This paper analyzes the effects of the 1988-1992 macroeconomic crisis in Peru on the schooling and employment decisions taken by school-aged children in urban areas. It discusses the Peruvian setting during this period and describes the data used in the analysis and the econometric specification. Two basic findings were made: (1) there was no effect of the crisis on attendance rates of school-aged children, however, the fraction of children who were both employed and in school decreased significantly during the crisis; and (2) mean educational attainment increased significantly for children exposed to the crisis than for those unexposed. The paper argues that these findings may be related. Children who are not employed have more time available and, therefore, may put more effort into school. The analysis concludes with a discussion of the implications of these findings for the design of appropriate social protection policies. (Includes 21 notes, six figures, and four tables. Contains a 41-item bibliography.) (Author/BT)