Abstract. This paper aims to look at the factors that play an important role in discriminating welfare outcomes of children. The paper considers school participation and incidence of child labour as two important indicators of children welfare. The study has been carried out in four Indian states: Tamil Nadu and Himachal Pradesh as states with considerably better welfare outcomes and Bihar, Uttar Pradesh and Madhya Pradesh being the poor performing states. The unique feature of this paper is that it computes a child welfare index combining the schooling and labour outcomes of children using NFHS-3 survey data and employs Multiple Discriminant Analysis (MDA) technique to determine the household level factors that distinguish between the welfare outcome of children in terms of education and child labour. The results confirm that the incidence of child labour and poor school participation is not mutually exclusive and thus there are common factors that affect both the outcomes.

Keywords: child labour, schooling, child welfare, discriminant analysis, NFHS.