Revisiting the Relationship between Financial Development and Child Labor in Developing Countries: Do Inequality and Institutions Matter?

Aïssata Coulibaly

Working Papers from HAL

Abstract: This paper analyzes the relationship between financial development and child labor for a panel of developing countries over the period 1960 to 2004. We find that financial development measured by the ratio of private credit to GDP tends to increase child labor and this result is driven by countries with high level of inequality, above to the mean of the Gini coefficient. This could reflect that with access to credit, households tend to invest in their own farm or family business, raising the opportunity cost of schooling and inducing more working children. These findings are robust to the use of different estimation techniques like instrumental variables strategy and generalized method of moments. But this positive effect is likely to be non nonlinear, especially financial development and education spending are effective in reducing child labor only in countries with better control of corruption. This suggests that better institutions by improving the quality of education services and its return tend to alter the positive impact of financial development which occurs via the high opportunity cost of education.

Keywords: Child Labor; Financial Development; Inequality; SWIID. (search for similar items in EconPapers)
Date: 2016-11-25
New Economics Papers: this item is included in nep-dev
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01402997
References: Add references at CitEc
Citations:

Downloads: (external link)
https://shs.hal.science/halshs-01402997/document (application/pdf)

Related works:
Working Paper: Revisiting the Relationship between Financial Development and Child Labor in Developing Countries: Do Inequality and Institutions Matter? (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:halshs-01402997

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().