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

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.