The Responses of Child Labor, School Enrollment, and Grade Repetition to the Loss of Parental Earnings in Brazil, 1982–1999

Results in chapter 2 suggest that in Latin America, poverty and child labor are positively linked at least in some countries, and that poverty and educational attainment are more consistently negatively linked across all countries.1 Most of the research that has documented these links has concentrated on the impact of persistent poverty on child labor and time in school. Less understood is whether transitory shocks to household income also affect decisions regarding child time allocations. If poor households can absorb income shocks by borrowing against future income, then short-term income loss from unemployment, illness, or injury to adults in the household should not affect the schooling or work decisions of the children in the home. However, if poor households face constraints on borrowing because they lack collateral or other means of demonstrating ability to repay, then child work time may be used to substitute for lost adult work time. Even temporary exits from school can lead to permanent loss of human capital if school success is predicated on continuous participation.