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Child labor, income shocks, and access to credit

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  • Dehejia, Rajeev H.
  • Beegle, Kathleen
  • Gatti, Roberta

Abstract

Although a growing theoretical literature points to credit constraints asan important source of inefficiently high child labor, little work has been done to assess its empirical relevance. Using panel data from Tanzania, the authors find that households respond to transitory income shocks by increasing child labor, but that the extent to which child labor is used as a buffer is lower when households have access to credit. These findings contribute to the empirical literature on the permanent income hypothesis by showing that credit-constrained households actively use child labor to smooth their income. Moreover, they highlight a potentially important determinant of child labor and, as a result, a mechanism that can be used to tackle it.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3075.

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Date of creation: 30 May 2003
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Handle: RePEc:wbk:wbrwps:3075

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Related research

Keywords: Environmental Economics&Policies; Labor Policies; Children and Youth; Economic Theory&Research; Health Economics&Finance; Health Economics&Finance; Street Children; Environmental Economics&Policies; Youth and Governance; Children and Youth;

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References

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  1. Townsend, R.M., 1991. "Risk and Insurance in Village India," University of Chicago - Economics Research Center, Chicago - Economics Research Center 91-3, Chicago - Economics Research Center.
  2. Morduch, Jonathan, 1994. "Poverty and Vulnerability," American Economic Review, American Economic Association, American Economic Association, vol. 84(2), pages 221-25, May.
  3. Canagarajah, Sudharshan & Nielsen, Helena Skyt, 1999. "Child labor and schooling in Africa : a comparative study," Social Protection Discussion Papers 20456, The World Bank.
  4. Jean-Marie Baland & James A. Robinson, 2000. "Is Child Labor Inefficient?," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 108(4), pages 663-679, August.
  5. Sonia Bhalotra & Christopher Heady, 2003. "Child Farm Labor: The Wealth Paradox," World Bank Economic Review, World Bank Group, World Bank Group, vol. 17(2), pages 197-227, December.
  6. Kaushik Basu, 1999. "Child Labor: Cause, Consequence, and Cure, with Remarks on International Labor Standards," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 37(3), pages 1083-1119, September.
  7. Stephen Zeldes, . "Consumption and Liquidity Constraints: An Empirical Investigation," Rodney L. White Center for Financial Research Working Papers, Wharton School Rodney L. White Center for Financial Research 24-85, Wharton School Rodney L. White Center for Financial Research.
  8. Jonathan Morduch, 1995. "Income Smoothing and Consumption Smoothing," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 9(3), pages 103-114, Summer.
  9. Antoine Bommier & Sylvie Lambert, 2000. "Education Demand and Age at School Enrollment in Tanzania," Journal of Human Resources, University of Wisconsin Press, vol. 35(1), pages 177-203.
  10. Gary S. Becker & Kevin M. Murphy, . "The Family and the State," University of Chicago - Population Research Center, Chicago - Population Research Center 87-15, Chicago - Population Research Center.
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  12. Alan B. Krueger, 1996. "Observations on International Labor Standards and Trade," NBER Working Papers 5632, National Bureau of Economic Research, Inc.
  13. Gupta, Manash Ranjan, 2000. "Wage Determination of a Child Worker: A Theoretical Analysis," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 4(2), pages 219-28, June.
  14. 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.
  15. Ranjan, P., 1999. ""Credit Constraints and the Phenomenon of Child Labor"," Papers, California Irvine - School of Social Sciences 98-99-12, California Irvine - School of Social Sciences.
  16. Ravallion, Martin & Wodon, Quentin, 2000. "Does Child Labour Displace Schooling? Evidence on Behavioural Responses to an Enrollment Subsidy," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 110(462), pages C158-75, March.
  17. Kathleen Burke & Kathleen Beegle, 2004. "Why Children Aren't Attending School: The Case of Northwestern Tanzania," Journal of African Economies, Centre for the Study of African Economies (CSAE), Centre for the Study of African Economies (CSAE), vol. 13(2), pages 333-355, June.
  18. Al-Samarrai, Samer & Peasgood, Tessa, 1998. "Educational attainments and household characteristics in Tanzania," Economics of Education Review, Elsevier, Elsevier, vol. 17(4), pages 395-417, October.
  19. Morduch, Jonathan, 1999. "Between the State and the Market: Can Informal Insurance Patch the Safety Net?," World Bank Research Observer, World Bank Group, World Bank Group, vol. 14(2), pages 187-207, August.
  20. Blunch, Niels-Hugo & Verner, Dorthe, 2001. "Revisiting the Link Between Poverty and Child Labor: The Ghanaian Experience," CLS Working Papers, University of Aarhus, Aarhus School of Business, Centre for Labour Market and Social Research 01-3, University of Aarhus, Aarhus School of Business, Centre for Labour Market and Social Research.
  21. Parsons, Donald O & Goldin, Claudia, 1989. "Parental Altruism and Self-Interest: Child Labor among Late Nineteenth-Century American Families," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 27(4), pages 637-59, October.
  22. repec:fth:prinin:362 is not listed on IDEAS
  23. Jacoby, Hanan G & Skoufias, Emmanuel, 1997. "Risk, Financial Markets, and Human Capital in a Developing Country," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 64(3), pages 311-35, July.
  24. Paxson, Christina H, 1992. "Using Weather Variability to Estimate the Response of Savings to Transitory Income in Thailand," American Economic Review, American Economic Association, American Economic Association, vol. 82(1), pages 15-33, March.
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