Principal Investigators: Erica Field, Rohini Pande & José Martinez
Research Team: Meghana Katoch
LEAD Centre: Centre for Microfinance (CMF)
Focus Area: Credit
Project Geography: Ahmedabad, Gujarat, India
Partner: SEWA Bank
Status: Ongoing


The objective of the project is to evaluate the impact of access to microfinance institutions (MFIs) on female labor force participation and childbearing.

The past two decades have witnessed a rapid increase in the availability of microfinance loans to female entrepreneurs in South Asia. The expansion of access to formal loans allows formerly credit constrained individuals to expand or start small businesses and there by increase household income. On the other hand, by giving individual borrowers more rights over household resources, greater use of credit could shift decision-making power in favor of the woman. Both mechanisms have the potential to increase labor force participation and reduce fertility. Of course, an increase in labor force participation may also directly contribute to lower fertility.To the best of our knowledge, this study constitutes the first rigurous investigation on the long term causal effects of credit access on female labor force participation and fertility

Previous work by Erica Field and Rohini Pande evaluated the long-run impact of access to SEWA bank services on household income and female labor force participation. That study collected information on a sample of 3,000 SEWA Bank borrowers in the year 2009. The results provider igorous evidence that access to microfinance increased rates of female labor force participation and women’s share of household income, though it had negligible impact on total household income. The study also found that changes in the female labor force participation and the household earnings shares following microfinance access were associated with large reductions in the number of children in the household.

Given these results, we are now collecting a second round of follow-up data that focuses on demographic and reproductive outcomes, as well as more concrete measures of decision-making power within the household. Our outcomes of interest are total fertility (gathered through reproductive histories), demand for children by both husbands and wives, and female decision-making power. This will enable us to build on our previous impact evaluation and test whether changes in labor force participation and household earnings shares that result from greater access to microfinance loans are also associated with reductions in fertility and increases in female decision-making power within the household.