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Does Microcredit Reduce Gender Gap in Employment? An Application of Decomposition Analysis to Egypt

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  • Mohamed El Hedi Arouri

    () (Université d'Auvergne & EDHEC Business School, France)

  • Nguyen Viet Cuong

Abstract

In this paper, we examine the impact of microcredit on labor supply of men and women and subsequently investigate whether microcredit can reduce employment gap between men and women in Egypt. Overall, we show no significant effects of microcredit on labor supply of men. Yet, we find a strong effect on employment of women aged 22 to 65. Borrowing from a microcredit source increases the probability of working for women by 0.071. Since the proportion of working of women was around 2.1%, it implies microcredit can increase the proportion of working of women by around 30 percent. Using decomposition analysis, we find that micro-credit can reduce the employment gap between men and women by 0.43 percentage points. If 20 percent of women obtain microcredit, the employment gap between men and women would be decreased by 4.3 percentage points.

Suggested Citation

  • Mohamed El Hedi Arouri & Nguyen Viet Cuong, 2016. "Does Microcredit Reduce Gender Gap in Employment? An Application of Decomposition Analysis to Egypt," Working Papers 1017, Economic Research Forum, revised Jun 2016.
  • Handle: RePEc:erg:wpaper:1017
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