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The path to shared prosperity: Leveraging financial services outreach to create decent jobs in developing countries

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  • Coulibaly, Aïssata
  • Yogo, Urbain Thierry

Abstract

Understanding the channels through which financial inclusion affects poverty reduction remains a key policy issue in development debates. Considering that labour is the main asset of the poor, this paper investigates the effect of financial outreach on the number of workers living below the poverty line. It also analyses whether this effect may occur through increasing investment, remittances, private credit and the number of rich workers who can provide employment opportunities to the poorest. The study finds that improving financial outreach through additional bank branches reduces the number of poor workers, especially in developing countries hit by macroeconomic instability. In addition, this effect occurs mainly through credit expansion, while other channels substitute financial outreach in countries with a low level of financial development.

Suggested Citation

  • Coulibaly, Aïssata & Yogo, Urbain Thierry, 2020. "The path to shared prosperity: Leveraging financial services outreach to create decent jobs in developing countries," Economic Modelling, Elsevier, vol. 87(C), pages 131-147.
  • Handle: RePEc:eee:ecmode:v:87:y:2020:i:c:p:131-147
    DOI: 10.1016/j.econmod.2019.07.013
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    More about this item

    Keywords

    Decent job; Working poverty; Financial outreach; Bank penetration; Remittances; Private credit; Trickle-down hypothesis; Developing countries;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
    • J8 - Labor and Demographic Economics - - Labor Standards
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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