Financial access and labor market outcomes: evidence from credit lotteries

Bernardus F Nazar Van Doornik, Armando Gomes, David Schoenherr and Janis Skrastins

No 1071, BIS Working Papers from Bank for International Settlements

Abstract: We assess the employment and income effects of access to credit dedicated to investment in individual mobility by exploiting time-series variation in access to credit through random lotteries for participants in a group-lending mechanism in Brazil. We find that access to credit for investment in individual mobility increases formal employment rates and salaries, yielding an annual rate of return of 12 percent. Consistent with a geographically broader job search, individuals transition to jobs farther from home and public transportation. Our results suggest that accessing distant labor markets through credit for investment in individual mobility yields high and persistent returns.

Keywords: access to credit; household finance; labor mobility; spatial mismatch (search for similar items in EconPapers)
JEL-codes: D14 G23 J62 R20 R23 (search for similar items in EconPapers)
Date: 2023-01
New Economics Papers: this item is included in nep-ban, nep-lab, nep-mfd and nep-ure
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