Publication: The Pecuniary and Non-Pecuniary Returns to Micro-Entrepreneurship: Evidence from a Cross-Section of Women in Mexico
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2025-01-13
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2025-01-13
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Abstract
This paper estimates the monetary and full returns to micro-entrepreneurship using a cross-section of Mexican women leveraging self-reported reservation wages. A generalized Roy model of micro-entrepreneurship choice that accounts for selection bias and non-response in earnings is estimated. The analysis exploits variation in homicide rates as an exclusion restriction to identify the average treatment-on-the-treated. The average monetary return is 4.2 percent while the average full return is 68 percent, which points to substantial non-pecuniary benefits from entrepreneurship among women. The monetary return sharply increases with years of schooling. Full returns are less steep, suggesting that non-pecuniary benefits are more salient for less educated women.
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“Williams, Benjamin; Torres, Jesica; Francis, David C.. 2025. The Pecuniary and Non-Pecuniary Returns to Micro-Entrepreneurship: Evidence from a Cross-Section of Women in Mexico. Policy Research Working Paper; 11033. © World Bank. http://hdl.handle.net/10986/42662 License: CC BY 3.0 IGO.”
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