Access to Microfinance, Female Empowerment and Fertility in Urban India

Jose A. Martinez, Duke University
Erica Field, Duke University
Rohini Pande, Harvard University

The past two decades have witnessed a rapid increase in the availability of microfinance services to females throughout the developing world. By increasing women's decision-making power within the household, increasing female labor force participation, or simply increasing household income, a greater credit access could reduce fertility. Exploiting quasi-random variation in transaction costs of getting a loan, this study provides rigorous empirical evidence on the long-run effects of credit access on childbearing choices and fertility. For the project, we tracked a sample of more than 3000 females over a decade (1999-2009) in Ahmedabad (India), who have never taken a loan before 1999. Preliminary results show that a greater access to microfinance increases credit usage; and more interestingly, it raises the rates of female labor force participation and women's share of household income. The latter effects lead to a reduction in child-bearing/fertility. Recently collected data will allow to disentangle the driving mechanisms.