Credit, Natural Disasters, Coffee, and Educational Attainment in Rural Honduras

SummaryThis paper exploits a two-stage estimation approach to examine the impact on secondary school attainment in rural Honduras of four key variables affecting household choices: wealth, credit access, crop choice, and shocks. The first stage estimates the probability that a household is credit constrained, while the second estimates secondary school educational attainment of appropriately aged children. The second stage includes variables for crop selection and household wealth shocks from Hurricane Mitch in addition to other characteristics of the child, household, and community that can influence educational attainment. Credit-constrained households have lower educational attainment and are more likely to be adversely affected by negative shocks.