Document Type

Discussion Paper

Date of Paper

Summer 6-19-2024


Poor entrepreneurs must frequently choose between business investment and children’s education. To examine this trade-off, we exploit experimental variation in short-run microenterprise growth among a sample of Indian households and track children’s education and business outcomes over eleven years. Treated households, who experience higher initial microenterprise growth, invest more in education and are one-third more likely to send children to college. However, only literate households experience child schooling gains and their enterprises stagnate in the long-run. In contrast, illiterate treatment households experience long-run business gains but declines in children’s education. Our findings suggest that microenterprise growth has the potential to reduce relative intergenerational educational mobility.


We thank Camille Falezan for incredible research assistance and Sitaram Mukherjee for research management. We thank Sandy Black, Mateus Ferraz Dias, David Jaeger, Samuel Solomon, three referees and numerous seminar participants for comments and are grateful for funding from PEDL, NSF Rapid#1329354, IPA SME, WAPP Harvard and Yale Economic Growth Center. This project was pre-registered under AEA registry ID AEARCTR-0003572.