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Risk preference and child labor : Econometric evidence

Title data

Frempong, Raymond Boadi ; Stadelmann, David:
Risk preference and child labor : Econometric evidence.
In: Review of Development Economics. (January 2021) .
ISSN 1467-9361
DOI: https://doi.org/10.1111/rode.12746

Official URL: Volltext

Abstract in another language

Households may invest in the human capital development of their children not only for altruistic reasons but also as insurance against future income shocks. Therefore, the allocation of the child's time between school and work is a function of the risk preference of the household head. This paper analyzes the relationship between parental risk preferences and child labor decisions using recall information on child labor and a risk elicitation question. Results reveal that risk‐averse households are more likely to send their children to work. Endogeneity issues are addressed by employing instrumental variables. These results suggest that child labor may be driven by the need to maximize the household's expected income from the child. Regarding heterogeneity, we find that the child labor effect of risk‐aversion is higher for older children. Furthermore, the father's risk‐aversion matters for the probability of child labor, while the intensity of child labor increases with the mother's risk‐aversion. The findings call for an understanding of the behavioral context of the affected households and how risk preferences can affect the success of proposed policies to reduce child labor.

Further data

Item Type: Article in a journal
Refereed: Yes
Keywords: Altruism; Child labor; Household welfare; Human capital; Risk preference; Uncertainties
Institutions of the University: Faculties > Faculty of Law, Business and Economics > Department of Economics
Faculties > Faculty of Law, Business and Economics > Department of Economics > Professor Economics with a focus on development economics > Professor Economics with a focus on development economics - Univ.-Prof. Dr. David Stadelmann
Profile Fields > Advanced Fields > African Studies
Result of work at the UBT: Yes
DDC Subjects: 300 Social sciences > 330 Economics
Date Deposited: 11 Feb 2021 07:40
Last Modified: 11 Feb 2021 07:40
URI: https://eref.uni-bayreuth.de/id/eprint/62956