The Impact of Micro-credit on Employment : Evidence from Bangladesh and Pakistan

Khan, Azhar and Rahman, Twyeafur and Wright, Robert E. (2016) The Impact of Micro-credit on Employment : Evidence from Bangladesh and Pakistan. Discussion paper. Institute for the Study of Labor (IZA), Bonn.

[thumbnail of Khan-etal-IZA-DP-2016-The-impact-of-micro-credit-on-employment-evidence-from-Bangladesh]
Preview
 Text. Filename: Khan_etal_IZA_DP_2016_The_impact_of_micro_credit_on_employment_evidence_from_Bangladesh.pdf
Final Published Version
Download (257kB)| Preview

Abstract

This paper examines the impact of micro-credit on employment. Household-level data was collected, following a quasi-experimental design, in Bangladesh and Pakistan. Three borrower groups are compared: Current borrowers; Pipeline borrowers and Non-borrowers. Pipeline borrowers are included to control for self-selection effects. It is argued that micro-credit causes a substitution of employment away from employment-for-pay to self-employment. Therefore, the effect on total employment is ambiguous. OLS and fixed effects regression are used to examine separately self-employment and employment-for-pay between three groups of borrowers. For Pakistan, there is no evidence that micro-credit effects employment. However, for Bangladesh, there is robust evidence consistent with this hypothesis.

ORCID iDs

Khan, Azhar, Rahman, Twyeafur ORCID logoORCID: https://orcid.org/0000-0002-1305-1136 and Wright, Robert E. ORCID logoORCID: https://orcid.org/0000-0001-8761-1020;
CORE (COnnecting REpositories)