Productivity Shocks and Child Labor: The Role of Credit and Agricultural Labor Markets

Economic shocks have been shown to affect child labor, particularly when households cannot access credit. This paper asks whether access to agricultural labor markets also reduces the impact of productivity shocks on child labor. Using panel data from Tanzania, I show that (1) child labor rises with a positive rainfall shock, (2) child labor rises less when households have access to a labor market, and (3) the labor market seems more efficient than the credit market in smoothing child labor. These findings are consistent with theoretical predictions and highlight that imperfect labor markets are important determinants of child labor.