From climatic to international shocks: Where does the evidence stand on income changes and child labor

Children in developing countries are vulnerable to shocks and adversities and child labor is often seen as a direct consequence of poverty and economic downturns. While such univocal causality may appear obvious, its empirical basis has not been systematically evaluated. To understand the linkages between shocks, changes in the economic situation of families and child labor, we therefore conduct a systematic literature review on the impact of income-related shocks on child labor. We evaluate empirical studies of weather events and natural disasters, agricultural shocks such as crop failures, family shocks like parental illness, price shocks and transnational shocks through trade, migration, and remittances. Focusing on the literature that identifies causal effects, we find that the relationship between shocks and child labor is far from univocal. While in most cases adverse shocks increase child labor, we find that favorable shocks that improve earning opportunities may also cause more child labor. Policies to tackle child labor should therefore develop safety nets that minimize the probability of children being used as buffers in adverse economic downturns, but also consider the risk that positive economic shocks may attract children into labor due to changes to the value of children's time spent working.