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Child labor under cash and in-kind transfers: evidence from rural Mexico

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  • Federico Tagliati

    (Banco de España)

Abstract

This paper studies the effects of cash versus in-kind transfers on child labor. Using data from a program which randomly transferred either cash or a basket of food to poor households in Mexico, I find that the cash transfer reduced children’s work participation by a significantly larger margin than the in-kind transfer. Both transfers had large negative effects on child labor among recipients in the middle tertile of the income distribution. However, the in-kind transfer did not reduce child labor among children in the bottom tertile, whereas the cash transfer did. Moreover, transfer recipients in different income tertiles adjust child labor on different margins (extensive versus intensive). I show that the different margins of adjustment across the income distribution can be rationalized by a model in which preferences for schooling respect a luxury axiom and the household could forego child labor earnings only when the transfer pushes consumption above subsistence.

Suggested Citation

  • Federico Tagliati, 2019. "Child labor under cash and in-kind transfers: evidence from rural Mexico," Working Papers 1935, Banco de España.
    • Handle: RePEc:bde:wpaper:1935
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    More about this item

    Keywords

    cash transfers; in-kind transfers; child labor; schooling;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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