This paper investigates the policy issue of whether schooling scholarships tend to decrease
the incidence and intensity of child labor. The issue is examined in the particular country
context of Nepal where child labor is not uncommon. Using data from the 2010 Nepal
Living Standards Survey III and the method of coarsened exact matching, the paper finds that
scholarships of a high-enough value decrease girls’ work by 7.5 hours per week (relative to a
control group average of about 23 hours of total work per week), largely reducing their hours
in economic and extended-economic activities with little impact on hours in domestic work.
Scholarships of similar value do not appear to affect the work hours of boys. These findings
have broader relevance and implications for the potential of scholarships as a policy option
for combating child labor in developing countries. As these scholarships typically do not
enforce regular school attendance, the findings also point to the potential importance of
largely unconditional (but sizeable) transfers in many policy settings where conditionality is
difficult to implement.