Child Labour in Developing Economies - Essay Example

Q. In developing countries child labour seems to be immune to legislative interventions (such as banning child labour, or compulsory school education). Why is so? Can financial incentives alleviate child labour? What other measures can be taken? Discuss the efficacy of these measures with empirical evidence. (Word Count: 1476) 1. Introduction International Labour Organization (ILO) defines child labour as work that deprives children of their childhood, their potential and dignity and that is harmful to their physical and mental development while interfering with their schooling.1 According to the ILO, in 2004, 246 million children between the ages of 5 and 17 years were child labourers.2 This is not a new problem and throughout history their have been instances of child labour in almost all parts of the world. Starting twentieth century, attempts have been made to end child labour permanently. Unfortunately, developing countries, where the problem is most acute, have proved to be immune to legislative interventions. In this essay, we try to understand the reasons why legislations have failed to end child labour and discuss other measures and their efficacy. 2. Causes of Child Labour As early as in 1867, Karl Marx in “Capital” had outlined a formal model for the causes of child labour. Marx had noted that while technology ideally would require less labour, lower demand for labour would depress wages and hence it was worthwhile for capitalist to use labour liberally and for the workers to have their entire family work to make ends meet.3 In modern times, the most well-known economic model of child labour is from Basu and Van4. The Basu-Van Model argues that low income economies are characterized by multiple equilibria. There is a bad equilibrium in which the adult wages are low and the child wages even lower and so the parents are compelled to send their children to work in order to survive. The good equilibrium is when adult wages are high and no children are offered in the labour market. In between these two equilibria is the state when both the good and the bad equilibria exist. Unfortunately, both the good and the bad equilibria can be stable, i.e. if the economy is in the state of bad equilibrium, it is unlikely to get out of it. The Basu-Van model is based on two assumptions. The “Luxury Axiom” asserts that households send their children to work only when driven by poverty and a non-working child is a luxury good. The “Substitution Axiom” asserts that adult and child labour is substitutable. The figure below shows the Basu-Van Model. Figure: The Basu-Van model Thus, we see that the reason for child labour in poor economies is that parents perceive cost of education to be too high. Here, cost of education does not just refer to the direct cost of schooling, which is often subsidised or even free, but also to the cost of lost opportunity when the child is not at work. Also, the quality of education is often extremely poor and parents do not see their children adding to their employability by attending school. They would rather teach their children skills that would help them earn a living. 2. Limitations of Legislative Interventions In view of above reasons, legislations like boycotting products made from child labour and compulsory education do not have the desired effect. On the contrary, as Basu and Van5 have shown, legislations such as the Harkin’s Bill can actually result in an increase in the incidence of child labour. Figure: Shift of labour demand and unique good equilibrium As shown in the above diagram, they have argued that boycott by foreign buyers will reduce the labour demand curve, which in turn will increase poverty. As a result, the family which is sending a child to work due to its subsistence requirements is forced to send more children to work. Thus, such legislations actually prove to be counter-productive. Also, it has to be noted that there are worse things than child labour. While passing laws, it must be kept in mind that by banning child labour, the legislators are not exposing children to worse things such as hunger and starvation.6 Similarly, when a child is send to work to fulfil the family’s subsistence needs, legislations regarding compulsory education lose their impact. In cases of extreme poverty, education is viewed as a luxury and legislations do not matter. 3. Solving the Problem Legislative interventions to end child labour are of three kinds: “Intra-national” efforts are the laws that a country enacts to end child labour within its national boundaries. “Supranational interventions” are those which are attempted through international organizations like ILO, WTO and UNICEF. The third kind intervention is when developed countries enact legislations in their own country in the hope to curb child labour in developing nations. This kind of intervention is called “extra-national intervention”.7 Of these, the extra-national intervention is the least effective and is often misused by the protectionist forces. Supranational interventions such as imposing international labour standards are mired in controversy and are slow to be adopted by many countries. Intra-national efforts are the most successful in helping curb child labour. As Basu and Van8 have argued, a comprehensive ban on child labour will force the bad equilibrium out of existence and only good equilibria will exist. Furthermore, once the good equilibrium is reached, it will sustain itself and it will be no longer necessary to impose ban on child labour. Governments should also make education compulsory. It is also important to provide better and more schools and to improve infrastructure to make these schools easily accessible to all children. There is also a need to raise social awareness about the benefits of education and the evils of child labour. Also, parents should perceive school education as helping their children improve their employability. For this, it could help to introduce vocational courses in school. It might also help to provide children with education at the workplace. Education is an investment in which parents invest but the benefits are reaped by the children. Hence it is important for the parents to see some incentive in sending their children to school. Monetary compensation to the parents has definitely helped reduce the problem of child labour in many countries. Some of the programmes which have shown some success through monetary compensation to the parents include mid-day meal at school, food-for-schooling and monetary transfers, e.g. Mexico’s Progresa and Brazil’s Bolsa Escola. The mid-day meal at school was implemented in India after a the Indian Supreme Court made it mandatory for all public primary schools in the country to provide cooked meal. This had led to a definite increase in the attendance of poor children in school. Bangladesh was one of the first countries to implement the food-for-schooling (FFS) programme.9 Under the programme, families are entitled to a free monthly ration of food grains in return for sending their children to school. The family can consume the grain to reduce their food budget or sell it and use the cash for other needs. To qualify for the programme, the household should be landless or own less than one acre of land, the head of the household should be a day labourer and the wage earners should be from low income families. Also, the students must attend 85% of classes each month to maintain their eligibility. By 2000, the pilot programme covered 27% of all schools in Bangladesh and about 40% of the students enrolled in schools received food grains. After implementation of the programme, the student enrolment increased by 35% while enrolment in non-FFS schools increased by only 7%. The overall rate of attendance in FFS school is 71% and only 58% in non-FFS schools. While there is scope for further improvement, the programme has largely proved effective in bringing more children to school and away from workplace. Mexico’s Progresa began its operations in August 1997 as a part of an overall strategy for poverty alleviation.10 By the end of 1999, the program covered 40% of all rural families and one-ninth of all families in Mexico. In 1999, Progresa’s budget was approximately $777 million which was equivalent to 0.2% of Mexico’s GDP. The programme benefits are designed to contribute to long term human capital development. Among the various criteria for families to receive the monetary benefits is that the children attend grades through three to nine, with higher payments in higher grades. It also requires families to make a specified number of visits to clinics. The programme targets the poorest of poor and has succeeded to a large extend in alleviating poverty. 4. Conclusion Thus we see that while legislative interventions like banning child labour do not have the desired effect, it is possible to end or reduce instances of child labour through other more positive interventions such as the Bangladesh’s food-for schooling programme and Mexicos’ Progresa. The only way to end child labour and build long term human capital is to give incentive to parents to send their children to school. Of course, as economies move from developing to developed, the instances of child labour automatically reduce as seen in the cases of developed nations. Bibliography Basu, K., “Child Labor: Cause, Consequence, and Cure, with Remarks on International Labor Standards”, Journal of Economic Literature, vol. 37, no. 3, September 1999, pp. 1083-1119. Basu, K., Pham Hoang Van, “The Economics of Child Labor”, The American Economic Review, vol. 88, no. 3, June 1998, pp. 412-427. International Food Policy Research Institute, PROGRESA- The Education, Health and Nutrition Program of Mexico, retrieved 23 November, International Food Policy Research Institute, Results of Evaluation: Food for Schooling in Bangladesh, retrieved 23 November, International Labour Organization, Facts on Child Labor, 2004. International Programme on Elimination of Child Labour, About Child Labour, 1996-2007, retrieved 23 November 2007, . Read More