Market Imperfections and Child Labor

SummaryThis article looks into the relationship between market imperfections and child labor. A rural household model shows that households with medium-sized plots may increase child labor when the labor market improves, contrary to the others. We estimate the relationship between child labor and various measures of market imperfections in Madagascar, controlling for a large set of village characteristics and district fixed effects. On average, market imperfections increase child labor but the effects are heterogenous by land ownership (and consistent with the model). An improvement of markets is associated to a decrease in child labor, which is suggestive of new policies to fight against child labor.