Bhalotra, Sonia: Is Child Work Necessary?
World Conference Econometric Society, 2000, Seattle

Sonia Bhalotra, University of Cambridge
Is Child Work Necessary?
Session: C-1-25  Friday 11 August 2000  by Bhalotra, Sonia
This paper investigates whether the income from child wage work is necessary to the survival of rural households in Pakistan. It is by no means obvious that it is. For instance, children may work because the returns to work exceed the returns to school, or because parents are selfish or short-sighted. It is argued here that, if child work is necessary, then the income effect of a wage change will dominate the substitution effect and the labour supply curve will be "forward falling" or negatively sloped at low wages. Existing studies have concentrated on the income elasticity, but this tells us nothing other than that leisure is a normal good. Studying the wage elasticity, however, permits us to infer from behavioural responses whether or not a household is at a subsistence level of income. Structural labour supply models for boys and girls are estimated, conditioning on full income and a range of demographic variables. We cannot reject the hypothesis that child work is necessary in the first quartile of the expenditure distribution. This suggests that trade sanctions or bans on child labour may be undesirable in the short run unless households are compensated for the loss in income. On the other hand, policies targeted at alleviating poverty or liquidity constraints are likely to reduce the prevalence of child work.
Submitted paper full-text in .pdf

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