Graduation Year


Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts


International Relations

Reader 1

Kenneth P. Miller

Reader 2

Roderic A. Camp

Reader 3

Gregory D. Hess

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Rights Information

© 2011 Lauren C. Smith


Microfinance has become one of the most promising tools for development and poverty alleviation over the past two decades. Millions of borrowers around the globe have utilized microcredit to start or expand their small businesses and raise their household income. One poverty-induced problem microfinance could potentially alleviate is child labor. Despite international legislation prohibiting it, child labor continues to deprive millions of children of their right to education. Without education, there is little hope for a country to increase productivity and wealth in the future. A number of scholars have highlighted a negative correlation between credit rationing and child labor. However, there are no studies that examine whether or not children are less likely to work in households that participate in microfinance programs. In some circumstances, microcredit may increase household income and induce parents to withdraw their children from work while in others, raising the household income level may lead children to work more. In low-income countries with numerous microfinance institutions, many children work despite their parents’ access to credit. In order to examine this paradoxical phenomenon, this thesis presents a number of econometric models which analyze both child labor and credit at the household level. Though these models are vital in explaining the relevant trends, a purely economic analysis fails to capture the political and cultural factors that also engender child labor. To illustrate this complex relationship between economics and mores, this thesis highlights the impact of microfinance on child labor in Bangladesh. Bangladesh is an ideal country for this study because microfinance and child labor are both endemic. Finally, conclusions drawn from this analysis inform policy recommendations to amplify the effectiveness of microfinance on diminishing child labor.


Previously linked to as:,39

OCLC number: 549514825