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How to Deal with Covert Child Labour, and Give Children an Effective Education, in a Poor Developing Country


  • Cigno, Alessandro

    () (University of Florence)


As credit and insurance markets are imperfect, and given that intra-family transfers, and the way a child uses her time outside school hours, are private information, the second-best policy makes school enrollment compulsory, forces overt child labour below its efficient level (if positive), and uses a combination of need and merit based grants, financed by earmarked taxes, to relax credit constraints, redistribute and insure. Existing conditional cash transfer schemes can be made to approximate the second-best policy by incorporating these principles in some measure.

Suggested Citation

  • Cigno, Alessandro, 2011. "How to Deal with Covert Child Labour, and Give Children an Effective Education, in a Poor Developing Country," IZA Discussion Papers 5663, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp5663

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    References listed on IDEAS

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    Cited by:

    1. Alessandro Balestrino & Lisa Grazzini & Annalisa Luporini, 2017. "A normative justification of compulsory education," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(2), pages 537-567, April.

    More about this item


    optimal taxation; moral hazard; uncertainty; education; child labour;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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