(with Olga Kondratjeva)
This paper uses data from the Living Standards Measurement Survey 1998 and 2005 from Nicaragua to identify the effect of borrowing behavior on children’s schooling. It examines how much schooling children obtain, when comparing children from borrowing and non-borrowing households and children from households with a male and a female borrower. Findings of the econometric analysis indicate that girls from non-borrowing households compared to girls from households with a female borrower and boys from non-borrowing households compared to boys from households with a male borrower tend to have better schooling outcomes. Additionally, there is some evidence that girls from households with a female borrower have lower schooling outcomes compared to girls from households with a male borrower. These findings provide support for the child-labor demand effect driven by substitutability/complementarity of time and skills between borrowers and children of the same gender.