Abstract
The authors develop a semi-parametric latent class random effects multinomial logit model to distinguish between observed and unobserved household characteristics as determinants of child labor, school attendance and idleness. The authors find that much of the substitution between activities as a response to changes in covariates is between attending school and being idle, with work being rather resistant. Unobserved household heterogeneity is substantial and swamps observed income and wealth heterogeneity. A characterization of households into latent types reveals very different intrinsic propensities towards the three children's activities and those households with a high propensity to send their children to school are poorer and have less educated parents compared to households in the other classes.
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