Using data from the National Survey of Standards of Living conducted in Guatemala in 2000, this article tests the hypothesis that Guatemalan households use child labor and reduce child schooling to cope with household shocks. First, the authors use factor analysis to estimate the latent household propensity to natural disasters and socioeconomic shocks. Then, they estimate bivariate probit mode...

Using data we collected in rural Burkina Faso, we examine how children’s cognitive abilities influence households’ decisions to invest in their education. To address the endogeneity of child ability measures, we use rainfall shocks experienced in utero or early childhood to instrument for ability. Negative shocks in utero lead to 0.24 standard deviations lower ability z-scores, corresponding wi...