The Tradeoff of Child Labor: Evidence from Indonesia

Abstract

Using data from the Indonesia Family Life Survey (IFLS), this study examines the influence of child labor on wages and educational attainment in Indonesia. Several statistical methods, such as Propensity Score Matching (PSM), Quantile Regression, and robust Ordinary Least Squares (OLS) models, are used to analyze the relationship between child labor, income, and education while controlling for confounding variables. The findings indicate that child labor is initially associated with reduced wages, but this association becomes insignificant when other variables, such as years of education, are considered. Longer educational periods mitigate the negative effects of child labor on wages. In addition, the analysis reveals a tradeoff between child labor and educational attainment, highlighting the impact of child labor on education. Access to economic resources, however, mitigates this tradeoff, highlighting the importance of economic factors in children's decision-making. The study highlights the significance of child protection measures and effective socioeconomic policies to guarantee children's access to education and enhance their opportunities. It provides valuable insights into the effects of child labor on education and the role of economic factors in determining how children allocate their time.