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Child Labor And Schooling Responses To Access To Microcredit In Rural Bangladesh

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  • ASADUL ISLAM
  • CHONGWOO CHOE

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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Suggested Citation

  • Asadul Islam & Chongwoo Choe, 2013. "Child Labor And Schooling Responses To Access To Microcredit In Rural Bangladesh," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 46-61, January.
  • Handle: RePEc:bla:ecinqu:v:51:y:2013:i:1:p:46-61
    DOI: j.1465-7295.2011.00400.x
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    Cited by:

    1. Jing You & Samuel Annim, 2014. "The Impact of Microcredit on Child Education: Quasi-experimental Evidence from Rural China," Journal of Development Studies, Taylor & Francis Journals, vol. 50(7), pages 926-948, July.
    2. Ghulam Abid & Binish Khan & Zeeshan Rafiq & Alia Ahmed, 2015. "Child Trade-Off Theory: A Theoretical Discussion on the Structure, Causes, Consequences and Eradication of Child Labor," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 4(1), pages 24-34, March.
    3. Oryoie, Ali Reza & Alwang, Jeffrey & Tideman, Nicolaus, 2017. "Child Labor and Household Land Holding: Theory and Empirical Evidence from Zimbabwe," World Development, Elsevier, vol. 100(C), pages 45-58.
    4. Emerson, Patrick M. & McGough, Bruce, 2010. "Are Microloans Bad for Growth?," IZA Discussion Papers 5249, Institute for the Study of Labor (IZA).
    5. Chongwoo Choe & Ratbek Dzhumashev & Asadul Islam & Zakir H. Khan, 2011. "Corruption and Network in Education: Evidence from the Household Survey Data in Bangladesh," Monash Economics Working Papers 08-11, Monash University, Department of Economics.
    6. Islam, Asadul, 2015. "Heterogeneous effects of microcredit: Evidence from large-scale programs in Bangladesh," Journal of Asian Economics, Elsevier, vol. 37(C), pages 48-58.
    7. Lutfunnahar Begum & Philip J. Grossman & Asadul Islam, 2014. "Parental Attitude and Investment in Children’s Education and Health in Developing Countries," Monash Economics Working Papers 30-14, Monash University, Department of Economics.
    8. Jacobus Hoop & Patrick Premand & Furio Rosati & Renos Vakis, 2018. "Women’s economic capacity and children’s human capital accumulation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 31(2), pages 453-481, April.
    9. Furio C. Rosati, 2016. "Can cash transfers reduce child labor?," IZA World of Labor, Institute for the Study of Labor (IZA), pages 293-293, September.
    10. Dinh, Cuong & Nguyen, Cuong & Pham, Phuong, 2014. "Does Microcredit Have an Impact on Children? Evidences from Vietnam," MPRA Paper 71092, University Library of Munich, Germany.
    11. repec:spr:jglont:v:8:y:2018:i:1:d:10.1186_s40497-018-0088-4 is not listed on IDEAS
    12. repec:pid:journl:v:55:y:2016:i:4:p:853-870 is not listed on IDEAS
    13. Marco Sanfilippo & Bruno Martorano & Chris De Neubourg, 2012. "The Impact of Social Protection on Children: A review of the literature," Papers inwopa666, Innocenti Working Papers.

    More about this item

    JEL classification:

    • A20 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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