The Scars of Child Labor: Links with Youth Employment and Earnings

We use panel data that tracks individuals from childhood to adulthood—the YoungLives data—and investigate the effects of involvement in child labor at age 12 on labor market outcomes later in life. The results suggest that one hour of participation in child labor at the age of 12 increases the probability of youth employment by 10.7 percent later in life, at least in part, indicating an early entry advantage in the labor market. However, we find that participants in child labor have a higher likelihood of working in hazardous jobs later in life. Using earnings as an outcome variable, we also find that involvement in child labor at age 12 has a significant negative effect on earnings 14 years later (at age 26). We argue that one of the key mechanisms through which child labor affects labor market outcomes later in life is through its persistent negative effect on education. Our findings provide insights into the potential social benefits of addressing child labor and mitigating its impact on human capital formation through safety nets.