a deworming program as children to calibrate a version of the Grossman (1972) model, in which investments in health increase future endowments of healthy time. Mean hours worked increase by 12% in the treatment group, or 1.8 more hours each week on a base of 15.2. There is also evidence that deworming generated positive externalities in work hours. Furthermore, both the direct and externality effects are even larger in our preferred subsample analysis on out-of-school youth. Gains are concentrated outside of traditional agriculture, among small business owners and those working for wages. Among wage earners no longer in school, the treatment group earned over 20% more, with manufacturing employment tripling. These results suggest health improvements may increase labor supply and facilitate structural transformation. A calibration of the model combining data on the impacts of deworming and the price responsiveness of d...
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Working Paper
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March 01, 2011
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Poverty, lack of female empowerment, and lack of education are major risk factors for childhood illness worldwide. Microcredit programs, by offering small loans to poor individuals, attempt to address the first two of these risk factors, poverty and gender disparity. They provide clients, usually women, with a means to invest in their businesses and support their families. This study investigates the health effects of also addressing the remaining risk factor, lack of knowledge about important health issues, through randomization of members of a microcredit organization to receive a health education module based on the World Health Organization’s Integrated Management of Childhood Illness (IMCI) community intervention.
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Published Paper
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January 24, 2011
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Farmers face a particular set of risks that complicate the decision to borrow. We use a randomized experiment to investigate (1) the role of crop-price risk in reducing demand for credit among farmers and (2) how risk mitigation changes farmers’ investment decisions. In Ghana, we offer farmers loans with an indemnity component that forgives 50 percent of the loan if crop prices drop below a threshold price. A control group is offered a standard loan product at the same interest rate. Loan uptake is high among all farmers and the indemnity component has little impact on uptake or other outcomes of interest. 
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Published Paper
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January 20, 2011
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Though formal and informal sex work has long been identified as crucial for the spread of HIV/AIDS, the nature of the sex-for-money market remains poorly understood. Using a unique panel dataset constructed from 192 self-reported diaries, we find that women who engage in transactional sex substantially increase their supply of risky, better compensated sex to cope with unexpected health shocks, particularly the illness of another household member. These behavioral responses entail significant health risks for these women and their partners, and suggest that these women are unable to cope with risk through other consumption smoothing mechanisms.
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Published Paper
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January 01, 2011
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We use two natural field experiments and surveys to identify character elements, and test whether these traits can be used to predict the likelihood of loan default. In the first experiment we identify subjects with high psychosomatic moral costs by observing their reactions when a bank error is made in their favor. In the second experiment we identify subjects that were less naïve about their own ability to meet future commitments. We found that both individuals with higher moral costs and individuals who were the least naïve displayed lower default rates than other groups. We also explore the relationship between qualitative survey-based social capital measures and loan default. We find that survey-based social capital measures are not predictive of loan default for these individual loans, contrary to the results from a prior study -with group loans. Lastly, we examine whether more general personality index measures predict default, and we find that they do not. Overall, the lessons...
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Working Paper
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January 01, 2011
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This paper draws lessons from an original randomized experiment in Malawi. In order to understand why roads in relatively good condition in rural areas may not be used by buses, a minibus service was subsidized over a six-month period over a distance of 20 kilometers to serve five villages. Using randomly allocated prices for use of the bus, this experiment demonstrates that at very low prices, bus usage is high. Bus usage decreases rapidly with increased prices. However, based on the results on take-up and minibus provider surveys, the experiment demonstrates that at any price, low (with high usage) or high (with low usage), a bus service provider never breaks even on this road. This can contribute to explain why walking or cycling is so widespread on most rural roads in Sub-Saharan Africa. In terms of policy implications, this experiment explains that motorized services need to be subsidized; otherwise a road in good condition will most probably not lead to provision of service at an...
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Working Paper
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January 01, 2011
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Following the 2011 elections, one of the most pressing challenges for the President, government ministries and international organizations is boosting youth incomes and employment, especially those of high-risk youth. What kinds of programs can boost employment and incomes and reduce the risk of social instability? This report details findings from an impact evaluation of a reintegration and agricultural livelihoods program for high-risk Liberian youth, and draws out lessons for employment policies in 2012 and beyond.
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Report
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January 01, 2011
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We use a randomized experiment to test whether and what information changes teenagers’ sexual behavior in Kenya. Providing information on the relative risk of HIV infection by partner’s age led to a 28 percent decrease in teen pregnancy, an objective proxy for the incidence of unprotected sex.
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Published Paper
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January 01, 2011
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The controversy over how much to charge for health products in the developing world rests, in part, on whether higher prices can increase use, either by targeting distribution to high-use households (a screening effect), or by stimulating use psychologically through a sunk-cost effect. We develop a methodology for separating these two effects. We implement the methodology in a field experiment in Zambia using door-to-door marketing of a home water purification solution. We find evidence of economically important screening effects. By contrast, we find no consistent evidence of sunk-cost effects.
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Published Paper
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December 01, 2010
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Little is known about the impacts of military service on human capital and labor market outcomes due to an absence of data as well as sample selection: recruits are self-selected, screened, and selectively survive. We examine the case of Uganda, where rebel recruitment methods provide exogenous variation in conscription. Economic and educational impacts are widespread and persistent: schooling falls by nearly a year, skilled employment halves, and earnings drop by a third. Military service seems to be a poor substitute for schooling. Psychological distress is evident among those exposed to severe war violence and is not limited to ex-combatants.
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Published Paper
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November 01, 2010
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This report presents an analysis of land and property conflicts in rural Liberia, using two recently developed sources of data: 1) qualitative data on land tenure and land conflict in Lofa County collected by the Norwegian Refugee Council’s (NRC) Monitoring and Evaluation team; and 2) quantitative baseline survey data on land tenure and land conflict in three rural counties collected by the Yale University / Innovation for Poverty Action evaluation of the Peace Education and Community Empowerment (PEACE) programme in Liberia. The purpose of this analysis is to examine why and how land conflicts develop and the effectiveness of different dispute resolution methodologies in resolving land conflicts. Insights developed through this analysis will be used to evaluate the effectiveness of the NRC’s Information, Counseling and Legal Assistance project in Liberia and disseminated to inform the design and development of similar land and property dispute resolution programmes elsewhere in the wo...
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Report
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November 01, 2010
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We designed and tested a voluntary commitment product to help smokers quit smoking. The product (CARES) offered smokers a savings account in which they deposit funds for six months, after which they take a urine test for nicotine and cotinine. If they pass, their money is returned; otherwise, their money is forfeited to charity. Eleven percent of smokers offered CARES tookup, and smokers randomly offered CARES were 3 percentage points more likely to pass the 6-month test than the control group. More importantly, this effect persisted in surprise tests at 12 months, indicating that CARES produced lasting smoking cessation. Research brief is available here.
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October 01, 2010
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Microfinance banks use group-based lending contracts to strengthen borrowers' incentives for diligence, but the contracts are vulnerable to free-riding and collusion. We systematically unpack microfinance mechanisms through ten experimental games played in an experimental economics laboratory in urban Peru. Risk-taking broadly conforms to theoretical predictions, with dynamic incentives strongly reducing risk-taking even without group-based mechanisms. Group lending increases risk-taking, especially for risk-averse borrowers, but this is moderated when borrowers form their own groups. Group contracts benefit borrowers by creating implicit insurance against investment losses, but the costs are borne by other borrowers, especially the most risk averse. Access the Briefing Note here. 
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Published Paper
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July 01, 2010
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We analyze a randomized trial of a program that rewarded Kenyan primary school teachers based on student test scores, with penalties for students not taking the exams. Scores increased on the formula used to reward teachers, and program school students scored higher on the exams linked to teacher incentives. Yet most of the gains were focused on the teacher reward formula. The dropout rate was unchanged. Instead, exam participation increased among enrolled students. Test scores increased on exams linked to the incentives, but not on other, unrelated exams. Teacher attendance and homework assignment were unaffected, but test preparation sessions increased.
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Published Paper
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July 01, 2010
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A decade ago, many in the development community acted with the best of intentions, but without the best of evidence. If households lack clean water, help build wells; if people suffer ill health, improve health services; if the poor lack capital to start businesses, give them credit. Reality is more complicated than the best intentions allow. Well water can be contaminated, people don’t always use their local clinic, and savings or insurance for some may be better then credit. When resources are limited (and when aren’t they?), we should strive to do the most good with the resources we have.
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Annual Report
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July 01, 2010

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