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The impact of wealth on the amount and quality of child labor

  • Del Carpio, Ximena V.
  • Loayza, Norman V.

This paper analyzes to what extent, and under what conditions, an increase in household wealth affects the use of child labor in poor households. It develops a simple theoretical model, which uses child labor, training, and schooling to maximize household income over time, subject to resource constraints. Then, it conducts an empirical analysis using randomized trial data, which were collected for the evaluation of the 2006 Nicaragua conditional cash transfer program. This social program transfers wealth to poor families in rural areas, conditional on children's school attendance and health check-ups. In addition, for one third of the beneficiaries, there is a further wealth transfer to start a non-agricultural business. The paper finds that the conditional cash transfer program affected the volume and quality of child labor, reducing it in the aggregate and steering it towards skill-forming activities. Specifically, the program appears to have reduced the use of child labor for household chores and farm work, while increasing it for the non-traditional, skill-forming activities related to commerce and retail. Moreover, the paper finds that the source behind the increase in skill-forming child labor is not the basic component, which provides a transfer for paying for schooling and health services, but it's the business-grant component, which provides a household grant for the creation of a micro business or a new economic activity.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5959.

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Date of creation: 01 Jan 2012
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Handle: RePEc:wbk:wbrwps:5959
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  1. Macours, Karen & Vakis, Renos, 2009. "Changing households'investments and aspirations through social interactions : evidence from a randomized transfer program," Policy Research Working Paper Series 5137, The World Bank.
  2. Bhalotra, Sonia & Heady, Christopher, 2001. "Child farm labour : the wealth paradox," Social Protection Discussion Papers 24088, The World Bank.
  3. Ranjan, Priya, 2001. "Credit constraints and the phenomenon of child labor," Journal of Development Economics, Elsevier, vol. 64(1), pages 81-102, February.
  4. Dean Karlan & Martin Valdivia, 2006. "Teaching entrepreneurship: Impact of business training on microfinance clients and institutions," Natural Field Experiments 00282, The Field Experiments Website.
  5. Attanasio, Orazio & Fitzsimons, Emla & Gomez, Ana & Lopez, Diana & Meghir, Costas & Mesnard, Alice, 2006. "Child Education and Work Choices in the Presence of a Conditional Cash Transfer Programme in Rural Colombia," CEPR Discussion Papers 5792, C.E.P.R. Discussion Papers.
  6. Carol Ann Rogers & Kenneth A. Swinnerton, 2008. "A theory of exploitative child labor," Oxford Economic Papers, Oxford University Press, vol. 60(1), pages 20-41, January.
  7. Eric V. Edmonds, 2007. "Child Labor," NBER Working Papers 12926, National Bureau of Economic Research, Inc.
  8. Deolalikar, Anil B & Vijverberg, Wim P M, 1987. "A Test of Heterogeneity of Family and Hired Labour in Asian Agriculture," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 49(3), pages 291-305, August.
  9. Basu, Kaushik & Das, Sanghamitra & Dutta, Bhaskar, 2007. "Child Labor and Household Wealth: Theory and Empirical Evidence of an Inverted-U," Working Papers 07-02, Cornell University, Center for Analytic Economics.
  10. Ana C. Dammert, 2009. "Heterogeneous Impacts of Conditional Cash Transfers: Evidence from Nicaragua," Economic Development and Cultural Change, University of Chicago Press, vol. 58(1), pages 53-83, October.
  11. Skoufias, Emmanuel & Parker, Susan W., 2001. "Conditional cash transfers and their impact on child work and schooling," FCND briefs 123, International Food Policy Research Institute (IFPRI).
  12. Ponczek, Vladimir Pinheiro & Souza, André Portela Fernandes de, 2007. "The causal effect of family size on child labor and education," Textos para discussão 162, Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
  13. Ravallion, Martin & Wodon, Quentin, 1999. "Does child labor displace schooling? - evidence on behavioral responses to an enrollment subsidy," Policy Research Working Paper Series 2116, The World Bank.
  14. Beegle, Kathleen & Dehejia, Rajeev H & Gatti, Roberta, 2004. "The Education, Labour Market and Health Consequences of Child Labour," CEPR Discussion Papers 4443, C.E.P.R. Discussion Papers.
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