| Abstract: |
Improved household accessibility to credit is identified as a significant
determinant of intra-household re-allocation of labour resources with
important implications for productivity, income, and poverty status. However,
credit accessibility could also have wider impacts on poverty if it leads to
new hires outside the household. This paper contributes to the existing
literature on microcredit in two important ways: first, it investigates the
routes through which microcredit reaches those in poverty outside the
household. We test whether, by lending to the vulnerable non-poor, microcredit
programmes can indirectly benefit poor labourers through increased employment.
Second, we conduct the study in the spatial dimension of urban poverty Mexico.
This is relevant when considering that, unlike in rural areas, labour often
represents the only source of livelihoods to the extreme poor. Our findings
point to significant trickle-down effects of microcredit that benefit poor
labourers; however, these effects are only observed after loan-supported
enterprising households achieve earnings well above the poverty line. The
paper concludes with reflections on the policy implications. |