In the absence of developed financial markets, households appear to resort to child labor to cope with income variability. This evidence suggest that policies aimed at increasing households' access to credit could be effective in reducing child labor

"This paper exploits a unique longitudinal data set from Tanzania to examine the consequences of child labor on education, employment choices, and marital status over a 10-year horizon. Shocks to crop production and rainfall are used as instrumental variables for child labor. For boys, the...