Short and long-term effects of a child-labor ban

Abstract

This is the first study that investigates the short and long-term causal effects of a child-labor ban. We explore the law that increased minimum employment age from 14 to 16 in Brazil in 1998 and uncover its impact on time allocated to schooling and work in the short term and on school attainment and labor-market outcomes in the long term. We use cross-sectional data from 1998 to 2014 and apply a fuzzy regression discontinuity design to estimate the impact of the ban at different points of individuals’ life-cycles. Our estimates show that the ban reduced incidence of boys in paid work activities by 4 percentage points or 46 percent. We find that the fall in child labor is mostly explained by the change in the proportions of boys working for pay and studying and observe an increase in the proportion of boys only studying as a consequence. The results suggest that the ban reduced boys’ participation in the labor force. We follow the same cohort affected by the ban over the years and find that these short-term effects persisted until 2003 when they turned 18. We pooled data from 2007 to 2014 to check whether the ban affected individuals’ stock of human capital and labor-market outcomes. Our estimates suggest that the ban did not have long-term effects for the whole cohort, but found some indication that it did negatively affect the log earnings of individuals at the lower tail of earnings distributions and those more likely to be affected by the law.