POLICY RESEAR( H WORKING PAPER 2116

# Summary findings

RavalCion and Wodon try to determine whether children seln _to_ work in rural Bangladesh are caught in a poverty trap, with the extra incorne to poor families from child labor comiing at the expense of the chilcdren's longer-term prospects of escaping povei-ty through education.

The poverty trap argument depends on children's work being substitutable for schooling. Casual observations and the descriptive statistics available from surveys seem to offer littLe support for the argument.

To explore the questioni more deeply. Ravallion and Wodon use a targeted school stipend to identify how nmuch clhild labor substitutes for schooling. They find that Bangladesh's Food-for-Education program is a strong incentive tor school attendance. A stipend with a value considerably less than the mean child wage was enough to ensure nearly full school attendance among participants.

The enrollment subsidy also reduced the incidence of clhild labor, an effect that accounted for only a small proportion of the increase in school enrollment. The reduction in the incidence of child labor among boys (girls) represents about one-quarter (one-eighth) of the increase in their school enrollment rate. Parents are clearly substituting other uses of their children's time to secure the current income gain from access to the program, with modest impact on earnings from their children's work.

The authors' tests were limited. Work may well displace time for doing homework or attending afterschool tutorials, for example. Ravallion and Quentin were unable to identify such effects from the data available.

There may also be other welfare losses to children from work (such as exposure to an unsafe working environment) as well as welfare gains (such as skills learned from working that enhance returns to schooling).

But their results do lead them to question the seemingly common view that child labor is a major factor perpetuating poverty in Bangladesh by keeping children from poor families out of school.

This paper-a joint product of Poverty and Human Resources, Development Research Group, and Poverty Reduction and - Economic Management Sector Unit. Latin America and the Caribbean Region is part of a larger effort in the Bank to study behavioral responses to social programs. Copies of the paper are available free from the World Bank, 1818 H Strect NW, Washington, DC 20433. Please contactPatriciaSader, roomMC3-632, telephone 202-473-3902, fax 202-522-1153, Internet address psaderCfvvorldbank.org. Policy Research Working Papers are also posted on the Web at http:/; www.worldbank.org,html/,dec/Publicationis/Workpapers/home.html. The authors may be contacted at mravallion (gfworldbank.org or qwodon2<worldbanlk.org. May 1999. (21 pages) _|Ihe l'olicy Research orkiig Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about | developmzent isssiss. An1 objectiv e of/the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. do not necessarily represent the view of the World Bank, its Executive Directors, or the countries theys represent._

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