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Children's schooling in Nicaragua: What is the link between educational achievement, borrowing, and gender?

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  • Olga Kondratjeva
  • Joyce J. Chen

Abstract

The impact of credit has been widely studied, and yet little is known about the effect of formal versus informal loans. In this paper, we contrast the two and their impact on children's schooling using longitudinal data from Nicaragua. To address endogeneity, we utilize both household fixed effects and locality–year fixed effects. Our results indicate that, on average, children from borrowing households fare worse than children from nonborrowing households, with male borrowers having a disproportionately negative effect on boys, and vice versa for girls and female borrowers. Informal credit is found to have a protective effect on school attendance, but the effects of formal and informal credit on cumulative schooling are found to be statistically equivalent. However, this appears to mask considerable heterogeneity within informal borrowing.

Suggested Citation

  • Olga Kondratjeva & Joyce J. Chen, 2018. "Children's schooling in Nicaragua: What is the link between educational achievement, borrowing, and gender?," Review of Development Economics, Wiley Blackwell, vol. 22(3), pages 1125-1145, August.
  • Handle: RePEc:bla:rdevec:v:22:y:2018:i:3:p:1125-1145
    DOI: 10.1111/rode.12377
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