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Informal Sector Economy, Child Labor and Economic Growth in Developing Economies: Exploring the Interlinkages

Author

Listed:
  • Sumbal Shahid

    (Department of Economics, The Islamia University of Bahawalpur. Pakistan.)

  • Rana Ejaz Ali Khan

    (Department of Economics, The Islamia University of Bahawalpur. Pakistan.)

Abstract

The study explores the interlinkages among informal sector, child labor and economic growth covering 50 developing economies for the time period 2001-2015 through 3SLS approach. The results show that informal sector positively influences child labor and child labor positively influences informal sector. It creates a vicious cycle of underdevelopment and poverty. Similarly child labor positively contributes in economic growth and economic growth enhances child labor in developing economies. However, informal sector increases economic growth but economic growth decreases informal sector. So there emerged a complex and discoursing interlinkage among informal sector, child labor and economic growth in developing economies. The informal sector is positively influenced by population growth. Child labor is also positively influenced by population growth and age dependency but negatively by globalization. Economic growth is positively influenced by capital formation, globalization and governance. A multidimensional approach is required for decreasing the size of informal sector economy and eliminating the child labor along with having good economic growth. Control of population growth is emerged one of them which may slide down informal sector economy and child labor. The capital formation and governance may be a part of the policy framework for economic growth.

Suggested Citation

  • Sumbal Shahid & Rana Ejaz Ali Khan, 2020. "Informal Sector Economy, Child Labor and Economic Growth in Developing Economies: Exploring the Interlinkages," Asian Development Policy Review, Asian Economic and Social Society, vol. 8(4), pages 277-287, December.
  • Handle: RePEc:asi:adprev:2020:p:277-287
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    References listed on IDEAS

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    More about this item

    Keywords

    Informal sector; Child labor; Economic growth; Population growth; Globalization; Age dependency.;
    All these keywords.

    JEL classification:

    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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