credit constraints and the phenomenon of child labor abstract this paper develops an overlapping generations general equilibrium model where inefficient child labor arises due to credit constraints it derives a positive relationship between inequality in the distribution of income and the incidence of child labor looking at policy implications it shows how trade sanctions against countries using child labor may fail to reduce the incidence of child labor it discusses some alternative policies to reduce the incidence of child labor

effects of economic shocks on children s employment and schooling in brazil abstract this paper uses longitudinal employment survey data to analyze the impact of household economic shocks on the schooling and employment transitions of young people in metropolitan brazil the paper uses data on over 100 000 children ages 10 16 from brazil s monthly employment survey pme from 1982 to 1999 taking advantage of the rotating panels in the pme we compare households in which the male household head becomes unemployed during a four month period with households in which the head is continuously employed probit regressions indicate that an unemployment shock significantly increases the probability that a child enters the labor force drops out of school and fails to advance in school the effects can be large implying increases of as much as 50 in the probability of entering employment for 16 year old girls in contrast shocks occurring after the school year do not have significant effects suggesting that these results are not due to unobserved characteristics of households that experience unemployment shocks the results suggest that some households are not able to absorb short run economic shocks with negative consequences for children

the family and the state the immaturity of children sometimes precludes efficient arrangements between children and parents or others responsible for child care the difficulty in establishing efficient relations within families provides the point of departure for our interpretation of the heavy state involvement in the family the authors believe that a surprising number of state interventions mimic the agreements that would occur if children were capable of arranging for their care many regulations of the family improve the efficiency of family activities these interventions include subsidies to education and training social security and other old age support subsidies to births laws that limit access to divorce and the sale of children and laws that require parents permission for early marriage and other choices of children families that leave bequests can force children to repay parents for investments in human capital by reducing bequests therefore these families do not underinvest in childrens human capital by contrast families that do not leave bequests often poorer families do underinvest in children the state may subsidize schools and other training facilities to raise investments in children by poorer families to efficient levels authors modified

does globalization increase child labor abstract there is no empirical evidence that trade exposure per se increases child labor as trade theory and household economics lead us to expect the crosscountry evidence seems to indicate that trade reduces or at worst has no significant effect on child labor consistently with the theory a comparatively well educated labor force and active social policies appear to be conducive to a reduction in child labor for countries with a largely uneducated workforce the problem is not so much globalization as not being allowed to take part in it

weathering the storms credit receipt and child labor in the aftermath of the great floods 1998 in bangladesh summary in this paper we use data from a unique survey conducted in the aftermath of the 1998 floods in bangladesh to examine how the household shock child labor relationship is affected by credit receipts of households adopting the ratio of assets lost due to the floods as a likely exogenous shock proxy we find that child labor increases with the magnitude of the shock but only if households do not receive credit this suggests that following shocks child labor may be a response to non availability of credit the policy implication suggests a distinct and alternative channel in combating the economic incentives behind child labor access to credit diminishes the immediate financial burden on constrained households reducing their need for child labor

child labor the role of financial development and income variability across countries abstract in this article we examine the link between child labor and financial development using cross country data we show that child labor and financial development display a significant negative relationship which is particularly strong in the sample of low income countries and is robust for a wide range of specifications and estimators including fixed effects and instrumental variables we identify a plausible channel through which financial development affects child labor as we find that income variability has a sizable positive impact on child labor in countries where financial markets are underdeveloped although this is not the case when financial markets are developed our results suggest that policies aimed at widening access to credit could be effective in reducing the extent of child labor

parental altruism and self interest child labor among late nineteenth century american families intergenerational relationships within late nineteenth century industrial families are analyzed using several large scale contemporary household surveys nonaltruistic behavior by parents was pervasive even among families with positive assets child labor was common in certain industrial settings suggesting that child labor or nonschooling did not simply reflect parental borrowing constraints neither did physical asset transfers offset human capital losses among working youth a quantitative estimate of parental nonaltruism is derived from an equilibrium labor market model approximately 90 percent of all child earnings was implicitly competed away through lower adult wages as families migrated to areas with abundant child labor opportunities

borrowing constraints and progress through school evidence from peru this paper investigates the effect of borrowing constraints on the timing of human capital investment in a developing country by looking at how quickly children with different family backgrounds progress through the primary school system in peru the main findings are that children start withdrawing from school earlier as indicated by repetition of grades in households with lower income and durable good holdings and when children are more closely spaced behavior also differs as predicted between children from households that appear to be borrowing constrained and those that appear unconstrained copyright 1994 by mit press

child labor cause consequence and cure with remarks on international labor standards although the literature on child labor is enormous it lacks a common theoretical foundation in this paper analytical survey of this field is provided keeping in mind that this is an area where the primary reason for theorizing is ultimately to influence policy overall it is noted that the literature on child labor is an illustration of abundance and anarchy although empirical writings on child labor are numerous they are not usually founded on theory it is argued that there is much that can be done in curbing the issue of child labor several theories were studied in this paper including collaborative intervention such efforts include public action which alters the economic environment such that the parents of their own accord prefer to withdraw the child from labor force another strategy involves the government a legal intervention is enforcing a total ban on the subject although such interventions have good intentions some of them may not be feasible in general it is better to take economy wide measures against child labor and if there is to be a sector specific ban it should be based on the working conditions of that sector rather than the destination of the goods

is child labor inefficient we build a model of child labor and study its implications for welfare we assume that there is a trade off between child labor and the accumulation of human capital even if parents are altruistic and child labor is socially inefficient it may arise in equilibrium because parents fail to fully internalize its negative effects this occurs when bequests are zero or when capital markets are imperfect we also study the effects of a simple ban on child labor and derive conditions under which it may be pareto improving in general equilibrium we show that the implications of child labor for fertility are ambiguous

the policy analysis of child labor a comparative study the policy analysis of child labour c grootaert h a patrinos modelling the determinants of child labour c grootaert child labour in cote d ivoire k cartwright child labour in urban bolivia k cartwright h a patrinos child labour in the philippines c sakellariou a lall policies to reduce child labour c grootaert h a patrinos

child labour in indonesian small industries abstract we analyse the geographic incidence of child labour in small manufacturing firms in indonesia at the village level our unique data set covers virtually all indonesian villages and urban neighbourhoods it allows us to distinguish between demand and supply side determinants of child labour we show by correcting for sample selection that a number of counterintuitive results child labour being unaffected by credit access and school proximity are the result of an interplay between supply and demand side determinants credit access and school proximity reduce child labour supply but simultaneously constitute positive location factors for firms thereby increasing the demand for child labourers to effectively reduce child labour growth oriented policies such as enhancing school and credit facilities should be complemented by policies specifically geared towards increasing school attendance

a study in structural change relative earnings in wales since the 1970s the welsh economy has undergone rapid structural change in recent years this paper uses data from the new earnings survey to examine how earnings in wales changed relative to those of great britain between 1975 and 1994 there are five main findings first earnings of workers in wales have declined relative to those in great britain second the shift away from full time men has been an important factor in the fall in average relative earnings third the decline in the relative earnings of full time men is mostly explained by falling relative earnings in construction distribution and transport as well as the failure of workers in banking and financial services in wales to keep up with their counterparts in great britain fourth the shift in full time employment to health education and other services has tended to support relative earnings fifth the decline in full time men s earnings relative to great britain seems to have been caused by long run factors that are unlikely to naturally reverse the

financing patterns around the world are small firms different using a firm level survey database covering 48 countries we investigate how financial and institutional development affects financing of large and small firms our database is not limited to large firms but includes small and medium size firms and data on a broad spectrum of financing sources including leasing supplier development and informal finance small firms and firms in countries with poor institutions use less external finance especially bank finance protection of property rights increases external financing of small firms significantly more than of large firms mainly due to its effect on bank finance small firms do not use disproportionately more leasing or trade finance compared with larger firms so these financing sources do not compensate for lower access to bank financing of small firms we also find that larger firms more easily expand external financing when they are constrained than small firms finally we find suggestive evidence that the pecking order holds across countries

investment in education do economic volatility and credit constraints matter abstract recent research has focused on the effects of economic volatility on the investment in physical capital this paper shows that economic volatility and the lack of financial markets have a negative effect also on the accumulation of human capital our evidence drawn from cross country and panel regressions is that average secondary enrollment in the period 1970 1972 is negatively affected by the lack of financial markets income or employment volatility and income inequality our results are robust to different specifications of volatility the inclusion of public expenditure in education country specific effects and different sets of regressors

does child labour displace schooling evidence on behavioral responses to an enrollment subsidy this brief summarizes the results of a gender impact evaluation study entitled does child labour displace schooling evidence on behavioral responses to an enrollment subsidy conducted between 1995 and 1996 in bangladesh the study observed that the subsidy increases schooling but its effect on child labour is ambiguous the subsidy increased schooling by far more than it reduced child labour substitution effects helped protect current incomes from the higher school attendance induced by the subsidy substitution effects helped protect current incomes from the higher school attendance induced by the subsidy the reduction in the incidence of child labour by boys girls represents about one quarter eighth of the increase in their school enrollment rate

risk financial markets and human capital in a developing country this paper explores the link between financial market incompleteness and human capital accumulation we examine how child school attendance responds to seasonal fluctuations in the income of agrarian households using panel data from rural india to pinpoint market imperfections we study responses to aggregate and idiosyncratic as well as to anticipated and unanticipated income shocks our main finding is that seasonal fluctuations in school attendance are a form of self insurance but one which does not result in a substantial loss of human capital on average

will trade sanctions reduce child labour the role of credit markets abstract we examine the interaction between credit markets trade sanctions and the incidence of child labour in a two good two period model with unequally wealthy households both poverty and poor education quality inter alia are important determinants of child labour the incidence of child labour decreases as we move from the case of borrowing constraints to the case in which poor households can borrow freely from rich ones and then to the case of perfect international credit markets trade sanctions can increase child labour especially among poor households a possibility that decreases as their access to credit improves

an economic analysis of child labor abstract this paper shows how poverty in combination with credit constraints can give rise to the phenomenon of child labor in developing countries it further shows how banning child labor can reduce the welfare of the households intending to send their children to work and suggests some alternative policies

government in transition abstract the speed of economic reforms is not the only important determinant of the success of the transition to a market economy the transition of government from a communist state to an institution supporting a market economy is as critical survey evidence shows that russia lags significantly behind poland in the transition of its government which may account for its inferior economic performance despite adopting similar economic reforms i argue that the lack of turnover of old communist politicians and the creation of inappropriate electoral and fiscal incentives for these politicians may account for the poor performance of the russian government and suggest some strategies for improving the situation