Inspired by a 1999 paper authored by Kaushik Basu, our paper does away with the oft-assumed economic model that treats the household as a conflict-free unit which makes decisions as a unified whole. Instead, we assert, as does Basu, that as the proportion of who earns what changes within a household, so does the consumption of that household, even if the overall income of the household remains the same. This really make a lot of sense when you think about it. This is not just true for children, or for developing countries. For instance, it is likely that the expansion of the rights of females in the United States was affected, at least in some part, by the increased percentage of income generated by women relative to men in recent decades. Although the simplifying assumption that households are unified is useful for many economic analyses, it is detrimental to the aim of this paper, and has therefore been relaxed.
Let us consider this concept in relation to the topic at hand. In the developing world, there exist families that truly live on the margins of subsistence, and must therefore make horrible decisions between allowing their children to receive an education, and being able to provide enough food, clothing, and other basic necessities for those children. The child that chooses to/is allowed to work will be more of an asset to his or her family, relative to the child who refuses to work or is not allowed to do so. The latter child will be more of a liability to that child's family. It may seem harsh or cold to consider children as assets or liabilities, but given a family truly living on the margin, it makes sense to hypothesize that a child that is a net drain will be more likely to be abused or abandoned than a child that is a net benefit, all else equal.
Our empirical analysis seemed, in large part, to confirm our theory. We looked at countries in Latin America, India, and Africa, and considered the United States as a Benchmark, since the US is a fully developed country. We found that, as expected, the United States had relative low rates of both child labor and child abuse. This makes sense because the United States is fully developed and no longer needs children to supplement family incomes. In absolute terms, much of the poor in America are far better off than the vast majority of people in the developing world. The same incentive structures, are therefore not present in the US as in truly impoverished countries.
Latin America, on the whole, tends to have a relatively low child labor rate, but a relatively high child abuse rate. Further, much of the Child Abuse seems to be under reported.
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| English,
Cynthia and Godoy, Johanna (2010). <http://www.gallup.com/poll/139376/child-abuse-underreported-latin-america.aspx> |
One potential outlier we found was Columbia. According to a 2005 paper by Bill Van Auken, Columbia seems to have relatively high amounts of child labor and child abuse. However, "close to half of those who work are paid nothing, while the rest earn an average amounting to just one quarter of the Colombian minimum wage, which is $41 a month." If this is true, then this seeming contradiction actually fits well with the theory of our paper. A child's intra-household bargaining power does not increase merely because a child works--it increases only if that child is actually able to supplement the family income. A child that works, but is paid nothing, has not contributed anything extra to the family, and is therefore just as much of a liability as a child that never worked at all.
We found that India seemed to have an extremely high abandonment rate. Of the Twenty-million orphans in India, only 0.3% have both parents dead. This means that the vast majority of Indian children without families have been abandoned by their parents. Further, according to a 2007 paper by Geeta Pandey, "53% of the surveyed children report one or more forms of sexual abuse." On the other hand, India seemed to have a relatively low child labor rate of only about 5.0%, according to the International Labour Organization (ILO). Because such a relatively low percentage of the child population works, many children in India are more of a liability then they are an asset, and are therefore more prone to mistreatment and abandonment.
Our analysis of Africa finds support for our theory from another angle. Because of widespread disease in Africa (due to AIDS, River Blindness, Malaria, etc.) there is a deficit in the labor force. Children are needed to fill this deficit. As a result, there is a very high child labor rate within Africa relative to other developing countries.
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| The Table above shows the Child Labor Participation rates of children in various developing countries. The three tallest bars in the middle are three different regions of Africa. Graph taken from Unicef (2013). Monitoring the Situation of Children and Women. <http://www.childinfo.org/labour.html> |
Although there are laws in Africa that prohibit child labor, these laws are largely ignored. In tandem with these relatively high rates of child labor, the child abuse rates are relatively low. Studies that we look at show that children in Africa are rarely beaten by their parents. Further, the vast majority of orphans in Africa have both parents dead. Only 5.0% of these orphans are abandoned with both living parents. This should make intuitive sense. If a child is working for the family, and helping to supplement the family income, then that child will be a net asset to that family. It would make little sense for a family member to abuse or abandoned an able-bodied worker, especially when there is such a deficit of labor. At the margin, we would expect these families to treat these working children better than do the families in other developing countries in which children do not or cannot supplement the family income.
The general conclusion of our paper is that although almost all would agree that, holding all else equal, a world without child labor is preferable to a world with child labor, all else is not equal. We live in a world where millions of families live on the margins of subsistence, and really need their children to help supplement the family income. It may be reasonable to consider child labor to be a type of inferior good. Once a country is able to do without child labor, it tends to shed itself of the practice. Unfortunately, however, this can take a lot of time. Vilifying child labor will
not solve the problems of children in developing countries, and expecting
developing nations to be able to immediately absolve themselves of all
dependence on child labor is impractical and unrealistic. It is the belief of the authors of this paper that child labor is necessary
for developing countries to grow so that future generations can experience the
luxuries of the developed world.
If you would like a copy of our full paper, shoot me an email at connor.cosenza@gmail.com.
Have a magical day!
References for further reading:
Auken,
Bill Van (2005). “Latin America’s social crisis.” World Socialist. <http://www.wsws.org/articles/2005/may2005/amer-m11.shtml>.
Basu,
Kaushik and Van, Hoang Pham (1998). “The economics of Child Labor.” American
Economic Review. Vol 88, No. 3 p. 412-427
Pandey, Geeta (2007). "Abuse of Indian children
'common.'" BBC News. <http://news.bbc.co.uk/2/hi/6539027.stm>.
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