2027. Child Labor: Cause, Consequence, and Cure, with Remarks on International Labor Standards

Kaushik Basu
(December 1998)

Should child labor be banned outright? Should the World Trade Organization be given the responsibility to discourage child labor using trade sanctions? The answer to this complicated problem depends on the economic milieu, says Basu.

At least 120 million of the world's children aged 5 to 14 worked full-time in 1995, most of them under hazardous, unhygienic conditions, for more than 10 hours a day. This is an old problem worldwide but particularly so in Third World countries in recent decades. What has changed, with globalization, is our awareness of these child laborers. (The International Labour Organi-sation distinguishes between "child work," which could include light household chores and could have some learning value, and "child labor," a pejorative phrase.)

By bringing together the main theoretical ideas, Basu hopes to encourage both more theoretical research and empirical work with a better theoretical foundation. Among other things, Basu observes that:

• The problem is most serious in Africa, where the child-labor participation rate is 26.2 percent. The rate is 12.8 percent in Asia. But since 1950, the trend is a decline in that participation rate worldwide. For most Latin American countries, the decline is notable but less marked than in Asia. In large parts of Africa, including Ethiopia, the problem has been extremely persistent, but even there the trend is downward.
• Child labor has not always been considered evil, and there is no consensus on why it began to decline. In some (not all) countries legislative acts declared it illegal, in some there were rules about compulsory education, and increasing prosperity generally made families less likely to experience poverty if their children weren't working.
• Mandating compulsory education is regarded as more effective than outlawing child labor, because attendance at school is easier to monitor, but some experts believe economic progress is the answer to the problem. The justification for many interventions is that the state is more concerned about the well-being of children than their parents are; Basu believes such an assumption to be wrong when child labor occurs as a mass phenomenon rather than as isolated abuse.

Basu argues that, in some economies, the market for labor may exhibit multiple equilibria, with one equilibrium having low adult wage and a high incidence of child labor and another equilibrium exhibiting high adult wage and no child labor.

The model is used to provide a framework for analyzing the role of international labor standards.

This paper—a product of the Office of the Senior Vice President, Development Economics—is part of a larger effort in the Bank to promote understanding of the causes of child labor. The study was funded by the Bank's Research Support Budget under the research project "Literacy and Child Labor" (RPO 683-07). Copies of this paper are available free from the World Bank, 1818 H Street NW, Washington, DC 20433. Please contact Michelle Mason, room MC4-338, telephone 202-473-0809, fax 202-522-1158, Internet address mmason1@worldbank.org. The author may be contacted at kbasu@worldbank.org. (73 pages)

The full report is available in PDF format.