|
|  |
Impact of Microfinance on Rural Employment:Evidence
on Promoting Self-Employment
5.1
Introduction
Other
than rent from land and interest earning from credit advances,
income in rural Bangladesh is almost invariably rooted in employment.
Thus, impact of any program on income would be routed through
the latter’s impact on employment. In case of the microfinance
programs in Bangladesh, this is expected to be more so since
self-employment activities are often targeted by these programs.
In this chapter, we take further look into the rural employment
structure and on changes in the nature of participation in wage
and self-employment activities. The chapter also provides further
evidence to suggest that the MFIs have been able to promote
self-employment activities, which have reduced the seasonal
variability in employment and income of the rural people, especially
the poor. Returns to some of the activities have been estimated
and it has been shown that the MFIs provide a significant part
of the working capital required for undertaking these activities.
Rural people are generally
engaged in four broad categories of employment: on-farm self-employment,
wage employment, self-employment in non-farm activities, and
salaried jobs. On-farm self-employment is unpaid and returns
to labor is not readily translated into cash since it includes
such activities as, crop production, home gardening, on-farm
processing of crops, raising poultry & livestock and pond-fishery.
In case of self-employment on non-farm activities, one may point
at the presence of unpaid labor when there are multiple members
working for the same activity. However, there is a cash return
to the labor, which the participating household receives. In
case of wage employment and salaried jobs, returns are specific
to individuals. In this chapter, the focus is on wage employment
and self-employment in non-farm activities – the other two have
been purposively kept aside.
5.2
Participation in Rural Labor Market: Concepts
The
presentation in this chapter makes use of several concepts with
regards to the nature of participation in individual markets.
As with the case of participation in MFI programs, discussed
in Chapter 3, we propose an alternative set of concepts in order
to better capture the dynamics of rural labor market and better
comprehend the area of MFI impacts. In the previous chapter,
we had already noted that participation in the labor market
could be quite irregular, which may be differentiated across
time. Thus, a person may be identified to be a regular participant
in a market if he/she transacts with the market at least once
every year. With a second approach, one may identify those who
participate in a market in all seasons of a year. There is a
second dimension, which characterizes the type of participation
in the labor market – number of broad activities that a person
engages in. Taking account of these factors, Table 5.1 shows
the operational definitions of various types of participation
(in labor market) that have been adhered to in this chapter.
Table
5.1
Schema
of Participation in Various Labor Markets
In our case, we look into wage employment and self-employment;
and not all cells in the above schema have been addressed. Broadly,
participation in a particular market is grouped into two: regular
and irregular. Amongst all adult persons, there is obviously
a third group, who do not participate in a market at all. Of
those who are regular, involvement in an activity may be in
all seasons, which we identify as “round-the-year”, while others
are seasonally involved. Amongst those who have “round-the-year”
involvement, those who engage in only one market, are, for convenience,
identified as “full-time”.
The aforementioned abstract categories are proposed to understand
the dynamics of rural labor market and assess how MFI programs
influence the outcomes in this market. An increase in “regular”
workforce would imply increase in market-based activities, which
are sustained from one year to another. Given an increase in
regular workforce, an increase in “round-the-year” employment
would imply increase in activities that are not dominated by
seasonal availability of resources, including labor. In contrast,
seasonal involvement, in some cases, reflects residual character
of such activities, which supplement income at the margin. Finally,
“full-time” involvement reflects those activities, which reveal,
at least over the period of the survey, that can accommodate
individuals throughout the year.
5.3
Participation in Rural Labor Market: Evidence
Member-specific information on employment for three consecutive
years allowed us to group all adults into several categories
discussed in the previous section. The aggregate compilation
is provided in Table 5.2, while the details by MFI-participation
and eligibility are presented in Table 5.A.1 at the end of this
chapter. About 80 percent of adult females and 35 percent of
adult males do not participate in either wage or self-employment
activities. Such non-participation is highly correlated with
landownership and wealth status of the households. Amongst the
land-rich households (non-eligible in our classification – see
Table 5.A.1), about 95 percent of the females and 50 percent
of the males do not participate in either labor activity. This
generally reflects higher self-employment on own farms and greater
number of youth in education.
In contrast, percentages of non-participants in wage and self-employment
activities are respectively, 30 and 20 for females and males.
Table 5.2 Distribution of 14-59 Years
old persons, according to their participationIn wage labor market and self-employment
|
Self-employment
Wage
employment
|
Regular
|
Irregular
|
Non-participant
|
Row
total
|
|
Females
|
|
Regular
|
0.1
|
0.3
|
1.9
|
2.2
|
|
Irregular
|
0.5
|
2.0
|
5.2
|
7.7
|
|
Non-participant
|
3.0
|
7.1
|
80.0
|
90.1
|
|
Column
Total
|
3.5
|
9.4
|
87.1
|
100
(4689)
|
|
Males
|
|
|
1.9
|
4.7
|
10.5
|
17.1
|
|
Irregular
|
5.4
|
10.1
|
8.5
|
24.0
|
|
Non-participant
|
13.5
|
10.7
|
34.8
|
58.9
|
|
Column
Total
|
20.8
|
25.5
|
53.7
|
100
(4929)
|
Relatively, a
higher percentage of both males and females participate in self-employment
activities, compared to wage labor. As one would expect, regular
involvement is relatively higher among males than females. Such
involvement is also found to be higher in case of self-employment
activities.
Table 5.3
Characteristics
of Different Labor and Non-Labor Groups
|
Description
|
Non-laborer
|
Pure wage laborer
|
Pure self-employment
|
Mixed laborer
|
All
|
|
Female
|
|
Age, year
|
29.5
|
32.5
|
32.3
|
32.3
|
29.9
|
|
Class passed
|
3.3
|
0.7
|
2.0
|
1.0
|
3.0
|
|
% of village land flood
|
36.9
|
33.0
|
27.9
|
23.3
|
35.8
|
|
Family size, 2000
|
6.8
|
5.4
|
6.1
|
5.2
|
6.7
|
|
Homestead land, decimal
|
12.0
|
7.7
|
8.4
|
6.6
|
11.4
|
|
Operational holding, 1998
|
127.3
|
40.4
|
52.3
|
16.5
|
115.5
|
|
Operational holding, 2000
|
115.6
|
32.0
|
55.0
|
19.5
|
105.4
|
|
Number of days away
from home in last 6 months
|
15.4
|
6.0
|
6.7
|
2.8
|
14.1
|
|
Total Income, 1998
|
47936
|
28989
|
33950
|
27242
|
45528
|
|
Total Income, 2000
|
57253
|
30247
|
44975
|
31450
|
54591
|
|
Land owned in 1997, decimal
|
162
|
51
|
71
|
31
|
147
|
|
Land owned in 2000, decimal
|
162
|
49
|
74
|
32
|
147
|
|
Total labor days in 3 years
|
0
|
182
|
151
|
228
|
24
|
|
Male
|
|
Age, year
|
26.5
|
27.6
|
31.4
|
30.7
|
27.6
|
|
Class passed
|
7.8
|
3.7
|
5.4
|
2.3
|
6.6
|
|
% of village land flood
|
35.6
|
42.1
|
35.6
|
46.5
|
37.0
|
|
Family size, 2000
|
7.6
|
6.7
|
7.0
|
6.6
|
7.3
|
|
Homestead land, decimal
|
15.1
|
9.2
|
13.4
|
12.0
|
13.9
|
|
Operational holding, 1998
|
165.0
|
102.0
|
198.8
|
120.3
|
159.9
|
|
Operational holding, 2000
|
173.2
|
| |
