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Household Choices of Child Labor and Schooling: A Simple Model with Application to Brazil

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Author Info
Diana Kruger () (Pontificia Universidad Católica de Valparaíso)
Rodrigo R. Soares () (University of Maryland, Catholic University of Rio de Janeiro, NBER and IZA)
Matias Berthelon () (Pontificia Universidad Católica de Valparaíso)

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Abstract

This paper develops and estimates a simple structural model of household decisions regarding child labor and schooling. 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 leads to an empirical specification where income and substitution effects can be clearly identified. We apply our model to Brazil and use agricultural shocks to local economic activity (coffee and overall agricultural 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 increased opportunity cost of children’s time and, therefore, higher child labor and lower schooling. The results reconcile economic theory with seemingly contradictory evidence from the previous empirical literature.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2776.

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Length: 36 pages
Date of creation: May 2007
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Handle: RePEc:iza:izadps:dp2776

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Related research
Keywords: child labor; schooling; generalized ordered logit; 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
O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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References listed on IDEAS
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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. [Downloadable!] (restricted)
  2. Ranjan, Priya, 2001. "Credit constraints and the phenomenon of child labor," Journal of Development Economics, Elsevier, vol. 64(1), pages 81-102, February. [Downloadable!] (restricted)
    Other versions:
  3. Carol Ann Rogers & Kenneth A. Swinnerton, 2003. "Does Child Labor Decrease When Parental Incomes Rise?," Development and Comp Systems 0306006, EconWPA. [Downloadable!]
    Other versions:
  4. 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. [Downloadable!] (restricted)
  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.
    Other versions:
  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. [Downloadable!] (restricted)
  8. 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. [Downloadable!] (restricted)
  9. 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. [Downloadable!] (restricted)
  10. Dessy, Sylvain E., 2000. "A defense of compulsive measures against child labor," Journal of Development Economics, Elsevier, vol. 62(1), pages 261-275, June. [Downloadable!] (restricted)
  11. Eric V. Edmonds, 2007. "Child Labor," IZA Discussion Papers 2606, Institute for the Study of Labor (IZA). [Downloadable!]
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  12. Victoria Gunnarsson & Peter F. Orazem & Mario A. Sánchez, 2006. "Child Labor and School Achievement in Latin America," World Bank Economic Review, Oxford University Press, vol. 20(1), pages 31-54.
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  13. Eric V. Edmonds, 2005. "Does Child Labor Decline with Improving Economic Status?," Journal of Human Resources, University of Wisconsin Press, vol. 40(1). [Downloadable!] (restricted)
  14. 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!]
  15. 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, Oxford University Press, vol. 17(2), pages 229-254, December.
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