Loan Regulation and Child Labor in Rural India
We study the impact of loan regulation in rural India on child labor with an overlapping-generations model of formal and informal lending, human capital accumulation, adverse selection, and differentiated risk types. Specifically, we build a model economy that replicates the current outcome with a loan rate cap and no lender discrimination by risk using a survey of rural lenders. Households borrow primarily from informal moneylenders and use child labor. Removing the rate cap and allowing lender discrimination markedly increases capital use, eliminates child labor, and improves welfare of all household types.
|Date of creation:||Nov 2012|
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- Burgess, Robin & Pande, Rohini, 2004.
"Do Rural Banks Matter? Evidence from the Indian Social Banking Experiment,"
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Cahiers de recherche CREFE / CREFE Working Papers
123, CREFE, Université du Québec à Montréal.
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Springer;European Society for Population Economics, vol. 23(1), pages 169-198, January.
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""Credit Constraints and the Phenomenon of Child Labor","
98-99-12, California Irvine - School of Social Sciences.
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- Karan Singh, B, 2011. "Impact of adverse economic shocks on the Indian child labour market and the schooling of children of poor households," MPRA Paper 30958, University Library of Munich, Germany.
- Duryea, Suzanne & Lam, David & Levison, Deborah, 2007. "Effects of economic shocks on children's employment and schooling in Brazil," Journal of Development Economics, Elsevier, vol. 84(1), pages 188-214, September.
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