Mortality risks and child labor

This paper aims to contribute to the literature on child labor by investigating the role of lifetime uncertainty on the supply of child labor. More specifically, we examine the impact that the child’s lifetime uncertainty may have on the parents ’ decision to send their child to school or to work, in the absence of insurance mechanisms. We show that the level of child labor may be inefficiently high if parents are not altruistic towards their children and expect to receive filial transfers. However, if the parents are altruistic and expect to leave positive net bequests to their children, the level of child labor they choose is inefficiently low. Finally, we investigate a potential efficiency-restoring policy intervention, namely cash transfers conditional on child’s schooling, and we show that it may restore efficiency in parents ’ decision concerning child labor. Provisional version. Please do not circulate, do not quote. 1