Economic Geographies

I’ve seen some interestingly conflicting reports lately on the impacts of microfinance upon education.  Someone directed me to one which showed that microcredit clients were more likely to pull their children out of school to do the domestic work which parents gave up in order to run their microcredit-supported businesses, but I’ve also seen another which found that the children of microcredit clients were actually more likely to be in school, as their parents could more easily pay their school fees.  I can think of several different ways in which these elements of small businesses, children’s labor, and schooling could interact:

• Maybe the parents who pulled their children out of school to cope with successful businesses worked far from their homes and didn’t have the time to handle both business and domestic work, while successful clients whose children stayed in school worked closer to home and were more easily able to balance the two.
• Perhaps there’s some sort of U-shaped curve of parental income (as supported by microcredit) and the likelihood of children’s schooling.  Parents who are suddenly busier with work than previously, but are still too poor to afford to hire domestic help, may be the ones more likely to pull their children out of school – the low point of the U.  Parents whose businesses are quite successful, on the other hand, might better be able to pay for both domestic help and school fees.
• This is probably also correlated with whether parents were successfully able to repay their loans.  There must be some exogenous shocks to parental earnings that affect both their ability to repay their loans and their financial capacity to send their kids to school – drought, for instance.  So one might find microcredit clients pulling their kids out of school for reasons unrelated to their loans.

On an unrelated note, I came across a sentence I totally loved whilst rereading Understanding Poverty recently – “these essays presage what we feel is an important new trend in the economics of poverty: a willingness to take the social and psychological environment of the poor seriously.”  This is probably the most fruitful interaction possible between qualitative and quantitative disciplines in the study of development – a genuine respect for the psychosocial lives of the poor.

I’ve been reading a great deal recently about the linkages between food availability, intra-household resource allocation, and nutritional status, and it’s made me wonder about time-specific determinants of resource allocation.  That is, it’s clear that there are some systematic, long-term differences in allocation connected to overall education levels, overall income, and gender.  What I’m curious about are short-term, potentially more idiosyncratic effects: for instance, are women more or less likely to command adequate nutrition if they fall ill?  Are there differences between the amount of food received at home by, say, a young child in school (potentially also benefiting from a school lunch program) and an older child who drops out to care for younger ones or help in the fields? How much would one discount future education (for the young child) versus immediate ability to do work in that case, and how might one be able to change that calculus if it weren’t a long-term beneficial one?

The obvious connection to pro-poor financial services lies in the oft-noted social “shock” of women suddenly receiving access to credit when they previously had none, which disrupts existing allocation schemes and may result in tension or violence between women and their relatively disempowered husbands.  I can think of a few specific predictors of violence or generally negative reactions in this case – a history of prior violence being the most obvious one, or a husband’s unemployment, or a cultural injunction against women handling money – but I wonder if there are other traits that could be used to predict whether men might react poorly to women’s credit, and perhaps develop plans to defuse this scenario.  I’ll have to think some more about this.  The intersection between culture and credit is a fraught and fascinating one.