Child labor : the role of income variability and access to credit in a cross-section of countries

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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;	Collection Title:	Policy, Research working paper series ; no. WPS 2767
Date Stored:	2002/02/16	Document Date:	2002/01/31
Document Type:	Policy Research Working Paper	Language:	English
Major Sector:	(Historic)Social Protection	Report Number:	WPS2767
Sub Sectors:	Labor Markets & Employment	SubTopics:	Environmental Economics & Policies; Children and Youth; Economic Theory & Research; Labor Policies; Health Economics & Finance; Street Children; Youth and Governance
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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