Do Entry Costs Provide an Empirical Basis for Poverty Traps? Evidence from Mexican Microenterprises

Dados Bibliográficos

ID4360469
AutoresDavid Mckenzie (0000-0002-1885-2426), David J Mckenzie (0000-0003-0961-9101), Christopher Woodruff (0000-0003-3471-7520, University of California San Diego)
Ano2006
Volume55
Fascículo1
Páginas3-42
Data de publicação2006-10-01
Peer ReviewedSim
Open AccessNão
TipoARTICLE
PeriódicoEconomic Development and Cultural Change (JOURNAL)
Identificadores do periódicoISSN: 0013-0079 • E-ISSN: 1539-2988
EditoraUniversity of Chicago Press (PUBLISHER • US)
DOI10.1086/505725
OpenAlexW2076822181
IdiomaEN
Citações recebidas56
Referências citadas23

Recent theoretical literature in development economics has shown that nonconvex production technologies can result in low‐growth poverty traps. This article uses detailed microenterprise surveys in Mexico to examine the empirical evidence for these nonconvexities at low levels of capital stock. While theory emphasizes nondivisible start‐up costs that exceed the wealth of many potential entrepreneurs, this article shows start‐up costs to be very low in some industries. Semiparametric methods are then used to flexibly estimate returns to capital in microenterprises. Much higher returns are found at low levels of capital stock than at higher levels, and this remains true after controlling for firm characteristics and measures of entrepreneurial ability. Overall, little evidence of production nonconvexities is found at low levels of capital. The absence of nonconvexities is a significant finding because it suggests that access to start‐up capital does not determine the ultimate size of the enterprise

Capital (architecture) · Demographic economics · Economic growth · Economics · Empirical evidence · Human capital · Labour economics · Microeconomics · Physical capital · Poverty · Production (economics) · Stock (firearms) · Economic Growth and Productivity · Firm Innovation and Growth · Innovation and Socioeconomic Development