Financial Access and Labor Market Outcomes: Evidence from Credit Lotteries
36 Pages Posted: 9 Mar 2021 Last revised: 13 Jul 2023
Date Written: March 8, 2021
We assess the employment and income effects of access to credit dedicated to investment in individual mobility by exploiting time-series variation in access to credit through random lotteries for participants in a group-lending mechanism in Brazil. We find that access to credit for investment in individual mobility increases formal employment rates and salaries, yielding an annual rate of return of 12 percent. Consistent with a geographically broader job search, individuals transition to jobs farther from home and public transportation. Our results suggest that accessing distant labor markets through credit for investment in individual mobility yields high and persistent returns.
Keywords: access to credit, household finance, labor mobility, spatial mismatch
JEL Classification: D14, G23, J62, R20, R23
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