Does Child Labor Decline with Improving Economic Status?

Between 1993 and 1997, child labor in Vietnam declined by nearly 30 percent while the country’s GDP grew by nearly 9 percent per year on average. Using a simple, nonparametric decomposition, I investigate the relationship between improvements in per capita expenditure and child labor with a panel data set that spans this episode of growth in Vietnam. Improvements in per capita expenditure can explain 80 percent of the decline in child labor that occurs in households whose expenditures improve enough to move out of poverty. This finding suggests a previously undocumented role for economic growth in the amelioration of child labor.