ECON101: Principles of Microeconomics (2021.A.01)

Professor Sonia Bhalotra investigated the role of household poverty in child labor. Imagine a household with two parents and two children, a boy and a girl. If only the parents work, the family income may be less than an amount required for subsistence. In order to at least raise the income of the family to subsistence, will the labor of both children be added? If only one child will work, will it be the boy or the girl? How do the motivations of parents to send their children to work affect the design of policies to encourage education? Will a program that reduces school fees or improves school quality lead to more education or would a program that provides cash or food to households who send their children to school work better?

Using information on over 3,000 children in an area of rural Pakistan where their labor force participation is high, child wage labor is common, and gender differences in education and work of children prevail, Professor Bhalotra specifically estimated how changes in wages for boys and girls affect the number of hours they work. She focused on wage work outside the home because it usually involves more hours and less flexibility than, say, work on one's own farm, which essentially rules out going to school.

She argues that if the work of a child is geared toward the family hitting a target level of income, then an increase in the wage will lead to fewer hours of work. That is, the labor supply elasticity will be negative and the labor supply curve will have a negative slope. For boys, she finds that the wage elasticity is about −0.5. For girls, she finds that the wage elasticity is about 0, meaning the labor supply curve is vertical. To further her hypothesis that the labor supply decision for boys but not for girls is compelled by household poverty, she notes that separate estimates show that the income of the family from sources other than having their children work reduces the amount that boys work but has no effect on the amount that girls work. Other research she has undertaken on labor supply of children on household-run farms provides further support for these gender differences: Girls from families that own relatively larger farms were both more likely to work and less likely to go to school than girls from households with farms of smaller acreage.

Why the gender differences and how do these findings affect drafting of policies to encourage schooling? For boys, cash or food given to households could induce parents to send their sons to school. For girls, household poverty reduction may not work. Their relatively lower level of participating in schooling may be related to an expected low impact of education on their future wages. Expectations about when they will get married and whether or not they should work as adults, especially if it means moving to other areas, may also play a role. For girls, policies that alter attitudes toward girls' education and in the longer term affect educated female adult earnings may be more instrumental in increasing their educational attainment.