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Household choices of child activities in the presence of cash transfers

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  • Casco, José L.

Abstract

This paper investigates the impact of a government cash transfer on household decisions regarding different activities that a child may perform (schooling, work, leisure). Using data from a randomized evaluation of a cash transfer program in Ecuador, I estimate a choice model to quantify the effect of this policy. The empirical results suggest that the most common behavioral change caused by the program was a reduction in the probability that the household would send the child to work and an increase in the likelihood that a household would choose to combine child labor with schooling. On the other hand, the transfer reduced the allocation of time to certain child working activities, but these results are mainly driven by the effect of the transfer at the extensive margin rather than at the intensive margin. To explain these findings and provide recommendations on how to improve the design of cash transfers, I develop a theoretical model of parental decision-making regarding child activities. Depending on the endowment of skills, a cash transfer attenuates the likelihood of parents choosing market work for their child and increases the likelihood that they may send the child to school or combine child labor with schooling. By modeling the cash transfer as a subsidy of the human capital input and as lump-sum transfer, this study also contributes to the rising evidence that the design of welfare programs strongly matters in terms of achieving program goals.

Suggested Citation

  • Casco, José L., 2022. "Household choices of child activities in the presence of cash transfers," Journal of Economic Behavior & Organization, Elsevier, vol. 196(C), pages 524-545.
  • Handle: RePEc:eee:jeborg:v:196:y:2022:i:c:p:524-545
    DOI: 10.1016/j.jebo.2022.02.017
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    More about this item

    Keywords

    Cash transfer programs; Child labor; Schooling; Idleness;
    All these keywords.

    JEL classification:

    • D10 - Microeconomics - - Household Behavior - - - General
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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