Credit access, human capital and class structure mobility

This article examines the impact of micro-enterprise credit programmes on class structure mobility in LDCs. It develops a model that endogenously generates an eight-fold class structure. Class membership is determined by optimal choice of labour activity, which is a function of access to credit and human capital endowments. Theoretical predictions from the model are compared with data on class structure mobility collected first-hand in Western Guatemala. Empirical results show that upward class structure mobility increases substantially with access to credit. (DSE/DÜI)