This business is mine! Intra-household effects of property rights in micro-enterprises

Abstract

This paper studies the intra-household impact of property rights in micro-enterprises. A randomized field experiment on firm formalization in Benin provides exogenous variation in individual property rights. The results reveal significant gender differences. Women entrepreneurs who formalize invest more in their businesses and are more likely to pay to conceal a large windfall transfer from their husbands—a measure of intra-household inefficiency. These findings suggest that while stronger property rights secure and incentivize investment, they may also reduce household cooperation, leading to efficiency losses. Despite this trade-off, women report higher overall well-being when granted formal property rights. In contrast, formalization improves intra-household efficiency for men, likely by reinforcing their authority over household decision-making. Consistently, male entrepreneurs who formalize are more likely to separate business and household finances and to resist pressure to share resources.