Educational Attainment and Child Labor: Do Subsidies Work?

24 Pages Posted: 8 Aug 2005

See all articles by Subhayu Bandyopadhyay

Subhayu Bandyopadhyay

Federal Reserve Bank of St. Louis - Research Division; IZA Institute of Labor Economics; West Virginia University

Abhra Roy

Kennesaw State University; IZA Institute of Labor Economics

Date Written: July 2005

Abstract

We analyze the role of education subsidies in affecting child labor where a family chooses the quantity of children, the level of educational attainment and the fraction of time an offspring spends on child labor. This is relevant because following the threat of trade sanctions and suspension of GSP privileges, many developing countries are aggressively pursuing educational policy to reduce the incidence of child labor. We find that education subsidies may increase (or reduce) the equilibrium level of education and child labor depending on the relative weight that a family attaches to quality. The latter depends on the educational attainment level. We find that subsidies that target fixed and those that target variable costs may lead to opposite effects on child labor. Given that established subsidy programs like PROGRESA have both variable and fixed components, this finding assumes special relevance. It is interesting to note that the empirical literature in this area has found that a rise in the cost of schooling decreases child labor in some countries while increasing it in others. Our findings suggest that there may be reasons for observing such apparent contradictions.

Keywords: child labor, educational attainment, education subsidies

JEL Classification: J1, O1

Suggested Citation

Bandyopadhyay, Subhayu and Roy, Abhra, Educational Attainment and Child Labor: Do Subsidies Work? (July 2005). IZA Discussion Paper No. 1686. Available at SSRN: https://ssrn.com/abstract=773947

Subhayu Bandyopadhyay (Contact Author)

Federal Reserve Bank of St. Louis - Research Division ( email )

411 Locust St
PO Box 442
St. Louis, MO 63011
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

West Virginia University ( email )

Morgantown, WV 26506-6025
United States
304-293-7879 (Phone)
304-293-7061 (Fax)

Abhra Roy

Kennesaw State University ( email )

1000 Chastain Road
Kennesaw, GA 30144
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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