Can child labor reform affects adulthood? Evidence from Indonesia’s 2003 Manpower Act

Elghafiky Bimardhika, World Bank
Firman Witoelar, Australian National University

In the early 2000s, Indonesia began a series of reforms aimed at suppressing child labor. This culminated in the 2003 Manpower Act that raised the minimum working age. Despite being one of the most popular instruments in combating child labor, the effectiveness and the long-term impact of this policy lacks empirical investigation. To that end, I exploit the timing of the national legislation to identify the causal effects of child labor reform using the Regression Discontinuity Design. I find that children who entered adulthood after the reform are less likely to participate in the labor market during childhood. The reform also lowers the likelihood of poor health and improves the probability of working in paid jobs when the children have reached adulthood. These results indicate the importance of complementing regulation with enforcement and support programs to minimize unintended consequences. Through heterogeneous sector and group analysis, I find that the impact is mainly driven by the reduction in paid work, in the agriculture and manufacturing sectors, among boys, among households with formal worker breadwinner, and in regions with early enforcement. I find that my result is robust to various sensitivity tests.

Keywords: Children, Adolescents, and Youth, Human Capital, Education, and Work, Econometrics , Longitudinal studies

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