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Bounded rationality, expectations, and child labour

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  • Patrick M. Emerson
  • Shawn D. Knabb

Abstract

This paper develops a model with overlapping generations, where the household's optimal fertility, child labour, and education decisions depend on the parents’ expectations or beliefs about the return to education. It is shown that there exists a range of parental income where the fertility rate is high and children participate in the labour market and receive an incomplete education if a parent believes the return to education is low. The act of participating in the labour market reduces the child's ability to accumulate human capital; thus, the action of sending a child into the labour market is sufficient to ensure that the parents’ initially pessimistic expectations are fulfilled. It is then shown that a one‐time policy intervention, such as banning child labour and mandatory education, can be enough to move a country from the positive child labour equilibrium to an equilibrium with no child labour. Rationalité limitée, anticipations et travail des enfants. Ce mémoire développe un modèle de chevauchement des générations où la fécondité optimale du ménage, le travail des enfants et les décisions à propos de l’éducation dépendent des anticipations des parents ou de qu'ils croient être le rendement sur l'éducation. On montre qu'il existe un éventail de revenus des parents pour lequel le taux de fécondité est élevé, et les enfants participent au marché du travail et reçoivent une éducation incomplète, si un parent croit que le rendement sur l'investissement en éducation est faible. Le fait d'entrer sur le marché du travail réduit la capacité de l'enfant à accumuler du capital humain, et donc le fait de l'envoyer sur le marché du travail est suffisant pour s'assurer que les anticipations pessimistes du parent se réalisent. On montre qu'une intervention ponctuelle de politique publique à un moment donné – comme bannir le travail des enfants ou imposer l'éducation obligatoire – peut suffire pour déplacer un pays d'un équilibre avec travail des enfants vers un équilibre sans travail des enfants.

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  • Patrick M. Emerson & Shawn D. Knabb, 2013. "Bounded rationality, expectations, and child labour," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 46(3), pages 900-927, August.
    • Handle: RePEc:wly:canjec:v:46:y:2013:i:3:p:900-927
    DOI: 10.1111/caje.12032
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