Financial Inclusion and Child Labour in Ghana

ABSTRACT

The financial inclusion‐child labour nexus is one of the least explored research topics despite global attempts to reduce child labour due to its adverse repercussions on the development of children. We contribute to the literature by examining the impact of financial inclusion on child labour using two‐wave panel data from Ghana. We measure child labour using the hours and the number of days children worked as on‐farm casual workers, whereas financial inclusion is conceptualized using a multidimensional index. Our endogeneity‐corrected results indicate that financial inclusion reduces child labour. This outcome is pronounced for male children and children living in rural areas. Our mediation analysis indicates that the financial inclusion‐reducing effect of child labour is channelled through household poverty and wealth accumulation. Carefully designed policies aimed at improving households' access to financial services and products will go a long way to reduce child labour.