PIP: 1991 census data on the prevalence of child labor in the 75 districts of Nepal are analyzed to determine the relationship of poverty and literacy on the prevalence of child labor. The census collected data on labor among children aged 10-14 years as well as upon their duration of work. No data were collected on labor among children aged 5-9 years. Child labor in this analysis refers to children aged 10-14 years gainfully employed for 6 months of longer in exchange for cash or kind. 422,286 (18%) of the country's 2.3 million children aged 10-14 worked at least 6 months during the year preceding the census, while an additional 4.6% worked for less than 6 months. There is a wide variation in the prevalence of child labor in the 75 districts, ranging from 4.5-36.2% among boys and 5.5-79% among girls. Districts with a higher incidence of poverty are associated with a higher percentage of working children, while districts with a lower percentage of literates are associated with a significantly higher level of child labor. Female children are more strongly affected by poverty than males. Intervention programs designed to reduce the level of child labor need to focus upon both reducing poverty and increasing literacy.