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

the expansion of modern agriculture and global biodiversity decline an integrated assessment the world is banking on a major increase in food production if the dietary needs and food preferences of an increasing and increasingly rich population are to be met this requires the further expansion of modern agriculture but modern agriculture rests on a small number of highly productive crops and its expansion has led to a significant loss of global biodiversity ecologists have shown that biodiversity loss results in lower plant productivity while agricultural economists have linked biodiversity loss on farms with increasing variability of crop yields and sometimes lower mean yields in this paper we consider the macro economic consequences of the continued expansion of particular forms of intensive modern agriculture with a focus on how the loss of biodiversity affects food production we employ a quantitative structurally estimated model of the global economy which jointly determines economic growth population and food demand agricultural innovations and land conversion we show that even small effects of agricultural expansion on productivity via biodiversity loss might be sufficient to warrant a moratorium on further land conversion

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

child labor and agricultural shocks this paper examines the relationship between household income shocks and child labor in particular we investigate the extent to which transitory income shocks lead to increases in child labor and whether household asset holdings mitigate the effects of these shocks using data from a household panel survey in tanzania we find that both relationships are significant we investigate mechanisms that could account for these results including buffer stocks and borrowing

cournot oligopoly reconsidering cournot the cournot equilibrium is consistent this article uses an infinite regress model of firm level decisions to find a rational expectations equilibrium for a duopoly and to relate concepts of conjectural variations and consistency to the cournot equilibrium the model derives a conjectural variation instead of assuming it in particular the cournot equilibrium is shown to be consistent in the usual sense of the literature the conflict between notions of consistent conjectures and the cournot equilibrium results from a compounding problem inherent in the earlier models we extend these results to the n firm problem alternatively the article can be viewed as providing a purely static model that generates the cournot equilibrium without reference to conjectures or quasi dynamics

industrial organization and public policy competition policy has been dominated by politics industrial organization can expect to exert an influence only insofar as it commands superior knowledge that is true with respect to the long run since economies of scale are limited to the short run competition is feasible in the long run therefore a trade off approach seeking to identify optimal market structures is misleading competition policy should instead be directed at prohibiting protective strategies of incumbents to deter entry competition being a process of creative destruction political viability of a competitive order requires competition policy to be supplemented by a social welfare policy

dynamic capacity planning using strategic slack valuation in this paper we analyze a particular aspect of capacity planning that is concerned with the active trading of production facilities for a homogenous product market we provide a theoretical rationale for the valuation and trading of these assets based on a metric of strategic slack we show that trading production assets with non additive portfolio profitability involves complex coordination with multiple equilibria and that these equilibria depend on the foresight in the planning horizon using the concept of strategic slack we have analyzed the dynamics of market structure the impact of asset trading on the level of production of the industry and to derive boundaries on the value of the traded assets moreover through computational learning the formulation is applied to a large oligopolistic electricity market showing that plant trading tends to lead to increased market concentration high prices lower production and a decrease in consumer surplus

child labor and schooling response to changes in coca production in rural peru abstract coca eradication and interdiction are the most common policies aimed at reducing the production and distribution of cocaine in the andes but little is know about their impact on households this paper uses the shift in the production of coca leaves from peru to colombia in 1995 to analyze the indirect effects of the anti coca policy on children s allocation of time after different sensitivity checks the results indicate that a decrease in coca production is associated with increases in work and hours children living in coca growing states devote to work within and outside the household with no effects on schooling outcomes these findings suggest a previously undocumented indirect effect of drug policies on household behavior

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

estimating the causal effect of forced eradication on coca cultivation in colombian municipalities summary colombia has aggressively pursued forced coca eradication to reduce the amount of land that agricultural households devote to illegal crops however few rigorous empirical studies have assessed its causal effect on land allocation decisions i use a 6 year panel covering the entire country for the years 2001 06 to estimate this effect i instrument eradication with changes in the expected cost of protecting eradication crews as they get far from the airports used as a point of departure estimates show the causal effect of a 1 increase in eradication to be approximately a 1 increase in coca cultivation

child labor in the global economy few issues in developing countries draw as much popular attention as child labor this paper begins by quantifying the extent and main characteristics of child labor it then considers the evidence on a range of issues about child labor fundamentally child labor is a symptom of poverty low income and poor institutions are driving forces behind the prevalence of child labor worldwide this study concludes by assessing the policy options to reduce worldwide child labor

blessing and curse the gold boom and local development in colombia abstract i provide a microeconomic channel for the resource curse using the boom in colombian gold mining as a case study identification strategies exploit trend changes in international gold prices after 2002 and regional gold production capabilities as measured by water supply the majority of gold mining in colombia is placer mining and water is important for industrial gold production i find that the gold boom decreases local unemployment in the short term by 3 5 however given the lack of capacity to effectively ban child labor these economic opportunities are also available for children my results indicate that because of the gold boom the probability that a child works increases by 9 3 and school attendance decreases by 23 9 capital accumulation seems to be permanently hurt since the probability that a child is lagging three or more grades behind increases by 9 these effects are only discernible after 2002 the human capital results can be retrieved from different databases furthermore results are robust to a series of robustness checks restricting the sample to gold producers and their neighbors using alternative sets of controls and restricting the sample to non migrants resources are a blessing in the short term but a curse for long term economic growth if human capital is productive

the global child labor problem what do we know and what can we do the problem of child labor has moved from a matter of regional and national concern to one of international debate and possible global persuasion and policy intervention in crafting policy for mitigating this enormous problem of our times it is important to start with a proper theoretical and empirical understanding of the phenomenon what gives rise to child labor and what are its consequences what interventions might end child labor without hurting children a well meaning but poorly designed policy can exacerbate the poverty in which these laboring children live even leading to starvation the article surveys the large and rapidly growing literature on this subject focusing mainly on the new literature based on modern economic theory and econometrics it also looks at some of the broad policy implications of these new findings with the objective of contributing to better informed discussion and policy design

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

child labour a review of recent theory and evidence with policy implications in recent years a growing number of authors have turned their attention to the question of why children work the purpose of this paper is to review some of the more recent theoretical and empirical research into the topic of child labour and to illustrate the fact that no one factor on its own can account for the phenomenon of child labour therefore policies aimed at eradicating child labour will need to address the broad range of underlying factors that contribute to the incidence of child labour such as poverty market imperfections and access to education

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

crop choice school participation and child labor in developing countries cotton expansion in burkina faso we estimate the effects of changes in cotton adoption on children s schooling and child labor in rural burkina faso using time and spatial variations we find evidence that expansion of cotton farming has led to an increase in enrollment and to a reduction of participation in child labor for girls there are however no detectable effects on boys in theory cotton adoption could increase household income leading to increased demand for schooling and reduced child labor on the other hand because children are productive on cotton farms adoption of cotton could increase the opportunity cost of child time and the demand for child labor we provide suggestive evidence showing that boys are more productive than girls on cotton farms taken together the results suggest that the income effect from cotton adoption might have been larger than the wage effect for girls hence the overall positive impacts on school enrollment for girls

a strategic production costing model for electricity market price analysis production costing models pcms have been extensively used to analyze traditional power systems for decades these tools are based on the costs of production but in oligopolistic electricity markets market prices can not be explained attending just to marginal costs but instead bid prices have to be considered since market participants seize their dominant position in the market looking for higher profits thus the merit order composition criteria applied in traditional pcms has to be somehow reconsidered in order to be able to represent the agents strategic bidding the objective of the strategic production costing model spcm presented in this paper is to evolve the pcm approach to adapt it to the actual wholesale electricity markets without losing its typical advantages the generalization proposed allows to represent an oligopolistic hydrothermal electricity market and provides the system price duration curve as well as the income and expected costs of every generating agent compared with other oligopolistic models the main advantage of the spcm is its potential computational speed which makes it very suitable for risk analysis studies that require considering a large number of scenarios

rationalizable strategic behavior the notion of equilibrium proposed by nash 19 has come to play a dominant role in economic applications of noncooperative games while analyses of nash equilibria have unquestionably contributed to our understanding of economic behavior it would be unreasonably optimistic to maintain that nash solved the problem of noncooperative strategic choice there is a small literature beginning with ellsberg 6 and a much larger oral tradition which argues that nash behavior is neither a necessary consequence of rationality nor a reasonable empirical proposition in this paper i take the view that although there may be various reasons why an agent might select a nash strategy the notion of an equilibrium has little intrinsic appeal within a strategic context when an agent reaches a decision in ignorance of the strategies adopted by other players rationality consists of making a choice which is justifiable by an internally consistent system of beliefs rather than one which is optimal post hoc this point of view is not original indeed most serious justifications of the nash hypothesis embrace such an approach arguing that agents will expect the game to yield a nash outcome and consequently will choose their equilibrium strategies nevertheless when we think in terms of maximizing utility subject to expectations rather than realizations it becomes clear that the nash hypothesis far from being a consequence of rationality arises from certain restrictions on agents expectations which may or may not be plausible depending upon the game being played we are then quite naturally led to ask are there any restrictions of individuals expectations and hence choices which are required by rationality alone rather than by subjective plausibility this paper is concerned with defining justifying characterizing and refining a criterion for rational strategic choice which i label rationalizability

the inconsistency of consistent conjectures abstract conjectural variation models have been criticized because firms are right for the wrong reasons and because possible equilibria are abundant lately several papers have attempted to meet these difficulties by some condition of consistency or rationality on the conjectural variation this paper shows that stronger versions of such conditions lead into paradoxes while the weaker forms are of little use in solving the conceived problems the original cournot assumption actually satisfies consistency enterions the problems with consistent conjectures illuminates fundmental problems with too demanding information assumptions like perfect foresight such assumptions may create non trivial structures of self reference

rationalizable strategic behavior and the problem of perfection this paper explores the fundamental problem of what can be inferred about the outcome of a noncooperative game from the rationality of the players and from the information they possess the answer is summarized in a solution concept called rationalizability strategy profiles that are rationalizable are not always nash equilibria conversely the information in an extensive form game often allows certain unreasonable nash equilibria to be excluded from the set of rationalizable profiles a stronger form of rationalizability is appropriate if players are known to be not merely rational but also cautious what constitutes rational behavior in a noncooperative strategic situation this paper explores the issue in the context of a wide class of finite noncooperative games in extensive form the traditional answer relies heavily upon the idea of nash equilibrium nash 17 the position developed here however is that as a criterion for judging a profile of strategies to be reasonable choices for players in a game the nash equilibrium property is neither necessary nor sufficient some nash equilibria are intuitively unreasonable and not all reasonable strategy profiles are nash equilibria the fact that a nash equilibrium can be intuitively unattractive is well known the equilibrium may be imperfect introduced into the literature by selten 20 the idea of imperfect equilibria has prompted game theorists to search for a narrower definition of equilibrium while this research some of which will be discussed here has been extremely instructive it remains inconclusive theorists often agree about what should happen in particular games but to capture this intuition in a general solution concept has proved to be very difficult if this paper is successful it should make some progress in that direction the other side of the coin has received less scrutiny can all non nash profiles really be excluded on logical grounds i believe not the standard justifications for considering only nash profiles are circular in nature or make gratuitous assumptions about players decision criteria or beliefs the following discussion of these points is extremely brief due to space constraints more detailed arguments may be found in pearce 18

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

can conditional cash transfers compensate for a father s absence this paper investigates how the permanent departure of the father from a household affects children s school enrollment and work participation in rural colombia the results indicate that the permanent departure of the father decreases children s school enrollment by approximately 5 percentage points and increases child labor by 3 percentage points this paper explores the rollout of a conditional cash transfer program during the period of study and shows that this program counteracts these adverse effects when coupled with other evidence this finding strongly suggests that the channel through which the father s departure most affects children is by reducing the income of very poor households which tightens their liquidity constraints this finding also highlights the important safety net role played by welfare programs with respect to disadvantaged households particularly because these households are unlikely to have formal or informal mechanisms with which to insure themselves against such vagaries

the economic costs of conserving genetic resources at the cgiar centres abstract the 11 genebanks of the consultative group on international agriculture cgiar have grown considerably in size over the past few decades currently holding about 666 000 accessions of germplasm conserving germplasm is a very long run if not in perpetuity proposition the mismatch between the mainly annual funding support for this conservation effort and its very long term nature and intent is a serious concern using the results of five cgiar genebank case studies accounting for 87 of the total cgiar genebank holdings we estimate the size of an endowment or trust fund that would be required to assure a funding stream to conserve this genetic material for future generations the annual cost in year 2000 us of conserving and distributing the genetic material presently held in all 11 cgiar genebanks is estimated to be 5 7 million us mus which could be maintained for all future generations by setting aside a fund of 149 mus invested at a real rate of interest of 4 per annum this would be sufficient to underwrite the costs for the cgiar s current conservation activities in perpetuity estimated to be 61 mus as well as the cost of maintaining the distribution activities 88 mus that provide germplasm to breeders scientists farmers and others world wide

child labor and schooling decisions in urban and rural areas comparative evidence from nepal peru and zimbabwe summary this study sheds some light on the causes of child labor using crosscountry empirical data we find that while poverty is the main cause of child labor in rural areas there is a general lack of support for the poverty hypothesis in urban areas similarly improving access to credit has a greater potential for alleviating child labor and enhancing school attendance in rural areas on the other hand availability of alternative childcare options promises greater impact in urban areas finally the evidence from all countries suggests that efforts to bolster adult educational level and wage will help curb the prevalence and intensity of child labor and improve the likelihood that children stay in school

child labor and schooling in a globalizing world some evidence from urban india trade influences child time allocation in developing countries through its effects on the returns to education labor demand and poverty we examine how india s dramatic 1991 trade liberalization influenced child labor and schooling in urban areas of india that differ in the extent to which employment lost tariff protection in general urban india experienced large increases in schooling and decreases in child labor over the 1990s we find that these improvements are attenuated in indian cities where employment experienced larger reductions in tariff protection girls are particularly affected we argue that the observed changes in child time allocation are consistent with differential declines in poverty across regions but changes in the economic opportunities of children might also play a role in our findings jel f15 f16

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

shadow wages and peasant family labour supply an econometric application to the peruvian sierra a striking feature of developing economies is the large proportion of the work force that is self employed lack of widespread labor market participation in the agricultural sector can pose a major obstacle to the empirical implementation of economic models of the peasant household whether because wage data are simply not available or because the assumptions required to make use of wage data stretch the bounds of credulity this paper develops a methodology for estimating a structural labor supply model for primarily self employed peasant households which holds under a general agricultural technology and set of labor market conditions the unique feature of the approach is that the opportunity cost of time or shadow wage of household workers is explicitly estimated from an agricultural production function and is subsequently used to identify a set of structural labor supply parameters recent household survey data from rural peru is employed to estimate and perform various diagnostic tests on the model the empirical findings lend support to the hypothesis that peasant households allocate their members time as if to maximize a family utility function and moreover demonstrate the tractability of the shadow wage methodology and its usefulness in estimating more elaborate time allocation models

farmers subjective valuation of subsistence crops the case of traditional maize in mexico shadow prices guide farmers resource allocations but for subsistence farmers growing traditional crops shadow prices may bear little relationship with market prices we econometrically estimate shadow prices of maize using data from a nationally representative survey of rural households in mexico shadow prices are significantly higher than the market price for traditional but not improved maize varieties they are particularly high in the indigenous areas of southern and southeastern mexico indicating large de facto incentives to maintain traditional maize there

schooling and labor market consequences of school construction in indonesia evidence from an unusual policy experiment between 1973 and 1978 the indonesian government engaged in one of the largest school construction programs on record combining differences across regions in the number of schools constructed with differences across cohorts induced by the timing of the program suggests that each primary school constructed per 1 000 children led to an average increase of 0 12 to 0 19 years of education as well as a 1 5 to 2 7 percent increase in wages this implies estimates of economic returns to education ranging from 6 8 to 10 6 percent

commodity prices and intra household labor allocation volatility in commodity markets poses a distinct risk to farmers in developing countries who rely on cash crop agriculture we combine a time series of international coffee prices with a long running panel on coffee growing households in vietnam to investigate coping mechanisms employed by farmers in a transitioning economy we find that households cope with lower coffee prices by increasing wage labor of adults with children and adolescents substituting for adults on the farm heterogeneity analysis indicates a stronger substitution pattern among women ethnic minorities and households with fewer assets a variety of robustness checks corroborate these findings account of this finding should be taken in formulating and implementing social protection and inclusive growth policies

colombia s income from the drug trade abstract we estimate the net dollar proceeds that colombia receives from the drug trade making use of production data recently compiled by us authorities care is taken in assuring that our estimations are consistent with previous research on cocaine consumption in the united states and production in bolivia and peru we show that net dollar proceeds which used to represent around 7 of gdp and 70 of exports in the early 1980s now represent around 3 of gdp and 25 of exports these numbers though significant pale in comparison with those suggested in the popular press according to which colombia s economy has been all but overtaken by the drug trade

the escape from conjectural variations the consistency condition in duopoly theory from bowley to fellner the paper covers the 1924 1949 debate on the conjectural variations approach to duopoly theory and focuses on the evolution of economists views about the imposition of a consistency condition on the firms conjectures the main point is that although the consistency condition entailed a notion of interactive equilibrium that resembled the modern correct conjectures equilibrium most neoclassical economists of the time refused to apply it because of the excessive requirements it imposed upon the firms forecasting abilities and because of its failure to encompass an explanation of the equilibrating process