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Can Microinsurance Help Prevent Child Labor? An Impact Evaluation from Pakistan

Author

Listed:
  • Landmann, Andreas

    (University of Erlangen-Nuremberg)

  • Frölich, Markus

    (University of Mannheim)

Abstract

Child labor is a common consequence of economic shocks in developing countries. We show how reducing vulnerability can affect child labor and schooling. We exploit the extension of a health and accident insurance scheme by a Pakistani microfinance institution (MFI) that was set up as a randomized controlled trial and accompanied by household panel surveys. Together with increased coverage the MFI offered assistance with claim procedures in treatment branches. Using Difference-in-difference techniques we find lower incidence of child labor and lower child labor earnings caused by the innovation. Separating the two parts of the innovation package, the effects of claim assistance are mostly insignificant, while increased insurance coverage has large effects on child labor outcomes and days missed at school. Consistent with a theoretical model we develop in this paper, the effect is largely due to an ex-ante feeling of protection as opposed to a shock-mitigation effect.

Suggested Citation

  • Landmann, Andreas & Frölich, Markus, 2013. "Can Microinsurance Help Prevent Child Labor? An Impact Evaluation from Pakistan," IZA Discussion Papers 7337, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp7337
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    References listed on IDEAS

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    1. Reducing child labor with micro-insurance
      by Economic Logician in Economic Logic on 2013-05-20 19:27:00

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    Keywords

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    JEL classification:

    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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