Entrepreneurship and human capital development in children: The case of Tanzania

Abstract

This paper examines the contribution of household non-farm enterprises (NFEs) to human capital development in children, measured through child labour and schooling. We use nationally representative panel data from Tanzania and control for observed and time-invariant unobserved factors in pooled least squares and household fixed effects estimations. Both contemporaneous and dynamic analyses are performed separately for boys and girls and for different types of NFEs, including those with and without employees, as well as father- and mother-owned NFEs. We find that father-owned and NFEs without employees are associated with less child labour on average. The impacts on schooling are not consistently estimated, except for girls and father-owned NFEs. Less child labour among boys is associated with father’s NFEs and among girls with NFEs hiring employees. Our findings indicate that NFEs may contribute to reducing the child labour problem, but they may be insufficient for resolving low school attendance.