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Is a ban on child labour likely to lead to an increase in poverty? If developing
countries do not ban child labour, should we ban the import of goods produced
with child labour?
The International Labour Organisation (ILO) estimated in 1990 that there were 79
million children doing regular work worldwide
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7%, and in some parts of Africa as high as 32
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It is
undeniable that child labour is a problem on a huge scale, and the natural reaction of
many is to try and ban it
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However is this truly the case in many Less Developed
Countries (LDCs)? In this essay I am presenting the thesis that economies with
multiple equilibria can benefit, even from benign interventions, particularly if a ban is
coupled with compulsory schooling
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A ban on the import of goods using child labour as an
input has been implemented before in the US (Harkin’s Bill), and once again the
effects of this are debateable – does it reduce child labour and increase education in
LDCs, or are children forced out of factories and into more dangerous and unpleasant
work such as brick breaking? Unfortunately data seems to support the latter, and I
believe banning the import of such goods will only damage welfare in such countries
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Contrary to
popular thought, Basu and Van (1998) argue that child labour reflects a problem of
stark poverty in LDCs, where parents are compelled to send children to work for
reasons of survival – not so that they themselves do not have to earn money
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Goldin’s 1979 analysis of
late 19th century census data for Philadelphia supports this point, as she found that the
‘higher the father’s wage, the lower the probability of the child participating in the
labour force’, and ‘the father’s unemployment sent both boys and girls into the labour
force, with stronger impact on the former’
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The model
shows that there may not be a case for banning child labour in certain situations, as
while a ban on child labour will raise the adult wage (due to a contraction in the
supply of labour, given that adult and child labourers are substitutes), if this is less
than the previous adult wage plus the child wage, then all labouring households will
be worse off
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The
capacity curve details the relationship between income and nutrition and how this
affects capacity to work – a minimum threshold level of nutrition is required before a
person can carry out productive work, the individual labour supply curve exhibits a
discontinuity
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If a ban on child labour reduced average household income, the effects

would continue to deteriorate – the lower income would lead to lower nutrition,
leading to an even lower income in future
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This is an outcome that has been seen in practice, with some even greater adverse
effects
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The laws reduced child wages, and as the households’ needs
for income remained the same, families simply had to send more of their children out
into the workforce in order to maintain living standards
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Not only this, but the idea that the long run effect can
be even worse than the ban’s failure in the short term is also widely supported
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It
seems overall that the case against child labour bans is strong, as even properly
enforced bans which may manage to reduce child labour do not necessarily improve
child welfare, and that, surely, is the true end game
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Where the labour market is characterized by multiple equilibria –
one in which wages are low and children work, and another in which wages are high
and children do not work – bans could be highly effective in that they shift the
economy from one equilibrium to another, higher welfare alternative
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The Factory Act of 1833 achieved such
an economic shift, so that even if the intervention was revoked, the economy would
stay child-labour free (a benign intervention)
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This is even more significant from the view of Hirschman’s
arguments for certain impositions on consumer sovereignty
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Corporal punishment for children is an example of this – in some societies
such punishments are natural or even desirable, and to others abominable
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If
our aversion to child labour is through acquired morality, perhaps one way to remove
it is to make it customary for children to not work – not through expectation that the
ban itself will stop child labour, but because judgement of the matter may change in a
society
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For a true reduction of poverty in the long run, it is also commonly thought that
education is key – Psacharopoulos wrote in 1994 that primary schooling remains the
‘number one investment priority’ due to its fundamental role in income generation

and the many other ways in which it is thought to promote and sustain development
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Equally,
Dreze and Sen (2002) attribute China’s rapid growth in comparison to India’s to
market reforms that were put in place in 1979
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As
such, Case (2004) puts a strong emphasis on the importance of education, both in
improving health and income, causing a reversal of the downward spiral discussed
earlier, and reducing fertility
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Aside from a total ban, it has long been suggested that developed countries can take
active steps in reducing child poverty worldwide by boycotting imports that have had
an input of child labour
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For
one, if the export industry is competitive, running on a slender profit margin, and we
are considering a small country facing fairly elastic demand, a ban on child labour in
those industries producing goods to export can increase the cost of production and
cause the export industry to shrink sharply, leaving worker households worse off
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This includes any industries producing for the
domestic market, and can force children into increasingly dangerous work in
unpleasant conditions
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Hence a partial ban like this is likely to have even worse effects than a
total ban, without any of the potential benefits
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While ideally we would like
children to be able to access education, and alter acquired morality in many of these
countries, it is impossible to argue that those facing starvation should not be able to
do what may be the only thing to in order to earn enough money to eat, and stay alive
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References
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R
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8,13
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403-408
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(1996), Education and the Market: which Parts of the Neoliberal Solution are Correct? World Development, 24(4), 589-610
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Research Program in Development
Studies, Princeton University, working paper no
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Basu and Van (1998), The Economics of Child Labour ; American Economic
Review, 88(3), 412-27
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, L
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Lakdawala and N
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NBER
working paper 19602

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