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WP202305-Labeled-loans-and-human-capital-investments.pdf
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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

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

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).

Sara Giunti

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

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).
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