Health shocks are considered as idiosyncratic shocks, they depart from internal households and have to impact on the income and labor force of households at the same time. This sections will discuss the impacts of health shocks based on the indirect and direct effects on child labor. The relationship between health shocks and child labor is illustrated through four main channels (Dinku, 2017). Firstly, health shocks can rise directly the number of child labor. Children have to spend their time to take care of diseased members. Secondly, another households can experience the unbalance of the family labor supply when they meet health shocks, through (1) Loss of individuals (labor), especially adults (main labor); (2) A drop in productivity due to the less healthy of labor;
(3) Other member may leave her/his job to care for the diseased person. Children might have to engage to some work activities such as farming work, chores and collecting wood
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to substitute for their parents or other members (when they spend time with illness people). Substitution effects lead children transfer from study or leisure to work.
Thirdly, health
shocks can generate a decrease of the household smoothing consumption because of an increase of the medical spending, especially costly treatments. This can raise the financial pressure on households, and parents may have to send their children to work more frequently. Fourthly, health risks can make a loss household income through reducing wage's employment and farming profit. Moreover, the trading assets (even land) or making loans can create the loss of the future earning such as benefits obtained from assets or gained interest as well as future payables. As the result, the children may face a rise of work time when their family experiences health risks. In the other words, to adopt income loss, parents may send their children to work to find supplement income. Additionally, lower-income leads families to reduce investment in education's children, and therefore, the future human capital is expected a lower level as well as attendance of children to the labor market increase.
Under health risks, child labor can be employed as a coping strategy to substitute the adult labor in labor market, however, it is not necessary to understand this is a perfect substitution (Basu &Van, 1998; Raijan, 1999). The feature of works, as well as applied technologies, would cover the ability of substitution. In particular, the participation of children in the types of tasks on the labor market also is relied on their skills and health status. Child work may consistent with domestic household activities such as house chores, collecting the firewood, water and caring younger siblings. Although child labor is banned in some fields, especially works in the formal labor market, farming and business activities are still the potential sources of the child work. Additionally, children can support for adult works together in some part of the work process.
Therefore, children can spend more time for studying in school or enjoying the leisure, while they can help their adults in the family some works as well. For examples, study's Ray (2000) presents results related to the complement between mother and daughters in household tasks in Pakistan. Additionally, Peru's data give another interesting result, the higher wage of male leads a lower work hour of girls. Diamond and Fayed (1998) also argues a similar result for female adults and children in the household level.
In the types and the degree of health shocks also indicate the various effects on child labor (Alam and Mahal (2014). If family members occur the mild illness, they may still remain to work some activities. Naturally, the labor productivities might reduce.
Meanwhile, members which have the illness in bed may be difficult to attend any activities in households, even need caregivers to caring. This is more likely to increase participation's children in the labor market rather than the mild illness case
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Salmon, 2008). However, when families experience the death of members following long- time treatment, especially the main labor, the effect of health shocks on families may exponential increase (Dillion, 2012). Dependent people as children may have to take part into the labor market, even out of school due to the shortage budget which comes from the loss huge income from wage's labor as well as the medical payment.
As the review in section 2.2, although many empirical studies focus on the impacts of health shocks on household labor supply, not seem to be much focus on child labor. In Bangladesh, Bazen and Salmon (2008) study the impacts of parental health shocks on child work in the short term and in the long term. Using the bivariate probit model, results show that father experiences illness leading an increase of child work in overall. Meanwhile, the proportion of children works increase with the illness of the mother during the last month. Similarly, Dillon (2012) also finds the significant impacts of health shocks on child work. In particular, if the illness occurs in the other children of the family, in overall, the child time allocation of agricultural work will increase around 4 hours each week. Adult female’s illness leads an increase of 1.6 hours per week which children spend for caring of younger siblings, while adult male counterpart is associated with 2.6 hours per week for the child work on the business. Using Tanzania’s data, Bandara et al (2014) consider health shocks include not only death parents but also other members and find that the impact of a death in the family on the total work hours is positive significantly both the male and female children samples.
This paper also studies the different types of work which children enter into. As the results, health shocks generate an increase of the agriculture work hour, whereas there is a decrease of the inside work. Additionally, the results also indicate that assets create the buffering effect on health shocks.
In the basic assumption, if households face with the income or non-income shocks, child labor is employed without other coping mechanisms (Basu & Van, 1998;
Gertler & Gruber, 2000; Dillon, 2012). However, in the wider approach, even when households have the ability to access to the credit or retain the asset, child labor is still used as the useful mechanism to households coping with shocks. In other words, the impact of health shocks on child labor might depend on the degree of asset holding and access to credit as well. Beegle et al (2003) find that access credit might mitigate the negative effects of income shocks on child labor using an interaction variable of collateral asset and the crop loss event to measure the buffering effect of credit on
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child labor. The similar result is also found in the research of Bandara et al (2015) where the significant result is found in the mitigating impact of asset holding on child labor in both income shocks and health shocks.
Furthermore, as the results of health shocks, child labor makes the negative impacts on childhood as well as the child human capital. Another aspect, in terms of child background, when households occur the health risks, families may reduce their abilities to provide necessary conditions for children. For examples, mother's death may the lack of caregiver for children, may lead the less fulfill growth for them. Besides, the exhaustion of household budget can lead to the less investment in the education and the nutrition as well. The psychological impacts also important for the child development.
Using data in Vietnam, O'Donnell et al (2005) indicate the evidence of the long-term effects of child work on children's health.
Omitted variables bias can appear by the simultaneity relation between child labor and health shocks due to similar negative events such as disease, drought, and flood. For examples, when families experience drought event, they may not enough fresh water to use. This may affect negatively to the health of member households due to lack of water or even excessive anxiety, and also increase time children spend to collect water or material for livestock. Therefore, it is necessary to use the additional variable related to other shocks to capture this problem (Bandara et al, 2015).
Additionally, mortality of member in households also considers as a permanent shock, some effects are unobserved. Furthermore, some unobserved household characteristics can be influent simultaneously on the health of numbers in families and child labor. In distances, Farrell and Fuchs (1982) show that parents who are less expectation of return in future from investment on the education of children (e.g shift child time to work) may also not invest their health (e.g lead health risks). In this case, using variables of parental characteristics can help control the bias problem of omitted variables (Bazen & Salmon, 2008; Bandara el al, 2015; Dinku, 2017).
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CHAPTER III: RESEARCH METHODOLOGY