This paper examines work participation and school attendance for children aged 7-15 using survey data from rural Ethiopia. To this effect, a bivariate probit model that addresses the interrelatedness of the two decisions is employed. Given the agrarian nature of the economy, special focus is given to child labour on family farms and within the household. The trade-off between child labour and educational attainment is also analysed by estimating an equation for age-adjusted educational attainment of children. Male children are found to be more likely to attend school than their female counterparts, pointing towards gender bias in school attendance. There is also some ‘specialization’ in child labour with females having a higher likelihood of participation in domestic chores while males having a higher likelihood of participation in market work. Large family size and ownership of livestock are also found to increase the probability of combining schooling with work. More importantly, long hour of work is found to reduce educational attainment of working children. Reducing family size and increasing educational opportunities, among others, may hold the key for raising educational attainment of working children.