The Relationship between Child Labor and Microfinance: Evidence from Rural Bangladesh

Abstract

This paper analyzes the relationship between availability of microfinance and child labor in rural Bangladesh. Using household-level fixed effect in panel data, this paper shows that the stock of women's recent loans negatively impacts child labor. A 10 percent increase in the stock of recent borrowing by women reduces child labor supply by 2.58 percent. By contrast, the paper does not find any significant effect of male credit on child labor.