Taking control: how financial inclusion impacts labor supply
Social and familial financial transfers are common in low-income communities and have positive social effects
Abstract
Social and familial financial transfers are common in low-income communities and have positive social effects. To address this challenge, the authors designed and implemented a financial innovation to lower redistributive pressure among female cashew-processing workers: a blocked savings account into which gains in workers’ earnings get transferred. Take-up of the private account was substantially higher at 60%, compared to 14% for the non-private account. Being offered a private account increased workers’ attendance by 9.7% and earnings by 11.4%. The estimates imply that workers face a 9 to 23% social tax rate, and that the welfare benefits of informal redistribution may come at the cost of depressing labour supply and productivity.
This is an output from the Africa Gender Innovation Lab programme
Citation
Carranza, Eliana; Donald, Aletheia Amalia; Grosset, Florian; Anand, Supreet Kaur. Taking control : how financial inclusion impacts labor supply (English). Gender Innovation Lab Washington, D.C, World Bank Group, 2023
Links
Taking control: how financial inclusion impacts labor supply