Child Labor

What is the best way to reduce the use of child labor around the world?

Research changes Ideas about Children and Work

When Americans think about child labor in poor countries, they rarely picture girls fetching water or boys ten din livestock. Yet most of the 211 million children, ages 5 to 14, who work worldwide are not in factories. They are working in agriculture from 92 percent in Vietnam to 63 percent in Guatemala and most are not paid directly “Contrary to popular perception in high-income countries, most working children are employed by their parenta rather than in manufacturing establishments or other forms of wage employment,” two Dartmouth economists Eric V. Edmond s and Nina Panicky, wrote in “Child Labor in the Global Economy; published in the Economic Perspectives Their article surveys’ what is known about child labor. Research over the past several years, by these economists and others. has bun to erode some popular beliefs about why children work, what they do and when they are likely to leave work for school When he started world ding on child labor issues six years ago, Professor Edmond’s said in an interview the conventional view was that child labor really wasn’t about poverty.” Children’s work, many policy makers believed reflected perhaps parental callousness or a lack of education for “about the benefits of educating your child So policies to curb child labor focused on educating parents about why their children should not work and banning children’s employment to remove the temptation. Recent research, however, casts doubt on the cultural explanation. “In every context that I’ve looked at things, child labor seems to be almost entirely about poverty. I wouldn’t say it’s only about poverty, but it’s got a lot to do with poverty,” Professor Edmonds said & familia’ incomes increase, children tend to stop working and, where schools are available, they go to school. If family incomes drop, children are more likely to return to work. , Some of the best data, and the most noteworthy results, come from Vietnam, which tracked about 3,000 households from 1993 to 1998. This was a period of rapid economic growth, in which gross domestic product rose about 9 percent a year Tn a paper published in the Winter 2005 Journal of Human Resources, “Does Child Labor Decline With Improving Economic Status?,” Professor Edmonds found that child labor dropped by nearly 30 percent over this five-year period. Rising incomes explain about 60 percent of that shift. The effects were greatest for families escaping poverty. For those who crossed the official poverty earning enough to pay for adequate food and basic necessities, higher incomes accounted for 10 percent of the drop in child labor. In 1993, 58 percent of the population fell below the poverty line, compared with 33 percent me years later. “Child labor does not appear to vary with per capita expenditure until households can meet their food needs, and it then declines dramatically,” Professor Edmonds wrote. During this same period, Vietnam repealed its policy against exporting rice. That opened a big new market for Vietnamese farmers-the country went from almost no exports to being one of the world’s top rice exporters-and significantly raised the price of rice. This change, along with the family survey data, allowed Professors Edmonds and Pavcnik to examine what happens when household incomes rise but children’s labor also becomes more valuable. Their paper, “The Effect of Trade Liberalization on Child Labor,” was published in the March 2005 Journal of International Economics In the interview, Professor Edmonds said he expected that the booming for rice would lead more children to work in agriculture, if only on their own families’ farms, because the value of their labor had risen substantially But that was not what happened. “Instead, it looks like what households did was, with rising income, they purchased substitutes for child labor. They used more fertilizers. There was more mechanization, more purchasing of tools he said, adding, “It was the opposite of what I expected to find coming in The results from Vietnam suggest that families do not want their children to work. Parents pull their children out of work when they can afford. to, even when the wages children could earn are rising. Poverty, not culture, appears to be the fundamental problem Most child labor policy even today is directed at trying to get kids into unemployment-to limit working opportunities for kids he said in the interview. But, “if households are already in a situation where they don’t want their children to be working, but they’re forced to because of their circumstance, taking additional steps to prevent the kids from working is punishing the poorest for being poor.

Although the antipoverty program we have been discussing is hypothetical, it is not as unrealistic u might first appear. Welfare, Medicaid, food stamps, and the Earned Income Tax Credit are all programs aimed at helping the poor, and they are all tied to family income. As a family’s income rises, the family becomes ineligible for these programs. When all these programs are taken together, it is common for families to face effective marginal tax rates that are very high. Sometimes the effective marginal tax rates even exceed 100 percent so that poor families are worse off when they earn more. By trying to help the poor, the government discourages those families from working. According to critics’ of antipoverty programs. these programs alter work attitudes and create a “culture of poverty. It might seem that there is an easy solution to this problem: Reduce benefits to poor families more gradually as their incomes rise. For example, if a poor family loses 30 cents of benefits for every dollar it earns, then it faces an effective marginal tax rate of 3Q percent. Although this effective tax reduces work effort to some extent, it does not eliminate the incentive to work completely The problem with this solution is that it greatly increases the cost of programs to combat poverty If benefits are phased out gradually as a poor family’s income rises, then families just above the poverty level will also be eligible for substantial benefits. The more gradual the phase-out, the more families are eligible, and the more the program costs. Thus, policymakers face a trade-off between burdening the poor with high effective marginal tax rates and burdening taxpayers with costly programs to reduce poverty There are various other ways to try to reduce the work disincentive of antipoverty programs One is to require any person collecting benefits to accept a government-provided  system sometimes called
workfare. Another possibility is to provide benefits for only a limited period of time. This route was taken in the 1996 welfare reform bill, which imposed a 5-year lifetime limit on welfare recipients, When President Clinton signed the bill, he explained his policy as follows Welfare should be a second chance not a way of life How has the reform worked? The debate over the bill persists to this day, but there is no doubt that its passage was followed by a large decrease in the welfare rolls and a large increase in employment among those groups traditionally on welfare. In a 2003 study, economist Rebecca Blank a prominent expert on the welfare system, summarized the experience as follows This nation transformed its assistance programs to poor families with children from cash-assistance oriented programs aimed at providing income support, to work-assistance programs aimed at encouraging and supporting work. Critics can argue that the changes have left us with an inadequate safety net, in which an increasing number of families will be unable to return for assistance due to time limits, past sanctions, and limited state funds. Meanwhile, work requirements force women into unstable, difficult work situations with low wages and inadequate support for child care, health care or other family needs. Supporters can argue that the system has now worked for seven years. Due to a mix of economic good fortune and well-designed policies, a substantial number of women who would previously have been receiving welfare are now in employment building a record of experience and demonstrating to their children the importance of work preparation. Dire predictions about deep poverty and greatly increased homelessness have not come to pass. Even if the work-support system is far from perfect, it may be preferable to the poorly-functioning AFDC welfare system of the past.

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