The Chilean government launched the “Micro-entrepreneurship Support Program” (MESP), Programa de Apoyo al Microemprendimiento (PAME) in Spanish, in 2006 to provide previously unemployed or underemployed individuals with the skills and capital required to generate income through self-employment. PAME included training as well as a cash transfer component. The training ran for four months and taught participants basic administrative and business planning skills. After completing the training, PAME offered participants about 300,000 CLP (US$600)approximately 4.5 times the monthly poverty linethat beneficiaries could spend on machinery, raw materials, or other inputs. PAME benefits about 24,000 individuals annually. To qualify, individuals must be over the age of 18, classified by the Chilean government as economically vulnerable, unemployed or have an unstable job, and must benefit from social security.
We partnered with the Chilean Ministry of Social Development to examine how combining business training with cash transfers impacts individual micro-entrepreneurs' employment and income. Additionally, to evaluate the effect of providing entrepreneurs with larger grants, researchers offered some PAME participants an additional transfer. Eligible individuals were randomly assigned to one of three groups:
1) Traditional MESP: individuals in this group were offered the traditional MESP program.
2) MESP-plus: individuals in this group received the same benefits as those in the Traditional MESP group but also received an additional 120,000 CLP (US$240) seven months after the end of the traditional MESP.
3) Comparison group: individuals in this group received nothing.
689 individuals were assigned to the regular PAME, 693 to the modified PAME with additional cash transfer, and 566 to the comparison group.