How does working as a child affect wage, income, and poverty asan adult?
The authors use a unique data set on adult earnings in Brazil to study how child labor affects adult earnings through its impacts on work experience, years of schooling, and human capital attained per year of schooling. Adding up these positive and negative effects, their empirical findings suggest that adults who entered the labor market before age 13 earn 20 percent less per hour, have 26 percent lower incomes, and are 14 percent more likely to be in the lowest two income quintiles. Overall, child labor raises the probability of being poor later in life by 13 percent to 31percent. These magnitudes are large. On the other hand, while child labor reduces the productivity of schooling, the net effect of an additional year of schooling on adult wages is still positive, even if the child works while in school. Consequently, policies which delay dropping out of school, even as the child works, appear to be effective at mitigating adult poverty. This report is a promising first step toward a better understanding of the theoretically ambiguous impact of early labor market entry on lifetime labor market outcomes and the dynastic poverty traps discussed below.
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