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Labor Drops: Experimental Evidence on the Return to Additional Labor in Microenterprises

By Suresh de Mel, David McKenzie, and Christopher Woodruff

American Economic Journal: Applied Economics, January 2019

A field experiment in Sri Lanka provided wage subsidies to randomly chosen microenterprises to test whether hiring additional labor benefits such firms, and whether a short-term subsidy can have a lasting impact on firm employment. Using 12 rounds of surv...