The Impact of Wealth on the Amount and Quality of Child Labor

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.

Bibliographic Details

Main Authors:	Loayza, Norman V., Del Carpio, Ximena V.
Language:	English
Published:	2012-01-01
Subjects:	ACCESS TO SERVICES, ACCOUNT, ADVERSE EFFECTS, ATTRITION, BORROWING, CAPITAL INVESTMENT, CHILD EDUCATION, CHILD LABOR, CHILD LABOR DECLINE, CHILD LABOR DECLINES, CHILD LABOUR, CHILD WORK, CLERICAL WORK, DAY LABORERS, DEVELOPMENT ECONOMICS, ECONOMIC GROWTH, ECONOMICS, EDUCATIONAL LEVEL, FINANCIAL MARKETS, HOUSEHOLD CHARACTERISTICS, HOUSEHOLD INCOME, HOUSEHOLD SURVEY, HOUSEHOLD SURVEYS, HOUSEHOLD WEALTH, HUMAN CAPITAL, HUMAN RESOURCES, INCOME, JOBS, LABOR ALLOCATION, LABOR ALLOCATIONS, LABOR ECONOMICS, LABOR MARKET, LABOR MARKETS, LABOR OFFICE, LABOR PRODUCTIVITY, MALE-HEADED HOUSEHOLDS, MORAL HAZARD, MOTIVATION, OCCUPATION, OCCUPATIONS, OLDER CHILDREN, OPTIMAL ALLOCATION, PARENTS, POLITICAL ECONOMY, PRESENT VALUE, PREVIOUS SECTION, PRIMARY SCHOOL, PRODUCTION FUNCTION, PRODUCTIVE ACTIVITY, PROGRAM DESIGN, PUBLIC SECTOR JOB, RENTS, SAFETY, SAFETY NET, SCHOOL ATTENDANCE, SKILLED LABOR, SMALL BUSINESS, SOCIAL PROTECTION, TECHNICAL ASSISTANCE, TRAINING COURSE, WORK ACTIVITIES, WORKER, WORKERS, YOUNG ADULTS,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120130155316 https://hdl.handle.net/10986/3244
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