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Regular version of the site

Seminar «The Income Elasticity of Child Labour: Do Cash Transfers Have an Impact on the Poorest Children?»

A joint research seminar of the Laboratory for Labour Market Studies and the Centre for Labour Market Studies was held at HSE On December 11, 2018.

Speaker:  Furio C. Rosati, Professor of Public Finance at the University of Tor Vergata, Director of CEIS (Center for Intrnational Economic Studies) and of ICID (Italian Center for International Development), Research Fellow at IZA. 

The possible non linearity of the income elasticity of child labour has been at the centre of the debate regarding both its causes and the policy instruments to address it. We contribute to this debate providing theoretical and empirical novel results. From a theoretical point of view, for any given transfer size, there is a critical level of household income below which an increase in income has no impact on child labour and education. We estimate the causal impact of an increase in income on child labour and education exploiting the random allocation of the Child Grant Programme, an unconditional cash transfer, in Lesotho. We show that the poorest households do not increase investment in children’s human capital, while relatively less poor households reduce child labour and increase education. In policy terms, the results indicate that while targeting remains essential, some form of means testing of the transfer is necessary to improve their effectiveness towards the most destitute children.