Childcare for Firm Growth

Microenterprises are an important source of employment, and developing such enterprises is a key policy concern in most countries, and especially in low-income countries where they employ more than half of the labour force. Experimental studies have demonstrated that microenterprises with a female owner have lower returns to capital and business training compared to enterprises with a male business-owner. In this project the researchers will study one potential explanation behind this effect: lack of access to childcare services. To the extent that familial obligations constrain women’s businesses, providing them with subsidized access to quality childcare services may increase the productivity of their businesses and improve the effectiveness of mainstream development interventions targeting them, such as microcredit or business training. The goal of the project is to study both the direct effects of such an approach on female-owned businesses and any spillover effects this may have on their children and other businesses in the relevant sectors.

To shed light on these questions, the research team will collaborate with BRAC in Uganda and conduct a cluster-randomized experiment that will provide randomly selected microfinance groups with: (i) subsidized access to childcare (ii) business training (iii) childcare and business training together. A fourth group will be kept as control. The cluster randomization along with a representative sample of targeted businesses, their children and non-targeted businesses will enable the team to study both the direct effects of the interventions on business outcomes and any spillover effects on children or other, non-targeted businesses.

There is an extensive literature discussing the effects of child-care provision on women’s labour force participation in the USA and in Europe (see for example Berger & Black, 1992; Connelly, 1992, Baker, Gruber, & Milligan, 2008; Bauernschuster & Schlotter, 2015; Bick, 2016). These studies show impacts of different magnitudes, but there is a large consensus that childcare has a liberating effect on women and plays a crucial role in helping women to become more active on the labour market. As there is lack of similar research in Sub-Saharan Africa, setting up and testing a strategy of family support for business development in the context of a developing country will be highly important to both inform policymakers and advancing the field.

Authors

Kjetil Bjorvatn

Norwegian School of Economics

Lore Vandewalle

The Graduate Institute Geneva

Vincent Somville

Norwegian School of Economics

Wameq A Raza

The World Bank