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Child labor: The role of income variability and access to credit across countries

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Author Info
Rajeev H. Dehejia () (Columbia University - Department of Economicss)
Roberta Gatti () (World Bank - Development Research Group (DECRG))

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Abstract

This paper examines the relationship between child labor and access to credit at a crosscountry level. Even though this link is theoretically central to child labor, so far there has been little work done to assess its importance empirically. We measure child labor as a country aggregate, and credit constraints are proxied by the extent of financial development. These two variables display a strong negative relationship, which we show is robust to selection on observables (by controlling for a wide range of variables such as GDP per capita, urbanization, initial child labor, schooling, fertility, legal institutions, inequality, and openness, and by allowing for a nonparametric functional form), and to selection on unobservables (by allowing for fixed effects). We find that the magnitude of the association between our proxy of access to credit and child labor is large in the subsample of poor countries. Moreover, in the absence of developed financial markets, households appear to resort substantially to child labor in order to cope with income variability. This evidence suggests that policies aimed at widening households' access to credit could be effective in reducing the extent of child labor.

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Paper provided by Columbia University, Department of Economics in its series Discussion Papers with number 0102-69.

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Length: 44 pages
Date of creation: 2002
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Handle: RePEc:clu:wpaper:0102-69

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  2. Guido W. Imbens, 1999. "The Role of the Propensity Score in Estimating Dose-Response Functions," NBER Technical Working Papers 0237, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Ranjan, Priya, 1999. "An economic analysis of child labor," Economics Letters, Elsevier, vol. 64(1), pages 99-105, July. [Downloadable!] (restricted)
  5. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 1999. "A new database on financial development and structure," Policy Research Working Paper Series 2146, The World Bank. [Downloadable!]
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  8. Kaushik Basu, 1999. "Child Labor: Cause, Consequence, and Cure, with Remarks on International Labor Standards," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1083-1119, September. [Downloadable!] (restricted)
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  9. Beck, Thorsten & Asl Demirguc-Kunt & Maksimovic,Vojislav, 2002. "Financing patterns around the world : the role of institutions," Policy Research Working Paper Series 2905, The World Bank. [Downloadable!]
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  13. Canagarajah, Sudharshan & Coulombe, Harold, 1997. "Child labor and schooling in Ghana," Policy Research Working Paper Series 1844, The World Bank. [Downloadable!]
  14. Bourguignon, F. & Browning, M. & Chiappori, P. A., 1995. "The Collective Approach to Household Behaviour," DELTA Working Papers 95-04, DELTA (Ecole normale supérieure).
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  16. Jacoby, Hanan G, 1994. "Borrowing Constraints and Progress through School: Evidence from Peru," The Review of Economics and Statistics, MIT Press, vol. 76(1), pages 151-60, February. [Downloadable!] (restricted)
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  18. Rajeev H. Dehejia & Sadek Wahba, 1998. "Causal Effects in Non-Experimental Studies: Re-Evaluating the Evaluation of Training Programs," NBER Working Papers 6586, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  20. Ravallion, Martin & Wodon, Quentin, 1999. "Does child labor displace schooling? - evidence on behavioral responses to an enrollment subsidy," Policy Research Working Paper Series 2116, The World Bank. [Downloadable!]
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  21. Eric Edmonds & Nina Pavcnik, 2002. "Does Globalization Increase Child Labor? Evidence from Vietnam," NBER Working Papers 8760, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Eric Edmonds & Nina Pavcnik, 2004. "International Trade and Child Labor: Cross-Country Evidence," NBER Working Papers 10317, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Kathleen Beegle & Rajeev Dehejia & Roberta Gatti, 2003. "Child Labor, Crop Shocks, and Credit Constraints," NBER Working Papers 10088, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  3. Fares, Jean & Raju, Dhushyanth, 2007. "Child labor across the developing world : patterns and correlations," Policy Research Working Paper Series 4119, The World Bank. [Downloadable!]
  4. Kathleen Beegle & Rajeev H. Dehejia & Roberta Gatti, 2002. "Do households resort to child labor to cope with income shocks?," Discussion Papers 0203-12, Columbia University, Department of Economics. [Downloadable!]
  5. Hazel Jean Malapit & Jade Eric Redoblado & Deanna Margarett Cabungcal-Dolor & Jasmin Suministrado, 2006. "Labor Supply Responses to Adverse Shocks under Credit Constraints: Evidence from Bukidnon, Philippines," Cahiers de recherche PMMA 2006-15, PEP-PMMA. [Downloadable!]
  6. repec:ese:iserwp: is not listed on IDEAS
  7. Dehejia, Rajeev H. & Beegle, Kathleen & Gatti, Roberta, 2003. "Child labor, income shocks, and access to credit," Policy Research Working Paper Series 3075, The World Bank. [Downloadable!]
  8. Drusilla K. Brown & Alan V. Deardorff & Robert M Stern, 2002. "The Effects of Multinational Production on Wages and Working Conditions in Developing Countries," Working Papers 486, Research Seminar in International Economics, University of Michigan. [Downloadable!]
    Other versions:
  9. Gautam Hazarika & Sudipta Sarangi, 2005. "Household Access to Microcredit and Child Work in Rural Malawi," IZA Discussion Papers 1567, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  10. Agus Priyambada & Asep Suryahadi & Sudarno Sumarto, 2002. "What Happened to Child Labor in Indonesia during the Economic Crisis? The Trade-off between School and Work," Labor Economics Working Papers 87, East Asian Bureau of Economic Research. [Downloadable!]
  11. Shunsuke Sakamoto, 2006. "Parental Attitudes toward Children and Child Labor: Evidence from Rural India," Hi-Stat Discussion Paper Series d05-136, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
  12. Sonia Bhalotra, 2003. "Is Child Work Necessary?," Bristol Economics Discussion Papers 03/554, Department of Economics, University of Bristol, UK. [Downloadable!]
    Other versions:
  13. Eliana Cardoso & Andre Portela Souza, 2004. "The Impact of Cash Transfers on Child Labor and School Attendance in Brazil," Working Papers 0407, Department of Economics, Vanderbilt University. [Downloadable!]
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