The Dark Side of Solidarity. Hadnes, M., Vollan, B., & Kosfeld, M.
The Dark Side of Solidarity [pdf]Paper  abstract   bibtex   
We study the impact of demands for financial support from family members on entrepreneurial activity in a field and real effort experiment in Burkina Faso, West Africa. 154 tailors accepted a lucrative job opportunity and we measured their productivity in two distinct treatments where the tailors' solidarity network was either informed or not informed about the prospective income. Our results show that implicit and explicit solidarity obligations as well as the expectation of future claims for financial support lead to a significant reduction in productivity. The results provide evidence that solidarity networks hinder entrepreneurial activity. We further find that tailors expectation of future claims for financial support are as high as real demand from their family. Furthermore, tailors who migrated to the capital in order to open a business most strongly reacted to our peer-information treatment. This has important implications on individual investment decisions and therefore long-term economic growth.
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 title = {The Dark Side of Solidarity},
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 abstract = {We study the impact of demands for financial support from family members on entrepreneurial activity in a field and real effort experiment in Burkina Faso, West Africa. 154 tailors accepted a lucrative job opportunity and we measured their productivity in two distinct treatments where the tailors' solidarity network was either informed or not informed about the prospective income. Our results show that implicit and explicit solidarity obligations as well as the expectation of future claims for financial support lead to a significant reduction in productivity. The results provide evidence that solidarity networks hinder entrepreneurial activity. We further find that tailors expectation of future claims for financial support are as high as real demand from their family. Furthermore, tailors who migrated to the capital in order to open a business most strongly reacted to our peer-information treatment. This has important implications on individual investment decisions and therefore long-term economic growth.},
 bibtype = {article},
 author = {Hadnes, Myriam and Vollan, Björn and Kosfeld, Michael}
}
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