increase in consumption expenditure is largely the result of her increased labor productivity. Using the same data as Pitt and Khandker (1998) and correcting for the potential sources of bias mentioned earlier, Pitt et al. (2003) find that credit to women has a significant positive effect on children’s health, while credit to men does not have an effect. These positive effects on children’s education and health from providing credit to women increases the likelihood of higher future (adult) labor productivity and earnings.

# _Effects on empowerment_

The positive welfare effects of providing credit to women could arise either due to standard income and substitution effects or due to empowerment where there is a rebalancing of intrahousehold decisionmaking power (or agency) over resources in favor of women. Several studies, virtually all of them with respect to microcredit programs in rural Bangladesh, find that the provision of credit to women has a positive effect on various self-reported empowerment measures (see, e.g., Mizan 1993, Hashemi et al. 1996, Zaman 1999, Schuler and Hashemi 1994, Kabeer 2001).<sup>15</sup> For example, Hashemi et al. 1996 find that, controlling for various relevant factors, microcredit has a significant positive effect on empowerment, where empowerment is measured using eight different indicators ranging from physical mobility to participation in mass political activities. They also find that the effect is independent of women’s contribution to household income, that is, the effect of microcredit on empowerment comes from just participating in microcredit programs.

Pitt et al. (2006) provide the most reliable estimates of the positive effect of credit on empowerment. Controlling for non-random program placement, self-selection in program participation, and choice-based sampling, they find that when women were the direct beneficiaries of credit, it had a positive effect on virtually all of the women’s latent empowerment factors examined; when men were the direct beneficiaries of credit, it either did not have an effect or had a negative effect on these same factors for women.

# **6. Land**

Other than their labor, land often serves as the most important productive asset for households dependent on agriculture. It is also often the primary source of transferable and inheritable wealth for these households (Deininger and Binswanger 1999). Furthermore, in many cases, access to water and other natural resources is contingent on having access to land (FAO 2002). Consequently, access to arable land, the quantity and quality of land, and the strength and extent of rights over land have strong implications for both the present and long-term economic welfare of rural households. Numerous empirical studies across the developing world show a significant positive association between the possession and size of arable land and household income and

> 15 Although they do not explicitly examine the issue of empowerment, Goetz and Sen Gupta (1996) stand as an exception.  Using an index of credit control, they find that most women (63 percent) cede control over loans to male members of the household.  They also find that loan control is higher among women who are divorced, separated, or widowed, when loans are invested in traditional women’s income-generating activities, and when the loan amounts are small.

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