Mentors or Teachers? Microenterprise Training in Kenya∗

We use a randomized controlled trial to demonstrate that inexperienced female microenterprise owners in a Kenyan slum benefit from mentorship by an experienced entrepreneur in the same community. Using seven rounds of surveys, we find that mentorship increased profits by 20% relative to control. We conduct a formal business education intervention, which has no effect on profits despite changes in business practice. Our results demonstrate that missing information is a salient barrier to profitability, but the type of information matters: localized, specific information (like finding local suppliers) increases profit while abstract, general information (like how to do bookkeeping) does not. JEL Classification Codes: O12, L26, M53 ∗Thanks to conference and seminar participants at Arizona State, Notre Dame, the World Bank, York University, the Chicago Fed M&M Development Workshop, Development Day (Michigan), the Econometric Society NASM (Penn), IGC Growth Week at LSE, NEUDC (MIT), and the World Bank ABCDE for comments and insights, especially Nick Bloom, Paco Buera, Bill Evans, Xavi Giné, Joe Kaboski, Molly Lipscomb, David McKenzie, Ezra Oberfield, and Chris Woodruff. This paper also benefitted substantially from discussions by Paulo Bastos and Jing Cai. We thank the Ford Family Program and the Helen Kellogg Institute for International Studies for financial support, including Bob Dowd and Dennis Haraszko for their help coordinating the project, and Lawrence Itela, Jackline Aridi, and Maurice Sikenyi for their excellent work managing the project in Dandora. Contact Info: 434 Flanner Hall, Notre Dame, IN 46556. Brooks: [email protected]; Donovan: [email protected]; Johnson: [email protected]