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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

Abstract

Although bans against child labor are a ubiquitous policy tool, there is very little empirical evidence on 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 whom the ban applied to, we show that the relative probability of child employment increases and child wages (relative to adult wages) decrease after the ban. Our main specification relies on comparing changes in work probabilities over time for children of the same age but with siblings who are rendered either eligible or ineligible for legal work when the ban is implemented. The increases in the probability of economic activity are largest for children (i) in areas where the industries targeted by the ban play a larger role in local labor markets, (ii) in areas where the probability of employer inspections is higher, and (iii) in families that are poorer. 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. We also find decreases in child participation in schooling (for younger children only) and no economically meaningful change in household outcomes like assets or calorie intake.

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  • Prashant Bharadwaj & Leah K Lakdawala & Nicholas Li, 2020. "Perverse Consequences of Well Intentioned Regulation: Evidence from India’s Child Labor Ban," Journal of the European Economic Association, European Economic Association, vol. 18(3), pages 1158-1195.
  • Handle: RePEc:oup:jeurec:v:18:y:2020:i:3:p:1158-1195.
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    6. Putnick, Diane L. & Bornstein, Marc H., 2015. "Is child labor a barrier to school enrollment in low- and middle-income countries?," International Journal of Educational Development, Elsevier, vol. 41(C), pages 112-120.
    7. Calel, Raphael & Colmer, Jonathan & Dechezlepretre, Antoine & Glachant, Matthieu, 2021. "Do carbon offsets offset carbon?," LSE Research Online Documents on Economics 113849, London School of Economics and Political Science, LSE Library.
    8. Kozhaya, Mireille & Martínez Flores, Fernanda, 2022. "Child Labor Bans, Employment, and School Attendance: Evidence from Changes in the Minimum Working Age," IZA Discussion Papers 15144, Institute of Labor Economics (IZA).
    9. Jaime DE MELO & Marcelo OLARREAGA, 2017. "Trade Related Institutions and Development," Working Papers P199, FERDI.
    10. Dena Aufseeser & Michael Bourdillon & Richard Carothers & Olivia Lecoufle, 2018. "Children's work and children's well†being: Implications for policy," Development Policy Review, Overseas Development Institute, vol. 36(2), pages 241-261, March.
    11. Natalie Bau & Martin Rotemberg & Manisha Shah & Bryce Steinberg, 2020. "Human Capital Investment in the Presence of Child Labor," NBER Working Papers 27241, National Bureau of Economic Research, Inc.
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    JEL classification:

    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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