Returns to Capital for Whom? Experimental Evidence from Small Firm Owners and Workers in Ghana

Working Paper
Published on 1 August 2023


We document capital contributions from workers to their employers in a representative sample of small firms. We then conduct a two-sided experiment in a sample of small employers within industries where this contract type is relevant, randomizing cash transfers to firm owners or a randomly selected worker. Relative to the control group, transfers to either party increase firm profits in equal magnitude. Treated owners purchase additional business assets; treated workers purchase business assets that are used in their employing firm. Our findings suggest widespread household-level cash transfer programs may yield spillover benefits to firms that flow through the labor market.


Morgan Hardy

New York University, Abu Dhabi

Jamie McCasland

University of British Columbia

Jiayue Zhang

Brown University