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This paper is motivated by the observation that children in land-rich households are often more likely to be in work than the children of land-poor households.The vast majority of working children in developing countries are in agricultural work, predominantly on farms operated by their families. Land is the most important store of wealth in agrarian societies and it is typically distributed very unequally. These facts challenge the common presumption that child labour emerges from the poorest households. This article suggests that this seeming paradox can be explained by failures of the markets for labour and land. Credit market failure will tend to weaken the force of this paradox. These effects are modeled and estimates obtained using survey data from rural Pakistan and Ghana.The main findings are that in both Ghana and Pakistan the daughters of land-rich households are more likely to work than the daughters of land-poor households, even after controlling for household resources and other relevant household, child, and community characteristics. Introducing control variables mitigates the paradoxical patterns in the data for boys. The estimates are consistent with the hypothesis that the wealth paradox can be explained in terms of imperfections in land and labor markets. This effect appears to dominate any effect of credit market imperfections.The main policy implications of these findings are:Given that the majority of working children in developing countries work on family-run farms, some of the policies that have recently received attention from economic theorists and journalists interested in child labour (minimum wage legislation, trade sanctions) have limited direct relevance to the problemThe results highlight the gender differential in work and school participation and identify gender differences in the determinants of child labour. They are a useful guide to interventions designed to close the gender gap. In Pakistan, where the gender gap is enormous, closing the gender gap would substantially reduce overall child work participation ratesThe finding that farm size increases child labor suggests that, at given levels of household income, the return to work relative to the return to school is a significant determinant of child labor, especially among girls. A natural policy implication is therefore to invest in raising the returns to education. Additional incentives for the attendance of girls in schools should be consideredPolicies that improve the functioning of labor and land markets in rural areas will reduce child labor, especially of girls
