Home

Child labor: The role of income variability and access to credit across countries

Rajeev H. Dehejia; Roberta Gatti

Title:
Child labor: The role of income variability and access to credit across countries
Author(s):
Dehejia, Rajeev H.
Gatti, Roberta
Date:
Type:
Working papers
Department:
Economics
Permanent URL:
Series:
Department of Economics Discussion Papers
Part Number:
0102-69
Publisher:
Department of Economics, Columbia University
Publisher Location:
New York
Abstract:
This paper examines the relationship between child labor and access to credit at a cross-country level. Even though this link is theoretically central to child labor, so far there has been little work done to assess its importance empirically. We measure child labor as a country aggregate, and credit constraints are proxied by the extent of financial development. These two variables display a strong negative relationship, which we show is robust to selection on observables (by controlling for a wide range of variables such as GDP per capita, urbanization, initial child labor, schooling, fertility, legal institutions, inequality, and openness, and by allowing for a nonparametric functional form), and to selection on unobservables (by allowing for fixed effects). We find that the magnitude of the association between our proxy of access to credit and child labor is large in the subsample of poor countries. Moreover, in the absence of developed financial markets, households appear to resort substantially to child labor in order to cope with income variability. This evidence suggests that policies aimed at widening households' access to credit could be effective in reducing the extent of child labor.
Subject(s):
Economics, Labor
Item views:
193
Metadata:
View

In Partnership with the Center for Digital Research and Scholarship at Columbia University Libraries/Information Services.