Essays on economics of microcredit and economics of fertility

Abstract

[ACCESS RESTRICTED TO THE UNIVERSITY OF MISSOURI AT AUTHOR'S REQUEST.] This dissertation is a combination of three essays on development economics. In essay 1, I examine the impact of microcredit use on several aspects of households in Vietnam. One of the main findings is that access to microcredit makes people feel more optimistic. To deal with the possible endogeneity of microcredit availability, I use fixed effect models and also consider an instrumental variables approach. This framework provides controls for both unobserved and observed attributes of households. I do not find clear evidence that microcredit use has significant impact on household profits and expenditures on healthcare, education, food, or assets. The difference between how households respond to permanent income and oneshot income can be used to explain Vietnamese households' consumption behaviors. Because microcredit loans are uncertain incomes, households may hesitate to spend them right away. This could be a reason why we do not see clear evidence of microcredit effects on household consumption behaviors. Essays 2 and 3 focus on economics of fertility. In particular, in essay 2, I evaluate the children quantity/quality trade-off model. Finding exogenous variations in the quantity of children is the key in empirical studies on the quantity-quality trade-off. Prior to 2003, the Vietnamese government restricted the number of children per family to two and the policy was binding on government workers. Using the Vietnam Household Living Standard Survey data, I find that after the relaxation of the two-child policy in 2003, government workers are more likely to have more than two children compared to the general population. In particular, the policy increases the percentage of families that have more than two children by 8 percent. I use this exogenous increase in the quantity of children to build an instrument for fertility to test the Becker model. My findings are an increase in the number of children reduces the school enrollment of first-born children, but increases the education spending on a first-born child who is enrolled. In essay 3, I examine the causal link from family size to labor force participation of members in families, including mothers, fathers, and the first-born children. The research design exploits variation in fertility due to preferences for male children. Adopting the instrument for fertility introduced by Angrist et al. (1998, 2010), we find that the preference for a mixed sibling-sex composition Angrist et al. described in their papers does not exist in Vietnam. Having two first girls is more likely to push couples to try for more in hope of having a boy, but having two first boys can be enough for them. Empirical results show members in families respond differently to an increase in family size, and the results are also very different for urban and rural households. Children in rural areas suffer the most from high fertility. An additional child makes more rural parents get involved in self-employment to find a way to support their families. Negative effects of fertility on parental working hours are found in samples of urban mothers and rural fathers.