a defense of compulsive measures against child labor abstract this research characterizes policies likely to trigger the onset of a growth enhancing fertility transition even for an economy with initially a low per capita income the environment considered is one where children s time has an economic value and schooling and child labor are the main competing claims on a child s time using a one parent family overlapping generations model i argue that compulsive measures against child labor are justifiable as an integral part of an intervention that combines incentives and regulations in order to eliminate child labor the analysis highlights fertility and child labor dynamics as shaped by the relative cost of children

accounting for labor gaps abstract this study explains the impact of taxes and labor market institutions on the total hours observed in france germany the united kingdom and the united states we develop a balanced growth model with matching frictions in the labor market distinguishing between the extensive margin and intensive margin of labor supply we show that i hours are more sensitive to changes in taxes whereas employment reacts more to shifts in labor market institutions and ii a substitution effect exists between employment and hours counterfactual experiments show that if france had experienced the same trend in labor market institutions as the united states its employment rate would have increased by 25 percentage points whereas its number of hours worked per employee would have reduced by 1 percentage point if france had chosen the us paths of both taxes and labor market institutions then its employment rate would have been larger by 20 percentage points and the number of hours worked by employees would have been larger by 3 percentage points than the current one a situation observed before the 1970s

does schooling cause growth a number of economists find that growth and schooling are highly correlated across countries a model is examined in which the ability to build on the human capital of one s elders plays an important role in linking growth to schooling the model is calibrated to quantify the strength of the effect of schooling on growth by using evidence from the labor literature on mincerian returns to education the upshot is that the impact of schooling on growth explains less than one third of the empirical cross country relationship the ability of reverse causality to explain this empirical relationship is also investigated

political repression and child labour theory and empirical evidence most normative studies on child labour arrive at the conclusion that child labour is detrimental to social welfare child labour is however still prevalent in many developing countries even though in many of these countries it is forbidden by law in this paper we develop a political economic model that explains lenient enforcement of existing child labour legislation the most important implication of our model is that in countries with repressive political regimes enforcement is more lenient and child labour thus more prevalent than in countries enjoying political freedom we test this implication and find that it is confirmed by the data

income distribution and macroeconomics this paper analyzes the role of wealth distribution in macroeconomics through investment in human capital it is shown that in the presence of credit markets imperfections and indivisibilities in investment in human capital the initial distribution of wealth affects aggregate output and investment both in the short and in the long run as there are multiple steady states this paper therefore provides an additional explanation for the persistent differences in per capita output across countries furthermore the paper shows that cross country differences in macroeconomic adjustment to aggregate shocks can be attributed among other factors to differences in wealth and income distribution across countries

spatial competition with heterogeneous firms i model endogenous horizontal and vertical product differentiation with arbitrarily many heterogeneous firms firms are asymmetric in that they differ in their marginal costs i prove that under an equilibrium refinement all economically relevant firm outcomes are uniquely determined across all strict subgame perfect nash equilibria there are two central results first a firm s price market share and profit are independent of its neighbors marginal costs conditional on the average marginal cost in the market second more productive firms are more isolated all else equal in particular the distance between two firms is strictly decreasing in their average marginal cost

information provision by interest groups we investigate interest groups incentives to inform consumers about the damaging practices of firms and the impact such an ig has on firms technology choices the ig aims to reduce the production of some bad say pollution it can at a cost investigate firms production practices and inform consumers about its findings since consumers care about the environment revealing differences in pollution levels between firms leads to vertical product differentiation the information by shifting sales from dirty towards clean firms reduces pollution we show that the ig is most inclined to investigate firms in relatively competitive industries and that the threat of being unmasked as a polluter prompts dirty firms to adopt a clean technology

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

why is child labor illegal abstract we present a theory of the emergence of laws restricting child labor or imposing mandatory education that is consistent with the fact that poor parents tend to oppose such laws we find that if altruistic parents are unable to commit to educating their children child labor laws can increase the welfare of higher income parents in an ex ante sense on the basis of an empirical analysis of latin american household surveys we demonstrate that per capita income in the country of residence has the predicted effect on child labor supply even after controlling for other household characteristics

the effects of compulsory schooling on growth income distribution and welfare abstract in this paper we consider an olg model with productive capital and human capital affecting the quality of labor in each generation parents invest in their children s education but disregard its external effect on the aggregate production function government intervention in providing compulsory schooling increases economic growth along the equilibrium path while the intragenerational income distribution becomes more equal also in the long run the majority of individuals in each generation are better off due to compulsory schooling

cheap talk with two audiences these problems have in common a simple structure an informed sender says something to two interested but uninformed receivers who then take actions based on their beliefs these actions affect the sender as well as the receivers in this paper we study how costless nonverifiable claims cheap talk can affect these beliefs and hence the actions and how the incentives for truthful revelation to one receiver are affected by the presence of the other we then ask how welfare is affected by whether claims are made in public or in private as some of the above examples suggest public messages may be more credible than private messages addressed to either audience one possibility is that the presence of one audience can discipline the sender s relationship with the other we call this one sided

parental choice of human capital investment abstract in this paper we present a model in which parents make schooling decisions for their children we compare two educational regimes public and private education in the private education regime all human capital investment decisions are made by individuals under public education the government uses income tax revenue to finance one input to schooling in the private education regime cycles may occur even though there are constant returns to scale in the augmentable factors in the public education regime there are no cycles but poverty traps may occur

policy analysis in a matching model with intensive and extensive margins the large differences in hours of work across rich countries reflect large differences in both employment to population ratios and hours per worker we imbed the canonical model of labor supply into a matching model to produce a model with operative intensive and extensive margins and assess the implications of several policies for changes along the two margins tax and transfer policies lead to decreases along both margins whereas regulations that increase the cost of creating or maintaining a job may lead to decreases in employment but necessarily lead to increases in hours per worker

on the distributional consequences of child labor legislation this article studies the effects of child labor legislation on human capital accumulation and the distribution of wealth and welfare we calibrate our model to u s data circa 1880 and find that the consequences of restricting child labor or providing tax financed education depend on the main source of individual household income households with significant financial assets unambiguously lose from government intervention whereas high wage workers benefit most from a child labor ban and low wage workers benefit most from free education introducing free education results in substantial welfare gains whereas a child labor ban induces small welfare losses

the macroeconomics of child labor regulation we develop a positive theory of the adoption of child labor laws workers who compete with children in the labor market support a child labor ban unless their own working children provide a large fraction of family income fertility decisions lock agents into specific political preferences and multiple steady states can arise the introduction of child labor laws can be triggered by skill biased technological change which induces parents to choose smaller families the theory can account for the observation that in britain regulations were first introduced after a period of rising wage inequality and coincided with rapid fertility decline

consumption savings decisions with quasi geometric discounting we study the consumption savings problem of an infinitely lived rational consumer who has time inconsistent preferences in the form of quasi geometric discounting the consumer operates a weakly concave production function and must simply divide current resources into current consumption and savings there is no uncertainty a solution to the consumer s problem is a subgame perfect equilibrium of a dynamic game between the consumer s successive selves we show that this game has a continuum of equilibria in stationary markov strategies not only is the stationary point of the consumer s asset holdings indeterminate but each stationary point has a continuum of dynamic paths converging to it the savings policy rules underlying these dynamic paths are step functions

on the compassion of time limited welfare programs supporters of recent welfare reforms argue that time limits and other eligibility restrictions serve recipients we present a simple model of agents with present biased preferences to investigate the theoretical validity of this claim we first identify four types of outcome that describe the behavior of a present biased agent in the absence of time limits we then show that the behavioral consequences of time limits are contingent on which outcome characterizes the agent s behavior in the absence of time limits we show that under some conditions the imposition of time limits may improve the wellbeing of welfare recipients evaluated both in terms of long run time consistent utility and the periodone self s utility this benefit of time limits may come either from allowing the welfare eligible to start working earlier than they otherwise would or contrary to the intent of the reforms from allowing them to postpone working d 2002 elsevier b v all rights reserved

assessing the impact of a school subsidy program in mexico using a social experiment to validate a dynamic behavioral model of child schooling and fertility this paper uses data from a randomized social experiment in mexico to estimate and validate a dynamic behavioral model of parental decisions about fertility and child schooling to evaluate the effects of the progresa school subsidy program and to perform a variety of counterfactual experiments of policy alternatives our method of validation estimates the model without using post program data and then compares the model s predictions about program impacts to the experimental impact estimates the results show that the model s predicted program impacts track the experimental results our analysis of counterfactual policies reveals an alternative subsidy schedule that would induce a greater impact on average school attainment at similar cost to the existing program

green business and blue angels this paper presents a model of a monopolist svoluntary overcompliance with legal environmentalstandards under asymmetric information about thefirm s environmental impacts the key assumptions are the existence of quality premia for environmentalsoundness a positive but imperfect degree ofmonitoring and adaptive consumer expectations conditions necessary for overcompliance to arise in aprofit maximizing equilibrium are derived the effectsof a third party eco labeling system are analyzed itis shown that the existence of an independent labelingauthority increases the likelihood of overcomplianceto be profit maximizing moreover firms might have anincentive to lobby for the introduction of such asystem the effect of consumers risk preferences andan instrument for preventing greenwash companieslying about their environmental performance is alsodiscussed

relying on the information of interested parties we investigate the conventional wisdom that competition among interested parties attempting to influence a decisionmaker by providing verifiable information elicits all relevant information we find that if the decisionmaker is strategically sophisticated and well informed about the relevant variables and about the preferences of the interested party or parties competition may be unnecessary to achieve this result if the decisionmaker is unsophisticated or not well informed competition is not generally sufficient if the interested parties interests are sufficiently opposed however or if the decisionmaker is seeking to advance the parties welfare then competition can reduce or even eliminate the decisionmaker s need for prior knowledge about the relevant variables and for strategic sophistication in other settings only the combination of competition among information providers and a sophisticated skepticism is sufficient to allow effective decisionmaking