The Effect of Food Price Changes on Child Labour: Evidence from Uganda

Most people in developing countries spend up to 60 per cent of their income on food, even though the majority of them are farmers. Hence, a change in food prices affects both their revenue as well as expenditure, and it may thereby affect their labour market decisions. Using the Uganda National Panel Survey and monthly regional food prices, this paper examines the effect of changes in food prices on child labour. The empirical evidence shows that an increase in food prices is linked to an increase in the probability and the intensity of child labour. We find the effect of food price increases to be smaller among landowning households, which is consistent with the view that landowning households can better compensate for price shocks. The empirical results suggest that periodic shocks in food prices may have longer lasting effects on economic development in developing countries through the channel of child labour.