Working Paper: NBER ID: w12665
Authors: Matthias Doepke; Dirk Krueger
Abstract: In this paper we investigate the positive and normative consequences of child-labor restrictions for economic aggregates and welfare. We argue that even though the laissez-faire equilibrium may be inefficient, there are usually better policies to cure these inefficiencies than the imposition of a child-labor ban. Given this finding, we investigate the potential political-economic reasons behind the emergence and persistence of child-labor legislation. Our investigation is based on a structural dynamic general equilibrium model that provides a coherent and uniform framework for our analysis.
Keywords: Child Labor; Legislation; Macroeconomics; Welfare; Political Economy
JEL Codes: E6; H80; I28; I38; J40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Introduction of child labor restrictions (J88) | Decrease in welfare (I38) |
| Laissez-faire equilibrium (D50) | Increase in welfare compared to child labor restrictions (J89) |
| More efficient policy interventions available than outright bans on child labor (J88) | Inefficient laissez-faire equilibrium (D59) |
| Labor market competition (J29) | Support for child labor restrictions (J88) |
| Child labor legislation (J88) | Effects on welfare and capital-labor ratios remain unchanged (D69) |