Abstract
This paper shows that mobile money technology—an electronic wallet service that allows users to deposit, transfer, and receive money using their mobile phones—is positively correlated with increased school participation of children in school age. By using data from 4 African countries, we argue that, by reducing transaction costs, and by making it easier and less expensive to receive remittances, mobile money reduces the need for coping strategies that are detrimental to child development, such as withdrawing children from school and sending them to work. We find that mobile money increases the chances of children attending school. This finding is robust to different empirical models. In a nutshell, our results show that 1 million children could start attending school in low-income countries if mobile money was available to all.
Highlights
According to the latest available data, two billion people worldwide are still unbanked, i.e., they do not have access to an account at a formal financial institution (The World Bank 2015)
We start by estimating the association between mobile money and the probability that a household has children in school age that do not attend school
Columns 1–2 report the results of estimating Eq (1) while using as dependent variable a dummy indicating whether the household has children in school age that do not attend school
Summary
According to the latest available data, two billion people worldwide are still unbanked, i.e., they do not have access to an account at a formal financial institution (The World Bank 2015). Saving and borrowing help in coping with transitory income shocks, by reducing households’ needs to resort to strategies that might be detrimental for their members in the longer term (Munyegera and Matsumoto 2016) such as selling livestocks. An electronic wallet service that allows users to deposit, transfer, and receive money using their mobile phones, is deemed as a way to extend financial services to the unbanked, especially in remote and rural areas. Thanks to the expansion of mobile phones, this financial innovation has spread rapidly in low-income countries (Suri and Jack 2016)
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