Agricultural Export Boom and Child Development: Evidence from Indonesian Palm Oil

Child labor and schooling can change through the demand and labor supply of a booming commodity. The increased global demand for palm oil put international attention on the increased child labor incidence in the Indonesia palm oil sector. We estimate using difference-in-difference for two time periods of data from SUSENAS in 2002 and 2010 on the district level using increasing global demand and suitability cultivation as the exogenous treatments. This paper's findings suggest that the palm oil boom increased child labor by as 1.44% and reduced schooling as much as 1.85% on average in the district above the suitability of palm oil cultivation than those below the median. Therefore, the Indonesian government should commit to eradicating child labor in palm oil areas by improving labor control and increasing the number and quality of schools.