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Stronger together? Shocks, educational investment, and self-help groups in Tanzania

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  • Francisco M. P. Mugizi

    (University of Dar es Salaam)

Abstract

Do income shocks affect educational investment? Can self-help groups or Savings and Credit Cooperative Organizations (SACCOs) mitigate the impact of shocks on educational investment? Using nationally representative panel data from Tanzania, I find that educational investment suffers because of income shocks. On a whole, I find that income shock is negatively correlated with educational investment measured in per school-age child educational expenditure. However, I find no strong evidence to suggest that self-help groups and SACCOs buffer against income shocks. This suggests that locally available buffering mechanisms such as self-help groups and SACCOs do not necessarily help households to cushion against income shocks partly because many of the shocks affect most people in a given locality. Therefore, relying solely on the local mitigating mechanisms may not be a good option. This calls for a need to design policies that would enable households to insure themselves beyond their local insurance mechanisms. Public insurance and social safety nets programs may help households to overcome income shocks.

Suggested Citation

  • Francisco M. P. Mugizi, 2022. "Stronger together? Shocks, educational investment, and self-help groups in Tanzania," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 24(2), pages 511-548, December.
    • Handle: RePEc:spr:jsecdv:v:24:y:2022:i:2:d:10.1007_s40847-022-00183-3
    DOI: 10.1007/s40847-022-00183-3
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    More about this item

    Keywords

    Shocks; Educational investment; Self-help groups; SACCOs; Tanzania;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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