How Does Credit Access Affect Children’s Time Allocation? Evidence from Rural India

Discussion Papers


by FUWA Nobuhiko , ITO Seiro , KUBO Kensuke , KUROSAKI Takashi, SAWADA Yasuyuki

January 2009


Using a unique dataset obtained from rural Andhra Pradesh, India that contains direct observations of household access to credit and detailed time use, results of this study indicate that credit market failures lead to a substantial reallocation of time used by children for activities such as schooling, household chores, remunerative work, and leisure. The negative effects of credit constraints on schooling amount to a 60% decrease of average schooling time. However, the magnitude of decrease due to credit constraints is about half that of the increase in both domestic and remunerative child labor, the other half appearing to come from a reduction in leisure.

Keywords: child labor, schooling, gender bias, credit constraint, household models
JEL classification: I21, I22, J22, O12, O16

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