THE BLACK SOCIAL ECONOMY: PERSEVERANCE OF BANKER LADIES IN THE SLUMS

In a neoliberal world where commercial financial services are controlled by elites, poor Black women in the slums are usually excluded from financial programs – even microfinance ones. In my empirical study of 491 people in Jamaica, Guyana and Haiti, I argue that the participation in informal banking systems by the poor, not only provides coping tools for livelihood survival, but banker ladies insert a program of social connectedness and political action when they organize these local resources. Banker ladies have a clear social justice agenda: to validate the business activities of marginalized people. Informal banks are a counter project to neoliberalism because it is focused on the collective, where poor Afro‐Caribbean women are creating alternative financial programs that are squarely part of the social economy.     

Women's political leadership and economic empowerment: Evidence from public works in India

Despite recent advances, women trail men in political participation, especially in developing countries where the long-term economic benefits from empowering women politically have not been well-researched. We use data from 163 villages of 12 main Indian states to explore whether requiring that village leadership positions be held by women (political reservation) affected uptake of economic opportunities via the National Rural Employment Guarantee Scheme. Reservation triggered increases in women's demand for work, program participation, and access to financial services that were sustained beyond the period of female political leadership. Enhanced female participation in program oversight, civic engagement, and electoral participation are plausible channels for such effects and political and economic empowerment seem to be complementary.     

Microfinance and gender inequality: cross-country evidence

Microfinance enables poor women to engage in income-generating activities, which helps them become financially independent, strengthening their decision-making power within the household and society. Consequently, microfinance has the potential to reduce gender inequality (GI). Case-study evidence from across the developing world both supports and contradicts this hypothesis. We therefore revisit this issue using macroeconomic cross-country panel data for 64 developing economies over the period 2003–2014. We find that women’s participation in microfinance is associated with a reduction in GI. However, regional interactions reveal that cultural factors are likely to influence the GI–microfinance nexus.     

WHY WAIT?: EXAMINING DELAYED WIC PARTICIPATION AMONG PREGNANT WOMEN

Despite the benefits of prenatal participation in the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), many eligible women either do not participate or begin participation late in their pregnancies. Using recent nationally representative data, we find that more disadvantaged women are more likely to access WIC and, with some notable exceptions, to participate earlier in their pregnancies. Hispanic women, especially those with language difficulties, enroll in WIC later in their pregnancies. Early WIC participation, particularly among teenagers, is less likely among women experiencing a first birth and depends on the mother’s early recognition of her pregnancy. (JEL I18, I30)     

Discounting telephone service: An examination of participation in the Lifeline Assistance Program using panel data

We examine the Lifeline Assistance Program to consider reasons people forgo a program providing financial benefits. Using panel data we employ a feasible generalized least squares estimation in which the dependent variable is the logit of the Lifeline participation rate. Our unique database incorporates characteristics of the eligible rather than the general population. We find incumbent telecommunications providers’ enrollment efforts are statistically significant, and that home ownership and female head of household are associated with greater participation; being elderly and less educated are associated with less participation. Additionally, we find that an increase in the local phone rate is associated with increased participation. Our findings are important for regulatory policy surrounding the Lifeline program and universal service programs generally.     

Should income transfers be targeted or universal? Insights from public pension influences on elderly mortality in Canada, 1921–1966

Abstract. We investigate the impact of Canada's means‐tested and universal public pension programs on the mortality rates of age groups eligible for pension benefits for the period 1921–1966. We find that only the universal program significantly reduced pension eligible age group mortality rates. The implied social value of the mortality risk reduction from this program is one‐tenth of the value per statistical life associated with contemporary government policy, meaning that Canadians did not need to place a high value on the life of a senior to justify the higher cost of the universal program. JEL classification: I3, J1     

Who benefit from government-led microfinance projects? Evidence from rural China

Drawing from a unique dataset of 2356 Chinese villages, this paper assesses the anti-poverty effect of the largest government-led microfinance project in the developing world. We find that the project can significantly increase the income level in the targeted villages. The main engine of the project lies in the expansion of access to nonfarm activities. We also highlight the importance of institutional circumstance in the effectiveness of the project. Specifically, a more democratized village with less political connection to local governments reaps more benefits from its participation.     

Benefit-induced female sole parenthood in Australia, 1973-85

The supporting mothers' benefit, introduced into Australia's Social Security Act in 1973, made nonwidowed single mothers eligible for direct Commonwealth transfer payments after a 6 month waiting period from date of separation or birth. The number of sole parent beneficiaries reached 176,730 by 1986, with an annual outlay of over US$1.3 billion. In essence, the supporting parents' benefits program legitimizes and facilitates pursuing a career as a single parent. Econometric estimates of the effects of economic and program-related variables on the benefits participation rates of Australian women during the 1973-86 period suggest that the program has had a substantial effect on several margins of individual choice. The outcome for the individual depends on economic, preference, and demographic variables for individuals, their potential or actual spouses, grandparents, and the benefits and eligibility characteristics of the government's parenting support system. In specifying a female sole parent supply function, the appropriate dependent variable is the female beneficiary participation rate--the number of supporting mother beneficiaries as a percentage of the population aged 15 years and over. Time series analysis suggests that, while the eligible population of lone females heading income units was growing before the 1973 introduction of the benefit scheme, there was also a substantial rise in this eligible population after 1973. However, this rise was less than the rise in female supporting parent beneficiaries between 1974-84. It appears that the female beneficiary rate has increased both because the eligible population of lone females heading income units increased in total and as a proportion of the female population and because of an increase in the benefit participation of those eligible. The data further provide evidence of relative wage and discouraged worker effects; coefficients of the weekly real value of benefits and supplementary assistance relative to female wages and the lagged female unemployment rate are positive.     

Microfinance spillovers: A model of competition in informal credit markets with an application to Indian villages

Despite widespread interest in the development of microfinance, spillover effects on the non-using population and redistributive issues remain largely unexplored. I study a competition game between microfinance institutions (MFIs) offering joint-liability loans and moneylenders offering individual loans in presence of adverse selection. I show that one unintended consequence of the entry of a microfinance sector in local credit markets can be to trigger an increase in the equilibrium informal interest rate, because MFIs tend to attract a disproportionately-safe share of the borrower pool away from incumbent moneylenders. The existence of such composition externality depends crucially on the size of the microfinance sector and the risk composition of the borrower pool. The model predicts a non-linearly increasing relationship between informal interest rates and MFIs' capacity in relatively safe credit markets, and no relationship in risky villages. I show evidence supporting these predictions, using a first-hand panel database that records all credit transactions over 8 years for a sample of about 1000 households living in Indian villages with extensive space and time variation in the size of their microfinance sector.     

Does women’s participation in agricultural technology adoption decisions affect the adoption of climate‐smart agriculture? Insights from Indo‐Gangetic Plains of India

Increased participation of women in the agricultural technology adoption decision by farm households is one of the key indicators of gender empowerment in the agricultural sector. This study examines whether women’s participation in the household decision to adopt agricultural technology affects the adoption of climate‐smart agriculture (CSA), using data collected from 1,267 farm households from two Indian states of Bihar and Haryana. When we considered the sex of the household head (using a dummy variable for male‐headed vs female‐headed household) as a basis of analyzing the role of gender in the adoption of CSA, we found that women in Haryana had no role in the adoption of CSA. On the contrary, when we considered women’s participation in technology adoption decisions as a basis of gender analysis, we found that women’s participation in technology adoption decisions in Haryana is much higher as compared to Bihar. Consequently, the likelihood to adopt CSA is higher in Haryana than in Bihar. We also found that wealth, training, and access to extension and market positively influenced CSA adoption. Qualitative analysis shows that women farmers prioritize family food security rather than farm income, and therefore, they are more likely to focus on CSA to ensure food security.     

Do microfinance institutions fulfil their promise? Evidence from cross-country data

The concept of microfinance promises poverty reduction and economic growth. We empirically challenge this economic and social promise in an attempt to prove its fulfilment. Our multivariate regressions of economic development variables such as per capita gross national income based on PPP converted to international dollars (GNI per capita PPP), GDP growth, as well as gross capital formation and labour participation rate against specific microfinance institutions’ (MFI) variables show that the success and performance of MFIs significantly influence economic development. Microfinance directly influences economic growth through the value that MFI performance adds to purchasing power. An indirect impact comes from an improvement in capital accumulation and employment rates. These insights are valuable as the interdependencies between microfinance and economic development that this article verifies offer new and progressive insights into purposeful action that can be taken to stimulate economic development and growth. Targeted development programmes as well as socially responsible investments can be applied in developing economies in order to strengthen their growth and alleviate poverty.     

Wages in a growing Russia

The robust Russian economic recovery after the 1998 financial crisis raised the economic standing of the population, especially for lowly paid workers, most of whom are women. In this paper I use the Russian Longitudinal Monitoring Survey from 1996 through 2002 to ask whether this helped to reduce the gender wage gap. I first focus on those whose wages are paid in full. Next, I ask about the gender composition of wage arrears as the overall extent of wage arrears dropped from 60 to 20 per cent after the 1998 crisis. I show that a temporary widening of the overall gender wage gap in 2000 is due to low‐wage women becoming more likely to receive their wages in full than low‐wage men. Except for this effect, the male–female pay difference in Russia exhibits a stable pattern.     

THE EFFECT OF WELFARE ASSET RULES ON AUTO OWNERSHIP,EMPLOYMENT, AND WELFARE PARTICIPATION: A LONGITUDINAL ANALYSIS

This paper investigates how asset tests for welfare eligibility affect auto ownership, employment, and welfare participation for single mothers without a college degree. We combine longitudinal data from the 1996 Survey of Income and Program Participation with data on state‐level welfare program rules from the Urban Institute and data on state‐level controls to test whether these single mothers were more likely to (1) own a car, (2) be employed, and (3) be off of welfare, depending on the welfare asset rules instituted in their state. We find evidence that, taken as a group, the asset rules have a statistically significant effect on the probability of car ownership. Ordinary least squares results and cross‐sectional two‐stage least squares (2SLS) results using the asset rules to instrument for car ownership show a large, positive, statistically significant effect of car ownership on employment. However, in 2SLS models controlling for prior car ownership and prior employment, the asset instruments are weaker and we do not find an effect of car ownership on employment. Of significance for policy makers, we find that the asset rules do not have a statistically significant joint effect on welfare participation, even after addressing possible endogeneity. (JEL I38, J68, J08)     

“Big Man” politics in the social economy: a case study of microfinance in Kingston,Jamaica

Microfinance and its “reinvention as bankers-for-the-poor” to create financial inclusion has not been effective everywhere. The literature seems to suggest that the social economy and microfinance help marginalized business people; yet no one considers that political bias interferes with the social economy, making it hard for it to be just. The promise of micro-credit was to achieve a double bottom line: first, the financial sustainability of the lending institution itself, and second, the social benefit of providing loans to low-income business people. Yet, alternative pitches of a social economy to “help people” fail to analyze the embedded power dynamics within the social economy. In this case study in downtown Kingston, Jamaica, 233 small-business people who depend on development finance because of social exclusion now find that these targeted programs are intertwined in partisan, sometimes dangerous, politics. As a result, oppressed people opt out of micro-banking programs to resist “Big Man” politics – the politicians or gangsters attempting to control them. In this study of 307 interviews, I analyze the informal politics of Dons and politicians who misuse micro-credit for their own ends. I find that the coupling of class biases and clientelist practices in the social economy discourages eligible business people from taking micro-loans, and argue that the microfinance industry needs to pay close attention to this issue if it is to continue to help marginalized business people.     

Positive versus negative incentives for loan repayment in microfinance: A game theory approach

In most of the methodologies used so far by microfinance institutions, negative incentives are predominant, which can contrast with these institutions’ social mission. This paper investigates whether the microfinance industry could benefit from using more positive incentives. The main results of our game model are twofold. First, (positive or negative) incentives increase “on‐time” repayments. Second, the client is more likely to repay her loan with the encouragement of a bonus scheme rather than under the pressure of a sanction, regardless of the amount. This paper therefore argues for the increased use of positive incentives in the industry.     

Individual versus Village Lending: Evidence from Montenegro

This paper analyzes differences in loan performance across two Montenegrin microfinance institutions with different lending techniques using a sample of individuals borrowing from both institutions. We make use of administrative data from both institutions over the period 2004–2013. While one institution relies on village associations for screening and monitoring of borrowers, the other institution uses the individual liability approach. We find that the likelihood to go into arrears is higher for the institution with a strictly individual lending technique, while the likelihood of going into arrears over 30 days is higher for the institution working with village associations. These results are robust to a variety of additional tests, including different definitions of arrears and subsamples. Our findings suggest that the institution using an individual lending technique provides certain flexibility to its clients, while the village‐based microfinance institution might face more strategic default behavior. We provide evidence that once a borrower is in arrears, (s)he is more likely to stay in arrears for more than 30 days in branches with a higher share of borrowers in arrears and in the village‐based lender. Our findings provide evidence that a village‐ or group‐based lending technique is not necessarily superior to the individual lending technique in terms of loan performance.     

Microfinance and missing markets

The existing theoretical analysis of microfinance focuses on the nature of the loan contract such as group liability. We draw attention to the role of missing or imperfect labour markets in understanding some of the important “second generation” debates in microfinance. Our analysis helps explain a number of puzzles in microfinance including high repayment rates with high interest rates, difficulties in scaling up projects, limited economic impact on borrowing households, low take‐up rates in recent microcredit programs, conflicting views about the interest rate elasticity of demand, and spurious mission drift. Microcredit can play a role when labour markets are underdeveloped, but it may also hinder structural transformation.     

Evaluating the long-run impact of an innovative anti-poverty programme: evidence using household panel data

Using a four-round panel data set from the first phase of the Challenging the Frontiers of Poverty Reduction – Targeting the Ultra Poor (CFPR – TUP) programme of BRAC, we investigate whether a one-off transfer of livestock assets improves well-being of the very poor women in Bangladesh. Programme impact is assessed on a wide range of monetary and nonmonetary measures of well-being using difference-in-difference (DD) as well as matching methods. We find significant positive long-term impact on food security, household savings, assets and participation in microfinance. Participant women are less likely to be in distress occupation and more into self-employment. However, the long-term effect is much smaller for most outcomes when compared to short- and medium-run impacts. We conclude by discussing the significance of the institutional and regional context for the observed time path of estimated programme effect.     

Inequality,Community Participation,and the Allocation of Collective Profits

This study analyzes the relationship between inequality in land holdings and participation in community assemblies in Mexican villages. Our identification strategy is unique in that it exploits contemporaneously exogenous variation in inequality due to historic and legal restrictions on the subdivision and sale of parcels in the communities we study. The data show that at an aggregate level, villages with more inequality in land holdings have lower participation rates. Individuals with greater land holdings relative to other community members are more likely to participate. This relationship intensifies with increasing inequality. We also consider how participation influences the allocation of public funds. We find greater investment in public goods where inequality is lower and participation higher. Finally, we demonstrate that those who are less likely to attend meetings are also less likely to receive government subsidies and benefits.