Neighbourhood effects and the incidence of child labour

In spite of the growing interest in factors driving the incidence of child labour, little is known of the relationship between neighbours’ decisions and a child’s propensity to engage in paid work, i.e., the neighbourhood effect. This paper examines this relationship using the spatial autoregressive linear probability model. We find a positive and highly significant relationship. Using several subsample analyses, we find that the relationship is stronger for males and for children in rural areas. Contrary to earlier studies, the association between poverty and the incidence of child labour is relatively weak in the presence of neighbourhood effects. We also find that the propensity to engage in child labour is increasing in the level of employment at the community level.