Mobile Money and Structural Transformation

Evidence from Tanzania

Abstract

In less than a decade, mobile money has risen from a simple tool to transfer money with cell phones to an innovation that delivers credit and insurance. We use rich panel data from Tanzania from 2008 to 2019 to investigate whether mobile money adoption leads to structural transformation. Leveraging the staggered introduction of mobile money agents through difference-in-differences and event-study strategies, we find evidence that areas with mobile money agents experience a sharp reduction in agricultural employment and agricultural land use. While released workers reallocate to non-agricultural sectors, we also find that these changes cause extensive migration of people. Mobile money also leads to an increase in the use of improved seeds as they become more available, a decrease in the use of banks and cooperatives, and promotes new migration patterns.