Cambodian Child's Wage Rate, Human Capital and Hours Worked Trade-off: Simple Theoretical and Empirical Evidence for Policy Implications

As it is often said that child labor comes on the expense of schooling. But the fact in Cambodia case is quiet different because most children are likely to combine work and study together. This means that child labor contributes to human capital of the child as long as we still find children combine both work and study. This study tries to investigate that perhaps hours worked of children rather than child participation rate in the labor force are really trade-off with schooling outcomes of children. If children's income play significant role in parents' decision over human capital formation of their children, thus we need to estimate the rate of return to child labor as well. By employing simple theoretical and empirical model, we found that education of the child plays crucial role in their wage rate and/or earning capacity, which is a considerable results to help encourage parents to invest in their children's education. Finally the most striking results out of this study is that working children contribute to their human capital because children's working hours stay below the threshold level of 3 hours per day.