The Impact of Micro-Credit on Employment: Evidence from Bangladesh and Pakistan

Azhar Kahn, Twyeafur Rahman and Robert Wright ()
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Azhar Kahn: University of Strathclyde
Twyeafur Rahman: University of Strathclyde

No 10046, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper examines the impact of micro-credit on employment. Household-level data was collected, following a quasi-experimental design, in Bangladesh and Pakistan. Three borrower groups are compared: Current borrowers; Pipeline borrowers and Non-borrowers. Pipeline borrowers are included to control for self-selection effects. It is argued that micro-credit causes a substitution of employment away from employment-for-pay to self-employment. Therefore, the effect on total employment is ambiguous. OLS and fixed effects regression are used to examine separately self-employment and employment-for-pay between three groups of borrowers. For Pakistan, there is no evidence that micro-credit effects employment. However, for Bangladesh, there is robust evidence consistent with this hypothesis.

Keywords: micro-credit; poverty; self-employment (search for similar items in EconPapers)
JEL-codes: G21 I39 J22 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2016-07
New Economics Papers: this item is included in nep-dev and nep-lma
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Citations: View citations in EconPapers (1)

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Working Paper: The impact of micro-credit on employment: evidence from Bangladesh and Pakistan (2016)
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