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Market imperfections and child labor

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  • Dumas, Christelle

Abstract

There is some indirect evidence that child labor is affected by market imperfections. This paper provides a theoretical model to discuss the effect of improvements on the labor market, when households cannot rely on neither the land nor the credit markets. The predictions differ by land ownership: landless or large landowners should decrease child labor when labor market imperfections decrease. Households who had chosen not to supply any labor on the wage market (households with intermediate-upper land levels) remain unaffected and households who combine farm work with wage work (households with intermediate-lower land levels) may either increase or decrease their child labor use. We use Malagasy data to estimate the relation between child labor and various measures of markets imperfections. We match those data with a municipality census so as to control for a large set of village characteristics. We find that on average market imperfections (labor but also land and credit) do indeed increase child labor and obtain heterogenous effects by land ownership that are consistent with the theoretical model. The results point to the fact that an improvement of markets competitiveness should decrease child labor (and even the more so for labor markets), which provides an alternative policy to fight against child labor. --

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Bibliographic Info

Paper provided by Verein für Socialpolitik, Research Committee Development Economics in its series Proceedings of the German Development Economics Conference, Berlin 2011 with number 25.

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Date of creation: 2011
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Handle: RePEc:zbw:gdec11:25

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Keywords: Child labor; Market imperfections; Land; Labor; Credit; Madagascar;

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  1. Beegle, Kathleen & Dehejia, Rajeev H. & Gatti, Roberta, 2006. "Child labor and agricultural shocks," Journal of Development Economics, Elsevier, Elsevier, vol. 81(1), pages 80-96, October.
  2. Sonia Bhalotra & Christopher Heady, 2003. "Child Farm Labor: The Wealth Paradox," World Bank Economic Review, World Bank Group, World Bank Group, vol. 17(2), pages 197-227, December.
  3. Kathleen Beegle & Rajeev Dehejia & Roberta Gatti, 2004. "Why Should We Care About Child Labor? The Education, Labor Market, and Health Consequences of Child Labor," NBER Working Papers 10980, National Bureau of Economic Research, Inc.
  4. Basu, Kaushik & Das, Sanghamitra & Dutta, Bhaskar, 2010. "Child labor and household wealth: Theory and empirical evidence of an inverted-U," Journal of Development Economics, Elsevier, Elsevier, vol. 91(1), pages 8-14, January.
  5. Denis Cogneau & Rémi Jedwab, 2008. "Family income and child outcomes: the 1990 cocoa price shock in Cote d’Ivoire," Working Papers, DIAL (Développement, Institutions et Mondialisation) DT/2008/05, DIAL (Développement, Institutions et Mondialisation).
  6. Christelle Dumas, 2007. "Why do parents make their children work? A test of the poverty hypothesis in rural areas of Burkina Faso," Oxford Economic Papers, Oxford University Press, vol. 59(2), pages 301-329, April.
  7. Mueller, Eva, 1984. "The value and allocation of time in rural Botswana," Journal of Development Economics, Elsevier, Elsevier, vol. 15(1-3), pages 329-360.
  8. Ranjan, P., 1999. ""Credit Constraints and the Phenomenon of Child Labor"," Papers, California Irvine - School of Social Sciences 98-99-12, California Irvine - School of Social Sciences.
  9. David E. Sahn & David Stifel, 2003. "Exploring Alternative Measures of Welfare in the Absence of Expenditure Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 49(4), pages 463-489, December.
  10. Edmonds, Eric V., 2006. "Child labor and schooling responses to anticipated income in South Africa," Journal of Development Economics, Elsevier, Elsevier, vol. 81(2), pages 386-414, December.
  11. Duryea, Suzanne & Arends-Kuenning, Mary, 2003. "School Attendance, Child Labor and Local Labor Market Fluctuations in Urban Brazil," World Development, Elsevier, Elsevier, vol. 31(7), pages 1165-1178, July.
  12. Jacoby, Hanan G & Skoufias, Emmanuel, 1997. "Risk, Financial Markets, and Human Capital in a Developing Country," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 64(3), pages 311-35, July.
  13. Jafarey, Saqib & Lahiri, Sajal, 2002. "Will trade sanctions reduce child labour?: The role of credit markets," Journal of Development Economics, Elsevier, Elsevier, vol. 68(1), pages 137-156, June.
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