In this paper, we develop a theoretical framework for analyzing the nature and
scope of child labour at different stages of development. In Chapter 2 we look at the
role of children as producer goods in a developing country context, as well as the role of
children as consumer goods. Using household utility theory, in Chapter 3 we develop a
model of household choice. First, we discuss the role of children at an advanced stage
of development using Becker’s mathematical formulation of the quantity-quality
interaction with regard to child demand. We then modify the model to include
household time allocation in order to illustrate the case for a lower level of
development. We test the validity of the hypothesis that in the aggregate, we may
observe a rise in the incidence of child labour in the early stages of development, until
some threshold level of income is achieved. Upon reaching this threshold, the
incidence of child labour declines more steadily. The results are presented in Chapter 5.
Regressions are run on different models with percent child labour as the
dependent variable and per capita GDP as the explanatory variable. We find that the
quadratic model provides the best fit. We find evidence of an inverted-U shaped
relation for the total sample as well as for those countries in which per capita GDP is
greater than US$1000. Moreover, the income elasticities at the mean suggest that as per
capita GDP increases, the incidence of child labour increases provided there are no
effective changes in policy. The small size of the income parameters suggests that other
aspects of development are important determinants of child labour levels. Government
policy may also provide children with a voice until we are able to model the role of
children more effectively. For the bottom 20 per cent of the sample, those countries
with per capita GDP below US$1000, we find the opposite, though insignificant pattern.
That is to say, the child labour force participation rate is inversely correlated with per
62capita GDP, although the income parameters are insignificant at more than the 10 per
cent level and are therefore of no consequence.
Forecasts for per capita GDP, percent child labour, as well as the net primary
enrollment ratio are obtained. Without significant and effective changes in policy, the
incidence of child labour will continue to rise in many countries for several decades to
come. It follows that, ceteris paribus, in these countries economic growth alone, as
measured by per capita GDP, may not be a sufficient means by which to reduce child
labour, or eliminate it altogether. It could take more than 150 years to reduce average
child labour force participation to 10 per cent. To reach this target by 2029, the
required growth rates range from 2 to 15 per cent. It may be impossible to generate an
outcome in which the level of child labour is significantly reduced unless measures are
taken to stabilize household income. Measures taken towards improving the
distribution of income will be most effective. That is to say, increasing the level of
income may not reduce the number of gainfully employed children; redistribution
efforts are more likely to have the desired effect.
Our results complement the findings of much of the related research which
imply that by reducing income variability, policies that raise the wage of adults relative
to children are more likely to reduce the supply of child workers.
Providing some
form of assistance to poor households through income supplementation schemes might
be a sufficient short term solution when improving conditions in the adult labour market
is not an option. This is true only if the resources are available and if parents believe
that policymakers are credible. The relaxation of credit constraints and targeting
coordination failures within credit markets is important. Credit markets could replace
children as a source of insurance against unstable current and future income.
The introduction of a formal system of social security may help to reduce the
need for children, a traditional mechanism of support for the elderly. Effective credit
markets will provide parents a means by which to save for their consumption needs in
old age. The establishment of institutions that substitute for the services children
provide to their parents is crucial in order to reduce parental dependence on child
Access to credit markets will enable parents to save for their own future
consumption needs.
In addition, effective monitoring of child time use is necessary. As Weiner
(1991) notes, no country has successfully eliminated child labour without regulating the
use of children’s time. While the historical experience of Britain and the United States
suggests that child labour levels had already begun to decline before compulsory
schooling was introduced, such legislation could have a positive impact, provided it is
designed appropriately and easily enforceable. However, this must be done in such a
way as not to harm families economically. For instance, incentive-based educational
opportunities could stimulate child enrollment ratios and reduce the number of gainfully
employed children without economically hurting their families. Moreover, while
banning, boycotting and bullying have shown to have negative effects on child workers
and their families, regulating children’s working conditions could prove to be
beneficial. Such initiatives will also provide an incentive for firms to adopt better
technologies.
Our results also illustrate the positive correlation between fertility and child
labour. Studies have shown that higher education for mothers is associated with fewer,
healthier children.
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This could potentially increase household resources devoted to
each child. Subsidizing the education of both women and children will substantially
benefit households and communities.
There are several opportunities for further research. It would be interesting to
test for this relationship using more specialized econometric as well as forecasting
models, provided more extensive microeconomic data is available. Specifically,
regional analyses of countries that have experienced significant growth in certain key
areas would provide us with the means by which to make more relevant inference and
hence, more context appropriate policy recommendations. For instance, it would be
interesting to observe how this relationship is characterized in Western India – a region
of India that has experienced growth in both state domestic product and child labour –
compared with other Indian provinces.
41
See Cochrane (1983), Farooq et al. (1987), Strauss (1990), Ahmad (1991), Thomas (1991), and
Ainsworth et al. (1995).
64This study also highlights the need for economic models to include children
rather than lump them into the category of the household. Those models that do
explicitly consider the role of children in the household tend not to accurately reflect the
nature of their role; this is particularly true in the context of resource allocation models.
The static model presented in this paper is only a first step. We have looked at
household utility of child time spent in different activities at a point in time. There are
many limitations to this approach, where household decisions regarding child time use,
child demand and resource allocation are made at one point in time and by one
household member representing the family. For instance, fertility theory and human
capital investment theory are modeled such that decision-making takes place over time.
Thus, a dynamic model would allow us to combine these ideas in order to develop more
relevant and effective policy. It would be interesting to examine this question using a
dynamic approach to intra-household bargaining, thereby taking into consideration the
role of children as strategic decision-makers over time. Effective evaluation of child
time use is important. That is to say, the next step would be to examine the utility of
child time use for children and for the household over time.
When children are recognized as producers, it is often perceived as the result of
a combination of poverty and their weak economic and social position. Children are
rarely considered to be legitimate social and economic actors; rather, they are assumed
to be recipients of orders given by the head of household. Even bargaining models,
whereby household members and other relevant parties are modeled to act according to
some strategic interest, tend to neglect children as having any bargaining power
whatsoever. This is another limitation to the approach we have taken. The recognition
of children as participants in family decision-making will lead to further insight into
childhood and future adulthood wellbeing.
Studies of industrial structures and production processes in different economic
sectors are also important. We must explore these issues in order to identify the
determinants of child labour. Other concerns include the effects of war and parental
illness, and the role of government policy.
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