A little help may be no help at all: child labor and scholarships in Nepal

This paper investigates the policy issue of whether schooling scholarships tend to decrease the incidence and intensity of child labor. The issue is examined in the particular country context of Nepal where child labor is not uncommon. Using data from the 2010 Nepal Living Standards Survey III and the method of coarsened exact matching, the paper finds that scholarships of a high-enough value decrease girls’ work by 7.5 hours per week (relative to a control group average of about 23 hours of total work per week), largely reducing their hours in economic and extended-economic activities with little impact on hours in domestic work. Scholarships of similar value do not appear to affect the work hours of boys. These findings have broader relevance and implications for the potential of scholarships as a policy option for combating child labor in developing countries. As these scholarships typically do not enforce regular school attendance, the findings also point to the potential importance of largely unconditional (but sizeable) transfers in many policy settings where conditionality is difficult to implement.