Microfinance Programs, Empowerment and Contraceptive Use: Evidence from Indonesia

Alison M. Buttenheim, University of California, Los Angeles

This study examines the relationship between microfinance programs, empowerment and contraceptive use with data from the 1993, 1997 and 2000 waves of the Indonesia Family Life Survey. Community and individual fixed-effects models are used to control for nonrandom program placement and program participation selection bias. Empowerment of women, as measured by level of involvement in household decision-making, is the hypothesized mechanism linking microfinance programs and contraceptive use. I conclude that microfinance program participation and availability do not uniformly increase contraceptive use, but rather increase a woman’s ability to achieve her fertility preferences as measured by desire for more children. Household decision-making is also associated with higher rates of contraceptive use, but does not mediate the relationship between microfinance programs and contraceptive use.