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Determinants of Child Labor and School Attendance: The Role of Household Unobservables

We develop a semi-parametric latent class random effects multinomial logit model to distinguish between observed and unobserved household characteristics as determinants of child labor, school attendance and idleness. We find that much of the substitution between activities as a response to changes in covariates is between attending school and being idle, with work being rather resistant. Unobserved household heterogeneity is substantial and swamps observed income and wealth heterogeneity. A characterization of households into latent types reveals very different instrinsic propensities towards the three children's activities and that households with a high propensity to send their children to school are poorer and have less educated parents compared to households in the other classes.

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Paper provided by Hunter College Department of Economics in its series Economics Working Paper Archive at Hunter College with number 02/9.

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Length: 33 pages
Date of creation: 2002
Date of revision:
Handle: RePEc:htr:hcecon:02/9
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  1. Ranjan, Priya, 2001. "Credit constraints and the phenomenon of child labor," Journal of Development Economics, Elsevier, vol. 64(1), pages 81-102, February.
  2. Basu, Kaushik, 1998. "Child labor : cause, consequence, and cure, with remarks on International Labor Standards," Policy Research Working Paper Series 2027, The World Bank.
  3. Jean-Marie Baland & James A. Robinson, 2000. "Is Child Labor Inefficient?," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 663-679, August.
  4. Deb, Partha & Trivedi, Pravin K., 2002. "The structure of demand for health care: latent class versus two-part models," Journal of Health Economics, Elsevier, vol. 21(4), pages 601-625, July.
  5. Peter Jensen & Helena Skyt Nielsen, 1997. "Child labour or school attendance? Evidence from Zambia," Journal of Population Economics, Springer, vol. 10(4), pages 407-424.
  6. Lung-fei Lee, . "A Numerically Stable Quadrature Procedure for the One-Factor Random Component Discrete Choice Model," Computing in Economics and Finance 1997 158, Society for Computational Economics.
  7. Keane, Michael, 1993. "Simulation estimation for panel data models with limited dependent variables," MPRA Paper 53029, University Library of Munich, Germany.
  8. Daniel McFadden & Kenneth Train, 2000. "Mixed MNL models for discrete response," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(5), pages 447-470.
  9. FurioCamillo Rosati & Zafiris Tzannatos, 2006. "Child Labour In Vietnam," Pacific Economic Review, Wiley Blackwell, vol. 11(1), pages 1-31, 02.
  10. George J. Borjas & Glenn T. Sueyoshi, 1993. "A Two-Stage Estimator for Probit Models with Structural Group Effects," NBER Technical Working Papers 0146, National Bureau of Economic Research, Inc.
  11. Browning, Martin & Francois Bourguignon & Pierre-Andre Chiappori & Valerie Lechene, 1994. "Income and Outcomes: A Structural Model of Intrahousehold Allocation," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1067-96, December.
  12. Ravallion, Martin & Wodon, Quentin, 2000. "Does Child Labour Displace Schooling? Evidence on Behavioural Responses to an Enrollment Subsidy," Economic Journal, Royal Economic Society, vol. 110(462), pages C158-75, March.
  13. Jain, Dipak C & Vilcassim, Naufel J & Chintagunta, Pradeep K, 1994. "A Random-Coefficients Logit Brand-Choice Model Applied to Panel Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 12(3), pages 317-28, July.
  14. Sin, Chor-Yiu & White, Halbert, 1996. "Information criteria for selecting possibly misspecified parametric models," Journal of Econometrics, Elsevier, vol. 71(1-2), pages 207-225.
  15. Ranjan Ray, 2000. "Analysis of child labour in Peru and Pakistan: A comparative study," Journal of Population Economics, Springer, vol. 13(1), pages 3-19.
  16. James J. Heckman, 2001. "Micro Data, Heterogeneity, and the Evaluation of Public Policy: Nobel Lecture," Journal of Political Economy, University of Chicago Press, vol. 109(4), pages 673-748, August.
  17. Behrman, Jere R., 1993. "Intrahousehold distribution and the family," Handbook of Population and Family Economics, in: M. R. Rosenzweig & Stark, O. (ed.), Handbook of Population and Family Economics, edition 1, volume 1, chapter 4, pages 125-187 Elsevier.
  18. Butler, J S & Moffitt, Robert, 1982. "A Computationally Efficient Quadrature Procedure for the One-Factor Multinomial Probit Model," Econometrica, Econometric Society, vol. 50(3), pages 761-64, May.
  19. Pudney, Stephen & Galassi, Francesco L & Mealli, Fabrizia, 1998. "An Econometric Model of Farm Tenures in Fifteenth-Century Florence," Economica, London School of Economics and Political Science, vol. 65(260), pages 535-56, November.
  20. Kim, Byung-Do & Blattberg, Robert C & Rossi, Peter E, 1995. "Modeling the Distribution of Price Sensitivity and Implications for Optimal Retail Pricing," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(3), pages 291-303, July.
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