A majority of people in developing countries spend about 60 percent of their income
on food, even though most of them are farmers. Hence, a change in food prices
affects both their revenue as well as expenditure, and thereby their labor market
decisions. Using the Uganda National Panel Survey and monthly regional food
prices, this paper examines the effect of exogenous changes in food prices on child
labor. The econometric evidence shows that an increase in food prices leads to an
increase in the probability and intensity of child labor. We find the effect of food
price increases to be smaller among landowning households, which is consistent with
the view that landowning households can better compensate for price shocks. The
results suggest that periodic shocks in food prices may have longer lasting effects
on human capital development and poverty in developing countries.