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A Theory of Exploitative Child Labor

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Author Info

  • Carol Ann Rogers

    (Georgetown University)

  • Kenneth A. Swinnerton

    (U.S. Department of Labor Bureau of International Labor Affairs)

Abstract

We develop a model of exploitative child labor with two key features: first, parents have imperfect information about whether employment opportunities available to their children are exploitative or not. Second, firms choose whether or not to exploit their child workers. In our model, a ban on exploitative child labor is desirable, because it resolves the problem of imperfect information faced by parents, and therefore leads to Pareto efficiency. We also find that a ban leads to an increase in the wages of child workers, and that firm profits, even for firms that do not exploit child workers, fall. Finally, a ban has ambiguous effects at the macroeconomic level: aggregate child employment and aggregate output can rise or fall.

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File URL: http://128.118.178.162/eps/dev/papers/0306/0306005.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Development and Comp Systems with number 0306005.

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Length: 28 pages
Date of creation: 25 Jun 2003
Date of revision:
Handle: RePEc:wpa:wuwpdc:0306005

Note: Type of Document - ; pages: 28
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Web page: http://128.118.178.162

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Keywords: child labor; economic exploitation;

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References

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  1. Dessy, Sylvain E. & Pallage, Stephane, 2001. "Child labor and coordination failures," Journal of Development Economics, Elsevier, Elsevier, vol. 65(2), pages 469-476, August.
  2. Sylvain Dessy & Désiré Vencatachellum, 2002. "Explaining Cross-Country Differences in Policy Response to Child Labour," Cahiers de recherche 02-03, HEC Montréal, Institut d'économie appliquée.
  3. Basu, Kaushik & Van, Pham Hoang, 1998. "The Economics of Child Labor," American Economic Review, American Economic Association, American Economic Association, vol. 88(3), pages 412-27, June.
  4. Basu, Kaushik, 1998. "Child labor : cause, consequence, and cure, with remarks on International Labor Standards," Policy Research Working Paper Series 2027, The World Bank.
  5. 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.
  6. Carol Ann Rogers & Kenneth A. Swinnerton, 1999. "Inequality, Productivity, and Child Labor," Labor and Demography, EconWPA 9907003, EconWPA, revised 30 Jul 1999.
  7. Kenneth A. Swinnerton, 1997. "An Essay on Economic Efficiency and Core Labour Standards," The World Economy, Wiley Blackwell, Wiley Blackwell, vol. 20(1), pages 73-86, 01.
  8. Genicot, Garance, 2002. "Bonded labor and serfdom: a paradox of voluntary choice," Journal of Development Economics, Elsevier, Elsevier, vol. 67(1), pages 101-127, February.
  9. Ranjan, Priya, 2001. "Credit constraints and the phenomenon of child labor," Journal of Development Economics, Elsevier, Elsevier, vol. 64(1), pages 81-102, February.
  10. Albrecht, James W & Axell, Bo, 1983. "An Equilibrium Model of Search Unemployment," Working Paper Series, Research Institute of Industrial Economics 99, Research Institute of Industrial Economics.
  11. Swinnerton, Kenneth A, 1996. "Minimum Wages in an Equilibrium Search Model with Diminishing Returns to Labor in Production," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 14(2), pages 340-55, April.
  12. Eric V. Edmonds & Nina Pavcnik, 2005. "Child Labor in the Global Economy," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 19(1), pages 199-220, Winter.
  13. Sylvain Dessy & Stéphane Pallage, 2003. "The Economics of Child Trafficking," Cahiers de recherche, CIRPEE 0323, CIRPEE.
  14. Sylvain E. Dessy & Stéphane Pallage, 2005. "A Theory of the Worst Forms of Child Labour," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 115(500), pages 68-87, 01.
  15. Natalia T. Tamirisa & R. B. Johnston, 1998. "Why Do Countries Use Capital Controls?," IMF Working Papers, International Monetary Fund 98/181, International Monetary Fund.
  16. Arnab K. Basu & Nancy H. Chau, 2004. "Exploitation of Child Labor and the Dynamics of Debt Bondage," Journal of Economic Growth, Springer, Springer, vol. 9(2), pages 209-238, 06.
  17. Arnab K. Basu & Nancy H. Chau, 2003. "Targeting Child Labor in Debt Bondage: Evidence, Theory, and Policy Implications," World Bank Economic Review, World Bank Group, World Bank Group, vol. 17(2), pages 255-281, December.
  18. Jean-Marie Baland & James A. Robinson, 2000. "Is Child Labor Inefficient?," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 108(4), pages 663-679, August.
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Citations

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Cited by:
  1. Caroline Orset, 2008. "A Theory of Child Protection against Kidnapping," Cahiers de recherche, CIRPEE 0816, CIRPEE.
  2. Ronald B. Davies, 2000. "Abstinence from Child Labor and Profit Seeking," University of Oregon Economics Department Working Papers, University of Oregon Economics Department 2000-1, University of Oregon Economics Department, revised 01 Aug 2002.
  3. Chau, Nancy, 2009. "Sweatshop Equilibrium," IZA Discussion Papers 4363, Institute for the Study of Labor (IZA).
  4. Irving Rosales, 2013. "Learn, sweat or steal: a theory of development and the activity of children," Working Papers, Universidad Iberoamericana, Department of Economics 0613, Universidad Iberoamericana, Department of Economics.
  5. Sylvain E. Dessy & Flaubert Mbiekop & Stéphane Pallage, 2005. "The Economics of Child Trafficking (Part II)," Cahiers de recherche, CIRPEE 0509, CIRPEE.
  6. Sylvain Dessy & Stéphane Pallage, 2003. "The Economics of Child Trafficking," Cahiers de recherche, CIRPEE 0323, CIRPEE.
  7. Sylvain Dessy & Caroline Orset & Legrand Yémélé Kana, 2012. "The Global Fight against Child Trafficking: How Can It Be Won ?," Cahiers de recherche, CIRPEE 1213, CIRPEE.
  8. Bernd Beber & Christopher Blattman, 2010. "The Industrial Organization of Rebellion: The Logic of Forced Labor and Child Soldiering," HiCN Working Papers 72, Households in Conflict Network.
  9. Jorge Soares, 2009. "Welfare Impact of a Ban on Child Labor," Working Papers, University of Delaware, Department of Economics 08-01, University of Delaware, Department of Economics.
  10. Carol Ann Rogers & Kenneth A Swinnerton, 2005. "Slave Redemption When it Takes Time to Redeem Slaves," Development and Comp Systems, EconWPA 0510006, EconWPA.
  11. Del Carpio, Ximena V. & Loayza, Norman V., 2012. "The impact of wealth on the amount and quality of child labor," Policy Research Working Paper Series 5959, The World Bank.
  12. Eric V. Edmonds & Maheshwor Shrestha, 2013. "You Get What You Pay For: Schooling Incentives and Child Labor," NBER Working Papers 19279, National Bureau of Economic Research, Inc.

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