The power of remittances on the prevalence of child labor
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This article examines the relationship between migrants’ remittances and the prevalence of child labor by using a large sample of developing countries. In particular, we investigate whether the inflows of remittances help to offset the effects of financial constraints and income shocks on the prevalence of child labor. Starting from a simple theoretical model, then based on a sample of 97 developing countries (of which 31 are African) observed over the period 1998-2002, we show that remittances reduce significantly child labor in developing countries characterized by weak financial systems and by strong income instability. These results were robust even after taking into account the potential endogeneity of remittances and financial development in the regressions. Policy recommendations for specific strategies to facilitate receipt of remittances by households are more than ever appropriate for a region like Sub-Saharan Africa, which currently receives a small fraction of these funds compared to other developing countries, and where the prevalence of child labor is still a serious issue.