Working Paper: CEPR ID: DP17081
Authors: Oriana Bandiera; Robin Burgess; Erika Deserranno; Ricardo Morel; Imran Rasul; Munshi Sulaiman; Jack Thiemel
Abstract: The bulk of the world's extreme poor work in subsistence agriculture. Diversification out of this activity is often seen as the sine qua non of economic development. We evaluate whether the roll-out of a mainstay development intervention - microfinance - into poor, agricultural and largely unbanked populations in rural Uganda helps borrowers diversify into non-agricultural labor activities. The new microfinance product is targeted to women, and differs from existing sources of formal and informal credit in that it allows them to borrow larger amounts but has inflexible repayment dates and the use of funds is monitored. We find that the arrival of microfinance enables women to diversify out of agriculture and into service-based activities such as small-scale trading. This low-level structural change, however, is not transformative in that it does not lead - at least after two years - to significant uplifts in earnings, consumption, savings, investment and overall wealth.
Keywords: microfinance; diversification; Uganda; poverty; women; non-agricultural labor
JEL Codes: G51; O16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| microfinance access (O16) | labor activity diversification (J49) |
| labor activity diversification (J49) | economic welfare (D69) |