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Child Labor, Idiosyncratic Shocks, and Social Policy

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  • Alice Fabre
  • Stéphane Pallage

Abstract

In this paper, we measure the welfare effects of banning child labor in an economy with strong idiosyncratic shocks to employment. We then design two different policies: an unemployment insurance program and a universal basic income system. We show that they can often lead to an endogenous elimination of child labor. We work within a dynamic, general equilibrium model calibrated to South Africa in the 1990s.

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File URL: http://www.cirpee.org/fileadmin/documents/Cahiers_2011/CIRPEE11-15.pdf
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Bibliographic Info

Paper provided by CIRPEE in its series Cahiers de recherche with number 1115.

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Date of creation: 2011
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Handle: RePEc:lvl:lacicr:1115

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Keywords: Child labor; Idiosyncratic shocks; Unemployment insurance; Universal basic income; Heterogeneous agents; Child labor ban;

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  1. Dammert, Ana C., 2008. "Child labor and schooling response to changes in coca production in rural Peru," Journal of Development Economics, Elsevier, vol. 86(1), pages 164-180, April.
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  5. Pallage, Stephane & Zimmermann, Christian, 2001. "Voting on Unemployment Insurance," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(4), pages 903-23, November.
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  7. Dessy, Sylvain E. & Pallage, Stephane, 2001. "Child labor and coordination failures," Journal of Development Economics, Elsevier, vol. 65(2), pages 469-476, August.
  8. Robert Jensen, 2000. "Agricultural Volatility and Investments in Children," American Economic Review, American Economic Association, vol. 90(2), pages 399-404, May.
  9. Geeta Kingdon & John Knight, 2001. "Race and the Oncidence of Unemployment in South Africa," Economics Series Working Papers WPS/2001-18, University of Oxford, Department of Economics.
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  12. Basu, Kaushik & Van, Pham Hoang, 1998. "The Economics of Child Labor," American Economic Review, American Economic Association, vol. 88(3), pages 412-27, June.
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  14. Luis Felipe López Calva, 2002. "A social stigma model of child labor," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 17(2), pages 193-217.
  15. Karan Singh, B, 2011. "Impact of adverse economic shocks on the Indian child labour market and the schooling of children of poor households," MPRA Paper 30958, University Library of Munich, Germany.
  16. Dani Rodrik, 2006. "Understanding South Africa's Economic Puzzles," NBER Working Papers 12565, National Bureau of Economic Research, Inc.
  17. Gary D. Hansen & Ayse Imrohoroglu, 1990. "The Role of Unemployment Insurance in an Economy with Liquidity Constraints and Moral Hazard," UCLA Economics Working Papers 583, UCLA Department of Economics.
  18. Jorge Soares, 2009. "Welfare Impact of a Ban on Child Labor," Working Papers 08-01, University of Delaware, Department of Economics.
  19. Pallage, Stephane & Zimmermann, Christian, 2007. "Buying out child labor," Journal of Macroeconomics, Elsevier, vol. 29(1), pages 75-90, March.
  20. Emerson, Patrick M & Souza, Andre Portela, 2003. "Is There a Child Labor Trap? Intergenerational Persistence of Child Labor in Brazil," Economic Development and Cultural Change, University of Chicago Press, vol. 51(2), pages 375-98, January.
  21. Basu, Kaushik & Zarghamee, Homa, 2009. "Is product boycott a good idea for controlling child labor? A theoretical investigation," Journal of Development Economics, Elsevier, vol. 88(2), pages 217-220, March.
  22. Dessy, Sylvain E., 2000. "A defense of compulsive measures against child labor," Journal of Development Economics, Elsevier, vol. 62(1), pages 261-275, June.
  23. Doepke, Matthias & Zilibotti, Fabrizio, 2008. "International Labor Standards and the Political Economy of Child Labor Regulation," IZA Discussion Papers 3742, Institute for the Study of Labor (IZA).
  24. Moehling, Carolyn M., 2005. ": Youth Employment and Household Decision Making in the Early Twentieth Century," The Journal of Economic History, Cambridge University Press, vol. 65(02), pages 414-438, June.
  25. 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.
  26. Steven Shavell & Laurence Weiss, 1978. "The Optimal Payment of Unemployment Insurance Benefits over Time," Cowles Foundation Discussion Papers 503, Cowles Foundation for Research in Economics, Yale University.
  27. Baily, Martin Neil, 1978. "Some aspects of optimal unemployment insurance," Journal of Public Economics, Elsevier, vol. 10(3), pages 379-402, December.
  28. Kaushik Basu, 1999. "Child Labor: Cause, Consequence, and Cure, with Remarks on International Labor Standards," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1083-1119, September.
  29. Hopenhayn, Hugo A & Nicolini, Juan Pablo, 1997. "Optimal Unemployment Insurance," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 412-38, April.
  30. Delphine Boutin, 2011. "Envoi de fonds et allocation du temps des enfants au Niger : L’effet indirect des chocs négatifs," Larefi Working Papers 1105, Larefi, Université Bordeaux 4.
  31. Edmonds, Eric V., 2006. "Child labor and schooling responses to anticipated income in South Africa," Journal of Development Economics, Elsevier, vol. 81(2), pages 386-414, December.
  32. Beegle, Kathleen & Dehejia, Rajeev H. & Gatti, Roberta, 2006. "Child labor and agricultural shocks," Journal of Development Economics, Elsevier, vol. 81(1), pages 80-96, October.
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