Speakers at the online Applied Development Economics (ADE) seminar hosted by Lahore School of Economicsdiscussed the impact of cash transfers on child labour and schooling outcomes. The study is motivated by a widespread prevalence of child labour. With this backdrop, the authors study the potential role of Benazir Income Support Program (BISP) – a large scale social protection program in breaking the vicious cycle of child labour. According to the theoretical model developed by Dr Nasir Iqbal, Dean, Faculty of Social Sciences, Pakistan Institute of Development Economics, and his co-authors, ultra-poor households may use cash transfers as a means to alleviate financial constraints and substitute work with schooling for their children.
To test the predictions of this model, the authors combine administrative data on Poverty means testing with survey data for households conducted in 2011, 2013 and 2016 respectively. Furthermore, the authors use a regression discontinuity design to estimate the local average treatment effect of the cash transfer on indicators of interest.
For educational outcomes these are: school enrolment rate, drop-out rate and grade promotion for children aged 5 to 14 years. To quantify child labor, the authors aggregate the total number of combined hours worked by a child aged 5-14 years over the past week.To study effects on poverty, the authors use a multi-dimensional poverty index to capture the extent of deprivation in education and child conditions at the household level.
The results from this study show that there is a systematic difference between the treated (households below the PMT cut-off) and control group (households above the PMT cut-off). Cash transfers lead to a significant impact on educational attainment as observed by a significant increase in enrolment and grade promotion. The authors find the positive effect of cash transfers on educational attainment to be persistent across gender and age. The effect is observed for both younger children (between 5 to 11 years) as well as older children (between 12 to 14 years). Further, the authors observe a significant negative impact of receiving cash transfers on the incidence of child labor – with the effect being stronger for girls relative to boys. Finally, the authors also observed a reduction in the prevalence and incidence of poverty in response to the cash transfer program. Dr. Iqbal’s talk was well received by the audience and generated an engaging discussion among the audience.
