Empowering Women at the Cost of their Children -When Do Policies That Encourage Female Entrepreneurship Increase Child Labour?

An increasing number of women empowerment policies in developing countries consist of providing incentives for female entrepreneurship (workshops, targeted loans etc.). While there is evidence that those strategies have been a success story in empowering women, less is known about how such an increase in non-domestic female labour supply affects the work hours of their children. Taking data from rural Mexico we find that the probability of child labor increases by 43 percent if the mother works, independently of the level of household poverty. We provide a simple model that explains this phenomenon by, among other things, lack of adequate child care institutions (kindergarten, all day schools etc.). This is because without being monitored by either their mother or another institution, children may be exposed to a number of risks, such as playing in dangerous sites or getting involved 'with the wrong type of people or activities' (gangs etc.). The only feasible monitoring option for a mother is then to bring the child with her to work. Therefore, policies that encourage women entrepreneurial activity hence female labour supply, may have an unintended negative externality, which is that of increasing child labour as well.

JEL classification: C25, I21, J15

Keywords: Child Labor, Gender, Poverty