Welfare Impact of a Ban on Child Labor
This paper presents a new rationale for imposing restrictions on child labor. In a standard overlapping generations model where parental altruism results in transfers that children allocate to consumption and education, the Nash-Cournot equilibrium results in sub-optimal levels of parental transfers and does not maximize the average level of utility of currently living agents. A ban on child labor decreases children's income and generates an increase in parental transfers bringing their levels closer to the optimum, raising children's welfare as well as average welfare in the short-run and in the long-run. Moreover, the inability to work allows children to allocate more time to education, and it leads to an increase in human capital. Besides, to increase transfers, parents decrease savings and, hence, physical capital accumulation. When prices are flexible, these effects diminish the positive welfare impact of the ban on child labor.
|Date of creation:||2009|
|Date of revision:|
|Contact details of provider:|| Postal: Purnell Hall, Newark, Delaware 19716|
Phone: (302) 831-2565
Fax: (302) 831-6968
Web page: http://lerner.udel.edu/departments/economics/department-economics/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Boyan Jovanovic & Peter L. Rousseau, 2005.
"General Purpose Technologies,"
NBER Working Papers
11093, National Bureau of Economic Research, Inc.
- Soares, Jorge, 2015.
"Borrowing constraints, parental altruism and welfare,"
Journal of Macroeconomics,
Elsevier, vol. 45(C), pages 1-20.
- Jorge Soares, 2008. "Borrowing Constraints, Parental Altruism and Welfare," Working Papers 08-12, University of Delaware, Department of Economics.
- Dirk Krueger & Jessica Tjornhom Donohue, 2007.
"On The Distributional Consequences Of Child Labor Legislation,"
- Dirk Krueger & Jessica Tjornhom Donohue, 2005. "On The Distributional Consequences Of Child Labor Legislation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(3), pages 785-815, 08.
- Dirk Krueger & Jessica Tjornhom Donohue, 2004. "On the Distributional Consequences of Child Labor Legislation," NBER Working Papers 10347, National Bureau of Economic Research, Inc.
- Valerie A. Ramey & Neville Francis, 2006.
"A Century of Work and Leisure,"
NBER Working Papers
12264, National Bureau of Economic Research, Inc.
- Kaushik Basu, 1999.
"Child Labor: Cause, Consequence, and Cure, with Remarks on International Labor Standards,"
Journal of Economic Literature,
American Economic Association, vol. 37(3), pages 1083-1119, September.
- Basu, Kaushik, 1998. "Child labor : cause, consequence, and cure, with remarks on International Labor Standards," Policy Research Working Paper Series 2027, The World Bank.
- E. Paul Durrenberger, 2005. "Labour," Chapters, in: A Handbook of Economic Anthropology, chapter 8 Edward Elgar Publishing.
- Matthias Doepke & Fabrizio Zilibotti, 2005.
"The Macroeconomics of Child Labor Regulation,"
American Economic Review,
American Economic Association, vol. 95(5), pages 1492-1524, December.
- Basu, Kaushik & Van, Pham Hoang, 1998. "The Economics of Child Labor," American Economic Review, American Economic Association, vol. 88(3), pages 412-27, June.
- Sylvain Dessy & Stephane Pallage, 2000.
"Child Labor and Coordination Failures,"
Cahiers de recherche CREFE / CREFE Working Papers
109, CREFE, Université du Québec à Montréal.
- Sylvain E. Dessy & Stéphane Pallage, 2005. "A Theory of the Worst Forms of Child Labour," Economic Journal, Royal Economic Society, vol. 115(500), pages 68-87, 01.
- Carol Rogers & Kenneth A. Swinnerton, 2002.
"A Theory of Exploitative Child Labor,"
gueconwpa~02-02-03, Georgetown University, Department of Economics.
- O'Connell, Stephen A. & Zeldes, Stephen P., 1993.
"Dynamic efficiency in the gifts economy,"
Journal of Monetary Economics,
Elsevier, vol. 31(3), pages 363-379, June.
- B. Douglas Bernheim, 1989. "Intergenerational Altruism, Dynastic Equilibria and Social Welfare," Review of Economic Studies, Oxford University Press, vol. 56(1), pages 119-128.
- Raquel Fernandez & Richard Rogerson, 1995. "On the Political Economy of Education Subsidies," Review of Economic Studies, Oxford University Press, vol. 62(2), pages 249-262.
When requesting a correction, please mention this item's handle: RePEc:dlw:wpaper:09-01.. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Saul Hoffman)
If references are entirely missing, you can add them using this form.