Informal Institutions Undermining Women Emancipation Through Micro-Credit

By Leanne Zeppenfeldt

In the past decades, development efforts have increasingly been focused on women emancipation and gender equality, as girls and women constitute 70% of the people living in poverty worldwide. The emancipation of women would not only benefit them, but their emancipation would spur development throughout their societies.  

Many projects, often funded by important international institutions (IMF, World Bank, UN) have aimed to empower women by giving them access to funding or micro-credit to enable them to develop their own enterprise. Usually, rules and requirements for participating in these development aid projects are well established and formalized, in order to make sure the money ends up where it was intended: with the women. Unfortunately, designers often ignored or were unaware of informal institutions and power dynamics that greatly impacted the outcome of their implemented aid efforts.

For example, in several developing countries an informal institution exists that “requires men” to be in charge of the entire household income. While most development programs monitor whether the microcredit gets spent on actual enterprise development, few are able to monitor what happens with the income generated afterwards. As a result, the informal institution mentioned above might result in all the income flowing to the male head of the household, which is in great contradiction with the formalized rules of the development project. That is, the informal institution results in a divergent outcome from the intended outcome of the formal institutions, since these are ineffectively implemented. What results is an informal institution that competes with the formal ones and results in a failed effort to emancipate women in developing countries. In short, informal institutions should be incorporated in the design of development aid programs if we want to prevent our development money going to waste, or in the worst case, making things worse.  

To Have Children Now, or Later, That’s the Question: Sequencing of Life Decisions

By Leanne Zeppenfeldt

Many young women face the choice whether they want to have children before, during, or after they study and start their career. While all choices are valid, they will most likely influence the life and career of women. 

Namely, if woman A decides to have children during her studies, she is probably delayed in her studies due to the delivery and the time her children take up. Furthermore, money is likely to be an issue. However, as woman A starts working, she is less likely to be stalled in her career by pregnancy/discrimination.

Woman B decides to have children after she finished her studies. While she is not affected by her children during her studies, they will affect/delay her career. Nevertheless, money might be more affluent due to her increased availability to work, but saving and building capital might remain difficult, as she is less likely to get promotion(s) and move forward in her career.

Lastly, woman C decides to have children when she is already advanced in her career, partly due to her ability to devote more time to her career, as family life was not a ‘distraction’. While this probably resulted in more available capital, age and pregnancy (leave) might influence her ability to have children and her ability to advance further in her career afterwards.

Hence, what becomes apparent from the comparison above is that the sequencing of the ‘events’ of studying, investing in one’s career, and having children is significant to the outcome (career/capital/family). Furthermore, as the comparison of woman B and C illustrates, it is not only the sequence that matters, but also the relative timing of events. Other factors will obviously also play a role in determining the outcome, but in identical situations the sequence of events can explain a lot of the variation of outcomes.