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Child labor : the role of income variability and access to credit in a cross-section of countries, Volume 1
Author:Dehejia, Rajeev H.; Gatti, Roberta; Date Stored:2002/02/16
Document Date:2002/01/31Document Type:Policy Research Working Paper
SubTopics:Environmental Economics & Policies; Children and Youth; Economic Theory & Research; Labor Policies; Health Economics & Finance; Street Children; Youth and GovernanceLanguage:English
Major Sector:(Historic)Social ProtectionReport Number:WPS2767
Sub Sectors:Labor Markets & EmploymentCollection Title:Policy, Research working paper series ; no. WPS 2767
Volume No:1  

Summary: Even though access to credit is central to child labor theoretically, little work has been done to assess its importance empirically. Dehejia and Gatti examine the link between access to credit and child labor at a cross-country level. The authors measure child labor as a country aggregate, and proxy credit constraints by the level of financial market development. These two variables display a strong negative (unconditional) relationship. The authors show that even after they control for a wide range of variables-including GDP per capita, urbanization, initial child labor, schooling, fertility, legal institutions, inequality, and openness-this relationship remains strong and statistically significant. Moreover, they find that, in the absence of developed financial markets, households resort to child labor to cope with income variability. This evidence suggests that policies aimed at increasing households' access to credit could be effective in reducing child labor.

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