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Perverse Consequences of Well Intentioned Regulation: Evidence from India's Child Labor Ban

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  • Prashant Bharadwaj
  • Leah K. Lakdawala
  • Nicholas Li
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    Abstract

    While bans against child labor are a common policy tool, there is very little empirical evidence validating their effectiveness. In this paper, we examine the consequences of India’s landmark legislation against child labor, the Child Labor (Prohibition and Regulation) Act of 1986. Using data from employment surveys conducted before and after the ban, and using age restrictions that determined who the ban applied to, we show that child wages decrease and child labor increases after the ban. These results are consistent with a theoretical model building on the seminal work of Basu and Van (1998) and Basu (2005), where families use child labor to reach subsistence constraints and where child wages decrease in response to bans, leading poor families to utilize more child labor. The increase in child labor comes at the expense of reduced school enrollment. We also examine the effects of the ban at the household level. Using linked consumption and expenditure data, we find that along various margins of household expenditure, consumption, calorie intake and asset holdings, households are worse off after the ban.

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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 19602.

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    Date of creation: Oct 2013
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    Handle: RePEc:nbr:nberwo:19602

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    1. Basu, Kaushik, 2005. "Child labor and the law: Notes on possible pathologies," Economics Letters, Elsevier, Elsevier, vol. 87(2), pages 169-174, May.
    2. Carol Ann Rogers & Kenneth A. Swinnerton, 1999. "The Economics of Child Labor: Comment," American Economic Review, American Economic Association, American Economic Association, vol. 89(5), pages 1382-1385, December.
    3. Edmonds, Eric V. & Pavcnik, Nina & Topalova, Petia, 2007. "Trade Adjustment and Human Capital Investments: Evidence from Indian Tariff Reform," IZA Discussion Papers 2611, Institute for the Study of Labor (IZA).
    4. Saqib Jafarey & Sajal Lahiri, 1999. "Will trade sanctions reduce child labour? The role of credit markets," Economics Discussion Papers, University of Essex, Department of Economics 500, University of Essex, Department of Economics.
    5. Marco Manacorda, 2006. "Child Labor and the Labor Supply of Other Household Members: Evidence from 1920 America," American Economic Review, American Economic Association, American Economic Association, vol. 96(5), pages 1788-1801, December.
    6. Harsha Thirumurthy & Joshua Graff Zivin & Markus Goldstein, 2007. "AIDS Treatment and Intrahousehold Resource Allocations: Children's Nutrition and Schooling in Kenya," Working Papers, Center for Global Development 105, Center for Global Development.
    7. Robert T. Jensen & Nolan H. Miller, 2010. "A Revealed Preference Approach to Measuring Hunger and Undernutrition," NBER Working Papers 16555, National Bureau of Economic Research, Inc.
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    13. Marigee P. Bacolod & Priya Ranjan, 2008. "Why Children Work, Attend School, or Stay Idle: The Roles of Ability and Household Wealth," Economic Development and Cultural Change, University of Chicago Press, vol. 56, pages 791-828.
    14. Chin, Aimee, 2005. "Can redistributing teachers across schools raise educational attainment? Evidence from Operation Blackboard in India," Journal of Development Economics, Elsevier, Elsevier, vol. 78(2), pages 384-405, December.
    15. Gary Solon & Steven J. Haider & Jeffrey Wooldridge, 2013. "What Are We Weighting For?," NBER Working Papers 18859, National Bureau of Economic Research, Inc.
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    17. Boockmann, Bernhard, 2010. "The Effect of ILO Minimum Age Conventions on Child Labor and School Attendance: Evidence From Aggregate and Individual-Level Data," World Development, Elsevier, Elsevier, vol. 38(5), pages 679-692, May.
    18. Stigler, George J, 1992. "Law or Economics?," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 35(2), pages 455-68, October.
    19. Kirk Doran, 2012. "How Does Child Labor Affect the Demand for Adult Labor? Evidence from Rural Mexico," Working Papers 016, University of Notre Dame, Department of Economics, revised Aug 2012.
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    Cited by:
    1. Frédéric DOCQUIER & Tobias MÜLLER & Joaquín NAVAL, 2013. "Informality and long-run growth," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2013034, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).

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