Income Shocks and Child Labor: Evidence for the Rural Dominican Republic

Abstract

Child labor is a social problem with economic consequences for the growth and development of countries in the short and long term, affecting children’s physical and mental development because it interferes with their future wages. This article aims to assess how negative income shocks and economic assets are associated with child labor in the Dominican Republic. This issue is particularly important in the rural area, which is more prone to exogenous shocks and has fewer tools to mitigate them. The microdata from the Encuesta Nacional de Hogares de Propositos Multiples (ENHOGAR) are used for 2010. The empirical strategy was to use a bivariate probit for considering that the decision to work and study is interdependent. The results show that the assets positively affect the child’s decision to study. On the other hand, negative household income shocks increase the choice of working. Finally, this chapter brings important results for the formulation of public policies aimed to effectively prevent and eradicate child labor in rural areas.