Hyuk Harry Son (Cornell University) The Effect of Microinsurance on Child Work and Schooling: Evidence from northern Kenya and southern Ethiopia

I study the effects of index-based microinsurance on children's work and schooling using the Index-Based Livestock Insurance (IBLI), which targets pastoral households of Northern Kenya and Southern Ethiopia. The identification strategy uses randomly distributed discount coupons as an instrument for insurance coverage. Microinsurance shifts children's activity from work to schooling – the probability of a child engaged in part-time work decreased while the probability of a child being a full-time student increased. The insurance also protects children from increasing participation in livestock-related tasks during drought periods. These effects work through the changes in herding strategies. I find insurance increases periodic herd migration, which could explain a decrease in children's work as a secondary activity since the herd migration increases schooling costs. I also find heterogeneity across age, birth order, and gender of a child suggesting stronger benefit of the insurance towards younger children and highlighting the difference between nature of girls' and boy's work.