The Determinants of Child Labor and Schooling in Honduras,

Child labor occurs predominantly in developing countries, but its causes are debatable. This paper investigates the supply-side determinants of child labor in Honduras, Nicaragua, and Panama using data collected under the Statistical Information and Monitoring Programme on Child Labour (SIMPOC) program of the ILO. A multinomial logit analysis of the data challenges the commonly accepted assumption that child labor is driven by household poverty constraints. I find that variables that capture parents’ incentives, such as parental schooling, are much stronger determinants of child labor in the countries studied. Cross-country differences in the results confirm earlier studies that show that economic progress decreases child labor, but the country-specific results suggest that this is more likely due to factors associated with economic progress other than increase in household incomes. ∗ I would like to express my deepest gratitude to Professor John Pencavel for his patient guidance throughout the course of the year. It is a student’s honor and privilege to have worked with such a devoted teacher. This paper is dedicated to my parents for a lifetime of support and inspiration