Child labour and youth employment

1. Child labour and youth employment as a response to household vulnerability: evidence from rural Ethiopia

2. Introduction • Growing literature of the effect of household vulnerability on children’s work and youth employment; • Idiosyncratic shocks and natural disasters apparently lead households to use children as a risk copying instruments • There is robust evidence that shocks do in fact matter for housheold decision concerning children’s work and education; • But shocks experienced by household can take a variety of forms and their consequences may depend on their specific nature; • As a result, the policies required to help cope with risk might also vary depending on the type of shock;

3. Data and variable definition

4. Data and variabledefinition • The Ethiopia Rural Household Survey (ERHS) is a longitudinal household data set covering households in a number of villages in rural Ethiopia. • Data collection started in 1989; • In 1994, the survey was expanded to cover 15 villages across the country. • An additional round was conducted in late 1994, with further rounds in 1995, 1997, 1999, 2004, and 2009. In addition, nine new villages were selected giving a sample of 1477 households • Weuse the 2004 and 2009 round • The EHRS round 2004 and 2009 collectesinformationonchildreninvolvememntin employmentstartingfrom the ageof5 years

5. Data and variabledefinition • The two rounds of the Ethiopia Rural Household Survey (ERHS) collectalso information on occurenceofshocksduring the 5 yearspriorto the survey; • Children’s work appearstobesubstanciallyhigherforchildrenbelongingtohousehold hit by a shock; Note: Naturaldisaster (drought, pest-desease on crops, pest or desease on livestock); Economic shocks (input price increase, output price increase=; Other (land redistribution in PA, confiscation of assets); Lack demand input (lack of demand of agricultural products, lack of access to inputs). Source: Author’s calculationsbased on Ethiopia ERHS 2004-2009

6. Data and variabledefinition • On the contrary, the effectofshocks on children’s schoolattendanceisnotwelldefined; Note: Naturaldisaster (drought, pest-desease on crops, pest or desease on livestock); Economic shocks (input price increase, output price increase=; Other (land redistribution in PA, confiscation of assets); Lack demand input (lack of demand of agricultural products, lack of access to inputs). Source: Author’s calculationsbased on Ethiopia ERHS 2004-2009

7. Effectofshocks on youthemployment and schoolattendance are alsonotwelldefined; Source: Author’s calculationsbased on Ethiopia ERHS 2004-2009

8. Children’s work and • school attendance in rural Ethiopia

9. Children’s work and school attendance in Ethiopia Involvement in economic activity of Ethiopian children remain one of the highest in Africa region Source: Author’s calculationsbased on Ethiopia ERHS 2004-2009

10. Employment rate Source: Author’s calculationsbased on Ethiopia ERHS 2004-2009

11. Schoolattendance rate Source: Author’s calculationsbased on Ethiopia ERHS 2004-2009

12. Theoretical Model

14. Optimal labour supply and consumption: perfect capital markets

15. Child Labour supply: imperfect capital markets

16. Consumption: imperfect capital markets

17. Elasticity of child labour supply

18. EconometricanalysisPreliminaryResults

19. Two approaches to assess the impact of shocks on household behaviour • Non-Linear model : by regressing the outcome variable “employment” at time t on the employment at time (t-1), a set of individual and household characteristics at time (t), shocks experienced by the household; • Non-Linear model with IV • Using past shocks and individual and household characteristics as instruments

20. Regressionanalysis on employmentat time t, without instrumental variable Source: Author’s calculationsbased on Ethiopia ERHS 2004-2009

21. IV Regressionanalysis on employmentat time t Source: Author’s calculationsbased on Ethiopia ERHS 2004-2009

22. Regressionanalysis on schoolattendanceat time t, without instrumental variable Source: Author’s calculationsbased on Ethiopia ERHS 2004-2009

23. IV Regressionanalysis on schoolattendanceat time t Source: Author’s calculationsbased on Ethiopia ERHS 2004-2009