Shocks and Primary School Dropout Rates: A Case from 20 Sentinel Sites in Ethiopia

This paper investigates the impact of idiosyncratic and covariate economic shocks and the resulting work burden on children on the likelihood of children completing primary education or dropping out of primary school. In this endeavour, censored Cox proportional hazards model was estimated using data from the Young Lives study of childhood poverty. The estimated results indicate that both idiosyncratic shocks and covariate shocks have a statistically significant effect on the risk of children dropping out of primary school. Moreover, the amount of time children allocate to domestic activities, unpaid activities and paid labour were each found to have a positive effect on the probability of children dropping out of school. Separate Weibull accelerated failure time models for boys and girls and for rural and urban children were estimated to check the robustness of the results and the relative importance of the economic shocks to different groups of children. It was observed that the statistical significance and the sign of the coefficients remained the same. Considering the fact that both idiosyncratic and area-wide economic shocks are experienced at the household level, the study concludes that it is vital to take education into account when designing social protection programmes so as reduce the vulnerability of households to the shocks and keep children from dropping out from school. One way of doing this would be to introduce a conditional cash transfer programme that would provide families with incentives to keep their children enrolled in school.