Overlooked benefits of consumer credit growth: Impact on formal employment

Artikel

This paper investigates the role of consumer credit growth and expansion of consumer financial services on the reduction of informal employment in a developing country. I argue that financial services growth should lead to a decline in the share of informal employment given that consumers whose borrowing constraints are relaxed are more likely to purchase goods with consumer credit and more likely to demand formal contracts. I test this hypothesis by exploiting the regional variation in consumer credit growth in Turkey. In order to address the endogeneity of financial services, I employ minority population loss between 1893 and 1935 in as an instrument. The identification strategy relies on the fact that minorities were main users of financial instruments as they were the trading class in the former Ottoman Empire. The results provide evidence in favor of a positive causal impact of consumer credit growth on formal employment, especially on low-skilled labor.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: IZA Journal of Labor Policy ; ISSN: 2193-9004 ; Volume: 7 ; Year: 2018 ; Issue: 7 ; Pages: 1-35 ; Heidelberg: Springer

Classification and Topics

• Classification: Wirtschaft ; General Equilibrium and Disequilibrium: Financial Markets ; Informal Economy; Underground Economy ; Economic Impacts of Globalization: Labor ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Financial Institutions and Services: Government Policy and Regulation ; Labor Economics Policies ; Informal Labor Markets ; Particular Labor Markets: Public Policy
• Subject: Informal employment ; Consumer credits ; Financial services

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Aşık, Güneş A.
• Event: Veröffentlichung
• (who): Springer
• (where): Heidelberg
• (when): 2018

Further information

• DOI: doi:10.1186/s40173-018-0100-1
• Handle: http://hdl.handle.net/10419/222155
• Last update: 10.03.2025, 11:42 AM CET