Exit, Voice, and Vouchers: Using Vouchers to Train Microentrepreneurs––Observations from the Paraguayan Voucher Scheme

Abstract

The use of vouchers is increasingly advocated in development practice. Compared to the vast existing literature on microfinance, however, research on voucher projects is still scarce. This paper examines the training voucher scheme in Paraguay. By applying the theory of exit and voice to this case and to voucher systems in general, a theoretical framework is provided that identifies the advantages and limitations of training voucher schemes. It will be shown that voucher systems cannot solve the information problems inherent in markets and that not all microentrepreneurs benefit from voucher schemes in the same way. The concepts of “voice ex-ante” and “voice ex-post” as necessary ingredients of voucher schemes are introduced.