According to the legislation, children as young as 10 may work if they are enrolled in school and self-employed. At 12 years, children can take on contract work with parental consent.
In Bolivia, the United Nations Children's Fund estimates that more than 500,000 children contribute to their family's income.
The administration of President Evo Morales hopes that by lowering the working age, Bolivia can address its dire economic needs.
The International Labor Organization, however, advises against employing children younger than 15.
Bolivia's vice president acknowledges that "It would have been easier to pass a law in line with international conventions, but it would not be enforced because Bolivia's reality has other needs and characteristics."
The World Food Program, among other institutions, ranks Bolivia as one of the poorest countries in Latin America.
The ILO is investigating whether Bolivia's new child labor law violates international child labor regulations.
In addition to reducing the legal working age, the law also provides harsher penalties for those who commit violence against children, and stipulates a 30-year prison sentence for child murderers.