Household Income, Joint Work-Schooling and Human Capital in Indonesia

Treena Wu, National University of Singapore

This paper uses a natural experiment with IV estimation to investigate the influence of household income on joint work-schooling behavior for Indonesian children, 6 – 15. Child labor is studied in terms of i) work within the household and schooling ii) work outside the household and schooling and iii) hours worked outside and schooling. Children choose from different schooling types – formal education, non-formal school for child workers and home schooling. The results show that income shifts the child towards more work and less schooling. But income has a negligible effect on the number of hours of wage work. From age 12 onwards, children especially boys transition from work in the household to work outside the household and to wage work that is likely to separate them from the family. But interruptions to human capital accumulation and separation from the family are less likely if the child is home schooled.