Global Financial Crisis, Credit Access and Children: Evidence from Tanzania

We employ the difference-in-differences framework to examine households' access to credit as a possible transmission channel of the global financial crisis to child labor in Tanzania. To deal with the endogeneity of access to credit, we propose a new instrument that considers the regional concentration of available micro-finance institutions and the number of households' assets. Our instrument incorporates information on both demand and supply sides of credit access irrespective of whether a household has received credit. The empirical results reveal that a negative shock on credit-recipient households is associated with a significant increase in child labor in Tanzania