A Note on Multiple General Equilibria with Child Labour
It has been conjectured, using partial equilibrium analysis, that the market for child labour is likely to exhibit multiple equilibria, with children working in some but not in others. Such a result has important policy implications, especially concerning the use of a legislative ban on child labour. This paper shows that the multiple equilibrium result holds in a formal general equilibrium model. The paper develops the concept of a 'wage bill curve' and shows how this is a useful tool for studying the relation between household preference and multiple equilibria. It also clarifies the kind of welfare criteria needed to justify a legislative ban on child labour.
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