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Journal of African Economies Advance Access originally published online on July 14, 2007
Journal of African Economies 2008 17(2):207-238; doi:10.1093/jae/ejm010
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© The author 2007. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org

Risk and Schooling Decisions in Rural Madagascar: A Panel Data-Analysis

Flore Gubert and Anne-Sophie Robilliard*

IRD, DIAL, Paris, France

* DIAL' 4 rue d'Enghien, 75010 Paris, France. Tel: +33 1 53 24 14 50. Corresponding author: robilliard{at}dial.prd.fr.

Most households in rural Madagascar are engaged in agriculture and derive a large share of their income from the production of food or cash crops and from animal husbandry. However, agricultural yields can be extremely volatile due to weather conditions, pests, insects, rodents and other calamities. As a result, households record large fluctuations in their incomes that must be dealt with. Since the usual consumption-smoothing market mechanisms are quite limited in the Malagasy context, households need to rely on non-market mechanisms or to adopt multi-faceted strategies to cope with risk. In this paper, we examine the possibility that parents obtain informal income insurance by letting their children work. We test this hypothesis by examining the relationship between household income shocks and human capital investment in children. In particular, we investigate whether children's propensity to join school and to drop out of school responds to transient shocks. We also investigate issues such as gender and intrahousehold resource allocation.

JEL classifications: D91, I21, J24, O55

We would like to thank Isabelle Droy, François Roubaud and INSTAT for making the data available. We thank Philippe De Vreyer for providing the rainfall data in a user-friendly form and for his kind help. We also thank two anonymous referees and seminar participants at the AFSE conference in Clermont-Ferrand, at the C3ED workshop on child labour, at the CSAE conference and at DIAL for helpful comments. Support from the French Ministry of Research through ACI ‘Sociétés et cultures dans le développement durable’ is gratefully acknowledged.


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