Does Child Labor during Adolescence Impact Entrepreneurial Entry?

There is a widespread recognition that child labor during adolescence has both detrimental, and developmental consequences for the labor market, which raises an important unanswered question: Does child labor during adolescence play a role in the labor market through entrepreneurial entry? We propose that child labor during adolescence plays a positive role in the engagement of formerly working adolescents in the labor market through entrepreneurial entry, rather than the employment route. We combine two longitudinal datasets from the UK with census data to test our proposition. We account for endogeneity using coarsened exact matching, Mundlak Chamberlain estimator, and a within twin fixed effects estimation. Our findings indicate that child labor during adolescence positively correlates with entrepreneurial entry. This finding, however, is observed among people with limited human capital, particularly people with no education qualification. Critically, our results present some differences when disentangling sole-entrepreneurial entry, and job-creating entrepreneurial entry. We explain two channels: education, and health.