Document Type

Discussion Paper

Date of Paper

Fall 11-2020

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.

Share

COinS