Credit Programs for the Poor and Reproductive Behavior in Low Income Countries: Are the Reported Causal Relationships the Result of Heterogeneity Bias?

This paper examines whether participation in group-based lending programs significantly changes reproductive behavior and whether the gender of the program participant matters.

The paper:

• Uses data from a special survey carried out in 87 rural Bangladeshi villages;
• Estimates the impact of female and male participation in group-based credit programs on reproductive behavior;
• Pays close attention to issues of self-selection and endogeneity.

The authors state that:

• The quasi-experimental design of the survey and the credit programs surmount the problem of identification in the presence of unobserved heterogeneity;
• A comparison of their econometric method with simpler alternative approaches indicates the importance of attentiveness to endogeneity in evaluating credit programs.

The paper finds that:

• Empirical evidence provides no support for the hypothesis that female participation in group-based credit programs increases contraceptive use relative to non-participants;
• Fertility results, which indicate that female participation in credit programs has a positive, though not always significant, effect on fertility relative to non-participants, are consistent with the contraceptive results;
• The self-employment activities that credit programs foster are essentially different from wage labor market opportunities in that they do not necessarily raise the shadow cost of a child;
• Unlike female participation, male participation in credit programs reduces fertility and may slightly increase contraceptive use relative to non-participants.