THE INFLUENCE OF MICROFINANCE ON THE EDUCATION DECISIONS OF RURAL HOUSEHOLDS: EVIDENCE FROM BOLIVIA

Jorge Maldonado

No 3606, Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE

Abstract: Increased access to education will be key in any efforts to improve the quality of rural life and the welfare of the next generation in developing countries. Microfinance programshave been among components of strategies for poverty alleviation that have attempted to address this challenge. This essay uses data from three different surveys of households of clients of microfinance Organizations (MFOs) in Bolivia to examine several channels through which microfinance may exert an influence on Education outcomes. Five channels are identified, designated as income, risk-management, child-labor demand, gender, and information effects. Based on an econometric specification that explains schooling decisions at the household level, regression models are used to examine determinants of education achievements and to make inferences about the potential influence of microfinance, through these channels, on those achievements. The results challenge usual assumptions in microfinance programs. In particular, for some ranges of household income and some types of borrowers, access to loans has conflicting effects on school enrollment. On the one hand, loans increase the demand for education as a result of income, risk-management, gender, and information effects. On the other hand, credit-constrained households that cultivate land or operate labor-intensive microenterprises discover new demands for child labor, either for farming, working in the microenterprise, or taking care of siblings while the mothers operate the new or expanded business. Significant program and policy consequences are derived from these paradoxical results.

Keywords: Microfinance (search for similar items in EconPapers)
JEL-codes: C25 (search for similar items in EconPapers)
Pages: 43
Date: 2005-08-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://repositorio.uniandes.edu.co/bitstream/handle/1992/7953/dcede2005-46.pdf

Related works:
Working Paper: THE INFLUENCE OF MICROFINANCE ON THE EDUCATION DECISIONS OF RURAL HOUSEHOLDS: EVIDENCE FROM BOLIVIA (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:col:000089:003606

Access Statistics for this paper

More papers in Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE Contact information at EDIRC.
Bibliographic data for series maintained by Universidad De Los Andes-Cede ().