The Impact Of Child Labor Eradication Programs In Brazil

After a period of falling child labor rates, Brazil has witnessed an increase in its incidence. There are two main federal policies against child labor in the country. The Child Labor Eradication Program (PETI) was created in 1996, designed with a conditional cash transfer approach that requires families to pull their children from labor situation and to have them attend school. The Bolsa Familia Program (PBF) targets families living in poverty and extreme poverty via cash transfers conditional on school attendance and vaccination of children. Despite the PBF not directly addressing child labor, the two programs have been in integrated management since 2005. We use a comprehensive dataset covering the entire Brazilian population in 2010 to estimate the effect of each program individually on labor supply of children, both in terms of the extensive margin (probability of labor) and the intensive margin (weekly hours worked conditional on working). We adopt a Propensity Score Matching methodology, flexibly selecting covariates among a wide list of variables related to demographics and socioeconomic indicators of the children and their households, using the algorithm proposed by Imbens (2015) based on the repeated estimation of likelihood ratio tests. In order to consider possible heterogeneous effects, we also perform all estimation procedures separately for each Brazilian region. Our results suggest that the PBF is only able to reduce the probability of child labor in the South region, while the PETI only does so in the Southeast region. Disturbingly, both programs seem to increase the likelihood of child labor in the North and Northeast regions, which are the poorest in the country. On the other hand, when considering the intensive margin of child labor, we find that both PBF and PETI seem to be effective in diminishing weekly hours worked among children in the entire country (except for PETI in the South and Midwest, with less precise estimates). Our estimates also suggest that PETI conditionalities are not closely monitored. Furthermore, with the evidence indicating the programs can only partially reduce hours worked but are unable to remove children from the labor market, we interpret that cash transfer amounts might be insufficient to discourage child labor, especially those from PETI, which have not been updated since 1996.