One more year of schooling or work: Grade-transition and child labor in rural Bangladesh

This paper aims to identify the main factors hindering the achievement of universal primary education (Millennium Development Goal 2) for children in Rural Bangladesh using a large household survey data. It empirically examine factors affecting the grade-transition and the labor force participation of children aged 7-14 years in rural Bangladesh using the Multiple Indicator Cluster Survey (MICS) 3 2005-2006 data. It addresses following important questions: (i) effects of family background and resources and child-specific characteristics on the grade-transition and child labor and (ii) whether these effects vary across grade levels. It uses the bivariate probit model to jointly estimate the grade-transition and the labor force participation equations. Results show that parental education has a significant positive effect on the grade-transition and a significant negative effect on the labor force participation. Children of more educated parents are more likely to transit to the next grade and just study and are less likely to participate in the labor force, combine study and work, and just work. It also finds that the positive effect of mother’s education on the probability of grade-transition and just study is larger on children in higher grades. On the other hand, it has a greater negative effect on the probability of just work on children in higher grades. Overall results show that father’s education has greater effect on the grade-transition in lower grades, while mother’s education has greater effect on the grade-transition in higher grades. Results suggest that birth-order has larger effect on the grade-transition and the labor force participation of children in lower grades. First-born children in lower grades are less likely to transit to the next grade and just study. On the other hand, they are more likely to participate in the labor force, combine study and work, and just work. Similarly, results show that children who experienced interruptions in schooling in lower grades are more likely to participate in the labor force and combine study and work, and are less likely to just study compared to children who experienced interruptions in schooling in higher grades. Results suggest that low parental education level and significant resource constraints both in terms of wealth and time are main obstacles in achieving the goal of universal primary education for children. Many children lack adequate learning environment at home, in part due to low parental educational attainment. There is an urgent need to focus on increasing the capacity, financial and non-financial, of rural households. Conditional cash transfers, micro-finance programs, interest-free educational loans, and scholarships, particularly targeted towards poorer households and female students, will enhance educational investments and reduce child labor.