Finance and Demand for Skill: Evidence from Uganda

Abstract

In this paper the authors explore the empirical interaction between firm growth, financing constraints and job creation. Using a novel small business survey from Uganda, they find that the extent to which small businesses expand skilled employment as their sales and profits increase depends significantly on access to external funding. The results are robust to the inclusion of various firm level controls, region and sector fixed effects. They address reverse causality concerns by providing empirical evidence using planned hiring regression specifications