Child Labor, Rainfall Shocks, and Financial Inclusion: Evidence from Rural Households

Carolina Bernal and Razvan Vlaicu

No 13008, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: This paper examines how rural households cope with climate change related rainfall shocks by re-allocating childrens time between domestic activities and school attendance. Households affected by an unanticipated rainfall shock face an inter-temporal trade-off between current household income and future potential earnings. Financial inclusion may mitigate or exacerbate the human capital impacts of rainfall shocks depending on whether it relaxes or constrains household budgets. The data come from a three-round panel household survey in rural Colombia collected between 2010-2016. The main findings are that rainfall shocks induce households to choose immediate benefits over long-run investments in education by increasing the incidence of child labor and household chores at the expense of school attendance. Over-indebtedness through pre-existing formal loans reinforces the likelihood that a child works due to rainfall shocks, whereas asset insurance, foreign remittances, and natural disaster aid mitigate or eliminate the shock-induced shift toward domestic activities and away from schooling.

Keywords: Child Labor; human capital; Rainfall shocks; climate change; financial inclusion; Rural households; Schooling (search for similar items in EconPapers)
JEL-codes: D14 J13 J22 O15 Q54 (search for similar items in EconPapers)
Date: 2023-08
New Economics Papers: this item is included in nep-dev, nep-env and nep-fle
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://publications.iadb.org/publications/english ... Rural-Households.pdf (application/pdf)

Related works:
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:idb:brikps:13008

DOI: 10.18235/0005058

Access Statistics for this paper

More papers in IDB Publications (Working Papers) from Inter-American Development Bank Contact information at EDIRC.
Bibliographic data for series maintained by Felipe Herrera Library ().