2019/12/17 by Philippe Alby, Emmanuelle Auriol, Pierre Nguimkeu · 14 citations
Business, Management and Accounting · Computer Science · Economics, Econometrics and Finance · #Business #Constraint (computer-aided design) #Economic Growth and Development #Economic growth #Economics #Entrepreneurship #Finance #Innovation and Socioeconomic Development #Labour economics #Microfinance and Financial Inclusion #Productivity #Profitability index #Workforce
paper · doi:10.1111/ecca.12330
published in Economica 87(346), 299-327 (Wiley)
openalex publication_date 2019/12/17 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/22
In the absence of a public safety net, wealthy Africans have the social obligation to share their resources with their needy relatives in the form of cash transfers and inefficient family hiring. We develop a model of entrepreneurial choice that accounts for this social redistributive constraint. We derive predictions regarding employment choices, productivity, and profitability of firms run by entrepreneurs of African versus non‐African origin. Everything else equal, local firms are overstaffed and less productive than firms owned by non‐locals, which discourages local entrepreneurship. Using data from the manufacturing sector, we illustrate the theory by structurally estimating the proportion of missing African entrepreneurs. Our estimates, which are suggestive due to the data limitation, vary between 8% and 12.6% of the formal sector workforce. Implications for the role of social protection are discussed.