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Does entrepreneurship increase the chance of the poor?

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  • Rodriguez Torres, Omar

    (UNU-MERIT)

Abstract

This paper investigates how entrepreneurship affects the likelihood of households graduating out of poverty. It analyses the effect of entrepreneurship in the outcomes of the households enrolled in the Colombian poverty reduction programme. A contribution to the Capability Approach is proposed with the inclusion of entrepreneurship as a 'functioning' linked to overcoming poverty. Entrepreneurship presents a great potential given its multidimensional nature. In its more basic conception, it is connected to income-generation, and in its more complex conception, it is related to the concept of agency. Using the Colombian UNIDOS programme (which is a programme focused on helping poor graduating out of poverty) as a case study, we employ a Probit Regression model with sample selection to model this mechanism. The results present a positive, statistically significant impact of entrepreneurial households in their probability of graduating out of poverty. The results confirmed that entrepreneurial households show a higher likelihood of escaping from poverty.

Suggested Citation

  • Rodriguez Torres, Omar, 2021. "Does entrepreneurship increase the chance of the poor?," MERIT Working Papers 2021-018, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:unumer:2021018
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    File URL: https://unu-merit.nl/publications/wppdf/2021/wp2021-018.pdf
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    References listed on IDEAS

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    1. Jagannadha Tamvada, 2010. "Entrepreneurship and welfare," Small Business Economics, Springer, vol. 34(1), pages 65-79, January.
    2. Juan M. Villa & Miguel Niño-Zarazúa, 2014. "Poverty Dynamics and Programme Graduation from Social Protection: A Transitional Model for Mexico's Oportunidades Programme," WIDER Working Paper Series wp-2014-109, World Institute for Development Economic Research (UNU-WIDER).
    3. Caterina Ruggeri Laderchi, 1997. "Poverty and its many dimensions: The role of income as an indicator," Oxford Development Studies, Taylor & Francis Journals, vol. 25(3), pages 345-360.
    4. Alfonso Miranda & Sophia Rabe-Hesketh, 2006. "Maximum likelihood estimation of endogenous switching and sample selection models for binary, ordinal, and count variables," Stata Journal, StataCorp LP, vol. 6(3), pages 285-308, September.
    5. Maria Ana Lugo, 2007. "Employment: A Proposal for Internationally Comparable Indicators," Oxford Development Studies, Taylor & Francis Journals, vol. 35(4), pages 361-378.
    6. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    7. González-Flores, Mario & Heracleous, Maria & Winters, Paul, 2012. "Leaving the Safety Net: An Analysis of Dropouts in an Urban Conditional Cash Transfer Program," World Development, Elsevier, vol. 40(12), pages 2505-2521.
    8. Roberto Angulo & Yadira Díaz & Renata Pardo, 2016. "The Colombian Multidimensional Poverty Index: Measuring Poverty in a Public Policy Context," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(1), pages 1-38, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Capability approach; poverty reduction; entrepreneurship; public policy; enterprise policy;
    All these keywords.

    JEL classification:

    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy

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