No silver bullet to combat child labor

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Child labor is a pressing concern that lingers for decades in many parts of the world. The incidence sparks controversies in a wide range of issues: how to measure child labor, whether child labor should be eradicated, and most importantly, how to design viable instruments that can completely ban child labor. Is there a silver bullet to prevent children from being sent to work? Probably not. In fact, what is more important than fully abolishing child labor is to minimize the child worker’s welfare loss while avoiding curbing the overall welfare of the poorest households. In order to do so, not only should we consider the macro forces that give rise to the incidence of child labor but we also must not overlook the underlying causes of child labor at the household level.

Why legal bans, consumer boycotts, and trade sanctions may not be the best way to mitigate child labor?

It is commonly believed that children work for wages in formal sectors; more specifically, in factories, sweatshops, or mines where the working environment is hazardous and the working hours are inadequately long. It is true that some forms of child exploitation as such do exist. However, contrary to the common belief, the statistics of child labor give us a surprising overall picture of child labor. Firstly, different from the general perception of children being employed in the manufacturing sector, most child laborers seem to be active in agriculture or services . Secondly, the majority of child laborers concentrate in family farm work or family businesses instead of working for firms outside the family scope.

These two facts partly explain the reason why legal bans, consumer boycotts and trade sanctions may not be effective in cutting off the number of children in the workforce. Since most working children are active within the households and not in the manufacturing sector, banning factories from employing underage workers would probably not be right on the target. Moreover, on the one hand, legal bans are difficult to be successfully enforced in practice due to the fact that child labor is more widespread in rural areas, and within the informal households’ business. On the other hand, trade sanctions against goods produced through child labor inputs may help reduce the number of children employed in the export sectors but eventually these children would reallocate in the import sectors. As a result, these trading policies would fail to bring down the overall number of child laborers. In the worst scenario, these trade policies could distort market prices of exports and imports by an increase in tariff, which eventually leads to a higher demand for child laborers.  Similarly, consumer boycott against goods produced with child labor can also be counterproductive. Goods being boycotted turn out to be sold with lower prices on the market, which drives their demand higher and causes child labor to increase instead of falling.

Besides the fact that these policies may not be feasible in cutting off the number of child laborers, they also turn out not to be desirable from the standpoint of poor households. Theoretically, if there were no children working, the demand for adult workers would increase, which would cause the adult wage to increase. However, practically, given a number of children being reallocated out of the workforce, the increase in adult wage would still not be sufficient for many poor households to cover subsistent needs. As a result, the family’s survival would become critical.

A concrete example of how bans and trade sanctions can backfire is the Child Labor Deterrence Act passed by US Senator Tom Harkin. The bill banned imported goods that used child labor as one of the production inputs. As a result, about 50,000 child laborers were dismissed from the Bangladeshi garment industry. This would have been a good outcome for child labor but the story did not end there. What happened to these 50,000 child laborers was that the majority of them reallocated in stone crushing or prostitution.

Overall, this does not mean that legal bans, boycotts, or trade policies play no role in eliminating child labor. The shortcoming of these policies is that most of the time they only address the symptoms, and fail to target the causes of child labor. If the poor had other options, they possibly would have not sent their children to work. For this reason, the next step to combat child labor is to understand why children work and how to incorporate the household decision-making on child labor in a policy framework.

Cash transfers: the new light at the end of the tunnel

Among many reasons why children work, it comes as no surprise that the dominant driver is poverty. There are two types of poverty that translate directly to child labor: subsistence poverty, which indicates the lack of basic needs for family’s survival; and poverty of opportunity, which on the other hand, refers to family facing low returns in education instead of low income.

In families, where adults’ wage is not sufficient to cover the subsistent needs, sending children to the workforce is the only option for family’s survival. For this reason, providing families with additional resources is the key to prevent child labor. Specifically, resources can be transferred under two major forms: unconditional cash transfers and conditional cash transfers. Through the same channel of alleviating the lack of resources, both of these two forms reduce the probability of children entering the workforce, or at least children’s number of working hours.

Each form has its own pros and cons. The impact of unconditional cash transfers on reducing child labor does not necessarily go hand in hand with an improvement in education. Child labor and education are, in fact, not mutually exclusive. The child’s time allocation can shift towards doing house chores instead of spending in schools. On the other hand, conditional cash transfers can target both reducing child labor and ameliorating child’s education. What come along with the regular cash the family would receive are certain behavioral conditions such as school attendance. However, one common pitfall of conditional cash transfer programs is that if the conditions are not well designed, they could distort the social structure.  For example, while a conditional cash transfer program prevents the conditioned child from working and allow him or her to attend school, it increases the likelihood that other siblings would be sent to work or would have to work longer hours.

Furthermore, in order to enable cash transfers to be effective, it is important to consider parents’ bargaining power. There is a wide range of empirical evidence that when women have higher bargaining power, more family resources would be directed towards child bearing, e.g. health and education. In this case, direct money transferred to the woman in the household instead of the man can result in a higher cut in child labor.

In general, recent empirical works prove that cash transfer programs are prominent for decreasing the number of children working. However, one significant downfall of this approach is the budget. In order to alter families’ decisions and behaviors, these programs require a substantial amount of resources being reallocated. For this reason, either it may not be feasible for certain governments to carry out these programs, or the government may have to give up other development priorities.

Education: quantity or quality?

Besides families who face subsistence poverty, another vulnerable group is families with poverty of opportunity. Different from subsistence poverty, poverty of opportunity directly affects families’ decision on child labor through a different channel: the returns to education. The qualities of schooling, which strongly correlates with the returns to education, vary substantially along with several factors such as: the region of the country, or the ethnical and class that the individual belongs to. More importantly, if the returns to education are not sufficient to cover the cost of foregoing children to work, parents are discouraged to invest in children’s education and more likely to let children work . In fact, this creates a vicious circle for the trade-off between education and child labor, as parents with low education are more likely to send their children to work instead of school.

Education supply-side policies are potential to reduce child labor for this group of households. It is evidenced that compulsory education programs contribute to lowering the number of child laborers. However, compulsory education alone is not effective for families facing poverty of opportunity. In fact, improvement of education quality is the crux of helping decrease child labor for those households. Once the quality of education increases, the return to education increases, and thus education becomes a more attractive alternative than child labor. In the long run, increasing education can break the education vicious circle, as being mentioned above, parents with higher education level are more likely to send their children to school.

Moreover, education supply-side interventions can be designed along with conditional cash transfer programs in order to leverage the overall impacts not only on child labor, but also on human capital accumulation.

“As leaders we have a duty therefore to all the world’s people, especially the most vulnerable and, in particular, the children of the world, to whom the future belongs,”  the United Nations Millenniums Declaration states. Protecting children is no doubt a global responsibility. Yet, we should not fail to be responsive to the actual needs of children and their family. Alone legal bans, boycotts, or trade sanctions against child labor prove to be no silver bullet. In fact, policies aiming at abolishing child labor nationwide or globally are not always a step in the right direction. Child labor is caused by both push and pull forces, which require delicate combinations of not only hard policies, but also supporting interventions at the household level.

Photo credit: Zoriah, http://bit.ly/1Klzubf

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