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Abstract

This paper develops a simple theory of household choices of child labor and schooling. The model is used as a benchmark to read the available empirical evidence and to guide our empirical specification. We argue that part of the conflicting results from the previous literature – related to the effect of improvements in economic conditions on child labor – derives from the different income and substitution effects implicit in different types of income variation. Our model suggests an empirical specification where income and substitution effects can be identified. We use agricultural shocks to local economic activity in Brazil (coffee production) to distinguish between the effects of increases in household income and increases in the opportunity cost of children’s time. The results show that higher parental wages and household wealth are associated with lower child labor and higher school attendance. Nevertheless, conditional on family income and socioeconomic status, exogenous temporary increases in local economic activity are associated with higher child labor and lower schooling. The paper reconciles economic theory with seemingly contradictory evidence from previous empirical studies.

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Bibliographic Info

Paper provided by Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto in its series Working Papers with number 09-2010.

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Date of creation: Feb 2010
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Handle: RePEc:fea:wpaper:09-2010

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Related research

Keywords: child labor; schooling; generalized ordered logit; agricultural shocks; Brazil;

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Find related papers by JEL classification:

• D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
• J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

References

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1. Eric V. Edmonds, 2003. "Does Child Labor Decline with Improving Economic Status?," NBER Working Papers 10134, National Bureau of Economic Research, Inc.
   
   • Eric V. Edmonds, 2005. "Does Child Labor Decline with Improving Economic Status?," Journal of Human Resources, University of Wisconsin Press, vol. 40(1).
2. Eric Edmonds, 2007. "Child Labor," Working Papers id:988, eSocialSciences.
   
   • Edmonds, Eric V., 2008. "Child Labor," Handbook of Development Economics, Elsevier.
   • Eric V. Edmonds, 2007. "Child Labor," NBER Working Papers 12926, National Bureau of Economic Research, Inc.
   • Edmonds, Eric V., 2007. "Child Labor," IZA Discussion Papers 2606, Institute for the Study of Labor (IZA).
3. Ranjan, Priya, 2001. "Credit constraints and the phenomenon of child labor," Journal of Development Economics, Elsevier, vol. 64(1), pages 81-102, February.
   
   • Ranjan, P., 1999. ""Credit Constraints and the Phenomenon of Child Labor"," Papers 98-99-12, California Irvine - School of Social Sciences.
4. Carol Ann Rogers & Kenneth A. Swinnerton, 2003. "Does Child Labor Decrease When Parental Incomes Rise?," Development and Comp Systems 0306006, EconWPA.
   
   • Carol Ann Rogers & Kenneth A. Swinnerton, 2004. "Does Child Labor Decrease When Parental Incomes Rise?," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 939-968, August.
   • Carol Rogers & Kenneth A. Swinnerton, 2002. "Does Child Labor Decrease When Parental Incomes Rises," Working Papers gueconwpa~02-02-02, Georgetown University, Department of Economics.
5. Basu, Kaushik & Van, Pham Hoang, 1998. "The Economics of Child Labor," American Economic Review, American Economic Association, vol. 88(3), pages 412-27, June.
6. Emerson, Patrick M & Souza, Andre Portela, 2003. "Is There a Child Labor Trap? Intergenerational Persistence of Child Labor in Brazil," Economic Development and Cultural Change, University of Chicago Press, vol. 51(2), pages 375-98, January.
   
   • Emerson, Patrick M & Souza, Andre Portela, 2003. "Is There a Child Labor Trap? Intergenerational Persistence of Child Labor in Brazil," Economic Development and Cultural Change, University of Chicago Press, vol. 51(2), pages 375-98, January.
   • Patrick M. Emerson & Andre Portela Souza, 2002. "Is There a Child Labor Trap? Inter-Generational Persistence of Child Labor in Brazil," Vanderbilt University Department of Economics Working Papers 0214, Vanderbilt University Department of Economics.
7. Duryea, Suzanne & Arends-Kuenning, Mary, 2003. "School Attendance, Child Labor and Local Labor Market Fluctuations in Urban Brazil," World Development, Elsevier, vol. 31(7), pages 1165-1178, July.
8. Beegle, Kathleen & Dehejia, Rajeev H. & Gatti, Roberta, 2006. "Child labor and agricultural shocks," Journal of Development Economics, Elsevier, vol. 81(1), pages 80-96, October.
9. Black, Dan A. & McKinnish, Terra G. & Sanders, Seth G., 2003. "Does the availability of high-wage jobs for low-skilled men affect welfare expenditures? Evidence from shocks to the steel and coal industries," Journal of Public Economics, Elsevier, vol. 87(9-10), pages 1921-1942, September.
10. Kruger, Diana I., 2007. "Coffee production effects on child labor and schooling in rural Brazil," Journal of Development Economics, Elsevier, vol. 82(2), pages 448-463, March.
11. Levison, Deborah & Moe, Karine S. & Marie Knaul, Felicia, 2001. "Youth Education and Work in Mexico," World Development, Elsevier, vol. 29(1), pages 167-188, January.
12. Gunnarsson, Victoria & Orazem, Peter & Sanchez, Mario A., 2003. "Child Labor and School Achievement in Latin America," Staff General Research Papers 10684, Iowa State University, Department of Economics.
    
    • Victoria Gunnarsson & Peter F. Orazem & Mario A. Sánchez, 2006. "Child Labor and School Achievement in Latin America," World Bank Economic Review, World Bank Group, vol. 20(1), pages 31-54.
13. Edmonds, Eric V., 2006. "Child labor and schooling responses to anticipated income in South Africa," Journal of Development Economics, Elsevier, vol. 81(2), pages 386-414, December.
14. Jean-Marie Baland & James A. Robinson, 2000. "Is Child Labor Inefficient?," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 663-679, August.
15. Dessy, Sylvain E., 2000. "A defense of compulsive measures against child labor," Journal of Development Economics, Elsevier, vol. 62(1), pages 261-275, June.
16. Eliana Cardoso & Andre Portela Souza, 2004. "The Impact of Cash Transfers on Child Labor and School Attendance in Brazil," Vanderbilt University Department of Economics Working Papers 0407, Vanderbilt University Department of Economics.
17. FranÁois Bourguignon & Francisco H. G. Ferreira & Phillippe G. Leite, 2003. "Conditional Cash Transfers, Schooling, and Child Labor: Micro-Simulating Brazil's Bolsa Escola Program," World Bank Economic Review, World Bank Group, vol. 17(2), pages 229-254, December.

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Cited by:

1. L. Guarcello & S. Lyon, 2003. "Children's work and water access in Yemen," UCW Working Paper 53, Understanding Children's Work (UCW Programme).

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