The responses of child labor, school enrollment, and grade repetition to the loss of parental earnings in Brazil, 1982-1999

The authors evaluate the effects of idiosyncratic shocks to a father's income on his children's probability of dropping out of school, entering the labor market, or failing to advance to the next grade level. Their analysis uses a large rotating panel data set containing information on household income and child time use for households in six cities in Brazil between 1982 and 1999. They find that for children aged 10 to 15 in the poorest households, loss of earnings by the household head has adverse consequences on child time in school and chance of promotion, and that these children are more likely to enter employment. Children in higher-income households are not adversely affected. The presumption is that wealthier households can self-insure against income shocks or can borrow to smooth consumption in the face of adverse income shocks. In contrast, poor households must use other means, including child labor, to replace lost labor market earnings of adults in the household.