Employment, Not Microcredit, is the Solution

14 Pages Posted: 14 Feb 2007  

Aneel G. Karnani

University of Michigan, Stephen M. Ross School of Business

Date Written: January 2007

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 Classification: I30, O16

Suggested Citation

Karnani, Aneel G., Employment, Not Microcredit, is the Solution (January 2007). Ross School of Business Paper No. 1065. Available at SSRN: https://ssrn.com/abstract=962941 or http://dx.doi.org/10.2139/ssrn.962941

Aneel G. Karnani (Contact Author)

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States

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