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Child Labor, Idiosyncratic Shocks, and Social Policy

  • Alice Fabre

    ()

    (AMSE - Aix-Marseille School of Economics - EHESS - École des hautes études en sciences sociales - Centre national de la recherche scientifique (CNRS) - Ecole Centrale Marseille (ECM) - AMU - Aix-Marseille Université)

  • Stéphane Pallage

    (CIRPEE and Département des Sciences Economiques - UQAM - Université du Québec à Montréal)

In this paper, we provide a dynamic model with heterogeneous agents to study child labor in an economy with idiosyncratic shocks to employment. Households facing adverse shocks may use child labor as a buffer to smooth consumption. We show that the introduction of an unemployment insurance program and/or a universal basic income system help eliminate child labor endogenously in this context. A calibration to South Africa in the 1990s is provided.

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Handle: RePEc:hal:wpaper:halshs-00913666
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