Document Type

Discussion Paper

Date of Paper

Fall 12-2020

Abstract

We deliver an unconditional cash transfer equal to one month’s average profit to a randomly selected group of Kenyan female microenterprise owners in May 2020 at the outset of exponential growth in COVID-19 cases. Firm profit, inventory spending, and food expenditures increased relative to a control group. Entrepreneurs recovered about one third of the profit lost during the crisis. The transfers caused greater business activity by inducing previously closed businesses to re-open. PPE spending and precautionary management practices increase to mitigate this effect, but only among those who perceive major health risk from COVID-19. The results suggest cash transfers promoted economic stabilization during the crisis, but may work against the public health goal of reducing interpersonal interaction.

Acknowledgements

Thanks to seminar participants at Yale University for comments and to Brian Ambutsi for his excellent work managing the project in the field. We are grateful for funding from the Abdul Latif Jameel Poverty Action Lab (J-PAL) grant JOI-1375 and the Kellogg Institute for International Studies at the University of Notre Dame. This project was approved by the IRBs of Strathmore University and Yale University, along with the National Commission for Science, Technology and Innovation (NACOSTI) in Kenya. AEA RCT Registry ID: AEARCTR-0005704.

Comments

Updated December 2020

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