EVENT ;
o cash transfer programs - social protection programs that provide
income to poor households often on the condition that children in these
households attend school - lower child labor? Answering this question is
important for a variety of reasons. Child labor is widely prevalent.
According to the latest
estimates of the International Labour
Organization, about 10% of the children aged 5 to 14 worldwide are
engaged in economic activities, often despite national child labor
regulation prohibiting their involvement in work. Participation in child
labor is often feared to affect children's ability to learn in school,
to affect their health both in the short and long-run, and to result in
negative externalities. And, while cash transfer programs are currently
operated by many countries around the world and many of them target
populations with high child labor prevalence rates, in theory their
effect on child labor is ambiguous.
The latter statement requires a little more explanation. Providing
households with additional income will increase their consumption of
"normal goods" such as schooling and leisure and thus lower children's
participation in work. Moreover, if the additional income is provided
conditional on children's school attendance, this will increase the
opportunity cost of children's work. However, cash transfer programs may
increase household investment in productive activities (e.g. Gertler, Martinez, and Rubio-Codina, 2012; Daidone et al., 2014) and thus raise the returns to children's work. They may boost the local economy (e.g. Angelucci and De Giorgi, 2009) and thus raise the demand for child labor. They may improve children's health and nutrition (e.g. Fiszbein and Schady,
2009) and thus affect their ability to carry out productive activities.
And, paradoxically, it is possible that cash transfer programs lower
some households' disposable income and thus increase incentives for
children in these households to work. The latter happens when cash
transfer programs effectively increase school participation, but do not
fully compensate for the cost of school attendance (this discussion is
related also to De Hoop and Rosati, 2014).
To get a better understanding of the effects of cash transfer programs
on child labor, Furio C. Rosati and I recently carried out a review of
the empirical literature entitled Cash Transfers and Child Labor.
In this review we synthesize the evidence presented in impact
evaluations of cash transfer programs implemented in various countries.
Most of the evidence comes from Latin America and the Caribbean, but
there is also some evidence from countries in other geographical areas.
Our review shows that both conditional and unconditional cash transfer
programs do tend to lower child labor. None of the examined programs
increase children's participation in work, while about half of the
programs lowers both the probability that children work and the hours
they spend in work. Reductions in child labor are particularly
pronounced in poor households. Boys appear to reduce especially their
participation in economic activities, while girls reduce especially
their participation in household chores. There is some evidence that
cash transfer programs cushion the effect of economic shocks, such as
the departure of a breadwinner from the household, that may push
children out of school and into work. The empirical literature also
provides a note of caution though, as it shows that the effects of cash
transfer programs may not be homogeneous within households. In
particular, it is possible that some children increase their
participation in work and lower their participation in school to support
the school participation of their siblings who participate in the cash
transfer scheme.
All in all, the empirical evidence is encouraging (this in contrast with
recent papers suggesting that interventions that aim to increase
households income generating capacity, such as micro-credit schemes, may
increase child labor, e.g. Augsburg et al. 2012; Nelson
2011. We therefore conclude that the empirical evidence supports the
widespread use and the rapid proliferation of cash transfer programs.
That being said, the empirical evidence does not give a solid ground to
provide more detailed policy advice. We describe a few particularly
pressing issues in our paper and we hope that they will be addressed in
future research.
One issue is that, although cash transfer programs tend to reduce child
labor on average, there is wide variation in their effects. Our
understanding of the causes of this variation is limited. For instance,
we know relatively little about how the characteristics of cash transfer
programs (e.g. conditions and amounts transferred) affect child labor.
Evidence on the role of program characteristics is more abundant for
schooling outcomes such as attendance rates and performance in
standardized tests. We also do not know whether cash transfer programs
are effective at tackling the worst forms of child labor, such as work
under hazardous conditions and long working hours. A recent paper (Edmonds and Shreshta,
2013) suggests that they do lower also the worst forms of child labor.
However, this paper also points out that the effects of cash transfer
programs on child labor tend to last only for the duration of the
program and dissipate quickly after the program ends. Finally, we know
little about the interaction between cash transfer programs and other
interventions. This is an important issue, as cash transfer programs
typically form part of a broader set of government policies (such as
improvements in the education system).