and Coulombe 1997).<sup>32</sup> In terms of land ownership, children in households that own land are an estimated 5% more likely to work. Interaction terms between wealth quintiles and land ownership are also tested and illustrate that children living in land-owning households within poorer quintiles are more likely to work than those in land-owning households within richer quintiles.

To estimate the potential effects of returns to education on child labor and schooling, mean income from employment by paternal levels of education is calculated for the cluster average. Income from employment is aggregated at the cluster level for several reasons. One, this reduces endogeneity with any income gained by children in the same household. Two, many child laborers live in villages where reported income from employment is not always common, constraining thereby aggregation at low geographic levels. Three, aggregation at higher levels would not allow for sufficient variation in income from employment between districts or regions. At the same time however, a limitation of any analysis estimating the potential effects of returns to education is that it is not possible to easily discern whether parents make decisions based on current returns or possibly on expected future returns. This analysis here, acknowledging such limitations, applies current returns that are averaged at the cluster level and then divided into terciles. In clusters with the highest returns to primary education (tercile 3), children are an estimated 5% less likely to be working and 2% more likely to be schooling relative to those living in clusters with the lowest returns to primary (tercile 1), while also controlling for mean income from employment at the cluster level and levels of fathers’ education and household wealth. These results suggest that child labor may respond to higher returns to primary schooling and that raising returns may increase incentives to send children to school.

To try and test the ‘luxury axiom’ with a possible exogenous source of variation, a variable is included into the second model on whether children received a scholarship during the past 12 months. Results show that recipient children are an estimated 4% more likely to attend school while the estimated effect on reducing child labor is not significant. This may suggest that any potential effect of the scholarship on increasing school attendance is more likely to be a result of attracting idle (‘inactive’) children or child laborers who then combine work with school, rather than a corresponding reduction in child labor. Increasing school participation through such education subsidies will thus not inevitably reduce child labor, as school and work are (as mentioned) not the inverse of each other for the majority of child laborers. As another possible exogenous source of variation, including a variable for whether households received any domestic or foreign remittances in the past year (accounting for 35% of households) illustrates that children in recipient households are an estimated 2% more likely to attend school but the estimated effect on child labor is not significant. Thus, both of these exogenous variables, which raise households’ disposable income and significantly increase the likelihood for children to attend school, have no significant reported effect on child labor and provide further evidence against the ‘luxury axiom’ in agrarian economies like Ghana.

While the entire paper analyzes child labor defined as working for economic gain, a model is tested here using total hours spent on non-economic household chores as a dependent variable and using the same controls as in the second model. Results show that both girls and non-poor children are significantly more likely to do household chores. An interesting result is that children across Southern regions (where child labor is least pervasive) are more likely

> 32 The potential effects of religious affiliation or ethnicity nonetheless likely have little policy relevance relative to many of the other analyzed variables, especially in terms of targeting government programs due to issues associated with social stigma.

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