Natural Disaster and Child Labor: Evidence from Indonesian Earthquake

Abstract

Natural disasters can bring considerable damages to households in terms of casualties of household members, destruction of houses, and loss of physical assets. We examine the impact of an earthquake in Indonesia on children’s school and work activities and how the effect differs by access to credit. We find that the earthquake decreases education and increases child labor, but the effect is stronger for households with access to credit. Our finding indicates the complementary effect between credit and child labor and suggests the need for policies to increase educational investment when providing credits to households recovering from a shock.