Household shocks, child labor, and child schooling: evidence from Guatemala

Using data from the National Survey of Standards of Living conducted in Guatemala in 2000, this article tests the hypothesis that Guatemalan households use child labor and reduce child schooling to cope with household shocks. First, the authors use factor analysis to estimate the latent household propensity to natural disasters and socioeconomic shocks. Then, they estimate bivariate probit models to identify the determinants of child labor and schooling, including household propensity to natural disasters and socioeconomic shocks. Results suggest that households use child labor to cope with natural disasters and socioeconomic shocks. In contrast, the authors found no evidence that suggests that households reduce child schooling to cope with shocks. Findings also indicate that poor households are more likely to use child labor and schooling reduction as strategies to cope with socioeconomic shocks.