Risk and schooling decisions in rural Madagascar: A panel data-analysis

• Published in: Journal of African economies 2008-03, Vol.17 (2), p.207-238
• Main Authors: Gubert, Flore, Robilliard, Anne-Sophie
• Format: Article
• Language: English
• Subjects: Agricultural income; Agriculture; Animal husbandry; Bildungssystem; Bildungsverhalten; Breeding of animals; Child labor; Child labour; Children & youth; D91; Datasets; Developing countries; Economic analysis; Economic fluctuations; Education; Employment; Families & family life; Family income; Food; Gender; Girls; Household economics; Households; Human capital; Hypotheses; I21; Income maintenance; J24; Landbevölkerung; LDCs; Ländlicher Raum; Madagascar; Madagaskar; O55; Parents & parenting; Poverty; Rain; Regression analysis; Resource allocation; Rural areas; School attendance; School dropouts; Securities markets; Security management; Studies; Volatility
• ISSN: 0963-8024; 1464-3723
• DOI: 10.1093/jae/ejm010

Most households in rural Madagascar are engaged in agriculture and derive a large share of their income from the production of food or cash crops and from animal husbandry. However, agricultural yields can be extremely volatile due to weather conditions, pests, insects, rodents and other calamities. As a result, households record large fluctuations in their incomes that must be dealt with. Since the usual consumption-smoothing market mechanisms are quite limited in the Malagasy context, households need to rely on non-market mechanisms or to adopt multi-faceted strategies to cope with risk. In this paper, we examine the possibility that parents obtain informal income insurance by letting their children work. We test this hypothesis by examining the relationship between household income shocks and human capital investment in children. In particular, we investigate whether children's propensity to join school and to drop out of school responds to transient shocks. We also investigate issues such as gender and intrahousehold resource allocation.