Could a partial subsidy for child education increase child labor? Using data from the randomized evaluation of a conditional cash transfer program CCT in the Philippines, we find that children who were neither in school nor work in the absence of the program not only increased school participation but also increased work for pay.
We show suggestive evidence that because the cash transfer only provided a partial schooling subsidy children worked to cover the shortfall in schooling fees. Our findings contribute to the increasing evidence that the design of CCTs, in this case transfer size, matters considerably in terms of achieving program goals. In this paper, we present a counterexample from the experimental pilot of a conditional cash transfer program in the Philippines showing that cash transfers can, under certain conditions, increase both school enrollment and participation in paid work.
This increase is on the order of five percentage points, relative to a control mean of 12 percentage points in the rate of child work for pay.
In particular, the program appears to have encouraged children who would otherwise be neither in school nor in work to attend school and to start working. We consider and rule out a range of possible explanations for the increase in child labor, including investment of the transfers in household productive activities and changes in adult productive engagement, both of which can increase household demand for child labor, as well as improvements in child health, which could affect the supply of child labor.
During the evaluation period, education transfers did not fully cover the cost of educationβhence, the school attendance of compliers, that is, those who started attending school in response to the program, represented a net cost to the household. We show that the earnings of working children make up for a large portion of this shortfall.
