The high incidence of both child labour and out-of-school children in the South Asian region has given rise to competing explanations. Broadly speaking, these can be categorised as those which focus on poverty and under-development and those which focus on policy failure and poor implementation of educational services. This paper reviews the empirical evidence put forward for each of these explanations, focusing primarily on India and Bangladesh, and concludes that they mutually reinforce, rather than contradict, each other. It is evident that the design of educational services as far as their norms, content and procedures are concerned discriminates against precisely those children who are at the greatest geographical, social and economic disadvantage. It is those governments at national and local level who have demonstrated the greatest commitment to countering these biases who have managed to make the greatest progress, regardless of the incidence of poverty. There are clearly important lessons to be learnt from their efforts. However, in the absence of changes in the broader policy climate, the paper identifies a number of programmatic interventions which might achieve similar results but at the micro-level and in the short-run.