Although in general less prevalent than other developing countries at similar stage of development, the problem of child labor in Indonesia is significant. Like in other countries, this study finds that there is a strong link between the child labor phenomenon and poverty. The profile of child labor largely mirrors the profile of poverty. Furthermore, poverty is found as an important determinant of working for children. However, working does not always completely eliminate a child’s opportunity to obtain formal education. In fact, children from poor households can still go to school by undertaking part-time work to pay for their education, implying that banning working for these children may force them to drop out of schools instead. Since the phenomenon of child labor is strongly associated with and determined by poverty, the most effective policy for eliminating child labor is through poverty alleviation. Other policies that can foster the rate of reduction in child labor are to make it easier for children from poor families to access education and to increase the opportunity cost of working by improving the quality of education to increase the rate of return to education.
Key words: child; labour.