Short- and long-term impacts of economic policies on child labor and schooling in Ghana

While the issue of child labor in developing countries has received increased attention in recent years, most of the empirical analysis has been based on one-time cross sectional samples. While this may give an idea of the incidence, and determinants of child labor at one point in time, it is silent about the dynamics of child labor over time, and sometimes may even influence policy choices against child labor adversely. This paper attempts to fill this void, analyzing the dynamics of child labor and schooling in Ghana, aiming at investigating the impact of broad economic reforms on child labor and schooling in the short, medium and long-run. Starting from a premise that the simple - direct - relationship between poverty and child labor, which has often been seen as the feature of child labor, may not adequately capture the multi-facetted nature of child labor, we find evidence of asymmetries in the child labor-poverty link, as well as quite complex dynamics in the evolution of child labor and schooling, and their determinants over time. Most notably, child labor is found to be responsive to poverty in the short run, but not in the long run, while child schooling is unaffected by poverty in the short run, but responds in the medium- to long run. These results suggested that child labor acts as an economic buffer of the household in the short run, regardless of changes in the economic environment, or perceptions of the latter, following economic reforms, thus supporting - and refining - the poverty explanation of child labor.