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Parental income, child labour, and human capital accumulation: evidence from trade liberalisation in India

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  • Joseph Boniface Ajefu

Abstract

This article examines whether parental income affects decisions on children’s human capital investment and labour market participation. India’s sudden and unanticipated trade liberalisation was a national policy that created an exogenous variation in industry-specific tariff rates over time. The policy consequently led to variation in workers’ earnings according to their industrial affiliations. The disparity in earnings across industries provides a good setting for identifying the causal effect of parents’ income on child’s labour and schooling, using an instrumental variables approach. The study finds a positive effect of parents’ income on children’s schooling but a negative effect on children’s work. The magnitude of effect, however, is higher for girls compared to boys.

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  • Joseph Boniface Ajefu, 2018. "Parental income, child labour, and human capital accumulation: evidence from trade liberalisation in India," Development in Practice, Taylor & Francis Journals, vol. 28(8), pages 1071-1082, November.
    • Handle: RePEc:taf:cdipxx:v:28:y:2018:i:8:p:1071-1082
    DOI: 10.1080/09614524.2018.1505828
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