In my opinion, one of the worst aspects of child labor is the child’s lack of agency to make their own decisions. I recognize that a child may not have the knowledge to expertly weigh current and future costs and benefits, but it seems particularly cruel that a child is denied education and with it the potential to escape poverty, without having a say in the matter. Furthermore, I think that it is eye-opening that Udry explains the challenges facing child labor in impoverished nations even if the parent fully calculates the costs and benefits, including the cost of the child’s reduction of future earnings. The fact that imperfect capital markets and divided agency within the household can have such a negative effect on a child’s educational attainment even in this idealistic world of perfectly calculated decisions is worrisome, given that this condition rarely holds in reality. Udry is realistic in thinking a simple “ban” on child labor may not be in the best interest of the child. First of all, given that most child labor occurs in rural settings, enforcing the ban would be difficult and costly. Second, banning child labor altogether may detrimental to a family that is already barely making ends meet with the child’s help. After all, it is not as though families with money to spare are forcing their children into child labor. Removing that income could result in severe malnutrition among other negative conditions. It is interesting, though not surprising, that the most effective method of keeping kids in school is a direct subsidy to the household of the approximate value of child labor wage. As Udry notes, this circumvents the issue of failed capital markets and since the grant must be used for schooling, there is no tension between parents. Udry comments that because child labor wages are so low, this isn’t necessarily a costly program; however, if that were the case, I’m not sure why more countries haven’t tackled this issue. Clearly, providing subsidies to families who keep their children in school keeps attendance higher, child labor rates lower, and gives more children the opportunity to escape the cycle of poverty.
Christopher Udry’s paper on child labor points out the obvious; child labor is both a symptom and cause of poverty. It is unrealistic to think that children do not share in household chores and responsibilities, thus it is useful to define child labor as activities “that involve the sacrifice of a child’s future welfare in exchange for a current benefit to the household.” What is not obvious is how we may solve child labor. The themes of this paper are similar to concerns we have been tackling in class all term. Child labor reflects absolute poverty, the inability of parents to transfer income over time, the reduction in human capabilities and inexistent or ineffectiveness of institutions. Child labor is most prevalent in rural areas, single parent households, households with low levels of education and in developing countries that lack viable institutions. Researchers also find that children work more when their household experiences adverse shocks like natural disasters or parental unemployment. To solve the problem of child labor we must tackle parent’s agency, this is easier said than done. I agree with Udry that banning child labor and alleviating poverty are unrealistic. The solution I find most compelling is finding a way to subsidize consumption now to promote increased consumption later. Education offers much higher long run returns for household than the immediate benefits of child labor. Whether through subsidizing schooling, providing food for school enrollment or developing a financial sector, mechanisms that smooth shocks to poor households should be successful in reducing the damaging effects of child labor.
Although there are many very dangerous types of child labor, Udry explains that most child laborers are engaged in less extreme activities where “the primary cost of child labor is the associated reduction in investment in their human capital.” In reading about the case of child labor, I could not help but think of one of our very first readings that explained why extremely poor people do not spend more of their money on food when they may not be getting the nutritional value they need. In that case, they seek immediate satisfaction and may spend their money on things such as alcohol or entertainment. In the case of child labor, there is also an immediate need being filled. Rather than making the decision that is best in the long run, educating child so that he or she may earn more in the future and prevent their own future family from facing the same dilemma, parents force their children into child labor to solve their problems now. However, it is obviously not this simple. In many cases, this may be the only way to keep the children from starving to death because financial markets are not developed enough to allow parents to borrow enough to send their children to school. Additionally, if the loss of income from a child attending school rather than working is detrimental enough and leads to sickness or starvation, the child will probably not perform extremely well in school and have lowered chances of future success. However, the lack of education attained as well as the physical strain on young people working so hard at such a young age seriously damages their potential in the labor market as well. Because of this, an impoverished family can never escape poverty by child labor, but only aid its income or production in some small way with it. This circle of poverty created has been seen over and over throughout the course of our class and is especially apparent here as poverty obviously leads to child labor, but child labor also adds to future poverty. On the brighter side of this issue, Udry points out that once this cycle is broken once by only one child obtaining more education rather than going into child labor, the same system of positive feedback can cause sustained growth and higher incomes in future generations. To accomplish this, Udry explains that moving out of poverty is clearly the ticket. However, he also explains that we may not have time to wait for this to happen. Perhaps the best way to break the cycle is to increase school quality and provide subsides for sending children going to school, in order to increase school attendance. If successful policies for increasing school attendance can be implemented, it is possible that the cycle of poverty can be broken for many families around the world.
Christopher Udry explains in his "child labor" paper that child labor is a result of poverty and is generally tied to imperfect financial markets and agency issues within the household. Children generally work because their families need the wages from the children to meet current consumption needs. However these families generally don't consider the reduction in human capital that foregoing education creates. Children who aren't educated are at a severe disadvantage in the future in terms of earning a higher wage. If parents had access to affordable long term credit, they could borrow against the wages that children would receive in the short term, and thus provide the children with tools to earn higher future wages. Furthermore the agency problem explains that if parents don't save part of their earnings to leave a bequest to their children, then they don't have any extra capital to absorb the short term financial shock of sending their children to school. A big problem in my opinion is that generally these parents themselves were not educated. They most likely were forced to work by their parents and as a result don't know any alternatives. This creates a vicious cycle of poverty because this lack of education will repeat itself in future generations. Even if parents understand the potential returns that their children would experience in the long term, much of the time they may not be able to sacrifice their child's wage.Udry explains that a promising remedy to the problem of child labor is compensating families that send their kids to school. This grant would help to offset the lost wages from the children therefore encouraging parents to send their kids to school. This solution is further promising because it would be very inexpensive. Generally children that work are earning an extremely low wage to begin with therefore this grant would not have to be very high. While I feel that this is a very promising solution and should absolutely be put into effect now, I also think focusing on the credit markets can be equally effective. If developed countries (like the US) could provide affordable credit to these families, they could in fact send their kids to school while paying off their loans simultaneously. Since interest rates are practically 0 in much of the developed world right now, I don't see why this process can't be started. It would cost very little for these parents to finance a loan when they are paying very low interest expenses and could truly go a long way to ending poverty. This would also be in developed countries best interest because if developing countries' economies can improve, then the world economy will improve as a result.
Udry’s “Child Labor” article raises many interesting points about an issue that is far too prevalent in our world. Like Udry mentions, child labor is an unfortunate result of dysfunctional financial markets, and often parent’s have little choice in the matter when it comes down to their family’s survival and need to have income. It is, Udry argues, a cost-benefit analysis. Labor market wages, educational costs, interest, etc… all play a roll in the calculation of whether or not it is more beneficial for a child to work or go to school. However, as Udry mentions, if a child is not in the labor force, there is no guarantee that they will be in school. This is where the cost to a child not working is not being matched by benefits. Not only is the family receiving less income, but the child is not receiving any educational gains. Effective policy can make a difference here, which Udry discusses briefly at the end of his article. Something that Udry didn’t really mention, but that I think could play a role in child labor, is cultural norms and expectations of children in developing countries. I was stunned by the work ethic of the children I lived with this past summer in Tanzania. They were up at 5, worked until 7 or 8, went to school, and then went back out into the fields from 3-5. What surprised me the most was that there was no school on Friday, and it was a national “agriculture” day. So all over the country children worked on Fridays, instead of going to school. I haven’t had the chance to verify this, because I honestly questioned whether or not it was true. If it is true, however, I feel like it somewhat encourages the use of child labor, rather than looking for effective ways to decrease it. If agriculture and child labor are ingrained into the culture and ways of communities, it is going to be hard to stop it. Especially when, in a place like rural Tanzania, agriculture is really the only sector with future potential. Most families are extremely impoverished subsistence farmers, and learning how to farm at a young age is going to most likely be much more beneficial for a child if they are going to have to farm to survive when they are an adult. It ultimately comes down to policies and how the country is choosing to handle their poverty issues. In a place like Tanzania, there needs to be more than just the school subsidy programs Udry mentioned. While those are excellent way to reduce the costs a family incurs by keeping a child out of the labor market, there are still many large issues at play that will need to be addressed in the coming years.
The problem of child labor in poor countries echoes a lot of the issues we've talked about in this class. One issue that immediately came to mind was the low level of savings among poor households. Not only is there not much extra income TO save, but those in extreme poverty, facing low life expectancy and great uncertainty, don't know if they'll be around to use their savings in the future. Foregoing consumption in the present is much easier with a guarantee of future consumption. Investing in education can be deconstructed much the same way. Expenditures on education and foregone child wages decrease current consumption but increase future earnings (and therefore consumption). The reasons households do not same are most likely very similar to the reasons families will pull their child out of school to earn an income. Of course, this results in the child remaining in poverty through adulthood due to low educational attainment, and the vicious cycle is repeated through their offspring.Another issue this matter touches on is one of private costs/benefit versus public costs/benefit. We've already seen how a person's wage is a function of the quality of workers around him or her. Well if workers in a community are on average poorly educated due to a prevalence of child labor (that at least existed when they were kids), then even an educated worker's wages won't be as high as they could be. This lowers the future private benefits of education for a single person. This creates a coordination problem. If all the households could decide together to educate their children, then the future private and social benefits to education would increase much more than if only one household educates its children. This is why Chris Udry states that 'the existence of these social benefits from schooling is an important element in the traditional argument for subsidization of education and public schooling."
This article changed the context of thinking about child labor - never before had I considered child labor as the sacrifice of future welfare in exchange for gains in the present. Of course child labor is known as an injustice, one which most would agree there is a pressing need to eradicate, but the economics of it show the major problems in low-development countries of addressing it. From a development stand point, it seems to me that if there is a way to actually eradicate child labor the "vicious cycle" would turn into a positive economic growth cycle. This is another idea I had never considered before - that along with improving financial resources, educating and empowering women, and other suggested development actions, we should also be focusing on stopping child labor in order to vastly improve the education and knowledge of the workforce in the future. However, the article also points out the problems associated with working to stop child labor. As with other problems of poverty we've discussed, the major economic issue of child labor is the forgone income for families, and the inability of many people in low-development countries and those living in poverty to plan strategically for the future. Another major problem Udry pointed out was the positive correlation between child labor and increasing prices of coffee in Brazil - the idea that if wages or prices rise (something usually thought of as a positive for low-development countries) the value of a child joining the work force also rises. This could potentially increase the amount of children joining the workforce, reinforcing the fact that there is no easy answer when it comes to stopping child labor. Udry states that for most low-income, low-developed countries, a rise in family income leads to a decrease in child labor, because the family has more economic opportunity to send a child to school, rather than depend on that child to provide for the family. However, "this relationship is less marked in more affluent developing countries". This points out a major problem - if, as countries pull themselves out of poverty, the child labor rate has the potential to increase then that could touch off the same 'vicious cycle' of poverty noted earlier.
Prior to taking this class and reading this paper I would have thought that creating a system that banned/prevented the use of child labor would be sufficient to solving the problem proposed by Udry. As we've learned throughout this semester, solving problems in developing countries is never a choice between black or white. Child labor becomes such a difficult issue to address because the socially efficient level of labor conflicts with the moral high ground of society, particularly from the point of view of developed countries that don't have child labor. The choice of child labor is not intended to be one of cruelty towards the child(ren). In Udry's words, "...it is the best response people can come up with to intolerable circumstances." As such, policies aimed at banning child labor are not necessarily in the best interest of the child. The way I see it, and the point I feel that Udry made, is similar to Kremer's findings in his "DeWorm the World" campaign. A child that earns wages contributes to the household income. This income is then used to provide necessities such as food, shelter, etc. If a child is prevented from working, the family's income drops and subsequently they are able to spend less on food, and since the adults are now the ones working, it makes sense that they get more food than the children so they can maintain productivity. Although the children now have the time to go to school, I imagine a similar effect of hunger on educational outcomes as worms. Using Kremer's study, I would assume that starving children will be able to achieve only a marginally better education than those that earn wages and only attend school sparingly (if at all). With this in mind, morality needs to take a back seat to efficiency. Yes, in an ideal world no child would have to sacrifice their education to earn wages. In an ideal world the child would have the agency to make that choice. However, given the economic environment of developing countries, the elimination of child labor is impossible without the help of outside forces. Udry explains that the most promising policy are subsidies for families that send their kids to school instead of work.While child labor is a HUGE issue, it falls under the larger umbrella of poverty. I thought it was an interesting argument that Udry made about the access to adequate capital markets plays a role in a household's decision on child labor. This ties into, as a few other people have pointed out, the idea of savings and investment as a means of economic development that has been a reoccurring theme this semester. Finding ways to smooth consumption for households, for example through capital markets, would go a long way in reducing the amount of child labor and allowing future generations to achieve higher returns on their education and ultimately improve their income and living standards.
As I began to read through the article, one of the first questions that came to mind was, how come parents do not focus the capital spent to send multiple children to school for an insufficient number of years on one child so that he or she can attain some type of certification? I mean this less of a realistic expectation of parents or a devaluation of their struggles to make the decisions that they currently have to endure. My question stems from the fact that it seems like a terribly inefficient method since children cannot realize the full potential of their human capital. If, for example, the oldest child attends school while his siblings work to help support the household, perhaps the oldest child can obtain a high-skill job with a higher return than the current wages of all the children. Perhaps, this can break the cycle of poverty and child labor. However, I realize that parents are not usually "strategic" in this manner of decision-making. They want their children to be educated until the point when the current demands (for capital) exceeds the benefits of potential future returns. As the article points out, parents that engage their children in labor do so because of dire circumstances. The solution that Udry advocates for is at least in the same realm as my thoughts (it is still essential to focus on education in order to alleviate poverty without increasing the hardships of the household.) Obviously, Udry's suggestions are a lot more realistic and acceptable than my initial response to the introduction. The Dufflo presentation we saw in class a couple of weeks ago forecasted the effectiveness of an education incentive program. Her study saw that vaccinations or rice can increase children's years of schooling, and at the same time, improve the health of the child and the village. The point is, in order to decrease child labor, the government must increase potential future benefits above the current benefits. Subsidies seem to be effective.
Udry does a good job of not only illustrating how child labor can result in poverty traps and future income reductions but he also effectively articulates how child labor is a direct result of the overall framework of poverty. It is not hard to see why an impoverished family would view child labor as an effective short term tool in reducing financial strains within a household. However, as Udry explains, this short term fix often leads to long term negative consequences resulting in lower incomes and increased poverty for the victims of child labor. Families that simply cannot manage without the extra incomes of their children are forced to resort to child labor and thus perpetuate the vicious cycle of poverty as those children earn lower future incomes and are in turn forced to employ their children at young ages. Once again education becomes a crucial factor in reducing poverty and in turn reducing the necessity for child labor. Udry appropriately highlights the positive effect education has on the reduction of child labor while carefully examining the various causal pathways associated with increases in education, increases in income, and reduction of child labor. For instance, a poor family may place a higher importance on education due to the higher education of their parents which may in turn result in greater income gains. Udry also emphasizes the importance of sound financial markets in reducing child labor as they provide effective ways to compensate for the income lost by families when they make the choice to send their children to school for longer periods. These financial markets enable families to borrow and save at beneficial rates that will allow them to sustain adequate levels of income and educate their children. In stressing the importance of financial markets in solving child labor problems, Udry reminds us that (as is true with many of the negative consequences of poverty) child labor can best be addressed through policy that addresses the overall framework of poverty rather than policy that simply aims to ban child labor. This is an extremely important point to remember as developed and developing countries attempt to solve the child labor problem. By simply banning child labor (excluding the more extreme cases such as human trafficking and bonded laborers) governments can place added financial strain on a given household and thus negatively effect the parents and children in a family unit. Udry gives some great examples of policies and programs that can help to alleviate the financial strain in impoverished households while encouraging education and thus reducing child labor. The Opportunidades program in mexico and the Red de Proteccion Social program in Nicaragua both provide grants to households that keep their children in school and thus provide the income these families need to survive while encouraging the education of their children that is so beneficial to them both financially and socially. We must look to cultivate these types of programs in addressing not only child labor but other problems associated with poverty as they understand the multi-faceted nature of poverty and refuse to adopt a narrow minded approach to policy.
Child labor is an issue that rightfully receives a lot of attention in developed countries due to the size and severity of the problem. Most people’s gut reactions would be simply ban the practice, but as Udry shows that would be an ineffective policy. Instead, understanding the causes of child labor brings up many of the themes we have consistently been talking about in class- lack of opportunity and under-developed institutions, but households that still respond to the correct incentives when they are put in place. Udry sets up a model that includes expected returns from school, the discount rate and current wages. Many households in low-income countries do not have access to developed financial markets, so they are not able to borrow money to finance education. This points to the lack of institutional development. Although this would not be an easy problem to solve, it shows the need to promote better institutions in developing countries. Udry also mentions a study in Madagascar that showed that school enrollment changed based on the amount of trained teachers. Better developed education systems would also go a long way in increasing the returns to education, which would increase the cost of child labor and decrease the overall level in the long run.In his policy recommendations Udry shows the importance of designing the correct incentives into programs to alleviate the problem. The most effective programs are targeted to families that send their children to school. Similar programs to the ones he outlines have also been used in Brazil and have also been very successful. Finally, he also differentiates between societal and family benefits. Programs like Progresa only change incentives at for the family unit, and they are still proven to be effective. If you take into account the greater benefits to society of increased education, it would be justifiable to increase funding to these programs more and focus on developing better school systems.
As we live in a developed country that long ago banned child labor, it's only something that we hear about, not something that we ever see. Granted we hear about children working in sweatshops and whatnot which naturally brings an outcry against employing children. And since banning child labor in America worked for us, my first instinct would've been to insist that developing countries ban it as well. However, when America banned it, we were already a developed nation, and thus the policy has a different effect than it would in a developing country. The unfortunate truth is that a lot of extremely poor households rely on child labor out of financial desperation. And thus putting a ban on it only hurts those families and subsequently those children. Also these countries most of the time don't have the means to enforce an effective ban on child labor. In Chir Udry's paper, the key thing that he shows is that the best way to reduce child labor is to subsidize a child getting an education. In other words a child and their family will be worse off with sanctions against child labor. Whether in the form of a ban or reducing children's wages. But as Udry notes, the evidence is strong that the most effective way to reduce child labor is to encourage school attendance. But how one makes school more appealing in the face of poverty is naturally to provide incentives for the family to send their child to school. Based off of the results of the Progresa program in Mexico and the Red de Protección Social in Nicaragua, subsidies to families that send children to school greatly increases school attendance. And by increased school attendance, it keeps the children out of the labor force so that they may focus on their education to earn more in the future and getting themselves and their future family out of the poverty trap. Udry's studies reinforce the power that education has when it comes to development. This investment in human capital is essential to economic growth. The main problem with poverty is that it is cyclical, but if you can empower children to have the opportunity to gain an education in order to better their future, they have the opportunity to therefore break out of that cycle. And with a higher education, they will grow to earn higher wages and thus contribute more to a country's GDP and further economic growth overall. The solution always seems to be in education, and when there's clear evidence that supports its positive effects, it's hard to argue with that.
Christopher Udry expectantly addresses the issue of child labor in less developed countries in his paper “Child Labor”. Udry begins by exploring the cycle of poverty as a result of children substituting education for work. Because child labor contributes to poverty in future generations by reducing school attainment, poor households, which are likely to send their children to work, get stuck in a poverty trap. Udry expresses this by saying, “This circular pattern of positive feedback between poverty and child labor may lead to a vicious cycle of poverty, in which the descendants of the poor remain poor because they were poorly educated” (Udry 3). In order to break the cycle, schooling attainments must be improved so children can increase their human capital and eventual income. Imperfect financial markets also contribute to the poverty trap. According to Udry, “Even if the parents are fully altruistic towards their children, in the sense that they treat the future costs to children of current child labor symmetrically with current benefits to the household, poorly-functioning financial markets can induce too much child labor and too little schooling” (7). Because the benefits of child labor can be immediately gained, while the returns to education are delayed, poor households struggle to sacrifice immediate revenue for increased returns in the future. The presence of uncontrollable shocks, which are considered an act of god, also causes this decision between education and child labor to lean toward the side of child labor. This is shown when Udry says, “Faced with an adverse transitory shock, a poor household is forced into a stark choice: maintain the schooling enrollment of the children and face a decline in an already inadequate level of consumption, or try and protect the family’s current living standard by relying on increased child labor” (6). Finally, agency problems also contribute to the misallocation of child labor and education. Udry expresses this by saying “Agency problems can induce too much child labor and too little investment in education. The source of the problem is that poor parents who plan to leave no bequest to their children use child labor to support the current consumption of the household” (8).
This article gives a multifaceted perspective on why child labor exists and potential solutions for how to fix it. The article first discusses the notion that curing poverty will cure child labor. It is true that wealthy parents do not send their child into the field to work but in many cases children and parents wage is related. That is, if the wage of the parents rise then the wage of the children rise. When the wage of the children is rising there is a higher opportunity cost for sending a child to school. In this scenario, it is my belief that we should spend money improving the school systems of a country. Better education as shown in the Solow growth model increases the savings rate and brings about more output. If parents are still choosing to send their children into the fields then obviously the return from human capital is not high enough and we need to improve the education system. Secondly, the article glosses over the reasons parents send their children into the workforce. I agree that it is an evil and it causes cyclical poverty. Take an example given in class on Tuesday: if you have two children and one of them gets malaria and is dying then most parents will do whatever they have to do to save their child, even if it means taking their other child out of school, especially if the sick child is a male. So not only is poverty a cause of child labor but also urgency. We should not, with one fell swoop, condemn all parents that send their kids into the workforce as always immoral or uneducated. Many times it the only option that they have. This article and Chapter 9 of Sen's Development as a Freedom suggests that development combats fertility. And through women's opportunities, education, and lower infant mortality rates we can eradicate child labor. Women's opportunities are so crucial because they raise the opportunity cost of having a child. Not only that but when women are educated and hold jobs they have more power in the household and can make decisions about child labor. Studies show that women are much more likely when given the same funds, to reinvest in their children then men. Giving them the resources of education and jobs will help eradicate child labor. Improving infant mortality will decrease the need for having ten children to ensure that you have a few surviving children. In developing countries without healthcare the healthcare, retirement, and social security are your children. If we improve infant mortality the impetus to have a high number of children (which is correlated with child labor) will fall.
Udry’s work on Child Labor outlines the causes of child labor, how it is connected to poverty, and a pathway to reduce it. One of the main issues with child labor is that is creates a vicious cycle of poor families raising children to work rather than earn an education. The lack of education produces no improvement or gains in human capital and thus leaves a society not able to reach its full potential. Families turn to child labor out of desperation, a way to “make ends meet” (Udry 10). The lack of credit and the lack of access to capital markets cause families to be in need of income for immediate consumption. Accordingly, the benefits of child labor are seen immediately whereas the costs are not taken into consideration until far into the future. Also, agency comes into play here because the family decides whether or not the child will work, the family collects the benefits, and the child eventually ends up with the costs. It was really interesting to read about the effects of a developed trade-policy especially because that is a current issue. Developed countries are looking for ways to reduce poverty around the world and increase welfare. At first glance, this plan seems like a great idea. However, Udry explains why it would cause more harm than good. Child workers would be of less value to employers and their wages would decrease. Although these low wages would put the children back in school, their families would face even more poverty. Finally, Udry identifies that the key to reducing child labor and creating a more virtuous cycle of economic growth, productivity and education will be to increase enrollment in schools (although not through a developed trade-policy). Udry mentions various ways to do this including subsidizing education. For example, the Progresa program in Mexico and the RPS program in Nicaragua have made great impacts on society. Another way to increase school attendance would be to improve school quality. Udry’s main point of this work is that child labor will decrease when poverty is alleviated, but there is no time to wait and steps must be taken now.
The two most challenging portions of Christopher Udry's paper on child labor were confronting that some child labor only occurs out of necessity and the effect of credit markets on education decisions. Prior to reading this paper, I mainly conceptualized child labor as exploitive either parents taking advantage of their children or corporations exploiting families. But Udry's argument as to why outright banning of child labor could in fact be more detrimental to the children then allowing them to continue work. It did not occur to me that the reason children may be working is that without their additional income the family would be unable to survive. The question this raises though is if child labor is successfully banned wouldn't that shift the labor supply curve in driving up the real wage increasing the income of the still working adults?On BBC there was a piece on the first ever-televised presidential debate in Ghana. The key focus of the debate was on whether primary education should be free. A summary of one of the candidate’s positions was the Ghanian government should borrow to pay for education since it has access to international credit markets and then it would be able to pay for the debt with the future increase in productivity. An option not mentioned was cutting certain programs to fund education and it seems the problem do families is similar, they cannot borrow to pay for education nor cut expenses therefore the children must enter the labor market. With out access to credit markets, parents are faced with a much different decision rather than will income gains of my children be able to pay off the loans I take out to educate them becomes does providing less now to my children to pay for education equal the returns on education. Except the margins on that decision is much narrower if the children are barely receiving enough for as it is, if the child starves to go to school there may not be strong returns on education. Conversely the one part I do not understand well is how the socially efficient level factors in. Is that saying that parents will not educate their children (if possible) past a certain point if it is not socially efficient? This seems to run contrary to the assumptions made elsewhere in the paper of altruistic parents, where parents provide as much benefit to their children as possible. The issues of child labor are far more complicated than a simple explanation of exploitive relationship.
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The cyclical nature of poverty contributes to the rise in child labor worldwide. Though the negatives highly outweigh the benefits, children are pulled out of school everyday to work. In "Child Labor" Christopher Udry notes that the majority of children who are working are engaged in less extreme activities that include work on their own families farms or in their businesses. This money that they earn while working may go towards their household or themselves. More often than not the money goes directly to the household. In poorer countries where birthrates are high, more children means that a family can have more workers. However, more children also means more mouths to feed. Child labor is essentially up to a parent's discretion which strips children of their freedoms to education and choice. Christopher Udry talks about this concept as "unitary household model" which regards that the income earned by those in the household are pooled together. Thus earnings made by a child would go directly to the household. The problems concerning child labor are those associated with the declining attendance in school. Though these children are not necessarily placed in heavily dangerous conditions or forced labor they are still denied the opportunity for more schooling. The opportunity cost of work does not equate the reward of an education. Udry argues that the benefits of schooling heavily outweigh the benefits of work and wage that a child would perform and earn. Christopher Udry makes an interesting point that simply banning child labor would not create desired effects. A strict ban would not only make conditions worse for children than they already are but would also affect the price of goods and in turn the wages of child laborers. Lowering the wages of children may encourage some to go to school but it may also put more strain on already struggling families. This cycle of child labor relates to the cycle of poverty in the way that it appears we can reduce its acceleration with the increasing promotion of schooling. Knowledge through education can serve as a tool to help end this vicious cycle.
Preface: this is Ainsley Daigle's post. She's out of town and couldn't find internet.This article is particularly interesting because it focuses on the indirect effects of putting children to work rather than the direct abuses that often come to mind when one thinks of child labor. In particular, he focuses on the trade-off between current income/production gained from putting a child into the labor force and future gains from investments in developing the human capital of those children. By his definition, child labor is "the sacrifice of the future welfare of the child in exchange for additional current income." It is this future welfare sacrifice that creates a vicious cycle in which child labor is an effect of poverty, as children are only sent to work when the family has no other options, but also a cause of future poverty, as children who are forced to work do not receive the education needed to escape destitution. To evaluate the cycle, he attempts to understand the decision to put a child to work from the point of view of a parent who is considering his/her options. When making this decision the parent has to evaluate his/her costs and benefits. In this evaluation, the benefits of child labor are all immediate. The wages that child brings in and the money saved by not sending that child to school are both incentives for putting the child into the labor market. On the other hand, the costs are realized in the future. The reduced future earnings of the child as a result of educational deficiencies and the lost potential social benefits of going to school are all discounted as they are not realized until later in the child's life.As the author works through this issue and arrives at potential policy solutions I was struck by how many of the proposed solutions faces a sort of catch-22. For example, if governments were to ban child labor in an effort to make the children better off in the future this would then force the families to send their children to school, but the family would be lacking in household income and the children would actually be worse off in the present. So what the author claims we really need to do is make school more attractive and affordable through an education subsidy. Many programs have been developed under this premise in which a family receives a subsidy in response to sending children to school. Since the subsidy is calculated based off the wages that would have been brought in by the child (albeit slightly less), the family is able to invest in the human capital of the child while still getting the benefit they would have gotten had they sent the child to work. He provides such a simple, beneficial, and seemingly low-cost solution! Though he gives some information, I would definitely be interested in learning more about the success of programs already in place, such as Opportunidaes in Mexico or RPS in Nicaragua. Specifically, I would want to know where the money comes from and how it has impacted future returns as measured by changes in the country's development overall, rather than just school attendance as mentioned. I'm sure one could make an argument that the schools also need the money to improve quality because even if enrollment rates are up the school quality will be a big determinant of how helpful this is to the children.
The decision to sacrifice a child's future well-being for an immediate gain is an unwise and a very emotion-driven decision. However, those in poverty do not necessarily have a choice, especially in adverse economical circumstances, they cannot survive with out earning the extra income from their children or utilizing their child's productivity. The decision, made on the margin, decides that the present gain of income, allowing a family to purchase or produce enough sustenance to live, is more important than the future success of the child. This method of thinking is logical: the parents grew up this way and are now stuck in the same position that their parents were in. It is a detrimental cycle that shows no hope of rescuing large amounts of populations from poverty.The pending question is: how can financial restraints of poor households be lessened to the point in which they are capable of sending their child to school to break out of this cycle of poverty? One option would be for a family to borrow to support consumption while the child is unable to work. This decision comes with risk but could potentially, drastically improve the well-being of a family and the probability of future profitability. Christopher Udry suggests improving school systems to higher the incentive, giving subsidies to the families that choose to educate their children, or implementing a food-for-education program. These are good ideas in theory, but where should we get this money? Is this issue important enough for the government to set aside funding? I would argue that based on the future probability of success and possible alleviation of poverty, this could be a very successful method to push developing countries in the right direction and it is well worth government financing.
In agreement with Sen’s desire to reduce developing countries’ fertility rates, I think one of the best ways to reduce child labor is to empower women. Sen’s literature outlined that increasing freedom for women was one of the best ways (highest statistical significance) to reduce fertility, which can lead to higher family incomes and therefore less of a need for additional labor from the child, which Udry’s paper illustrates is the moral hazard of reducing investment in young people’s human capital. This cyclical nature of entrapment, which is always so prevalent in every aspect of poverty analysis, can be addressed in many ways. Udry claims that the “obvious response” would be an outright ban of child labor. This initial reaction is consistent with my perception of the majority response to child labor. However, Udry wisely points out several problems with this approach. First, developing countries do not have the ability to enforce such bans; I would even argue that developed countries still have problems enforcing labor restrictions on the population. For instance, the prevalence of undocumented workers in the United States is estimated to be in the many millions. So, with the context of most of the child labor occurring in rural sectors on family farms or neighboring agriculture, it is highly doubtful that lasting impact and success can be made through a government prohibition. I thought that one of the most interesting claims of the paper is that there is actually little evidence to show that US child labor laws caused the decline of child labor in the 1800s. Accordingly, the reduction occurred because of the rise in the real wage, waves of immigration, and huge changes in technology. Because these claims were not sufficiently accompanied by evidence, I researched Carolyn Moehling and complimentary historians on the ineffectiveness of child labor laws. In her conclusion of her paper cited in Udry’s analysis, she acknowledges that the occupational rate of child did decline in states that enacted these laws, but so did the rates for children who were not restricted. Interestingly enough, she claims that the legislative reform to oppose child labor was not the initiator of change, but a consequence of lower industrial opposition to change that occurred because of wage, technology, and immigration changes.
Education is obviously one of the most important ways to develop human capital, and child labor directly interferes with it. Unfortunately, in the poorest households of the world, the short-term benefits of sending their children to work often outweigh the long-term benefits of sending their children to school. One of the primary problems with this is the lack of adequate access to financial markets. Households are less likely to reap the benefits of their children's education if they have to take out loans with high interest rates to finance it, as their ability to pay off the loan is delayed too far into the future. Furthermore, in countries like Africa with high morbidity and mortality rates, the heightened uncertainty regarding the future makes these investments even less rational. I am also concerned with the access to job markets after receiving an education. In developing countries with a large rural sector and high unemployment in the urban sector, a household might feel like investing in their children's education is ultimately pointless because the likelihood of them finding a higher paid job is not significantly enhanced. This is an even greater concern for households that only have access to schools with inadequate funds and mediocre teachers. In this way, child labor is a function of poverty. Unfortunately, however, we also know that poverty is a function of child labor, as the children who don't receive an education are more likely to grow up and remain in poverty. Udry's suggested response to this problem is to invest more in schools, making them more desirable by increasing the potential returns to education, and to subsidize households for sending their children to school.
There are costs and benefits of child labor, and clearly the consensus is that these costs are much greater than the benefits. the question should be, what is the value of child labor and what is the value of child education. The jobs childeren are performing are relatively low skilled jobs, while the education they would be recieving is decidedly much more efficient. since kids don't get paid to go to school, it is hard to see the economic benefits right away, but in a low-skilled jobs the benefits are seen as soon as pay day comes. But when is pay day for an education? The answer is everyday. One child recieving an education beneifts the economy for everyone around that child. This greatly improves quality of life for that child, but it also improves the quality of life to some point for everyone around them. Unfortunately for that child, they do not begin to recieve the benefits of their own education until they graduate and start working in a more skilled job. Then the returns to education are exponential because the imporves the economy personally, locally, and globally. Then this also improves the life of the child who recieved the education. The opposite of this effect can be seen in the example of the child who doesn't recieve the education and just works a low-skilled job. This only improves that childs life minimully while they would have been recieving an education. Then once that child reaches an age where it would have recieved an education, that child's economic benefit decreaseds tremendously and that child contributes much less to the growth of the local and global economies. So we can see that child labor is also very harmful to the economy. This is understood through the idea that a decrease in human capital is just as bad for the economy as an increase in human capital is good for the economy.
I worked at a food bank in Camden, NJ this summer. The food bank created a program that gave bags of food to children in school. If the children showed up on this particular day they would receive a bag of food to take home to their families. The food bank created this program to make sure families were being fed but also created an incentivized program. This program has the potential to increase school attendance, like the programs in Mexico and Nicaragua. The teachers even started to use the bag of food as an incentive for the students to behave. If the kids were misbehaving the teachers threatened to take their bag away. I do not think this was the food bank’s intention. Students will come to school if there is a benefit for attending that outweighs the costs. Christopher Udry does a good job explaining why banning child labor will not benefit poor families. The families he discusses in this paper have to send their children to work in order to provide necessary consumption. School has benefits in the long run but these families are surviving in the short run. I had a difficult time explaining the benefits of school to students in Camden because they had bad teachers, little future opportunities, and neighborhood pressures not to go to school. It is even more difficult to look into the future when you physically need your child to work in order to survive. The incentives will help families alleviate physical constants but the schools need to provide a strong education and the job market needs to be promising. If children continue to work in undeveloped countries poverty will continue to be cyclical. And if children in Camden keep dropping out of school to join a gang, become a prostitute, or whatever else, they will remain in poverty. The government will not have to force children to school if the benefits of the education are so vast that looking long term is not so difficult. The families need to be alleviated in the short term in order to change their perspectives. Also, if women in these countries are empowered, child fertility will be reduced. If the family has less children to pay for then they would increase their chances of being able to send their children to school.
I agree with the comments questioning how you get parents to care about investing in their children's education. Subsidies are an instrument that has been used and should continue to be used but I'm waiting for another solution to the problem that comes out of left field like the returns from deworming children. The most striking thing I've gotten out of this paper was how pensions to grandmothers goes to food for grandchildren but pensions to grandfathers doesn't. I've read a number of articles on grandmothers influence in Africa and I think this points to the continued trend of women being the facilitator of children's welfare. Maybe subsidies should be aimed primarily at women if they aren't already.
Prior to reading this paper, I knew that child labor was an issue around the world; however, I did not realize that one in ten children worldwide are working full-time. That is an abhorrently high number when you consider that many other children are working substantial hours doing part time work. Yet this part time labor is not what Udry is worried about in his paper. He is concerned with the decisions on the margin that involve a total trade-off between a family sending their child to school or having them work. Most of the time we see that the child labor is a rural, agricultural phenomenon. It does not occur nearly as often in urban areas. This potentially stems from many different causes. A few might be higher wages in urban areas, easier access to urban schooling, less employment opportunities for urban children because cannot work on the family farm and high urban unemployment levels. The main cost of child labor is the future increase in earnings that are lost due to the lack of education. There are also social costs stemming from child labor. If children are less educated then they contribute less to society and may even be a drain on society as an adult. If they are in such poverty that they are a drain, it is likely that their children will not receive an education and be stuck in a poverty trap. Thus, I like the idea of a subsidy to encourage a family to send their kids to school. However, their needs to be a limit on the number of children this subsidy will cover because it creates an incentive to have large numbers of children.
I found this article to be very interesting and informative. Usually when one thinks of child labor, he or she thinks about the horrific abuses and sweatshops and that sort of thing. The primary cost of child labor is a lower investment in human capital because the child does not go to school and receive an education, thus does not reach a higher level of capabilities or skills. The problem is that the child is the one impacted by this, not the parents. The child bears all of the cost in the future while the parents receive the benefits of extra income in the present. Child labor is also cyclical. It is both a symptom of poverty and the cause of future poverty. Udry points out that the market failure here is that costs of working and the benefits of schooling are entirely private. It does not take into account Kremer’s O-Ring Theory. If one worker, A, has a higher average of skills than another, B, than B has more of an incentive to increase or acquire more skills. As the human capital increases, the PPF curve shifts out showing the productivity increase and increase in the economy.