Poverty Alleviation and Child Labor - Dartmouth College.pdfVIP

Poverty Alleviation and Child Labor By ERIC V. EDMONDS AND NORBERT SCHADY* Forthcoming in American Economic Journal: Economic Policy Final version: September 2011 Poor women with children in Ecuador were selected at random for a cash transfer equivalent to 7 percent of monthly expenditures. The transfer is greater than the increase in schooling costs at the end of primary school, but it is less than 20 percent of median child labor earnings in the labor market. Poor families with children in school at the time of the award use the extra income to postpone the childs entry into the labor force. Students in families induced to take-up the cash transfer by the experiment reduce their involvement in paid employment by 78 percent and unpaid economic activity insi de their home by 32 percent. These declines in economic activity are accompanied by an increase in time in unpaid household services, but overall time spent working declines. * Edmonds: Department of Economics, Dartmouth College, 6106 Rockefeller Hall, Hanover NH 03755 USA (email: eedmonds@); Schady: Inter-American Development Bank, 1300 New York Avenue, NW, Washington DC 20577 USA (email: norberts@). The views in this paper do not necessarily reflect those of the Inter-American Development Bank, its Executive Directors, or the countries they represent. We appreciate the helpful comments of Caridad Araujo, Kathleen Beegle, Milo Bianchi, Francisco Ferreira, John Giles, Sylvie Lambert, Marco Manacorda, David McKenzie, Christopher Snyder, Zafiris Tzannatos, and especially Hilary Hoynes and our referees, as well as seminar