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Poverty alleviation and child labor (Edmonds & Schady 2012)

Absence of conflict of interest.

Citation

Edmonds, E. V., & Schady, N. (2012). Poverty alleviation and child labor. American Economic Journal: Economic Policy, 4(4), 100-124.

Highlights

  • The purpose of the study was to examine the impact of unconditional cash transfers on child labor, within the Bono de Desarrollo Humano (BDH) program.
  • The study was a randomized controlled trial, where households within each local parish were randomly assigned to either the treatment group, who are eligible for the cash transfers, or the control group, who are not. The authors compared child labor and school enrollment outcomes, using a follow-up survey administered over a year after the program began.
  • The study found that children were significantly less likely to participate in child labor and more likely to be enrolled in school if they were assigned to the treatment group than if they were assigned to the control group.
  • The quality of causal evidence presented in this report is high because it was based on a well-implemented randomized controlled trial. This means we are confident that the estimated effects are attributable to the Bono de Desarrollo Humano program, and not to other factors.

Intervention Examined

Bono de Desarrollo Humano (BDH) program

Features of the Intervention

The BDH was an unconditional cash transfer program that was implemented in four provinces in Ecuador. The program, run by the government of Ecuador, was designed to replace an earlier cash transfer program by limiting eligibility to higher poverty households. In BDH, households were eligible for the intervention if they were in the lowest two-fifths of income and had a child 6-17 years old. Once selected into the program, program participants could receive the equivalent of a $15 (USD) monthly cash transfer without having to meet any conditions. To receive the money, they needed to either visit a bank or arrange to receive the money in their bank account.

Features of the Study

The study used a randomized controlled trial to test the impact of the BDH program. From the four provinces, the authors selected a random sample of parishes. In each of these parishes, 1,488 eligible households were randomly selected for the study. To be eligible, participants needed to be in the bottom two-fifths of income and have a child 6-17 years old. These households were randomly assigned to either the treatment or control group via a lottery. The treatment group households were to receive the $15 monthly cash transfer, and the control group was not to receive any benefits. However, there was noncompliance with the study. Cash transfers were not distributed to all the treatment households and some control group households received the transfer. As a result, the study authors used an intent-to-treat approach to analyze differences between the groups, maintaining the integrity of random assignment.

Households completed a baseline survey before transfers began and then completed a follow-up survey more than a year later. Both surveys asked about household demographic characteristics along with schooling and child labor outcomes of interest. In the baseline survey, there were 993 children ages 11-16 in the treatment group and 890 in the control group. Using data from the follow-up survey, the authors compared child labor and school enrollment outcomes between the treatment and control groups and controlled for baseline differences such as child age, gender, and mother’s education. While the analysis did not control for other household socioeconomic characteristics, households in both groups were expected to be in the bottom two-fifths of income given the program’s eligibility criteria.

Findings

Employment/Child labor

  • Children assigned to the treatment group had a significantly lower rate of participating in child labor at all than those assigned to the control group.

Education (School participation/enrollment)

  • Children assigned to the treatment group had a significantly higher likelihood of school enrollment compared to those assigned to the control group.

Considerations for Interpreting the Findings

While the study was a randomized controlled trial, the authors reported problems with noncompliance. Many of the households in the treatment group did not receive cash transfers in accordance with their assigned group (31% of children in households in the treatment group did not receive the transfer and 38% of children in households in the control group received it). This means that the findings only show the overall effect of being assigned to receive the transfer, but does not show the effect of actually receiving the transfers. If there was greater compliance with the experiment, it is possible that the treatment effect would be different.

Causal Evidence Rating

The quality of causal evidence presented in this report is high because it was based on a well-implemented randomized controlled trial. This means we are confident that the estimated effects are attributable to the Bono de Desarrollo Humano program, and not to other factors.

Reviewed by CLEAR

December 2018

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