Loan regulation and child labor in rural India

Arbeitspapier

We study the impact of loan regulation in rural India on child labor with an overlapping-generations model of formal and informal lending, human capital accumulation, adverse selection, and differentiated risk types. Specifically, we build a model economy that replicates the current outcome with a loan rate cap and no lender discrimination by risk using a survey of rural lenders. Households borrow primarily from informal moneylenders and use child labor. Removing the rate cap and allowing lender discrimination markedly increases capital use, eliminates child labor, and improves welfare of all household types.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 6979

Classification and Topics

• Classification: Wirtschaft ; Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance ; Formal and Informal Sectors; Shadow Economy; Institutional Arrangements ; Informal Economy; Underground Economy
• Subject: child labor ; India ; informal lending ; lending discrimination ; interest rate caps ; Kinderarbeit ; Ländlicher Finanzmarkt ; Informeller Finanzsektor ; Kreditmarkt ; Regulierung ; Ländlicher Raum ; Indien

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Dasgupta, Basab ; Zimmermann, Christian
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/67145
• Last update: 10.03.2025, 11:42 AM CET