Loss in Rural Incomes, Children’s Education, and Child Labor

Abstract

This essay focuses on how marked losses in incomes amongst poor households may lead parents to make significant cutbacks in their expenditures on their children’s education, and perhaps also put their children to work. It is based on simulation exercises using data on farming households in Punjab state, India. This research generated three main results. First, even small–moderate losses in incomes, ranging from 6 to 10 percent, can cause parents to cutback all their education expenditures, as well as other expenditures. Second, free education can help avoid cutbacks in these and other expenditures if the income losses are approximately 10 percent. Third, free education can significantly reduce parents’ need for income from child labor, and the decrease could be in the range of 67–76 percent.