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

does child labor decline with improving economic status between 1993 and 1997 child labor in vietnam declined by nearly 30 percent while the country s gdp grew by nearly 9 percent per year on average using a simple nonparametric decomposition i investigate the relationship between improvements in per capita expenditure and child labor with a panel data set that spans this episode of growth in vietnam improvements in per capita expenditure can explain 80 percent of the decline in child labor that occurs in households whose expenditures improve enough to move out of poverty this finding suggests a previously undocumented role for economic growth in the amelioration of child labor

a test for moral hazard in the labor market contractual arrangements effort and health moral hazard plays a central role in many models depicting contractual relationships involving worker effort the authors show how time series information on worker health consumption and work time can be used to measure the effort effects of payment schemes estimates from longitudinal data describing farming rural households indicate that time wage payment schemes and share tenancy contracts reduce effort compared to piece rate payment schemes and on farm employment the evidence also indicates consistent with moral hazard that the same workers consume more calories under a piece rate payment scheme or in on farm employment than when employed for time wages copyright 1994 by mit press

fiscal spillovers in the euro area this paper analyses the dynamic effects of fiscal imbalances in a given emu member state on the borrowing costs of other countries in the euro area the estimation of a multivariate multi country time series model specifically a global var or gvar using quarterly data for the emu period suggests that euro denominated government yields are strongly linked with each other however financial markets seem to be able to discriminate among different issuers consequently fiscal imbalances in italy and in other peripheral countries should be closely monitored by their emu partners and the european institutions

biased signaling and yardstick comparisons in a sovereign debt market abstract this paper develops a sovereign debt model in which governments are privately informed about their likelihood of default but can themselves have a biased perception of this likelihood i show that in this setup government borrowing acts as a signal that is only partially informative about fundamental default probabilities and bond prices do not necessarily reflect true credit risk i also show that in a two country version of the model correlations between the two countries induces yardstick comparisons and the borrowing decision of one government affects the bond price received by the other whether the information spillover increases or decreases the distortion created by the bias depends on the extent to which borrowing signals reinforce each other

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

timing and real indeterminacy in monetary models an increasingly common approach to the theoretical analysis of monetary policy is to ensure that a proposed policy does not introduce real indeterminacy and thus sunspot fluctuations into the model economy policy is typically conducted in terms of directives for the nominal interest rate this paper uses a discrete time money in the utility function model to demonstrate how seemingly minor modifications in the trading environment result in dramatic differences in the policy restrictions needed to ensure real determinacy these differences arise because of the differing pricing equations for the nominal interest rate

economic determinants of the nominal treasury yield curve abstract macroeconomic shocks account for most of the variability of nominal treasury yields inducing parallel shifts in the level of the yield curve we develop a new approach to identifying macroeconomic shocks that exploits model based empirical shock measures technology shocks shift yields through their effect on expected inflation and the term premium shocks to preferences for current consumption affect yields through their impact on real rates and expected inflation for both shocks the systematic reaction of monetary policy is an important transmission pathway we find little evidence that fiscal policy shocks are an important source of interest rate variability

the economics of child labor if child labor as a mass phenomenon occurs not because of parental selfishness but because of the parents concern for the household s survival the popular argument for banning child labor loses much of its force however this assumption about parental decision making coupled with the assumption of substitutability in production between child and adult labor could result in multiple equilibria in the labor market with one equilibrium where children work and another where adult wage is high and children do not work the paper establishes this result and discusses its policy implications copyright 1998 by american economic association

nominal price rigidity money supply endogeneity and business cycles abstract this paper investigates the ability of nominal price rigidity to explain the co movement of inflation with the cyclical component of output observed in the post war u s data a dynamic general equilibrium model is constructed with the introduction of monopolistic competition and nominal price rigidity in a standard real business cycle model allowing for an endogenous money supply rule it is then demonstrated that sticky price models can explain the observed associations between movements in inflation and output much better than flexible price models this result depends little on whether money supply is assumed to be endogenous or not

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

can fiscal spending stimulate private consumption abstract empirically government expenditure shocks seem to crowd in private consumption while neoclassical and new keynesian models predict crowding out we derive conditions under which a government in utility specification in a sticky price model helps to reconcile theory and evidence

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

child labor school attendance and intrahousehold gender bias in brazil an extensive survey data set of brazilian households is used to test whether intrahousehold gender bias affects the decisions of mothers and fathers to send their sons and daughters to work and to school an intrahousehold allocation model is examined in which fathers and mothers may affect the education investment and the child labor participation of their sons and daughters differently because of differences in parental preferences or differences in how additional schooling affects son s and daughter s acquisition of human capital brazilian household survey data for 1998 are used to estimate the impact of each parent s education on the labor market participation and school attendance of their sons and daughters for labor market participation the father s education has a greater negative impact than the mother s education on the labor status of sons the father s education also has a greater impact on son s labor status than on daughter s for schooling decisions the mother s education has a greater positive impact than the father s education on daughter s school attendance but fathers have a greater positive impact on sons school attendance than on daughter s

the impact of income and non income shocks on child labor evidence from a panel survey of tanzania summary this paper investigates the impact of income and non income shocks on child labor using a model in which the household maximizes utility from consumption as well as human capital development of the child we also investigate if access to credit and household assets act as buffers against transitory shocks our results indicate significant effects of agricultural shocks on the child s overall work hours and agricultural work hours with higher effects for boys crop shocks also have significant adverse effects on school attendance with girls experiencing a more than 70 increase in the probability of quitting schooling the results also indicate that access to a bank account has a buffering effect on the impact of shocks on child hunger having a bank account reduces both male child labor and household work hours of a girl child while assets reduce working hours of girls we do not find it having a significant effect on boys we also do not see assets to act as a buffer against shocks

was it real the exchange rate interest differential relation over the modern floating rate period in this paper we explore the relationship between real exchange rates and real interest rate differentials in the united states germany japan and the united kingdom contrary to theories based on the joint hypothesis that domestic prices are sticky and monetary disturbances are predominant we find little evidence of a stable relationship between real interest rates and real exchange rates we consider both in sample and out of sample tests one hypothesis that is consistent with our findings is that real disturbances such as productivity shocks may be a major source of exchange rate volatility this paper investigates the empirical relationship between major currency real exchange rates and real interest rates over the modern post march 1973 flexible rate experience the exchange rates examined here include the dollar mark dollar yen and dollar pound rates our two major findings are as follows first the data do not indicate a strong correspondence between real interest rate differentials short term or long term and real exchange rates this finding appears to conflict with the predictions of most monetary and portfolio balance models of exchange rate determination though the conflict can be substantially reconciled if aggregate disturbances are primarily real in nature i e changes in productivity tastes etc it is true that in many cases the sign of the estimated exchange rate interest rate differential relationship is consistent with the possible predominance of financial market disturbances but the relationship is not stable enough to be statistically significant second although one does find some evidence of a unit root in both real exchange rates and long term but not shortterm real interest differentials these two series do not appear to be linearly cointegrated hence the nonstationarity or near nonstationarity in the two series cannot be attributed to the same factor in section i we briefly describe a class of small scale monetary models of exchange rate determination the importance of this class of models for empirical work derives from its strong predictions about how the exchange rate will move

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

discrimination fact or fiction an examination using an alternative approach women earn less than men blacks earn less than whites these facts are blatantly observable in the economy with the proliferation of civil rights legislation in the last two decades social scientists have become increasingly concerned with the determination of the wage gap attributable to discrimination because workers have different productivities statistical methods have been used to isolate the discrimination effect from wage differences justified by differences in productivity the primary method estimates an equation with wages expressed as a function of productivity and sex or race since productivity cannot be directly observed a number of proxies for productivity have been used such as education tenure and experience statisticians 11 have shown that the necessity of using proxies results in statistical biases which may tend to overestimate discrimination they have shown that mismeasuring any independent variable can impart a bias on each regression coefficient thereby causing a severe misestimate of discrimination these errors are proportional to the degree of mismeasurement the relative degree of error variance in the independent variables as well as to the amount of intercorrelation between each variable and race or

interest rate co movements global factors and the long end of the term spread the decoupling of us short and long interest rates has been a distinctive feature of the 2000s we employ recent advances in panel econometrics to document this disconnect for industrial countries and link it to a global latent factor in long term rates we investigate whether international forces such as global inflation global output or the global savings glut may be behind this global latent factor the savings glut is the most likely contender suggesting that reserve accumulation and a search for yield from emerging markets has lowered long rates internationally driving a wedge between domestic short and long rates

world real interest rates a global savings and investment perspective over the past 15 years long term interest rates have declined to levels not seen since the 1970s this article explores possible shifts in global savings and investment that have led to this fall in the world real interest rate there are several key findings first the authors identify the relative weakness in investment demand as more important than the relative increase in desired global savings to explain the decline in global interest rates second the results indicate that the key factors explaining movements in savings and investment are variables that evolve relatively slowly over time such as labour force growth and age structure the conclusions suggest that over the coming years world real interest rates are likely to continue to adjust slowly reflecting long term trends

household income as a determinant of child labor and school enrollment in brazil evidence from a social security reform abstractthis article studies the effects of household income on labor participation and school enrollment of children aged 10 14 in brazil using a social security reform as a source of exogenous variation in household income i find that increased benefits are associated with increases in school enrollment for girls as well as a smaller reduction in their labor participation but i find no effects for boys i also uncover evidence that the gender of the benefit receiver matters for girls labor variables only benefits received by females reduce girls work

the effect of food price changes on child labour evidence from uganda abstractmost people in developing countries spend up to 60 per cent of their income on food even though the majority of them are farmers hence a change in food prices affects both their revenue

cross sectional estimation in marketing direct versus reverse regression empirical results in marketing research are often derived from linear additive models estimated on cross sectional data an underlying assumption of these model specifications is that each exogenous variable contributes an additive effect to the endogenous variable measuring these additive effects is problematic if some components of the endogenous variable are not observable to the researcher reliance on observable correlates to capture those aspects of the endogenous variable might require reverse regression to ensure unbiasedness of the estimated effects in contrast to direct regression used exclusively in marketing research reverse regression first estimates the effect of the endogenous variable on those correlates and then derives unbiased estimates of the additive effect of other exogenous variables specified in the basic model this paper discusses the reverse regression approach relying on recently published analytic results a statistically powerful and analytically simple test is developed which allows the marketing researcher to assess a priori whether direct or reverse regression will provide unbiased parameter estimates an empirical illustration focuses on the measurement of potential market share rewards for pioneering businesses contained in the pims data base other areas in marketing where the issue of direct versus reverse regression is pertinent are mentioned

rejoinder to comments on reverse regression fairness and employment discrimination 1984 rejoinder to comments on reverse regression fairness and employment discrimination journal of business economic statistics vol 2 no 2 pp 126 139

you get what you pay for schooling incentives and child labor abstract can schooling promotion deter child participation in hazardous forms of child labor we examine two interventions intended to promote schooling and deter child labor for children associated with carpet factories in kathmandu the first intervention provides scholarships for school related expenses the second provides the scholarship and an in kind stipend conditional on school attendance paying for schooling expenses promotes schooling but only at the beginning of the school year when most schooling expenses occur the scholarship combined with the conditional stipend increases school attendance rates by 11 decreases grade failure rates by 46 and reduces carpet weaving by 48 financial support lasted one year effects on schooling and weaving do not persist past the year of support you get what you pay for when schooling incentives are used to combat hazardous child labor

a little help may be no help at all size of scholarships and child labour in nepal in the empirical literature on child labour and income transfer programmes evidence has been lacking on whether and how the size of transfer influences the impact on child labour this paper fin

changing households investment behaviour through social interactions with local leaders evidence from a randomised transfer programme this article analyses the role of interactions with local leaders in amplifying poor households investment response to a social programme the causal effect of social interactions is identified through the randomised assignment of leaders and other beneficiaries to three different interventions aimed at increasing human capital and productive investments social interactions are found to augment programme impacts on households investments in education nutrition and income generating activities and to affect households attitudes towards the future

effects of public policy on child labor current knowledge gaps and implications for program design many policy instruments can be used to address or affect child labor even if they are implemented to achieve other objectives from a theoretical point of view however the impact of these policies on child labor is undetermined this paper discusses the evidence generated by rigorous evaluations on the impact on child labor of labor market programs conditional and unconditional transfers and microcredit among other social programs and interventions the study finds that although transfer programs generally tend to reduce child labor other policies risk increasing child labor especially if they affect households productive opportunities the findings also point to knowledge gaps that should be addressed in future evaluations while progress has been made over the past decade there is still much to learn about the effects of public policy on the labor participation of many children in developing countries

the economics of child labor comment in a recent paper kaushik basu and pham hoang van bv 1998 develop an important and very interesting model in which a fairly productive economy exhibits multiple equilibria with children working in at least one they identify two assumptions as essential to this result the first which they call the luxury axiom is that a family sends its children to the labor market only if its income from sources other than child labor is very low the second is embodied in their substitution axiom which states that from the point of view of firms child labor is substitutable for adult labor in this comment we show that in addition to these two assumptions about the micro level behavior of households and firms there is also an essential macro level assumption that may be termed the distribution axiom income or wealth from non labor sources must be sufficiently concentrated in the hands of a few agents we establish that if non labor income is distributed with sufficient equality a market equilibrium with child labor cannot exist in the bv model beyond their contribution as an extension of bv s theory our results formalize a proposition implicit in recent policy discussions of child labor christiaan grootaert and ravi kanbur 1995 note that as household level poverty is well known to be the major cause of child labor g eneral economic development equitably distributed is the best and most sustainable way of reducing child labor p 198 emphasis added policy documents from the international labor organization ilo have long conveyed this view and now the world bank appears to as well peter fallon and zafiris tzannatos 1998 there is a growing recognition that while economic development and development policies are necessary to eliminating child labor they are not always sufficient on their own distributional considerations matter indeed in the case in which bv s model yields multiple equilibria th this abstract was borrowed from another version of this item

fiscal policy and interest rates in europe the appetite for fiscal discipline has been steadily declining among most industrial countries in the past fiscal profligacy would have been punished by markets with higher interest rates and in some cases also exchange rate depreciation however in post emu europe exchange rate markets no longer discipline the fiscal behaviour of national governments perhaps more crucially even the interest rate punishment to fiscal indiscipline is highly uncertain with academic opinions being quite divided on this issue this paper takes a close look at the link between fiscal policy and interest rates in the european context the key finding is that an expansionary fiscal policy in one emu member will have an effect both on its spreads and on the overall level of interest rates for the currency union as a whole with the second effect however being quantitatively much more significant this suggests that there are indeed substantial spillovers through the interest rate channel among fiscal policies of member countries to limit countries incentive to run expansionary fiscal policies a set of rules like those embedded in the stability and growth pact is then needed some weak evidence is also found that after emu interest rate spillovers seem to be more significant for high debt countries with unsustainable fiscal policies reflecting perhaps market concerns about a possible sovereign bail out or the impact of financial distress there may be a case then for imposing tighter rules on high debt countries riccardo faini

the impact of conditional cash transfers on the amount and type of child labor this paper analyzes the impact of conditional cash transfers on the amount and type of child labor in poor households it first develops a simple theoretical model where child labor and training are chosen to maximize inter temporal household income given constraints to social household and child endowments then it conducts an empirical analysis using the randomized trial data collected to evaluate the 2006 nicaragua conditional cash transfer cct program this social program transferred wealth to poor families in rural areas of the country conditional on children s school attendance and health check ups one third of the beneficiaries received in addition a wealth transfer to begin a non agricultural business the paper finds that the cct program had a selective impact on the volume and quality of child labor reducing it in the aggregate and steering it toward skill forming activities specifically the program appears to have reduced child labor for household chores and traditional farming while increasing it for non traditional activities related to commerce and retail these require the child to develop basic skills in reading and writing arithmetic and interpersonal relationships moreover the paper finds that the source behind the increase in the better quality type of child labor is not the basic component of the program but distinctively its business grant intervention

world public debt and real interest rates real interest rates appear to have risen in virtually all industrialized countries in the 1980s and 1990s relative to levels that prevailed in earlier decades there is concern that this may reflect higher public debt which is crowding out private sector activity there has also been increasing international capital market integration implying that interest rates in any country may be sensitive to global fiscal developments this paper estimates the effects of such fiscal developments on real interest rates in nine industrial countries the results imply that the increase in oecd wide government debt since the late 1970s was a major factor in the rise in real interest rates copyright 1999 by oxford university press

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

fiscal policy in general equilibrium this paper studies four classic fiscal policy experiments within a quantitatively restricted neoclassical model the authors main findings are as follows 1 permanent changes in government purchases can lead to short run and long run output multipliers that exceed one 2 permanent changes in government purchases induce larger effects than temporary changes 3 the financing decision is quantitatively more important than the resource cost of changes in government purchases and 4 public investment has dramatic effects on private output and investment these findings stem from important dynamic interactions of capital and labor absent in earlier equilibrium analyses of fiscal policy copyright 1993 by american economic association

real interest rates and inflation an ex ante empirical analysis we develop a method of measuring ex ante real interest rates using prices of index and nominal bonds employing this method and newly available data we directly test the fisher hypothesis that the real rate of interest is independent of inflation expectations we find a negative correlation between ex ante real interest rates and expected inflation this contradicts the fisher hypothesis but is consistent with the theories of mundell and tobin darby and feldstein and stulz we also find that nominal interest rates include an inflation risk premium that is positively related to a proxy for inflation uncertainty

corruption tax evasion and the laffer curve in a corrupt tax administration a rise in tax ratesets off complicated strategic moves by both taxpayersand administrators it is shown that in somecircumstances this may bring about laffer likebehavior of overall tax revenue i e a higher taxrate results in smaller net revenue for thegovernment further a more intense tax effort byincreasing the number of returns audited may alsoreduce net revenues finally if tax and fine ratespositively influence the level of corruption in theadministration these outcomes become more likely

achieving optimal fines for political bribery a suggested political reform allowing appropriately high fines for political bribery would eliminate 1 the large and allocatively arbitrary bribes paid to our most senior retiring politicians 2 the more moderate but ubiquitous and still allocatively arbitrary bribes paid to less senior but strategically successful politicians and 3 the permanent loss through censure or expulsion of some highly proficient but strategically less successful legislative representatives moreover with fines appropriately set the incentives theoretically describing the entire political system would be elevated from allocative arbitrariness to approximately pareto optimal levels

long term real interest rates evidence on the global capital market the steady removal of capital controls and the consequent increase in international capital flows has led to a growing belief that there is now one global capital market with a single world real interest rate at its core we review the evidence on international real interest rate behaviour using alternative measures of real interest rates including those obtained from the growing set of inflation adjusted government bonds using a range of statistical tests we find that it is hard to argue that real interest rates are converging to single world rate though international factors are important moreover the large and persistent differences in real interest rates across countries cannot be explained in terms of real exchange rate expectations macroeconomic indicators from the countries concerned appear to play some role in accounting for these differences copyright 1999 by oxford university press

heterogeneous impacts of conditional cash transfers evidence from nicaragua abstract in the last decade the most popular policy tool used to increase human capital in developing countries has been the conditional cash transfer program a large literature has shown significant mean impacts on schooling health and child labor this paper examines heterogeneous effects using random assignment data from the red de proteccion social in rural nicaragua using interactions between the targeting criteria and the treatment indicator estimates suggest that children located in more impoverished localities experienced a larger impact of the program on schooling in 2001 but this finding is reversed in 2002 estimated quantile treatment effects indicate that there is considerable heterogeneity in the impacts of the program on the distribution of food expenditures as well as total expenditures in particular households at the lower end of the expenditure distribution experienced a smaller increase in expenditures this study also presents evidence of the rank invariance assumption to hel

child labor and household wealth theory and empirical evidence of an inverted u some studies on child labor have shown that at the level of the household greater land wealth leads to higher child labor thereby casting doubt on the hypothesis that child labor is caused by poverty this paper argues that the missing ingredient may be an explicit modeling of the labor market we develop a simple model which suggests the possibility of an inverted u relationship between land holdings and child labor using a unique data set that has child labor hours it is found that controlling for child household and village characteristics the turning point beyond which more land leads to a decline in child labor occurs around 4 ac of land per household c 2009 published by elsevier b v