UC Davis Agricultural and Resource Economics

Julia Garlick, Yale University

Occupation Choices and Education Investments: Unintended Effects of Microcredit

Date and Location

Wednesday, February 24, 2016, 4:10 PM - 5:30 PM
ARE Library Conference Room, 4101 Social Sciences and Humanities


This paper demonstrates the existence of negative effects from microcredit on education outcomes. Among households that start a business as a result of the introduction of a microcredit lender, school enrollment for adolescents declines significantly. To understand the mechanisms driving this result, I develop and estimate a structural model of joint occupation and education choice with heterogeneous households that face frictions in the credit and labor market. Using data on the Thai Million Baht Village Fund program, I find that this quasi-experimental program induces increased self employment and decreased school enrollment among high productivity poor households, which has long-run implications for children’s future wage earnings. Their decreased enrollment is offset at the aggregate level by increased enrollment by less productive households. I show in counterfactual simulations that the former can be mitigated by making loans conditional on continued school enrollment. However, such policies must be carefully designed to allow borrowing by ultra-poor households whose children are already out of school.

Subscribe to Upcoming Seminars

Click here to receive weekly notice of all upcoming seminars via email.

Individual seminar and workshop announcements are circulated via separate mailing lists. To subscribe, send an email to the relevant list:

Contact Us

2116 Social Sciences and Humanities
University of California, Davis
One Shields Avenue
Davis, CA 95616

Main Office: 530-752-1515
Student Advising Services: 530-754-9536
DeLoach Conference Room: 530-752-2916
Main Conference Room: 530-754-1850