Martín Valdivia

Teaching entrepreneurship: Impact of business training on microfinance clients and institutions

Most academic and development policy discussions about microentrepreneurs focus on credit constraints and assume that subject to those constraints, the entrepreneurs manage their business optimally. Yet the self-employed poor rarely have any formal training in business skills. A growing number of microfinance organizations are attempting to build the human capital of microentrepreneurs in order to improve the livelihood of their clients and help further their mission of poverty alleviation. Using a randomized control trial, we measure the marginal impact of adding business training to a Peruvian group lending program for female microentrepreneurs. Treatment groups received thirty- to sixty-minute entrepreneurship training sessions during their normal weekly or monthly banking meeting over a period of one to two years. Control groups remained as they were before, meeting at the same frequency but solely for making loan and savings payments. We find little or no evidence of changes in key outcomes such as business revenue, profits, or employment. We nevertheless observed business knowledge improvements and increased client retention rates for the microfinance institution.

Inequalities in health in Latin America and the Caribbean: descriptive and exploratory results for self-reported health problems and health care in twelve countries

OBJECTIVE To explore and describe inequalities in health and use of health care as revealed by self-report in 12 countries of Latin America and the Caribbean. METHODS A descriptive and exploratory study was performed based on the responses to questions on health and health care utilization that were included in general purpose household surveys. Inequalities are described by quintile of household expenditures (or income) per capita, sex, age group (children, adults, and older adults), and place of residence (urban vs. rural area). For those who sought health care, median polishing was performed by economic status and sex, for the three age groups. RESULTS Although the study is exploratory and descriptive, its findings show large economic gradients in health care utilization in these countries, with generally small differences between males and females and higher percentages of women seeking health care than men, although there were some exceptions among the lower economic strata in urban areas. CONCLUSIONS Inequalities in self-reported health problems among the different economic strata were small, and such problems were usually more common among women than men. The presence of small inequalities may be due to cultural and social differences in the perception of health. However, in most countries included in the study, large inequalities were found in the use of health care for the self-reported health problems. It is important to develop regional projects aimed at improving the questions on self reported health in household interview surveys so that the determinants of the inequalities in health can be studied in depth. The authors conclude that due to the different patterns of economic gradients among different age groups and among males and females, the practice of standardization used in constructing concentration curves and in computing concentration indices should be avoided. At the end is a set of recommendations on how to improve these sources of data. Despite their shortcomings, household interview surveys are very useful in understanding the dimensions of health inequalities in these countries.

Household catastrophic health expenditures: A comparative analysis of twelve Latin American and Caribbean Countries

OBJECTIVE Compare patterns of catastrophic health expenditures in 12 countries in Latin America and the Caribbean. MATERIAL AND METHODS Prevalence of catastrophic expenses was estimated uniformly at the household level using household surveys. Two types of prevalence indicators were used based on out-of-pocket health expense: a) relative to an international poverty line, and b) relative to the households ability to pay net of their food basket. Ratios of catastrophic expenditures were estimated across subgroups defined by economic and social variables. RESULTS The percent of households with catastrophic health expenditures ranged from 1 to 25% in the twelve countries. In general, rural residence, lowest quintile of income, presence of older adults, and lack of health insurance in the household are associated with higher propensity of catastrophic health expenditures. However, there is vast heterogeneity by country. CONCLUSIONS Cross national studies may serve to examine how health systems contribute to the social protection of Latin American households.

Business Training Plus for Female Entrepreneurship? Short and Medium-Term Experimental Evidence from Peru

With millions of women around the developing world thrown into self-employment but with low productivity, the question about how to increase the profitability and growth potential of their businesses is increasingly relevant for poverty reduction and gender equity. This study evaluates the impacts of a business development services program serving female microentrepreneurs in Lima using an experimental design, that included two treatment groups: One received only general training (GT), albeit more time-intense than previous studies, and delivered by experts, while the other received in addition technical assistance (TA). Results show the existence of room for efficiency gains and growth, as all treated showed increased sales revenues and self-reported adoption of recommended business practices, although timing differed. Those that received full treatment (GT TA) were the only ones reporting increased sales 4-7 months after the end of the treatment, but GT-only treated were able to catch up about a year later. Low take up of the training may suggest some space to improve recruitment and delivery of good general business practices.

Trends in stunting and overweight in Peruvian pre-schoolers from 1991 to 2011: findings from the Demographic and Health Surveys

Objective To examine trends in stunting and overweight in Peruvian children, using 2006 WHO Multicentre Growth Reference Study criteria. Design Trend analyses using nationally representative cross-sectional surveys from Demographic and Health Surveys (1991–2011). We performed logistic regression analyses of stunting and overweight trends in sociodemographic groups (sex, age, urban–rural residence, region, maternal education and household wealth), adjusted for sampling design effects (strata, clusters and sampling weights). Setting Peru. Subjects Children aged 0–59 months surveyed in 1991–92 (n 7999), 1996 (n 14 877), 2000 (n 11 754), 2007–08 (n 8232) and 2011 (n 8186). Results Child stunting declined (F(1, 5149) = 174·8, P ≤ 0·00) and child overweight was stable in the period 1991–2011 (F(1, 5147) = 0·4, P ≤ 0·54). Over the study period, levels of stunting were highest in rural compared with urban areas, the Andean and Amazon regions compared with the Coast, among children of low-educated mothers and among children living in households in the poorest wealth quintile. The trend in overweight rose among males in coastal areas (F(1, 2250) = 4·779, P ≤ 0·029) and among males in the richest wealth quintile (F(1, 1730) = 5·458, P ≤ 0·020). Conclusions The 2011 levels of stunting and overweight were eight times and three and a half times higher, respectively, than the expected levels from the 2006 WHO growth standards. The trend over the study period in stunting declined in most sociodemographic subgroups. The trend in overweight was stable in most sociodemographic subgroups.

Equity in health and health care in Peru, 2004 - 2008

OBJECTIVE This study evaluates whether recent positive economic trends and pro-poor health policies have resulted in more health equity and explores key factors that explain such change. METHODS This study focuses on the evolution of measures of health status (self-reported morbidity) and use of health care services obtained from the 2004 and 2008 rounds of the Peruvian National Household Survey (Encuesta Nacional de Hogares). It concentrates on health inequalities associated with socioeconomic status and uses interquintile differences (gradient), concentration indices with and without needs-based adjustments, and decomposition analysis. RESULTS Findings show a low level of inequality in measures of health status, with a slightly pro-poor inequality in self-reported health problems and a slightly pro-rich inequality in self-reported chronic illness. Inequity in the use of curative services declined significantly between 2004 and 2008, while inequity in the use of preventive services increased slightly. Use of hospital and dental services remained unchanged during the same period. CONCLUSIONS Limitations of self-reported morbidity measures probably underestimate the results of health inequalities across socioeconomic groups. Improved equity in the use of curative health services can be explained by a number of positive factors that occurred concurrently during the analysis-namely, increased mean household income, reduced economic inequality, the Juntos conditional cash transfer program, and gradual expansion of public health insurance, Seguro Integral de Salud (SIS). Given that SIS expansion is the main public policy for promoting health equity in Peru, it is crucial that future steps in expansion come with a strategy to isolate its contribution to health equity improvements from that of other positive socioeconomic trends.

The Returns to Health for Peruvian Urban Adults: Differentials Across Genders, the Life Cycle and the Wage Distribution

This report shows evidence on determinants of health status for urban adults and their effects on productivity. Accurate estimation of the effect of health on wages is always difficult to obtain due to endogeneity and measurement error of the health indicators that are available in household surveys for developing countries. The health measure used here is the number of days ill, which involves endogeneity and reporting error problems that are controlled for. The use of household sanitary infrastructure and proxies for health prices, measured by the distance to the health center and the average waiting time for attention at the district level, enabled the construction of an instrument variable estimator for the effects of health on wages. The instruments are statistically significant for all urban individuals. Schooling effects on health are positive and strong for urban males, and the positive effect of schooling on health is clearly increasing with age. The effect of health on wages is positive and robust, especially for urban males. The larger effects of an additional day sick are found among older self-employed males (-4. 3%) and those at the bottom of the hourly earnings distribution (-3. 8%), and those in the private sector (-1. 8%). These results suggest that health has a stronger impact on the wages of those jobs where productivity and health are closely connected, as in the private sector and the self-employed. The inconclusive results among females indicate the need to work on the development of a model that better expresses the way in which women fit into the labor market.

Business Training for Microfinance Clients: How it Matters and for Whom?

We measure the impact of a business training program for female microentrepreneur clients of a group banking program in Peru. Using the credit with education model, we assigned clients randomly to either treatment or control groups. Treatment groups received thirty to sixty minute entrepreneurship training sessions during their normal weekly group banking meeting. These lasted between one to two years. Control groups remained as they were before, meeting weekly with the group banking program solely for making loan and savings payments. We find that intention to treat (ITT) led to higher repayment and client retention rates for the microfinance institution, improved business knowledge, and practices. More importantly, average business sales revenues also increase while revenues fluctuations were reduced. In addition, we find significant heterogeneity in the exposure of clients within the treatment group. Treatment on the treated (TOT) estimates, obtained using ITT as instrumental variable, show substantially larger effects.

Contracting the Road to Development: Early Impacts of a Rural Roads Program

We study here the early impacts of the Peruvian Rural Roads Program (RRP), characterized by a decentralized mechanism that contracts private local firms for the rehabilitation and maintenance of rural roads with local supervision by community leaders setting incentives that favour prevention activities and a sustainable and timely maintenance of rural roads. The analysis is based on a quasi-experimental approach through which control roads are defined prior to the intervention and based on key observable characteristics of the road and the villages they connect. Diff-in-Diff estimates are reported to control for biases associated with time-invariant unobservables. We find that this institutional innovation improved road transitability, which in turn led to significant changes in employment patterns and increased investments in education and health. Income effects are not significant on average, but they appear strong in villages with pre-existent endowments of key productive infrastructure, favouring the notion that road improvements need to be complemented with additional investments to effectively contribute to the reduction of rural poverty. Most of these results, though, are concentrated on interventions in motorized roads, although the inclusion of non-motorized tracks is supported by the empowering of women through their participation in farm activities. Thus, the results of this early evaluation are encouraging in terms of program impacts, as these indicate that the Peruvian RRP has been able to control local capture and corruption threats.

Social media instruments and the promotion of financial inclusion in Peruvian rural areas

This study seeks to evaluate the use of short soap operas as a mechanism to promote the use of formal savings accounts among poor rural women that have been secularly excluded from healthy interactions with the formal financial sector. We developed a short soap opera (telenovela), named Josefa, which transmitted pro-savings messages using characters and stories that could generate a level of identification with the intended audience. We used an experimental design that randomly assigned eligible villages of Huancavelica, the poorest department in Peru, to treatment and control groups, and organized special viewing sessions inviting all beneficiaries of Juntos, the Peruvian CCT program, in the eligible villages. A year later, we found that women who were exposed to the treatment have an improved knowledge and attitude towards formal savings, especially for precautionary motives. We did not find a significant change at the end of bimester savings balances until the July-August bimester, which we interpret as evidence that the improved pro-savings attitude remained latent for several months, until right about the time cash surpluses are likely, due to post-harvest season. In searching for the underlying mechanisms, we find no income effect, but a strong empowerment effect within the household, mainly for economic and financial decisions, and especially among the women under 40, which is also the group that shows more robust temporary savings effects. Overall, we interpret these results as evidence that the edutainment approach can have an important contribution to the financial inclusion of poor rural women that have faced secular exclusion from formal financial institutions like the ones from the Peruvian Southern Sierra.