School subsidies may increase school attendance and child labor

Child labor is widely recognized as a poverty trap problem. Parents know their child should go to school, but they cannot afford missing out on supplemental income or domestic help. And in cases where there is actually no good reason to send the child to school, it is because the economy does not have jobs for people with more education, because no one has more education. This is why several programs have been very successful in getting children into school as long as they provided the right incentives for parents: cash transfers and free lunches that provide the economic replacement of the income the child would have generated. The success is usually measured by looking at school attendance or outcomes.

Jacobus de Hoop and Furio Rosati point out that the impact on child labor is not so clear, especially as it is difficult to measure. Indeed, most of child labor is inside the household or in informal markets. Using data from Burkina Faso, they find that recipients from the BRIGHT program both increased school attendance and child labor. The BRIGHT program also includes the construction of school and provides for take-home food rations for girls.

De Hoop and Rosati show that these disheartening results can be consistent with altruistic parents when there are some non-convexities. The latter stem from the fact that there are substantial commuting times for school attendance. As the program built new schools, it reduced those commuting times. This in itself makes school attendance more likely, but at the cost of providing more time for work for those who were already going to school. This does not mean one should not build schools, though, rather one should find some other intervention that counteracts this perverse effect.