The International Cocoa Initiative reviewed evidence on how changes in household income impact child labour, with support from the Swiss Platform for Sustainable Cocoa. The analysis of 50 studies shows a complex relationship: while decreases in household income tend to increase child labour, increases in household income can cause child labour to rise, as well as to fall. As a global economic crisis hits due to the ongoing Covid-19 pandemic, these findings highlight the dangers this may pose to child protection in cocoa-growing communities.

At ICI, we believe farmers should earn a decent living. With our partners, we aim to address poverty in cocoa-growing communities, promoting effective and sustainable approaches to do so. We are also conscious that all activities can have unintended consequences, including on other children’s rights.

That is why, together with the Swiss Cocoa Platform’s Living Income & Child Labour working group, ICI conducted a review of the available evidence on how changes in household income affect child labour. We investigated the impact of unexpected shocks that either increased or decreased incomes, and the effects of policies and programmes to increase household incomes.

The evidence from this review shows that income increases alone are not a silver bullet to solve the problem of child labour. While poverty reduction needs to be part of the solution, it is crucial we use evidence on the different impacts of income changes on child labour to avoid adverse effects. Only through careful design and robust evaluation of policies and interventions to increase farmer incomes, can we ensure they also support reductions in harmful work by children.

Between negative and positive shocks

The relationship between income and child labour is complex. Negative shocks to farmer income, caused by crop failure, a fall in price, or a devastating bout of severe weather generally resulted in increased child labour. These negative shocks put greater strain on farming families, who with limited resources or alternative sources of labour, often called on their children to fill the gap. These findings suggest that efforts to build the resilience of farming households in the face of such shocks, might help families find other ways of coping in times of stress. In response to positive shocks, such as increased crop prices or higher rainfall leading to a larger harvest, impacts were mixed. In around half of cases, such positive shocks caused a rise in child labour. These findings suggest that whenever the value of agricultural activity increases, there is a potential risk that child labour will increase as well.

Policies to increase incomes: some promising examples amid limited evidence

Interventions to increase household incomes, such as cash transfers, in-kind support and micro-finance also showed mixed impacts on child labour. Cash transfers were generally found to be effective in reducing child work, especially paid work. However, some studies have found that cash transfers increased children’s work on family farms, in family businesses and on household chores. ICI’s forthcoming review of Cash Transfers and Child Labour will examine this relationship in more detail. School subsidies, school construction and direct incentives for pupils to attend school were found to be effective in increasing school attendance, but less so in reducing child labour. These findings underline how work and schooling are not mutually exclusive – many children continue to work alongside their studies. Indeed, income from work can help them stay in school. Micro-credit or health insurance schemes do not appear to be the most effective interventions to reduce child labour but did not lead to increases in child labour either. The evidence on this type of intervention is limited, making it hard to draw firm conclusions.

Whatever the intervention, some children benefit more than others

“The studies covered in this review show that income increases affect children differently, depending on many factors, such as age and gender” explains Megan Passey, Head of Knowledge and Learning at ICI. “Girls, for example, have been found in multiple contexts to benefit less from positive income changes and suffer more during negative income shocks.” Household and family characteristics matter too. Parental literacy, the size of the family, and access to credit all affect the likelihood of a household using child labour in the first place, in addition to how they react when income changes. At the community level, access to adult labour, social safety nets, and cultural factors also play a role.

Access ‘The effects of income changes on child labour: A review of evidence from smallholder agriculture‘ in full.