Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/67145
Authors: 
Dasgupta, Basab
Zimmermann, Christian
Year of Publication: 
2012
Series/Report no.: 
Discussion Paper Series, Forschungsinstitut zur Zukunft der Arbeit 6979
Abstract: 
We study the impact of loan regulation in rural India on child labor with an overlapping-generations model of formal and informal lending, human capital accumulation, adverse selection, and differentiated risk types. Specifically, we build a model economy that replicates the current outcome with a loan rate cap and no lender discrimination by risk using a survey of rural lenders. Households borrow primarily from informal moneylenders and use child labor. Removing the rate cap and allowing lender discrimination markedly increases capital use, eliminates child labor, and improves welfare of all household types.
Subjects: 
child labor
India
informal lending
lending discrimination
interest rate caps
JEL: 
O16
O17
E26
Document Type: 
Working Paper

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