July 2016

IZA DP No. 10054: Work versus School? The Effect of Work on Educational Expenditures for Children in Mexico

This paper explores the impact of child labor on child welfare, with a specific focus on the relationship between working and education. I look at the empirical relationship between working and educational expenditure budget shares for children age 5-14 in Mexico. I accomplish this using a household fixed effects model and data from two waves of the Mexican Family Life Survey (MxFLS). The results indicate that working increases school expenditure shares for working children. In particular, on average, girls engaged in paid work have total annual education expenditure shares that are 48.6% higher than girls who do not work. This relationship varies significantly with characteristics of both the individual and the household, including the child's gender and type of work performed, as well as the household's income, location, and relative female bargaining power. The results indicate that working does not appear to translate into a decrease in welfare and the additional expenditure is directed towards goods that improve the quality of education.