How Does Working as a Child Affect Wages, Income, and Poverty as an Adult?

Parents have their children specialize in schooling rather than go to work in part because they expect that children will earn enough as adults to repay the lost earnings as a child. However, children from poor households may not have the luxury of waiting to grow up before entering the labor market. Sending their children to work may be the only option poor parents have to sufficiently raise income to meet current consumption needs, so poor parents forgo the increased future income opportunity to meet basic necessities. One argument for government efforts to limit child labor is that poor parents may under-invest in their children’s education relative to the social optimum. Those parents’ decisions may not take into account societal returns associated with improved education such as poverty reduction, slower population growth, improved health, reduced crime, and a lower dependence on government transfer programs.