This study selected peer-reviewed publications that apply sound methodologies to identify the causal effect of changes in income on child labour. The review looked at effects of income increases or decreases due to unexpected shocks (e.g. price changes, crop losses) and income increases resulting from policies or programmes (e.g. cash transfers, school subsidies).
This review of the literature shows that the relationship between income changes and child labor is complex. While income increases are associated with reductions in child labour in some situations, in other situations, they can result in increases in child labour. The latter situation is often due to enhanced earning opportunities that also increase the value of children’s time spent on work.