2019/12/17 by Philippe Alby, Emmanuelle Auriol, Pierre Nguimkeu · 1 citation
Economics, Econometrics and Finance · Computer Science · Business, Management and Accounting · #Microfinance and Financial Inclusion #Economic Growth and Development #Innovation and Socioeconomic Development
paper · doi:10.1111/ecca.12330
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.