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Although there is an extensive literature on the determinants of child labor and many initiatives aimed at combating it, there is limited evidence on the consequences of child labor on socioeconomic outcomes such as education, wages, and health. We evaluate the causal effect of child labor participation on these outcomes using panel data from Vietnam and an instrumental variables strategy. Five years subsequent to the child labor experience, we find significant negative impacts on school participation and educational attainment, but also find substantially higher earnings for those (young) adults who worked as children. We find no significant effects on health. Over a longer horizon, we estimate that from age 30 onward the forgone earnings attributable to lost schooling exceed any earnings gain associated with child labor and that the net present discounted value of child labor is positive for discount rates of 11.5 percent or higher. We show that child labor is prevalent among households likely to have higher borrowing costs, that are farther from schools, and whose adult members experienced negative returns to their own education. This evidence suggests that reducing child labor will require facilitating access to credit and will also require households to be forward looking.

Using individual-level data for 35 countries, we investigate the microeconomic determinants of attitudes towards corruption. We consistently find women, employed, less wealthy, and older individuals to be more averse to corruption. We also provide evidence that social effects play an important role in determining individual attitudes towards corruption, as these are robustly and significantly associated with the average level of tolerance of corruption in the region. This finding lends empirical support to theoretical models where corruption emerges in multiple equilibria and suggests that "big-push" policies might be particularly effective in combating corruption. * We thank Steve Knack, Aart Kraay, and Giorgio Topa for useful comments and discussions. The views expressed here do not necessarily represent those of the World Bank and its member countries. Send correspondence to rgatti@wordbank.org.

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Although it is widely accepted that financial development is associated with higher growth, the evidence on the channels through which credit affects growth at the microeconomic level is scant. Using data from a cross-section of Bulgarian firms, we estimate the impact of access to credit, as proxied by indicators of whether firms have access to a credit line or overdraft facility, on productivity. To overcome potential omitted variable bias of Ordinary Least Squares (OLS) estimates, we use information on firms' past growth to instrument for access to credit. We find credit to be positively and strongly associated with TFP. These results are robust to a wide range of robustness checks. JEL classifications: G32, D24, G21.

By explicitly accounting for the interaction betveen compared with the optimal taxation benchmark without importers and corrupt customs officials, Gatti argues that corruption. setting trade tariff rates at a uniform level limits public A similar argument applies when customs officials officials' ability to extract bribes from importers.offer to classify goods into low-tariff categories in If the government's main objective is to raise revenues exchange for a bribe. at the minimum cost to welfare, optimally-set tariff ratesSetting trade tariffs at a uniform level eliminates will be inversely proportional to the elasticity of demand officials' opportunities to extract rents. Thus, when for imports. So they will generally differ across goods.corruption is pervasive, a uniform tariff can deliver more Such a menu of tariff rates endows customs officials government revenues and welfare than the optimally set with the opportunity to extract rent from importers. If (Ramsey) tariff benchmark. officials have enough discretionary power, they mightThe empirical evidence confirms that these threaten to misclassify goods into more heavily taxed considerations are relevant to policymaking, since a categories unless importers pay them a bribe. Because of robust association between the standard deviation of the bribe, the effective tariff rate for the importing firm trade tariffsa measure of the diversification of tariff increases, so demand for the good decreases.menusand corruption emerges across countries. The resulting drop in import demand implies an efficiency loss as well as lower government revenues, This papera product of Macroeconomics and Growth, Development Research Groupis part of a larger effort in the group to study corruption. Copies of the paper are available free from the World Bank,