Do capital grants improve microenterprise productivity?
File(s)
Supporting information
Published version
Author(s)
Janes, Laurin
Koelle, Michael
Quinn, Simon
Type
Journal Article
Abstract
Do capital grants improve microenterprise productivity? We use the lens of a production function to re-examine two previous randomised controlled trials that allocated capital to microenterprises. We find that productivity is higher for treated firms, and accounts for about 20-30 percent of the revenue effects of capital grants. Although long-run estimates are noisy, point estimates indicate that these productivity effects are sustained six years after the grants. We explore possible mechanisms for this finding, and show that treatment tilts the asset composition towards durables with a higher technology component: a result consistent with a important role for capital-embodied technology. Mediation analysis confirms that virtually all of the effect of treatment on productivity can be explained by the adoption of higher-technology durables.
Date Issued
2026-01-01
Date Acceptance
2025-05-01
Citation
The Economic Journal, 2026, 136 (673), pp.207-231
ISSN
0013-0133
Publisher
Oxford University Press (OUP)
Start Page
207
End Page
231
Journal / Book Title
The Economic Journal
Volume
136
Issue
673
Copyright Statement
© The Author(s) 2025. Published by Oxford University Press on behalf of Royal Economic Society. This is an Open Access article distributed under the terms of the Creative Commons Attribution License (https://creativecommons.org/licenses/by/4.0/), which permits unrestricted reuse, distribution, and reproduction in any medium, provided the original work is properly cited.
License URL
Identifier
10.1093/ej/ueaf042/8152900
Subjects
JEL classification: L25
O12
O14
O17
O33 Economic development
microenterprises
formality and informality
embodied technology
total factor productivity
Publication Status
Published
Date Publish Online
2025-05-29