Mortality risks and child labor

Fernanda Estevan and Jean-Marie Baland

No 2005049, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: In this paper, we investigate the role of young adult mortality on child labor and educational decisions. We show that, in the absence of appropriate insurance mechanisms, the level of child labor is inefficient. It may be too high if parents are not very altruistic and anticipate positive transfers from their children in the future, but it can also be too low, in particular when parents expect to make positive transfers to their children in the future. Imperfect capital markets unambiguously increase the equilibrium level of child labor. We also show that a cash transfer conditional on child's schooling can always restore efficiency regarding child labor.

Date: 2005-07
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Working Paper: Mortality risks and child labor (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2005049

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