| Abstract: |
Increased access to education will be key in any efforts to improve the
quality of rural life and the welfare of the next generation in developing
countries. Microfinance programshave been among components of strategies for
poverty alleviation that have attempted to address this challenge. This essay
uses data from three different surveys of households of clients of
microfinance Organizations (MFOs) in Bolivia to examine several channels
through which microfinance may exert an influence on Education outcomes. Five
channels are identified, designated as income, risk-management, child-labor
demand, gender, and information effects. Based on an econometric specification
that explains schooling decisions at the household level, regression models
are used to examine determinants of education achievements and to make
inferences about the potential influence of microfinance, through these
channels, on those achievements. The results challenge usual assumptions in
microfinance programs. In particular, for some ranges of household income and
some types of borrowers, access to loans has conflicting effects on school
enrollment. On the one hand, loans increase the demand for education as a
result of income, risk-management, gender, and information effects. On the
other hand, credit-constrained households that cultivate land or operate
labor-intensive microenterprises discover new demands for child labor, either
for farming, working in the microenterprise, or taking care of siblings while
the mothers operate the new or expanded business. Significant program and
policy consequences are derived from these paradoxical results. |