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Barriers to Capital Accumulation and the Incidence of Child Labor

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  • Richard C. Barnett
  • Marco A. Espinosa-Vega

Abstract

The World Bank documents an inverse relationship between GDP per-capita and child labor participation rates. We construct a life-cycle model with human and physical capital in which parents make a time allocation choice for their child. The model considers two features that have shown potential in explaining differences in states of development across nations. These are: i) a minimum consumption requirement, and ii) barriers to physical capital accumulation. We find the introduction of capital barriers alone is not enough to replicate the aforementioned observation by the World Bank. However, we find the interplay of a minimum consumption requirement and barriers to capital may enhance our understanding of child labor, human capital, and the poverty of nations. Additionally, we find support for policies aimed at reducing capital barriers as means to reduce child labor over an out and out ban on it.

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Bibliographic Info

Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c016_014.

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Length: 24 pages JEL Classification:
Date of creation: Sep 2011
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Handle: RePEc:deg:conpap:c016_014

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  1. Das Satya P & Deb Rajat, 2006. "A Dynamic Analysis of Child Labor with a Variable Rate of Discount: Some Policy Implications," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-30, August.
  2. S. Rao Aiyagari & Jeremy Greenwood & Ananth Seshadri, 1999. "Efficient investment in children," Discussion Paper / Institute for Empirical Macroeconomics 132, Federal Reserve Bank of Minneapolis.
  3. Saqib Jafarey & Sajal Lahiri, 1999. "Will trade sanctions reduce child labour? The role of credit markets," Economics Discussion Papers 500, University of Essex, Department of Economics.
  4. Robert J. Barro, 2012. "Inflation and Economic Growth," CEMA Working Papers 568, China Economics and Management Academy, Central University of Finance and Economics.
  5. María J. Álvarez & Antonia Díaz, 2001. "Minimum Consumption And Transitional Dynamics In Wealth Distribution," Economics Working Papers we015013, Universidad Carlos III, Departamento de Economía.
  6. Basu, Kaushik & Van, Pham Hoang, 1998. "The Economics of Child Labor," American Economic Review, American Economic Association, vol. 88(3), pages 412-27, June.
  7. Satyajit Chatterjee & B. Ravikumar & B. Ravikumar, 1997. "Minimum consumptions requirements: theoretical and quantitative implications for growth and distribution," Working Papers 97-15, Federal Reserve Bank of Philadelphia.
  8. Jones, Charles I., 1994. "Economic growth and the relative price of capital," Journal of Monetary Economics, Elsevier, vol. 34(3), pages 359-382, December.
  9. L. Rachel Ngai, 2003. "Barriers and the Transition to Modern Growth," CEP Discussion Papers dp0561, Centre for Economic Performance, LSE.
  10. Jean-Marie Baland & James A. Robinson, 2000. "Is Child Labor Inefficient?," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 663-679, August.
  11. Stephen L. Parente & Richard Rogerson & Randall Wright, 2000. "Homework in Development Economics: Household Production and the Wealth of Nations," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 680-687, August.
  12. Atkeson, Andrew & Ogaki, Masao, 1996. "Wealth-varying intertemporal elasticities of substitution: Evidence from panel and aggregate data," Journal of Monetary Economics, Elsevier, vol. 38(3), pages 507-534, December.
  13. Diego Restuccia, 2002. "Barriers to Capital Accumulation and Aggregate Total Factor Productivity," Working Papers diegor-02-01, University of Toronto, Department of Economics.
  14. Steger, Thomas M., 2000. "Economic growth with subsistence consumption," Journal of Development Economics, Elsevier, vol. 62(2), pages 343-361, August.
  15. Rangazas, Peter, 2000. "Schooling and economic growth: A King-Rebelo experiment with human capital," Journal of Monetary Economics, Elsevier, vol. 46(2), pages 397-416, October.
  16. Ranjan, P., 1999. ""Credit Constraints and the Phenomenon of Child Labor"," Papers 98-99-12, California Irvine - School of Social Sciences.
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