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Larger family size as well as presence of children below 5 years of age increases the chance of child labor in the family, as older children have to take care of younger siblings, and thus, often miss the school. Similarly, children from scheduled castes / tribe families are more likely to work compared to those from other strata of society.
This may be most probably due to the lower economic status of many of the SC/ST families, as has been shown by many researchers.

Poverty-related Factors

The primary poverty-related factors, which contribute to child labor, are poverty levels (or income levels) in the households, credit constraints, availability of micro-credit to households, etc. It has been seen that households with self-owned land / retail enterprises are more likely to employ children to reduce the losses due to potential pilferage by employees. Similarly, peak harvest season can lead to increase in child labor (in the form of work at fields and/or home). Moreover, income shocks - loss in income by accidental crop loss, lack of access to credit and lack of collateralizable assets (which in turn reduce the opportunity to avail credit) are also some of the important factors leading to increased child labor in rural areas.

Dubey et al (2002) have shown that rise in household income levels have a positive effect in decreasing child labor. However, this may not be the case everywhere as shown by Bhukuth et al (2006) in their work on Indian brick kiln industry.

Moreover, it has been seen that when micro-credit is extended to rural families (to help them in income generation), there are two opposing phenomenon in place. These are 'family-labor-substitution effect' (substitution of child labor by hired labor as capital increases) and 'household-enterprise-capitalization effect' (increase in child labors' productivity due to increased capital and inputs). While the former is negatively correlated to child labor, the latter is negatively related to child labor. Thus, relative magnitudes of these mutually opposite effects determine the overall effect of micro-credit on child labor {Hazarika et al. (2006)}.

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Dr. Shreyas Goswami and Vineet Jain are the First Year MBA (BM) Students at XLRI, Jamshedpur. While Shreyas is a Doctor by profession, Vineet is a Civil Engineer from Delhi College of Engineering, Delhi University.