Human Capital Investment in the Presence of Child Labor

Natalie Bau, Martin Rotemberg, Manisha Shah and Bryce Steinberg

No 27241, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Policies that improve early life human capital are a promising tool to alter disadvantaged children’s lifelong trajectories. Yet in many low-income countries, children and their parents face tradeoffs between schooling and productive work. If there are positive returns to human capital in child labor, then children who receive greater early life investments may attend less school. Exploiting early life rainfall shocks in India as a source of exogenous variation in early life investment, we show that child labor attenuates the positive effects of early life investment, and increased early life investment increases school dropout in districts with high child labor. This lower educational investment has persistent long-term consequences into adulthood, resulting in lower household consumption. We show that our results are robust to instrumenting for child labor prevalence using local crop mix. Reductions in educational investment in response to positive early life shocks appear to reduce overall welfare in high child labor districts.

JEL-codes: I2 J1 O12 (search for similar items in EconPapers)
Date: 2020-05
New Economics Papers: this item is included in nep-edu and nep-lab
Note: CH DEV ED LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://www.nber.org/papers/w27241.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:nbr:nberwo:27241

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w27241

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().