Loan Regulation and Child Labor in Rural India
AbstractWe study the impact of loan regulation in rural India on child labor with an overlapping-generations model of formal and informal lending, human capital accumulation, adverse selection, and differentiated risk types. Specifically, we build a model economy that replicates the current outcome with a loan rate cap and no lender discrimination by risk using a survey of rural lenders. Households borrow primarily from informal moneylenders and use child labor. Removing the rate cap and allowing lender discrimination markedly increases capital use, eliminates child labor, and improves welfare of all household types.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6979.
Length: 25 pages
Date of creation: Oct 2012
Date of revision:
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Other versions of this item:
- Basab Dasgupta & Christian Zimmermann, 2012. "Loan Regulation and Child Labor in Rural India," CESifo Working Paper Series 3992, CESifo Group Munich.
- Basab Dasgupta & Christian Zimmermann, 2012. "Loan Regulation and Child Labor in Rural India," Working Paper Series 70_12, The Rimini Centre for Economic Analysis.
- Basab Dasgupta & Christian Zimmermann, 2012. "Loan regulation and child labor in rural India," Working Papers 2012-027, Federal Reserve Bank of St. Louis.
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
This paper has been announced in the following NEP Reports:
- NEP-AGR-2012-11-17 (Agricultural Economics)
- NEP-ALL-2012-11-17 (All new papers)
- NEP-BAN-2012-11-17 (Banking)
- NEP-DEM-2012-11-17 (Demographic Economics)
- NEP-DEV-2012-11-17 (Development)
- NEP-DGE-2012-11-17 (Dynamic General Equilibrium)
- NEP-IUE-2012-11-17 (Informal & Underground Economics)
- NEP-MFD-2012-11-17 (Microfinance)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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