Child labour and youth employment as a response to household
vulnerability: evidence from rural Ethiopia
Slide 2
Introduction Growing literature of the effect of household
vulnerability on childrens work and youth employment; Idiosyncratic
shocks and natural disasters apparently lead households to use
children as a risk copying instruments There is robust evidence
that shocks do in fact matter for housheold decision concerning
childrens work and education; But shocks experienced by household
can take a variety of forms and their consequences may depend on
their specific nature; As a result, the policies required to help
cope with risk might also vary depending on the type of shock;
Slide 3
Data and variable definition
Slide 4
The Ethiopia Rural Household Survey (ERHS) is a longitudinal
household data set covering households in a number of villages in
rural Ethiopia. Data collection started in 1989; In 1994, the
survey was expanded to cover 15 villages across the country. An
additional round was conducted in late 1994, with further rounds in
1995, 1997, 1999, 2004, and 2009. In addition, nine new villages
were selected giving a sample of 1477 households We use the 2004
and 2009 round The EHRS round 2004 and 2009 collectes informationon
children involvememnt in employment starting from the age of 5
years Data and variable definition
Slide 5
The two rounds of the Ethiopia Rural Household Survey (ERHS)
collect also information on occurence of shocks during the 5 years
prior to the survey; Childrens work appears to be substancially
higher for children belonging to household hit by a shock; Data and
variable definition Percentage of children (5-14) in employment,
belonging to household experiencing shocks by type of shock, and
year Year 2004Year 2009 Type of shockNoYesNoYes Natural
disaster50.060.754.862.0 Economic60.853.954.568.6
Other58.063.260.553.7 Lack demand/input58.458.558.968.2 Note:
Natural disaster (drought, pest-desease on crops, pest or desease
on livestock); Economic shocks (input price increase, output price
increase=; Other (land redistribution in PA, confiscation of
assets); Lack demand input (lack of demand of agricultural
products, lack of access to inputs). Source: Authors calculations
based on Ethiopia ERHS 2004-2009
Slide 6
Percentage of children (5-14) attending school, belonging to
household experiencing shocks by type of shock and year Year
2004Year 2009 Type of shockNoYesNoYes Natural
disaster44.741.365.661.9 Economic42.441.360.466.2
Other41.351.163.051.9 Lack demand/input42.640.062.464.6 Data and
variable definition On the contrary, the effect of shocks on
childrens school attendance is not well defined; Note: Natural
disaster (drought, pest-desease on crops, pest or desease on
livestock); Economic shocks (input price increase, output price
increase=; Other (land redistribution in PA, confiscation of
assets); Lack demand input (lack of demand of agricultural
products, lack of access to inputs). Source: Authors calculations
based on Ethiopia ERHS 2004-2009
Slide 7
Percentage of youth (15-21) in employment, belonging to
household experiencing shocks by type of shock, and year Year
2004Year 2009 Type of shockNoYesNoYes Natural
disaster73.075.069.470.9 Economic73.676.568.273.6
Other74.674.170.761.1 Lack demand/input73.478.070.073.3 Percentage
of youth(15-21) attending school, belonging to household
experiencing shocks by type of shock and year Year 2004Year 2009
Type of shockNoYesNoYes Natural disaster58.448.462.461.1
Economic51.647.960.163.1 Other49.856.161.271.4 Lack
demand/input51.946.260.765.1 Source: Authors calculations based on
Ethiopia ERHS 2004-2009 Effect of shocks on youth employment and
school attendance are also not well defined;
Slide 8
Childrens work and school attendance in rural Ethiopia
Slide 9
Childrens work and school attendance in Ethiopia Source:
Authors calculations based on Ethiopia ERHS 2004-2009 Involvement
in economic activity of Ethiopian children remain one of the
highest in Africa region Child activity status (age 5-14), by year
Activity status 20042009 MaleFemaleTotalMaleFemaleTotal Employment
only 35.526.731.123.415.219.4 School only 9.420.214.811.132.421.5
Employment and school 35.419.227.351.430.641.3 Neither
19.734.026.814.121.717.8 100 Total Employment
70.945.958.474.845.860.7 Total schooling
44.839.442.162.56362.8
Slide 10
Employment rate, by age and years Employment rate Source:
Authors calculations based on Ethiopia ERHS 2004-2009
Slide 11
School attendance rate, by age and years School attendance rate
Source: Authors calculations based on Ethiopia ERHS 2004-2009
Slide 12
Theoretical Model
Slide 13
Slide 14
Optimal labour supply and consumption: perfect capital
markets
Slide 15
Child Labour supply: imperfect capital markets
Slide 16
Consumption: imperfect capital markets
Slide 17
Elasticity of child labour supply First best solution Borrowing
constraints: no corner solution for child labour supply Borrowing
constraints: corner solution for child labour supply Subjective
expectations of income risks : 00 Adverse realization of exogenous
income shocks: 00
Slide 18
Econometric analysis Preliminary Results
Slide 19
Two approaches to assess the impact of shocks on household
behaviour Non-Linear model : by regressing the outcome variable
employment at time t on the employment at time (t-1), a set of
individual and household characteristics at time (t), shocks
experienced by the household; Non-Linear model with IV Using past
shocks and individual and household characteristics as
instruments
Slide 20
(1)(2) Variablesemployment (t) Employment (t-1)0.564***
(7.86)(7.85) Shocks drought0.185**0.187** (2.23)(2.25) pest or
desease on crop0.281***0.282*** (3.23)(3.24) Lack of access to
inputs0.07410.0734 (0.63)(0.62) input price increase0.141** (1.99)
output price increase-0.163-0.164 (-0.88) lack demand agricultural
product-0.167-0.168 (-0.64) land redistribution in
PA-0.574**-0.569** (-2.01)(-2.00) confiscation of
assets-0.114-0.118 (-0.22)(-0.23) pest or desease on
livestock-0.117-0.118 (-1.25)(-1.26) dummy: zero per capita
consumption in Kcal (cereals)0.5790.583 (0.88)(0.89) Log per capita
consumption in Kcal (cereals)0.02090.0211 (0.39)(0.40) variance
ratio deficiency0.541** (2.04) variance per capita consumption in
Kcal (cereals)0.00993** (2.06) Constant0.1080.114 (0.13) Obs.
1,732; z-statistics in parentheses; *** p