Improving educational and labor outcomes through child labor regulation

We explore the effects of a child labor regulation that changed the statutory minimum working age in Spain in 1980. In particular, the reform raised the minimum working age from 14 to 16, while the age for compulsory education remained at 14 until 1990. To study the effects of this change on the incentives to work or study, we consider the different alternatives available at age 14 to individuals born at various times of the year before and after the reform. Before the reform, individuals born at the beginning of the year were legally able to work before finishing compulsory education. We show that individuals born at the beginning of the year were more likely to complete both compulsory and post-compulsory education if they turned 14 after the reform. The increase in educational attainment translates into better labor market outcomes in adulthood only partially. Depending on the level of socioeconomic development of the region, we provide evidence of differential impacts of the reform on men and women and offer plausible explanations for these differences. To the best of our knowledge, this is the first paper that, apart from increases in educational attainment, also finds relevant effects on long-term labor market outcomes from child labor regulations that forbid teenager work. We show that this type of regulation can be a generator of economic development and point to the conditions required for this to be the case.