Decomposition Analysis of Microfinance Borrowers in Nicaragua

• In Event: 280 - Regular Session. Development and Gender: Women and Empowerment

Abstract

Women's empowerment has long been stated as a central objective of the microfinance movement. Some studies have shown that women who take microfinance loans are more empowered than women who do not take such loans. However, those findings are based largely on narrow conceptualizations of empowerment, and most of them do not control for selection bias. This study attempts to rectify those problems by conducting a decomposition analysis of the earnings of men and women microfinance borrowers in Nicaragua. We show that men who borrow microfinance on average earn 35% more than do women borrowers. Decomposing that gap reveals that much of it cannot be explained by human capital, thus raising questions about discrimination in the market.

Authors

• Soren Hauge, Ripon College

• Dwight Neil Haase, University of Toledo