Evaluating the Impact of Microcredit on Women's Empowerment in Pakistan

Abstract

In this paper we evaluate the impact of microcredit on indicators of women’s empowerment in the urban slums of the Lahore district of Pakistan. A household level instrument that contains information on different dimensions of household decisions: child related, health, social mobility, economic and major household purchase decisions was specifically designed and implemented to explore the link between microcredit and women’s empowerment. After controlling for endogeneity in our estimation by using proxies for initial levels of empowerment, matching the controls and treated units on observable characteristics and finally instrumenting for the treatment, this paper finds no difference between the level of empowerment of treated and control units. Participation in the microcredit program is found to be insignificant in explaining all the outcome indicators of empowerment for the sampled households.