Microcredit, labour and poverty impacts in Mexico.

Research output: Working paper

  • Authors:
  • Miguel Nino Zarazua
  • Paul Mosley

Abstract

Improved household accessibility to credit is identified as a significant determinant ofintra-household re-allocation of labour resources with important implications forproductivity, income, and poverty status. However, credit accessibility could also havewider impacts on poverty if it leads to new hires outside the household. This papercontributes to the existing literature on microcredit in two important ways: first, itinvestigates the routes through which microcredit reaches those in poverty outside thehousehold. We test whether, by lending to the vulnerable non-poor, microcreditprogrammes can indirectly benefit poor labourers through increased employment.Second, we conduct the study in the spatial dimension of urban poverty Mexico. This isrelevant when considering that, unlike in rural areas, labour often represents the onlysource of livelihoods to the extreme poor. Our findings point to significant trickle-downeffects of microcredit that benefit poor labourers; however, these effects are onlyobserved after loan-supported enterprising households achieve earnings well above thepoverty line. The paper concludes with reflections on the policy implications.

Bibliographical metadata

Original languageEnglish
Place of PublicationUnited Kingdom
Number of pages29
Publication statusPublished - Sep 2009

Publication series

NameBWPI Working Paper Series
PublisherBrooks World Poverty Institute
No.103