ISS Working Paper 491

This paper explores how and why children are helping out at home and on the fields, and how this shifts when households are hit by income shocks. By using panel data the author creatively explores the role and effects of informal social networks, in particular labour sharing arrangements, on child labour hours. It is found that school attendance is less sensitive to these shocks than child labour. The author highlights the importance of social networks in smoothing out consumption and recommends development actors not to crowd out this informal way of dealing with agricultural shocks. The jury was really pleased by the coherence, the careful empirical analysis and the excellent presentation of this paper on “Child Labor, Agricultural Shocks and Labor Sharing in Rural Ethiopia”.

Abstract

The author studies the effect of an agricultural shock and a labor sharing arrangement (informal social network) on child labor. Albeit bad parental preference to child labor (as the strand of literature claims), poor households face compelling situations to send their child to work. This is, especially, true when they are hit by an income shock and face a binding adult labor constraint.

The author used panel data from the ERHS and employed a fixed effects model to pin down causal relation between shocks, membership in a labor sharing arrangement and child labor. It was found that child labor is, indeed, a buffer stock. Though a labor sharing arrangement doesn’t affect child labor at normal times, it helps households to lessen the pressure to rely on it when hit by idiosyncratic shocks. While almost the whole effect of these shocks is offset by participation in a labor sharing arrangement, the covariate shock is not. Even if this may well affect a child’s academic performance, school attendance doesn’t decrease. This differential effect of shocks on child labor in participant households might be because of the extra adult labor made available or due to mutual support that comes with these social networks.

This paper is indicative of the importance of considering social networks in smoothing out consumption. Further, it highlights the difficulty to cope up with covariate shocks and hence, calls for development interventions that are particularly meant to address their impact.

Keywords: child labor, shocks, labor sharing, social networks

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