Changes associated with modernisation, including livelihood change, urbanisation, and the introduction of formal education, reduce children’s ability to contribute to their households, and produce a trade-off between work and learning. Increasingly high levels of investment in education are thought to raise the costs of children, resulting in a ‘quantity-quality trade-off’ which incentivises reduced fertility. Relatively few studies have examined children’s time allocation in contemporary transitioning populations, where education is available and valued, but where subsistence livelihoods still create demand for children’s work. This study collected time allocation data from 1,278 children living in two communities in a rapidly modernising setting in Mwanza region, Tanzania. Focus group discussions were also conducted to investigate the perceived costs and benefits of education for parents and adolescents. The findings from this research highlight the importance of considering children’s work in providing a more nuanced understanding of variation in education. Lower than anticipated trade-offs between work and school suggest the opportunity costs of school in this context may be relatively low, potentially contributing to the stalled fertility decline. Households may balance work and schooling demands through substitution between co-resident children, and through fostering networks, with implications for classic models of fertility decline which focus mainly on parental investment. Girls’ household work involves a sacrifice of leisure time and does not appear to diminish significantly with modernisation, suggesting the need to challenge gender stereotypes, and reduce the domestic work burden in transitioning contexts. Finally, education is highly valued, but the barriers to academic achievement mean that few experience the desired benefits, pointing to the importance of improving employment prospects together with providing good-quality, locally relevant schooling.