ERIC Number: ED477285
Record Type: Non-Journal
Publication Date: 2003-Jun
Child Labor, Income Shocks, and Access to Credit. Policy Research Working Paper.
Beegle, Kathleen; Dehejia, Rajeev H.; Gatti, Roberta
Although a growing theoretical literature points to credit constraints as an important source of inefficiently high child labor, little work has been done to assess its empirical relevance. This paper examines the direct effect of a transitory income shock on household child labor choices, as well as the extent to which access to credit helps families smooth away the impact of a shock. Increasing child labor in response to a transitory shock carries important costs for human capital development because of the often-irreversible disruption in schooling. Panel data from approximately 800 agricultural households in the rural Dagera region of Tanzania show that transitory income shocks, as proxied by accidental crop loss, led to significantly increased child labor among children aged 10-15. Moreover, the availability of collateralizable assets offset the effects of income shocks on child labor, even when controlling for other sources of family wealth and for household-level unobservables. Findings corroborate a large theoretical literature on the relevance of credit constraints in predicting child labor and suggest that expanding access to credit might be effective in mitigating the prevalence of child labor. (Contains 41 references) (Author/SV)
Descriptors: Agriculture, Child Labor, Credit (Finance), Family Financial Resources, Family Income, Foreign Countries, Poverty, Rural Farm Residents, Rural Youth
For full text: http://econ.worldbank.org/view.php?type=5&id=27366.
Publication Type: Reports - Research
Education Level: N/A
Authoring Institution: World Bank, Washington, DC.
Identifiers - Location: Tanzania