DP4443 The Education, Labour Market and Health Consequences of Child Labour

Author(s): Kathleen Beegle , Rajeev H Dehejia , Roberta Gatti

Publication Date: May 2004

Keyword(s): child labour , returns to education , health

JEL(s): I21 , J22 , J24

Programme Areas: Labour Economics

Link to this Page: www.cepr.org/pubs/dps/DP4443.asp

Though there is a large literature on the determinants of child labour and many initiatives aimed at combating this phenomenon, there is limited evidence on the consequences of child labour for socioeconomic outcomes such as education, occupational choice, wages, and health. Using panel data from Vietnam and an instrumental variables strategy, we evaluate the effect of child labour participation on outcomes over a five-year horizon. We find significant negative impacts of child labour on subsequent school participation and educational attainment. On the other hand, we find that those who worked as children are likely to earn a higher wage as young adults. This effect more than fully offsets the foregone earnings due to reduced schooling, particularly for girls. We find no significant effects of child labour on several indicators of health. This evidence in part accounts for why child labour is such a pervasive phenomenon and suggests that the case against child labour requires both future increases in the returns to schooling (i.e., beyond the five year horizon encompassed by our data set) and that parents are able to borrow (or internally fund) the investment in schooling.