Shocks to income and to siblings: Effects on child schooling and work

Acknowledgements Funding from ESRC and DfID, grant number RES-167-25-0124, is gratefully acknowledged. All errors are our own. Abstract This paper investigates the effects of adversities directly affecting other household members, on child participation in school and work in rural Colombia. We consider adversities affecting separately the household head and siblings of the child. The first adversity is the departure of the head from the household. This is likely to induce a negative income shock, assuming that the head is the main breadwinner, and can affect child time use in the presence of credit and insurance market failures. The second adversity is the ill-health of siblings. This can have effects on child time use either due to the presence of credit constraints, or the existence of direct interactions between siblings in production. We find evidence that the departure of the household head affects negatively the schooling of males, and increases their participation in paid work. We attribute this effect to a negative income shock, as it holds even conditional on other changes that may occur with the head departing the household, such as a change in the education level and gender of the new decision-maker. By considering the effects of sibling ill-health, we find evidence consistent with complementarities between brothers in production, rather than sibling interactions being driven by resource constraints.