Demand for drugs caused a surge in child labour in Peru

Many costs of the illegal drug trade are easy to see. Body counts mount every year from overdoses by consumers and violence among traffickers and dealers. The full damage that the business inflicts, however, is far broader. A recent paper by Maria Micaela Sviatschi of Princeton University shows that demand for coca leaves, from which cocaine is produced, pushed a generation of children in Peru out of school and into lives of crime.

In the late 1990s Colombia, then the world’s leading coca producer (as it is again today), launched a campaign against drug gangs. Bolstered by Plan Colombia, a package of military and financial aid from the United States, the effort included spraying crop-killing chemicals in coca-growing areas. As a result, the country’s coca output fell for a while. With less supply and no change in demand, prices rose.

Farmers in neighbouring Peru, in valleys where the Andes meet the Amazon basin, took notice. The more profitable coca became relative to other crops, the more coca they sought to grow. Unlike coffee or cacao, however, most of the coca leaves were destined for illegal use. The solution farming families appear to have found was to delegate the labour to children too young to be prosecuted.

To measure this effect, Ms Sviatschi linked agricultural and ecological data with household surveys and drug prices. She found that in 1997-2003, as coca prices surged, the child-labour rate in coca-growing areas rose by 30% and the share of children set to begin secondary school who dropped out increased by 26%. These rates did not rise as much in other parts of Peru.

The consequences have been depressingly durable. Ms Sviatschi found that in regions where the price of coca doubled, the share of children then aged 11-14 who went on to be imprisoned for murder between the ages of 18 and 30 rose by 30%. There was no similar increase among children of the same age who grew up in different regions, or among those in the same areas who were born earlier or later. There was also no increase in the affected children’s chances of committing other crimes distinct from the drug trade, such as theft or sexual assault. The most likely explanation for this pattern is that children who grow coca acquire valuable industry-specific knowledge, such as how to turn it into cocaine or where to find buyers, that in turn leads them to stay in the business.

Ms Sviatschi did find one promising remedy. In theory, if parents had their kids grow coca because it was the only way to make ends meet, they might keep their children in school if given economic alternatives. And during the relevant time period, some districts in coca-growing zones ran a cash-transfer scheme that gave families $30 a month—a 20% increase in income, on average—if their children met certain criteria, such as attending 85% of classes in school. Other regions did not.

Sure enough, in areas that offered this incentive, coca production fell by 34% once it was introduced. Given the high cost and low impact of other anti-drug policies, such schemes look like a bargain.■

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Chart sources: “Making a narco: childhood exposure to illegal labour markets and criminal life paths,” by M.M. Sviatschi, July 2022, Econometrica; UN