Labeled loans and human capital investments

Published on 24 January 2023

This Working Paper is an update of Labelled Loans and Human Capital Investments

This Working Paper has been replaced by Labeled loans and human capital investments

We provide rigorous evidence of the impacts of labelled microcredit on household sanitation investment and borrowing behaviour.

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Imperfect capital markets and commitment problems impede lumpy human capital investments. Labeled loans have been postulated as a potential solution to both constraints, but little is known about the role of the label in influencing investment choices in practice. We draw on a cluster randomized controlled trial in rural India to test predictions from a theoretical model, providing novel evidence that labeled microcredit is effective in influencing household borrowing and investment decisions and increasing take-up of a lumpy human capital investment, a toilet.

    Authors

    Britta Augsburg
    Britta Augsburg

    Associate Director

    Britta Augsburg is Associate Director at IFS and leads the work on Human Capital Development.

    Bet Caeyers
    Bet Caeyers

    Research Associate Yale University, Stockholm University and FAIR/Norwegian School of Economics (NHH)

    Bet is a Research Associate of the IFS who is an Adjunct Associate Professor at FAIR/Norwegian School of Economics (NHH).

    Person graphic

    Sara Giunti

    Bansi Malde
    Bansi Malde

    Research Fellow City, University of London

    Bansi is a Research Fellow of the IFS, a Senior Lecturer of Economics at the City, University of London and also a Fellow at the Global Labor Organisa

    Person graphic

    Susanna Smets

    Working Paper details

    DOI
    10.1920/wp.ifs.2023.0523
    Publisher
    Institute for Fiscal Studies

    Suggested citation

    Augsburg, B et al. (2023). Labeled loans and human capital investments. 23/05. London: Institute for Fiscal Studies. Available at: https://ifs.org.uk/publications/labeled-loans-and-human-capital-investments (accessed: 29 April 2025).

    Grant

    ESRC Institute for the Microeconomic Analysis of Public Policy

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