Household Choices of Child Labor and Schooling: A Simple Model with Application to Brazil

Diana Kruger, Rodrigo Soares and Matias Berthelon

No 09-2010, Working Papers from Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade de Ribeirão Preto

Abstract: This paper develops a simple theory of household choices of child labor and schooling. The model is used as a benchmark to read the available empirical evidence and to guide our empirical specification. We argue that part of the conflicting results from the previous literature – related to the effect of improvements in economic conditions on child labor – derives from the different income and substitution effects implicit in different types of income variation. Our model suggests an empirical specification where income and substitution effects can be identified. We use agricultural shocks to local economic activity in Brazil (coffee production) to distinguish between the effects of increases in household income and increases in the opportunity cost of children’s time. The results show that higher parental wages and household wealth are associated with lower child labor and higher school attendance. Nevertheless, conditional on family income and socioeconomic status, exogenous temporary increases in local economic activity are associated with higher child labor and lower schooling. The paper reconciles economic theory with seemingly contradictory evidence from previous empirical studies.

Keywords: child labor; schooling; generalized ordered logit; agricultural shocks; Brazil (search for similar items in EconPapers)
JEL-codes: D13 J22 (search for similar items in EconPapers)
Date: 2010-02
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Related works:
Journal Article: Household Choices of Child Labor and Schooling: A Simple Model with Application to Brazil (2012)
Working Paper: Household Choices of Child Labor and Schooling: A Simple Model with Application to Brazil (2007)
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