Child Labour, Human Capital Accumulation and Foreign Aid

In a three period overlapping generations model with child labour, exogenous increases in child health endowments increase child labour and fertility. On the other hand, cash transfer and compulsory education funded through foreign aid have a negative effect on child labour. Foreign aid has a positive effects on fertility if cash transfers for child support are unconditional, and no effect if transfers are conditional on time spent in school. This result supports conditional cash transfer programs like the Bolsa Familia.