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Global financial crisis, credit access and children: Evidence from Tanzania

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  • Abdel-Latif, Hany
  • Murphy, Phil
  • Ouattara, Bazoumana

Abstract

This paper investigates the relationship between the recent global financial crisis and child labour in Tanzania. Using the difference-in-difference methodological framework, we identify households' access to credit as a possible transmission channel of the financial crisis to child labour. Unlike most of the existing studies that employ self-reported shocks, we exploit the incidence of the global crisis as an exogenous shock to compare households that were credit recipients before the crisis with households that were not recipients of credit either prior to the crisis or in its immediate aftermath. To deal with possible bias from the endogeneity of access to credit, this study proposes a new instrument that considers the regional concentration of available micro finance institutions and the number of households' assets. Unlike instruments suggested by the existing literature, our proposed instrument incorporates information on both demand and supply sides of credit access irrespective of whether a household has actually received credit. To avoid the wealth effect which would violate the exogeniety condition, we suggest to count the number of the household's assets no matter how much value they possess. By doing so, our instrument utilizes information on how risk averse a household is and therefore their chances of making a successful loan application. The empirical results reveal that a negative shock on credit-recipient households is associated with a significant increase in child labour in Tanzania.

Suggested Citation

  • Abdel-Latif, Hany & Murphy, Phil & Ouattara, Bazoumana, 2016. "Global financial crisis, credit access and children: Evidence from Tanzania," MPRA Paper 83577, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:83577
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    References listed on IDEAS

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    More about this item

    Keywords

    Global Financial Crisis; Child Labour; Credit Access; Tanzania;
    All these keywords.

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
    • J81 - Labor and Demographic Economics - - Labor Standards - - - Working Conditions
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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