characteristics in four countries: Cote d'Ivoire, Colombia, Bolivia and the Philippines. The results are remarkably consistent across them, despite their vastly different social and cultural characteristics. In a similar vein, Jacoby and Skoufias (1997) examine how school attendance responds to seasonal fluctuations in the income of agrarian households using panel data from rural India. Their main finding is that seasonal fluctuations in school attendance are a form of self-insurance. It would follow that the first-best response to child labor would be to correct the imperfections of credit markets (Cameron and Worswick, 1998; Ilahi, 1999). But this may not be feasible.

An alternative is to ban child labor. This is a viable policy option for relatively small and well-identified sectors. In particular, it should be forcefully pursued in the sex industry. But the effectiveness of a ban across all sectors is more dubious. The problem is the limited enforcement capacity of governments in developing countries. In practice, a ban could only be implemented on formal sector _firms;_ for example, those directly selling abroad. This may result in children still working, but in the informal sector, with lower wages and possibly worse working conditions. A partial ban could be welfare improving, but it could also backfire (Brown, Deardorff, and Stern, 1998). Admittedly, child labor bans were adopted in most of Western Europe during the nineteenth century, and developing countries could be inspired to follow the same path. However, other factors, such as rising incomes and technological change, might have been more important than the bans in reducing child labor (Nardinelli, 1980; Heywood, 1988).

From an economic point of view, it would be preferable to modify the incentives faced by households. Some have considered raising the earnings of adult workers, through minimum wages (Basu, 1999). The limited effectiveness of minimum wages in developing countries, discussed above, makes this an impractical alternative anyway. Most would prefer a cash stipend or a grant to poor families, conditional on school attendance. Programs of this sort are already in place in several countries. They include the Food for Education program in Bangladesh, _Bolsa Escola_ in Brazil and _Progresa_ in Mexico. Similar programs are being set up on a pilot basis in Argentina, Colombia, Jamaica and Nicaragua, among others.

While subsidies could have a positive impact on school attendance, they may fail to eradicate child labor. In India, it has been argued that the major deterrent for school participation is not the opportunity cost of not working, but low quality of the public education system. Duraisamy (2000) reports that the majority of children not enrolled in school are actually not working. An evaluation of the Food for Education program in Bangladesh shows that increased school enrollment did reduce child labor, although it also led to a considerable reduction in the children's leisure time (Ravallion and Wodon, 2000). A similar conclusion was reached for the _Progresa_ program in Mexico.

Last but not least, specific labor market policies could also be considered as a way to offset the effects of increased economic volatility. Fiscal and financial policies alone may not be enough to cope with the impact of terms-of-trade fluctuations and short-term capital movements. The potentially wider business cycles associated with globalization represent a form of uninsurable risk. Rodrik (1998) claims that bigger governments, and especially bigger public sector employment, can be used as a substitute for insurance. In 25