Alby, Philippe, Auriol, Emmanuelle and Nguimkeu, Pierre (2018) Does Social Pressure Hinder Entrepreneurship in Africa? The Forced Mutual Help Hypothesis. TSE Working Paper, n. 18-956, Toulouse

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In the absence of a public safety net, wealthy Africans have the social obligation to share their re- sources with their needy relatives in the form of cash transfers and inefficient family hiring. We develop a model of entrepreneurial choice that accounts for this social redistributive constraint. We derive pre- dictions regarding employment choices, productivity, and profitability of firms ran by entrepreneurs of African versus non-African origin. Everything else equal, local firms are over-staffed and less productive than firms owned by nonlocals, which discourages local entrepreneurship. Using data from the manu- facturing sector, we illustrate the theory by structurally estimating the proportion of missing African entrepreneurs. Our estimates, which are suggestive due to the data limitation, vary between 8% and 12.6% of the formal sector workforce. Implications for the role of social protection are discussed.

Item Type: Monograph (Working Paper)
Language: English
Date: September 2018
Place of Publication: Toulouse
Uncontrolled Keywords: Entrepreneurship, Family Solidarity, Formal Sector, Africa
JEL Classification: C51 - Model Construction and Estimation
H53 - Government Expenditures and Welfare Programs
H55 - Social Security and Public Pensions
O14 - Industrialization; Manufacturing and Service Industries; Choice of Technology
O17 - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements - Legal, Social, Economic, and Political
O55 - Africa
Divisions: TSE-R (Toulouse)
Institution: Toulouse Capitole University
Site: UT1
Date Deposited: 28 Sep 2018 14:36
Last Modified: 02 Apr 2021 15:58
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