Working paper abstract

#2021-018

Does entrepreneurship increase the chances of the poor?

Omar Rodriguez

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.

Keywords: Capability approach, poverty reduction, entrepreneurship, public policy, enterprise policy

JEL Classification: I31, I32, L26, J48, L53