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

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  • Islam, Asadul
  • Choe, Chongwoo

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.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 16842.

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Date of creation: 2009
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Handle: RePEc:pra:mprapa:16842

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Keywords: Microcredit; child labour; school enrolment; instrumental variable; treatment effect;

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Cited by:
  1. Bruno Martorano & Chris De Neubourg & Marco Sanfilippo & UNICEF Innocenti Research Centre, 2012. "The Impact of Social Protection on Children: A review of the literature," Innocenti Working Papers inwopa666, UNICEF Innocenti Research Centre.
  2. Emerson, Patrick M. & McGough, Bruce, 2010. "Are Microloans Bad for Growth?," IZA Discussion Papers 5249, Institute for the Study of Labor (IZA).
  3. Chongwoo Choe & Ratbek Dzhumashev & Asadul Islam & Zakir H. Khan, 2011. "Corruption and Network in Education: Evidence from the Household Survey Data in Bangladesh," Development Research Unit Working Paper Series, Monash University, Department of Economics 08-11, Monash University, Department of Economics.
  4. Jing You & Samuel Annim, 2013. "The impact of microcredit on child education: quasi-experimental evidence from rural China," Brooks World Poverty Institute Working Paper Series, BWPI, The University of Manchester 18313, BWPI, The University of Manchester.

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