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Investment credit and child labour

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  • Nidhiya Menon

Abstract

It is generally assumed that credit has a positive effect on children's schooling among poor households. This article shows that need not be the case when households obtain credit for investment purposes. In fact, investment loans may not have any effect on the likelihood of schooling for children who work in their family business. Our estimates confirm that this is the case; credit used to finance investments has no effect on the odds of schooling for employed children. This may be because investment loans increase children's labour productivity, which in turn increases the opportunity cost of schooling. The results of this study suggest that improving access to credit may not, by itself, constitute a solution to the problem of child labour in developing countries.

Suggested Citation

  • Nidhiya Menon, 2010. "Investment credit and child labour," Applied Economics, Taylor & Francis Journals, vol. 42(12), pages 1461-1479.
    • Handle: RePEc:taf:applec:v:42:y:2010:i:12:p:1461-1479
    DOI: 10.1080/00036840701721471
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    References listed on IDEAS

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    1. Rubiana Chamarbagwala, 2004. "Returns to Education, Child Labor, & Schooling in India," Development and Comp Systems 0410003, University Library of Munich, Germany.
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    Cited by:

    1. Chakravarty, Satya R. & Pal, Rupayan, 2013. "Financial inclusion in India: An axiomatic approach," Journal of Policy Modeling, Elsevier, vol. 35(5), pages 813-837.
    2. Britta Augsburg & Ralph De Haas & Heike Harmgart & Costas Meghir, 2012. "Microfinance, Poverty and Education," IFS Working Papers W12/15, Institute for Fiscal Studies.
    3. Bernal, Carolina & Vlaicu, Razvan, 2023. "Child Labor, Rainfall Shocks, and Financial Inclusion: Evidence from Rural Households," IDB Publications (Working Papers) 13008, Inter-American Development Bank.
    4. Aïssata COULIBALY, 2016. "Revisiting the Relationship between Financial Development and Child Labor in Developing Countries: Do Inequality and Institutions Matter?," Working Papers 201619, CERDI.

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