Abstract
Child labour is presently a phenomenon pervasive mostly in the transitional societies of the developing economies where multi-class social structures exist and a complex of traditional and pre-capitalist production relations are operative in an articulated capitalist mode of production and exploitation. In particular, child labour is predominant in the informal segment of the labour markets in developing countries, which are generally outside the purview of governmental regulation. It is mainly the poor working families employed in the informal sector who are the largest potential suppliers of child labour. Economic liberalisation has led to a contraction of the formal segment of the labour market and a significant expansion of the informal sector. The consequences of liberalised policies on the incidence of child labour depend on how the poor working families get affected by these policies.
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Notes
- 1.
If the ‘invisible’ workers who perform unpaid and household jobs are included, it is likely that the estimate would shoot up significantly further.
- 2.
Perceived poverty instead of actual poverty and desire for consumer goods and better living standards may sometimes contribute to the incidence of child labour.
- 3.
Parental attitudes, reflecting cultural norms and social values, nevertheless play a major role in sending a child to work or to school. Parents’ expectations that children will provide for them in their old age may lead to their having larger numbers of children and, where household incomes are limited, there may be a lower level of investment in each child, including in education. Parents may genuinely believe that they are doing the best for their children by allowing or encouraging them to work, not realising the hazards that the work might entail (ILO, 2002b).
- 4.
Owing to the possibility of introduction of the US Harkins Bill, which calls for complete ban on imports of any good that were manufactured wholly or partly by child workers, the employers in the booming garments industry in Bangladesh who had employed a large number of child labourers began removing the child workers drastically. The consequence was a chaotic process that left many children worse off than they had been before. See UNICEF (1997).
- 5.
To eradicate the incidence of child labour, World Development Report 1995 called for a multifaceted approach with programmes that increase income security, reduce education costs and improve the quality of schooling.
- 6.
See footnote 8 for the Substitution Axiom.
- 7.
The Basu and Van (1998) model, of course, can be easily embedded in a general equilibrium framework. Besides, Jafarey and Lahiri (2002) and Gupta (2002) have examined the efficacy of imposition of trade sanctions on export items of the developing countries produced by child labour as a policy in curbing the incidence of child labour in terms of general equilibrium models.
- 8.
In the developing economies child workers are mostly found in the production of carpets, glass, bangles, leather bags, shoes, garments, matchbox and fireworks and cattle feeding. It is sensible to assume that adults can perform all these tasks. First, all these industries exist in countries where there is no child labour. Second, not all the firms producing these goods in countries where child labour exists actually use child labour – after all, this is the justification for ‘social labelling’. The ‘nimble fingers’ argument, which once has been put forward, especially to carpet weaving, is an excuse given by employers and fails to convince researchers (see Burra, 1995; Weiner, 1991). Even if present technologies required the use of child labour and not adult labour in certain production activities, major changes in economic conditions coupled with the mobility of capital across sectors would certainly result in the adoption of different technologies allowing the substitution of adult for child labour.
- 9.
Chaudhuri and Gupta (2004) and Chaudhuri and Dwibedi (2006, 2007) are among the few notable exceptions.
- 10.
In the second model we will consider the case where child labour may be an essential input in the urban informal sector.
- 11.
In a developing economy the supply of child labour comes largely from the poor working families employed in the informal sectors. Their incomes from non-child labour sources are quite low and uncertain. In the rural areas, workers get employment in the peak season. But in the lean season, employment is not guaranteed, as the demand for labour remains low. However, it has been observed that the market for child labour remains relatively stable throughout the year as child workers are mainly employed to look after the cattle (see Gupta, 2000). Therefore, the poor families often send out their children to work for the purpose of ‘consumption smoothing’. In urban areas also there is very little employment security for the workers employed in the informal sectors. The present analysis, unfortunately, cannot take into consideration the aspect of income uncertainty on the part of informal sector workers. However, there is no reason to deny that the incidence of child labour is likely to fall significantly if the poor working families are protected by employment and social securities.
- 12.
Chandra and Khan (1993) and Gupta (1997) have also made this assumption. However, in these papers, the Harris–Todaro framework has been considered.
- 13.
An empirically testable hypothesis of Basu and Van’s model is that child labour arises if adult household income falls below some benchmark level. This hypothesis has been tested by different economists for different countries. Studies by Ray (1999) for India, Ray (2000) for Pakistan and Peru, Addison et al. (1997) for Ghana and Pakistan and Bhalotra (2000) for Pakistan have found the ‘Luxury Axiom’ of Basu and Van (1998) more or less to be statistically valid.
- 14.
Governments all over the world devote substantial resources to their education sector. This is especially true in developing countries. In 1995, public spending on education accounted for 15.7% of total government expenditure in developing countries (see Bedi and Garg, 2000). Furthermore, the majority of students in developing countries are educated in publicly funded and publicly managed educational institutions. According to Jimenez and Lockheed (1995), almost 90% of all primary and 70% of all secondary enrolments in developing countries are in public schools.
- 15.
Here we do not deal with an important aspect of child labour – its relation to education and human capital. However, Basu and Van (1998) also share the same limitation.
- 16.
In this context, mention should be made of the empirical paper by Ravallion and Wodon (1999) who have found that the school enrolment subsidy reduced the incidence of child labour in Bangladesh. However, they have admitted that the magnitude of decline in the incidence of child labour as a proportion of the total amount of enrolment subsidy is insignificant. This is because parents are clearly substituting other uses of their children’s time, so as to secure the current income gain from access to the programme with modest impact on earnings from their children’s work.
- 17.
The education subsidy policy is undertaken in different countries in a number of ways. Among the most popular incentive schemes are school meal programmes. In countries like Brazil, Egypt, South Africa and India mid-day meals are offered to poor children attending schools. However, as noted by Brown et al. (2001), school-lunch programmes themselves do not provide a sufficient incentive to draw children out of work and into school. As a result of the low financial value of the meal combined with the poor quality of schools, school-lunch programmes cannot generally alter the poor parents’ calculation of the value of school relative to work. Alternatively, in a few countries like Bangladesh and Mexico, governments have instituted cash stipends or in-kind gifts for children attending schools. Ravallion and Wodon (2000) have found the Food-for-Education (FFE) programme quite successful in keeping the children from poor families into schools in rural Bangladesh. However, the impact of this programme on the incidence on child labour was not satisfactory.
- 18.
This is a static model. So the aspects of education and human capital formation and its role on the incidence of child labour have not been dealt here.
- 19.
A comparative static result relating to a change in γ on the incidence of child labour in the economy has been discussed in details in footnote 25.
- 20.
We assume that W C>B(E). Otherwise, no children are sent to the job market.
- 21.
See Chapter 3 in this context.
- 22.
See Appendix 8.1 in this context.
- 23.
See Appendix 8.2 for detailed derivation.
- 24.
See Appendix 8.3 for detailed derivations.
- 25.
It may be an interesting idea to carry out a comparative static exercise with respect to γ. The parameter denoting the degree of altruism on the part of the guardian of a poor working family depends crucially on the social values and tradition. Owing to mass literacy and adult education programmes and vigorous public campaign against child labour, social values and tradition may change over time and raise the value of γ. From Equation (8.6.1) it is easy to check that an increase in γ lowers the supply of child labour from each poor family, l C. To find out the effect on the aggregate supply of child labour in the economy after differentiating Equation (8.7) with respect to γ and using Equations (8.15) and (8.19) we find that \(\begin{array}{ll} ({\rm{d}}L_C /{\rm{d}}\gamma ) = &- (L_C /\gamma )\left[ {\frac{{\mu \gamma W}}{{(W - \mu B)l_C |\lambda |}}} \right][\{ \lambda _{LX} (\lambda _{KY} + \lambda _{KZ} ) - \lambda _{KX} (\lambda _{LY} + \lambda _{LZ} )\} \\ &+ l_C \lambda _{LZ} \lambda _{KX} (1 - 1/\mu )] \\\end{array}\)
From this expression it follows that \(({\rm{d}}L_C /{\rm{d}}\gamma ) > ({<})0\) if and only if \(|\lambda |<(\hbox{>})0\). So, the incidence of child labour declines iff |λ|>0. This result may be intuitively explained in terms of direct effect and labour reallocation effect.
- 26.
As child labour and adult labour are substitutes in X and Y sectors, the effective labour force must include child labour subject to a scale correction of μ. Thus, a reduction in the number of child labour lowers the effective adult labour endowment of the economy.
- 27.
The interpretation of this condition has already been provided.
- 28.
An exogenously given rural wage for adult labour does not give rise to the possibility of rural unemployment of adult labour as we have considered a Harris–Todaro type economy. The levels of production and employment of labour in the rural sector (in other sectors of the economy as well) are determined by factor endowments, technological and other parameters of the system. Those adult workers who are unable to find employment in the rural sector migrate to the urban sector with their children as both adult and child wage rates in the urban informal sector are absolutely flexible. The complete flexibility of informal sector wage rates leads to the equality between the expected urban income for a prospective rural migrant family and their actual family income in the rural sector (given by Equation (8.29)). In a completely different context, Gupta (1994) has also made the same assumption and explained the simultaneous existence of informal sector and open unemployment in the urban area.
- 29.
According to the ‘wage efficiency hypothesis’ the nutritional efficiencies of the workers are positively related to their respective wage incomes (at least for some minimum levels). Thus the employers in the rural labour market would prefer to pay efficiency wages to their respective workers rather than lower wages even if there is excess supply in the labour market. In this situation, competition would fail to lower the wage rates and clear the labour market. For surveys of the nutritional evidence from the perspective of economics one can look at Dasgupta and Ray (1990) and Osmani (1990). On the other hand, Osmani (1991) has observed that in the casual labour market in the rural areas, workers generally refuse to undercut other workers, even if they are unemployed, for fear that this would lower wages for everybody at present and in the future. In other words, they may prefer to remain unemployed in the hope that in the next period they would find employment at the prevailing high wage rates. Thus, the wage rates would not fall even when there is open unemployment in the labour market.
- 30.
Complete flexibility of the wage rate of child labour ensures full-employment of child labour in the urban sector.
- 31.
This is not true in general. In some cases the children who especially work in the informal service sector of the urban area migrate without the other members of their families. Besides, there may be many cases where adult members of rural families come to the urban areas for work without their offspring. However, there is some empirical evidence in support of our assumption (see Mohsin, 1996).
- 32.
The Harris–Todaro (1970) model with urban unemployment fails to provide a satisfactory answer to the question as to how the unemployed workers persevere having no income at all. It is supposed that they survive as social parasites on the earnings of their employed counterparts. Fortunately, the present analysis furnishes a more acceptable answer to the above question. It explains that the offspring who find no problem to be absorbed in the urban informal sector take up the responsibility to feed their unemployed guardians and this case is common in the developing countries.
- 33.
We here assume that no child in the rural sector goes to school. This is not totally unrealistic because in the rural sector of the developing countries the very availability of educational opportunities is extremely limited.
- 34.
In a very special case, however, full employment of adult labour may occur depending on the parameter values of the system.
- 35.
This has been derived in Appendix 8.4.
- 36.
See footnote 15 in this context.
- 37.
See Appendix 8.5 for detailed derivations of Equations (8.35) and (8.36).
- 38.
This has been proved in Appendix 8.6.
- 39.
There are a large number of assumptions embodied in the model, some of which are restrictive. Fixed-coefficient technologies have been assumed in all the three sectors of the economy. Otherwise, it becomes very difficult to derive straightforward analytical results. Also, the assumption that a child worker cannot migrate to the urban sector unless his/her guardian migrates is restrictive. Although there is some empirical evidence in support of this assumption, it may not be the case in general.
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Chaudhuri, S., Mukhopadhyay, U. (2010). Incidence of Child Labour, Informal Sector and Economic Liberalisation. In: Revisiting the Informal Sector. Springer, New York, NY. https://doi.org/10.1007/978-1-4419-1194-0_8
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