Project report
RISK PREFERENCE AND CHILD LABOUR: ECONOMETRIC EVIDENCE *
Raymond Boadi Frempong, David Stadelmann ·
Summary
Written by AI, not yet AICS's view · claude-haiku-4-5-20251001This research examines why households send children to work, focusing on the role of parental attitudes toward risk. Using econometric methods on recall data about child labour, the authors find that households whose heads are risk-averse are more likely to send their children to work rather than to school. The study suggests this happens because risk-averse parents view child labour as a way to increase household income and protect against economic shocks. The analysis uses statistical techniques to establish that this relationship is causal rather than coincidental.
Key points
- Risk-averse households are more likely to send children to work
- The mechanism appears to be maximising household expected income from the child
- Instrumental variable regression confirms a causal relationship between parental risk aversion and child labour
- Households view child labour as insurance against future income shocks
- The allocation of a child's time between school and work depends partly on parental risk preferences
Limitations
The document does not specify the countries studied, sample size, or time period covered. Without this information, it is unclear how widely these findings apply or whether they reflect current conditions in specific contexts.
Abstract
The literature suggests that the household invests in the human capital of a child member not only for altruistic reasons but also as insurance against future income shocks. Hence, the allocation of the child's time between school and work is a function of the risk preference of the household head. This paper estimates the effect of parental risk preference on child labour decisions in the household using recall information on child labour and a risk elicitation question. We address endogeneity issues by applying an instrumental variable estimation technique. We find that risk-averse households are more likely to send their children to work. Further analyses suggest that such outcomes are driven by the need to maximise the household's expected income from the child. Evidence from instrumental variable regressions indicates that the relationship between risk aversion and child labour is causal and that risk aversion induces higher probabilities of children working.
Findings the Hub has extracted
Each claim below is labelled by its type of design and links back to this report.
- Intervention
- Analysis of the relationship between parental risk preference and child labour decisions
- Population
- Households with children; specific population characteristics not detailed in the abstract
Key finding
Risk-averse households are more likely to send their children to work