This paper looks at the consequences children face when they lose a parent(s). After modeling the representative household’s bargaining process between their biological and orphaned children, the empirical section of this paper looks at the types of activities that children engage in, and the differences in educational outlays of host households between those children who have lost their parents and those who have not. The results indicate that orphanhood is of critical importance to human capital formation as the probability of engaging in child labor and being idle increases relative to school attendance, following the loss of both parents. This has the same distortionary effect as a tax on children as a result of orphanhood. Even though these children do not have markedly lower abilities to read, write or perform written calculation before the death of their parents, they are outperformed in all three categories once they join the new household following the loss of both parents. It concludes that for policymakers, in-kind subsidies provided at the school level will have a bigger impact than those provided at the household level.