Child labor among farm households in Mozambique and the role of reciprocal adult labor

We test the impact of a reciprocal adult labor program, Ajuda Mútua (AM), on child labor and schooling. AM was introduced into the province of Nampula in Mozambique, an area where farm production relies on child labor, potentially due to labor and financial market failures. Using difference in differences, we estimate that AM reduces child labor by eight percentage points. We argue that AM reduces child labor by providing low-cost adult labor and potentially increasing farm productivity. We benchmark the AM results against the impact of Village Saving and Loan Associations (VSLA) and AM and VSLA in combination (VAM). Neither VSLA nor VAM reduce child labor. If credit is used in a way that increases labor demand beyond what can be accommodated by AM labor, child labor may increase. We conclude that addressing labor market failures may be more successful at reducing child labor than addressing financial market failures. Results on schooling are mixed.