Investing in Boys and Girls: Schooling Decisions and Child Labor for - PowerPoint PPT Presentation

Introduction Literature Data and empirical strategy Results Conclusion Appendix Investing in Boys and Girls: Schooling Decisions and Child Labor for Long-Run Microfinance Participants in India Jean-Marie Baland 1 Timothée Demont 2 Rohini Somanathan 3 1 CRED, University of Namur 2 Aix-Marseille School of Economics 3 Delhi School of Economics UNU-WIDER conference on Human Capital and Growth Helsinki, June 2016

Introduction Literature Data and empirical strategy Results Conclusion Appendix Research project Study the long-run evolution in the living standards of microfinance participants Self-Help Groups : a large and interesting form of microfinance Up to 7 years of detailed panel data (observational) Data on member, nonmember and control households quantify and account for selection and spillover effects estimate treatment effect at the level of villages ( ITT ) and participants ( ATT )

Introduction Literature Data and empirical strategy Results Conclusion Appendix Research project Study the long-run evolution in the living standards of microfinance participants Self-Help Groups : a large and interesting form of microfinance Up to 7 years of detailed panel data (observational) Data on member, nonmember and control households quantify and account for selection and spillover effects estimate treatment effect at the level of villages ( ITT ) and participants ( ATT ) This paper focuses on investments in children’s education and underlying mechanisms Evolution of enrolment rates and child labor Supporting mechanisms

Introduction Literature Data and empirical strategy Results Conclusion Appendix Indian Self-Help Groups: informal village “microbanks” largest model of microfinance in India with very deep outreach: about 8 million groups and >100 millions families (NABARD, 2013) self-managed and self-owned informal institutions groups of 10-15 poor self-selected women from same village democratic and rule-based functioning weekly meetings, mostly about savings and credit (but also...) linked to commercial banks , part of priority sectors loans from pool of savings, interest revenues and bank loans for any purpose and without predetermined order conditional on group’s approval usually 2% monthly interest rate annual dividend on savings promoted by an NGO (PRADAN) at an avg cost of 20$ per member autonomous, sustainable and even profitable (CGAP 07,Baland et al. 11)

Introduction Literature Data and empirical strategy Results Conclusion Appendix Rural Jharkhand: one of the poorest areas of India 51.6% of rural population below poverty line (India 41.8%) - Tendulkar Committee 2009 Multidimensional Poverty Headcount gives 75% of poor (India 54%), ranked 19 out of 23 states - UNDP 2011 Female literacy: 52% (India 65.5%) - 2011 national census source: IFMR 2012

Introduction Literature Data and empirical strategy Results Conclusion Appendix Education in India and Jharkand Compulsory and free education up to 14 years In Constitution from 2002, enforced from 2010

Introduction Literature Data and empirical strategy Results Conclusion Appendix Education in India and Jharkand Compulsory and free education up to 14 years In Constitution from 2002, enforced from 2010 The educational system: (5+3)+(2+2) primary school (grades 1 to 5): 6 to 11 years 1 average GER: India 83.3%, Jharkhand 72.1% (DHS 2005-06) upper primary / middle school (grades 6 to 8): 12 to 14 years 2 low transition rate to middle school: India 65%, Jharkhand 46% lower secondary (grades 9 and 10): 15 to 16 years 3 higher secondary (grades 11 and 12): 17 to 18 years 4 most important for long-term poverty reduction and growth ... but only 40% nationally and 20% in rural areas ... and persistent 10 p.p. gender gap (World Bank, 2009)

Introduction Literature Data and empirical strategy Results Conclusion Appendix Jharkhand has one of the lowest secondary GER Figure: source: World Bank 2009 (data from DHS 2005-06)

Introduction Literature Data and empirical strategy Results Conclusion Appendix Slow improvement in completion rate and gender gap Figure: Secondary completed (source: NSS 61st round, 2004)

Introduction Literature Data and empirical strategy Results Conclusion Appendix Main findings Education outcomes are slow moving: effects become visible after 4 years Treated households limit drop-out of children at secondary-school level Child labor and school enrollment not substitutes Credit plays no direct role Effect stronger if Village far from secondary school Woman more aware Presence of younger kids in household

Introduction Literature Data and empirical strategy Results Conclusion Appendix Outline Introduction 1 Literature 2 Data and empirical strategy 3 Results 4 Education Child labor Heterogeneity analysis and mechanisms Conclusion 5 Appendix 6

Introduction Literature Data and empirical strategy Results Conclusion Appendix The impact of microfinance In general, difficult issue Great diversity of MFIs: location, objectives, institutional type... Many effects take time to materialize <> very few studies long-term Early literature (e.g. Pitt, Khandker, Morduch) generally finds positive impacts but often suffer from serious methodological flaws Recent RCTs (e.g. Duflo, Karlan) find much more limited impacts (if any) but suffer from little power, little external validity, short term

Introduction Literature Data and empirical strategy Results Conclusion Appendix The impact of microfinance In general, difficult issue Great diversity of MFIs: location, objectives, institutional type... Many effects take time to materialize <> very few studies long-term Early literature (e.g. Pitt, Khandker, Morduch) generally finds positive impacts but often suffer from serious methodological flaws Recent RCTs (e.g. Duflo, Karlan) find much more limited impacts (if any) but suffer from little power, little external validity, short term In particular, mixed evidence about schooling Positive impact No impact Negative impact Karlan Zinman 2010 Duflo et al. 2015a,b Augsburg et al. 2012 RCTs urban Philippines urban India + rural Morocco (ITT) Bosnia Maldonado Gonzalez 2008 Kaboski Townsend 2012 Wydick 1999 Others Bolivia Thailand Guatemala

Introduction Literature Data and empirical strategy Results Conclusion Appendix The conceptual role of SHGs: potential channels Direct cost : providing credit to pay for school expenditures (especially relevant at secondary level) + coordination (e.g. travel) Wealth : if economic situation of members improves, both direct and opportunity costs of schooling might decrease in relative terms Opportunity cost : if home business grows, child labor might increase to help at work and/or at home (especially for poorest) Child care : if adults need to migrate less, can devote more attention to enrolled children / need less help to look after toddlers Insurance : if SHGs allow to smooth income after negative shocks (Demont 2012), can avoid taking children out of school Preferences : education of children (girls) is often valued positively and discussed among SHG members Bargaining power : SHGs give a higher status and financial power to women Public good provision : SHGs could get involved in increasing the quality of the educational system

Introduction Literature Data and empirical strategy Results Conclusion Appendix Outline Introduction 1 Literature 2 Data and empirical strategy 3 Results 4 Conclusion 5 Appendix 6

Introduction Literature Data and empirical strategy Results Conclusion Appendix Data Stratified random sampling: comparable treated and control villages from 4 geographical clusters village statistics 4 rounds of own LSM survey: 2002 (baseline), 2004, 2006, 2009 round 1 used only for selection model in treated villages analysis focuses on balanced sample from round 2 to round 4 - if anything, lower bound of treatment effect 1,080 households from 36 villages 45% members, 35% nonmembers, 20% controls limited total attrition of 4% sample dynamics non-compliance of 13% sample dynamics use original membership - lower bound of treatment effect

Introduction Literature Data and empirical strategy Results Conclusion Appendix Econometric analysis: model Compare evolution of average outcomes in member and control villages: effect of village-level treatment ( ITT ) Y ihvt = α + β T v + β 3 ( T v ∗ R 3 t ) + β 4 ( T v ∗ R 4 t ) + C ′ it γ + H ′ ht η + V ′ v ν + ψ S vt + λ t + δ v + ǫ ihvt (1) T : time-invariant dummy = 1 if village v is a treated village R 3 and R 4: round (time) dummies C , H : vectors of pre-determined control variables at child (age, sex, rank) and hh. levels (land, size, age, composition, SC/ST, religion) V : pre-treatment village characteristics (size, road access, distance to market and schools, prop. SC and landless, 2001 avg literacy...) S : village-wide income shocks during 2 years before each round λ and δ : time and district / village fixed effects Std errors clustered at hh. level; obs. weighted by sampling proba.