- <u>All businesses: Revenues in the last full month for the main business added to those in any</u> other businesses run by the entrepreneur. This variable was winsorized at the 99th and 1st percentiles by survey wave, and coded to 0 for individuals who are not running a business. Note revenue in other businesses was only asked in the long-term follow-up round, and not in the short-term rounds.

- <u>Main business conditional on survival: Revenue in the main business as defined above, but</u> coded as missing for individuals not running a business.

- <u>Main profits and business index: This index averages the standardized z-scores of profits and sales</u> in the main businesses.

- <u>Total labor income: this adds the total profits in all businesses in the last month, as defined above,</u> to total earnings from paid work, farming, retirement and investment income (winsorized at the 99<sup>th</sup> and 1<sup>st</sup> percentiles) to get the total monetary income earned by the entrepreneur.

The mechanism outcomes in Table 2 are defined as follows using the long-term survey:

- <u>Main firm employees: the number of employees in the main firm of the business, coded as 0 for</u> closed firms, and winsorized at the 99<sup>th</sup> percentile. We use the 2016 number of employees as the short-run outcome to represent the size of the firm after 2 years.

- <u>Capital stock: Total value of machinery and equipment, other work tools, vehicles, furniture,</u> other business assets, and inventories and stocks, winsorized at the 1<sup>st</sup> and 99<sup>th</sup> percentiles. Excludes the value of land and buildings given the highly skewed distribution (only 16 percent of firms report a value) and that it can be intertwined with household assets. Asked only during the in-person survey. Coded as 0 for closed firms. We use the 2016 capital stock as the short-run outcome, to represent capital accumulated after 2 years.

- <u>Entrepreneurial Self-Efficacy: This measures their self-confidence in their ability to carry out</u> different business tasks, regardless of whether or not they currently operate a business. It is the mean of responses (answered on a five-point Likert scale ranging from 1 = Not at all confident to 5 = totally confident) of the following statements:

- To start a business

- Perceive well business opportunities

- Ensure the marketing of the company properly

- Correctly set the prices of products or services

- Negotiate well with other business owners

- Manage a team of staff well

- Manage a business well

- Write a good business plan

- Find capital financing when starting a business

The internal consistency of this scale is good, with a Cronbach alpha of 0.83. These questions were only collected during the in-person long-run survey, and only during the fourth short-term followup in 2016.

- <u>Personal initiative: This is the mean of responses (answered on a five-point Likert scale ranging</u> from 1 = Strongly disagree to 5 = Strongly agree) of agreement with whether in the past six months the following statements apply to them:

- I normally go beyond what is expected of me

- I take the initiative immediately even when others do not

- I use opportunities quickly in order to attain my goals

- I actively tackle problems

- I have a gift for implementing ideas

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