(with Xinwei Dong, Huazhong University of Science and Technology)

The impact of microcredit on human capital accumulation remains uncertain in the literature. While microcredit might boost educational investment due to increased income, it could also hinder it by raising labor demand. This study provides new evidence using a large-scale microcredit program in Thailand that allocates one-million Baht to every village regardless of its size as a quasi-experiment. The program aims to boost household investment in small businesses. Through instrumental variable analysis, it is found that participation in the microcredit program led to a 50% increase in school enrollment among children, particularly those beyond compulsory education age. The increased enrollment could be attributed to a reduction in children's employment, including their involvement in family businesses. Long-term effects showed a higher likelihood of children continuing education beyond compulsory levels, indicating sustained human capital investment within households. Positive impacts could be linked to factors such as mismanagement and misappropriation of funds, highlighting real-world complexities of microcredit programs.