Employment, Not Microcredit, is the Solution

Abstract:     
Most studies suggest that microcredit is beneficial but only to a limited extent. The problem lies not with microcredit but rather with microenterprises. With low skills, little capital and no scale economies, these businesses have low productivity and lead to meager earnings that cannot lift their owners out of poverty. Creating opportunities for steady employment at reasonable wages is the best way to take people out of poverty. The government is responsible for providing public services that are critical for increasing the productivity and the employability of the poor.

Keywords: Microfinance, bottom of pyramid, poverty reduction

JEL Classifications: I30, O16

Working Paper Series