Chapter 23. Labor and Credit Networks in Developing Economies

The past decade has witnessed a surge of interest in the economic analysis of networks. This chapter is concerned with the role played by labor and credit networks in shaping economic activity in developing countries. The problem of identifying network effects on economic outcomes is first discussed, followed by solutions to this problem that have been put forward in the literature. This chapter concludes by discussing the static and dynamic inefficiencies that can be associated with community-based networks as well as their effect on growth and mobility in developing countries.