Wider Impacts of Microcredit : Evidence from Labor and Human Capital in Urban Mexico

This paper presents an estimation of the impacts of microcredit on labor and human capital following a quasi-experiment specifically designed to control for endogeneity and selection bias in the context of urban Mexico. We find important indirect trickle-down effects of credit through labor expenditure that benefit poor laborers; however, these effects were only observed when loan-supported enterprising households reached a level of income well above the poverty line. We also find significant, although small impacts of credit on children's schooling that could be potentially reinforced by improvements in lending technology, school grants and additional ex-ante preventive and ex-post protective risk-coping products