Provision of low-cost credit to the poor through self-help groups (SHGs) has been embraced as a key poverty-reduction strategy in developing countries, but evidence on the impact of this approach is thin.

This paper empirically identifies social learning and neighborhood effects in schooling investments in a new technology regime. Social learning implies that learning is most efficient when observed heterogeneity in schooling is greatest.

Three models of credit markets - (1) the permanent income model, (2) upward sloping credit supply to individual borrowers, and (3) constrained credit due to imperfect enforcement - are tested using credit market data and an experimental study of i