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Child Labour and Schooling Responses to Access to Microcredit in Rural Bangladesh

Asadul Islam () and Chongwoo Choe ()

MPRA Paper from University Library of Munich, Germany

Abstract: Microcredit has been shown to be effective in reducing poverty in many developing countries. However, less is known about its effect on human capital formation. In this paper, we develop a model examining the relation between microcredit and child labour. We then empirically examine the impact of access to microcredit on children’s education and child labour using a new and large data set from rural Bangladesh. We address the selection bias using the instrumental variable method where the instrument relies on an exogenous variation in treatment intensity among households in different villages. The results show that household participation in a microcredit program may increase child labour and reduce school enrolment. The adverse effects are more pronounced for girls than boys. Younger children are more adversely affected than their older siblings and the children of poorer and less educated households are affected most adversely. Our findings remain robust to different specifications and methods, and when corrected for various sources of selection bias.

Keywords: Microcredit; child labour; school enrolment; instrumental variable; treatment effect (search for similar items in EconPapers)
JEL-codes: A20 C21 O12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cwa, nep-dev, nep-edu, nep-lab and nep-mfd
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed

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https://mpra.ub.uni-muenchen.de/16842/1/MPRA_paper_16842.pdf original version (application/pdf)

Related works:
Journal Article: CHILD LABOR AND SCHOOLING RESPONSES TO ACCESS TO MICROCREDIT IN RURAL BANGLADESH (2013) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:16842

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