Working Paper: CEPR ID: DP3733
Authors: Matthias Doepke; Fabrizio Zilibotti
Abstract: We develop a positive theory of the adoption of child-labour regulation, based on two key mechanisms. First, parental decisions on family size interact with their preferences for child-labour regulation. Second, the supply of child labour affects skilled and unskilled wages. If policies are endogenous, multiple steady-states with different child-labour policies can exist. The model is consistent with international evidence on the incidence of child labour. In particular, it predicts a positive correlation between child labour, fertility and inequality across countries of similar income per capita. The model also predicts that the political support for regulation should increase if a rising skill premium induces parents to choose smaller families. A calibration of the model shows that it can replicate features of the history of the UK in the 19th Century, when regulations were introduced after a period of rising wage inequality, and coincided with rapidly declining fertility and rising educational levels.
Keywords: child labour; dynamic general equilibrium; fertility; inequality; political economy; transition
JEL Codes: J13; J24; N30; O11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| family size (J12) | parental preferences for child labour regulation (J88) |
| child labour supply (J82) | wages of unskilled workers (F66) |
| parental preferences for child labour regulation (J88) | political support for child labour regulations (J88) |
| child labour regulations (J88) | supply of child labour (J82) |
| wages of unskilled workers (F66) | parental preferences for child labour regulation (J88) |
| economic conditions (E66) | political support for child labour regulations (J88) |