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Is Bonded Labor Voluntary? Evidence from the Liberation of the Kamaiyas in the Far-Western Region of Nepal

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Author Info
Espen Villanger

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Abstract

The UN estimates that 20 million are held in bonded labor. Several economic analyses assert that bonded laborers accept these contracts voluntarily, which could imply that a ban would make such laborers worse off. We question the voluntary nature of bonded labor, discuss different theories and new evidence on the issue, and propose a new mechanism whereby landlords keep workers trapped. With different types of landlords not revealed to the laborer, we show how some landlords manipulate loan terms so that the laborer becomes bonded if future labor is rendered as collateral. Enforcement mechanisms and the monopolistic market for credit thus play a joint role. Providing alternative sources of credit, offering proper conflict resolution institutions for settling labor-contract disputes and banning the practice of bonded labor could emancipate bonded laborers, which would make them better off.

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Publisher Info
Paper provided by CMI (Chr. Michelsen Institute), Bergen, Norway in its series CMI Working Papers with number WP 2006:16.

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Length: 25 pages
Date of creation: 2006
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Handle: RePEc:chm:wpaper:wp2006-16

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Related research
Keywords: Asia Nepal Bonded labor Debt slavery;

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Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
D40 - Microeconomics - - Market Structure and Pricing - - - General
J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Mukherjee, Anindita & Ray, Debraj, 1995. "Labor tying," Journal of Development Economics, Elsevier, vol. 47(2), pages 207-239, August. [Downloadable!] (restricted)
    Other versions:
  2. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June. [Downloadable!] (restricted)
  3. Genicot, Garance, 2002. "Bonded labor and serfdom: a paradox of voluntary choice," Journal of Development Economics, Elsevier, vol. 67(1), pages 101-127, February. [Downloadable!] (restricted)
  4. Basu, Kaushik, 1986. "One Kind of Power," Oxford Economic Papers, Oxford University Press, vol. 38(2), pages 259-82, July. [Downloadable!] (restricted)
  5. Magnus Hatlebakk, 2006. "The effects of agrarian contracts of a governmental intervention into bonded labor in the western terai of Nepal," CMI Working Papers WP 2006: 6, CMI (Chr. Michelsen Institute), Bergen, Norway. [Downloadable!]
  6. repec:cup:cbooks:9780521622448 is not listed on IDEAS
  7. Hatlebakk, Magnus, 2002. "A new and robust subgame perfect equilibrium in a model of triadic power relations," Journal of Development Economics, Elsevier, vol. 68(1), pages 225-232, June. [Downloadable!] (restricted)
    Other versions:
  8. Akerlof, George A, 1976. "The Economics of Caste and of the Rat Race and Other Woeful Tales," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 599-617, November. [Downloadable!] (restricted)
  9. Bhaduri, Amit, 1977. "On the Formation of Usurious Interest Rates in Backward Agriculture," Cambridge Journal of Economics, Oxford University Press, vol. 1(4), pages 341-52, December.
  10. Debra Satz, 2003. "Child Labor: A Normative Perspective," World Bank Economic Review, Oxford University Press, vol. 17(2), pages 297-309, December.
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