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This paper analyses the impact of adverse economic shocks on human capital formation in thecase of India. It uses the extended theoretical model of Basu and Van (1998). The study has beencarried out for the period between 1999 and 2002 and covers 385 districts. The results show that during a crisis, there is a fall in the school enrollment rate and a rise in the child labour participation rate. The study also argues that in the absence of a well-functioning credit market, to mitigate the adverse economic shocks on the children of poor households, the government must provide an incremental cash/in-kind conditional transfers to poor households with children.

Impact of Adverse Economic Shocks on the Indian Child Labour Market and the Schooling of Children of Poor Households