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While an important share of the rural population in Sub-Saharan Africa owns a non-farm enterprise (NFE), it is unclear how these businesses, especially among female owners, contribute to rural development. This study investigates the missing link between rural NFEs and children s education in developing countries. Using nationally representative data for Ghana and instrumental variable regressions that pass weak and overidentification restrictions, we estimate the impact of mother s non-farm entrepreneurship on the propensity of child secondary school enrolment. We find a strong significant positive effect of 10.6% points, corresponding to a relative increase of 27.2%. We find a positive effect on Junior High School enrolment but not on Senior High School enrolment, which relates to lower expenses and a better spread in payment for Junior High School education. The school-improving effect of mother s NFE is equally strong for boys and girls and for high- and low-educated mothers, and stronger for poorer households. While most of NFEs are small-scale and informal, our results show that even these businesses result in increased investments in child schooling and directly contribute to development. The results imply that NFEs can stimulate schooling among children of low-educated and poor mothers and thereby reduce inequality in rural education. Acknowledgement : We gratefuly acknowledge the International Food Policy Research Institute (IFPRI), Accra, Ghana for the support provided in the field research and VLIR-UOS for the travel grant for the research stay in Ghana.

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