Exploitation of Child Labor and the Dynamics of Debt Bondage

This paper is concerned with the Institution of debt bondage and child labor employment in the context of an agrarian economy with overlapping generations. The model explores the principal-agent interaction between landlords and tenants, and identifies a set of reasons why households put children to...

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Bibliographic Details
Published in:Journal of economic growth (Boston, Mass.) Mass.), 2004-06, Vol.9 (2), p.209-238
Main Authors: Basu, Arnab K., Chau, Nancy H.
Format: Article
Language:English
Subjects:
Adults
Agricultural seasons
Child labor
Child labour
Children & youth
Collective bargaining
Consumption
Credit
Debt
Economic growth
Economic models
Economic theory
Employment
Exploitation
Externality
Harvesting seasons
Household consumption
Households
Intervention
Labor supply
Landlords
Lessors
Peonage
Poverty
Sanctions
Studies
Trade sanctions
Wages & salaries
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Summary:This paper is concerned with the Institution of debt bondage and child labor employment in the context of an agrarian economy with overlapping generations. The model explores the principal-agent interaction between landlords and tenants, and identifies a set of reasons why households put children to work in response to the need to service outstanding debts, only to realize that child labor work is "exploited", and households are made strictly worse off in general equilibrium. Debt bondage in one generation is further shown to leave spillover effects, and contribute to the cycle of debt, bonded child labor and poverty across generations. In this context, the effectiveness of trade sanctions as a policy response to bonded child labor is evaluated. Contrary to expectations, a trade ban can set off a sequence of increasing indebtedness among agrarian households that offset the intended (static) disincentives to employ child labor.
ISSN:1381-4338
1573-7020
DOI:10.1023/B:JOEG.0000031427.20051.38