Child Labor and Schooling Decisions among Self-Help Groups Members in Rural India

Jean-Marie Baland, Timothée Demont and Rohini Somanathan

No 1858, AMSE Working Papers from Aix-Marseille School of Economics, France

Abstract: This paper investigates the consequences of the participation in informal microfinance groups, known as Self-Help Groups (SHGs), on children’s education and work in rural India. We analyze first-hand data collected from a panel of households in areas where new groups were formed in 2002. We observe these households three times over a five year period, which allows us to examine medium-term effects of SHG participation. We find a robust and strong increase in treated children’s secondary school enrollment rate over time, by about 20 percentage points, to be compared with a baseline rate of 45%. This effect stems from a quicker grade progression, leading to lower drop-out rates between primary and secondary school. We find no decrease in overall child labor (but a reorientation towards part-time domestic work), indicating that there is no clear substitution between labor and education for children of secondary-school age in rural India. Contrary to what is usually believed, we show that credit does not play any direct role in the increased schooling. However, we find evidence that it partly follows from social interactions within SHGs, under the form of peer effects. Our findings indicate that microfinance groups can have large effects on the human capital of participants and their families, though such effects can take time to materialize and happen through unintended channels.

Keywords: microfinance; self-help groups; education; child labor; peer effects; India (search for similar items in EconPapers)
JEL-codes: C33 G21 O15 R2 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2020-05
New Economics Papers: this item is included in nep-dev and nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Child Labor and Schooling Decisions among Self-Help Group Members in Rural India (2020)
Working Paper: Child Labor and Schooling Decisions among Self-Help Group Members in Rural India (2020)
Working Paper: Child Labor and Schooling Decisions among Self-Help Groups Members in Rural India (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:aim:wpaimx:1858

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