From: levine@haas.berkeley.edu
To: e201b-1@haas.berkeley.edu, e201b-2@haas.berkeley.edu
Date: 1999-11-16 22:02:00+00:00
Subject: A classmate submits...

Marcello Fontana sent an article from this week's BusinessWeek on an 
apparently
succesful policy to promote growth.

ECONOMIC VIEWPOINT
'Bribe' Third World Parents to Keep Their Kids in School
GARY S. BECKER

        Many well-meaning Americans, including college students and religious
organizations, have attacked Nike Inc. and other companies accused of
using child labor in their overseas plants in poor nations. I agree that
something should be done to save the children from dismal long-term
economic prospects. However, effective policies must recognize that the
fundamental cause of child labor is poverty, not greedy foreign and
domestic employers. To combat the effects of poverty, poor mothers
should be ''bribed'' to keep their children in school longer.

        Really poor families in Brazil, Mexico, Zaire, India, and many other
nations put their children to work because their meager earnings help
provide basic food and medicine for themselves and younger siblings.
Although parents may recognize that schooling would improve their
children's marketable labor skills later in life, they cannot afford the
''luxury'' of taking them out of the labor market. In essence, child
labor is the result of a conflict between short-term parental economic
interests and the long-term interests of the children.

        Adequate economic growth always eliminates child labor even without
laws

against it. But poor nations needn't wait until they grow richer. There
are short-term solutions. Many nations have compulsory schooling laws up
to age 15 or so, but they are often hard to enforce, especially in rural
areas and poor sections of large cities. Families who want their
children to work simply do not send them to school, or the children have
very high absenteeism rates. Officials are reluctant to punish parents
of working children, perhaps because they recognize that the problem is
not selfishness but poverty.

        SHARE THE BURDEN. I propose a better way: Give parents a financial
incentive to keep their children in school longer. Poor mothers should
be paid if schools certify that their children attend classes regularly.
Parents would be strongly motivated to send their children to
school--even when the children do not want to go--if these payments were
not much below what the children could earn. Most poor parents would
happily continue.

        [A few sentences were cut here.  I think they describe Progresa 
program
in Mexico.  I think this program pays a few dozen dollars a month to families
that keep kids in school and immunized.]
Most poor Mexican families earn only about $100 a
month. That large a percentage increase should have a noticeable effect
on their behavior.

        Poor families in less developed nations whose children do go to school
are likely to withdraw their daughters when they become teenagers. This
tends to perpetuate economic inequalities, since the children of women
who receive little schooling also tend to be badly educated. Progresa
tries to combat this tendency to favor education of older sons by paying
a little more to families that keep teenage daughters enrolled.

        NARROW THE GAP. This pioneering Mexican approach appears to be highly
successful. An evaluation prepared for an October economics conference
in Chile shows that after only a couple of years, Progresa significantly
raised the schooling of children in very poor Mexican families. It has
also narrowed the education gap between girls and boys and reduced the
labor force participation of boys.

        Of course, governments need to find the tax revenue to finance
programs
like Progresa. A good start would be to recognize that Mexico and many
other less developed nations typically spend disproportionately on
universities and other education of their elites. Redistributing some of
this spending to the poor would both reduce inequality and stimulate
faster economic growth. Widespread basic education is more effective in
promoting economic development than generous subsidies to the richer
students who attend universities.

        Child-labor critics could spend their time more fruitfully by
attacking
not the overseas employment policies of multinationals but the social
policies of governments in poor nations that are really responsible for
the prevalence of child labor there. These governments, and perhaps
international organizations such as the World Bank, should follow
Mexico's example and introduce programs that pay poor mothers to keep
their teenage and younger sons and daughters in school and out of the
labor force.


David I. Levine                 Associate professor
Haas School of Business    ph: 510/642-1697
University of California    fax: 510/643-1420
Berkeley CA  94720-1900                            email:
levine@haas.berkeley.edu
http://web.haas.berkeley.edu/www/levine/