Intervention (Hidden)
We partnered with a social business focused on providing solar light solutions to the ultra poor with operations in over 1500 villages in Rwanda and Kenya. Each village has a microenterprise that sells low-cost rechargeable LED lights to their community and provides a solar recharge service for a small fee. The upfront price of lights is subsidized by our implementing partner, and the recharge fee, while lower than kerosene, is set slightly higher than marginal cost to recover the subsidy in the upfront price. Teams of four micro-entrepreneurs, mostly all-male teams, operate the microenterprises.
Administrative data suggests that, where in villages with female teams, the microenterprises perform as well as male teams. However, this could owe to selection issues, like female teams arising in more progressive villages, or in places with more profitable alternative economic activities that make running these businesses less attractive for males. In order to perform an accurate comparison of business performance of male versus female teams, we experimentally varied gender composition of the micro-enterprises, in three types of teams: all-male, all-female, and mixed teams (two males and two females).
Intervention started in December 2016, and took place in two districts: Ruhango and Rulindo. These districts were selected because our implementing partner had plans to expand its operations there. Given their interest in the research outcomes, they honored their agreement not to enter the control villages until the end of the study.
The intervention was implemented following the same plan of action as our implementing partner, thus allowing for scale up. Their staff (with support from IPA field teams) approached the village leaders to probe for their interest in setting up a recharge station, which implied putting together a four-person micro-entrepreneur team to operate it. Unlike our partner’s standard procedure, we randomly sorted interested villages in three groups (all-male, all-female, mixed) and requested a specific gender composition of the micro-entrepreneur teams in each village. We followed our partner’s standard procedure of requesting 40,000 Rwandan francs (around 50 US dollars) as co-investment (“commitment fee”) from the prospective micro-entrepreneur teams. This fee works as a deposit for the recharging station. In order to find the best counterfactual for the micro-entrepreneur teams, the commitment fee was raised from the prospective teams in all 272 villages prior to treatment assignment. Potential micro-entrepreneur teams were told their village had a 50% chance of being selected for expansion of our implanting partner’s activities. If the village was selected in the control group, the money was returned to the teams. If the village was selected in the treatment group, we randomly allocated 100 lights (one per household) for free and recharge kiosks were set up.
The source of exogenous variation in our study is random treatment assignment. Randomization was done at the village level. Villages were first sorted into all-male, all-female, or mixed gender (2 males and 2 females) resulting in 6 mutually exclusive treatment arms. The commitment fees were raised from all prospective micro-entrepreneur teams. Next, within each group villages were sorted into treatment or control. Treatment villages received the intervention, and control villages did not. Commitment fees were returned to prospective micro-entrepreneur teams in the control group.